FIFTH SECTION
DECISION
Application no. 5687/07
Yuriy Volodymyrovych BAKULIN
against Ukraine
The European Court of Human Rights (Fifth Section), sitting on 12 February 2019 as a Committee composed of:
André Potocki, President,
Mārtiņš Mits,
Lәtif Hüseynov, judges
and Claudia Westerdiek, Section Registrar,
Having regard to the above application lodged on 9 January 2007,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,
Having deliberated, decides as follows:
THE FACTS
1. The applicant, Mr Yuriy Volodymyrovych Bakulin, is a Ukrainian national who was born in 1963 and lives in Luhansk. He was represented before the Court by Ms N.Y. Tselovalnichenko, a lawyer practising in Kyiv.
2. The Ukrainian Government (“the Government”) were represented by their Agent, most recently Mr I. Lishchyna.
A. The circumstances of the case
3. The facts of the case, as submitted by the parties, may be summarised as follows.
4. On 23 February 2004 the applicant deposited 50,001 United States dollars (USD) with the State Import-Export Bank, JSC (“the bank”) with the term of repayment due on 29 March 2005. According to the deposit contract, the applicant was entitled to receive the deposited sum with interest at any time before that date, on giving two days’ notice.
5. On 17 November 2004 the applicant allegedly made an advance payment of 70,000 Ukrainian hryvnas (UAH) (at the material time –approximately 10,971 euros (EUR)) to Kh. in order to buy a house from him. He was to pay the balance of the purchase price by 30 December 2004.
6. On 30 November 2004 the Board of the National Bank of Ukraine issued decision no. 576 “On temporary measures in banking activity” (hereinafter – “the Decision”) by which it was forbidden to return deposits before the end of their term. The relevant part of the Decision provided as follows:
“In order to secure stability of the bank system and to safeguard the interests of depositors and creditors of the banks ... the Board of the National Bank stipulates that...
7. Temporarily, till 31 December 2004 banks must comply with the following demands.
...
7.7. Banks are prohibited to repay to physical persons and legal entities the sums deposited by them in the banks under deposit contracts whose term has not yet expired, provided that interest is paid in accordance with the respective deposit contracts.”
7. It was noted that the Decision entered into force on the date of its signature. According to the Decision, the aforementioned restrictions on the return of deposits should have been in force until 31 December 2004.
8. On the same day the Decision was issued, the applicant requested repayment of his deposit from the bank in full.
9. On 2 December 2004 the bank refused the applicant’s request, referring to the provisions of the Decision. According to the applicant, this led to his failure to fulfil his obligations before Kh. (see paragraph 5 above) and loss of UAH 70,000 paid in advance.
10. By letter of 6 December 2004 no. 18-111/4923-12622 addressed to Ukrainian banks, the National Bank of Ukraine interpreted certain provisions of the ban. In particular, it was explained that the ban did not prevent pre-term return of deposits if this were required for the purpose of, in particular, acquisition of a dwelling. In such cases the sum of the deposit should have been transferred directly to the bank account of the vendor.
11. On 29 December 2004 the Decision was revoked by the National Bank of Ukraine due to “signs of restoration of stability in the banking sector”.
12. On 29 March 2005, upon the expiry of the relevant term, the applicant received his deposit plus the interest.
13. On 22 April 2005 the applicant instituted proceedings in the Golosiyivskyy District Court of Kyiv against the bank, claiming compensation for pecuniary and non-pecuniary damage caused by the bank for its refusal to repay the deposited sum in accordance with the contract (see paragraphs 4, 8 and 9 above). The applicant stated that, since the Decision had contradicted other national laws and had not been registered by the Ministry of Justice (see paragraph 22 below), it had not become effective and, consequently, the domestic courts should have simply disregarded the provisions of the Decision while deciding on the applicant’s claim against the bank. The applicant claimed UAH 21,735.85 (EUR 3,234) in late payment penalty, UAH 16,007.67 (EUR 2,382) in inflation loss, UAH 2,379.57 (EUR 354) in interest for using his deposit, UAH 70,000 (EUR 10,416) in advance payment made to Kh. and UAH 5,000 (EUR 744) in compensation for non-pecuniary damage.
14. On 2 August 2005 the Golosiyivskyy District Court found against the applicant. When dismissing the claim, the local court came to the conclusion that (i) the Decision at the material time had been a valid act since no appeal had been made (ii) the restrictions imposed by the Decision had been of a temporary nature and had lasted for a short period (a month), finally (iii) there had been no causal link between the infliction of the alleged damage on the applicant and the actions of the respondent bank, as the restrictions in question had not prevented the applicant from discharging his civil obligations by means of a bank transfer.
15. On 23 January 2006 the Kyiv City Court of Appeal upheld that judgment.
16. On 7 June 2006 the Supreme Court of Ukraine rejected the applicant’s request for leave to appeal in cassation. This decision was posted to the applicant on 10 July 2006.
