PARTLY DISSENTING OPINION OF JUDGE BUSHEV, JOINED IN PART BY JUDGE HAJIYEV

The present opinion contains the joint dissenting opinion of Judge Hajiyev and of Judge Bushev with regard to the finding of a violation of Article 1 of Protocol 1 to the Convention (parts 1 and 2 below), and that of Judge Bushev with regard to the remainder of the issues (parts 3 and 4 below).

As to the violation of Article 1 of Protocol 1 to the Convention

Unfortunately, we must dissent from our colleagues’ (hereinafter, the Court) finding that there was a violation of Article 1 of Protocol 1 to the Convention in the case at hand, concerning (1) application of the 3-year limitation period, provided by article 113 of the Tax Code of the Russian Federation, in respect of the imposition of penalties for the years 2000 and 2001, and in respect of (2) certain elements of the enforcement proceedings with regard to court judgments on the debt arising from the Tax Assessments 2000-2003 (hereinafter, the enforcement procedure).

We will now examine each of the aforementioned findings.

1. With regard to application of the 3-year limitation period in respect of the imposition of penalties for the years 2000 and 2001.

1.1. The Court has, in essence, agreed in full with the conclusions of the Russian courts that OAO Neftyanaya kompaniya Yukos (hereinafter, Yukos) conducted numerous illicit transactions for the sole purpose of systematically and intentionally evading the payment of taxes. In addition, the Court found that the corresponding tax legislation, in form and in content, and the actions of the authorities in pursuing the assessment of tax arrears and surcharges, fully met the high standards of the Convention. Thus, the Russian Government had enough reasonable grounds for levying taxes and surcharges from the applicant. Equally, the Court has not challenged the Russian Government’s finding that Yukos actively opposed tax inspections, thus acting mala fides , for the purpose of drawing out the time-limits for their performance.

1.2. As to the levying of penalties for the intentional tax evasion, the Court did not find the rates applied excessively high or disproportional (see § 606 of the judgment). However, the Court’s findings with respect to each of the three tax periods differ, depending on the possibility of applying the 3-year limitation period set out in Article 113 of the Tax Code, to the imposition of tax liability.

 Thus, with respect to the penalties imposed in April 2004 for the tax violations committed in the period 2002-2003, the Court has not found any violations of the Convention, since those periods fall within the 3-year limitation period.

 In accordance with the rules of application of the 3-year limitation period identified by the Court, it found that imposition of the penalties in 2004 for the tax violations committed in 2000 contradicts the requirements of Article 113 of the Tax Code.

 With regard to the third period, concerning the penalties for 2001, the Court, while not doubting the grounds for their imposition, nonetheless challenged the 80 % rate of the penalty. The Court was not convinced by the Government’s argument that, under Article 114 of the Tax Code, the penalty could be increased from 40% to 80% in the event of a repeat conviction. Indeed, following the Court’s logic on the limitation period applicable to the penalties for 2000, there was no repetition in 2001, due to the fact that 2001, not 2000, is the first year for which the limitation period is inapplicable. In other words, the penalties for 2000 could not be treated as the initial instance of imposition of tax liability, and therefore, the increase in the penalty rate from 40% to 80% in 2001 was inadmissible, given that there was no repetition of the offence, for which liability could be imposed.

1.3. In examining the rule on the limitation period set out in Article 113 of the Tax Code, the Court has taken a literal approach, which has led it to find that neither the given provision, nor any other provisions of Russian legislation set out a ground for suspending or amending the limitation period. In the Court’s opinion, the wording of Article 113 of the Tax Code does not render it possible to foresee any exceptions from the rule arising from certain circumstances. In particular, the Court has not supported the Government’s argument that bad faith on the part of the taxpayer, expressed by actively opposing the authorities in establishing and classifying all elements of the corresponding fiscal and legal relationship, is such an exception.

The Court thus considers that the rule set out in Article 113 of the Tax Code did not render it possible for a reasonable person with a fair degree of certainty to foresee any inapplicability of the 3-year limitation period, even where such a person was actively impeding the tax authorities. Hence, as regards the penalties for 2000, the Court believes that the “quality” of Article 113 of the Tax Code did not meet in full the requirement of lawfulness for the Government’s interference in private property.

1.4. We are not convinced by the Court’s arguments.

Indeed, the lawfulness criterion is an indispensable requirement in appraising a Government’s activity in the light of Article 1 of Protocol 1 to the Convention. For this purpose the notion of law has a wide meaning and includes not only the acts of the respective parliament, but also delegated legislation, decrees, court practice, etc. The law has to meet certain requirements as to its form and substance. One of the requirements imposed on law under the Convention is its legal certainty, rendering it possible for private persons and public authorities to foresee the legal consequences of particular conduct. Meanwhile, the case-law of the European Court on Human Rights (the ECHR) follows the assumption that “those consequences need not be foreseeable with absolute certainty: experience shows this to be unattainable” (see Rekvényi v. Hungary [GC], no. 25390/94, § 34, ECHR 1999 ‑ III and Hertel v. Switzerland , 25 August 1998, § 35, Reports of Judgments and Decisions 1998 ‑ VI, refer also to § 598 of the judgment).

We believe that in the case at hand the statutory wording (its “quality”), and the specific qualities of the offender were reasonable enough for it to foresee the probability that the limitation rules set out in Article 113 of the Tax Code might be inapplicable in the event of its actively opposing (obstructing) tax inspections. Let us clarify this thinking.

1.5. “Legal quality” of Article 113 of the Tax Code.

No legal system enables the domestic legislation to be descriptive enough to provide for every eventuality. Setting out a rule of conduct in statute and comprehending the implicit sense thereof is attained by virtue of various legal techniques, including, in particular, judicial interpretation, the interpretation of a rule within a system of other rules, etc. Russian legislation has been codified in the traditions of a pandectic system of law, which assumes that comprehension of the implicit sense of a given special rule can be provided often by taking into consideration a more general rule. A general rule is by default applicable to a special rule, unless the latter sets out directly (obviously) an exception (waiver) to the former. In such a codification system the interpretation principles assume that every special rule contains the provisions of a more general rule, although the literal text of the said general rule is not included in the literal text of a special rule for the purposes of legal techniques.

Moreover, in the pandectic system a comprehension of the implicit sense of either special or general rules ought to exist through legal principles, which have a universal and exhaustive role. The effect of a legal principle is assumed with respect to each rule of the respective branch of law; every single rule set out in legislation is to be comprehended and applied within the semantic borders of the legal principle and unless the former contradicts the latter.

1.6. One such general legal principle is the principle of non-abuse of one’s rights and the consequent principle of refusal to grant protection to a person who has abused his or her rights. This principle is directly set out in the provisions of the branch of law which regulates property relationships and in the closely-related tax legislation.

