THIRD SECTION

CASE OF MENSHIKOV v. RUSSIA

(Application no. 36888/13)

JUDGMENT

STRASBOURG

2 May 2017

This judgment is final but it may be subject to editorial revision.

In the case of Menshikov v. Russia,
The European Court of Human Rights (Third Section), sitting as a Committee composed of:
	Helen Keller, President,
	Pere Pastor Vilanova,
	Alena Poláčková, judges,
and Fatoş Aracı, Deputy Section Registrar,
Having deliberated in private on 30 March 2017,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1.  The case originated in an application (no. 36888/13) 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 a Russian national, Mr Vladimir Vasilyevich Menshikov (“the applicant”), on 3 May 2013.
2.  The Russian Government (“the Government”) were represented by Mr G. Matyushkin, Representative of the Russian Federation to the European Court of Human Rights.
3.  On 16 February 2015 the application was communicated to the Government.
THE FACTS
Article I.	I.  THE CIRCUMSTANCES OF THE CASE
4.  The applicant was born in 1945 and lives in Pechora, the Komi Republic.
Section 1.01	A.  Judgments in the applicant’s favour
5.  The applicant sued the Municipal Unitary Enterprise for Housing and Communal Services (MUP Pechorazhilkomhoz or MUP PZHKH – МУП Печоражилкомхоз – hereafter “the company”) of Pechora, the Komi Republic, for salary arrears.
6.  On 31 May 2007 the Justice of the Peace of the Privokzalnyy Court Circuit of Pechora awarded the applicant the equivalent of 18,358 euros (EUR) of the salary owed to him for the period from 1 January 2005 to 31 December 2006. The judgment became final ten days later.
7.  On 12 January 2009 the Pechora Town Court granted another claim which the applicant had lodged against the company, awarding him EUR 592. The judgment became final ten days later.
8.  Neither judgment has been enforced.
Section 1.02	B.  Available information on the debtor company
9.  The company was incorporated as a municipal unitary enterprise. It was set up by a decision of the local administration to provide heating supply and housing maintenance services in the local area. 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.
10.  In 2006 the owner (the local administration) withdrew several of the company’s assets and transferred them either to the local treasury or to other legal entities.
11.  On 17 January 2007 the respondent company was declared insolvent and liquidation proceedings started.
12.  The company sued the owner in subsidiary liability proceedings. On 13 May 2009 the Commercial Court of the Komi Republic dismissed that action, having found that the owner had acted without intending to cause the company’s insolvency when transferring the assets.
13.  On 16 June 2009 the company was liquidated.
14.  The applicant brought subsidiary liability proceedings against the owner before the Pechora Town Court, arguing, inter alia, that the company’s insolvency had been premeditated. On 21 June 2012 the court dismissed the applicant’s claim against the owner as unfounded. On 3 September 2012 the Supreme Court of the Komi Republic upheld that decision.
Article II.	II.  RELEVANT DOMESTIC LAW
15.  The domestic provisions relevant to 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
Article III.	I.  ALLEGED VIOLATION OF ARTICLES 6 AND 13 OF THE CONVENTION AND ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION
16.  The applicant complained of the non-enforcement of domestic decisions given in his favour and of the lack of any effective remedy in domestic law. He 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.”
17.  The Government argued that the company had been a commercial enterprise that had operated independently of the authorities. They accordingly submitted that its debts were not attributable to the State.
18.  The applicant 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.
Section 3.01	A.  Admissibility
19.  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.
20.  The Court notes that the debtor company was set up to provide housing maintenance and heating supply services (see paragraph 9 above). 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).
21.  Furthermore, the actual degree of the State’s control over the company was amply demonstrated by the fact that the local authorities had disposed of its property as they saw fit. According to information submitted by the applicant and not disputed by the Government, in 2006 the owner (the local administration) withdrew several of the company’s assets and transferred them either to the local treasury or to other legal entities (see paragraph 10 above). The Court examined a similar situation in Liseytseva and Maslov (cited above, §§ 211 and 217), and found that the company’s assets and activities had been, as a matter of fact, controlled by the State to a decisive extent and that accordingly the State was liable for the company’s debts.
22.  In the light of the above, the Court finds that the company 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 applicant, in accordance with the final judgments in his favour.
23.  The Court further notes that the applicant’s 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. They are not inadmissible on any other grounds. They must therefore be declared admissible.
Section 3.02	B.  Merits
24.  The Court notes that the judgments in the applicant’s favour have not been fully enforced to date.
25.  The Court has established above that the State is responsible under the Convention for the debts owed by the respondent company (see paragraph 22 above). By failing to comply with the judgments and court orders issued, the national authorities prevented the applicant from receiving the money he could reasonably have expected to receive. The Court has found a violation of Article 6 of the Convention and Article 1 of 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 the effective remedies available to the applicant, the Court has already held, with respect to similar situations in Liseytseva and Maslov (cited above, §§ 165‑72), that there were no effective remedies available to the applicants in their attempt to obtain either the execution of awards made against municipal unitary enterprises or compensation for 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 applicant’s favour and the lack of effective remedies.
Article IV.	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.”
Section 4.01	A.  Damage
29.  The applicant claimed the sums awarded to him by the domestic courts (the equivalent of EUR 18,950) in respect of pecuniary damage and the amount equivalent of EUR 1,623 in respect of non-pecuniary damage.
30.  The Government considered the amount claimed to be excessive.
31.  In view of its findings above, the Court finds it appropriate to award the applicant in full the sums that had been initially awarded to him by the domestic courts in respect of pecuniary damage. The Court also considers it reasonable and equitable to award the applicant EUR 1,623, plus any tax that may be chargeable, in respect of non-pecuniary damage.
Section 4.02	B.  Costs and expenses
32.  The applicant did not submit a claim for costs and expenses. Accordingly, the Court considers that there is no call to award him any sum under that head.
Section 4.03	C.  Default interest
33.  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 of Article 1 of Protocol No. 1 to the Convention on account of the non-enforcement of the final and binding judgments in the applicant’s favour and the lack of effective remedies;

3.  Holds
(a)  that the respondent State is to pay the applicant, 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)  EUR 18,950 (eighteen thousand nine hundred and fifty euros), plus any tax that may be chargeable, in respect of pecuniary damage;
(ii)  EUR 1,623 (one thousand six hundred and twenty three euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;
(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.
Done in English, and notified in writing on 2 May 2017, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
	Fatoş Aracı	Helen Keller
	Deputy Registrar	President