CASE OF AVIAKOMPANIYA A.T.I., ZAT v. UKRAINE

FIFTH SECTION

CASE OF AVIAKOMPANIYA A.T.I., ZAT v. UKRAINE

(Application no. 1006/07)

JUDGMENT

STRASBOURG

5 October 2017

FINAL

05/01/2018

This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision.

In the case of Aviakompaniya A.T.I., ZAT v. Ukraine,

The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of:

Angelika Nußberger, President,
Ganna Yudkivska,
André Potocki,
Faris Vehabović,
Yonko Grozev,
Carlo Ranzoni,
Lәtif Hüseynov, judges,
and Milan Blaško, Deputy Section Registrar,

Having deliberated in private on 25 April 2017 and 5 September 2017,

Delivers the following judgment, which was adopted on the last-mentioned date:

PROCEDURE

1. The case originated in an application (no. 1006/07) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by Aviakompaniya A.T.I., ZAT (“the applicant company”), on 17 November 2006.

The applicant company was declared liquidated on 8 October 2015 but its only shareholder, East/West Alliance Limited − an Irish company − (“East/West”) indicated its interest in the examination of the case to be continued (see paragraph 14 below).

2. The applicant company was represented by Mr I.O. Savchuk of “International Law Firm “Consulting” TOV, a law firm based in Kyiv. The Ukrainian Government (“the Government”) were most recently represented by their Agent, Mr I. Lishchyna.

3. The applicant company alleged, in particular, that the Supreme Court had overstepped the limits of its jurisdiction in the applicant company’s case.

4. On 27 May 2013 the application was communicated to the Government.

THE FACTS

I. THE CIRCUMSTANCES OF THE CASE

A. Domestic proceedings

5. The applicant company was a Ukrainian joint-stock company registered in Kyiv. At the relevant time it operated a commercial air carrier business (see East West Alliance Limited v. Ukraine, no. 19336/04, § 7, 23 January 2014).

6. On 12 March 2003 the applicant company brought a claim for damages, in particular loss of profit, against the State Aviation Safety Department. The claim was based on a delay on the defendant’s part in issuing a safety certificate, which the Department had been required to issue in 2001 by a court judgment.

7. On 16 August 2005 the Kyiv City Commercial Court allowed the claim in part.

8. On 18 October 2005 the Kyiv Commercial Court of Appeal quashed the first-instance court’s judgment and rejected the claim, mainly on the grounds that the applicant company had failed to prove the loss of profit it had claimed. It considered the estimates of the loss profit speculative.

9. On 21 February 2006 the Higher Commercial Court reversed the ruling of the Court of Appeal and upheld the judgment of the first instance court. The Higher Court held that because the defendant’s inaction prevented the applicant company from operating its business as from 2001, the first instance court was correct in accepting the information about the applicant company’s gross income for 1999 and 2000.

10. On 6 June 2006 the Supreme Court quashed the ruling of the Higher Commercial Court and upheld the ruling of the Court of Appeal. The Supreme Court considered that no causal connection has been proven between the defendant’s culpable inaction and the alleged loss of profit. It held, in particular, that the applicant company had failed to prove that it had realised a profit, rather than gross income, prior to 2001, or that its income for the preceding years came from operations which required a safety certificate.

B. Subsequent events

11. Following communication of the case and unsuccessful friendly settlement negotiations, on 2 September 2014 the Government informed the Court of their intention to resolve the issue raised by the application. They produced a unilateral declaration, in which they acknowledged a breach of Article 6 § 1 of the Convention and offered to pay the applicant company a sum to cover any pecuniary and non-pecuniary damage together with any costs and expenses. The Government requested that the Court strike out the application in accordance with Article 37 § 1 of the Convention.

12. On 7 November 2014 the applicant company objected to the striking out of its application, wishing to have its merits determined with a view to obtaining appropriate redress. It argued, in particular, that under domestic law the unilateral declaration, unlike a Court’s judgment finding a violation, would not provide grounds for reexamination of its case by the Supreme Court. The Government’s unilateral declaration would therefore not lead to actual restoration of the applicant company’s rights.

13. The Government were invited to comment and on 10 July 2015 informed the Court of the relevant domestic legislation (see paragraphs 15 and 16 below). They submitted a letter from the Supreme Court informing the Government Agent there was no relevant domestic case‑law on the matter.

