FOURTH SECTION

FINAL DECISION

AS TO THE ADMISSIBILITY OF

Application no. 48757/99 by Valeri y Filippovich SHESTAKOV against Russia

The European Court of Human Rights, sitting on 18 June 2002 as a Chamber composed of

Sir Nicolas Bratza , President , Mr M. Pellonpää , Mr A. Pastor Ridruejo , Mrs V. Strážnická , Mr R. Maruste ,

Mr A. K ovler, Mr S. Pavlovschi , judges ,

and Mr M. O ' Boyle , Section Registrar ,

Having regard to the above application lodged on 1 March 1999 and registered on 14 June 1999,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,

Having deliberated, decides as follows:

THE FACTS

The applicant, Valeri y Filippovich Shestakov, is a Russian national, who was born in 1945 and lives in Pskov , Russia .

A. The circumstances of the case

The facts of the case, as submitted by the parties, may be summarised as follows.

In May 1998 the applicant placed 2,200 US dollars on a three-month deposit account in the Pskov branch of the SBS-Agro Bank (« СБС - Агро ») , then one of the largest banks in Russia . In August 1998, during a financial crisis and rapid currency devaluation, the applicant requested the Bank to refund the capital with interest. The Bank refused. On 8 October 1998, at the applicant ' s request, the Pskov City Court ordered the Bank to pay him the money owed together with interest.

In its judgment, the Pskov City Court excluded from the time for calculating interest the period from 28 August 1998 to 20 September 1998, pursuant to decisions of the Russian Central Bank temporarily to halt all operations on private deposits due to a banking crisis. The applicant appealed that part of the decision, and requested the Pskov branch of the Bank to be named as respondent, and not its Moscow headquarters. The Pskov Regional Court rejected the applicant ' s appeal and confirmed the decision of the City Court on 17 November 1998.

The decision was forwarded by the Pskov City Court for enforcement to the Moscow Bailiff ' s service, as the Bank ' s headquarters were situated in Moscow .

The applicant complained about this decision to various judicial and executive authorities, including the Pskov City Court, the Pskov Regional Court , the Pskov Regional and General Prosecutor ' s Office and the Ministry of Justice.

On 22 and 28 April 1999 the applicant was informed by the Bailiff Service of the Moscow City Department of Justice that enforcement proceedings ( исполнительное производство ) had been initiated by a bailiff in Moscow on 8 January 1999. The applicant did not receive a copy of that decision. The applicant was also informed that the bailiff in charge of the case had taken measures under the Law on Enforcement Procedure ( Закон « Об исполнительном производстве » ) , including the freezing of the Bank ' s assets, funds and real estate. However, the Bank ' s funds were not sufficient to satisfy the numerous creditors who also had enforcement proceedings pending against Bank. The applicant was informed that he had to wait until the Bailiff Service had money on its account to enforce the decision.

On 7 May 1999 the applicant was informed by the Bailiff Department of the Russian Ministry of Justice that, by the end of March 1999, over 2,000 enforcement proceedings had been initiated against the Bank, with an additional 70-80 being initiated every week. The applicant was informed that the bailiffs had seized the Bank ' s cars, real property and other assets. The Department also informed the applicant that it was monitoring the enforcement of the court decisions against the Bank, and that the applicant would be notified as soon as funds were available to pay him.

On 13 August 1999 the applicant was informed by the Moscow Bailiff Service that the consolidated enforcement proceedings were continuing, and that the applicant ' s number in the list of creditors was 430. The letter further stated that the applicant would be informed of developments in his case.

On 16 August and 15 September 1999 the Central Bank of Russia declared a moratorium until 17 November 1999 on execution of all creditors ' demands against the Bank. On 16 November 1999 the management of the Bank was taken over temporarily by the “Agency on Restructuring of Lending Agencies” (ARKO), set up by the State in accordance with the Law on Restructuring of Lending Agencies ( Закон « О реструктуризации кредитных организаций » ) . On 16 November 1999, in accordance with the same Law, a moratorium was f all creditors ' demands against the Bank for a year. This period was prolonged by ARKO on 17 November 2000 for another six months, until 17 May 2001. On 3 July 2001 the Constitutional Court found unconstitutional the legislative provision that allowed ARKO unilaterally to extend the moratorium for another six months, and ruled that such decisions should be subject to judicial control.

