JOINT DISSENTING OPINION OF JUDGES KOSKELO AND EICKE

1 . We regret that we are unable to agree with the conclusions reached by the majority in this case. For the reasons explained below, we are firmly of the opinion that the applicant company ’ s complaint is inadmissible under Article 35 § 1 on the grounds that it has failed to exhaust domestic remedies and/or that the complaint was lodged out of time. As the majority ’ s conclusions on the merits of this complaint, both under Article 6 § 1 and under Article 1 of Protocol No. 1, are closely linked to their approach on the issue of admissibility, we have also voted against the findings of a violation of Article 6 § 1 and Article 1 of Protocol No. 1 on the merits.

2 . Moreover, we consider that the position taken by the majority raises some serious concerns because of its potentially wider implications, especially in respect of measures (frequently historic) aimed at the restructuring of financial institutions or other companies, particularly public ones, in the event of their insolvency or similar circumstances of crisis.

Whether the applicant company had victim status

3 . When considering the question of who may qualify as a “victim” for the purposes of Article 34 of the Convention, in the specific context of matters relating to companies, and thus who is entitled to lodge a complaint before it, the Court has consistently acknowledged the need to maintain a firm distinction between the rights of the company (as a “legal person” in its own right) and those of its shareholders. Only the company, endowed with legal personality and acting through its competent governing bodies, can take action in respect of corporate matters (see Olczak v. Poland ( dec. ), no. 30417/96 , § 59, ECHR 2002 ‑ X, and Albert and Others v. Hungary [GC], no. 5294/14, §§ 126, 140-41, 7 July 2020). Accordingly, in respect of measures directly affecting the company , victim status before the Court can only be claimed by the company itself . It is only in certain very exceptional situations that the Court has accepted that shareholders may be entitled to bring a complaint on behalf of the company (see Albert and Others , cited above, §§ 139, 142-45). By contrast, the possibility for a shareholder to submit complaints in his or her own right is limited to circumstances where his or her rights as shareholder were directly affected as such, e.g., where the measures complained of were directly aimed at the applicant ’ s rights as shareholder and where, therefore, the applicant ’ s own rights as protected under Article 1 of Protocol No. 1 were directly affected (see Olczak , cited above, § 58, and Albert and Others , cited above, §§ 126-27).

4 . It is worth noting that, in the context of measures necessitated by insolvency or a similar financial crisis affecting a company, a specific situation frequently arises. After all, such measures primarily concern, and are aimed at, the company itself and not its shareholders. The purpose of such measures and procedures is to organise, as a matter of law, either the liquidation of the company to satisfy its creditors, or its reorganisation to enable it to overcome the financial difficulties and to resume its operations as a “going concern”. In such a situation, shareholders will, inevitably (albeit indirectly), be affected by such measures because, applying the most fundamental features of company law, the losses of share capital incurred must ultimately be attributed to the holders of the shares; as the lowest ranking stakeholders they will have to suffer the inevitable consequences of the company ’ s financial failure, thus incurring the risk inherent in their investment.

5 . In this context, the assessment of victim status calls for careful reflection. When a company is liquidated and wound up, its dissolution automatically entails the extinction of its shares and shareholdings. The measure is not directly aimed at the shareholders but its effect on them is a legal consequence of the measure taken in respect of the company as the debtor entity. While the company must remain entitled to challenge and complain of the opening and outcome of such proceedings, it would not be compatible with the economic and legal fundamentals of the situation also to treat the shareholders as having victim status, allowing them to bring complaints before the Court in their own right regarding the extinction of their shares as the inevitable result of the dissolution of the company itself; the only exception being where (unusually) they can lay claim to a residual value remaining due for distribution to them as shareholders.

6 . The situation is different where the resolution takes the form of a restructuring, whereby the extinction of shares and shareholder rights is not an automatic consequence of the company being dissolved, but a measure adopted as a necessary element of the capital restructuring of the company. The opening of a procedure for restructuring, of course, remains a measure which concerns, and is aimed at, the company and therefore can only be subject to challenge by the company itself, not the shareholders. However, it is justified to treat the shareholders as having victim status to the extent that the resolution involves aspects (and only in respect of those aspects) which directly concern and affect their rights as shareholders, albeit that they are part of a package of measures aimed at the reorganisation of the financial situation and the capital structure of the company.

