THIRD SECTION

CASE OF MARTOV AND OTHERS v. RUSSIA

(Application no. 14523/08)

JUDGMENT

STRASBOURG

11 October 2016

This judgment is final but it may be subject to editorial revision.
 
In the case of Martov and Others v. Russia,
The European Court of Human Rights (Third Section), sitting as a Committee composed of:
	Branko Lubarda, President,
	Pere Pastor Vilanova,
	Georgios A. Serghides, judges,
and Fatoş Aracı, Deputy Section Registrar,
Having deliberated in private on 20 September 2016,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1.  The case originated in an application (no. 14523/08) against the Russian Federation lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by four Russian nationals, Mr Vasiliy Vasilyevich Martov, Mr Zufar Ilyasovich Azmagulov, Ms Lyudmila Dmitriyevna Akishina and Ms Valentina Ivanovna Sholokhova (“the applicants”), on 15 January 2008.
2.  The Russian Government (“the Government”) are represented by Mr G. Matyushkin, the Representative of the Russian Federation at the European Court of Human Rights.
3.  On 16 May 2011 the application was communicated to the Government.
THE FACTS
I.  THE CIRCUMSTANCES OF THE CASE
4.  The applicants are Russian nationals who live in Kizel, Perm Region. Their names and dates of birth are tabulated below.
5.  The applicants sued the municipal unitary enterprise “Gorvodokanal” (МУП «Горводоканал») (hereafter “the company”) for salary arrears.
6.  The company was incorporated as a municipal unitary enterprise set up by a decision of the local administration and provided water supply in the town of Kizel. The company had “the right of economic control” (право хозяйственного ведения) over the assets allocated to it by the administration in order to carry out its statutory activities.
7.  On 7 September 2006 the company was declared insolvent and its liquidation started.
8.  In 2007 and 2009 domestic courts by separate judgments made pecuniary awards in the applicants’ favour, to be paid by the company. Particulars of each judgment are summarised in the appended table.
9.  On the dates listed in the Appendix the awards became enforceable.
10.  The applicants alleged that the judgments had remained unenforced. According to the Government, all the judgments, except the one delivered on 16 October 2009 in Mr Martov’s favour, had been fully enforced in December 2007-April 2010. The judgment of 16 October 2009 had not been enforced since Mr Martov had failed to submit the execution writ to the liquidator. The Government corroborated their statements by a certificate issued by the company’s liquidator on 6 February 2012. According to that document, the judgment of 1 August 2007 in Mr Martov’s favour had been enforced in full, whereas the execution writ issued in 2009 had never reached the liquidator. The document says nothing about other applicants.
 11.  The applicants submitted to the Court a copy of a letter they had received from the Prosecutor’s office of Kizel, dated 3 June 2011. According to the letter, in November 2009 Mr Martov submitted to the liquidator the execution writ in respect of the judgment of 16 October 2009.
II.  RELEVANT DOMESTIC LAW
12.  The domestic provisions relevant to the cases on the legal status of State and municipal unitary enterprises with the right of economic control are summarised in Liseytseva and Maslov v. Russia (nos. 39483/05 and 40527/10, §§ 54-127, 9 October 2014), and Samsonov v. Russia ((dec.) no. 2880/10, 18 September 2014).
THE LAW
I.  ALLEGED VIOLATION OF ARTICLES 6 AND 13 OF THE CONVENTION AND ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION
13.  The applicants complained of the non-enforcement of domestic decisions given in their favour and of the lack of any effective remedy in domestic law. They relied on Article 6 § 1 and Article 13 of the Convention and on Article 1 of Protocol No. 1 to the Convention, which read as follows:
Article 6 § 1
“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”
Article 13
“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”
Article 1 of Protocol No. 1
“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.”
A.  Submissions by the parties
1.  The Government
14.  The Government submitted that the company had not performed any public functions and its activities were commercial. The Government also pointed out that the company had not yet been liquidated. The Government submitted that the company was not the property of the State, was not entrusted with functions of public interest, was not controlled by the State, and had sufficient institutional and functional independence. They concluded that the debts of the company in the present cases were not attributable to the State. Accordingly, the judgments in the applicants’ favour should be regarded as issued against a private company. In line with the Court’s case-law, the authorities had provided requisite assistance to the applicants in their efforts to have the court awards enforced. This ultimately led to the execution of the judgments delivered in 2007. As to the judgment of 16 October 2009 in Mr Martov’s favour, the Government submitted that it had not been enforced as the applicant had failed to submit the writ of execution to the liquidator.
15.  The Government further claimed that the applicants had failed to exhaust the domestic remedies. In particular, they had not sought the assistance of the Bailiffs’ Service to speed up the enforcement proceedings.
2.  The applicants
16.  The applicants maintained that the debtor company had been, in fact, a State‑run enterprise controlled by the administration and that the State was responsible for the company’s debts. They stressed that the judgments had not been enforced while all the execution writs had been forwarded to the liquidator in due time.
B.  Admissibility
1.  Compatibility ratione personae
