A.S.I.T.O. v. THE REPUBLIC OF MOLDOVA

PARTIAL DECISION

AS TO THE ADMISSIBILITY OF

Application no. 40663/98

by ASITO

against the Republic of Moldova

The European Court of Human Rights (First Section) sitting on 16 March 1999 as a Chamber composed of

MrsE. Palm, President,

MrL. Ferrari Bravo,

MrGaukur Jörundsson,

MrR. Türmen,

MrB. Zupančič,

MrT. Pantiru,

MrR. Maruste, Judges,

withMrM. O’Boyle, Section Registrar;

Having regard to Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms;

Having regard to the application introduced on 5 February 1998 by A.S.I.T.O. against Moldova and registered on 6 April 1998 under file no. 40663/98;

Having regard to the report provided for in Rule 49 of the Rules of Court;

Having deliberated;

Decides as follows:

THE FACTS

The applicant company is a Moldovan incorporated insurance company.  It is represented before the Court by its lawyer, Mr. Ion Vasile Babei.

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

A.Particular circumstances of the case

On 25 November 1994, the applicant company concluded a joint-venture contract (“the contract”) with another company, F., for the production of brandy bottles and corks.  Under the terms of the contract, the applicant company made a capital contribution of 330,000 Moldovan lei (MDL), in relation to which it was to receive a fixed sum of MDL 297,000, payable by instalments of MDL 24,750 per month.  F. undertook to repay the amount of 330,000 lei by 25 November 1995.

The company F. paid the applicant company the fixed sum, but repaid only a part of the capital contribution.

On 24 May 1996 the applicant company filed an application with the Commercial Court of the Republic of Moldova (Arbitrajul Republicii Moldova), requesting that F. be ordered to pay it MDL 468,472, representing MDL 228,750 in relation to the capital contribution and MDL 239,722 in damages.

On 17 July 1996 the Procurator-General’s Office (Parchetul General) filed an application with the Commercial Court of the Republic of Moldova, seeking to have the contract annulled.  According to the Procurator-General’s Office, the contract was a disguised credit operation and the applicant company was not entitled to carry on credit activities, since it had not obtained the consent of the National Bank of Moldova to do so.  Therefore, the contract was contrary to Articles 10 and 19 of the Law on banks and banking activities of 12 June 1991.

In a judgment of 26 July 1996, the Commercial Court dismissed the application filed by the Procurator-General’s Office.  The court found that, according to the Law on insurance, insurance companies were allowed to provide commercial and financial services, and that joint commercial activities were permitted under the Civil Code.

On 1 August 1996 the Commercial Court made an order that the applicant company was entitled to recover the amount of MDL 327,474 from company F., representing MDL 228,750 in relation to the capital contribution, MDL 86,662.50 in damages (penalităţi) and MDL 12,062.25 stamp duty (taxa de timbru).

On 8 August 1996, the Procurator-General’s Office lodged an ordinary appeal (recurs) against the judgment of 26 July 1996.

On 20 August 1996, the Procurator-General’s Office also lodged a “surveillance appeal” (recurs în supraveghere) against the judgment of 1 August 1996 and requested a stay of execution of that order pending the outcome of the appeal lodged on 8 August 1996 in the annulment proceedings. 

On 24 July 1996 the Law No. 970 of 24 July 1996 on Economic Courts was adopted, which reorganised the commercial courts. It entered into force on 28 November 1996.  Under this Law, the Commercial Court of the Republic of Moldova became the Economic Tribunal of the Republic of Moldova.

On 6 September 1996, the Economic Tribunal of the Republic of Moldova  (Judecătoria Economică a Republicii Moldova) decided to stay execution of the judgment of 1 August 1996, as requested by the Procurator-General’s Office.  

On 14 April 1997 the Procurator-General’s Office withdrew its “surveillance appeal”.  As a consequence, the decision to stay execution of the judgment of 1 August 1996 was annulled.

On 19 April 1997, A.P., a member of the Moldovan Parliament, wrote two letters, one to the Procurator-General’s Office and one to the Economic Tribunal, protesting against the Procurator-General’s Office’s decision to withdraw the “surveillance appeal”.

On 23 September 1997 the Appeal Chamber of the Economic Tribunal of the Republic of Moldova (Colegiul de recurs al Judecătoriei Economice a Republicii Moldova) dismissed the appeal lodged on 8 August 1996 and upheld the judgment of 26 July 1996.

On 16 June 1997 the Procurator-General’s Office lodged an appeal for annulment of the judgment of 1 August 1996, requesting that the contract be declared null and void and that the fixed sum and damages sought by the applicant company be confiscated by the State.  This amount was estimated by the Procurator-General’s Office at MDL 327,474. 

On 1 July 1997, upon request of the Ministry of Finances, acting as representative of the State, the Banks Association of Moldova, submitted an advice, according to which the contract was not a credit contract and was lawful.