7 . The present case falls into this latter category. After all, paragraph VII of the Government Decision of 23 September 1999 (see paragraph 8), concerning the restructuring and recapitalisation of the bank, expressly provides that “[o]n the day of the publication of this Decision all existing shares of the Bank shall be revoked and cancelled”; a decision which clearly and directly affected – even if the overall measure was not primarily aimed at – the rights of the shareholders. As the judgment makes clear, in paragraph 37, it was this aspect of the Government Decision and the fact that “it had ... deprived [the applicant company] of its shares without good reason or compensation” which formed the basis of its complaint before the Court. As a consequence, we agree that in the particular circumstances of this case the applicant company has victim status under Article 34 of the Convention and the Court is, therefore, competent ratione personae to receive and consider the complaint before it.

8 . It goes without saying that this conclusion regarding locus standi in no way detracts from the substantive principle that losses of share capital must be attributed to the holders of the shares. The protection of rights arising under the Convention would not justify lending support to the moral hazard that would otherwise arise. Losses should land where they rightly belong, and the Convention should not stand in the way of that happening.

Exhaustion of domestic remedies and compliance with the six-month rule

9 . We would like to begin this part with the following observations regarding the context of the present complaint.

10 . The applicant company ’ s grievance arises from the fact that by the Government Decision of 23 September 1999 concerning the recovery and restructuring of Croatia Bank, all the shares held by the bank ’ s shareholders were “revoked and cancelled” (see paragraph 8 of the judgment). The specific features of the present case are illustrated by the fact that, as the majority note in paragraph 48 of the judgment, the key argument relied on by the applicant company is that the “bank had been in good standing and that its recovery had thus been unnecessary”. Apparently, the applicant company, like some of the other investors concerned, did not believe that there were any actual losses of capital which had to be covered, and which fell to be absorbed by them as shareholders.

11 . It is obvious as a matter of principle that such an allegation, contesting the bank ’ s financial situation and thus the fundamental factual basis for the measures taken for its restructuring, is one which is primarily for the bank ’ s competent organs to raise on behalf of the institution as a whole. Those organs are bound by the duty to act in the best interests of the bank, and thus in the collective interest of its shareholders, which would normally include a duty to oppose and challenge any unlawful and unjustified action taken against the bank. In the event of a failure of the competent organs to act, the shareholders would have to exercise remedies against the members of those organs.

12 . In this case, the bank ’ s organs took no action to challenge the Decision of the Croatian National Bank of 23 February 1999 concerning the appointment of a temporary administrator (see paragraph 6), or the Government Decision of 23 September concerning the recovery and restructuring measures. Even if the decision of 23 February 1999 had entailed the transfer of the powers of the bank ’ s governing bodies to the administrator, normally such an act should not be capable of preventing the bank ’ s organs from taking judicial action to challenge the lawfulness of the measure. However, if indeed it was the case that the bank ’ s competent organs were also stripped of any right to take action against the measures imposed by the Decision of 23 February 1999 and/or the Decision of 23 September 1999, the issue could have arisen as to whether and in what manner the shareholders might have been able to step in to take action in lieu of the bank ’ s organs to defend its rights and interests. It is clear from the judgment (paragraphs 9-12) that some shareholders (other than the applicant company) did indeed bring proceedings to challenge the lawfulness and constitutionality of the Government Decision of 23 September 1999 before the Constitutional Court, and that their petition was not found to have been inadmissible for lack of locus standi . Those proceedings were discontinued for other reasons .

13 . In any event, what is crucial to note is that, as the applicant company itself asserts (see paragraph 37), the extinction of its shares, together with those of all the other shareholders, was the direct result of the Government Decision of 23 September 1999. Therefore, any remedy capable of being effective for the purposes of Article 35 § 1 (as well as, on the substance, Articles 6 § 1 and/or Article 1 of Protocol No. 1) would have had to exist against that decision, primarily by an action both (a) against the decision ‑ maker responsible for the Decision in question (i.e. the Government of Croatia) and (b) directed at the annulment of that decision in whole or in part and/or an action for damages against the State for having imposed an allegedly unlawful or unconstitutional measure. If such a remedy was available but has not been exercised, the problem arises that the applicant will have failed to exhaust domestic remedies. If, on the other hand, no such remedy was available, there will be a problem of failure to comply with the six-month rule, which the Court is required to apply even in the absence of an objection raised by the respondent Government.