Thus, under Article 17 (3) of the Constitution of the Russian Federation, which is applicable directly to any relationship (Article 15(1)), the exercise of individual and civic rights and freedoms must not violate the rights and freedoms of others. As provided by Article 10 of the Russian Civil Code (this rule came in effect in 1995), which regulates property relationships in general, “actions by citizens and legal entities, performed with the express purpose of inflicting damage to another person, and the abuse of civil rights in other forms shall be inadmissible” (paragraph 1), and where a person fails to abide by this requirement a court shall have the right to reject this person’s claim for the protection of that right (paragraph 2).

1.7. With regard to tax relationships, the Russian Constitutional Court has drawn attention to the necessity, in elucidating the special rules of tax legislation, of applying the principle of refusal of protection of rights to persons abusing those rights. The present interpretation was given by the Constitutional Court both prior to the commission of tax violations by Yukos in 2000 (Constitutional Court judgment no. 24-P of 12 October 1998) and in the course of the limitation period, when the applicant was actively impeding the tax inspection (Constitutional Court judgment no. 139-O of 25 July 2001, etc.). The Court on the other issue has also acknowledged the possibility of uncertainty in the law, including the criminal law, as well as, in essence, a need to apply the legal principles – when assessing the quality of the law on specific taxes (see § 598 in the judgment).

1.8. Apart from those principles, consideration should be given to a special rule in Russian legislation which could be used in comprehending the implied sense of Article 113 of the Tax Code. Thus, the Court believes that the high rate of penalties (40%) applicable in cases of intentional tax violation creates a similarity between this sanction and measures imposed under the criminal law. Therefore, the Court argues, where such tax liability is imposed, procedural guarantees similar to those applicable in cases of criminal liability should be granted. This conclusion by the Court in respect of the present case is extremely debatable (see paragraphs 3.2 – 3.4 below). Nonetheless, the key issue lies elsewhere. If we follow the Court’s logic, the offender, in assessing the risk of applicability of the limitation period to its case, ought also, in our view, to have (or, at least, could reasonably have) considered the special rule of criminal law. According to Article 78 (3) of the 1996 Criminal Code, “expiry of a limitation period shall be suspended if the person who has committed the crime impedes the investigation or court trial”.

Besides, the rules on suspension or amendment of the limitation period as a result of certain exceptional circumstances are applicable and ultimately similar for all forms of legal liability.

1.9. Thus, Russian legislation contained provisions with sufficient legal certainty for the purpose of foreseeing the consequences of bad faith in opposing tax inspections and the applicability of a limitation period in this regard.

1.10. The Court in its judgment points to certain circumstances that prima facie diminish the “quality” of law and decrease the legal certainty of Article 113 of the Tax Code. Among such circumstances the Court refers to (i) paragraph 36 of judgment no. 5 of the Supreme Arbitration (Commercial) Court Plenum of 28 February 2001 ((§ 405), hereinafter – the SAC judgment of 2001), (ii) the Constitutional Court’s decision of 18 January 2005 ((§ 75), hereinafter – CC Decision of 2005), (iii) the Constitutional Court’s judgment of 14 July 2005 (hereinafter – the CC Judgment of 2005) and, last but not least, (iv) amendments to Article 113 of the Tax Code adopted in Federal Law no. 137-FZ of 27 July 2006 ((§ 410), hereinafter – the 2006 Federal Law). Although all of these circumstances pertain to Article 113 of the Tax Code, their quantity should not affect the comprehension of the “legal quality” of the provision at hand.

In fact, the SAC judgment of 2001 eliminated internal inconsistencies and contradictory court practice regarding the point at which tax liability is imposed (either the point of drawing up a record of a violation, or the point of adopting a resolution on the imposition of tax liability). The issue of bad faith in impeding tax inspections, and the applicability of the limitation period in this regard, was not addressed in the judgment. Neither was it touched upon in the CC Decision of 2005, which affirmatively answered a request by Yukos regarding the relevance of the limitation period’s application per se . The Constitutional Court justified its refusal to examine Yukos’s claim on the ground that it was inadmissible, as the applicant sought reassessment of the facts as stated by the arbitration (commercial) court, a matter that does not fall within the Constitutional Court’s authority (paragraph 2 of the CC Decision of 2005, paragraph 1.3 of the CC Judgment of 2005).

The CC Judgment of 2005 confirmed the Constitutional Court’s previous finding on the refusal of protection to bad-faith taxpayers, drawing attention to the fact that the said universal principle was also to be applied for the purpose of ascertaining the implicit sense of Article 113 of the Tax Code. Furthermore, the Constitutional Court emphasised that conduct such as impeding a tax inspection might be treated as a taxpayer’s abuse of rights and ought to be regarded as a certain form of bad-faith conduct by the taxpayer. The CC Judgment of 2005 indisputably increased legal certainty in comprehension of the special rule of Article 113 of the Tax Code and thus raised the degree of protection for the property interests of private persons. A comparable effect was gained through the enactment of the 2006 Federal Law. Nevertheless, the same interpretation was reasonably foreseeable on the basis of the previously existing legislative provisions, and the “legal quality” thereof complied fully with the requirements of the Convention.

1.11. The applicant’s subjective ability to comprehend the implicit sense of the law.

In deciding in any given case whether there has been a violation of the Convention in respect of the applicant, the ECHR considers that applicant’s specific situation. Evidently, applicants’ individual ability to interact with the public authorities, the degree of their security, so to speak, their ability to have victim status for the purposes of the Convention, can differ substantially. Nevertheless, in spite of its case-law, the Court in the case at hand failed to examine and refused to consider Yukos’ subjective ability to foresee the consequences of its own conduct in actively impeding tax inspections, and to assess the explicit and implicit sense of Article 113 of the Tax Code. Such approach by the Court is not consistent, as on the other issue – assessment of quality of provisions of the special tax laws, i.e. of an element of the tax law offence – the Court has taken into consideration the fact that the applicant was a large holding, capable to consult with experts for risk assessments (see § 599 of the judgment).

1.12. Yukos was one of the largest commercial companies in Russia. Running a business (carrying out for-profit activities) at one’s own risks implies consent by a commercial company, in the person of its managing bodies, to accept various consequences resulting from conditions of uncertainty, including the imperfections of legislation. The consequences of such uncertainty might be either positive or negative. Therefore, in regulating relationships involving non-entrepreneurs, especially physical persons (humans), who are able to influence the consequences of their risk to a lesser degree than commercial companies, the legal certainty of legislation should be substantially higher than for entrepreneurs (commercial companies). To paraphrase the above-mentioned principle, for the purposes of the Convention the standard of legal certainty of a legal rule might be lower for commercial companies.

