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FOURTH
SECTION
CASE OF
COOPERATIVA AGRICOLA SLOBOZIA-HANESEI v. MOLDOVA
(Application
no. 39745/02)
JUDGMENT
STRASBOURG
3
April 2007
This judgment will
become final in the circumstances set out in Article 44 § 2
of the Convention. It may be subject to editorial revision.
In the case of Cooperativa Agricola Slobozia-Hanesei v. Moldova,
The
European Court of Human Rights (Fourth Section), sitting as a Chamber
composed of:
Sir Nicolas Bratza, President,
Mr J.
Casadevall,
Mr G. Bonello,
Mr K. Traja,
Mr S.
Pavlovschi,
Mr J. Šikuta,
Mrs P. Hirvelä,
judges,
and Mr T.L. Early, Section Registrar,
Having
deliberated in private on 13 March 2007,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 39745/02) against the Republic
of Moldova lodged with the Court under Article 34 of the Convention
for the Protection of Human Rights and Fundamental Freedoms (“the
Convention”) by Cooperativa Agricola Slobozia-Hanesei (“the
applicant”), a company registered in Moldova, on 23 October
2002.
- The
applicant was represented by Mr G. Botezat, a lawyer practising in
Ştefan Vodă.
The Moldovan Government (“the Government”) were
represented by their Agent, Mr V. Pârlog.
- The
applicant complained that the failure to enforce the judgment of 26
April 2002 violated its right to have its civil rights determined by
a court guaranteed by Article 6 of the Convention and its right to
peaceful enjoyment of its possessions guaranteed by Article 1 of
Protocol No. 1 to the Convention.
- The
application was allocated to the Fourth Section of the Court. On
24 September 2004 a Chamber of that Section decided to
communicate the application to the Government. Under the provisions
of Article 29 § 3 of the Convention, it decided to examine the
merits of the application at the same time as
its admissibility.
- The
applicant and the Government each filed observations on the
admissibility and merits of the case (Rule 59 § 1).
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
- The
applicant, Agrarian Cooperative “Slobozia Hanesei”, is a
Moldovan registered company. It is represented before the Court by
Mr G. Botezat, a lawyer practising in Ştefan
Vodă.
- The
facts of the case, as submitted by the parties, may be summarised as
follows.
- According
to the statute of the State-owned company “Moldtranselectro”
(“M.”), as modified on 7 November 2000, the company is
empowered to consolidate the debts accumulated in the energy sector
of Moldova and is responsible both for lodging claims against
entities indebted to the former (State) energy companies and for
paying the debts that those companies owed to third persons. This is
regulated by Law no. 336 on the restructuring of the debt of energy
sector companies (see paragraph 13 below). In a letter dated 26
February 2002 the National Agency for Energy Regulation (NAER)
stated, inter alia, that in accordance with Law no. 336-XIV
(“Law no. 336”, see paragraph 13 below) M. had acquired
all debts and claims of legal persons in respect of Red Centru, a
State-owned energy company which was privatised after 1999.
- The applicant initiated court proceedings against M.
and SA Red Centru as a third party. It claimed that SA Red Centru
owed it 23,557 Moldovan lei (MDL) since 1999 and that its debts had
become the debts of M. by virtue of Law no. 336. On 26 April 2002 the
Chişinău Economic Court adopted a judgment by which M. was
ordered to pay the applicant MDL 23,557 (1,943 euros (EUR) at
the time). The court found that, in accordance with Article 6 of Law
no. 336 both the debts of SA Red Centru and the debts owed to it had
been transferred to M., as confirmed by an act of verification dated
8 February 2000. No appeal was lodged and the judgment became
enforceable on 12 May 2002.
- The
applicant obtained an enforcement warrant which the Bailiff did not
enforce. On 27 May 2002 it wrote to the Decision Enforcement
Department of the Ministry of Justice requesting the execution of the
judgment and the seizure of its debtor's property. On 1 September
2002 it wrote to “the Government” requesting the latter
to take measures to execute the judgment. The applicant received no
answer to any of these requests.
