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FOURTH
SECTION
CASE OF
UNISTAR VENTURES GMBH v. MOLDOVA
(Application
no. 19245/03)
JUDGMENT
STRASBOURG
9
December 2008
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 Unistar Ventures Gmbh v. Moldova,
The
European Court of Human Rights (Fourth Section), sitting as a Chamber
composed of:
Nicolas
Bratza,
President,
Lech
Garlicki,
Giovanni
Bonello,
Ljiljana
Mijović,
Ján
Šikuta,
Päivi
Hirvelä,
Mihai
Poalelungi,
judges,
and Lawrence Early, Section
Registrar,
Having
deliberated in private on 18 November 2008,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 19245/03) 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 Unistar Ventures GmbH, a company incorporated
in Germany (“the applicant”), on 7 March 2003.
- The
applicant company was represented by Mr V. Nagacevschi and Mr A.
Năstase, lawyers practising in
Chişinău. The Moldovan Government (“the Government”)
were represented by their Agents, Mr V. Pârlog and
subsequently, Mr V. Grosu.
- The
applicant complained that a final judgment in its favour was not
enforced for several years.
- The application was allocated to the Fourth Section of
the Court. On 15 June 2004 a Chamber of that Section
communicated the application to the Government. On 14 February 2006,
it was decided under the provisions of Article 29 § 3 of the
Convention to examine the merits of the application at the same time
as its admissibility.
- By
a decision of 20 February 2007 the Court declared the application
admissible in a separate decision and discontinued the application of
Article 29 § 3 of the Convention to the case. On the same date
the German Government were informed of their right to intervene in
the proceedings in accordance with Article 36 § 1 of the
Convention and Rule 44 §
1(b), but they did not communicate any wish to avail themselves of
this right.
- The
applicant company and the Government each filed observations on the
merits of the application (Rule 59 § 1), the Chamber having
decided, after consulting the parties, that no hearing on the merits
was required (Rule 59 § 3 in fine).
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
- The
applicant, Unistar Ventures GmbH (hereafter “UV”), is a
company incorporated in Germany.
1. The creation of the Moldovan-German company Air
Moldova S.R.L.
- On 3 March 2000 UV signed a contract with the Civil
Aviation State Authority (hereafter “CASA”), under which
the State-owned airline company Air Moldova was to be reorganised
into a Moldovan-German limited liability airline company called Air
Moldova S.R.L. (hereafter “the company”). The Moldovan
Government, represented by the CASA, was to contribute 31,025,504
Moldovan lei (MDL) (2,548,086 euros (EUR) at the time) representing
51% of the registered capital, and UV was to contribute 2,384,705
United States dollars (USD), the equivalent of MDL 29,808,812 (EUR
2,448,161 at the time) representing 49% of the registered capital.
The new company was declared to be the legal successor of the State
airline company, Air Moldova.
- On the same date the Articles of Association were
adopted and the Chief Executive Officer (CEO) was elected. The
Articles of Association provided that he could be dismissed only with
three quarters of the votes.
- On 7 April 2000 the Privatisation Department of the
Ministry of Economy issued a permit to the newly created company. The
permit stated, inter alia, that after having verified
the incorporation documents the Department of Privatisation had
decided to allow the creation of the new company.
- On 25 July 2000 a specialised department of the
Ministry of Justice examined the legality of the documents of
incorporation of the company. It issued a decision according to which
the company was legally incorporated and that all the documents of
incorporation were in order and conformed to the legislation of the
Republic of Moldova.
- On 2 August 2000, following a letter from a member of
Parliament, the Prosecutor General's Office carried out a
verification of the legality of the incorporation of the company. In
its written conclusion it stated that all the documents of
incorporation were in order and that the rules for creating a company
with State participation had been fully complied with.
- It appears from documents submitted by the parties
that on 12 June 2000 and 13 June 2001 the company received from UV
and/or its CEO via Dresdner Bank USD 2,384,705 in three instalments.
2. The purchase of new aeroplanes by the company
14. On an unspecified date the company concluded an agreement
with the Brazilian aircraft manufacturer Embraer-Empresa Brasileira
de Aeronáutica S.A. (hereafter “the Brazilian aircraft
manufacturer”) for the purchase of two Embraer 145 aeroplanes.
It appears from the documents submitted by the parties that the price
of the aeroplanes was approximately USD 39 million, of which 15% was
to be paid by the company and the rest was to be financed by Dresdner
Bank and the European Bank for Reconstruction and Development (EBRD)
by way of a ten-year loan.
- On an unspecified date the company paid a
non-refundable advance of approximately USD 3.7 million to the
Brazilian aircraft manufacturer.
3. The change of Government and the dispute between UV
and the new Government
- The
facts presented under this heading are based on the submissions and
documents provided by the applicant that were not disputed by the
Government.
- In February 2001 the Communist Party of Moldova won
the parliamentary elections. It declared in its manifesto, inter
alia, that Western countries had a tendency to enter the
Moldovan economy at any price, take over valuable assets and impose
unequal contracts on the country in order to make it dependent on
creditors. One of the goals of the Communist Party was to obtain
control over the strategic branches of the national economy while at
the same time keeping private the spheres of commerce and services,
agriculture and small manufacturing industries.
