SECOND SECTION

CASE OF KNICK v. TURKEY

(Application no. 53138/09)

JUDGMENT
(Merits)

STRASBOURG

7 June 2016

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 Knick v. Turkey,
The European Court of Human Rights (Second Section), sitting as a Chamber composed of:
	Julia Laffranque, President,
	Işıl Karakaş,
	Nebojša Vučinić,
	Paul Lemmens,
	Ksenija Turković,
	Jon Fridrik Kjølbro,
	Stéphanie Mourou-Vikström, judges,
and Stanley Naismith, Section Registrar,
Having deliberated in private on 17 May 2016,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1.  The case originated in an application (no. 53138/09) against the Republic of Turkey lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a German national, Mr Dieter Claus Knick (“the applicant”), on 24 September 2009.
2.  The applicant was represented by Ms J. Ertürk, a lawyer practising in Ankara. The Turkish Government (“the Government”) were represented by their Agent.
3.  On 17 October 2012 the application was communicated to the Government.
4.  Further to notification under Article 36 § 1 of the Convention and Rule 44 § 1 (a), the German Government did not wish to exercise their right to intervene in the present case.
THE FACTS
Article I.	I.  THE CIRCUMSTANCES OF THE CASE
5.  The applicant was born in 1960 and lives in Bad Dürkheim, Germany. Through the German stock market, he purchased 81,529 Turkish and 737 German share certificates in Demirbank, which at the time was identified as the fifth largest private bank in Turkey.
Section 1.01	A.  Background to the case
6.  By a decision dated 6 December 2000 (no. 123), the Banking Regulation and Supervision Board (Bankalar Düzenleme ve Denetleme Kurulu, hereinafter referred to as “the Board”) transferred the management and control of Demirbank to the Savings Deposit Insurance Fund (Tasarruf Mevduatı Sigorta Fonu – hereinafter “the Fund”), pursuant to section 14(3) of the Banking Activities Act (Law No. 4389). In its decision the Board held that the assets of Demirbank were insufficient to cover its liabilities and that the continuation of its activities would threaten the security and stability of the financial system. Accordingly, Demirbank’s management and control, and the privileges of its shareholders except for dividends, were transferred to the Fund. The Fund also confiscated all properties belonging to Demirbank.
7.  On 31 January 2001 all of the bank’s equities were removed from its account at the Istanbul Stock Exchange (Istanbul Menkul Kıymetler Borsası – hereinafter “the Stock Exchange”) and transferred to the account of the Fund. Subsequently, on 20 September 2001 the Fund entered into an agreement with the HSBC bank and sold Demirbank to the latter for 350,000,000 United States dollars (USD). As a result, on 14 December 2001 Demirbank’s legal personality was extinguished and it was struck off the commercial register.
Section 1.02	B.  Proceedings brought by the main shareholders of Demirbank
(a)	1.  Proceedings in respect of decision no. 123
8.  On 2 February 2001, the main shareholder of Demirbank, namely Cıngıllı Holding A.Ş., brought administrative proceedings against the Banking Regulation and Supervision Agency (Bankalar Düzenleme ve Denetleme Kurumu – hereinafter “the Agency”) before the Ankara Administrative Court, seeking a ruling setting aside the decision of 6 December 2000 to transfer Demirbank to the Fund.
9.  The Ankara Administrative Court found that it lacked jurisdiction, and transferred the case to the Supreme Administrative Court.
10.  In its submissions before the Supreme Administrative Court, the plaintiff claimed that its property rights had been violated. It also raised a plea of unconstitutionality under section 14 of the Banking Activities Act. The company further stated that prior to November 2000 Demirbank had never encountered major financial problems. It was pointed out that pursuant to section 14(2) of the Act, a bank with financial difficulties should first be given a warning to strengthen its financial structure and be allowed time to take specific measures. However, no such warning had been given in the instant case. Secondly, the Board had not claimed that Demirbank’s financial situation was so weak that it could not be strengthened even if specific measures were taken. Lastly, the company stated that following the transfer of the bank to the Fund, a General Assembly composed of the Fund’s officials had exonerated the former managers of Demirbank, holding that they had not been at fault in the incident leading to the bank’s transfer.
11.  After examining the case file, on 3 June 2003 the Supreme Administrative Court dismissed the case. It held that the takeover of the bank by the Fund had been in accordance with section 14(3) of the Banking Activities Act.
12.  On 18 December 2003 the Joint Administrative Chambers of the Supreme Administrative Court decided to quash the decision of 3 June 2003. In its judgment, the court held that prior to ordering the transfer of Demirbank to the Fund, the Board should have carried out an objective evaluation of the bank’s financial situation. The court also concluded that the Board should first have ordered Demirbank to take specific measures in accordance with section 14(2) of the Banking Activities Act before applying section 14(3) of the Act.
13.  On 29 April 2004 a request for rectification lodged by the Agency was refused.