It is undeniable that the applicant possessed an extremely high potential to assess its own legal risks; its consultants (advisors) were able to reasonably foresee all the possible consequences of application of a legal rule. One need only note that in certain proceedings the applicant was represented by 8 to 10 professional lawyers, the company carried out large-scale and legally significant activities both in Russia and abroad, implementing legal solutions that were occasionally unorthodox in the Russian legal sphere (e.g. use of transnational jurisdiction, the creation of multidivisional branches of affiliates (including sham companies) within a large Russian territory, as well as abroad). It should be mentioned that the applicant was aware of the possibility of tax liability well in advance of the expiry of the 3-year limitation period (a long-term tax inspection preceded signing the protocol on 29 December 2003, establishing tax-law violations); the decision imposing tax liability was issued with an insignificant overstepping of the 3-year term (14 April 2004, i.e. 3 and a half months); the tax authorities filed a claim for tax penalties on 14 April 2004, i.e. within the general term for public authorities to respond to tax violations, namely 3 years (the limitation period under Article 113 of the Tax Code) plus 6 months (the term for bringing a lawsuit before a court, Article 115 of the Tax Code).

1.13. Thus, we believe that neither the “quality” of the tax legislation (the objective factor), nor the alleged legal uncertainty with respect to the applicant’s rights (the subjective factor) constituted a violation of Article 1 of Protocol 1 to the Convention in terms of the existence of lawful grounds for an insignificant prolongation of the limitation period for the penalties in respect of 2000.

1.14. Retrospective effect of the CC Judgment of 2005.

We were also not convinced by the Court’s evaluation of the significance of the retrospective effect of the CC Judgment of 2005 with regard to interpretation of Article 113 of the Tax Code. As was mentioned above, the Constitutional Court did not amend the rules on application of the limitation period, it merely increased legal certainty in comprehension of the special rule of Article 113 of the Tax Code, which, in turn, had been reasonably foreseeable. However, even if we assume that the Constitutional Court introduced a new rule on the influence of a taxpayer’s bad faith on the running of the limitation period, the retrospective application of such a “new” rule was admissible in the given circumstances.

The Convention recognizes a wide margin of appreciation for national governments in regulating taxation and levying taxes and penalties . The ECHR respects any decision by the national legislator in this sphere, unless such a decision obviously has no reasonable ground (see Gasus Dosier- und Fördertechnik GmbH v. the Netherlands , 23 February 1995, § 60, Series A no. 306 ‑ B). The ECHR’s case-law contains several instances where the Court accepted retrospective amendments to legislation and, correspondingly, the imposition of additional payments on taxpayers (see National & Provincial Building Society, Leeds Permanent Building Society and Yorkshire Building Society v. the United Kingdom , 23 October 1997, § 80, Reports of Judgments and Decisions 1997 ‑ VII, Di Belmonte v. Italy , no. 72638/01, 16 March 2010).

It is worth noting that in the instant case the Constitutional Court did not stipulate any additional obligations regarding the rules on charging and paying taxes, nor did it impose a different rate of tax liability. At the moment of committing the tax offence the applicant had been aware of all of the principal conditions for imposing liability. It is unlikely that establishment of a limitation period is aimed at preventing or correcting the socially undesirable conduct of private individuals. Considering the vast amounts of evaded taxes and the long-term period of the tax violations, it is hardly reasonable to assume that the applicant would have not begun evading taxes or impeding tax inspections if it had been aware that the limitation period might have been 3 years and three-and-a-half months rather than 3 years.

1.15. Finally, let us end with a reference to the judgment of 17 May 2010 in the case of Kononov v. Latvia , delivered by the Grand Chamber, in which the Court set out certain standards as to the legal certainty and foreseeability of a legal rule. We would recall that the issue in question in this case was the legal certainty of a rule which had been effective in the distant past and which became the legal ground for imprisonment of the applicant for 6 years in 2000 for “military crimes” committed, according to the Latvian authorities, in 1944. At the moment when the events under consideration occurred, Latvian criminal legislation did not contain any explicit provisions regarding military crimes; moreover, it stipulated general and special limitation periods for criminal liability. Those limitation periods had expired long before the beginning of the criminal proceedings against Kononov. In 1993 the provisions on limitation periods were abolished by a Latvian legislative act. Nevertheless, the ECHR held that serviceman Kononov, who, unlike the applicant in the present case, had no real opportunity to apply to consult legal advisers, relying on a combination of various international conventions and legal customs (including certain that were not officially promulgated) could have foreseen that his conduct might be qualified as a military crime. In this the ECHR was also not troubled by the fact that the limitation period set out in national legislation for any type of crime at the time when Kononov committed the alleged offence (1944) had expired several decades before Kononov was brought to trial in 2000 (see Kononov v. Latvia [GC], no. 36376/04, § 239, 17 May 2010).

The right to liberty is one of the most protected rights under the Convention; it is at the summit in the hierarchy of human rights values, and therefore the standard of legal certainty in respect of it is much higher than in respect of the rules entitling national governments to control the private property of business organisations in the form of levying taxes and penalties.

1.16. The ECHR has repeatedly ruled that the burden of interpretation and enforcement of national legislation is primarily with the competence of national public authorities, and particularly state courts (see Winterwerp v. the Netherlands , 24 October 1979, § 60, Series A no. 33 and Iglesias Gil and A.U.I. v. Spain , no. 56673/00, § 61, ECHR 2003 ‑ V). In the case at issue the legal interpretation was given by the Constitutional Court; that interpretation is based on reasonable grounds, is not evidently unsubstantiated or unjust, and, considering the judgment in the Kononov case and the remainder of the case-law, meets the requirements of the Convention.

2. With regard to the enforcement proceedings.

2.1. In assessing the Government’s actions to collect tax arrears from Yukos the Court found no breaches of national law; however, the Court held that the measures taken by the public authorities against the offending company were disproportionate (see § 647 of the judgment). According to the Court, the enforcement procedure was executed too rapidly, the applicant in fact had been provided no real opportunity for any alternative ways to pay off its tax debts, the forfeiture of stocks in OAO Yuganskneftegaz (OAO “YNG”) (the applicant’s primary business asset) by auction was not justified, etc. (§ 650). At the same time, the Court did not find every single element of the enforcement proceedings to be disproportionate, but only in the cumulative effect of such elements. Further, in the Court’s opinion, the State did not properly take into consideration all of the factors related to the enforcement proceedings (§ 651), though it accounted a few of those (§ 652).

2.2. The width of the State’s margin of appreciation and factors determining its bounderies.

We would reiterate that the ECHR’s case-law relies on the necessity of recognising the wide margin of appreciation enjoyed by national governments in deciding on the exact measures intended to guarantee observance of human rights. The bounds of such discretion can vary depending on the scope and the nature of a certain right, as well as other circumstances developed under the ECHR’s practice (see Buckley v. the United Kingdom , 25 September 1996, § 74, Reports of Judgments and Decisions 1996 ‑ IV). For the purposes of levying taxes and penalties a government’s margin of appreciation is deemed to be particularly wide (see § 648 of the judgment).