- In
January 2002 the CASA made an attempt to change the company's CEO by
using its 51% of the votes. UV, however, opposed the attempt. UV's
position was supported by Dresdner Bank, who wrote to the President
of Moldova informing him that in its view the change of management
was contrary to the company's Articles of Association and that it
would consider withdrawing the lines of credit and that the EBRD
would do likewise in case of a change of management. It appears that
after this intervention, the CASA conceded temporarily. However, the
company started to experience pressure from different State bodies.
- Later, at the shareholders' meeting of 19 June 2002,
by making use of its 51% of the votes, the CASA unilaterally
dismissed Air Moldova's chief executive officer.
- On the same date Dresdner Bank informed the President
of Moldova, the Prime Minister, the German Embassy in Chişinău,
the EBRD office in Chişinău, the World Bank office in
Chişinău and the International Monetary Fund office in
Chişinău inter alia that the CASA's actions were
contrary to the Articles of Association of the company, which
provided that at least 75% of the votes were needed for a change of
management. It also declared its intention to withdraw from the
company's project of purchasing new aeroplanes and stressed that the
Government's actions were seriously damaging the image of the country
and its attraction for foreign investors.
- On 21 June 2002 the EBRD wrote to the Prime Minister
of Moldova and expressed concern about the pressure put on the
company and about the “arbitrary and commercially unnecessary
change of the airline's management”. It stressed that such
actions by the Government could lead to the termination of any EBRD
investment in Moldova and that the eventual withdrawal of the
Dresdner Bank from the financing of the company would also lead to
the EBRD's withdrawal.
- On 3 July 2002 Dresdner Bank informed the company of
its withdrawal of the credit line for the purchase of the Embraer
aeroplanes.
- On 18 July 2002 UV wrote to the CASA and proposed to
find a solution to the problem by reorganising the company into a
joint-stock company and including the EBRD as a shareholder. It
stressed that otherwise the company risked losing the advance of USD
3.7 million paid to the Brazilian aircraft manufacturer and incurring
penalties of up to USD 7 million. It appears that UV's
proposal was not followed up.
4. The court proceedings between UV and the CASA
- On 26 June 2002 UV brought a civil action against the
CASA, challenging the change of CEO on the ground that it was
contrary to the Articles of Association.
- On 10 July 2002 the CASA brought its own action
against UV, seeking the annulment of the contract of 3 March 2000 by
which the company had been created (see paragraph 8 above). The
grounds relied upon by the CASA were, inter alia, that the
documents of incorporation were not in conformity with Government
decisions and that the applicant did not have legal capacity to be a
partner in the company.
- UV contested the CASA's action, arguing, inter
alia, that it had legal capacity and that, under the Law
on Foreign Investment, companies with foreign investments were not
bound by Government decisions but exclusively by laws enacted by
Parliament. It also argued that in any event there was no prohibition
under Moldovan law on stipulating in the Articles of Association of a
company that a higher percentage of votes was needed for the election
of the management.
- The Economic Court of the Republic of Moldova joined
the two actions and, on 6 August 2002, ruled in favour of the CASA.
The court dismissed UV's action on the ground that, in accordance
with the Governmental Decision on Enterprises No. 500 of 10 September
1991, a chief executive officer had to be elected by a simple
majority of 51%.
- At the same time the Economic Court upheld the CASA's
action against UV, ordering the rescission of the contract by which
the company had been created. The court upheld all the arguments
relied upon by the CASA and also added, on its own initiative, that
it did not have in its possession any evidence that UV had paid its
contribution of USD 2,384,705 into the company's statutory fund.
- In the operative part of the judgment the Economic
Court made the following order:
“The parties shall be put in the same position as
they had been prior to the conclusion of the contract, following an
audit and accounting control to be carried out by the Government, the
Ministry of Finance and the Civil Aviation State Authority with the
participation of UV (in Romanian: Readucerea părţilor la
situaţia iniţială se va efectua după o verificare
de audit contabilă şi stabilirea cuantumului investiţiilor
efectuate. Alineatul dat al hotărârii
judecătoreşti se va executa de către Guvernul RM,
Ministerul Finanţelor, Administraţia de Stat a Aviaţiei
Civile, cu participarea ÎCS „Unistar Ventures GmbH”).”
- The
court also ordered UV to pay court fees in the amount of MDL 180,000
(approximately EUR 13,427).
- UV appealed against the judgment, but its appeal was
dismissed by the Supreme Court of Justice on 18 September 2002. No
new reasons were given by the Supreme Court of Justice.
- The decision of the Economic Court of 6 August 2002
became final and shortly thereafter the company was reorganised and
reregistered as a State-owned airline company called Air Moldova. It
appears that the reregistered company kept all the assets and debts
of the company.
4. The events which took place after the court
proceedings
- On
25 October 2002 UV wrote a letter to the CASA and to the State owned
company Air Moldova, requesting the reimbursement of its investment
by 29 October 2002. UV also stated that if the money was not paid, it
would take all the necessary measures up to sequestration of Air
Moldova's aircraft on German territory.
- On 4 November 2002 UV requested from the Economic
Court an enforcement warrant in respect of the decision of 6 August
2002.
- On 21 November 2002 the Economic Court replied that no
enforcement warrant could be issued because enforcement was to be
carried out solely on the basis of the judgment of 6 August 2002.