- The
judgment of 26 April 2002 has not been enforced to date. On
26 October 2006 the Parliament adopted the Law concerning the
improvement of the economic-financial situation of the State Company
“Moldtranselectro” by annulling certain obligations (no.
311-XVI). The law annulled a number of penalties resulting from
delays in payments by M. towards the State budget.
II. RELEVANT DOMESTIC LAW
- The
relevant provisions of domestic law have been set out in this Court's
judgment in the case of Prodan v. Moldova (no. 49806/99, ECHR
2004 III (extracts), § 31).
- In
addition, the relevant provisions of the Law on the restructuring of
the debt of energy sector companies no. 336-XIV read as follows:
“Article 1
The following companies ... [RED Centru] ... shall be
privatised without their debts older than 60 days owed to or
claimable against third parties...
Article 3
Pending the [privatisation] of energy sector companies,
the following debts shall be frozen:
2) of [list of energy sector companies] owed to the
State company “Moldtranselectro”;
Article 5
Debts older than 60 days at the moment of
[privatisation] of [private] companies owed to the energy sector
companies which are to be privatised shall become debts owed to the
State company “Moldtranselectro”.
Article 6
The Government
1) shall become the legal successor:
b) in the person of the
State Enterprise "Moldtranselectro" - of credit
indebtedness of the electricity sector enterprises undergoing
privatisation more than 60 days overdue as of the date of signing
contracts for the sale of the majority stake in their shares, except
for arrears of wages, contributions (payments) to the state social
insurance fund and the debt written off pursuant to Article 4,
paragraph 1);
...3) shall formulate proposals identifying
the sources of financing the difference between the debts owed to
'Moldtranselectro' and accumulated by it in accordance with Article 5
of the present law and of paragraph 1 b) of the present Article.”
THE LAW
- The
applicant complained that the failure to enforce the final judgment
of 26 April 2002 had violated its rights guaranteed under Article 6
§ 1 and Article 1 of Protocol No. 1 to the Convention.
Article
6 § 1 of the Convention, in so far as relevant, reads as
follows:
“1. In the determination of his civil
rights and obligations ... everyone is entitled to a fair hearing ...
within a reasonable time by a tribunal ....”
Article
1 of Protocol No. 1 reads as follows:
“Every natural or legal person is entitled to the
peaceful enjoyment of his possessions. No one shall be deprived of
his possessions except in the public interest and subject to the
conditions provided for by law and by the general principles of
international law.
The preceding provisions shall not, however, in any way
impair the right of a State to enforce such laws as it deems
necessary to control the use of property in accordance with the
general interest or to secure the payment of taxes or other
contributions or penalties.”
I. THE GOVERNMENT'S PRELIMINARY OBJECTION
- The
Government submitted that the applicant was itself responsible for
the non-enforcement of the judgment. In particular, they claimed
that, following two unsuccessful attempts to enforce the judgment, a
court had decided to return the enforcement warrant to the applicant
without enforcement due to the debtor's lack of assets. However, the
applicant did not re-submit the warrant during the following year as
it was entitled to do by law.
- The
applicant submitted that its debtor M. was a State company, as
confirmed by its statute, and that the State should be held
responsible for its debts.
- The
Court observes that it would appear from its statute and Law no. 336
mentioned above that M., while enjoying a certain degree of legal and
economic independence from the State, has assumed some of the
latter's functions. In particular, it was responsible, at the
relevant time, for claiming the debts owed by third parties to
privatised energy sector companies and for paying, with the means so
acquired, the debts owed by those privatised companies to third
parties. It was thus an instrument employed by the Government in the
privatisation of the State's energy sector and in settling any
subsequent claims with third parties. In addition, Law no. 336
expressly stated that the Government, through the State company M.,
had become the legal successor of the debts of energy sector
companies owed to third parties. The applicant had claimed such a
debt from a privatised energy sector company (see paragraph 9 above).
- Moreover,
the Government had to identify additional sources of funding, should
the sums accumulated from debts owed to privatised companies prove
insufficient to pay the debts taken over by M. by virtue of Law no.