B. Relevant domestic law
1. Civil Code, 2004
17. The relevant Articles of the Code provide as follows:
Article 1173. Compensation for pecuniary damage caused by a public authority, an authority of the Autonomous Republic of Crimea or a local self-governance authority
“1. Pecuniary damage caused to a natural person or legal entity by unlawful decisions, actions or omissions of State authorities, authorities of the Autonomous Republic of Crimea or local self-governance authorities in the course of the exercise of their powers shall be compensated for by the State, the Autonomous Republic of Crimea or local self-governance regardless of the fault of these bodies.”
Article 1175. Compensation for pecuniary damage caused by a State authority, an authority of the Autonomous Republic of Crimea or a local self‑governance authority within the scope of law-making activity
“1. Pecuniary damage caused to a natural person or legal entities as a result of adoption by State authorities, authorities of the Autonomous Republic of Crimea or a local self-governance authority of a normative-legal act that was declared illegal and annulled, shall be compensated for by the State, the Autonomous Republic of Crimea or the local self-governance authority regardless of the fault of officers and employees of these bodies.”
2. Code of Civil Procedure, 1963, in force at the material time
18. Articles 248-1 and 248-2 of the Code set forth that individuals were entitled to lodge complaints with the court challenging decisions, acts or omissions of State bodies provided that the decisions and legal acts in question affected their rights and/or freedoms, in particular, if they imposed restrictions on the exercise of the rights of individuals.
19. According to Article 15-1 of the Code competence of a court in a civil case is limited to the scope of claims raised before the respective court.
3. Law “On National Bank of Ukraine”, 1999 (as in force at the material time)
20. The relevant parts of the Law provided as follows:
Article 56. Legal acts of the National Bank of Ukraine
“The National Bank of Ukraine is entitled to adopt regulatory legal acts within its competence. These acts are obligatory for the State bodies, banks, enterprises and organisations regardless of who owns them, and for individuals.
...
The legal acts of the National Bank of Ukraine shall be registered by the Ministry of Justice and shall become effective in accordance with the law in force.
The legal acts of the National Bank of Ukraine may be challenged in accordance with the law.”
4. Letter no. 18-111/4923-12622 issued by the National Bank of Ukraine on 6 December 2004 and addressed to Ukrainian banks
21. The relevant part of the letter provided as follows:
“In case of need to pay for medical treatment or purchase of a dwelling place or investing in the construction of a dwelling place, it is permitted to pay the respective invoices by money transfer from the respective deposit accounts directly to the bank accounts of the recipient (hospitals etc.).”
5. Decree of the President of Ukraine on State registration of decisions of the ministries and other bodies of executive power, no. 493/92 of 3 October 1992
22. The relevant parts of the Decree provide as follows:
“1. .. starting on 1 January 1993 decisions, which were adopted by ministries and other main State bodies, and concern rights, freedoms and lawful interests of citizens, shall be subject to State registration.
2. The registration shall be conducted by ... the Ministry of Justice of Ukraine.
...
3. The legal acts specified in paragraph 1 of this Decree shall become effective in ten days upon their registration, unless a posterior date for their effect is provided in the respective acts.”
COMPLAINTS
23. The applicant complained that the Decision had not complied with the requirements of Article 1 of Protocol No. 1 and that its effects had constituted a violation of his property rights over the bank deposit. Under the same Article he also submitted that the domestic courts had failed to rectify the situation by awarding him damages.
24. He additionally complained under Articles 6 § 1 and 13 of the Convention that the proceedings before the domestic courts had not been fair.
25. Finally, the applicant cited Article 17 of the Convention without any further specification.
THE LAW
A. Complaint under Article 1 of Protocol No. 1
26. The applicant complained of a violation of Article 1 of Protocol No. 1 to the Convention, 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.”
27. The Government argued that the applicant had failed to exhaust available domestic remedies, namely to challenge the Decision before the domestic courts. In support of their statements, the Government provided copies of decisions of the domestic courts acknowledging different acts of State bodies as unlawful. The Government also mentioned that if the unlawfulness of the Decision had been established by a court, the applicant would have been entitled to damages under the Civil Code (see paragraph 17 above).
28. The applicant maintained that the ban on the return of bank deposits before the end of their term, introduced by the Decision, constituted an interference with his property rights which, according to the applicant, had been conducted in contravention with domestic law. In particular, the applicant insisted that the Decision could not have been viewed as a piece of valid legislation since it had not been registered by the Ministry of Justice as it should have been (see paragraph 22 above). According to the applicant, the lack of registration automatically rendered the Decision invalid and inapplicable.
29. The Court notes at the outset that Article 35 of the Convention requires that the remedies to be exhausted are those that relate to the breaches alleged and at the same time are available and sufficient. The existence of such remedies must be sufficiently certain not only in theory but also in practice, failing which they will lack the requisite accessibility and effectiveness; it falls to the respondent State to establish that these various conditions are satisfied (see Selmouni v. France [GC], no. 25803/94, § 75, ECHR 1999 V).
