CEDH · CASELAW;JUDGMENTS;CHAMBER;ENG — 15 octobre 2019

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font-family:serif; font-size:8pt } .sF6A12959 { width:33%; height:1px; text-align:left } .s2EB42ED2 { margin-top:0pt; margin-bottom:0pt; font-size:10pt } .s3133A7C8 { font-family:Arial; color:#0069d6 } .sC36A6361 { font-family:Arial; color:#000000 }     THIRD SECTION             CASE OF KUZHELEV AND OTHERS v. RUSSIA   (Applications nos.   64098/09 and 6 others – see appended list)                 JUDGMENT     STRASBOURG   15 October 2019       FINAL   15/01/2020       This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision.   In the case of Kuzhelev and Others v. Russia, The European Court of Human Rights (Third Section), sitting as a Chamber composed of:   Paul Lemmens, President,   Paulo Pinto de Albuquerque,   Helen Keller,   Dmitry Dedov,   Alena Poláčková,   Gilberto Felici,   Erik Wennerström, judges, and Stephen Phillips, Section Registrar, Having deliberated in private on 24 September 2019, Delivers the following judgment, which was adopted on that date: PROCEDURE 1.     The case originated in seven applications (nos.   64098/09, 64891/09, 65418/09, 66035/09, 67406/09, 67697/09 and 1504/10) against the Russian Federation lodged with the Court under Article   34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by seven Russian nationals. 2.     The Russian Government (“the Government”) were represented initially by Mr G. Matyushkin, the Representative of the Russian Federation to the European Court of Human Rights, and then by his successor in that office, Mr M.   Galperin. 3.     On various dates the Government were given notice of the complaints concerning the non-enforcement of the judgments given against the federal unitary enterprise. In 2017 they were given additional notice of the part of four applications concerning the non-enforcement of the judgments issued against the joint-stock company. The remainder of applications nos.   64098/09, 64891/09, 66035/09, 67406/09, 67697/09 and 1504/10 was declared inadmissible pursuant to Rule   54   §   3 of the Rules of Court. THE FACTS I.     THE CIRCUMSTANCES OF THE CASE 4.     The applicants are seven Russian nationals living in St Petersburg. Their personal details are set out in Appendix   I. A.     Information on the applicants’ former employer and creation of an open joint-stock company in 2007 1.     The employer unitary enterprise 5.     The applicants are former employees of the Kronstadt Marine Plant ( Kronshtadtskiy morskoy zavod – “the Marine Plant”), one of the oldest and largest shipyards in Russia, incorporated between 1997 and 2015 as a State unitary enterprise (“the FGUP” or “the enterprise”) of the Russian Ministry of Defence. It primarily provided various services to the Ministry, such as maintaining and repairing military ships and their weaponry, and shipbuilding for the Russian Navy. The FGUP’s assets were federal property (Paragraph   3.1 of the FGUP’s rules). The FGUP had a “right of economic control” (право хозяйственного ведения ) over the assets allocated to it in order to carry out its statutory activities (ibid.; for further details on the legal status of unitary enterprises in Russia, see, in so far as relevant, Liseytseva and Maslov v.   Russia , nos.   39483/05 and 40527/10, §§   55-75, 9   October 2014). It was apparently the main employer in the town of Kronstadt. 6.     The enterprise was set up as a separate legal entity, a commercial organisation liable for its obligations with its entire assets (Paragraphs   1.3, 1.5 and 1.6 of the rules). It was subordinate ( в ведомственном подчинении ) to the Ministry of Defence of the Russian Federation. Its founders were the Ministry of Property Relations [1] and the Ministry of Defence of the Russian Federation (Paragraph   1.4 of the rules). 7 .     It was created with the aim of producing goods and providing services to meet the needs of the Ministry of Defence and other public needs ( общественных потребностей ) and for extracting profit (Paragraph   2.1 of the rules). To achieve that aim, the enterprise carried out, in particular, the following activities: repair and docking of military ships of the executive power of the Russian Federation; repair of their weaponry and production of component parts of military ships and military equipment; exportation of products, works and services for military purposes, other military assets for ships and onshore assets under contracts with the Ministry of Defence or legal entities specialising in those types of activities; repair of ships under the flag of the Russian Federation; recycling of military equipment systems; provision of industrial and non-industrial services to individuals and legal entities, including transportation and provision of services involving the use of docks, service roads, railway lines, and storage facilities on the FGUP’s territory, as well as utility sales; engineering, technical reviews, exploitation and modernisation of property of the State technical authority ( объектов гостехнадзора ) for common and military use; education services, transportation services, medical activities, rent of vacant areas and quays; maintenance and servicing of cars; production of consumer goods, as well as research, development and technological works (Paragraph   2.2 of the rules). 