14.  The case was remitted to the Supreme Administrative Court, which delivered its decision on 5 November 2004 applying the decision of the Joint Administrative Chambers of the Supreme Administrative Court. It accordingly set aside the Board’s decision of 6 December 2000 ordering the transfer of Demirbank to the Fund, holding that the takeover had been illegal. A further appeal and a request for rectification lodged by the Agency were rejected on 14 April 2005 and 15 December 2005 respectively.
(b)	2.  Proceedings for the annulment of the agreement to sell Demirbank to HSBC
15.  On 20 September 2001 Ms S. Cıngıllıoğlu, the main shareholder of Cıngıllı Holding A.Ş., brought administrative proceedings against the Fund before the Ankara Administrative Court, seeking the annulment of the agreement to sell Demirbank to HSBC.
16.  Given that the transfer of Demirbank to the Fund had been found to be illegal by the Joint Administrative Chambers of the Supreme Administrative Court, on 21 April 2004 the Ankara Administrative Court annulled the agreement entered into by the Fund and HSBC on 20 September 2001. An appeal and a request for rectification lodged by the Fund were rejected on 3 June 2005 and 24 February 2006 respectively.
Section 1.03	C.  Proceedings brought by the applicant
(a)	1.  First set of proceedings
17.  Following the transfer of Demirbank to the Fund, the applicant applied to the Board claiming compensation. He did not receive any reply.
18.  Subsequently, on an unspecified date in 2002, the applicant brought compensation proceedings against the Agency before the Supreme Administrative Court. He argued that he had lost his shares in Demirbank as a result of its transfer to the Fund and requested that the Board’s implied rejection of his compensation claim be reversed.
19.  On 26 June 2003 the Supreme Administrative Court dismissed the applicant’s case. On the basis of a previous judgment it had rendered on 3 June 2003 (see paragraph 11 above), the court found that the takeover of the bank by the Fund had been in accordance with section 14(3) of the Banking Act.
20.  The applicant lodged an appeal.
21.  On 21 October 2004 the Joint Administrative Chambers of the Supreme Administrative Court decided to quash the judgment. It indicated that the previous judgment dated 3 June 2003, which had constituted the basis of the latter, had been quashed on 18 December 2003 (see paragraph 12 above).
22.  A rectification request lodged by the Agency was rejected on 26 May 2005.
23.  On 19 September 2005 the Supreme Administrative Court held that it lacked jurisdiction ratione materiae, as the applicant’s case merely concerned an implied rejection by the Board, which should be assessed by the Ankara Administrative Court.
24.  On 29 December 2005 the Ankara Administrative Court dismissed the case as out of time. The court held that the applicant should have initiated proceedings within sixty days of the date on which Demirbank’s equities had been transferred to the Fund’s account at the Stock Exchange, namely 31 January 2001 (see paragraph 7 above).
25.  The Supreme Administrative Court upheld the first-instance court’s judgment on 12 March 2007.
(b)	2.  Second set of proceedings
26.  Following the two judgments in respect of the main shareholders (see paragraphs 8-16 above), on 10 and 11 May 2006 the applicant applied to the Agency and the Fund respectively, requesting the restitution of his rights as a shareholder. Relying on the restitutio in integrum principle, he claimed that the above-mentioned judgments of the Supreme Administrative Court should be enforced and his rights as a shareholder of Demirbank reinstated.
27.  The Agency did not respond to the applicant’s request within the statutory time-limit.
28.  On 15 June 2006 the Fund refused the applicant’s request, stating that restitution was legally and practically impossible.
29.  Subsequently, the applicant initiated another set of proceedings before the Ankara Administrative Court, claiming that the Agency should enforce the above-mentioned judgments and that his rights as a shareholder of Demirbank should be reinstated. He argued that the bank still owned a certain amount of assets following its sale to HSBC and that restitution was therefore possible to a certain extent. He further claimed that in the event that his rights were not reinstated, he ought to be awarded compensation for the loss of his shares.
30.  On 30 November 2007, the Ankara Administrative Court dismissed the case. It pointed out that under Articles 12 and 28 of the Code of Administrative Procedure only “those concerned” had the right to bring proceedings seeking to remedy the situation in full (tam yargı davası). It found that the applicant could not be considered as “concerned” as he had not been a party to the annulment proceedings (iptal davası) brought by the main shareholders. The court held that if the annulled administrative act had been regulatory (düzenleyici işlem), the concept of “concerned persons” would have applied to anyone who had been affected by it, whereas in the case of an individual act (bireysel işlem), it applied only to those who had been parties to the annulment proceedings. Holding that the annulled administrative acts were individual acts, the court considered that the applicant had not been “concerned” by the annulment. Lastly, it indicated that the decisions of the Agency and the Fund to reject the applicant’s requests had been lawful and that restitution would not be possible.