After the communication of the complaint to the Russian Government on 22 March 2000, the applicant continued his efforts to have the court decision enforced. In particular, he sued the Moscow City Department of Justice for compensation for pecuniary and non-pecuniary damage. His claim was rejected in the final instance by the Moscow City Court on 4 July 2001. He also filed a request with the Moscow Commercial Court ( Арбитражный Суд г. Москвы ) for the Bank to be declared bankrupt, but his request was rejected on 16 August 2000 for lack of standing under national law. It also appears that the applicant attempted to complain about the actions of the Bailiff Service. On 15 May 2000 and on 19 June 2000 the Presnenskiy District Court of Moscow adjourned consideration of the complaint, as the applicant failed to distinguish between a complaint and a claim for damages. On 30 October 2000 the same court rejected the applicant ' s request to have the requirement to pay a fee for bringing his civil claim against the Bailiff Service lifted. On 1 August 2000 the same court adjourned the applicant ' s complaint concerning the actions of ARKO on account of his failure to comply with formal requirements. In October 2001 the Meshchanskiy District Court of Moscow rejected the applicant ' s claim for compensation against the Central Bank for pecuniary and non-pecuniary damage

On 8 May 2001 the Moscow Commercial Court approved the text of a tripartite friendly settlement involving the Association of the Bank ' s Creditors, the Bank and ARKO. The text of the friendly settlement was adopted at the general meeting of the Association of Creditors on 9 February 2001 by a majority of votes. The applicant, who had been invited to the meetings in November 2000 and February 2001, did not participate and it is not clear if he submitted his vote by post. According to the agreement, the applicant is entitled to the immediate refund in cash of 10 per cent of his deposit, and to two bonds of 1,000 USD each with maturity dates in 2007 and 2008.

On 22 June 2001 the Appeal Chamber of the Moscow Commercial Court ( апелляционная инстанция Арбитражного Суда г . Москвы по проверке законности и обоснованности решений арбитражных судов , не вступивших в законную силу ), and on 11 August 2001 the Federal Commercial Court for the Moscow Region ( Федеральный Арбитражный Суд Московского округа ) confirmed the decision of 8 May 2001.

In the same set of proceedings the courts reviewed the complaints of those creditors who were dissatisfied with various aspects of the friendly settlement. The courts found the settlement and the procedures leading to its conclusion to be in accordance with national legislation. In particular, the courts rejected the complaint that the moratorium, and later the friendly settlement, conflicted with the principles of compulsory execution of judgments and inviolability of property rights. The courts referred to the decision of the Russian Constitutional Court of 3 February 2000 on the constitutionality of a legislative provision allowing the Central Bank to declare a moratorium on the execution of a lending agency ' s debts. It noted that the aim of these provisions was to ensure a fair division of assets among all the creditors of a bank, which would not be possible if the “first-come-first-served” principle were to be applied. The courts also noted that the Law on Enforcement Procedure allowed closure of enforcement proceedings once a friendly settlement between the parties had been approved by a court.

On 23 July 2001, following an order of the Basmanny District Court of Moscow, the Moscow Bailiff Service closed the consolidated enforcement proceedings on court decisions against the Bank. The applicant appealed against this order, and on 8 April 2002 the Basmanny District Court found the bailiff ' s actions lawful, as they were based on a previous court order.

Throughout 2001 the applicant was informed by ARKO, the Bank and the Central Bank about the terms of the agreement. In December 2001 ARKO informed the applicant that over 97% of the total number of debtors had presented their claims and benefited from the terms of the agreement. The scheme would remain open until 1 April 2002, after which date the remaining liabilities would be deposited with a public notary.

In an unrelated set of proceedings, the applicant complained that in 1997 his apartment was burgled. The burglars, G. and V., were convicted in December 1997, sentenced to prison terms and ordered to compensate the applicant for the value of the stolen items. These sums were not paid until October 1999, as the debtors were in prison and did not have any assets. The applicant applied to the Pskov City Court to have the amount adjusted to take account of inflation. The Pskov City Court rejected the claim on 6 May 1999. Its decision was confirmed by the Pskov Regional Court on 10 June 1999.