8 .     The enterprise could sell, rent and loan its real property, transfer it as a capital contribution to the authorised capital of companies and partnerships, or otherwise dispose of such property, only with the prior approval of the Ministry of Property Relations (its regional department) and the Ministry of Defence (Paragraph   3.8 of the rules). The enterprise could pledge or rent the assets acquired as a result of its economic activity, or transfer such assets as a capital contribution to the authorised capital of companies and partnerships, in the manner and within the limits established by the rules and national law. The transfer of assets was by deed, in accordance with Paragraph   3.8 of the rules (cited above) and the procedure defined by the Ministry of Defence (Paragraph   5.1 of the rules). The Ministry of Defence determined the annual amount of benefits to be transferred by the enterprise to the federal budget (Paragraph   3.10 of the rules), as well as the rules for the setting of draft wholesale prices for State Defence order production in co-ordination and agreement ( согласование ) with State clients. Contracts with ordering parties of the Ministry of Defence were performed as a matter of priority (Paragraph   4.1 of the rules). The enterprise was obliged, in particular, to meet its financial performance targets and fulfil the State Defence order, provide information to the State bodies in the cases and within the procedure determined by the Ministry of Defence, and comply with secrecy and access requirements in the manner defined by the Ministry of Defence (Paragraph   4.7). 9.     Owing to the enterprise’s difficult financial situation, from 2000 onwards several attempts to set insolvency proceedings in motion took place. In early 2005 the company’s committee of creditors lodged an application with a commercial court requesting to place the FGUP in “external administration” ( внешнее управление ), a measure aimed at restoring the company’s solvency by applying special measures under an external administration plan. 10 .     On 14   March 2005 the Commercial Court of St Petersburg and the Leningrad Region placed the FGUP in external administration for a period of eighteen months and approved an external manager ( внешний управляющий ), who replaced the debtor’s management. On 26   June 2006 the same court extended the administration for a further six months. 2.     Creation of a joint-stock company, transfer of assets and the applicants’ employment 11 .     The external manager prepared an external administration plan to restore the FGUP’s solvency. The plan included, inter alia , a “substitution of assets” (“ замещение активов ”, see paragraph   74 below), to be achieved by creating an open joint-stock company (“the OAO”) and transferring the entirety of the FGUP’s assets thereto as a capital contribution. 12.     On 16   May 2005 the plan was approved by the creditors’ committee. 13 .     It appears from the relevant domestic court decision (see paragraph   21 below) that by letter no.   CC-08/14269 of 28   June 2005 the Federal State Assets Management Agency informed an unspecified recipient (apparently the OAO) of its decision to approve the major provisions of the external administration plan and, in particular, the substitution of assets involving a transfer of the debtor’s assets to the newly created joint-stock company as a capital contribution, as a measure to restore the debtor’s solvency. The letter indicated that transactions with the newly created company’s shares and immovable property effected in accordance with the external administration plan required an expert examination by the Federal State Assets Management Agency. 14 .     On 1   September 2006 an independent market valuation of the company’s assets was conducted. 15.     By a decision of 25   December 2006 the external manager (acting on behalf of the FGUP) created the open joint-stock company Kronstadt Marine Plant Awarded the Order of Lenin ( Kronshtadtskiy morskoy ordena Lenina zavod – “the OAO”) and transferred the major assets allocated under the FGUP’s economic control (a total of 184 items, including buildings and watercraft) to the OAO as a capital contribution, with effect from 1   March 2007. 16 .     The FGUP was the company’s only founder. 17.     The FGUP employees, including the applicants, were accordingly registered as working for the OAO from that later date. 18.     On 9   February 2007 the FGUP’s assets were transferred to the OAO in accordance with a transfer deed signed on that date. 3.     