31.  On 23 October 2008 the Ankara Regional Administrative Court upheld that judgment and on 26 February 2009 it rejected the applicant’s request for rectification.
Article II.	II.  THE RELEVANT DOMESTIC LAW
32.  A description of the domestic law may be found in the judgment of Reisner v. Turkey (no. 46815/09, § 34, 21 July 2015).
33.  In addition, Article 12 of the Code of Administrative Procedure states that anyone claiming to be a victim of an alleged breach of his or her rights as a result of an administrative act may bring proceedings before the administrative courts seeking to remedy the situation in full. At the same time, they may also bring an action for the annulment of the impugned act or, should they so wish, they may first initiate annulment proceedings and subsequently, depending on the result of those proceedings, lodge an action for full compensation within the statutory time-limits running from the notification of the decision regarding the annulment.
34.  Article 28 § 3 of the Code of Administrative Procedure provides that, should the public administration fail to fulfil the requirements of judgments pronounced by the administrative courts, proceedings seeking compensation for pecuniary and non-pecuniary damage may be brought.
THE LAW
Article III.	I.  THE GOVERNMENT’S OBJECTION BASED ON RULE 47 OF THE RULES OF COURT
35.  The Government submitted that the applicant had failed to indicate his profession on the application form. They therefore asked the Court to reject the application for failing to meet the requirements of Rule 47 of the Rules of Court.
36.  The Court notes that pursuant to the version of Rule 47 of the Rules of Court in force at the relevant time, an application under Article 34 of the Convention had to be made on the application form provided by the Registry, unless the Court decides otherwise. The application form should contain all the information requested in the relevant parts of the form to enable the Court to determine the nature and scope of the application without recourse to any other document. The Court observes that in his application form, the applicant clearly described the facts and the alleged violations of the Convention. It further notes that the requirement in question is not one of the inadmissibility grounds set out in Article 35 of the Convention. Accordingly, the Government’s preliminary objection should be dismissed as the application cannot be rejected for failure to comply with the procedural rules of the Court (see, Reisner v. Turkey, no. 46815/09, § 36, 21 July 2015).
Article IV.	II.  ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1 TO THE CONVENTION
37.  The applicant complained that his right to peaceful enjoyment of his property had been violated, in that he had been illegally deprived of his shares in Demirbank and had been unable to obtain any compensation for his loss. In this connection, he relied on Article 1 of Protocol No. 1 to the Convention.
38.  The Government contested the applicant’s allegation.
39.  Article 1 of Protocol No. 1 to the Convention 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.”
Section 4.01	A.  Admissibility
40.  The Government submitted that this complaint should be rejected for non-exhaustion of domestic remedies, as the applicant had failed to bring compensation proceedings before the domestic courts pursuant to Article 12 of the Administrative Procedure Code and Article 125 of the Constitution.
41.  The Court reiterates that an applicant must have made normal use of domestic remedies which are likely to be effective and sufficient and that, when a remedy has been pursued, use of another remedy which has essentially the same objective is not required (see Kozacıoğlu v. Turkey [GC], no. 2334/03, § 40, 19 February 2009). In the present case, the applicant sought the enforcement of the court decisions, but no action was taken by the administrative authorities, which were constitutionally bound to take all necessary measures to restore the de facto and de jure situation that was likely to have prevailed had Demirbank not been unlawfully transferred to the Fund. In these circumstances, the applicant could not have been expected to bring further actions against the State. The Court therefore concludes that the applicant has complied with the requirement of exhaustion of domestic remedies. It consequently rejects the Government’s objection in this respect (see, Reisner, cited above, § 41).
42.  The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
Section 4.02	B.  Merits
43.  The applicant complained that he had been deprived of his shares in Demirbank as a result of the illegal actions of the State and that he had not been compensated for his loss.
44.  The Government firstly argued that the applicant, as a minor shareholder, had not had any “possession” within the meaning of Article 1 of Protocol No. 1. They further maintained that it had been impossible de jure and de facto to enforce the court decision in question, because Demirbank had been struck off the commercial register and its legal personality had therefore ceased to exist. They also submitted that it had been impossible to revive Demirbank or the shares, as the authorities had had no authority to do so.