30. In the context of Article 13 of the Convention the Court has held that remedies available to a litigant at the domestic level are “effective” if they prevent the alleged violation or its continuation, or provide adequate redress for any violation that has already occurred (see, mutatis mutandis, and in respect of a complaint about the length of proceedings Charzyński v. Poland (dec.), no. 15212/03, §§ 32-33, ECHR 2005‑V).
31. In the instant case the Government submitted that the applicant had failed to challenge before the domestic courts the validity of the Decision, and subsequently to claim compensation. In support of this statement they have provided copies of judicial decisions by which different legal acts issued by State bodies were acknowledged to be unlawful and, where at the material time they were still in effect, were annulled.
32. The Court observes that while it is true that the applicant failed to initiate any proceedings with a view to declaring unlawful and/or annulling the impugned Decision, in the instant case such a claim cannot be considered as “effective” in practice. In particular, the Government failed to demonstrate that the aforementioned claim might have been considered within terms which would have allowed the applicant to avail himself of its results, namely that he would have had enough time to go through the judicial proceedings and, if successful, to enforce the favourable judgment in time. Moreover, the terms for consideration of the applicant’s claim against the bank (more than a year at three levels of jurisdiction) demonstrate that challenging the Decision before the domestic courts could hardly have made possible the timely discharge of the applicant’s alleged obligation to pay the purchase price for the house (see paragraph 5 above).
33. As for the Government’s second argument that, having challenged the Decision in question, the applicant would have been able to claim compensation, the Court notes that no judicial decisions (or decisions of other competent bodies) were submitted by the Government in support of this option. Moreover, the Government’s observations refer to Articles 1173-1175 of the Civil Code (2004) (see paragraph 17 above). The Court has already considered that, according to domestic legislation, compensation for damage inflicted by unlawful actions of State authorities set forth by Articles 1173-1175 of the Civil Code (2004) is dependent on further elaboration of the procedure to be followed and the conditions for obtaining such compensation, and that the mentioned procedure and conditions have not been defined by domestic legislation so far (see Portyanko v. Ukraine (dec.), no. 24686/12, 6 October 2015). Since the Government failed to rebut the aforesaid presumption of the Court, it sees no reasons to conclude otherwise in the instant case. Therefore, seeking compensation for damage resulting from the Decision cannot be said to have any reasonable prospects of success and, consequently, it cannot be said to be “effective”.
34. The Court reiterates that the six-month time-limit imposed by Article 35 § 1 of the Convention requires applicants to lodge their application within six months of the final decision in the process of exhaustion of domestic remedies. The only remedies which Article 35 of the Convention requires to be exhausted are those that relate to the breaches alleged (see Selmouni v. France [GC], cited above, § 75).
35. The Court observes that, in the instant case, the applicant initiated proceedings against a third party (the bank) claiming compensation for damage allegedly caused by its actions. As to the applicant’s allegations that the Decision was automatically void and thus inapplicable in the dispute with the bank, the Court notes that domestic courts are best placed to interpret and apply rules of substantive and procedural law (see Portyanko v. Ukraine (dec.), cited above). In the instant case the domestic courts at all levels viewed the Decision as an effective and valid bylaw. Furthermore, they were not entitled under the domestic procedural law (see paragraph 19 above) to declare the Decision void or to annul it ex officio, in absence of the applicant’s claim in this respect. Therefore, given that the bank acted in strict compliance with the Decision, it may be concluded that the avenue chosen by the applicant cannot be considered as an effective remedy against the alleged violation of Article 1 of Protocol No. 1.
36. If no remedies are available, or if they are judged to be ineffective, the six-month time-limit in principle runs from the date of the act complained of (see Dudnik and others v. Ukraine (dec.), nos. 9408/05, 10642/05 and 26842/05, 20 November 2007). In the instant case the impugned act (the Decision) was issued on 30 November 2004 and on the same day the applicant was familiarised with its provisions (see paragraph 8 above).
37. Consequently, the six-month time-limit in the case at hand runs from 30 November 2004. In view of the fact that the application was introduced before the Court on 9 January 2007, it should be rejected in accordance with Article 35 § 1, as being lodged outside the six-month time‑limit.
B. Remainder of the application
38. The applicant further invoked Articles 6 § 1 and 13 of the Convention claiming that domestic judicial proceedings were not fair. No particular reproaches as to violations of procedural guarantees constituting the right to a “fair hearing” were put forward by the applicant. Furthermore, it appears from the applicant’s submissions that his grievances in this respect are confined to his dissatisfaction with the outcome of the domestic judicial proceedings. Hence, the complaint under Article 6 § 1 is of a fourth-instance type. The applicant’s complaint under Article 13 is related to the same grievances raised by the applicant under Article 6 § 1 of the Convention and raises no separate issue.
39. Finally, the applicant cited Article 17 of the Convention without any further specification. Therefore, that this complaint must also be rejected as being manifestly ill-founded.
40. To sum up, this part of the application should also be rejected, pursuant to Article 35 §§ 3 and 4 of the Convention.
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Done in English and notified in writing on 14 March 2019.
Claudia WesterdiekAndré Potocki
RegistrarPresident
Full & Egal Universal Law Academy