14. On 3 November 2015 the applicant company’s only shareholder, East/West, informed the Court that on 2 October 2014 the Kyiv City Commercial Court had declared the applicant company bankrupt and opened liquidation procedure and on 8 October 2015 had declared it liquidated. Accordingly, East/West requested that any just satisfaction award due to the applicant company be paid to East/West. Asked to comment, the Government responded on 18 January 2016 that they “do not object against the applicant’s request as to the payment to its sole shareholder the awarded compensation and, thus, leave this question on the Court’s discretion”.

II. RELEVANT DOMESTIC LAW AND PRACTICE

A. Reopening of proceedings if a violation is found by the European Court of Human Rights

15. Article 111-16 of the Code of Commercial Procedure provides that the Supreme Court may reopen proceedings which have ended in a final decision where “an international judicial institution, whose jurisdiction Ukraine has recognised, establishes that Ukraine breached its international obligations in the course of judicial proceedings” (“встановлення міжнародною судовою установою, юрисдикція якої визнана Україною, порушення Україною міжнародних зобов’язань при вирішенні даної справи судом”). Under Article 111-15 of the Code, reopening can be requested by the party in whose favour the international institution delivered its ruling (“може бути подана особою, на користь якої постановлено рішення міжнародною судовою установою, юрисдикція якої визнана Україною”).

Article 237 of the Code of Administrative Procedure, Article 445 of the Code of Criminal Procedure and Article 355 of the Code of Civil Procedure contain analogous provisions.

16. Section 1 of the Law on the Execution of Judgments of the European Court of Human Rights (the “European Court Law”) defines a “decision” of the European Court subject to execution under the Law as including not only final judgments of the Court but also decisions of the Court approving the terms of a friendly settlement or of a unilateral declaration. Section 10 § 3 of the European Court Law provides that “execution” of a European Court “decision” includes, in particular, reopening of domestic proceedings.

17. Following the Court’s judgments in Bazalt Impeks TOV v. Ukraine (no. 39051/07, 1 December 2011) and Firma Veritas TOV v. Ukraine (no. 2217/07, 15 May 2012), in which the Court found that the Supreme Court had overstepped the limits of its jurisdiction in the applicant companies’ cases, the Supreme Court on 5 November 2012 quashed its own decisions, which had been criticised by this Court, and remitted the cases to lower courts for reexamination. A case (no. 30814/13) concerning the fairness of those proceedings concerning Firma Veritas is currently pending before the Court.

B. Liquidation of companies

18. Article 80 of the Code of Commercial Procedure provides that a commercial court must discontinue proceedings if “a commercial entity which was one of the original parties to the case has ceased its activity, provided that the relevant legal relations do not allow for succession” (“припинено діяльність суб’єкта господарювання, які були однією із сторін у справі, якщо спірні правовідносини не допускають правонаступництва”).

19. Article 104 § 1 of the Civil Code provides that a legal entity ceases to exist either through reorganisation (merger, division, transformation) or through liquidation. In the event of reorganisation, its assets, rights and obligations pass to its successors.

C. The powers of the Supreme Court in 2006

20. The relevant domestic law concerning the powers of the Supreme Court in commercial cases, as it stood at the time the Supreme Court examined the applicant company’s case, is summarised in Sokurenko and Strygun v. Ukraine (nos. 29458/04 and 29465/04, §§ 10-12, 20 July 2006).

III. RELEVANT COUNCIL OF EUROPE DOCUMENTS

21. On 19 January 2000 the Committee of Ministers of the Council of Europe adopted Recommendation No. R (2000) 2 to member States on the re-examination or reopening of certain cases at domestic level following judgments of the European Court of Human Rights. In that document the Committee of Ministers:

“I. Invites, in the light of these considerations the Contracting Parties to ensure that there exist at national level adequate possibilities to achieve, as far as possible, restitutio in integrum;

II. Encourages the Contracting Parties, in particular, to examine their national legal systems with a view to ensuring that there exist adequate possibilities of re‑examination of the case, including reopening of proceedings, in instances where the Court has found a violation of the Convention, especially where:

i. the injured party continues to suffer very serious negative consequences because of the outcome of the domestic decision at issue, which are not adequately remedied by the just satisfaction and cannot be rectified except by re-examination or reopening, and

ii. the judgement of the Court leads to the conclusion that

a. the impugned domestic decision is on the merits contrary to the Convention, or

b. the violation found is based on procedural errors or shortcomings of such gravity that a serious doubt is cast on the outcome of the domestic proceedings complained of.”

