BITROS A.B.E.E. IRON AND STEEL PRODUCTS, KORAL E.P.E. GENERAL REPAIRS OF SHIPS and MARINAKIS A.E. v. GREECE

THIRD SECTION

DECISION

AS TO THE ADMISSIBILITY OF

Application no. 37056/97
by BITROS A.B.E.E. Iron and Steel Products, KORAL E.P.E. General Repairs of Ships and MARINAKIS A.E.
against Greece

The European Court of Human Rights (Third Section), sitting on 12 September 2000 as a Chamber composed of

MrJ.-P. Costa, President,

MrC.L. Rozakis,
MrL. Loucaides,
MrP. Kūris,
MrsF. Tulkens,
MrK. Jungwiert,
MrsH.S. Greve, judges,
andMrsS. Dollé, Section Registrar,

Having regard to the above application introduced with the European Commission of Human Rights on 3 July 1997 and registered on 25 July 1999,

Having regard to Article 5 § 2 of Protocol No. 11 to the Convention, by which the competence to examine the application was transferred to the Court,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant companies,

Having deliberated, decides as follows:

THE FACTS

All three applicant companies are registered under Greek law. The first has its seat in Apropirgos in Attika, the second in Piraeus and third in Keratsini. They are represented before the Court by Mr C. Calavros, a lawyer practising in Athens.

A.The circumstances of the case

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

All three applicant companies are creditors of Elefsis Shipyards S.A., a company 97,1% of the capital of which belongs to four public sector banks. The Commercial Bank of Greece holds 65% of the capital, the Industrial Development Bank of Greece 24,6%, the Investment Bank, which is a subsidiary of the Commercial Bank, 4,7% and the Ionian Bank 2,8%.

In July 1992 Elefsis Shipyards S.A. was sold to A.M. Ltd under Article 44 of Law 1892/1990, which applies to "ailing companies". The sale fell within the context of a settlement procedure initiated by the majority of the creditors of the shipyard. It was approved by the majority of its shareholders and the Government. Under the terms of the sale agreement, A.M. Ltd did not become liable for most of the outstanding debts of Elefsis Shipyards except for, inter alia, claims of the shipyards' suppliers that had been properly entered into the company's books. It appears that the applicant companies had claims falling within this category.

Elefsis Shipyards remained under A.M. Ltd until 11 August 1995. Although A.M. Ltd did not honour its obligation under the above-mentioned agreement to satisfy the claims of the applicant companies, the latter  continued supplying the shipyards. These were heavily financed by a number of public sector banks including those that had previously owned them.

On 11 August 1995 A.M. Ltd, considering that the July 1992 contract for the purchase of the shipyards was null and void, withdrew from it. It also decided to surrender the management of the shipyards to the Investment Bank. Moreover, it was announced that the shipyards would suspend their operation.

On 25 August 1995, five of the creditors of Elefsis Shipyards - the Social Security Fund, the National Bank of Greece, the Commercial Bank of Greece, the Agricultural Bank of Greece and the Industrial Development Bank of Greece - requested the Court of Appeal (Efetio) of Athens to place Elefsis Shipyards under the special liquidation procedure of Article 46a of Law 1892/1990. They asked that the Investment Bank be appointed special liquidator. They also requested that the shipyards' personnel should not be dismissed so that the shipyards would continue functioning and discharge their obligations under certain contracts they had with the Greek State. This would have enabled the shipyards to be sold at a higher price later.

This application was notified to a number of interested parties but not to all the creditors of Elefsis Shipyards. The applicant companies were not among those to whom the application was notified.

 The second and third applicant companies, together with 14 other companies, intervened in the proceedings arguing that placing Elefsis Shipyards under the special liquidation procedure of Article 46a of Law 1892/1990 would amount to a violation of their rights under Article 6 § 1 of the Convention and Article 1 of Protocol No. 1.

On 19 September 1995 the Court of Appeal of Athens considered that the conditions set forth in Article 46a of Law 1892/1990 were met in the Elefsis Shipyards' case. The claims of the creditors who had lodged the application represented more than 51% of the total claims against the company and the shipyards were a commercial company that had suspended its operation for financial reasons. As for the rest, it was not necessary for the court to examine the reasons why the company had become indebted, who was responsible for the debts and whether placing the company under the special liquidation procedure would be in the best interests of all the creditors or of third persons or even of the company itself.

According to the Court of Appeal, the right of the second and third applicant companies under the Constitution and the Convention to be heard was not violated because they could intervene in the proceedings. Moreover, the Constitution and the Convention did not prevent the State from enacting laws for the control of the use of private property in the public interest. Therefore, the court decided that Elefsis Shipyards should be placed under the special liquidation procedure of Article 46a of Law 1892/1990.

Furthermore, the court considered that, under the above-mentioned law, it had to appoint as the special liquidator the bank suggested by the creditors, in casu the Investment Bank. It also decided that the shipyards' personnel should not be dismissed. The shipyards should continue functioning and fulfil their obligations under certain profitable contracts which were pending. This would increase the value of the company which would then be sold at a higher price.

