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FOURTH
SECTION
CASE OF
BUSINESS ŞI INVESTIŢII
PENTRU TOŢI v. MOLDOVA
(Application
no. 39391/04)
JUDGMENT
STRASBOURG
13 October
2009
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 Business Şi Investiţii Pentru Toţi
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,
David
Thór Björgvinsson,
Ledi
Bianku,
Mihai
Poalelungi,
judges,
and
Lawrence Early, Section
Registrar,
Having
deliberated in private on 22 September 2009,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 39391/04) 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 a company registered in Moldova, Businessbank
S.A., which was subsequently renamed Business şi
Investiţii Pentru Toţi (“the applicant
company”), on 1 November 2004.
- The
applicant company was represented by Ms T. Eremciuc, a lawyer
practising in Chişinău. The Moldovan Government (“the
Government”) were represented by their Agent, Mr V. Grosu.
- The
applicant company alleged, in particular, that the court action which
it had initiated against a company and a State institution had not
been examined by the domestic courts and that the courts had examined
another action, which had affected the applicant company's rights
even though it had not been party to those proceedings.
- The
application was allocated to the Fourth Section of the Court (Rule 52
§ 1 of the Rules of Court). On 28 November 2007 the
President of that Section decided to give notice of the application
to the Government. Under the provisions of Article 29 § 3 of the
Convention, it was decided to examine the merits of the application
at the same time as its admissibility.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
- The applicant company is registered in Moldova.
- The
facts of the case, as submitted by the parties, may be summarised as
follows.
- In
1987 a State-owned company started construction of an apartment
building, with the ground floor reserved for office space. After
several changes of ownership of the unfinished building, another
State company (L.) was designated as its owner. A subsequent
administrative decision allowed a third State company (M.) to become
a co-owner of the building.
- In
1997 L., with the apparent approval of the Department of
Privatisation (“the Department”), concluded a contract
with a private company (I.). The latter undertook to finish the
construction works in exchange for a share of the office space on the
ground floor of the building.
- On
19 October 2000 I. concluded a contract with the applicant company,
under which the applicant company would finance the construction work
and in exchange become the owner of a part of the office space in the
building.
- On
27 March 2001 M. initiated court proceedings against L., I. and the
Department for annulment of the 1997 contract, as interfering with
its right to a part of the building.
- On 19 November 2001 the applicant company initiated
court proceedings against I., claiming damages for I.'s failure to
fulfil its part of the contract in time. On 29 November 2001 the
applicant company requested I. to transfer the office space to which
it had rights under the contract concluded in 2000.
- On 6 February 2003 the applicant company initiated
court proceedings against I., M., the Department of Privatisation and
the Chişinău municipality, requesting confirmation of its
property right over the office space claimed from I. under the
contract of 19 October 2000. It noted that it had invested more than
a million United States dollars (USD) in the construction of the
building under that contract and that it was using the relevant
office space, but that it was still unable to exercise all rights
over that property as its rightful owner. It added that “due to
I.'s actions, [the applicant company] was dragged into court
proceedings against M., the Department, etc.” The applicant
company asked the court to recognise its property right over
specifically identified office space in the relevant building.
- On
27 April 2004 the applicant company asked the court to discontinue
the proceedings it had initiated against I. because the latter had
accepted its claims and transferred the relevant office space. On the
same day the Chişinău Court of Appeal allowed the applicant
company's request.
- Also
on 27 April 2004 the Chişinău Court of Appeal rejected the
claims of M. as unfounded.
- On
8 July 2004 the Supreme Court of Justice quashed that judgment and
adopted a new one, allowing M.'s claims in full.
- The
applicant company asked for a revision of the judgment of 8 July
2004. It complained that it had not been joined as a party to the
proceedings, even though its property rights had been affected.
Moreover, its court action lodged on 6 February 2003 had not been
examined and the judgment of 8 July 2004 had prejudged the outcome of
those proceedings. The applicant company emphasised that it had
withdrawn only its court action against I. and not that against M.
and the Department for recognition of its property right over the
part of the building which it had been occupying throughout the
proceedings.
- On 16 September 2004 the Supreme Court of Justice
rejected the applicant company's request for revision. It found that
the applicant company was not the owner of the disputed part of the
building. It also found that on 19 October 2000 I. had concluded the
contract with the applicant company in bad faith, since it had been
aware of the ongoing legal dispute with M. in respect of the building
and of the court prohibition on continuing any construction work. The
proceedings which had ended with the judgment of 8 July 2004 did not
affect the applicant company's right to claim damages from I. for its
actions in bad faith.