In a letter to the Economic Tribunal dated 18 September 1997, upon request of the Procurator-General’s Office, the Ministry of Finances, acting as representative of the State in cases where pecuniary damages were allegedly caused to the State, expressed the view that the contract was lawful and that prejudices were not caused to the State as a result of this contract.

On 23 September 1997 the Appeal Chamber of the Economic Tribunal allowed the appeal for annulment in part, quashed the judgment of 1 August 1996 and, despite finding that the contract was lawful, dismissed the applicant company’s claim.  The Court found that F. had already paid the applicant company MDL 420,750, of which MDL 330,000 represented the capital contribution and a fixed sum of MDL 90,750, but that it could not be ordered to pay the whole amount stipulated in the contract, since it had not made enough profit.

On 3 October 1997 the applicant company lodged an appeal (recurs) against the judgment of 23 September 1997 by which the judgment of 1 August 1996 had been quashed.  The applicant company pointed out that the appeal for annulment of the Procurator-General’s Office was unlawful, as the contract concluded between F. and the applicant company was a private law contract and the State could not invoke its own interest.  The applicant company refuted the interpretation of the contract by the Appeal Chamber of the Economic Tribunal and requested that the judgment of 1 August 1996 of the Commercial Court be upheld. 

On 17 November 1997 the Procurator-General’s office lodged an appeal for annulment of the judgments of 26 July 1996 and 23 September 1997.  It requested that the contract be declared null and void and that the fixed sum already paid to the applicant company be confiscated by the State. 

On 24 December 1997 the Supreme Court of Justice quashed the judgment of 26 July 1996 and the judgment of 23 September 1997. It declared the contract between the applicant company and F. null and void.  The court found the contract contrary to the provisions of the Law on banks and banking activities, as the applicant company had not had, at the time when the contract was signed, the consent of the National Bank to its carrying on banking activities.  The court rejected the Procurator-General’s Office’s request that the amount of MLD 90,750 be confiscated by the State. 

The Ministry of Finances was not summoned, and, therefore, was not present at the hearing before the Supreme Court.

The applicant company lodged an appeal for annulment and a petition for review (revizuire) of the judgment of 24 December 1997. On 21 January 1998 the Supreme Court of Justice rejected both motions.

On 2 February 1998 the Procurator-General filed an application with the Economic Tribunal of the Republic, requesting that the amount of MDL 420,750 already paid by F. to the applicant company be confiscated by the State.  These proceedings appear to be still pending.

B.Relevant domestic law

Law No. 970 of 24 July 1996 on Economic Courts

Article 38 § 3

“The Procurator-General and his deputies may lodge, within a year, with the Appeal Chamber of the Economic Tribunal of the Republic of Moldova an appeal for annulment of any final decision of the Commercial Court (...) on the ground that the material or procedural law was violated (...).  They may also request a stay of execution of the decision of the Commercial Court.”

Law No. 942 of 18 July 1996 amending the Code of Civil Procedure

Article 278/60

“The parties at a trial, the president of the Supreme Court of Justice, the Procurator-General and the president of the Economic Tribunal of the Republic may, either on their own motion or on an application by one of the parties, lodge with the Supreme Court of Justice an appeal for annulment of any final judicial decision of the Economic Tribunal of the Republic, on the following grounds :

(1) where the judgment has no legal basis or is contrary to the law or the law was wrongly applied ; ...”

Law No. 601 of 12 June 1991 on banks and banking activities

Introduction

“Banking activity in the Republic of Moldova is carried on through the National Bank of Moldova and through commercial banks established under the present Law.”

Article 10  (Chapter III : ON FOUNDING BANKS)

“Private individuals and moral persons can carry on banking activities only after having obtained the consent of the National Bank of Moldova, after the adoption of the statutes by the founding members and after their registration with the National Bank.”

Article 19 : Banking operations

“1. Banks can carry on operations that are not contrary to the law and are within the limits set up by their statutes.  The main operations they can undertake are:

a) receiving and cashing money;

b) entering into credit agreements and granting credit... .”

COMPLAINTS

1.The applicant company complains that its case has not been decided within a reasonable time.  The applicant company alleges that the length of the proceedings initiated  on 17 July 1996 by the Procurator-General’s Office for the annulment of the contract was not “reasonable” and therefore it was contrary to Article 6 § 1 of the Convention.  The applicant company points out that these proceedings lasted more than a year and a half.

2.The applicant company also complains under Article 6 § 1 of the Convention that its case has not been decided by an independent court.  It complains in this respect that A.P., a member of the Parliament,  interfered with the activity of the Economic Tribunal of Moldova, by expressing his view on the litigation pending before this court.  Thus, the principle of separation of powers was infringed.