On 17 March 2000 the Presidium of the Pskov Regional Court , acting upon a request for supervisory review lodged by the Pskov Regional Prosecutor, quashed the decisions of 6 May 1999 and 10 June 1999 and remitted the case for a new consideration. On 20 March 2001 the Pskov Regional Court awarded the applicant 6,700 roubles, to be paid jointly by G. and V. On 26 April and 7 May 2001 the Pskov Bailiff Service opened enforcement proceedings. On 17 July 2001 these proceedings were adjourned in respect of debtor G. as his location was unknown. The applicant did not appeal against this order.

B. Relevant domestic law

Article 9 of the Law on Enforcement Procedure provides that the bailiff shall issue within three days after receiving a court order an act initiating enforcement procedure ( постановление о возбуждении исполнительного производства ). Copies of the act are to be forwarded to the parties and to the court which made the order. Article 11 provides that the enforcement proceedings take place at the location of the debtor or his property. Article 13 provides that the bailiff shall enforce the order within two months from the date of receiving it. Article 90 provides that complaints about actions of the bailiff should be submitted to the district court for the area where the bailiff is located.

The Law on Insolvency (bankruptcy) of Lending Agencies ( Закон « О несостоятельности ( банкротстве ) кредитных организаций » ), Article 26 thereof, provides that the Bank of Russia may introduce a three-month moratorium on execution of all debts of a bank/lending agency if there is a threat of bankruptcy.

The Law on Restructuring of Lending Agencies gives details on the transfer of the management of a lending agency to the Agency on Restructuring of Lending Agencies (ARKO). Article 13 states that when ARKO takes over management of a bank/lending agency which is under threat of bankruptcy, a moratorium of 12 months is declared on execution of all its debts. ARKO may extend the moratorium for another six months.

On 3 July 2001 the Constitutional Court adopted a decision ( Постановление Конституционного Суда Российской Федерации № 10- П ) by which it found unconstitutional the legislative provisions which allowed ARKO to extend a moratorium for six months. The Court noted that ARKO was not a public authority and that it enjoyed an unlimited discretion in this decision, which could interfere with the rights of creditors. It further noted that ARKO ' s actions should be subject to judicial control.

COMPLAINTS

1. The applicants complain s, under Article 6 of the Convention, that the lengthy non-enforcement of the court decision of 8 October 1998 (as confirmed) violated his right to a fair hearing.

2. The applicant also complains that, because of the non-enforcement of the court decision, he was unable to enjoy his possessions, and thus his right to protection of property under Article 1 of Protocol No. 1 was violated.

3. Finally, the applicant complains that the courts ' refusal to adjust the amount owed to him as compensation for burglary and the non-enforcement of the judgments in his favour violated his right to enjoy peacefully his possessions and his right to protection of property under Article 1 of Protocol No. 1.

THE LAW

1. The applicant complains that the court decision of 8 October 1998 (as confirmed) has not been enforced. He alleges a violation of Article 6 of the Convention.

Article 6 § 1 of the Convention provides, so far as relevant, as follows:

“In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.”

The Government submit that the applicant failed to exhaust the domestic remedies available to him as he did not apply, in accordance with formal requirements, to a proper court in Moscow with a complaint against the actions of the bailiff.

The applicant submits that he exhausted the domestic remedies available to him, having applied on numerous occasions to courts and to various governmental bodies.

The Court observes that in the circumstances of the applicant ' s case it is of no importance whether his complaints about the bailiff ' s actions were or were not duly submitted to a court. The facts of the case show that throughout most of the period under consideration the enforcement of the court decision of 8 October 1998 was prevented by legislative measures, rather then by misconduct on the part of the bailiffs. On that account the applicant cannot be reproached for not having taken proceedings against the bailiff.

The Court recalls that the right to a court, embodied in Article 6 § 1, would be illusory if a Contracting State ' s domestic legal system allowed a final, binding judicial decision to remain inoperative to the detriment of one party. Execution of a judgment given by a court must therefore be regarded as an integral part of the “trial” for the purposes of Article 6 (see the Hornsby v. Greece judgment of 25 February 1997 , Reports of Judgments and Decisions 1997-II, p. 510, § 40, and Burdov v. Russia , no. 59498/00, § 34, 7 May 2002). Further, the execution of a judicial decision cannot be unduly delayed (see Immobiliare Saffi v. Italy [GC], no. 22774/93, ECHR 1999-V, § 66, which concerned a court order directed at a private party, the enforcement of which required specific action by State authorities).