- On
6 December 2002 UV wrote a letter to the Government of Moldova and
the Ministry of Finance asking them to comply with the court decision
of 6 August 2002, so as to put the parties in the same position as
they had been prior to the conclusion of the joint venture contract.
- On 26 December 2002 the Court of Accounts of the
Republic of Moldova, the body which controls the formation,
administration and use of public finances in Moldova, issued a
decision concerning the administration of public money with regard to
the company. It found, inter alia, that UV had invested USD
2.384 million in the statutory fund of the company, representing 49%
of the capital, which, at the date of the examination by the Court of
Accounts, was entirely paid up by UV. The decision of the Court of
Accounts was published in the Official Gazette.
- On
20 February 2003 the Ministry of Finance replied to UV's letter of 6
December 2002 indicating that since it was not the beneficiary of the
investment, it could not pay.
- Since the State Registry of immovable property was
refusing to reregister some of the assets of the former
Moldovan-German company in the name of the reorganised State-owned
company on the ground of lack of clarity of the judgment of 6 August
2002, the CASA made a request to the Economic Court, on 12 February
2004, asking it to clarify the judgment in that respect.
- On
6 May 2004 UV addressed a similar request to the Economic Court
asking, inter alia, for clarification of the reason for
ordering an audit and accounting control once the size of the
investment was known to the parties. It also asked who was to carry
out the control and whether it should be a national, international,
governmental or non-governmental organisation. It finally asked about
the time-limit for carrying out the control and explanation of the
phrase in the judgment “with the participation of UV”.
- On 18 May 2004 the Economic Court upheld the CASA's
request and ordered that the assets be reregistered in its name. At
the same time, referring to UV's request, the court argued that the
operative part of the judgment was clear enough as concerned the
restitution of UV's investment and that since the court had not been
presented [during the proceedings] with evidence establishing the
exact amount, an audit control was ordered so that its amount could
be established and repaid to UV.
- After the communication of this case to the
Government, on 20 May 2005, the CASA wrote to UV proposing to hold a
meeting within the next fifteen days in order to agree upon the
method of enforcement of the judgment of 6 August 2002. In
particular, it stressed that it was necessary to agree upon the audit
company to be employed, the costs of the audit and the questions to
be put to the auditor.
- On 26 May 2005 UV's representative replied that he was
ready to meet the CASA's representatives and that he was available on
any date except 30 and 31 May and 1, 2, 6 and 14 June 2006.
- On 23 August 2005 a meeting between the
representatives of the CASA, the Ministry of Finance and UV took
place and it was agreed that the first two would formulate questions
to be put to the auditor and send them to UV for comments. UV's
representative expressed his disagreement with the proposal of the
other parties that the company should contribute to the costs of the
audit control. He argued that, according to the judgment, the audit
control was to be carried out by the Government, the Ministry of
Finance and the CASA, while UV was only to “participate”.
- On
30 May 2005 the CASA wrote to the Economic Court asking it to clarify
the judgment of 6 August 2002, namely to clarify who was to organise
the audit and accounting control and what was the required extent of
involvement of the Government, the Ministry of Finance, the CASA and
UV. The CASA also asked for clarification as to which company was to
carry out the control, what the questions to be put to it were and
who was to pay for the audit control. It appears that the Economic
Court never examined this request.
- On 5 October 2005 UV's representative received from
the CASA a set of questions to be put to the auditor. The questions
raised such issues as Air Moldova's financial state at the time of
its reorganisation into a Moldovan-German company, its financial
evolution, the impact on the company of the contract for the purchase
of Embraer aeroplanes, the manner in which UV's investment was used,
the company's financial state at the date when the contract of
association was declared null and void and the amount which should be
restituted to UV. The CASA also proposed that the audit control be
carried out by Deloitte & Touche and that the costs of the
control should be divided between all the parties.
- On 19 October 2005 UV's representative wrote back to
the CASA and argued that the questions proposed were not consistent
with the operative part of the judgment of 6 August 2002 and with the
decision of 18 May 2004, since–according to them–the
audit control was intended to establish the amount of money invested
by UV in order to refund it, but not such issues as the impact of the
contracts concluded by the company during its existence. He also
argued that the financial evolution of the company was irrelevant for
the purpose of putting the parties “in the same position as
they had been prior to the conclusion of the contract”. UV
proposed two questions which, in its view, were consistent with the
operative part of the judgment of 6 August 2002 and which raised such
issues as finding out the exact amount of UV's investment and of the
default interest due to UV for the inability to use it.
- On
8 November 2005 the CASA invited the representative of UV to another
meeting to be held on 10 November. The representative declined the
invitation, however, on the ground that he was busy on that date. He
asked the CASA to notify him of meetings at least one week in
advance.
- On
28 December 2005 the CASA lodged an application with the Economic
Court asking it to amend the wording of its judgment of 6 August 2002
and arguing that the operative part differed from that pronounced
orally on 6 August 2002.
- On 30 December 2005 the Economic Court upheld the
CASA's application and amended the operative part (see paragraph 29
above), as suggested by the CASA, by deleting the words “audit”
and “with the participation of”.