Annulment of the creation of the OAO and transfer of assets 19 .     By Decree no.   394 of 21   March 2007 the President of the Russian Federation ordered that the Kronstadt Marine Plant be included in the United Shipbuilding Corporation, which had been created to unite the major shipbuilding companies, ship repair yards and maintenance companies across Russia, to streamline and consolidate civilian shipbuilding using military facilities. 20 .     The military prosecutor, acting in the interests of the Russian Federation, the Federal State Assets Management Agency and the Ministry of Defence, lodged a court action against the FGUP challenging the decisions to create the OAO and transfer the assets, claiming that they were unlawful and void ab initio . The prosecutor argued, in particular, that, contrary to the requirements of the Insolvency Act, the external manager had failed to obtain a mandatory expert examination of the market valuation report by the Federal State Assets Management Agency, and that the value contained in the report was too low. The OAO objected, referring, inter alia , to the owner’s approval of the main provisions of the external administration plan, including the substitution of assets (see paragraph   13 above). 21 .     On 19   October 2007 the Commercial Court of St Petersburg and the Leningrad Region allowed the prosecutor’s action. It held that a substitution of assets was possible in respect of unitary enterprises. However, under sections   94(2) and 115(2) of the Insolvency Act, this way of restoring a company’s solvency could only be included in the external administration plan or submitted for the committee of creditors’ consideration if there was a decision by the managerial body of the debtor entitled to decide on the debtor’s concluding such transactions by the company’s constituent documents. The FGUP’s assets were State property allocated to the FGUP’s economic control. The enterprise could not enter into any transactions leading to the encumbrance or alienation of immovable property without the owner’s consent (Article   295   §   2 of the Civil Code). The court established that the interests of the owner of the assets of the debtor unitary enterprise in the context of the insolvency proceedings were represented by the Federal State Assets Management Agency. The court rejected the OAO’s reference to the Agency’s letter of 28   June 2005, as it indicated that transactions involving immovable property and shares of the newly created joint-stock company were subject to a mandatory expert examination by the Federal State Assets Management Agency. However, according to the court, the market valuation report (see paragraph   14 above) had not been subject to the mandatory expert examination by that Agency. The court concluded that the decision of 25   December 2006 had been taken in violation of domestic law, and accordingly declared the creation of the OAO and transfer of assets invalid. It further ordered the assets to be returned to the FGUP, pursuant to Article   167   §   2 of the Civil Code (see paragraph   66 below). 22.     On 11   February 2008 the 13 th Commercial Appeal Court quashed the judgment of 19   October 2007 on appeal. 23 .     On 29   April 2008 the Commercial Court of the North-West Circuit quashed the appeal judgment of 11   February 2008 and upheld the judgment of 19   October 2007 at final instance. The court established that, in accordance with section   94(1) of the Insolvency Act, as of the date of the institution of external administration, the powers of the managerial bodies of the debtor, as well as those of the owner of property of the debtor incorporated as a unitary enterprise, had to be terminated, and the powers of the head of the debtor and other managerial bodies of the debtor were transferred to the administrator. However, that rule was subject to the exceptions set out in section 94(2) of the Insolvency Act (see paragraph   71 below). In particular, within the limits of the competences provided for by federal law, the managerial bodies of the debtor were entitled to take decisions on substitution of the debtor’s assets. Even though the rights of the owner of the assets of the unitary enterprise were not set out directly in the Insolvency Act, section   94(2) thereof was to be applied by analogy. The court concluded that in the absence of any decision by the owner of the FGUP’s assets, a substitution of assets could not be included in the external administration plan. The court, however, found no evidence that such a decision had ever been taken by the owner of the assets. Accordingly, the external manager’s decision to create the OAO was invalid, as it had been taken in violation of the Insolvency Act. The appellate court further confirmed that the first-instance court had correctly applied the consequences of the invalid transaction and had rightly ordered the OAO to return the assets to the FGUP. 24 .     