However, the right to a court, and the enforcement phase of a relevant court decision, is not absolute and may be subject to legitimate restrictions. Where the individual ' s access is limited either by operation of law or in fact, the Court will examine whether the limitation imposed impaired the essence of the right and, in particular, whether it pursued a legitimate aim and there was a reasonable relationship of proportionality between the means employed and the aim sought to be achieved ( Ashingdane v. the United Kingdom judgment of 28 May 1985, Series A no. 93, pp. 24-25, § 57). If the restriction is compatible with these principles, no violation of Article 6 will arise.

It is clear in the present case that Article 6 applies to the proceedings which the applicant brought against the Bank: they were, as the applicant submits, proceedings against a private bank for recovery of money invested with that bank.

The Court must determine whether the enforcement proceedings to date have been incompatible with the applicant ' s right to a court. In doing so, the Court will look at two sets of events: first, the proceedings that took place between the judgment of 17 November 1998 and the declaration on 16 August 1999 by the Central Bank of a moratorium on execution of all debts of the Bank; and second, the period after 16 August 1999.

As to the first period, the Court notes that the enforcement procedure against the bank was initiated on 8 January 1999 by a bailiff, who is a State officer, responsible for the implementation of judicial decisions. It appears that the bailiff took several measures: as the applicant was informed in April 1999, the bailiff seized the Bank ' s assets, which were, however, not sufficient to satisfy all creditors. Thereafter, the applicant was periodically informed of the progress in the distribution of the Bank ' s assets, and was further told that he would be informed if and when his judgment debt could be satisfied.

In these circumstances, given the manner in which the enforcement proceedings were pursued, the Court considers that events between the entry into force of the judgment on 17 November 1998 and the halting of execution on 16 August 1999 cannot be said to have denied the applicant the very essence of his right to a court in the determination of civil rights in the initial proceedings.

As to the second period, the judgment was prevented from execution by moratoria declared by the Central Bank and ARKO. In the meantime, a friendly settlement had been reached between the creditors and the Bank. On this basis the enforcement proceeding were closed in June 2001.

As previously mentioned, the right to court includes a right to have a court decision enforced without unduly delay (see the above-mentioned Immobiliare Saffi v. Italy judgment, § 66). However, a stay of execution of a judicial decision for such period as is strictly necessary to enable a satisfactory solution to be found to public-order problems may be justified in exceptional circumstances (see the Immobiliare Saffi judgment cited above, § 69).

The Court first notes that State responsibility for enforcement of a judgment against a private company extends no further than the involvement of State bodies in the enforcement procedures. Once the enforcement procedures were closed by a court in accordance with the national legislation, the responsibility of the State ended. In the present case, three years and seven months passed between the entry into force of the judgment and the closure of the proceedings. The proceedings at issue were factually complex and required the solution of complicated practical and administrative issues, namely finding a way to satisfy the demands of numerous creditors of the Bank and negotiating a solution which would allow it to continue to operate as an important part of the country ' s banking system. Having in mind the public-order problems which Russia undoubtedly faced in the banking sphere after the financial crisis of August 1998 and the efforts undertaken by the State to overcome it, the Court considers that this delay was not so long as to deprive the outcome of the judicial process of all useful effect or to undermine its substance (see, mutatis mutandis , Meazzi v. Italy (dec), no. 35815/97, 15 November 2001). Nor can the Court conclude that the length of the proceedings at issue was unreasonably long.

In addition, the Court observes that the assessment of the necessity and legality of the moratoria, and of the terms and conditions of the friendly settlement, were subject to review by the Constitutional Court and the Commercial Courts (see, a contrario, the above-mentioned Immobiliare Saffi judgment, § 72).

It appears from the submitted documents that during the negotiation of the friendly settlement the applicant was repeatedly invited by the Bank to take part in the negotiation and to submit his vote. After the settlement ' s approval, the applicant was similarly invited to benefit from its terms, and his failure to do so cannot be attributed to the State.

In these circumstances, taking into account that enforcement proceedings were opened and progressed, the public order problems caused by the demands of a large number of creditors of the insolvent Bank, the judicial review of the enforcement proceedings and the conclusion of the friendly settlement, the Court considers that events since the judgment of November 1998 cannot be said to have denied the applicant his right to a court.

It follows that this part of the application is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention, and that it must be declared inadmissible pursuant to Article 35 § 4.