The ECHR demonstrates even more tolerance towards the public authorities’ actions in respect of private persons in cases where (a) an applicant happens to be a commercial company (see Å paček, s.r.o., v. the Czech Republic , no. 26449/95, § 59, 9 November 1999, Regent Company v. Ukraine , no. 773/03, §§ 60, 61 and 67, 3 April 2008). (b) an applicant’s conduct contributed to his detriment (see Beyeler v. Italy [GC], no. 33202/96, § 116, ECHR 2000 ‑ I) (c) the applicant behaved unfairly - mala fides (see AGOSI v. the United Kingdom , 24 October 1986, § 54, Series A no. 108, Sarmin and Sarmina v. Russia (dec.), no. 58830/00, 22 November 2005, Al-Nashif v. Bulgaria , no. 50963/99, § 89, 20 June 2002); (d) there is no consensus among the Contracting States, i.e. governments employ different measures under similar circumstances (see T. v. the United Kingdom [GC], no. 24724/94, §§ 71-72, 16 December 1999), etc. Moreover, the ECHR considers the specific economic and other circumstances in which the governmental action being assessed was carried out (see James and Others v. the United Kingdom , 21 February 1986, § 46, Series A no. 98).

All of these factors, developed in the ECHR’s case-law and cumulatively denoting a need to recognize a much wider margin of appreciation for the Government than in other cases, are present here. However, they have not been taken into consideration properly by the Court.

2.3. Yukos at that time was one of the biggest commercial companies, not only in Russia, but throughout the world, and wielded considerable economic and other influence and power. The company engineered and implemented large-scale abusive tax schemes for the sole purpose of systematically and intentionally evading taxes. As a result, the State budget suffered a tremendous amount of damage, unprecedented in the area of tax violations. In the meantime the unpaid funds were at the company’s disposal, having probably enriched substantially both the company and its shareholders. The Government’s actions were aimed only at levying tax arrears and penalties (see § 646 of the judgment) the alleged political motive, and the aim of reallocating assets or another intention, unrelated to the tax collection, and selectiveness (discrimination) by the State, as claimed by the applicant, were held to be unsubstantiated (§§ 616, 666). The scope and rapidity of the State measures against the applicant were determined by the scale of intentional tax violations committed by it, and by the extent of damage inflicted on the State budget (public interest). The company refused to acknowledge the unlawful nature of its activity; the company ignored the advice of its official auditor (ZAO PricewaterhouseCoopers Audit), which informed the company’s management well in advance of the tax inspection of the illegality of certain operations being used to evade taxes (the promissory notes schemes, royalty-free disposal of property, etc.); the company was actively impeding the government in collecting taxes and penalties prior to and during the enforcement proceedings.

We would also note that the impugned events occurred during the international financial crisis at the end of the 1990s/early 2000s, and the subsequent recovery of the Russian economy, i.e. when the violations by Yukos were especially harmful to the State budget. The State experienced a period of a transitional economy, which can be attributed to restructuring of the political machinery, assembling and adjustment of legislation, inter alia , in the taxation sphere, and reorganization of State bodies.

2.4. Naturally, whatever the wide margin of appreciation granted to a national Government, even in exceptional circumstances, such a margin cannot be boundless. It is always hypothetically possible to imagine certain cases in which the Government’s actions would be disproportionate. The question is – who is best placed to assess and stipulate the extent of such appreciation? Clearly, a judge of an international court has less opportunity than a national authority, which is in the thick of the action, to appraise all the nuances and shades thereof, and to establish whether or not certain actions by the public authorities in specific circumstances were reasonable and proportionate. Finally, we must admit that a decision deemed inaccurate today might be reappraised at a later stage. An unambiguously correct appraisal, especially in complicated circumstances, is hardly possible. The multidimensional nature of the various elements involved, specific national conditions, and other circumstances that demand that a national government be granted a margin of appreciation do not deprive the ECHR of its capability to assess the boundaries of such discretion in the light of the requirements of the Convention.

2.5. The presumption that the State [8] is acting in good faith .

The ECHR’s case-law relies not only upon a margin of appreciation, granted to public authorities, but also upon the presumption of bona fides on the part of a State. As with most other presumptions, the above presumption is rebuttable. However, the standard of proof to overcome the presumption of bona fides of a State Government is high, and irrefutable evidence must be adduced (see Khodorkovskiy v. Russia , no. 5829/04, § 255-256, 31 May 2011, not final). In the case at hand the Court, in spite of the claims by Yukos, found no reasonable legal grounds to overcome a presumption of the Government’s good faith. Moreover, as mentioned above (paragraph 2.3.), the Court did not find any alleged political motive or any intention to liquidate the company or reallocate its assets to the interest of the third parties, or discriminatory actions, as alleged by the applicant.

The Government may act bona fides , enjoying a wide margin of appreciation in selecting various means for protecting the public interest; however, the reverse must also be true. The main criterion in assessing the Government’s activity as regards compliance with the Convention, alongside the criteria of lawfulness in actions for the public interest, is the proportionality test. Clearly, given the variety and diversity of legal solutions and national systems, defining common criteria for the concept of proportionality is hardly possible. Nonetheless, the ECHR has developed some common approaches.

2.6. Proportionality of the actions employed by the State to secure public interest

A selected remedy might be acknowledged to be disproportionate in cases when it is obviously unreasonable (see Gasus Dosier- und Fordertechnik Gmbh (cited above) and other cases). It is worth noting that the above-mentioned test by the ECHR does not include every form of unreasonableness, but only explicit, obvious, doubtless forms. Doubts as to reasonableness can arise on any ground, including the existence of those doubts themselves. We believe that the wider the margin of appreciation granted to the Government, the more evident the unreasonableness should be.

2.7. The ECHR’s case-law also takes account of other factors in assessing proportionality. Thus, the existence of an effective and accessible system for appealing against the Government’s acts before the courts is of great importance (see Immobiliare Saffi v. Italy [GC], no. 22774/93, § 54, ECHR 1999 ‑ V). Furthermore, the ECHR examines the availability to a State of less harmful remedies; however, the existence of alternative measures and their non-application in a particular case is not a sufficient and substantive ground to hold the interference in an applicant’s private sphere unjustified (see James and Others (cited above) § 51, Borzhonov v. Russia , no. 18274/04, § 61, 22 January 2009).

2.8. The provision of compensation is a significant criterion in establishing the proportionality of specific measures by a Government. The payment of fair compensation by a State leads, as a general rule, to a finding that the requirement of proportionality has been met. The ECHR tends to apply different approaches to the consideration of proportionality in the case of State interference, depending on whether or not the applicant’s conduct was lawful and whether or not the latter behaved in good faith.