In May 2008 the OAO advised the applicants of their potential dismissal and on 21   August 2008 dismissed them from their jobs. 25 .     According to the applicants, between August and November 2008 the FGUP refused to reinstate them in their jobs and allow them access to their workplace. B.     Proceedings against the OAO and its insolvency 1.     The prosecutor’s claims against the OAO on the applicants’ behalf and subsequent proceedings 26.     Shortly after the annulment of the above-mentioned transaction, a local prosecutor brought proceedings against the OAO on behalf of the applicants. (a)     Case of Mr Smirnov 27 .     In the case of Mr Smirnov, the prosecutor claimed unpaid salary for April 2008 and compensation for delayed payment of salary. He further amended the claim, dropping the part concerning unpaid wages. By a judgment of 23   September 2008 the justice of the peace of the 110 th   Court Circuit of St Petersburg allowed the remaining claim in part and ordered the OAO to pay Mr Smirnov 445 Russian roubles ((RUB) – approximately 11   euros (EUR)) in compensation for delayed payment of salary in early 2008 (see Appendix II). The judgment entered into force ten days later. A writ of execution was issued. On 16 March 2009 the applicant forwarded it to the OAO’s insolvency manager. The judgment has not been enforced. (b)     Cases of the six other applicants (i)     Court orders in the applicants’ favour against the OAO 28 .     In the cases of the six other applicants, the prosecutor brought proceedings against the OAO on their behalf seeking unpaid wages for June to August 2008 and in some cases, severance pay. On the dates listed in Appendix   II the justice of the peace of the 110 th   Court Circuit of St   Petersburg awarded the applicants the amounts claimed in separate court orders ( судебные приказы ). 29 .     They took effect immediately but have never been enforced. (ii)     Application for the FGUP to substitute the debtor 30.     In 2008 the applicants applied to have the debtor in the domestic proceedings (the OAO) substituted. They argued that, since the creation of the OAO had been declared invalid and all the assets were to be returned to the FGUP, the latter was liable to pay the judgment debts made against the OAO. 31 .     On the dates specified in Appendix   I the justice of the peace of the 110 th Court Circuit of St Petersburg allowed the application at first instance. She held that as the transaction had been voided, no transfer of rights or obligations to the OAO had taken place, and therefore the transfer of the employer’s rights and obligations to the OAO had also been unlawful. The justice of the peace further cited, without giving further details, Article   44 of the Code of the Civil Procedure on legal succession (see paragraph   67.   below) and ordered that the OAO, the debtor under the court orders, be replaced by the FGUP. 32 .     On the various dates in 2009 listed in Appendix   I the Kronstadt District Court of St Petersburg quashed the above-mentioned decisions. Firstly, it found that the annulment of the unlawful decisions to create the OAO and transfer assets had not given rise to legal succession. The court considered that the transfer of assets from the OAO to the FGUP had not automatically resulted in the obligations being transferred. Indeed, the judgment of 19   October 2007 had not contained an order to that effect (see paragraph   21 above). Otherwise, there were no grounds for such a transfer, as a result of either the OAO’s reorganisation, or a “singular succession”, as, for instance, in the event of assignment or transfer of the debt. Secondly, the court found that the decision on legal succession had been issued in the absence of the respondent’s representatives, in violation of its procedural rights. (iii)     Adjustment proceedings 33 .     It is apparent from the parties’ observations received in 2011 that on various dates in 2010 the same justice of the peace adjusted the compensation by applying the consumer price index. The amounts are specified in Column   5 of Appendix   II. The relevant judgments have not been enforced. According to the Government, Mr Kuzhelev and Ms Pavlova have never requested the original orders from the judicial authority and they remain in their respective case files. 2.     Insolvency proceedings in respect of the open joint-stock company 34 .     On 6   October 2008 the FGUP, as the only founder of the OAO, decided to liquidate the company. 35 .     On 13   February 2009 the St Petersburg Commercial Court observed that the OAO had been created by a decision of the FGUP. By a final judgment of 29   April 2008 that decision had been declared invalid, and the OAO had been ordered to return the assets to the FGUP. On the date of the insolvency petition the OAO had been transferring assets to the FGUP and had discontinued production activities. According to the liquidation committee, the OAO’s debts not challenged by the company exceeded RUB   305 million, whilst the aggregate value of the company’s assets was RUB   25.2 million, including RUB   53,564 in recoverable accounts receivable. The court declared the OAO insolvent, and the liquidation process began. 