- The court also considered that by withdrawing its
claims on 27 April 2004 the applicant company had sought to have
the proceedings discontinued in their entirety. It added that “since
the applicant company had withdrawn the totality of its claims, but
the court decided to discontinue the proceedings only in respect of
one such claim, the parties have the right to ask for an additional
decision discontinuing the proceedings in respect of the recognition
of the property right”.
II. RELEVANT DOMESTIC LAW AND PRACTICE
- Article
37 of the Code of Civil Procedure, in force before 12 June 2003,
reads as follows:
“...
If the legally protected rights and interests of persons
not participating in the proceedings may be affected by a court
judgment because of the nature of the legal relationship or
applicable legal provisions, the court is obliged to join such
persons to the proceedings as co-defendants or to inform them of
their right to join as co-plaintiffs”.
- Article 449 of the Code of Civil Procedure reads as
follows:
“A request for revision shall be granted if:
...
(g) the court has adopted a judgment affecting the
rights of persons who were not parties to the proceedings;
(h) the judgment adopted prevents the taking of a lawful
decision in other proceedings; ...”.
- In the case of Soroca mining company (see Baroul
Partner-A v. Moldova, no. 39815/07, § 49, 16
July 2009), the Supreme Court of Justice, after annulling the
contract for the privatisation of the mining company, also annulled
all subsequent legal acts adopted on the basis of that privatisation
such as the issuing of shares.
THE LAW
- The
applicant company complained under Article 6 § 1 of the
Convention that its property rights had been affected by court
judgments in proceedings to which it had not been a party, thus
depriving it of the right to have its position heard by the courts.
The relevant part of Article 6 § 1 of the Convention reads:
“In the determination of his civil rights and
obligations ... everyone is entitled to a fair ... hearing ... by [a]
... tribunal ...”
I. ADMISSIBILITY
- In
its initial application the applicant also complained of a violation
of its rights guaranteed under Article 1 of Protocol No. 1 to the
Convention. However, in its observations on the admissibility and
merits it asked the Court not to proceed with the examination of this
complaint. The Court finds no reason to examine it.
- The
Court considers that the applicant's complaint under Article 6 § 1
of the Convention raises questions of fact and law which are
sufficiently serious that their determination should depend on an
examination of the merits, and no other grounds for declaring it
inadmissible have been established. The Court therefore declares this
complaint admissible. In accordance with its decision to apply
Article 29 § 3 of the Convention (see paragraph 4
above), the Court will immediately consider the merits of the
complaint.
II. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE
CONVENTION
A. Arguments of the parties
- The
applicant company submitted that the domestic courts' failure to
involve it as a party to the proceedings involving I., M. and the
Department amounted to a violation of its rights guaranteed under
Article 6 to the Convention. In particular, it argued that the
domestic courts had never prohibited I. from concluding investment
agreements. Thus I. had had the right to conclude such an agreement
with the applicant company, despite a court injunction against
selling the property concerned. Moreover, the law did not require the
applicant company to register its contract with I. with the real
estate authority, but merely gave it the right to do so.
- Moreover,
it was not for the Government to decide whether, in light of the
absence of its prima facie property right, the applicant company's
participation in court proceedings initiated by it had been
“necessary”. It was precisely in order to assert the
existence of such a right that the proceedings had been initiated. It
was clear from the case file examined by the Supreme Court of Justice
that the applicant company had become the owner of a part of the
building which was disputed in the proceedings initiated by M.
against I. and the Department. The court was obliged to involve the
applicant company in the proceedings, given the clear consequences
for its property right over the building. Moreover, the Supreme Court
of Justice failed to deal with the contracts concluded by I. in
respect of the building, contrary to its own jurisprudence in cases
of annulment of the original title, as exemplified by the annulment
of the privatisation and subsequent sale of the Soroca limestone mine
(see paragraph 21 above).
- The
Government submitted that the applicant company had never had a
property right in respect of the disputed building. I. could not
legally dispose of the disputed building because of a court
injunction, and thus the investment contract which it concluded with
the applicant company was null and void ab initio.
Accordingly, the applicant company had no right to intervene in the
proceedings initiated by M. against I. and the Department and its
participation was not necessary for the courts to be able to fully
examine the case. The fact that the contract between I. and the
applicant company was not registered with the relevant real estate
authorities only confirmed the unlawfulness of the entire deal.