In the event of lawful conduct by the applicant, the compensation should, as a general rule, be equal to the damage suffered for the proportionality test to be met. At the same time, even in the event of lawful conduct by the applicant, the compensation may be less than the harm sustained by a private person (see Jahn and Others v. Germany [GC], nos. 46720/99, 72203/01 and 72552/01, § 94, ECHR 2005 ‑ VI, KozacıoÄŸlu v. Turkey [GC], no. 2334/03, § 64, 19 February 2009, Broniowski v. Poland [GC], no. 31443/96, §§ 182, 186, ECHR 2004 ‑ V), or compensation might not be paid at all (see The Holy Monasteries v. Greece , 9 December 1994, Series A no. 301 ‑ A). In other words, in certain exceptional circumstances the State, acting in the public interest, is justified in inflicting greater loss than may seem necessary on a private person who has behaved lawfully and in good faith.

Where the applicant has behaved unlawfully and in bad faith the ECHR accepted a much higher scale of loss, and no compensation at all might be awarded. In respect of tax violations the Court recognizes and advocates the right of the Contracting States to inflict high penalties, especially if the applicant behaved mala fides (see Bendenoun v. France , 24 February 1994, §§ 33, 46, Series A no. 284). Where the applicant’s conduct is criminal in nature, the ECHR accepts confiscation as an indispensable and effective measure against committal of a crime, i.e. an interference in private property interests which implies no payment of compensation at all (see Phillips v. the United Kingdom , no. 41087/98, ECHR 2001 ‑ VII and Denisova and Moiseyeva v. Russia , no. 16903/03, § 58, 1 April 2010).

This approach is partially supported by the concept of justifiable defence, recognised by most legal systems. As a general rule, the damage sustained by the offender may be slightly higher than the damage prevented. However, in certain exceptional circumstances, subject to the provisions of both civil and criminal law, the infliction of damage (harm) on the offender might be held to be lawful, even if the scope of the damage thus inflicted significantly exceeds the actual damage that might have been sustained were the offender to have completed his actions. In other words, in the event of unlawful conduct an offender accepts the risk of possible infliction of damage (harm).

Under this logic, we believe that the infliction of damage on a bad-faith offender, in respect of the levying of taxes owed and imposition of penalties by the national government, does not constitute a violation of the Convention in this regard. In other words, the offender may suffer certain negative consequences, including, inter alia , those that he might not have foreseen at the moment of the unlawful conduct and others which are additional to the impact he intended to avoid or escape (arrears, default interest rate, penalties and fines, and other adverse consequences that could reasonably be foreseen under the applicable law). The existence of even highly significant damage in such a case does not in itself mean that the proportionality test has not been met.

2.9. Let us look again at the factual circumstances of this case, this time through the prism of proportionality.

The Court did not detect any violation of national legislation in the measures applied by the Government to the company within the enforcement proceedings. Nevertheless, according to the Court, the manner in which these measures were applied – so to say, “excessively harshly” – does not meet the Convention requirement of proportionality. We believe that the Court, in finding disproportionality, substantially deviated from the practice developed in the ECHR’s case-law. Indeed, the judgment states that, in themselves, the measures applied by the Government were not evidently unreasonable (see, for example, § 654 of the judgment). Moreover, the overwhelming majority of decisions rendered by the enforcement bodies were subject to court supervision, on the applicant’s initiative. In some instances those claims were resolved in favour of the applicant.

As to the existence of alternative measures, as was mentioned above, this factor is not decisive. According to the case-file, and the judgment itself, it is not clear whether any other effective remedies existed and whether their adoption would have led to the goal of collecting taxes and penalties, in satisfaction of the public interest. Thus, after the disposal of OAO YNG stocks the funds raised were still insufficient to settle the tax and penalties debt owed to the State budget. The reacquisition (redemption) price was assessed by an independent international appraiser (Dresdner Kleinwort Wasserstein, the investment branch of Dresdner Bank AG), and on the basis of the auction itself. As noted by the Court, before the enforcement proceedings were initiated, the company was probably in a state of pre-insolvency (§ 649), which is proved, particularly, by the fact that the company informed the US Bankruptcy Court of its intention to file a voluntary petition for bankruptcy long before the auction (§ 252). It appears from the case-file that a certain amount of assets was being rapidly transferred abroad. In such circumstances it cannot be ruled out that further procrastination and/or a decision to seize less liquid assets would have significantly reduced the Government’s chances of obtaining payment of the taxes and penalties. The only possible alternative, which was offered by the company itself, was to dispose of OAO Sibneft stocks instead of the stocks in OAO YNG. However, the ownership of OAO Sibneft stocks was subject to litigation, and they were consequently regarded as less liquid.

It follows that the decision to seize the applicant’s primary business asset and the speed of the enforcement proceedings to collect tax payments do not seem clearly unreasonable. The measures applied by the enforcement bodies were to a large extent determined by the company’s actions. The Court recognises the right of national governments to adopt remedies which might grant the State certain privileges over the remaining creditors (see Gasus Dosier und Fordertechnik GmbH (cited above)), i.e. the right to apply exceptional measures.

Let us now turn in more detail to some of the elements of the enforcement procedure. As mentioned above, each of such elements does not appear, in the circumstances of the case, entirely unreasonable, and therefore overall the procedure cannot be said to have been disproportionate to the legitimate aim pursued.

2.10. Specific elements of the enforcement procedure/interim measures.

Interim measures intended to ensure enforcement, including putting a lien on assets, may be adopted in good time, before the final decision comes into effect (see Janosevic v. Sweden , no. 34619/97, ECHR 2002 ‑ VII), provided that such measures will not cause material adverse consequences to interested persons at an early stage and will not substantially affect their defence in forthcoming litigation. In the case at hand, considering the applicant’s active impeding of the tax authorities, the use of such interim measure as attachment and freezing orders does not seem unreasonable; the lawfulness of the corresponding State actions was upheld by the national courts. Clearly, interim measures are likely to cause a certain inconvenience in most cases, and might even have adverse consequences for an applicant. However, the applicability of such measures, and the corresponding consequences of their use for Yukos were reasonably foreseeable. The interim measures applied to Yukos did not affect its business activity; nor could they negatively affect the applicant’s capability to defend itself in court.

2.11. Seven-percent enforcement fee.

As regards the seven-percent enforcement fee, the Court, having recognised that collection of that fee was a common practice in Russia (see § 647 of the judgment), nonetheless considered the amount to be disproportionate, as it significantly exceeded the expenses which could have possibly been expected to be borne by the State for the enforcement proceedings (§ 655). The Court’s reasoning on the compensatory nature of that fee is not fully clear. Indeed, the Constitutional Court in its Judgment № 13-P of 30 July 2001 (§ 485), clearly stated that the enforcement fee is a type of administrative penalty and is not designed for compensation of enforcement expenses. The procedure for such compensation is stipulated in another statutory provision, namely section 82 of the Enforcement Proceedings Act. The penalty in question is imposed by the bailiff should his proposal for voluntary enforcement of the court award not be met (§ 484). Failure to impose the penalty or a reduction in its amount in the case at hand would have amounted to non-compliance by the bailiff with the statutory requirements, and to discrimination against similar non-payers. The Court based its conclusion on this issue on an incorrect interpretation of the national law, having reached its conclusion on the basis of a misunderstanding about the nature and function of the fee in question (compensation, as opposed to a penalty).