36 .     On 13   October 2009 the bailiffs service discontinued the enforcement proceedings and forwarded the relevant writs to the insolvency manager. 37.     Some applicants’ attempts to challenge the court orders against the OAO in their favour (see paragraph   28 above) on account of newly discovered circumstances, namely the decision to discontinue the enforcement proceedings and the insolvency procedure opened in respect of the OAO, proved unsuccessful. In particular, such request lodged by Mr   Kuzhelev was rejected in the final instance by the St Petersburg City Court on 7   April 2010. 38.     According to the stock inventory by the liquidator, as of 1   June 2009 the company had fixed assets of RUB   16,000, resources of RUB   369,000 and a total of accounts receivable of RUB   727,657,000. On an unspecified date the market value of the assets was assessed by an independent expert as follows: no fixed assets determined; resources of RUB   369,000; and accounts receivable of RUB   10,600,000 [2] . 39.     According to the Government, at some point the OAO’s assets were offered for sale at auction but were not sold, whereupon the relevant documents were compiled. 40 .     On various dates between 9 and 15 December 2009 Mr Khuzhelev, Ms Kudryashova, Ms Petrova, Ms Pavlova, Ms Lebedeva and Mr Tomilin requested the insolvency manager representing the OAO to inform them whether their claims were included in the second line of the creditors’ claims. On 28   January 2010 a group of OAO creditors under the court orders, including the six applicants, complained to the prosecutor’s office that the insolvency manager had failed to reply. 41 .     On 25   February 2010 the prosecutor’s office of the Kronstadt District of St Petersburg advised Ms Kudryashova that all employees who had lodged a request with the insolvency manager of the OAO were included in the second priority line to be repaid. The prosecutor’s office informed the applicants that the claims were to be satisfied in accordance with the Insolvency Act. As the insolvency proceedings were ongoing, the prosecutor’s office did not see any reason to intervene. 42 .     On 12   April 2010 the Oktyabrskiy District Court of St   Petersburg rejected Mr Tomilin’s challenge of the bailiffs’ decision to discontinue the enforcement proceedings (see paragraph   36 above). The court found that the bailiffs service had lawfully discontinued the proceedings and had forwarded the writs to the insolvency manager, as the debtor OAO was undergoing insolvency proceedings. The applicant’s appeal was disallowed by the St Petersburg City Court on 18   August 2010 for non-compliance with the necessary formal requirements, namely failure to specify the claim and pay the court fee. 43.     At some point the claims of 648 second priority line creditors were included in the registry of the creditors’ claims. 44 .     On 29   March 2012 the St Petersburg Commercial Court discontinued the insolvency proceedings and ordered the OAO’s liquidation. The claims which had not been satisfied during the liquidation process, including the applicants’ claims, were considered settled. 45.     On 31   May 2012 the OAO’s liquidation was recorded in the Register of Legal Entities, and it ceased to exist. C.     Judgments in the applicants’ favour against the FGUP and their enforcement 1.     Proceedings concerning reinstatement and unpaid wages 46.     In 2008 the applicants brought proceedings against the FGUP challenging their dismissal, requesting to be allowed to work as of 21   August 2008, the date of their actual dismissal (see paragraph   24 above). They also claimed unpaid wages and other work-related payments from 1   March 2007. (a)     Case of Mr Smirnov (application no. 65418/09) 47.     The applicant sued both the OAO and the FGUP for reinstatement in his job and unpaid wages as of 21   August 2008. He further supplemented his claims by challenging the orders of the external manager and the OAO director for his transfer from the FGUP to the OAO, requesting reinstatement in his job at the FGUP as of 21   August 2008 and asking for his employment record to be updated accordingly. He further dropped his claims against the OAO. The Kronstadt District Court decided that the claim for unpaid wages would be dealt with in a separate set of proceedings. (i)     Proceedings for reinstatement of employment 48 .     