Communicated on 8 September 2017

THIRD SECTION

Application no. 56935/11 Galina Vasilyevna NAGAYEVA against Russia lodged on 24 August 2011

STATEMENT OF FACTS

The applicant, Ms Galina Vasilyevna Nagayeva , is a Russian national who was born in 1949 and lives in Ulan-Ude.

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

A. The circumstances of the case

The applicant is the former employee of a forestry company subordinate to the Forestry Agency of the Chita Region (“the debtor agency”), a federal budgetary institution.

On an unknown date liquidation proceedings started in respect of the debtor agency.

1. First judgment in the applicant ’ s favour and the debtor agency ’ s liquidation

The applicant brought a claim against the debtor agency, seeking reinstatement in her job as head of the forestry company and to recover unpaid salary.

On 19 January 2007 the Tsentralnyy District Court of Chita ordered the debtor agency to immediately reinstate the applicant and pay her 120,744 Russian roubles (RUB) in salary arrears, as well as RUB 3,000 in respect of non-pecuniary damage and RUB 1,000 in costs and expenses (a total of approximately 3,614 euros (EUR)).

On the same date the applicant requested the liquidation commission to include her in the list of creditors. It appears that her request was received by the commission three days later but was never answered.

It appears that on 19 January 2007 a writ of execution was issued in respect of the applicant ’ s reinstatement. On 30 January 2007 the bailiffs ’ service warned the debtor agency that it had to comply with the judgment. The agency replied that it was unable to comply with the judgment because since 19 December 2006 all local forestry companies under its control, including the company that had employed the applicant, had been transferred to the Chita Region. The agency further advised the bailiffs that it would not comply with the judgment while the appeal it had brought was still pending.

On 14 March 2007 the judgment was upheld by the Chita Regional Court.

On 3 April 2007 the debtor agency was liquidated and the liquidation recorded in the Register of Legal Entities. Any creditors ’ claims not satisfied during the liquidation were considered settled.

On 3 April 2007 the first-instance court issued a writ of execution in respect of the monetary award. The applicant took the writ to the Federal Treasury Department of the Chita Region on the same date she received it. Referring to domestic law provisions governing budgetary institutions, the treasury advised the applicant that it was unable to comply with the writ as the debtor agency had been liquidated.

The judgment has not been enforced.

2. Second judgment in the applicant ’ s favour

In the meantime, apparently in Janaury –February 2007, the applicant brought a claim against the debtor agency, seeking unpaid salary from 19 January 2007 onwards (see above).

On 18 April 2007 the Tsentralnyy District Court of Chita ordered the debtor agency to pay the applicant RUB 54,558.40 (approximately EUR 1,561). It appears that the judgment was not appealed against and entered into force ten days later. The applicant forwarded the related writ of execution to the Federal Treasury Department of the Chita Region. The judgment has not been enforced.

3. Proceedings against the Federal Forestry Agency

On an unknown date the applicant sued the Federal Forestry Agency for payment of the amounts due to her under the first and second judgment. She argued that the federal agency had decided to liquidate the debtor agency and was the main recipient and administrator of the relevant budgetary funds within the meaning of the Budget Code.

On 3 December 2009 the Zamoskvoretskiy District Court of Moscow dismissed the applicant ’ s claim on the following grounds. Firstly, before bringing a court action for the Federal Forestry Agency to bear subsidiary liability for the liquidated agency ’ s debts, she should have claimed the debt from the debtor agency itself before its liquidation. However, she had failed to do so during the liquidation process. In any event, a State authority ’ s subsidiary liability for the debts of an institution would only be triggered if the debtor enterprise ’ s funds were insufficient, and the applicant had failed to prove such insufficiency in her case. Secondly, she had failed to submit her claims to the liquidation commission in good time and to bring proceedings to challenge its inaction before the debtor agency was liquidated. Lastly, it noted that the Federal Forestry Agency could not be sued as the main administrator of the relevant funds as the subordinate debtor agency no longer existed, and the applicant “had not made use of the right” to raise her claims in good time.

The applicant appealed, arguing that on 19 January 2007 she had duly submitted her claims to the liquidation commission.