2. The applicant also alleges a violation of Article 1 of Protocol No. 1 as a result of the non-enforcement of the judgment of 8 October 1998. Article 1 of Protocol No. 1 provides 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.”

The Government submit that the applicant failed to exhaust domestic remedies available to him.

The applicant objects, and submits that by applying to various administrative and judicial bodies he has exhausted domestic remedies. He also considers that he was deprived of control over his property, which was de facto expropriated.

Applying its reasoning related to the complaint under Article 6, the Court notes that the question of exhaustion of domestic remedies is not entirely clear. The Court will however assume that in the present circumstances the applicant has exhausted domestic remedies available to him.

The Court considers that the interference complained of amounted to a control of the use of property within the meaning of Article 1 § 2 of Protocol No. 1 and pursued a legitimate aim in the general interest, as required by that provision (see the Immobiliare Saffi judgment cited above, §§ 46 and 48, and the Scollo v. Italy judgment of 28 September 1995, Series A n o 315-C, p. 26, §§ 30-31).

The Court recalls that any interference must strike a “fair balance” between the demands of the general interest and the requirements of the protection of the individual ' s fundamental rights in order to be compatible with Article 1 of Protocol No. 1. The concern to achieve this balance is reflected in the structure of Article 1 as a whole, and therefore also in its second paragraph. There must be a reasonable relationship of proportionality between the means employed and the aim pursued. In determining whether this requirement is met, the Court recognises that the State enjoys a wide margin of appreciation with regard both to choosing the means of enforcement and to ascertaining whether the consequences of enforcement are justified in the general interest for the purpose of achieving the object of the law in question. In areas of great public importance, such as managing the aftermath of a banking and financial crisis, the Court will respect the legislature ' s judgment as to what is in the general interest unless that judgment is manifestly without reasonable foundation (see the Immobiliare Saffi judgment cited above, § 49).

The Court notes that the factors which prevented the implementation of the judgment, i.e., the moratoria and closure of enforcement proceedings, were defined by statute. The legislation contained procedural safeguards for the Bank ' s creditors, who obtained judicial review of the moratoria and were involved in the negotiations and judicial approval of the friendly settlement. The terms of the settlement were approved by a majority of the creditors ' votes and it was open to the applicant to participate in the process. The nature of the financial institution and the vast number of creditors involved made it impossible to seek the endorsement of each single creditor. The mechanism by which the agreement was approved by a majority of votes of creditors does not seem unreasonable or without a rational foundation.

The Court finds that, in the instant case, a balance was maintained between the interests at stake (see the Scollo v. Italy judgment cited above, § 37). It considers that the restriction on the applicant ' s use of his property did not impose on him an individual and excessive burden, contrary to the requirements of the second paragraph of Article 1 of Protocol No. 1.

Having regard to the general interests at stake and in the light of the Court ' s observations in connection with the applicant ' s complaints under Article 6 of the Convention, it cannot be said that the applicant has been the victim of a de facto deprivation of property, or that his right to peaceful enjoyment of his possessions has otherwise been violated.

It follows that this part of the application is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention and must be rejected pursuant to Article 35 § 4 of the Convention.

3. The applicant also complains about the refusal of the domestic courts to adjust the amount of compensation awarded to him as the victim of a burglary so as to take account of inflation, and of non-enforcement of the judgment. He alleges a violation of Article 1 of Protocol No. 1.

In so far as the applicant complains about non-adjustment of the amount of compensation , the Court notes that neither Article 1 of Protocol No. 1 nor any other provision of the Convention guarantees the right to have judgments index-linked to take account of inflation.

As to the applicant ' s complaint of non-enforcement, it concerns a failure of the private debtors to comply with judgments in his favour. It appears from the submissions that after the judgments were pronounced, enforcement proceedings were opened by the bailiffs, but that the debtors were insolvent and could not pay the total sum, and the whereabouts of the debtor G. could not be established after the latter ' s release from prison. Nothing in the submissions indicates that the bailiff service failed in its duty to find the debtor, or that it was otherwise responsible for the non-enforcement of the judgment.

It follows that this part of the application is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention and must be rejected pursuant to Article 35 § 4.

For these reasons, the Court unanimously

Declares the application inadmissible.

Michael O ' Boyle Sir Nicolas Bratza Registrar President