On 20   November 2008 the Kronstadt District Court allowed his claim in part. The court found that, in accordance with section   115(4) of the Insolvency Act and Article   75 of the Labour Code (see paragraphs   68 and 77 below), the transfer of an employer’s rights and obligations to a newly created joint-stock company was conditioned only by a change in ownership of the company’s assets, which meant, by operation of law, a transfer of title to the assets. As the transfer in the present case had been declared invalid and without legal effect, a change in ownership of the assets had not taken place. Accordingly, the court declared the transfer of the employer’s rights and obligations to the OAO unlawful, and the respective orders of the external manager and OAO director invalid. The court concluded that the applicant’s employment with the FGUP had not been terminated lawfully and ordered his reinstatement as of 1   March 2007 and his employment record to be updated accordingly. 49 .     On 24   December 2008 the St Petersburg Regional Court upheld the lower court’s findings on appeal. It noted in addition, in reply to the FGUP’s appeal, that the applicant’s reinstatement to work for the OAO in March 2007 was not per se a ground to discontinue his employment relationship with the FGUP, as this was not one of the grounds for termination of a contract of employment set out in the Labour Code. (ii)     Proceedings for unpaid wages for August to November 2008 50 .     On 28   November 2008 the Kronstadt District Court allowed the applicant’s claims for unpaid wages for July to November 2008. As in the earlier set of proceedings (see paragraph   48 above), it found that, as the transfer of title to the FGUP’s assets had not taken place as a result of the invalidity of the transaction, the OAO had not acquired the employer’s rights and obligations under the applicant’s contract of employment. Accordingly, his employment with the FGUP had not been discontinued, and the FGUP was liable to pay him wages. The court further held as follows: “The court further rejects the [respondent FGUP’s] argument about the [OAO’s] responsibility to pay [the applicant] wages and allowances, as, [given] the unlawfulness of the transfer of duties and obligations from the FGUP to the OAO, there are no grounds for the latter to calculate and pay the above amounts to [the applicant]”. 51 .     The court also noted that the justice of the peace of the 110 th Court Circuit had not issued a court order in the applicant’s favour against the FGUP [3] . The court ordered the FGUP to pay the applicant RUB   82,583.45 in respect of salary for “July and August 2008 and the period between 21   August and 28   November 2008” and dismissed the remainder of his claims. 52 .     On 21   January 2009 the St Petersburg Regional Court upheld the judgment on appeal for the same reasons as in the first-instance judgment. The court stressed, in particular, that under Article   77   §§   1, 2 and 3 of the Labour Code, a change in ownership of assets was not grounds to discontinue an employment relationship. Domestic law attached importance to an employer’s link with an enterprise as an asset complex, irrespective of ownership. Therefore, in the absence of an employee’s intention, a change in ownership of assets was not a reason to discontinue an employment relationship at the employer’s initiative. The appellate court concluded that the transfer of assets from the FGUP to the OAO and, subsequently, back to the State enterprise, was not grounds for the applicant’s dismissal within the meaning of the Labour Code. (b)     Cases of the six other applicants (i)     Proceedings for reinstatement of employment 53.     In November 2008, pursuant to the annulment of the decisions to create the OAO and transfer the FGUP’s assets, the applicants obtained separate judgments reinstating them in their jobs with the FGUP from 21   August 2008, the date of their dismissal from the OAO. (ii)     Proceedings for unpaid wages for August to November 2008 54 .     On the dates specified in Appendix   I the Kronstadt District Court examined the claims of the six applicants for unpaid wages and in separate judgments allowed them in part for the same reasons as in the case of Mr   Smirnov (see paragraph   50 above). The court awarded them their unpaid wages from 21   August 2008 to the dates of the relevant judgments, and dismissed the remainder of the claims. In particular, it refused to order the FGUP to pay severance pay and unpaid wages for June to August 2008, as those claims had already been allowed by the justice of the peace of the 110 th Court Circuit in the proceedings against the OAO (see paragraph   28 above). The judgments were subsequently upheld on appeal and entered into force on the dates specified in Appendix I. (c)     Index-linking proceedings in all cases 55.     On 7   April 2009 the Kronstadt District Court found that the FGUP had failed to comply with the judgment in favour of Mr Smirnov and awarded him a total of RUB   8,056 (EUR   183). That amount represented the index-linking of the award, compensation for delayed payment of the amounts awarded by the court and compensation in respect of non ‑ pecuniary damage for the non-enforcement. On 13   May 2009 the St   Petersburg Regional Court upheld the decision. 