- On 3 January 2006 the Vice-President of the Economic
Court wrote to the Government Agent informing him, inter alia,
that if UV possessed evidence to establish the amount of its
investment then, in order to recover the money, it should have given
the evidence to the Ministry of Finance.
- On
2 March 2006 a meeting was held between the representatives of the
CASA, the Government, UV, the Ministry of Finance and the State-owned
company Air Moldova at which the representatives of the State
insisted on the same questions as proposed to UV on 5 October 2005.
Moreover, this time they proposed that the audit control be carried
out by the National Centre for Expert Analysis under the control of
the Ministry of Justice. UV's representative agreed with the
questions but expressed concerns about the independence of the
auditor proposed by the representatives of the State. Finally, UV's
representative agreed with the proposed auditor, subject to the
request to have sight of all the documents which were to be given to
it.
- It appears that UV was not sent the documents
submitted to the National Centre for Expert Analysis.
- On 6 April 2006 the latter drew up a
“technical-scientific” report. Initially the report was
to be signed by the Minister of Justice, as ordered by the Prime
Minister of Moldova. However, the Minister of Justice wrote to the
Prime Minister expressing her view that the applicant company could
contest the independence and the impartiality of the National Centre
for Expert Analysis on the ground that it was subordinated to the
Ministry of Justice. She expressed the view that the report would be
more credible if signed by the experts who had drafted it but not by
her. Her proposal was accepted and the report was signed by the
experts.
- The conclusion of the report was, inter alia,
that UV had invested USD 2,384,705 in Air Moldova, but since that
money had been paid as an advance to the Brazilian aircraft
manufacturer, it could be repaid to UV only after Air Moldova had
recovered it or when the Embraer aeroplanes were delivered to Air
Moldova. Moreover, the report stated that the money invested by UV
had not been used by Air Moldova in its business activity, so UV
could not lay claim to any part of the profit gained during the years
2000-2002 and could not be held liable for any part of the losses.
- On 11 September 2006 the Court of Accounts of the
Republic of Moldova issued a decision concerning the creation of the
statutory fund of the Moldovan-German Airline Company Air Moldova. It
found, inter alia, that some documents had been destroyed in
accordance with the law, while others were contradictory, and decided
to remit the materials to the Centre for Fighting Economic Crime and
Corruption for investigation.
- On
13 December 2006 the CASA wrote to the Economic Court and asked again
for clarification of the manner of enforcement of the judgment of 6
August 2002.
- On
23 March 2007 the Economic Court issued again an explanatory judgment
in which it explained that the parties should recover all the assets
and moneys with which they had participated in the company and that
any profit obtained by the company during its existence should be
divided among them in accordance with the percentage of their
participation.
- In
April 2007, after the case was declared admissible by the Court, the
parties agreed to contract a foreign audit company for the purpose of
determining the amount due to the applicant company.
- On
21 September 2007 the Government and the applicant company signed an
agreement with Deloitte & Touche. The parties agreed to accept
without any reserves the results of the report which was due by 1 May
2008. According to its mandate, Deloitte & Touche was to
determine the amounts to be refunded to the founders in proportion to
their shareholdings as at 25 September 2002 and in accordance
with the National Accounting Standards and the pertinent court
decisions. The mandate did not provide for the conversion of the
amounts to a particular currency and for the calculation of any
interest on the amounts due.
- On 23 April 2008 Deloitte & Touche issued a report
in which it determined that the applicant company had invested USD
2,384,705 in the share capital of the company and that the part of
the profit to which it was entitled amounted to MDL 13,055,376 (EUR
984,108) as at 25 September 2002. It appears from the parties'
submissions that they both accepted the report without any
reservations. Nonetheless, in view of the diverging opinions
concerning the interest due, the applicant company has not been
refunded to date.
II. RELEVANT NON-CONVENTION MATERIALS
62. The
relevant provisions of the Civil Code in force at the material time
read as follows:
“Article
- Nullity of contracts that are not in conformity with
the law
...
When a contract is declared null and void, each party
must return the other party everything received from it on the basis
of the contract...
Article 198. Judgment
by which a legal person is ordered to pay money
When the court orders a legal person... to pay an amount
of money, it must indicate in the operative part of the judgment the
nature of the amounts to be paid and the account from which the
amounts will be deducted.
Article 207. Enforcement
of the judgment
A court judgment must be enforced after it becomes
final, except for cases of immediate enforcement.
Article
Enforcement documents are:
1) Enforcement warrants issued
on the basis of court judgments and decisions, friendly settlements
accepted by the court...
Article 338. Issuing of an enforcement
warrant
An enforcement warrant must be issued to the plaintiff
by a court, after the judgment has become final...
The enforcement warrant must be
handed personally to the plaintiff, or if he or she so requests, it
must be sent directly to the Department of Enforcement of court
judgments by the Ministry of Justice.
Article 343. Request for enforcement
The bailiff shall start the enforcement of a judgment
upon the request of [one of the parties to the proceedings]...
Article 361. Adjournment of enforcement
The bailiff can adjourn the enforcement only at the
request of the plaintiff or on the basis of a court order.”
- According
to Article 143 (8) of the Code of Civil Procedure in force at the
material time expert reports were to be ordered by the judge, at the
stage of preparation of the case for debates, after having consulted
the parties.
