STARTSEV AND OTHERS v. RUSSIA - 44244/08 (Judgment (Merits and Just Satisfaction) : Court (Third Section Committee)) [2016] ECHR 365 (19 April 2016)

In the case of Startsev and Others v. Russia,

The European Court of Human Rights (Third Section), sitting as a Committee composed of:

          Helena Jäderblom, President,
          Dmitry Dedov,
          Branko Lubarda, judges,
and Stephen Phillips, Section Registrar,

Having deliberated in private on 22 March 2016,

Delivers the following judgment, which was adopted on that date:

PROCEDURE

1. The case originated in an application (no. 44244/08) 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 sixteen Russian nationals on 6 June 2008. Their full names and dates of birth are listed in the Appendix (column no. 1).

2. The applicants were represented by Mr Nikolay Startsev, the first applicant. The Russian Government (“the Government”) were represented by Mr G. Matyushkin, the Representative of the Russian Federation to the European Court of Human Rights.

3. On 6 May 2011 the application was communicated to the Government.

THE FACTS

I. THE CIRCUMSTANCES OF THE CASE

A. The debtor company

1. Information on the debtor company

4. The municipal unitary enterprise Sysolskoye proizvodstvennoye obyedineniye “Zhilkomkhoz” (МУП Сысольское производственное объединение «Жилкомхоз», hereinafter “the company”) was set up by a decision of the administration of the Sysolskiy District. It provided maintenance services in respect of municipal housing, including heating and water supply, maintenance of the sewage systems and renovation and maintenance of the municipal housing stock.

5. The Company had “the right of economic control” (право хозяйственного ведения) over the assets allocated to it in order to carry out its statutory activities. According to its statutory articles all of the company’s property as well as obtained profits belonged to the municipal estate.

2. Decision on the company’s insolvency

6. On 3 March 2006 the Commercial Court of the Komi Republic commenced insolvency proceedings and appointed an external administrator to oversee the company’s administration.

7. On 29 September 2006 the Commercial Court of the Komi Republic ordered the insolvency proceedings in respect of the company.

3. The company’s liquidation

8. On 28 August 2008 the Commercial Court of the Komi Republic discontinued the insolvency proceedings and ordered the respondent company’s liquidation. The creditors’ claims, which had not been satisfied during the liquidation procedure, including the applicants’ claims, were considered as settled.

9. On 8 September 2008 the company was removed from the Register of Legal Entities.

B. Decisions in the applicants’ favour against the debtor company

10. On an unspecified date in 2006 the applicants brought proceedings against the debtor company seeking salary arrears and other work-related payments.

11. On 9 August 2006 and 30 October 2006 the Justice of the Peace of the Sysolskiy Court Circuit of the Komi Republic awarded the applicants salary arrears (the amounts are specified in the Appendix, column no. 2) and compensation for non-pecuniary damage against their employer. On 10 October 2006 and 10 November 2006 respectively the Sysolskiy District Court upheld those judgments on appeal and they became final.

II. RELEVANT DOMESTIC LAW AND PRACTICE

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 argued that the unitary company in question had been owned by the relevant municipality, which was not a “State” authority within the meaning of the Convention. They accordingly submitted that the debts of municipal unitary enterprises were not attributable to the State.

15. The Government further claimed that the applicants had failed to exhaust the domestic remedies available to them. In particular, they could have claimed compensation for damage under Articles 1069 and 1070 of the Civil Code, as well as non-pecuniary damage under Article 151 of the Civil Code.

2. The applicants

16. The applicants maintained that the debtor company had been, in fact, a State-run enterprise controlled by the local administration and that the State was responsible for the company’s debts.

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 State unitary enterprise was set up for providing maintenance services in respect of municipal housing. In Lyatskaya v. Russia the Court found that unitary enterprises, such as the municipal maintenance company, do not enjoy sufficient institutional and operational independence from the State (see Lyatskaya v. Russia, no. 33548/04, § 14, 18 September 2008, and Yershova v. Russia, no. 1387/04, §§ 58-62, 8 April 2010). In the present case the Court finds no reason to reach a different conclusion.

19. The Court accordingly dismisses the Government’s ratione personae objection and concludes that the company did not enjoy sufficient institutional and operational independence from the municipal authority. 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, § 165) 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 sixteen applicants.

3. Conclusion

21. The Court further notes that the applicants’ complaints under Articles 6 and 13 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 judgments made in 2006 in the applicants’ favour remained unenforced up to date (see the Appendix, column no. 2).

23. The Court has established above that the State is responsible under the Convention for the debts owed by the respondent company (see paragraphs 18 and 19 above). By failing to comply with the judgments and court orders 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 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).

24. 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.

25. 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

26. 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

1. Pecuniary damage

27. The applicants claimed the amounts awarded by the courts in respect of pecuniary damage. These amounts, which have remained unpaid to date, are set out in column no. 2 of the Appendix.

28. The Government noted at the outset that the applicants’ observations were submitted and signed by Mr Nikolay Startsev on behalf of all the applicants despite the fact that he lacked formal power to represent them. In any event, they argued that no award should be made to the applicants, since their Convention rights had not been violated, but did not dispute the specific sums claimed by the applicants.