2.12. Auctioning of the shares of OAO YNG.

Auctioning of the shares of OAO YNG, one of the key enforcement measures, was not, as stated by the Court entirely (evidently) unreasonable (see § 654 of the judgment), and, therefore, in our view, may not in itself be seen as disproportionate (see paragraph 2.6. above). In addition, the following events, which took place after the auction was completed, deserve attention, since they might implicitly provide evidence of the actual economic meaning of the enforcement proceedings for the company.

More than a year passed between completion of the enforcement proceedings and the initiation of the bankruptcy proceedings; the bankruptcy proceedings were initiated by a consortium (syndicate) of major western banks, seeking debt collection under a credit agreement awarded by a British court judgment; the management of Yukos repeatedly announced that the auction had not negatively affected the company’s commercial viability. It is also worth considering that it was not the business assets of OAO YNG that were disposed of in the auction in question, but a controlling block of stocks. Obviously, such a change in the controlling stockholder might eventually lead to certain changes in the respective company’s business. Nevertheless, the respective company’s commercial obligations to third parties, particularly OAO YNG’s obligations to Yukos, are based on contractual rather than corporate relations (creditors’ rather than stockholders’ control). Thus, a change in stakeholder (whose opportunity to exercise control over a respective company is limited by law), or even numerous changes in stakeholder, do not automatically lead to a weakening of business commitments. A substitution of the controlling stakeholder is not a legal ground for amendment or termination of commercial contracts, unless the latter explicitly provides otherwise. The case-file does not contain any reliable evidence that OAO YNG breached or failed to perform any of its contractual obligations to Yukos, and the latter made no claims to that effect.

2.13. As a conclusion, with due account for the arguments set out above, and for other circumstances (the applicant’s unlawful and bad-faith conduct, the tremendous extent of damage caused by the violations, a lack of consensus among Contracting States, etc.), we believe that the Court, having referred to the concept of a wide margin of appreciation enjoyed by national governments in tax disputes, in fact failed to apply this concept to the case at hand, thus disregarding the ECHR’s own case-law.

As to the violation of Article 6 of the Convention

I cannot support my colleagues (hereafter, the Court) in their finding of a violation of Article 6 §§ 1 and 3 (b) of the Convention for the following reasons.

3.1. In the present case dozens of hearings were held in the national courts at various instances and several hundred procedural actions were taken. Of the numerous uncompromising procedural struggles conducted with varying success by the parties, the Court has identified two counts where, in its opinion, the Government, firstly in the form of the first-instance court, and secondly in the form of the appellate court, acted too speedily. In both instances the applicant was allegedly granted insufficient time to prepare for the court hearings, which had possibly affected the capability of Yukos’s legal advisers to counter effectively the tax authorities’ lawyers. Both of those episodes concern only the litigation on the collecting of tax payments for 2000. The Court did not find any procedural violations in the chains of court proceedings on collection of tax payments for 2001, 2002 and 2003 or the litigation regarding the enforcements proceedings.

3.2. My first counter-argument refers to both of the omissions identified by the Court.

The ECHR’s practice in evaluating tax disputes in the light of Article 6 of the Convention is extremely contradictory, in that, under Article 6, tax disputes do not come under either criminal or civil law (see Ferrazzini v. Italy [GC], no. 44759/98, ECHR 2001 ‑ VII and Finkelberg v. Latvia (dec.), no. 55091/00, 18 October 2001). The ECHR tends to dismiss such cases. An exception is made for cases in which the rigidity of the liability imposed on the applicant verges toward a criminal sanction. At the same time, the rigidity of the sanction is not the sole criterion inviting application of the standards set out in Article 6. A brief overview of the relevant “for and against” practice is set out in the joint partly dissenting opinion of Judges Costa, Cabral Barreto and Mularoni, joined by judge Caflisch, in the case of Jussila v. Finland ([GC], no. 73053/01, ECHR 2006 ‑ XIII). That particular precedent was referred to by the Court when declaring admissible the applicant’s complaint under Article 6 of the Convention (admissibility decision, § 451).

3.3. Nonetheless, in terms of application of Article 6, the present tax case differs substantially from the case of Jussila , and from the other precedent which was taken as a basis for the latter, namely Ezeh and Connors v. the United Kingdom ([GC], nos. 39665/98 and 40086/98, ECHR 2003 ‑ X). In both of those cases the judgments were delivered on the basis of applications from physical persons, not a commercial company. In both Finland and the United Kingdom (and in many other European countries), unlike as in Russia, criminal liability of legal entities is not excluded. Although the Convention’s protection extends to the rights of legal entities, one of the four named criteria is qualification of the tax violation as a criminal offence under national legislation. That criterion is not decisive for the purposes of the Convention; however, it must be taken into consideration together with the other criteria.

Under Russian legislation the liability imposed on legal entities is administrative, but not criminal. However, this does not exclude the possibility of simultaneously imposing criminal sanctions on physical persons – including a company’s managers who personally participated in taking an unlawful decision on behalf of a legal entity. It is to physical persons that the guarantees concerning criminal prosecution set out in Article 6 are granted (free assistance of an interpreter, free access to legal representation by a court-appointed lawyer, etc.).

3.4. It should be noted that the judgment in the Jussila case was delivered in November 2006, that is, two years after the events and circumstances assessed in the present case. In this respect, given the contradictions and inconsistency in the ECHR’s previous case-law, the public authorities hardly had an opportunity to take into account the provisions and standards developed therein. Given the above, in any event, I consider that the standard of requirements with regard to Article 6 of the Convention in this case should have been less harsh.

Let us now examine briefly each of the violations detected by the Court in respect of the litigation concerning payments for 2000.

As regards the lack of time granted to the applicant for familiarization with the case file prior to the hearing before the first-instance court (see §§ 536-541 of the judgment)

3.5. The Court found that the mere four days granted to the applicant for familiarisation with the case files in the tax authorities’ (“the Ministry’s”) premises could have adversely affected the capability of Yukos’ numerous legal counsel to prepare the applicant’s case efficiently (§§ 540, 551). It is to be recalled that the tax authorities filed the claim with the court on 14 April 2004, and the main court hearing was held more than a month later – from 21 to 26 May 2004 (§ 46). Further to the court’s procedural decision of 15 April 2004 the tax authority provided the applicant with an opportunity to familiarise itself with the case files from 17 to 20 May 2004, that is, four days. In the Government’s submission, which was not disputed by the applicant, the filed documents primarily contained financial and other detailed source documents, which were formerly in Yukos’s possession and/or with which it ought to have been familiar.