336 (see paragraph 13 above). In addition, further measures aimed at
improving M.'s financial situation by annulling its penalties were
taken in 2006 (see paragraph 11 above). Accordingly, the Court
considers that the State has a significant control over M.'s assets,
increasing them by entrusting M. with the right to exercise claims
against third parties or providing additional funding and annulling
its penalties, as well as giving third parties the right to direct
their claims against M.
- In
view of the delegation of some State functions to M. (see paragraph
17 above) and of the significant control over M.'s assets (see
paragraph 18 above), the Court considers that the State is to be held
responsible for any debts incurred by M. (see, mutatis mutandis,
Mykhaylenky and Others v. Ukraine, nos. 35091/02, 35196/02,
35201/02, 35204/02, 35945/02, 35949/02, 35953/02, 36800/02, 38296/02
and 42814/02, §§ 41-46, ECHR 2004 XII). Hence, the
enforcement warrant in favour of the applicant may be considered as
having been issued against the State itself.
- The
Court recalls that “a person who has
obtained an enforceable judgment against the State as a result of
successful litigation cannot be required to resort to enforcement
proceedings in order to have it executed (see Koltsov v. Russia,
no. 41304/02, § 16, 24 February 2005; Petrushko v. Russia,
no. 36494/02, § 18, 24 February 2005; and Metaxas v. Greece,
no. 8415/02, § 19, 27 May 2004). It follows that the
Government's objection based on the failure of the applicant to
re-submit the enforcement warrant cannot be accepted since the State
had to ensure its enforcement when it was first submitted, if need be
from its own funds.
- In
view of the above, the Court concludes that the application cannot be
declared inadmissible for non-exhaustion of domestic remedies.
Accordingly the Government's objection must be dismissed.
- The
Court considers that the applicant's complaints under Article 6
§ 1 and Article 1 of Protocol No. 1 to the Convention raise
questions of fact and law which are sufficiently serious that their
determination should depend on an examination of the merits, and no
other grounds for declaring them inadmissible have been established.
The Court therefore declares these complaints admissible. In
accordance with its decision to apply Article 29 § 3
of the Convention (see paragraph 4 above), the Court will immediately
consider the merits of these complaints.
II. ALLEGED VIOLATION OF ARTICLE 6 § 1 AND ARTICLE 1
OF PROTOCOL NO. 1 TO THE CONVENTION
- The
applicant complained that the non-enforcement to-date of the judgment
in its favour had violated its right under Article 6 § 1 of the
Convention to have its case examined “within a reasonable
time”, since examination of a case does not end with the
adoption of a judgment but must also include the period of its
enforcement.
- The
applicant also complained that that non-enforcement had violated its
right to property guaranteed by Article 1 of Protocol No. 1 to the
Convention and had caused it considerable pecuniary and non-pecuniary
damage.
- The
Government submitted that the authorities had taken all reasonable
steps to ensure enforcement and could not be held liable for the
debtor's lack of assets.
- The
Court refers to its finding (see paragraph 19 above) that the State
is to be held responsible for the debts of M. It also recalls that it
is not open to a State authority to cite lack of funds as an excuse
for not honouring a judgment. Admittedly, a delay in the execution of
a judgment may be justified in particular circumstances. However, it
may not be such as to impair the essence of the right protected under
Article 6 § 1 of the Convention (see Immobiliare Saffi v.
Italy [GC], no. 22774/93, § 74, ECHR 1999-V). In the instant
case, the applicant should not have been prevented from benefiting
from the success of its litigation.
- The
issues raised under Article 6 § 1 and Article 1 of Protocol No.
1 to the Convention are identical to those found to give rise to
violations of those Articles in Prodan v. Moldova (cited
above, §§ 56 and 62) and Sîrbu and Others v.
Moldova (nos. 73562/01, 73565/01, 73712/01, 73744/01, 73972/01
and 73973/01, § 40, 15 June 2004). There is no reason to depart
from those findings in the present case.