On 16 February 2011 the Moscow City Court upheld the judgment on appeal. It agreed with the lower court ’ s findings that the applicant had failed to sue the liquidation commission in court before the liquidation balance had been approved, and had not demonstrated that the debtor agency had lacked funds at the time of liquidation. The court refused to take into account her request to the liquidation commission, as there had been no evidence that she had challenged its inaction before the debtor agency ’ s liquidation. The court concluded that the applicant ’ s claim had to be dismissed, because any creditors ’ claims submitted after the liquidation of a debtor institution could not be met at the expense of the owner of the institution ’ s assets.

The applicant was not present at the hearing and received a copy of the final decision on 17 June 2011.

B. Relevant domestic law and practice

1. Provisions on institutions applicable at the material time

Institutions ( учреждения ) are non-profit organisations set up by owners to perform managerial, socio-cultural or other functions of a non ‑ commercial nature (Article 120 § 1 of the Civil Code, in force as of 3 November 2006). On 8 May 2010 substantive amendments were introduced to the Civil Code provisions governing institutions (in force as of 1 January 2011). Prior to that date, the following rules applied.

Institutions could be private, State or municipal. A State or municipal institution could be created by the Russian Federation, its federative entities or a municipality. At the time of the events, State and municipal institutions could be “budgetary” or “autonomous”. Budgetary institutions were financed by their owners in full or in part (Article 120 § 2).

Institutions had a right of operational control ( оперативное управление ) over assets allocated to them by their owner. This meant that institutions owned, used and disposed of assets allocated under their “operational control” within the limits set by the domestic law, in accordance with the purpose and aims of the institution, the instructions of the owner and the assets ’ intended use (Article 296 § 1, as in force as of 3 November 2006). The owner could withdraw redundant, unused or misused assets allocated to the institution or acquired by it at its own expense and dispose of them as it saw fit (Article 296 § 1, as in force as of 3 November 2006). A budgetary institution could not alienate or dispose of assets allocated to it by the owner or acquired using funds allocated by the owner to purchase them (Article 298 § 1 of the Code as in force as of 3 November 2006). If an institution was entitled to carry out income-generating activities in accordance with its articles of association, it could independently dispose of its profits, as well as assets acquired with those profits (Article 298§ 2 of the Code).

The Civil Code established specific rules concerning who should bear liability for an institution ’ s debts (Article 56 § 2 of the Civil Code). Budgetary institutions were liable for their debts with the funds at their disposal. Where those funds were insufficient, the owner of the assets allocated to the institution would bear subsidiary liability for the institution ’ s debts (Article 120 § 2 of the Civil Code).

In subsidiary liability proceedings concerning the debts of subordinate budgetary institutions the relevant State, regional or municipal authority would be represented by the main administrator of the budgetary funds (Article 158 § 10 of the Budget Code as in force before 1 January 2008, relied on by the applicant).

2. Provisions referred to by the domestic courts

a ) As regards the liquidation of legal entities

In the event of liquidation, a legal entity ceases to exist without succession (Article 61 of the Civil Code).

Where the funds of an institution in liquidation were insufficient to meet the insolvency creditors ’ claims, the creditors could lodge a court action to have their claims satisfied at the expense of the owner of the institution ’ s assets (Article 63 § 6 of the Civil Code, as in force at the material time).

Where the liquidation commission refused to satisfy a creditor ’ s claim or evaded its consideration, the creditor could bring a court action against the liquidation commission, provided it was brought before the liquidation balance of the debtor entity was approved (Article 64 § 4 of the Civil Code, as in force at the material time).

Any creditors ’ claims which were not satisfied owing to the insufficiency of the assets of the entity in liquidation would be deemed settled. Any creditors ’ claims which had not been acknowledged by the liquidation commission would also be deemed settled if the creditor had not applied to a court or if the claims had been dismissed by a court (Article 64 § 6 of the Civil Code, as in force at the material time).

An obligation is terminated with the liquidation of the legal entity (the debtor or creditor), unless another person has to execute an obligation of the liquidated legal entity in accordance with the domestic law (Article 419 of the Civil Code).

b ) As regards damage caused by authorities

Damage caused as a result of unlawful actions or inaction on the part of State or local authorities or their officials is to be compensated. Such compensation is to be paid from the federal or regional treasury (Article 1069 of the Civil Code).

c ) As regards the burden of proof

It is for a party to prove the circumstances on which he or she relies as the basis for his or her claims and complaints, unless the federal law establishes another rule (Article 56 of the Code of Civil Procedure).

d) Clarifications by the Supreme Commercial Court referred to by the courts

By Information Letter No. 104 of 21 December 2005 the Presidium of the Supreme Commercial Court of Russia clarified that if creditors failed to raise their claims during the liquidation proceedings in respect of an institution, their claims could not be satisfied at the expense of the owner of the institution ’ s assets after the liquidation of the institution.