THE LAW

I. PRELIMINARY ISSUES

A. The applicant company’s liquidation

22. The Court observes that the applicant company was liquidated. It appears that it no longer exists and has no legal successor under Ukrainian law (see paragraph 19 above and compare Intertrans ZAT v. Ukraine (dec.), no. 20647/08, 18 November 2014). However, East/West, its only shareholder, indicated its interest in the examination of the case to be continued. Neither the liquidator nor the Government has objected to the continuation of the proceedings before the Court. In fact, the Government explicitly stated that they did not object to just satisfaction being paid to East/West (see paragraph 14 above). In Metalco Bt. v. Hungary ((revision), no. 34976/05, § 14, 26 June 2012) the Court held that in such a situation it had not been prevented from continuing the examination of that case.

23. In Uniya OOO and Belcourt Trading Company v. Russia (nos. 4437/03 and 13290/03, §§ 258-65, 19 June 2014), where one of the applicant companies was liquidated, the Government asked the Court to discontinue the examination of the case. However, the Court declined to do so holding that the applicant company’s shareholder had a legitimate interest in obtaining a final determination of that case by the Court, even though under domestic law the applicant company’s obligations and claims were formally extinguished upon its liquidation. It was a consideration for the Court that respect for human rights required it to continue to examine the case, in particular because the case raised an issue of general interest transcending the facts of that particular case (see also, mutatis mutandis, OAO Neftyanaya Kompaniya Yukos v. Russia (just satisfaction), no. 14902/04, § 38, 31 July 2014, and contrast RF spol. s.r.o. v. Slovakia (dec.), 9926/03, 20 October 2010).

24. The Court reiterates that its judgments in fact serve not only to decide those cases brought before it but, more generally, to elucidate, safeguard and develop the rules instituted by the Convention, thereby contributing to the observance by the States of the engagements undertaken by them as Contracting Parties. Although the primary purpose of the Convention system is to provide individual relief, its mission is also to determine issues on public‑policy grounds in the common interest, thereby raising the general standards of protection of human rights and extending human rights jurisprudence throughout the community of Convention States (see OAO Neftyanaya Kompaniya Yukos v. Russia (dec.), no. 14902/04, § 442, 29 January 2009).

25. In light of its conclusions in paragraphs 34-38 below, the Court considers that the present case raises an issue of general interest going beyond its particular facts. That issue, moreover, has to do with the effect of the Court’s rulings in domestic law. In view of these considerations the Court considers that it should continue its examination of the case despite the applicant company’s liquidation.

B. The Government’s unilateral declaration

1. The parties’ submissions

26. The Court observes that the Government invited the Court to strike the application out of its list on the basis of their unilateral declaration. The applicant company disagreed arguing that under domestic law a unilateral declaration, unlike a Court’s judgment finding a violation, would not provide grounds for the reopening of its case at the domestic level (see paragraphs 11-14 above).

2. The Court’s assessment

(a) General principles

(i) Criteria to be applied in evaluation of unilateral declarations

27. The Court reiterates that it may be appropriate under certain circumstances to strike out an application under Article 37 § 1 (c) of the Convention on the basis of a unilateral declaration by the respondent Government, even if the applicant wishes the examination of the case to be continued. It will depend on the particular circumstances whether the unilateral declaration offers a sufficient basis for finding that respect for human rights as defined in the Convention and its Protocols does not require the Court to continue its examination of the case (see Tahsin Acar v. Turkey (preliminary issue) [GC], no. 26307/95, §§ 74-77, ECHR 2003-VI, and, for a recent review of the Court’s case-law and practice in the area of unilateral declarations, Jeronovičs v. Latvia [GC], no. 44898/10, §§ 64-71, ECHR 2016).

28. Relevant factors in this respect include the nature of the complaints made, whether the issues raised are comparable to issues already determined by the Court in previous cases, the nature and scope of any measures taken by the respondent Government in the context of the execution of judgments delivered by the Court in any such previous cases, and the impact of these measures on the case at issue. It may also be material whether the facts are disputed between the parties, and, if so, to what extent, and what prima facie evidentiary value is to be attributed to the parties’ submissions on the facts. In that connection it will be significant whether the Court itself has already taken evidence in the case for the purposes of establishing the disputed facts. Other relevant factors may include the question of whether in their unilateral declaration the respondent Government have made any admission(s) in relation to the alleged violations of the Convention and, if so, the scope of such admissions and the manner in which they intend to provide redress to the applicant. As to the last-mentioned point, in cases in which it is possible to eliminate the effects of an alleged violation (as in certain property cases, for example) and the respondent Government declare their readiness to do so, the intended redress is more likely to be regarded as appropriate for the purposes of striking out the application. The foregoing list is not intended to be exhaustive (see Tahsin Acar, cited above, §§ 76 and 77).