Moreover, the applicant company was fully aware of the situation, and
took the risk of concluding an unlawful contract.
- In
addition, by withdrawing its court action on 27 April 2004 the
applicant company had agreed to withdraw from the proceedings
voluntarily. In its judgment of 8 July 2004 the Supreme Court of
Justice did not therefore decide on the rights and lawful interests
of the applicant company, as had been explained in that court's
decision of 16 September 2004 (see paragraphs 17 and 18 above).
Finally, the judgment of 8 July 2004 did not prevent the applicant
company from claiming damages from I.
B. The Court's assessment
- The
Court notes that the parties disagree on whether the applicant
company had a property right in respect of a part of the disputed
building. It considers that it is not necessary to determine this
point, in light of the following. At the moment when the Supreme
Court of Justice examined the case on 8 July 2004, two companies
claimed to have a property right in respect of a part of the same
building. One of them was M., the plaintiff, which had been found by
the first-instance court not to have any valid claims to the
building. The other was the applicant company, which obtained its
right over a part of the building from I., the company which had won
at first instance. The contract between I. and the applicant company
was valid at the relevant time. It follows that the applicant
company's claim, which had been based on the contract with I., was
not prima facie devoid of a factual or legal basis. The domestic
courts did not mention any other circumstance preventing them from
examining the applicant company's claim. In such circumstances, the
applicant company's claim could not be left unexamined or otherwise
disregarded without a formal examination.
- The
Court considers that issues such as whether the applicant company's
claim had any chance of success in view of the alleged nullity of the
contract with I. was a decision which only a court could take. At the
same time the Supreme Court of Justice, which was fully aware that
two companies (M. and the applicant company) each claimed to have
property rights over a part of the same disputed building (see
paragraph 12 above), could not deal with the claim of one of those
companies without prejudging the other company's rights. It follows
that, in accepting M.'s claims over the disputed part of the
building, the Supreme Court of Justice had prejudged the outcome of
the proceedings initiated by the applicant company against M. and the
Department.
- The
Court notes the Government's argument that only I. had the right to
participate in the proceedings, the applicant company not having any
legal standing in them. However, it reiterates that, in principle, a
new owner of property acquired can claim in courts all the rights
which the old owner could have raised (see, mutatis mutandis,
Anghelescu v. Romania, no. 29411/95, §§ 49
et seq. and §§ 66 et seq., 9 April 2002; Mihailescu
v. Romania (dec.), no. 32913/96, 22 June 2004; and
Moldovahidromas v. Moldova (dec.), no. 30475/03,
4 April 2006). In the present case, I. transferred its
rights to the applicant company in respect of the disputed building.
It follows that the applicant company had a right to intervene in any
proceedings concerning I.'s rights over the disputed building.
- The
Government further submitted that, as found by the Supreme Court of
Justice, the applicant company had withdrawn all of its claims on
27 April 2004 (see paragraph 18 above). However, the Court finds
no reason to believe that the applicant company asked for the
discontinuation of the proceedings against all defendants which it
had designated in its court action of 6 February 2003 other than I.
(see paragraph 12 above). On the contrary, the applicant company
expressly asked for the discontinuation of the court action initiated
against I., while not stating anything about its intentions
concerning the other defendants. Moreover, not only was the court
action against I., M., the Department and the Chişinău
municipality initiated more than a year after the initial action
against I., but it had a different subject matter. The applicant
company's initial claim was to obtain from I. damages for the delay
in honouring its obligations under the contract, followed by an
additional request to transfer into its property the relevant office
space (see paragraph 11 above). By contrast, the second action was
aimed at the recognition of the applicant company's property right
over the office space already transferred to it by I. (see paragraph
12 above), and was directed against all those legal persons and
authorities which could have a claim or a legal interest in respect
of the disputed building.
- The
Court concludes that the applicant company's court action against M.,
the Department and the Chişinău municipality was never
examined. At the same time, its claim that it had a property right in
respect of a part of the disputed building was prejudged when the
Supreme Court of Justice accepted M.'s claims for the recognition of
its right over the same building, without involving the applicant
company as a party to the proceedings. Moreover, even though
examining a case which may affect the rights and interests of a third
party without involving that party is an express ground for reopening
the proceedings (see paragraph 20 above), the Supreme Court of
Justice rejected the applicant company's request based on that legal
provision.