29. The Court observes on the basis of the documents submitted that the applicants agreed to be represented by Mr Startsev at the initial stage of the proceedings before the Court. Furthermore, they later provided authority forms confirming Mr Startsev’s authority to represent them. The Government’s objection must be therefore dismissed.

30. In view of its findings above (see paragraph 25 above) the Court finds it appropriate to award the applicants the amounts specified in the Appendix (column no. 2) in respect of pecuniary damage.

2. Non-pecuniary damage

31. The applicants claimed 3,000 euros (EUR) each in respect of non-pecuniary damage.

32. The Government considered the amount claimed to be excessive.

33. The Court considers it reasonable and equitable to award EUR 2,000, plus any tax that may be chargeable, to each of the applicants in respect of non-pecuniary damage (Voronkov v. Russia, no. 39678/03, §§ 68-69, 30 July 2015)

B. Costs and expenses

34. The applicants did not submit any claim for costs and expenses.

C. Default interest

35. 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 Articles 6 and 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, plus any tax that may be chargeable, 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 2,435 (two thousand four hundred and thirty-five euros) to Mr Nikolay Startsev,

EUR 2,357 (two thousand three hundred and fifty-seven euros) to Mr Aleksandr Chiyanov,

EUR 2,050 (two thousand and fifty euros) to Mr Maksim Belyayev,

EUR 1,843 (one thousand eight hundred and forty-three euros) to Mr Roman Tutrinov,

EUR 2,088 (two thousand and eighty-eight euros) to Mr Aleksey Punegov,

EUR 2,298 (two thousand two hundred and ninety-eight euros) to Mr Vladimir Lapayev,

EUR 2,287 (two thousand two hundred and eighty-seven euros) to Mr Aleksandr Rudenko,

EUR 2,390 (two thousand three hundred and ninety euros) to Mr Aleksey Khrisanfov,

EUR 1,370 (one thousand three hundred and seventy euros) to Ms Yelena Tachonaya,

EUR 1,727 (one thousand seven hundred and twenty-seven euros) to Ms Mariya Chernikova,

EUR 2,398 (two thousand three hundred and ninety-eight euros) to Mr Sergey Kanov,

EUR 2,217 (two thousand two hundred and seventeen euros) to Mr Aleksandr Parnachev,

EUR 2,064 (two thousand and sixty-four euros) to Mr Sergey Aksenov,

EUR 2,424 (two thousand four hundred and twenty-four euros) to Mr Vladimir Stefanishin,

EUR 1,290 (one thousand two hundred and ninety euros) to Mr Vladimir Startsev,

EUR 1,586 (one thousand five hundred and eighty-six euros) to Mr Nikolay Mityunin;

(ii) in respect of non-pecuniary damage:

EUR 2,000 (two thousand euros) to each applicant;

(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;

5. Dismisses the remainder of the applicants’ claim for just satisfaction.

Done in English, and notified in writing on 19 April 2016, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Stephen Phillips Helena Jäderblom
Registrar President

APPENDIX

No.	Applicant name, date of birth, place of residence Column no. 1	Judgment issued on - amount for pecuniary damage (converted into EUR) Column no. 2	Judgment became final on Column no. 3
1.	Mr Nikolay STARTSEV 24/05/1958 Vizinga	09/08/2006 - 2,435	10/10/2006
2.	Mr Aleksandr CHIYANOV 06/10/1958 Vizinga	09/08/2006 - 2,357	10/10/2006
3.	Mr Maksim BELYAYEV 23/10/1977 Vizinga	09/08/2006 - 2,050	10/10/2006
4.	Mr Roman TUTRINOV 09/02/1977 Vizinga	09/08/2006 - 1,843	10/10/2006
5.	Mr Aleksey PUNEGOV 26/02/1958 Vizinga	09/08/2006 - 2,088	10/10/2006
6.	Mr Vladimir LAPAYEV 05/07/1964 Vizinga	09/08/2006 - 2,298	10/10/2006
7.	Mr Aleksandr RUDENKO 30/08/1961 Vizinga	09/08/2006 - 2,287	10/10/2006
8.	Mr Aleksey KHRISANFOV 18/10/1978 Vizinga	09/08/2006 - 2,390	10/10/2006
9.	Ms Yelena TACHONAYA 08/10/1971 Vizinga	09/08/2006 - 1,370	10/10/2006
10.	Ms Mariya CHERNIKOVA 27/04/1976 Vizinga	09/08/2006 - 1,727	10/10/2006
11.	Mr Sergey KANOV 07/11/1973 Vizinga	09/08/2006 - 2,398	10/10/2006
12.	Mr Aleksandr PARNACHEV 19/02/1953 Vizinga	09/08/2006 - 2,217	10/10/2006
13.	Mr Sergey AKSENOV 12/02/1972 Vizinga	09/08/2006 - 2,064	10/10/2006
14.	Mr Vladimir STEFANISHIN 18/04/1976 Vizinga	09/08/2006 - 2,424	10/10/2006
15.	Mr Vladimir STARTSEV 20/08/1985 Vizinga	30/10/2006 - 1,290	10/11/2006
16.	Mr Nikolay MITYUNIN 16/05/1957 Vizinga	09/08/2006 - 1,586	10/10/2006

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