- On
12 June 2003 a new Civil Code was enacted, the relevant provisions of
which read as follows:
Article 619. Default interest
“(1) Default interest is payable for delayed
execution of pecuniary obligations. Default interest shall
be 5% above the interest rate provided for
in Article 585 [NBM refinancing interest rate] unless
the law or the contract provides otherwise. Proof that less
damage has been incurred shall be admissible.
(2) In non consumer-related situations default
interest shall be 9% above the interest rate provided
for in Article 585 unless the law or the contract provides
otherwise. Proof that less damage has been incurred shall be
inadmissible.”
- The
explanatory judgment of the Plenary of the Supreme Court of Justice,
No. 12 of 25 April 2000 states:
“...A court judgment must be certain, complete,
clear, coherent and convincing...
It is forbidden to use superfluous and unclear ...
language...
No judgment shall be pronounced whose enforcement
depends on the fulfilment of a precondition.”
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1 TO THE
CONVENTION
- The
applicant company complained that the non-enforcement of the final
judgment of 6 August 2002 had violated its right to the peaceful
enjoyment of its possessions under Article 1 of Protocol No. 1 which,
in so far as relevant, provides:
“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....”
A. The submissions of the parties
1. The applicant company's submissions
- The
applicant company submitted in the first place that the pressure put
on it, starting in January 2002, and the subsequent proceedings which
ended with the final judgment of 6 August 2002 were a result of the
implementation by the Government of the programme of the Communist
Party (see paragraph 17 above).
- According
to the applicant company, making the enforcement of the judgment of 6
August 2002 conditional on an audit control pursued the aim of
delaying or even hindering the refunding of the money invested by it.
Imposing that condition was illegal because it was contrary to the
explanatory judgment of the Plenary Supreme Court of Justice, No. 12
of 25 April 2000. The applicant company admitted that, under the
domestic law, the explanatory judgments of the Supreme Court were in
theory not binding on the lower courts; however, there was no
explanation as to why the Supreme Court had disregarded its own
case-law. Moreover, the applicant company pointed to the fact that
the Government had not presented any domestic case-law in which the
Supreme Court had departed from its explanatory judgments.
- The
fact that the judgment of 6 August 2002 had ordered an audit control
after the judgment became final was also contrary to Article 143(8)
of the Code of Civil Procedure, which stipulated clearly that an
expert control should be ordered during the proceedings but not
afterwards. The applicant company alleged that the courts which
considered its case were not independent from the Government. In its
view the problem of restitutio in integrum was not so complex
as to require an audit control. It was sufficient to refund the
applicant company the invested money and 49% of the profit obtained
by the company during its existence.
- The
applicant company further submitted that the Government had not
undertaken any steps in order to enforce the judgment of 6 August
2002, a judgment which was in any event illegal in its view. The
Government had started to act only after the communication of this
case by the Court and all their acts pursued the goal of avoiding
paying any compensation to UV. The applicant company sent the Court a
copy of a newspaper article containing a statement of the United
States Ambassador to Moldova, in which it was mentioned, inter
alia, that several foreign companies including UV had been
deprived of their investments in Moldova without any compensation.
- Referring
to the Government's statement that it (UV) should have presented
evidence concerning its investment in the statutory fund of the
company, the applicant company argued that the Court of Accounts of
the Republic of Moldova in its decision of 26 December 2002 had
established clearly the amount of the investment in the statutory
fund (see paragraph 37 above). The applicant company also argued that
it was undisputed that it had transferred USD 2,384,705 to the
company and that the accounting documents of the company showed that
amount as UV's contribution to the statutory fund. In any event the
money could not have been transferred for other purposes as there was
no consideration other than the subscription of shares. Moreover, the
fact that the money had been transferred into the statutory fund had
also been established by two independent companies, KPMG and Ernst &
Young, in their yearly audit reports for 2000-2003 which proved that
UV had invested USD 2,384,705 in the statutory fund of the company.
- The
applicant company argued that while the judgment of 6 August 2002 was
illegal under the domestic law in that it did not specify the exact
amount of money to be paid to it, it still established clearly that
the applicant had a monetary claim against the Government in the
amount of its investment in the company. That claim could be
considered a possession for the purposes of Article 1 of Protocol No.
1. The failure to pay the applicant company the invested money
constituted an interference with the right to property which was not
provided for by law, was not in the public interest and was
disproportionate.
- In
its observations of 15 July 2006 the applicant company informed the
Court that the Government were not happy with the decision of the
Court of Accounts of the Republic of Moldova of 26 December 2002 (see
paragraph 37 above) because it was not consistent with their position
in this case. It drew the Court's attention to the fact that the
Government were undertaking measures directed at amending that
decision. The applicant company expressed the view that the decision
would be modified by the time the Government's final observations
were due.
2. The Government's submissions
-
The Government argued that the National Centre for Expert
Analysis had found in its report of 6 April 2006 (see paragraph 54
above) that USD 2,384,705 had not in fact been invested by UV in
the statutory fund of the company but had been used by the company
for the purchase of Embraer aeroplanes and that reimbursement would
be possible only after the aeroplanes were delivered or the money was
refunded by the Brazilian aircraft manufacturer.