3.The applicant company complains that both the judgment of 23 September 1997 of the Appeal Chamber of the Economic Tribunal, by which the judgment of 1 August 1996 was quashed, and the decision of the Supreme Court of Justice of 24 December 1997, deprived it of its possessions in a manner contrary to Article 1 of Protocol No. 1. 

Concerning the judgment of 23 September 1997, the applicant company points out that the appeal by the Procurator-General’s Office for annulment constituted an interference by the State in a private dispute over the execution of a commercial contract.  This interference was not provided for by law, as there was no public interest of the State.

Moreover, in allowing the appeal for annulment, the Appeal Chamber of the Economic Tribunal quashed the final judgment of 1 August 1996 and thus deprived the applicant company of its possessions.  This deprivation was not provided for by law as there was no domestic law requiring the consent of the National Bank for carrying on commercial activities such as those in the present case.  Concerning the Law on banks and banking activities, the applicant company considers that this law is not precise enough and cannot constitute a sufficient legal basis for the interference of which complaint is made.

In so far as the judgment of 23 December 1997 is concerned, the applicant company points out that this judgment deprived it of its possessions.  The deprivation was the result of an action instituted by the Procurator-General’s Office although no general interest was at stake.  Moreover, the deprivation was not provided for by law.

Finally, the applicant company complains that the procedures which led to the deprivation did not afford it the opportunity to examine the representative of the State, the Ministry of Finances.  It points out in this respect that the Ministry of Finances, representing the interest of the State, was not summoned and was not present either at the hearing before the Appeal Chamber of the Economic Tribunal on 23 September 1997 or at the hearing before the Supreme Court of Justice on 24 December 1997.

THE LAW

1.The applicant company complains of the length of the proceedings which commenced on 17 July 1996 before the Economic Tribunal of Moldova.  It invokes Article 6 § 1 of the Convention, which provides, as far as relevant:

“              In the determination of his civil rights and obligations ..., everyone is entitled to ... a hearing within a reasonable time by an independent and impartial tribunal ... .”

The Court notes in the first place that no issue arises as to the applicability of Article 6 § 1 of the Convention to the proceedings in question, as they determined the applicant company’s civil rights and obligations.

The Court has then examined the length of the proceedings in this case according to the criteria established in its case-law.

The relevant period which the Court may consider did not begin when the civil proceedings were instituted in July 1996, but only as of 12 September 1997 when Moldova ratified the Convention and recognised the right of individual petition.  The Court is not competent to examine complaints relating to violations of the Convention by acts, decisions or events that have occurred prior to this date.

However, the Court recalls that in cases where it can, by reason of its competence ratione temporis, only examine part of the proceedings, it can take into account, in order to assess the length, the stage reached in the proceedings at the beginning of the period under consideration (cf. Eur. Court H.R., Baggetta judgment v. Italy of 25 June 1978, Series A no. 119, p. 32, § 20, with further reference). 

The proceedings terminated on 21 January 1998, when the Supreme Court of Justice, after an examination of the merits, delivered a judgment upholding the annulment of the contract in question.  The period to be considered thus amounts to four months and one week and the case was examined by three instances.

The Court finds that, in these circumstances and according to its constant case-law, the length of the proceedings, even taking into account their state in September 1997, was not excessive. Consequently, there is no appearance of a violation of the applicant company’s right to a hearing within a reasonable time, as guaranteed under Article 6 § 1 of the Convention.

It follows that this part of the application is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention.

2.The applicant company also complains under Article 6 § 1 of the Convention, that  its case has not been decided by an independent court.  It complains in this respect that A.P., a member of Parliament, interfered with the activity of the Economic Tribunal of Moldova by expressing his views on the litigation pending before this court.  Thus, the principle of separation of powers was infringed.

The Court considers that it cannot, on the basis of the file, determine the admissibility of this complaint and that it is therefore necessary, in accordance with Rule 54 § 3 b) of the Rules of Procedure, to give notice of this complaint to the respondent Government.

3.The applicant company finally complains that both the judgment of 23 September 1997 of the Appeal Chamber of the Economic Tribunal, by which the judgment of 1 August 1996 was quashed, and the decision of the Supreme Court of Justice of 24 December 1997, deprived it of its possessions.  The applicant company alleges that this deprivation is contrary to Article 1 of Protocol No. 1, which provides as follows:

“              Every natural or legal person is entitled to the peaceful enjoyment of his possessions.  No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

The Court considers that it cannot, on the basis of the file, determine the admissibility of this complaint and that it is therefore necessary, in accordance with Rule 54 § 3 b) of the Rules of Procedure, to give notice of this complaint to the respondent Government.

For these reasons, the Court, unanimously,

DECIDES TO ADJOURN the examination of the applicant company’s complaints that its case has not been decided by an independent court and that it was deprived of its possessions;

DECLARES INADMISSIBLE the remainder of the application.

Michael O’BoyleElisabeth Palm
RegistrarPresident

Full & Egal Universal Law Academy