17.  The Court has held that the existing legal framework in Russia does not provide unitary enterprises with a degree of institutional and operational independence that would absolve the State from responsibility under the Convention for the debts of such companies (see Liseytseva and Maslov, cited above, §§ 193-204). In order to determine the issue of State responsibility for the debts of unitary enterprises the Court must examine whether and how the extensive powers of control provided for in domestic law were actually exercised by the authorities in the present case.
18.  The Court notes that the debtor company was set up for providing services of water supply. In Liseytseva and Maslov (cited above, § 208) the Court held that such companies’ institutional links with the public administration were particularly strengthened by the special nature of their activities (see also Yershova v. Russia, no. 1387/04, § 58, 8 April 2010).
19.  In the light of the above the Court finds that the companies did not enjoy sufficient institutional and operational independence from the municipal authorities and dismisses the Government’s ratione personae objection. Accordingly, the municipality, and hence the State, is to be held responsible under the Convention for the debts owed by the respondent company to the applicants in accordance with the final judgments in their favour.
2.  Exhaustion of domestic remedies
20.  In Liseytseva and Maslov (cited above, § 160) the Court dismissed a similar objection raised by the Government. There is no reason to reach a different conclusion in respect of any of the applicants in the present case.
3.  Conclusion
21.  The Court further notes that the applicants’ complaints under Articles 6 and 13 of the Convention and Article 1 of Protocol No. 1 to the Convention are not manifestly ill‑founded within the meaning of Article 35 § 3 (a) of the Convention and they are not inadmissible on any other grounds. They must therefore be declared admissible.
C.  Merits
22.  The Court notes that the parties did not agree as to whether the final judgments in the applicants’ favour had been enforced. The Government submitted that all the judgments, except the one delivered on 16 October 2009 in Mr Martov’s favour, had been fully enforced in December 2007‑April 2010. The applicants maintained that the judgments had remained unenforced (see paragraph 10 above).
23.  The Court observes that the only document produced by the Government in support of their statement is a certificate issued by the company’s liquidator on 6 February 2012 (see paragraph 10 above). According to that document, the first judgment in Mr Martov’s favour had been fully enforced between December 2007 and April 2010. The document contains no information about enforcement of the judgments in favour of Mr Azmagulov, Ms Akishina and Ms Sholokhova.
24.  In these circumstances the Court lends more credence to the applicants’ allegation that the judgement debts had never been paid to them. As to Mr Martov, the Court is ready to accept that the first judgment in his favour, delivered on 1August 2007, had been enforced. The Court notes, however, that enforcement proceedings had lasted for two years and six months, which is not compatible with the Court’s case-law (see Koltsov v. Russia, no. 41304/02, § 23, 24 February 2005, where the Court found that the authorities’ failure, for one and a half years, to enforce a final judgment in the applicant’s favour amounted to a violation of Article 6 § 1 of the Convention).
25.  The Court has established above that the State is responsible under the Convention for the debts owed by the respondent company (see paragraph 19 above). By failing to comply, in due time, with the judgments the national authorities prevented the applicants from receiving the money they could reasonably have expected to receive. The Court found a violation of Article 6 of the Convention and Article 1 of the Protocol No. 1 to the Convention in respect of issues similar to those in the present case (see Liseytseva and Maslov, cited above, §§ 208-24).
26.  As regards to the effective remedies the Court has already held in respect to similar situations in Liseytseva and Maslov (cited above, §§ 165‑72) that there were no effective remedies in the applicants’ attempt to obtain either the execution of the awards made against the municipal unitary enterprises or the compensation of the alleged violations.
27.  Accordingly, there has been a violation of Article 6 § 1 and Article 13 of the Convention and of Article 1 of Protocol No. 1 to the Convention on account of the non-enforcement of the final and binding judgments in the applicants’ favour and the lack of effective remedies.
II.  APPLICATION OF ARTICLE 41 OF THE CONVENTION
28.  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
29.  The applicants claimed 45,930 euros (EUR) each in respect of pecuniary and non-pecuniary damage.
30.  The Government argued that the claims were excessive and unsubstantiated.
31.  In view of its findings above the Court finds it appropriate to award the applicants in full the sums that had been initially adjudged to them by domestic courts (except Mr Martov) in respect of pecuniary damage. In the case of Mr Martov the Court notes that the first judgment in his favour has been enforced. Accordingly, the Court finds it appropriate to award him the sums adjudged to him by the judgment of 16 October 2009 in respect of pecuniary damage.
32.  As to non-pecuniary damage, the Court considers it reasonable and equitable to award EUR 2,000, plus any tax that may be chargeable, to each of the applicants (Voronkov v. Russia, no. 39678/03, §§ 68‑69, 30 July 2015).
B.  Costs and expenses
33.  The applicants did not claim costs and expenses and, accordingly, there is no cause to make an award under this head.
C.  Default interest
34.  The Court considers it appropriate that the default interest rate 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,
1.  Declares the application admissible;