- In
the light of the above, the Court concludes that the applicant
company's right of access to court was breached. There has,
accordingly, been a violation of Article 6 of the Convention.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
- Article 41 of the Convention provides:
“If the Court finds that there has been a
violation of the Convention or the Protocols thereto, and if the
internal law of the High Contracting Party concerned allows only
partial reparation to be made, the Court shall, if necessary, afford
just satisfaction to the injured party.”
A. Damage
- Referring to the Court's case-law in Sovtransavto
Holding v. Ukraine (just satisfaction) (no. 48553/99, §
79, 2 October 2003), and Oferta Plus S.R.L. v. Moldova (just
satisfaction) (no. 14385/04, § 74, 12 February 2008), the
applicant company claimed 50,000 euros (EUR) in respect of
non-pecuniary damage caused as a result of the violation of its
rights guaranteed under Article 6 of the Convention. It submitted
that the company's administration had suffered anxiety and
uncertainty as to their own and their company's future.
- The
Government considered that the applicant company's submissions were
unsubstantiated and that the amount claimed was exaggerated. They
invited the Court to reject the applicant company's claims as
unsubstantiated or to decide that the finding of a violation
constituted sufficient just satisfaction.
- The Court recalls that legal persons can, in
principle, claim damage for non-pecuniary damage caused and
reiterates that “[n]on-pecuniary damage suffered by such
companies may include heads of claim that are to a greater or lesser
extent 'objective' or 'subjective'. Among these, account should be
taken of the company's reputation, uncertainty in decision-planning,
disruption in the management of the company (for which there is no
precise method of calculating the consequences) and lastly, albeit to
a lesser degree, the anxiety and inconvenience caused to the members
of the management team” (see Comingersoll S.A. v. Portugal
[GC], no. 35382/97, § 35, ECHR 2000 IV). In the present
case, the Court considers that the management of the applicant
company must have been caused a certain amount of uncertainty and
disruption of the company's plans as a result of the violations of
its rights guaranteed under Article 6 of the Convention. However, it
considers that the claim made is excessive. Deciding on an equitable
basis, the Court awards it EUR 2,000 in respect of non-pecuniary
damage.
B. Costs and expenses
- The
applicant company claimed EUR 2,500 for legal representation and EUR
50 for translation services. It relied on a contract with
V. Nagacevschi from Lawyers for Human Rights, a non-governmental
organisation based in Chişinău, regarding the drafting of
observations in the present case. According to an annex to the
contract, the applicant company confirmed that Mr Nagacevschi had
worked fifteen hours on the case and was paid the equivalent of EUR
2,500.
- The
Government submitted that the applicant company had not proved its
legal costs claim. They referred to the fact that the applicant
company had been represented before the Court by Ms Eremciuc and not
by Mr Nagacevschi, and that there was no relation between the alleged
number of hours worked on the case by Mr Nagacevschi in the absence
of any mandate from the applicant company to do so.
- The
Court notes that the applicant company did not submit a power of
attorney to be represented by Mr Nagacevschi in the proceedings
before it. However, it also notes that the applicant company
concluded a contract with that lawyer for drafting observations to be
submitted to the court, and that those observations were submitted in
time. The Court finally observes that the applicant company did not
make a separate claim for legal expenses of the lawyer designated by
it as its official representative before the Court. In these
circumstances the Court awards the applicant company EUR 1,550 for
costs and expenses.
C. Default interest
- The
Court considers it appropriate that the default interest should be
based on the marginal lending rate of the European Central Bank, to
which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
- Declares the application admissible;
- Holds that there has been a violation of
Article 6 § 1 of the Convention;
- Holds
(a) that
the respondent State is to pay the applicant company, within three
months from the date on which the judgment becomes final in
accordance with Article 44 § 2 of the Convention,
EUR 2,000 (two thousand euros) in respect of non-pecuniary damage and
EUR 1,550 (one thousand five hundred and fifty euros) for costs and
expenses, to be converted into the national currency of the
respondent State at the rate applicable at the date of settlement,
plus any tax that may be chargeable;
(b) that
from the expiry of the above-mentioned three months until settlement
simple interest shall be payable on the above amounts at a rate equal
to the marginal lending rate of the European Central Bank during the
default period plus three percentage points;
- Dismisses the remainder of the applicant's claim
for just satisfaction.
Done in English, and notified in writing on 13 October 2009, pursuant
to Rule 77 §§ 2 and 3 of the Rules of Court.
Lawrence Early Nicolas Bratza
Registrar President