- There
has, accordingly, been a violation of Article 6 § 1 and
Article 1 of Protocol No. 1 to the Convention.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
- Article 41 of the Convention provides:
“If the Court finds that there has been a
violation of the Convention or the Protocols thereto, and if the
internal law of the High Contracting Party concerned allows only
partial reparation to be made, the Court shall, if necessary, afford
just satisfaction to the injured party.”
A. Damage
- In
its initial application, the applicant claimed the payment of
MDL 23,557 representing the award which had not been enforced.
It also claimed EUR 50,000 in compensation for non-pecuniary damage.
- The
Court notes that the applicant submitted its observations on the
merits of the case and its just satisfaction claims outside the
time-limit set. It finds that the applicant's lawyer's explanations
for this delay are unpersuasive, namely that the lawyer understood
that he had to come for a hearing in Strasbourg and, since he had
been away and could not arrive in time, he did not contact the
Registry or take any other action in this regard. The Court decides
not to award any compensation for any non-pecuniary damage caused.
- However,
in view of its finding that the authorities have not taken the
necessary steps to ensure the enforcement of the judgment in the
applicant's favour and that the judgment has still not been enforced,
the Court finds that the applicant is still entitled to recover the
judgment debt awarded in the domestic proceedings (EUR 1,943).
B. Costs and expenses
- The
applicant did not make any claim for costs and expenses.
C. Default interest
- The
Court considers it appropriate that the default interest should be
based on the marginal lending rate of the European Central Bank, to
which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
- Declares the application admissible;
- Holds that there has been a violation of
Article 6 § 1 of the Convention;
- Holds that there has been a violation of Article
1 of Protocol No. 1 to the Convention;
- Holds
(a) that
the respondent State is to pay the applicant, within three months
from the date on which the judgment becomes final in accordance with
Article 44 § 2 of the Convention, EUR 1,943 (one
thousand nine hundred and forty three euros) in respect of pecuniary
damage, to be converted into the currency of the respondent State at
the rate applicable at the date of settlement, plus any tax that may
be chargeable;
(b) that
from the expiry of the above-mentioned three months until settlement
simple interest shall be payable on the above amount at a rate equal
to the marginal lending rate of the European Central Bank during the
default period plus three percentage points;
- Dismisses the remainder of the applicant's claim
for just satisfaction.
Done in English, and notified in writing on 3 April 2007, pursuant to
Rule 77 §§ 2 and 3 of the Rules of Court.
T.L. Early Nicolas Bratza
Registrar President
In accordance with Article 45 § 2 of the Convention and Rule 74
§ 2 of the Rules of Court, the partly concurring opinion of Mr
Pavlovschi is annexed to this judgment.
N.B.
T.L.E.
PARTLY CONCURRING OPINION OF JUDGE PAVLOVSCHI
In
the case under consideration I had no difficulty in finding a
violation of Article 6 § 1 of the Convention, as the time taken
to enforce the final judicial decision – about five years –
was truly excessive.
As
far as a violation of Article 1 of Protocol No. 1 to the Convention
is concerned, the situation is less clear, and it was only after a
great deal of hesitation that I decided to go along with the
majority's position.
As a
matter of principle, State-owned companies cannot be held liable for
each other's debts, just as a State cannot be held liable for the
debt of State-owned companies, which act independently of the State
on the basis of private law. Of course there are some exceptions, for
instance, in situations where a State assumes a State owned
company's debts, or where a State-owned company exercises State power
or acts on behalf of the State, and so forth.
In
the case before us it is of great importance to examine whether or
not one or more of these exceptions are applicable to the applicant's
situation and, more precisely, whether or not the Moldovan Government
– in the person of the State enterprise “Moldtranselectro”
– assumed responsibility for all the debts of the energy sector
in Moldova.
In my
view, there are two possible approaches to the problem of Article 1
of Protocol No. 1 in this case.
The
first approach is a theoretical, legal one, based on law and the
second approach is a formal approach based on the position of the
national judicial authorities and representatives of the Moldovan
Government.