14 . In this context, we would recall the key principles of the Court ’ s established case-law on these points. The requirements contained in Article 35 § 1 as to the exhaustion of domestic remedies and the six-month period are closely interrelated. Normally, the six-month period runs from the date of the final decision in the process of the exhaustion of domestic remedies. However, in application of this provision the Court will only have regard to domestic remedies which are normal and effective. Thus, an applicant cannot extend the strict six-month time-limit imposed under the Convention by seeking to make inappropriate or misconceived applications which are unable to offer effective redress for the complaint in issue under the Convention. It follows that if an applicant has recourse to a remedy which is doomed to fail from the outset, the decision on that remedy cannot be taken into account for the calculation of the six-month period (see, among many other authorities, Lekić v. Slovenia [GC], no. 36480/07 , § 112, 11 December 2018). Furthermore, where no effective remedy is available at the domestic level, the period runs from the date of the acts or measures complained of, or from the date of knowledge of that act or its effect or prejudice on the applicant (see, among many other authorities, Jeronovičs v. Latvia , no. 547/02 , § 75, 1 December 2009).

15 . In the present case, however, the applicant company did not, initially, seek to bring an action against the relevant decision-maker. On the contrary, the first action it brought was an action before the commercial courts against the bank and the DAB (the State Agency for Deposit Insurance and Bank Resolution), respectively the subject of the Decision of 23 September 1999 and the agency directed by that decision to fund the bank ’ s recapitalisation and to become the holder of the new shares that were to be issued by virtue of that decision. It appears that, in this action, the applicant company sought (a) a declaratory judgment to be issued against the bank “confirming” that the applicant company remained the holder of the portion of shares in the bank that had belonged to it before the Decision of 23 September 1999; (b) an order for the DAB to “transfer” the corresponding number of shares from its portfolio to the applicant company; and (c) an order for the bank to record the applicant company as holder of those shares (see paragraph 13 of the judgment). In other words, what the applicant company attempted was to obtain a judgment by which the bank and the DAB would have been required to “undo” the effects of the Decision of 23 September 1999, which itself remained in force and which the commercial courts had no jurisdiction to quash.

16 . In our view, it must have been clear from the outset that having recourse to such a civil action was doomed to fail. Firstly, the shares had been extinguished by the Government ’ s Decision of 23 September 1999, which was not annulled at any stage, nor otherwise found to have been unlawful or unconstitutional, and thus continued to produce its legal effects. Secondly, it would have been incompatible with the fundamental principles pertaining to public companies for the bank to “restore” the shares extinguished by the above Decision. A company cannot issue new shares unless it obtains a corresponding cash payment toward its share capital. Otherwise, the result would be either a fictitious increase of the nominal capital or the dilution of the value of all existing shares. Nor could it be envisaged that the civil/commercial courts would or could order the “transfer” of shares from one shareholder, the DBA, which, by virtue of a measure which remains legally valid, had obtained title to those shares, for the benefit of a person (the applicant company) whose shareholdings had been extinguished through that very same measure. In our view, the attempted remedy was not and could not have been effective. Its anomaly is so blatant that, even making allowance for the fact that we are concerned here with a legal system that is not our own, we cannot see any reasonable excuse for the postponement of the complaint before this Court beyond the six months provided for in Article 35 § 1 by reference to the pursuit of such proceedings.