56.     The Government submitted in their observations that at some point the unpaid wages had been index-linked and the applicants had received compensation for non-pecuniary damage. The parties did not submit any further details or documents in that regard. 2.     The applicants’ dismissal in March 2009 and subsequent proceedings for damages 57 .     In early March 2009 the applicants were dismissed from the FGUP. After three to four weeks they received severance pay and various other payments related to their previous employment. Six of the applicants brought separate sets of proceedings claiming unpaid wages, severance pay and index-linking on those amounts. On various dates their claims were allowed in so far as they concerned the delay in payment of their severance package. They were awarded default interest and compensation for non ‑ pecuniary damage for that period, in the amounts specified in Appendix   I. The court dismissed the remainder of their claims. 3.     Enforcement of the above-mentioned judgments 58 .     In December 2009 the FGUP started paying the amounts awarded in both sets of proceedings, in several instalments. By 24   November 2010 they were paid in full. On 30   November 2010 the enforcement proceedings in respect of the judgments were discontinued because they had all been enforced. 4.     Index-linking of the awards against the FGUP (a)     Case of Mr Smirnov 59 .     According to the applicant’s observations, on 11   April 2011 the Kronstadt District Court ordered that the award in favour of Mr Smirnov for the period of non-enforcement be index-linked and obliged the FGUP to pay him RUB   12,825 under that head. The decision became final ten days later. 60 .     According to the Government’s observations of 19   October 2011, the applicant received the writ of execution in respect of that judgment but did not submit it to the bailiffs. 61.     It is unclear whether the decision was enforced. (b)     Cases of Ms Kudryashova and Mr Tomilin 62 .     The Government submitted copies of claims by Ms Kudryashova and Mr Tomilin for the index-linking of the initial awards against the FGUP, which appear to have been lodged with the domestic court in January 2011 and late December 2010 respectively. The parties did not provide copies of the subsequent court decisions or information on enforcement of the relevant court awards, if any. 5.     Decision to discontinue insolvency proceedings in respect of the FGUP and subsequent developments 63 .     By a letter of 16   July 2009 the Commander-in-Chief of the Russian Navy advised the FGUP’s employees’ representatives that the Marine Plant was included in a list of organisations of strategic importance entitled to receive a subsidy from the federal budget between 2008 and 2010 in order to resolve the FGUP’s financial difficulties. The Ministry of Defence was taking all possible measures to discontinue the insolvency proceedings in respect of the FGUP, including those aimed at payment of the enterprise’s debts and restoring its solvability. 64 .     In 2010 the insolvency proceedings in respect of the FGUP were discontinued owing to a settlement between the FGUP and its creditors. The owner of the debtor’s assets approved of the settlement. On 25   February 2010 the Commercial Court of St Petersburg and the Leningrad Region approved the friendly settlement. 65.     It further appears that the Marine Plant was in operation until 2015, when it was restructured and transformed into a different legal entity (a newly created joint-stock company). On 20   April 2015 the restructuring of the company was recorded in the Register of Legal Entities, and the FGUP ceased to exist. II.     RELEVANT DOMESTIC LAW A.     Invalid transactions 66 .     Article   167 of the Civil Code (General Provisions on the Consequences of the Invalidity of a Transaction) provides as follows: “1.     An invalid transaction shall not entail legal consequences, with the exception of those connected with its invalidity, and shall be invalid from the moment of its conclusion. 2.     If a transaction has been recognised as invalid, each of the parties shall be obliged to return to the other party all it has received as part of the transaction, and if return is impossible in kind (including where the transaction concerns the use of property, work performed or services rendered), its cost shall be reimbursed in money  unless other consequences of the invalidity of the transactions have been stipulated by law. 3.     If it follows from the content of the disputed transaction that it may only be terminated for the future, the court, while recognising the transaction as invalid, shall terminate its operation for the future.” B.     Provisions on procedural succession applied by the domestic courts 67.     