45.  The Court notes that it has recently examined a similar complaint and found a violation of Article 1 of Protocol No. 1 to the Convention in the case of Reisner (cited above, §§ 45-51), where it concluded that the Demirbank shares purchased on the stock market had had an economic value and thus constituted possessions within the meaning of Article 1 of Protocol No. 1. In that case, the Court also reiterated that the complexity of the domestic enforcement procedure or of the State budgetary system could not relieve the State of its obligation under the Convention to guarantee to everyone the right to have a binding and enforceable judicial decision enforced within a reasonable time (see Burdov v. Russia (no. 2), no. 33509/04, § 70, ECHR 2009, and Süzer and Eksen Holding A.Ş. v. Turkey, no. 6334/05, § 116, 23 October 2012). It also noted that the applicant, whose shares had been removed from his possession on the basis of administrative actions that were subsequently found to have been unlawful, had received no compensation for his loss and had thus had to bear a disproportionate individual burden (see Reisner, cited above, § 50).
46.  The Court observes that in the present case the applicant was also a small shareholder of Demirbank. However, the domestic courts dismissed his case on different grounds, namely on the grounds that he could not be considered as a “concerned” person since he had not been a party to the annulment proceedings brought by the main shareholders (see paragraph 30 above). In the Reisner case, however, the domestic courts, without dwelling on whether the applicant had been a “concerned” person who could benefit from the courts’ decisions, had held that the restitution of that applicant’s rights as a shareholder had been legally impossible as, following its sale to HSBC, Demirbank had been struck off the commercial register. The Court notes that although the domestic courts gave differing grounds for dismissal, both applications concern the very same subject matter and it therefore finds no particular circumstances in the instant case which would require it to adopt a different conclusion from the one reached in Reisner (cited above, §§ 45-51).
47. The Court particularly notes that the decision to declare the takeover and sale of Demirbank unlawful had consequences for both the main shareholders and small shareholders, whether they were parties to the annulment proceedings or not. It is clear that the applicant suffered pecuniary loss, no matter how small the number of his shares. The authorities were under an obligation to compensate him for the loss, which was clearly the result of illegal administrative actions that were subsequently declared unlawful by the Supreme Administrative Court (see paragraphs 8-16 above). The applicant’s shares were removed from his possession on the basis of unlawful interference, yet he received no compensation for his loss and was made to bear a disproportionate individual burden.
48.  In view of the foregoing considerations, the Court holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention.
Article V.	III.  OTHER ALLEGED VIOLATIONS OF THE CONVENTION
49.  Referring to Article 6 § 1 and Article 13, the applicant complained of further aspects related to both the first and the second sets of proceedings.
50.  Having regard to all the materials in its possession, and in so far as these complaints fall within its competence, the Court finds that there is no appearance of a violation of the rights and freedoms set out in these provisions in that respect. It follows that this part of the application must be rejected as being manifestly ill-founded, pursuant to Article 35 §§ 1, 3 and 4 of the Convention.
Article VI.	IV.  APPLICATION OF ARTICLE 41 OF THE CONVENTION
51.  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.”
52.  The applicant requested compensation for pecuniary damage. To calculate his financial loss, he relied on three different calculation methods, the results of which differed (6,020.29 euros (EUR), EUR 5,301.13, and EUR 3,038.12 respectively). He claimed a further EUR 1,000 in respect of non-pecuniary damage.
53.  The applicant also requested EUR 1,328.06 for lawyers’ fees and EUR 1,621.87 for costs and expenses.
54.  The Government contested the claims.
55.  In the particular circumstances of the present case, the Court considers that the question of the application of Article 41 is not ready for decision. It is therefore necessary to reserve the matter, due regard being had to the possibility of an agreement between the respondent State and the applicant (Rule 75 §§ 1 and 4 of the Rules of Court).
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1.  Declares the complaint under Article 1 of Protocol No. 1 admissible and the remainder of the application inadmissible;

2.  Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention;

3.  Holds that the question of just satisfaction under Article 41 of the Convention is not ready for decision, and accordingly:
(a)  reserves the said question in whole;
(b)  invites the Government and the applicant to submit, within three months of the date on which the judgment becomes final, in accordance with Article 44 § 2 of the Convention, their written observations on the matter and, in particular, to notify the Court of any agreement that they may reach;
(c)  reserves the further procedure and delegates to the President of the Chamber the power to fix the same if need be.
Done in English, and notified in writing on 7 June 2016, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Stanley Naismith	Julia Laffranque
	Registrar	President