With regard to the lack of time granted to the applicant for preparing the case, the Court investigated only one of the numerous elements in such preparation – the time for familiarisation with the case files in the tax authorities’ premises. This method of familiarisation is by no means the only one, and, in the present case, was probably far from the primary method for acquiring knowledge of the procedural opponent’s arguments and the relevant evidence. Having found the four-day term insufficient for familiarisation with the case files in the tax authorities’ premises, the Court extended this finding to the remaining stages of preparation of the applicant’s case. The question is therefore whether the relatively short time (four days) for familiarisation with the case file in the tax authorities’ premises could have significantly affected the applicant’s awareness of the case files, and whether the applicant was deprived of other available instruments for familiarisation with the case files and of an opportunity to prepare the defence properly? This question must be answered in the negative.

3.6. The ECHR’s case-law is based on the presumption that failure to provide documents for familiarisation does not in itself constitute a violation of Article 6. What is required is that the content of a document of which the applicant was unaware at a certain point was material and could therefore have affected the applicant’s legal argumentation (see Krčmář and Others v. the Czech Republic , no. 35376/97, §§ 40-44, 3 March 2000).

For instance, the ECHR did not find a violation of Article 6 of the Convention in a criminal case in which the text of a sentence transmitted to the appeal court contained significant digressions and discrepancies from the text of the sentence served on the convicted person. All of these differences were held to be insignificant and not to affect - to an extent inconsistent with the guarantees of Article 6 - the applicants’ right to defend themselves (see Karyagin, Matveyev and Korolev v. Russia , nos. 72839/01, 74124/01 and 15625/02, 28 May 2009)

3.7. I would suggest that, in preparing for the hearing before the first-instance court the applicant was aware, or could have familiarised itself in good time with the content of the documents; the new data which the applicant was allegedly unable to discover from the served documents was not material and could not affect the applicant’s legal argumentation.

Thus, the overwhelming majority of the documents with which the applicant intended to familiarise itself initially originated from the applicant itself; the court proceedings were preceded by a long-term tax inspection; the applicant was capable of familiarising itself with the documents in question not only in the tax authorities’ premises, but also at the court, since documents are filed simultaneously with the court as attachments to the statement of claim; the tax authorities’ arguments with regard to the numerous documents were set out systematically in the tax inspection statement of 29 December 2003 and in the decision (resolution) of 14 April 2004, and remained unchanged throughout the entire court proceedings; the overall duration of the proceedings in the case before all three instances exceeded five months (from 14 April to 17 September 2004); it is not clear from the applicant’s subsequent procedural documents how its statement of defence had significantly changed or might have changed had the applicant been granted more than four days to familiarise itself with the files in the tax authorities’ premises at the initial stage of the proceedings.

As to the commencement of the court proceedings before the appellate court before expiry of the time-limit for lodging an appeal (see § 544-548 of the judgment)

3.8. On 1 June 2004 one of the respondents – OOO “Yukos-Moskva” (Yukos-Moskva) – lodged an appeal against the first-instance court’s judgment with a court of appeal, as did the tax authority on 2 June 2004. Under a ruling (decision) of 4 June 2004 the hearing was scheduled for 18 June 2004 (see §§ 52-54 of the judgment). On the eve of the hearing, on 17 June 2004, the second respondent – Yukos – also lodged its appeal (§ 55). The court hearing lasted several days, from 18 to 29 June 2004, and the applicant (respondent) was represented by 10 attorneys (§§ 57, 60).

The cassation petition was filed by the respondent – Yukos – on 7 July 2004, i.e. less than 10 days after the appeal court judgment, and long before expiry of the statutory two-month period for applying to the next court instance. The applicant’s arguments as set out in the cassation petition were the same as those in its submissions to the appellate court (§ 67). The cassation proceedings were held more than two months later, on 17 September 2004 (§ 70).

The court judgments and decisions at all instances provided a detailed response to the applicant’s arguments.

Under the legislation in force at the material time, an appeal had to be judged within a month of being lodged with a court, including the time required to prepare for the proceedings and render a decision (§ 423). The judgment on the appeal lodged by Yukos-Moskva on 1 June 2004 was rendered on 29 June 2004, that is, one day before expiry of the statutory one-month term (§ 62).

Yukos-Moskva, which was the first party to submit an appeal, served as a management company for Yukos (§ 1). In those circumstances, it would be unreasonable to assume that these two respondents had not mutually coordinated and adjusted the other’s positions or, at the least, were not aware of them, and that Yukos’ procedural capacities were less than those of the company acting as the applicant’s executive body, namely Yukos-Moskva.

Besides, as noted above, the overall duration of the proceedings in the case at all three instances exceeded five months, the case was subject to review at fourth instance, and the overall duration was nearly fifteen months. It is difficult to accept that the overall duration of the proceedings before the national courts was unreasonably short, and that there was therefore a violation of Article 6 § 1 of the Convention in this respect. I would even suggest that, had the duration of the proceedings before the appeal court been extended, the applicant would have alleged, so to speak, the opposite violation of the Convention – namely, that the duration was unreasonably long (compare, for example, the allegation of a violation of the Convention with regard to exceeding - by two days - of the time-limit for preparation of the appeal court’s judgment (decision, § 43, judgment § 527 (5), and the judges’ unanimous opinion that this allegation was ill-founded (§§ 549, 550)).

As mentioned above, the ECHR relies upon the necessity of recognising the supremacy of national courts in ascertaining the facts and circumstances of a given case and interpreting national legislation. The applicant’s arguments concerning the lack of time for preparation of its case and the non-observance of the time-limits for examining the proceedings before the court of appeal were investigated by the Court and found to be insufficient and unsubstantiated (§§ 71, 72 and others).

As to the admissibility of the application – Article 35 of the Convention

On 29 January 2009 the Court issued a decision declaring the application admissible. At the same time, under Article 35 § 4 of the Convention, the Court must reject any application which it considers inadmissible due to any deterrent circumstances at any stage of the proceedings, i.e. also after the decision as to the admissibility of the application has been issued. Let us consider a few circumstances which were not fully reflected in the decision as to admissibility, but were in part assessed by the Court.

The power of attorney of the applicant’s lawyer Piers Gardner

4.1. The ECHR pays particular attention to verification of the validity of the authority held by the applicant’s representative in every case (see, inter alia , Post v. the Netherlands, no. 21727/08, 20 January 2009), and the absence of a duly-issued authority to act is a ground for finding a case inadmissible. Unfortunately, in the case at hand this requirement was not met.