- According
to the Government, the decision of the Court of Accounts of the
Republic of Moldova of 26 December 2002 (see paragraph 37 above)
should be disregarded because it did not focus on the investments
made by the parties in the company, but rather on the activity of
both the Stateowned Company “Air Moldova” and the
company during the period 1998-2002. The Government referred to a new
decision of the Court of Accounts of 11 September 2006 (see
paragraph 56 above), which in their view was more relevant because it
focused on the creation of the statutory fund of the company. The
Government disputed the applicant's submissions made in paragraph 73
above and argued that the Court of Accounts had acted on its own
initiative without any pressure from the Government.
- According
to the Government, making the enforcement of the judgment of 6 August
2002 subject to a precondition amounted to a temporary suspension of
enforcement which was possible under the Code of Civil Procedure.
Accordingly, it did not contradict the explanatory judgment of the
Plenary Supreme Court of Justice. In any event, they argued that the
explanatory judgments of the Supreme Court of Justice were not
binding on the lower courts.
- Making
the enforcement of the judgment subject to a precondition had been
dictated by the need to have a clear image of the investments
effectively made by UV in the company. Had the applicant company
submitted to the courts evidence concerning the amount of its
investment, the courts would not have subjected the enforcement of
the judgment to a precondition.
- The
Government further argued that the applicant company had not
submitted any evidence that the authorities had interfered with the
process of enforcement in order to hinder, invalidate or delay it. On
the contrary, both the domestic courts and the Government had done
everything possible to ensure that an audit control was carried out
irreproachably and expeditiously.
- In
their pre-admissibility observations on the merits, the Government
argued that the applicant company did not have a possession in the
sense of that Article because the judgment debt had not been clearly
established. In their final observations on the merits, the
Government submitted that the applicant company did not have a
possession until after the amount was determined in an accounting
report. Making the enforcement of the judgment conditional on the
carrying out of an audit control must be considered as a temporary
control of use of property, which was not contrary to Article 1 of
Protocol No. 1 since it had been done by a court in accordance with
the law. According to the Government, making the payment of the money
to the applicant conditional in the judgment of 6 August 2002 on
the carrying out of a preliminary audit control, pursued the
legitimate aim of “attempting to exclude arbitrariness in the
areas of protection of the interests of foreign investors and the
administration of public funds in a society which was in a process of
transition”. The Government also argued that the applicant
company did not bear an excessive burden because its investment would
be reimbursed as soon as the exact amount had been established.
- According
to the Government the non-enforcement was due to the behaviour of the
applicant company. They relied on the letter of 3 January 2006
of the Economic Court (see paragraph 51 above) and argued that the
applicant company should have provided the Ministry of Finance with
documents confirming its investment in order to be refunded, but had
not done so.
- From
30 December 2005 the applicant company had been under an obligation
to participate in the audit control (see paragraph 50 above);
however, it had not done anything in that respect.
- Referring
to the applicant company's representative's letter of 26 May
2005 (see paragraph 43 above), the Government argued that it was
proof of the lack of interest on the part of the company in solving
the problem quickly. Moreover, the fact that UV did not want to bear
the cost of the audit control (see paragraph 44 above) was further
proof of its lack of interest in a speedy execution of the judgment.
- In
their observations of 14 April 2006 the Government referred to the
letter from the Economic Court of 3 January 2006 addressed to the
Government (see paragraph 51 above) and argued that it was sufficient
for the applicant to present the Ministry of Finance with evidence
concerning its investment in order to be refunded.
- In
their observations of 18 September 2006 the Government argued that
the audit control had been ordered with a view to verifying how much
of the investment was left after the creation and liquidation of the
company. According to the Government, the creation and the
liquidation involved costs which had to be divided between the
parties on the basis of their contribution to the statutory fund: 51%
to 49%. They also argued that after the control of 6 April 2006 (see
paragraphs 54 and 55 above) the parties had to sign the report and
give it to a court for approval.
- According
to the Government, the CASA had signed the report of 6 April
2006 whereas the applicant company had refused to sign it. That was
another indication that its intention was to protract the execution
of the judgment of 6 August 2002 at all costs.
- The
Government further stated that if UV was sure of having invested
money in the statutory fund of the company, it should have simply
submitted the evidence rather than bear the supplementary expenses of
an audit control. They expressed their astonishment at the fact that
UV had presented such documents for the first time in the proceedings
before the Court. However, at the same time, they argued that the
documents presented by the applicant did not prove that the
investment had been made in the statutory fund of the company. The
Government concluded that UV's real intention was to obtain a
judgment from the Court in its favour at any price.
B. The Court's assessment
- The
Government argued that the applicant company did not have a
possession within the meaning of Article 1 of Protocol No. 1 until
after the amount had been determined in an accounting report. It
follows that according to the Government, the applicant company only
started to have a possession on 23 April 2008 when Deloitte &
Touche issued its report (see paragraph 61 above).
- The
Court reiterates that Article 1 of Protocol No. 1 protects pecuniary
assets, such as debts (see Pressos Compania Naviera S.A. and
Others v. Belgium, 20 November 1995, § 31, Series A no.
332).
- In
order to determine when the applicant company started to have a
“possession” for the purposes of Article 1 of Protocol
No. 1, the Court must ascertain whether the judgment of 6 August 2002
gave rise to a debt in its favour that was sufficiently established
to be enforceable (see Stran Greek Refineries and Stratis
Andreadis v. Greece, 9 December 1994, § 59, Series A
no. 301 B).