According to the judgment of the Court of Appeal, a company placed under special liquidation in accordance with Article 46a of Law 1892/1990 cannot be declared bankrupt. No judicial decisions can be enforced and no interim measures can be ordered against it.

The decision of 19 September 1995 of the Court of Appeal, the text of which was finalised on 26 September 1995, was not served on the intervening parties.

On 30 January 1996 the first applicant company obtained an order for payment against Elefsis Shipyards for 118,586,000 drachmas plus interest and costs. This was served on Elefsis Shipyards on 13 February 1996 and 18 November 1997.

On 14 February 1996 the second applicant company obtained a similar order for 25,000,000 drachmas plus interest and costs. On 20 March 1996 it obtained a further order for 32,500,000 drachmas plus interest and costs and on 16 July 1996 an order for 55,000,000 drachmas plus interest and costs. These were served on Elefsis Shipyards on 19 February 1996, 21 March 1996 and 17 October 1997 respectively. They were all re‑served on 14 November 1997.

On 26 March 1996 the third applicant company obtained an order for 6,000,000 drachmas plus interest and costs, on 11 April 1996 an order for 9,000,000 drachmas plus interest and costs and on 21 May 1996 an order for 10,000,000 drachmas plus interest and costs. These were served on Elefsis Shipyards on 27 March 1996, 16 April 1996, and 17 October 1997 respectively. They were all re‑served on 14 November 1997.

 These orders have been served on Elefsis Shipyards and have acquired res judicata effect. However, it has proved impossible to have them enforced.

Elefsis Shipyards continue functioning and making losses. They are financed by the same banks that requested its placement under special liquidation.

B.Relevant domestic law

According to Article 631 of the Code of Civil Procedure, a payment order can be enforced upon being served for the first time on the person concerned.

COMPLAINTS

1.The applicant companies complain under Article 6 § 1 of the Convention that they cannot obtain a "determination" by a court of their "civil rights" under the supply contracts with Elefsis Shipyards. The jurisdiction of the Court of Appeal, when examining whether a company should be placed under the special liquidation procedure of Article 46a of Law No. 1892/1990, is limited to establishing whether certain purely formal conditions have been met. There is no appeal against the court's decision and no other court proceedings can be taken against Elefsis Shipyards.

2.The applicant companies also complain under Article 1 of Protocol No. 1 and Articles 6 § 1 and 13 of the Convention of the impossibility of enforcing the payment orders issued in their favour against Elefsis Shipyards.

THE LAW

The applicant companies raise a number of complaints under Articles 6 § 1 and 13 of the Convention and Article 1 of Protocol No. 1 concerning the scope of review exercised by the Court of Appeal of Athens on 19 September 1995, when it placed Elefsis Shipyards under a special liquidation procedure, and the impossibility of enforcing payment orders obtained subsequently against Elefsis Shipyards.

The Government submit that the application has not been submitted within the six-month time-limit provided for in Article 35 § 1 of the Convention. They point out that the decision of the Court of Appeal, before which two of the applicant companies had intervened, was issued on 19 September 1995 and the application was introduced only on 3 July 1997. The impossibility of enforcement of the payment orders was the direct result of the placement of the shipyards under liquidation.

The applicant companies submit that the decision of the Court of Appeal was pronounced in their absence and was not served on them. They were informed about the special liquidation in May 1997, when the sale of Elefsis Shipyards was reported in the press.

The Court recalls that Article 35 § 1 of the Convention provides that it “may only deal with the matter after all domestic remedies have been exhausted, according to the generally recognised rules of international law, and within a period of six months from the date on which the final decision was taken.”

The Court accepts the Government’s argument that the impossibility of enforcement of the payment orders was the direct result of the placement of the shipyards under liquidation. It follows that the six-month time-limit for both the complaint concerning the review exercised by the Court of Appeal and the impossibility of enforcement of the payment orders should be calculated from the date when the applicant companies were apprised of the decision placing the shipyards under liquidation became final.

The Court notes that the Court of Appeal issued its decision on 19 September 1995 and that its text was finalised on 26 September 1995. Although two of the companies had intervened in the proceedings, the decision was not notified on them.

However, the Court also notes that all three applicant companies obtained payment orders against Elefsis Shipyards between 30 January 1996 and 21 May 1996. Some of these orders - and at least one for each applicant company - were served on the shipyards between February and April 1996. The Court considers that it must have become clear to the applicant companies reasonably soon after these dates that there could be no enforcement against the shipyards because of the decision of 19 September 1995 of the Court of Appeal with the contents of which they must have become familiar. However, the applicant companies waited until 3 July 1997, i.e. for more than six months, before introducing their application.

It follows that the applicant companies did not respect the six-month time-limit of Article 35 § 1 of the Convention and that the application must be rejected pursuant to Article 35 § 4 thereof.

For these reasons, the Court, by a majority,

DECLARES THE APPLICATION INADMISSIBLE.

S. DolléJ.-P. Costa
RegistrarPresident

Full & Egal Universal Law Academy