The case file contains a notice by the insolvency administrator appointed in the course of Yukos’s bankruptcy procedure – a private person entitled by law to act on behalf of the company – which revokes the authority to act initially granted to Mr Gardner and empowering him to represent the applicant before the ECHR (see § 299 of the judgment). It was Mr Gardner who filed the documents on behalf of the applicant, both prior to and following liquidation of the company, and who, notwithstanding the cancellation of his authority to act, represented the applicant in the hearings. The notice of the revocation of Mr Gardner’s authority was served to the ECHR prior to termination (liquidation) of the company as a legal entity, at a time when executive decisions could be taken only by the insolvency administrator. In addition, the authority to act granted to Mr Gardner by way of delegation, contained numerous legal omissions, affecting its validity and consequently rendering it null and void, irrespective of the insolvency administrator’s notice of revocation, and Professor Valeriy A. Musin, my predecessor as ad hoc judge in this case, rightly drew attention to them by dissenting from the majority in the admissibility decision.

As to the admissibility of the case before the ECHR before all domestic remedies have been exhausted – Article 35 § 1 of the Convention

4.2. As was mentioned above, throughout the enforcement proceedings numerous interim measures were taken for the purpose of compelling the applicant to pay the taxes and penalties. Some of these measures were challenged by the applicant in the domestic courts. However, in respect of many other measures the applicant failed to use the available domestic remedies first, but submitted the application in their respect to the ECHR directly (such as the seizure, certain of the bailiff’s decisions on imposition of the 7% penalty, etc.).

The Court, irrespective of whether a given measure was assessed by a national court, considered the interim measures in their totality and found that their joint application had been disproportionate (see paragraph 2.1. above). As a general rule, the ECHR may examine any given alleged violation of the Convention only after all domestic remedies have been exhausted. In the case at hand, application of that rule on exhaustion would have led to a requirement to dismiss certain interim measures from the Court’s assessment. The absence of certain interim measures from the examined “total” would possibly have mitigated the Court’s finding as to the disproportionality of the totality of the interim measures imposed on the applicant in the enforcement proceedings: the “totality” in this case would have been significantly decreased. However, the Court managed to overcome this possible logical trap by stating that, with regard to the considered measures, it was highly probable that the domestic courts would have rejected the applicant’s claims, and that applying to them would therefore have been pointless. The Court thereby established an exception from the exhaustibility rule in respect of the examined interim measures (see §§ 636–644 and § 6 of the operative provisions of the judgment).

Meanwhile, in spite of their similarities, such cases contain numerous procedural and factual specificities, which could result in different decisions by the national courts. It is to be noted that the applicant was frequently successful in its procedural struggles with the tax authorities on similar measures. For example, the first-instance court, upholding a motion by Yukos, suspended enforcement of the tax authority’s decision on payment of 14 April 2004 (§ 105 ) ; the same court reversed a bailiff’s decision on imposing a 7% penalty (§ 132) and reversed the bailiff’s decision on seizing the shares (§ 41), etc.; the company repeatedly obtained a reduction in the amounts levied (decision, §§ 42, 53, 66), etc.

In line with the Court’s logic, the following - clearly inaccurate - conclusion might be reached. Where there exists an extensive case-law by the national courts on any given matter, any applicant may apply to the ECHR directly, since the outcome of his or her case before the national courts is foreknown with a high, albeit not 100%, degree of probability. Yet a dispute may contain certain specific factual and procedural features, which may lead to the opposite conclusion [by the domestic courts]. Examination and assessment of such specificities is the priority of the national courts.

In view of the above considerations, I cannot agree with the Court’s finding as to the exhaustion of domestic remedies.

It is also difficult to refrain from a question concerning the exhaustibility of the measures taken to protect the applicant’s interests. Given the national courts’ numerous findings as to various violations of the tax legislation, what was to prevent Yukos, its shareholders and other interested parties from claiming compensation directly from those physical persons and legal entities who intentionally took decisions to adopt the abusive tax schemes, resulting in the losses by virtue of their arrogant activity; from those persons who are likely to have enriched themselves as a result of their illicit activity, covered by the Yukos corporate veil.

As to examination by the ECHR of a case which is substantially the same as a matter subject to a procedure of international investigation or settlement

4.3. Under Article 35 § 2 of the Convention the Court shall not deal with any application that is substantially the same as a matter that has already been examined by the ECHR or has already been submitted to another procedure of international investigation or settlement and contains no relevant new information.

In the Court’s opinion, the matter accepted for judgment by the Permanent Court of Arbitration in The Hague, pursuant to a legal action by the majority stockholders of Yukos (Yukos Universal Ltd., and others) against the Russian Federation under the Energy Charter Treaty, was not a bar to further examination of the case by the ECHR. The Court considered that, inasmuch as the parties in both cases were not identical the cases were substantially different (see § 526 of the judgment). Such a formal approach in the case at hand can hardly be accepted. In its arguments, the Court refers to a series of benchmarks developed in the ECHR’s case-law to distinguish different cases depending on the substantive nature of their respective similarities and divergences (the parties to the dispute, the substance and legal grounds of the redress sought, etc. - § 521). Yet in distinguishing between the cases under examination, the Court applied only the criterion of the parties to the respective proceedings. In this case, however, that criterion alone is insufficient to conclude that the cases are substantially distinct, irrespective of the fact that the legal entities acting as applicants in the two sets of proceedings are not formally identical.

Firstly , a legal entity as a legal institution, that is, as a product of legal techniques, a legal fiction , ultimately serves to represent the interests of certain individuals. The use of distinct legal entities in those two sets of proceedings does not itself imply that the judgments in the respective cases will affect the interests of different (distinct) individuals. Bearing in mind the close affiliation of the companies in the Yukos Group, it would be reasonable to assume that, most likely, identical individual persons have a stake in the outcomes in each set of proceedings.

The Court failed to explain why it chose not to observe the rule laid down in the case of Cereceda Martin and Others v. Spain (no. 16358/90, Commission decision of 12 October 1992) – the formal identity of the parties in any given case is insignificant when the claim, in essence, is submitted by the same complainants or interested parties.

Secondly , I would suggest that Article 35 § 2 (b) of the Convention, in referring to the substance of the matter, primarily concerns the merits (the substantial part) of the dispute, i.e. those criteria that the Court chose not to consider in the case at hand. Were it otherwise, it would be too simple to overcome the restriction set out in Article 35 § 2 (b) of the Convention by, for example, assigning rights to an affiliate, or submitting identical applications in the name of different stakeholders, etc.

In both sets of proceedings the primary question to be examined by the courts was the same – assessment of the tax schemes applied by Yukos and of the State’s corresponding response.

[1] Rectified on 17 January 2012 : the text was “18 May 2008”

[2] Rectified on 17 January 2012 : the text was: “ Article 46 of the Code of Commercial Court Procedure”

[3] Rectified on 17 January 2012: the text was: “ the judgment of 11 October 2004”

[4] Rectified on 17 January 2012: the text was: “ RUB 40,607,549,520 in penalties (approximately EUR 1,139,797,051)”

[5] Rectified on 17 January 2012: “Fund” has been added.

[6] Rectified on 17 January 2012: the text was: “up to 15 days …”.

[7] Rectified on 17 January 2012: “Commercial” was added.

[8] Rectified on 17 January 2012: “ good faith” was deleted.