- It
notes that the relevant domestic legislation, in particular Article
50 of the Civil Code, afforded the applicant company a right to
“restitutio in integrum” as a result of the
rescission of the contract of 3 March 2000 between it and the CASA
(see paragraph 62 above). The domestic courts also recognised in
their judgments of 6 August 2002 and 18 September 2002 the
applicant company's right to “restitutio in integrum”
(see paragraphs 29 and 31 above). For the reasons set out below, the
Court considers that those judgments gave rise to a debt in the
applicant company's favour that was sufficiently established to be
enforceable. The debt consisted of the recoupment of the initial
investment and the return of the profit earned by the company during
its existence.
- As
to the recoupment of the initial investment the Court notes that it
is undisputed that UV invested USD 2,384,705 in the company. This
amount appeared in the company's yearly audit reports of 2000-2002
(see paragraph 71 above) and in the decision of the Court of Accounts
of 26 December 2002 (see paragraph 37 above). Moreover, while
the Government insisted that the audit control made by the National
Centre for Expert Analysis was necessary to establish the exact
amount of UV's investment, the Court notes that even the questions
put to the National Centre for Expert Analysis by the Government
suggest that the amount of the investment was well known to them. In
particular, the National Centre for Expert Analysis was not asked how
much UV had invested in the company, but how its investment had been
used (see paragraph 46 above).
What
was disputed between the parties before April 2008, when Deloitte &
Touche issued its report, was whether the money was invested in the
statutory fund or used for other purposes. However, the Court does
not consider this issue of any relevance, since it appears clear from
the decision of 6 August 2002, as later clarified on 18 May 2004,
that the intention of the Economic Court was that the applicant
company be refunded the amount of its investment in the company
irrespective of whether the money was invested in the statutory fund
or invested elsewhere (see paragraphs 29 and 41 above). This
conclusion is also supported by the letter dated 3 January 2006 sent
to the Government Agent by the Vice-President of the Economic Court
(see paragraph 51 above), a copy of which was submitted to the Court
by the Government.
- As
to the return of the profit earned by the company during its
existence, the Court notes that this part of the debt was confirmed
by Deloitte & Touche, which ran an audit control in accordance
with the terms of the Economic Court's judgment of 6 August 2002. It
is to be noted that the Economic Court confirmed that this was the
case in its explanatory judgment of 23 March 2007 (see paragraph 58
above). Moreover, this was also the common understanding of the
parties when commissioning the audit from Deloitte & Touche. The
profit earned by the company during its existence must also have been
easily ascertainable from the financial statements made by the
company with the Tax Authorities.
- The
Court recalls that failure by the authorities to enforce a final
judgment can be considered a disproportionate interference with the
right to peaceful enjoyment of “possessions”. That has
been found to be the case on many occasions by the Court (see, for
example, Prodan v. Moldova, no. 49806/99, ECHR 2004 III
(extracts); Popov v. Moldova (no. 1), no. 74153/01, 18
January 2005). In the present case, the Court does not find any
reason to depart from its findings in the above cases.
- The
Court observes in this connection that the non-enforcement of the
final judgment of 6 August 2002 was due, to a large extent, to the
fact that the Economic Court did not indicate in its judgment the
amount to be paid to the applicant company, despite the provisions of
Article 198 of the Civil Code (see paragraph 62 above). It is to be
observed that the amount of the initial investment and the amount of
the profits earned by the Company were readily and easily
ascertainable. The Court refers to its findings in paragraphs 91 and
92 above in this connection. The justification for ordaining a
procedure for this purpose is thus open to question.
- Moreover,
the judgment of the Economic Court was drafted in such a way as to
make execution entirely dependent on the will of one of the parties
to the proceedings, namely the Government. Indeed, the judgment
ordered the restoration of the parties to their original position
only after the Government, the Ministry of Finance and the CASA had
carried out an audit and accounting control with the participation of
UV (see paragraph 29 above). The situation did not change
substantially after the changes made to the judgment on 30 December
2005 since the Government could still decide when and whether to
proceed with the accounting control (see paragraph 50 above). The
Government could not be coerced in any way by the applicant to comply
with the judgment of 6 August 2002 for the simple reason that the
Economic Court had refused to issue an enforcement warrant without
specifying the legal grounds for its refusal (see paragraphs 34 and 35
above). Accordingly, the only way for the judgment to be executed was
for the Government to comply with it voluntarily.
- The
Government decided to comply with the judgment of 6 August 2002 and
to carry out an audit control only after the Court had communicated
this case. However, it appears from the questions put to the auditor
(see paragraph 46 above) that even at that point their intention was
not to establish the amount of the investment as ordered by the
courts. It was only after the case had been declared admissible, in
February 2008, that the Government took more serious steps with a
view to complying with the judgment of 6 August 2002 and agreed
together with the applicant to employ Deloitte & Touche.