If we
take the legal approach, we will note the following. According to the
judgment delivered by the Chişinău Economic Court on 26
April 2002 “...it is established that, in accordance with
Article 6 of Law no. 336 of 1 April 1999, both the debts
accumulated by [the energy sector] and the debts owed [to it] were
transferred to SC “Moldtranselectro”, a fact confirmed by
the verification act of 8 February 2000...” (See the Economic
Court's judgment).
Hence
the Economic Court, in deciding to allow the applicant's claims and
to oblige the State-owned company “Moldtranselectro” to
pay the debts of SA Red Centru, made reference to Article 6 of Law
no. 336 of 1 April 1999 as a legal basis for its decision.
We
need to examine the exact terms of Article 6 of Law no. 336.
If we
study the text of this law we will find the following provisions:
“... The Government 1) shall become the legal successor: b) in
the person of
the State Enterprise “ Moldtranselectro” – of
credit indebtedness [datorii creditoriale] of the electricity
sector enterprises undergoing privatisation more than 60 days overdue
as of the date of signing contracts for the sale of the majority
stake in their shares...” (see paragraph 13 of the present
judgment).
So
Article 6 of Law no. 336 of 1 April 1999, to which reference is made,
says nothing about debts accumulated by the energy sector as
mentioned in the Economic Court judgment.
In
its judgment the Economic Court did not mention whether SA Red
Centru's debts vis-à-vis Cooperativa Agricola
Slobozia-Hanesei were “debts accumulated by” it within
the meaning of Law no. 336.
Here
a short remark is called for. The terms “debts accumulated by”
and “debts owed to” are book-keeping terms which, in my
opinion, describe two absolutely different situations. In relation to
the case before us, and in a very general sense, this means the
following – the “debts accumulated by”
“Moldtranselectro” are the debts that this company should
pay to others, whereas the “debts owed to it” are the
debts that this company should be paid by others. That is the
difference.
Unfortunately,
the Economic Court failed to make any distinction between these two
notions and made “Moldtranselectro” responsible for debts
which, in my opinion, are not covered by Article 6 of Law no. 336 of
1 April 1999. At the very least, it is not possible for me to find a
clear answer to this question without the nature of these debts being
determined. This, as I have mentioned, the Economic Court failed to
do.
Moreover,
even if we take the approach favoured by the Economic Court, we need
to determine whether SA Red Centru's debts vis-à-vis
the applicant were more than 60 days old since, according to the same
law (Article 1) “... [Red
Centru] ... shall be privatised without their debts older than
60 days owed to or claimable against third parties...” (see
paragraph 13 of the present judgment).
If
the debts were “older than 60 days” they should have been
extinguished; if they were not “older than 60 days” they
should have been paid. I regret to mention it, but the Economic Court
judgment does not provide us with any answer to this question.
Neither did the Government pay any attention to this issue.
So,
if we take a legal approach to the problem before us, we must
acknowledge that the State-owned company “Moldtranselectro”
cannot be held liable for any of Red Centru's debts, for two main
reasons:
- “Moldtranselectro”
succeeded to “debts owed to” the energy sector and not
“debts accumulated by” it.
- The
applicant never claimed, nor did the Economic Court ever establish,
that Red Centru's debts vis-à-vis Cooperativa Agricola
Slobozia-Hanesei were not, in fact, “older than 60 days”.
International
judicial decision-making is a very difficult and delicate process.
There are many different factors that influence international judges
in their decision making.
In my
view, the most difficult problem which a judge needs to solve is the
problem of using his or her legal knowledge, experience and
understanding of the national legal system in a situation where the
information submitted by a party or parties runs counter to the
judge's own understanding of the case.
To
come back to the present case: in principle, in such a situation, I
should have voted against finding a violation of Article 1 of
Protocol No. 1 to the Convention. However, an international
judge cannot act on the basis of his or her knowledge alone and, to
some extent, is bound by the position submitted by the parties to the
proceedings.
Since
in the present case the representatives of the Moldovan Government
failed to raise all the questions which I have mentioned above and
since the Economic Court failed to have them analysed either, I find
myself in a situation where I have no other option than to adopt a
formal approach and vote together with the majority in finding, in
the present case, a violation of Article 1 of Protocol No.1 to the
Convention.