17 . Furthermore, we note that by a decision taken on 16 March 2006 and published in the Official Gazette on 19 April 2006, the Constitutional Court had – in the context of proceedings brought by another former shareholder of the bank – confirmed that the Decision of 23 September 1999, by which all the old shares had been revoked, had fallen within the powers set out in the applicable statute and had not been in violation of the relevant constitutional provisions (see paragraph 36 of the judgment). As stated above, we consider that the originally attempted remedy was clearly futile from the outset. However and in any event, it must have become clear at the very latest through the publication of this decision by the Constitutional Court that the applicant company could not entertain any expectation either that (a) the High Commercial Court, in the context of the proceedings on appeal (see paragraph 16 of the judgment), could revisit the question of the lawfulness or constitutionality of the Decision of 23 September 1999; or that (b) its own constitutional complaint initiated on 14 October 2008 (see paragraph 17), more than nine years after the Government ’ s Decision and more than two years after the decision of the Constitutional Court confirming its constitutionality, would subsequently result in a reversal of the position taken. Thus, even assuming that the applicant company could not have realised from the outset that no remedy would be effective without the prior annulment of the Decision of 23 September 1999, or else an incidental finding to the effect that the Decision was unconstitutional or otherwise unlawful, this must at the very latest have become clear at the time of the publication of the above decision by the Constitutional Court (compare Edwards v. the United Kingdom ( dec. ), no. 46477/99 , 7 June 2001).

18 . Thus, our conclusion is that, even on the most indulgent view, there is no way around the fact that the applicant company has failed to comply with the requirements of Article 35 § 1 of the Convention. The application is therefore plainly inadmissible.

Concluding remarks and concerns

19 . The Croatia Bank, a public company, was bailed out by measures taken by the State authorities more than 20 years ago. Such rescues are undertaken to protect the depositors who have entrusted their funds to the bank, and to prevent adverse systemic repercussions in the financial system more broadly arising from the bank ’ s collapse.

20 . It goes without saying that even in such a context, adequate procedural safeguards must be put in place to ensure that the powers entrusted to the competent authorities cannot be abused and that the stakeholders which are adversely affected by their exercise have at their disposal appropriate means of access to judicial review and protection. In these kinds of situations, however, both time and legal certainty are very much of the essence. It seems clear that there were certain deficiencies in the Croatian legal framework, including importantly the availability of and access to timely and effective remedies, at the time when the restructuring measures regarding Croatia Bank were taken (see in particular paragraphs 83-84 of the judgment). This in turn has without doubt contributed to a situation where some of the original shareholders have attempted to have recourse to “surrogate” remedies which, however, have been without any prospect of success. Nevertheless and in any event, the bottom line is that the historic underlying problems cannot now be rectified through the vehicle of a judgment of the Court addressing complaints based, not on the substance of the underlying decision, but solely on the recourse to such futile “surrogate” remedies.

21 . We have previously written about our general concern with the Court ’ s frequent practice of recommending the reopening of proceedings (see our respective concurring opinions in Romić and Others v. Croatia , nos. 22238/13 and 6 others, 14 May 2020). However, our specific concern in the present context is that the application of this practice in the present case (see paragraph 111) is particularly inappropriate. In our view, it is highly problematic if shareholders, who are bound to be the first to suffer the losses of a company ’ s failure, can first spend (many) years pursuing domestic legal proceedings which, from the outset, had no real prospect of success, thereafter bringing their complaints before this Court, and after yet more time has passed obtain a finding of a (procedural) violation of the Convention, the only remedy for which is said to be a request for the reopening of the same (futile) proceedings. After all, although these proceedings were always (and have proved to be) unsuited to their intended purpose, and although the Croatian Constitutional Court has since ruled conclusively on the substantive validity of the Government ’ s Decision of 23 September 1999, this Court ’ s recommendation nonetheless appears to raise the prospect (or at the very least an expectation) that the restructuring effected more than two decades ago will now be called into question and somehow “undone” for the benefit of the original shareholders. Such a scenario fundamentally undermines legal certainty in a manner which in our view is wholly unacceptable.

22 . The outcome is even more problematic in so far as such a prospect or expectation created by this judgment might be read as supporting a scenario where shareholders would ultimately not end up bearing the losses that are incumbent on them to bear, or an implication that the bail-out of a bank should also involve a bail-out of its shareholders. In our opinion, any such development would be inconsistent with the Court ’ s approach to date and, as a matter of principle, profoundly unsound. As a result, the Court should do what it can to avoid such a situation; something it will unfortunately have failed to do if the present judgment should become final.