- The
Court does not accept the Government's submissions to the effect that
it was the applicant company's behaviour which prevented them from
complying with the judgment of 6 August 2002. The circumstances of
the case plainly indicate that the initiative lay with the Government
to complete the procedure set in motion by the judgment of 6 August
2002. They have failed to do so to date.
- In
such circumstances, the Court concludes that the interference with
the applicant company's right to peaceful enjoyment of “possessions”
was disproportionate and that there has accordingly been a violation
of Article 1 of Protocol No. 1 to the Convention.
II. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE
CONVENTION
- Since
the issues complained of under this Article are similar to those
examined under Article 1 of Protocol No. 1 to the Convention (see
paragraphs 94-97 above), the Court does not consider it necessary to
examine separately this complaint (see, mutatis mutandis,
Megadat.com S.r.l. v. Moldova, no. 21151/04, § 80, 8
April 2008; Davidescu v. Romania, no. 2252/02, § 57,
16 November 2006; Laino v. Italy [GC], no. 33158/96, § 25,
ECHR 1999 I; and Zanghì v. Italy, 19 February
1991, § 23, Series A no. 194 C).
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. Pecuniary damage
- The
applicant company claimed EUR 7,533,878 for pecuniary damage suffered
as a result of the failure of the authorities to enforce the judgment
of 6 August 2002. This amount, calculated as of the date on which the
applicant company submitted its claims under Article 41 of the
Convention, included the equivalent of
the investment from the date when the company was constituted, 49% of
the income earned by the company during its existence and the default
interest calculated in accordance with the Moldovan legislation. The
applicant company also claimed EUR 2,303 per day to be calculated
after the date on which they submitted their claims for just
satisfaction until such date when the Court would determine the issue
of just satisfaction in the case.
- The
Government agreed to pay the money invested by the applicant company
in the joint venture company and 49% of its profit as determined by
Deloitte & Touche. According to them this amount was EUR
3,431,313. As to the interest on the above amount, the Government
disagreed with the amount claimed by the applicant company and
reiterated their claim that the non-enforcement was due to the
applicant company's behaviour. They contested the method of
calculation used by the applicant company and submitted that they
were ready to accept an amount of EUR 1,514,287.
- The
Court accepts that the applicant company suffered pecuniary damage as
a result of the breach of Article 1 of Protocol No. 1 found above.
The Court considers that the applicant is entitled to recover its
lost investment and a part of the profit of the joint venture company
in proportion to its shareholding. Taking into account the
circumstances of the case under consideration and making its own
assessment, the Court awards the applicant company a total amount of
EUR 6,700,000 for pecuniary damage.
B. Non-pecuniary damage
- The
applicant claimed EUR 200,000 for the non-pecuniary damage suffered
as a result of the non-enforcement of the judgment of 6 August 2002.
- The
Government contested the amount claimed and asked the Court to
dismiss it.
- The
Court considers that the applicant company must have been caused
considerable inconvenience, if only in the conduct of the company's
everyday affairs. Deciding on an equitable basis, it awards the
applicant company EUR 3,000 for non-pecuniary damage.
C. Costs and expenses
- The
applicant company claimed EUR 9,855 to cover the representation fees
and EUR 28,420 to cover its expenses related to the accounting
control carried out by Deloitte & Touche.
- The
Government contested the amount claimed for legal fees, calling it
excessive and unreal in the light of the economic situation of the
country and of the average monthly salary. They disputed the number
of hours spent by the applicant company's lawyers and the hourly fees
charged by them and argued that the lawyers could claim a maximum sum
of EUR 350. They also contested the amount of EUR 28,420 and
argued that according to the judgment of 6 August 2002 as amended by
the Economic Court on 30 December 2005, the applicant company was to
contribute for the purpose of running the accounting verification.
- The
Court reiterates that in order for costs and expenses to be included
in an award under Article 41 of the Convention, it must be
established that they were actually and necessarily incurred and were
reasonable as to quantum (see, for example, Amihalachioaie
v. Moldova, no. 60115/00, §
47, ECHR 2004 III).
- The
applicant had not shown any basis for claiming the costs of the audit
carried out by Deloitte & Touche with the agreement of the
parties. Accordingly, this claim is disallowed. On the other hand,
the Court awards the applicant company the full sum claimed for costs
and expenses (EUR 9,855).
D. 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
- Holds unanimously that there has been a
violation of Article 1 of Protocol No. 1 to the Convention;
- Holds unanimously that there is no need to
examine separately the complaint under Article 6 § 1 of the
Convention;
- Holds by six votes to one:
(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, the following amounts to be converted into the currency
of the respondent State at the rate applicable on the date of
settlement:
(i) EUR
6,700,000 (six million seven hundred thousand euros) in respect of
pecuniary damage;
(ii) EUR
3,000 (three thousand euros) in respect of non-pecuniary damage;
(iii) EUR
9,855 (nine thousand eight hundred and fifty-five euros) in respect
of costs and expenses;
(iv) any
tax that may be chargeable on the above amounts;
(b) that
from the expiry of the above-mentioned three months until settlement
simple interest shall be payable on the above amounts at a rate equal
to the marginal lending rate of the European Central Bank during the
default period plus three percentage points;
- Dismisses unanimously the remainder of the
applicant's claim for just satisfaction.
Done in English, and notified in writing on 9 December 2008, pursuant
to Rule 77 §§ 2 and 3 of the Rules of Court.
Lawrence Early Nicolas
Bratza
Registrar President