2.  Holds that there has been a violation of Article 6 § 1 and Article 13 of the Convention and Article 1 of Protocol No. 1 to the Convention;

3.  Holds
(a)  that the respondent State is to pay the applicants, within three months the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement:
(i)  in respect of pecuniary damage:
EUR 193 (one hundred and ninety-three euros) to Mr Martov,
EUR 548 (five hundred and forty-eight euros) to Mr Azmagulov,
EUR 702 (seven hundred and two euros) to Ms Akishina,
EUR 1,318 (one thousand three hundred and eighteen euros) to Ms Sholokhova;
(ii)  in respect of non-pecuniary damage:
EUR 2,000 (two thousand euros) to each of the applicants, 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 amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;

4.  Dismisses the remainder of the applicants’ claim for just satisfaction.
Done in English, and notified in writing on 11 October 2016, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
	Fatoş Aracı	Branko Lubarda
	Deputy Registrar	President

APPENDIX

No.	First name
Last name	Birth date	Judgement by 	Date of judgment
Final on
Award	
1.		Vasiliy Vasilyevich MARTOV	24/07/1971	Justice of the Peace of the 61st Court Circuit of the Kizel District of the Perm Region	01/08/2007 19/09/2007
EUR 1,095	
1.				Justice of the Peace of the 60th Court Circuit of the Kizel District 	16/10/2009 26/10/2009
EUR 193	
2.		Zufar Ilyasovich AZMAGULOV	05/07/1961	Justice of the Peace of the 61st Court Circuit of the Kizel District 	01/08/2007 19/09/2007
EUR 548	
3.		Lyudmila Dmitriyevna AKISHINA	14/07/1957	Justice of the Peace of the 61st Court Circuit of the Kizel District	11/07/2007 02/08/2007
EUR 702 (in respect of Ms Akishina)
EUR 1,318 (in respect of Ms Sholokhova)
	
4.		Valentina Ivanovna SHOLOKHOVA	06/07/1939