3. Ruling No. 21 of 22 June 2006 of the Plenary Supreme Commercial Court

By Ruling No. 21 of 22 June 2006, as amended on 19 April 2007, the Plenary Supreme Commercial Court provided an authoritative interpretation of the provisions applicable to institutions. In particular, it stressed that the owner of an institution ’ s assets was only liable for the institution ’ s debts in cases where the institution ’ s funds were insufficient. Accordingly, the owner would only bear subsidiary liability if the creditor had first brought a court action against the debtor institution itself ( paragraph 4 of the Ruling).

With reference to Article 63 § 6 of the Civil Code ( summarised above) the Plenary Supreme Commercial Court reiterated that if a State or municipal institution was undergoing liquidation, creditors could bring court proceedings for satisfaction of their claims at the owner ’ s expense, where the institution ’ s funds were insufficient. Only creditors who had submitted their claims to the liquidation commission before the liquidation of the institution could claim that the owner should bear subsidiary liability for the institution ’ s debts. For that reason, any creditors ’ claims raised after the liquidation could not be settled at the owner ’ s expense ( § 10 of the Ruling).

COMPLAINTS

The applicant complains under Article 6 of the Convention and Article 1 of Protocol No. 1 thereto that she has not received the money she is owed as a result of the non-enforcement of the judgments of 19 January and 18 April 2007 in her favour.

She further complains, without referring to any Convention provision, that she was unable to obtain effective protection of her rights in respect of the non-enforcement. She avers, in particular, that she could not bring a court action against the liquidation commission as it no longer existed at the time the second judgment in her favour was delivered. Furthermore, she submits that she was unable to access any information about the insufficiency of the debtor agency ’ s funds as that information was in the exclusive possession of the domestic authorities.

QUESTIONS TO THE PARTIES

1. The Government are invited to provide information on the debtor agency ’ s legal status. Are the debts of the Forestry Agency of the Chita Region imputable to the State?

2 .

a) Did the applicant have at her disposal an effective domestic remedy in respect of her right to have the final judgments of 19 January and 18 April 2007 in her favour enforced fully and in a timely manner, as required by Article 13 of the Convention? In particular:

(i) Did proceedings against the liquidation commission constitute an effective remedy in the present case? Could the applicant effectively make use of these proceedings in the specific circumstances of her case, given that the judgment of 18 April 2007 was issued after the debtor agency ’ s liquidation?

(ii) Would subsidiary liability proceedings constitute an effective remedy in the present case? Could the applicant effectively make use of these proceedings in the specific circumstances of her case, given that the judgment of 18 April 2007 was issued after the debtor agency ’ s liquidation?

( iii ) Did the domestic remedy introduced by the Compensation Act of 30 April 2010 (Federal Law No. 68-FZ), as in force at the material time, apply to the applicant ’ s case? The Government are invited to substantiate their reply with examples of domestic case-law.

b) If any effective remedies were available in respect of the applicant ’ s non-enforcement complaint, did the applicant exhaust them?

c) If remedies did not exist or did not apply to the applicant ’ s case, was there a violation of her right to an effective domestic remedy under Article 13 of the Convention in conjunction with the non-enforcement complaint (see Burdov v. Russia (no. 2) , no. 33509/04, §§ 96 ‑ 117, ECHR 2009-I; Gerasimov and Others v. Russia , nos. 29920/05 and 10 others , § 166, 1 July 2014; and Liseytseva and Maslov v. Russia , no s . 39483/05 and 40527/10 , §§ 156-82, 9 October 2014 )?

3. Have the final judgments of 19 January and 18 April 2007 in the applicant ’ s favour been enforced fully and in a timely manner? If not, has there been a violation of the applicant ’ s right to a court under Article 6 of the Convention and her right to the peaceful enjoyment of possessions under Article 1 of Protocol No. 1 to the Convention (see Kuksa v. Russia , no. 35259/04, § 26, 15 June 2006)?