Under Article   44   §   1 of the Code of Civil Procedure, in the event of withdrawal ( выбытие ) of one of the parties in a disputed legal relationship or that established by a court ( в спорном или установленном решением суда правоотношении ) (in the event of death, restructuring of the legal entity, assignment of the debt, cession and in other cases of a change of the person in the obligations), the court allows ( допускает ) the replacement of this party by its legal successor. Procedural succession is possible at any stage of the civil proceedings. All actions taken before the legal successor’s entry into the proceedings are obligatory for him to the extent they would have been obligatory for the person whom the legal successor has replaced (Article   44   §   2). C.     Relevant provisions of the Labour Code 68 .     Article   75 of the Labour Code of the Russian Federation provides that a change in ownership of an organisation may not serve as grounds to discontinue employment contracts with other employees of the organisation. If an employee refuses to continue to work because of a change in ownership of an organisation, the employment contract is discontinued in compliance with the Code. A change in jurisdiction (subordination) of an organisation or restructuring (merger, accession, division, separation or transformation) of an organisation is not deemed grounds for rescission of the employment contracts concluded with the organisation’s employees. D.     Relevant provisions of the Insolvency Act 1.     External administration 69 .     “External administration” is a procedure applied in a bankruptcy case to the debtor for the purpose of restoring its solvency (section   2 of the Act). Section   93 of the Insolvency Act provides that external administration is instituted by a commercial court on the basis of a decision of a creditors’ meeting, except in the cases specified by the Act. It is put in place for a period not exceeding eighteen months. This period can be extended in the manner specified by the Act for up to a further six months, unless otherwise provided for by the Act. The external administration term can be reduced at the request of the creditors’ meeting or the external manager. The decision to put the external administration procedure in place takes effect immediately. It may be appealed against. 70 .     Section 94(1) of the Insolvency Act (“Consequences of the Institution of External Administration”) provides that once external administration is instituted: -     the powers of the head of the debtor are terminated, and the duty to manage the affairs of the debtor is vested in the external manager; -     the external manager is entitled to issue an order of dismissal of the head of the debtor or ask him or her to leave his or her office for another position in the manner and on the terms provided for by employment legislation; -     the powers of the managerial bodies of the debtor and owner of property of the debtor unitary enterprise are terminated, and the powers of the head of the debtor and other managerial bodies of the debtor are transferred to the external manager, except for the powers of the debtor’s managerial bodies and owner of the property of the debtor unitary enterprise specified in section   94(2). The managerial bodies of the debtor, interim receiver and administrative receiver must, within three days of the approval of the external manager, ensure that the debtor’s accounting and other documentation, seals and rubber stamps, material and other valuables are transferred to the external manager; -     a moratorium on meeting creditors’ claims relating to monetary obligations and mandatory payments may be imposed, except in the cases specified by the Act, and creditors’ claims for monetary obligations and compulsory payments, except for the current payments that may be presented to the debtor only in the observance of the procedure for presenting claims to a debtor provided for by the Act. 71 .     Section 94(2) of the Insolvency Act stipulates that the managerial bodies of the debtor, within the limits of the competences provided for by federal law, are entitled to make decisions: -     on designating the number and face value of shares; -     on increasing the joint-stock company’s authorised capital by means of issuing additional ordinary shares; -     on addressing a petition to a creditors’ meeting to include the possibility of an additional issue of shares in the external administration plan; -     on establishing the procedure for conducting a general meeting of shareholders; -     on filing a petition for the sale of the debtor’s enterprise; -     on replacing the debtor’s assets; -     on electing a representative of the debtor’s founders (stockholders); -     on concluding an agreement on the terms for the provision of funds for discharging the debtor’s obligations between a third party or third parties and the managerial bodies of the debtor authorised by the constituent