(ii) Re-examination or reopening of cases

29. A judgment in which the Court finds a breach of the Convention imposes on the respondent State a legal obligation to put an end to the breach and make reparation for its consequences in such a way as to restore as far as possible the situation existing before the breach (see, inter alia, Papamichalopoulos and Others v. Greece (Article 50), 31 October 1995, § 34, Series A no. 330‑B). While the Court’s judgments are essentially declaratory in nature, and it is primarily for the State concerned to choose, subject to supervision by the Committee of Ministers, the means to be used in its domestic legal order in order to discharge its obligation under Article 46 of the Convention (see, Öcalan v. Turkey [GC], no. 46221/99, § 210, ECHR 2005‑IV), the Contracting States are under a duty to organise their judicial systems in such a way that their courts can meet the requirements of the Convention, including in the execution of the Court’s judgments (see Verein gegen Tierfabriken Schweiz (VgT) v. Switzerland (no. 2) [GC], no. 32772/02, § 97, ECHR 2009).

30. The Court reiterates that, as regards the reopening of proceedings, it does not have jurisdiction to order such a measure (see Moreira Ferreira v. Portugal (no. 2) [GC], no. 19867/12, § 49, 11 July 2017). Nevertheless, the Court has held that where an individual has been convicted following proceedings that have entailed breaches of the requirements of Article 6 of the Convention, a retrial or the reopening of the case, if requested, represents in principle an appropriate way of redressing the violation (see also Recommendation No. R (2000)2 of the Committee of Ministers). However, the specific remedial measures, if any, required of a respondent State in order for it to discharge its obligations under the Convention must depend on the particular circumstances of the individual case and be determined in the light of the Court’s judgment in that case, and with due regard to the Court’s case-law. In particular, it is not for the Court to indicate how any new trial is to proceed and what form it is to take. The respondent State remains free to choose the means by which it will discharge its obligation to put the applicant, as far as possible, in the position he would have been in had the requirements of the Convention not been disregarded, provided that such means are compatible with the conclusions set out in the Court’s judgment and with the rights of the defence (ibid., § 50).

31. The situations in which certain cases may need to be reopened at the domestic level are not necessarily limited to violations in the field of criminal law and may arise in civil cases, in particular where domestic law provides for such a possibility (see, for example, Yevdokimov and Others v. Russia, nos. 27236/05 and 10 others, § 59, 16 February 2016).

32. That being said, the Court has had occasion to observe that there is no uniform approach among the Contracting States as to the possibility of seeking reopening of civil proceedings following a finding of a violation by this Court or as to the modalities of implementation of existing reopening mechanisms (see Bochan v. Ukraine (no. 2) [GC], no. 22251/08, § 57, ECHR 2015). Where a Contracting State provides for the possibility of requesting a reopening of terminated judicial proceedings on the basis of a judgment of the Court, it is for the domestic authorities to provide for a procedure to deal with such requests and to set out criteria for determining whether the requested reopening is called for in a particular case (ibid.). However, the Court has also stressed that the foregoing considerations should not detract from the importance, for the effectiveness of the Convention system, of ensuring that domestic procedures are in place which allow a case to be revisited in the light of a finding that Article 6’s safeguards of a fair trial have been violated. Such procedures may be regarded as an important aspect of the execution of the Court’s judgments as governed by Article 46 of the Convention and their availability demonstrates a Contracting State’s commitment to the Convention and to the Court’s case-law (ibid., § 58).

(iii) Rejection of unilateral declarations providing insufficiently certain access to domestic reexamination procedures

33. Being guided by the above principles, in a number of cases the Court has refused to accept unilateral declarations if the right to apply for reopening of domestic proceedings was not guaranteed to an applicant in domestic law, as it would be for an applicant in respect of whom the Court delivered a judgment (see Hakimi v. Belgium, no. 665/08, § 29, 29 June 2010; Šarić and Others v. Croatia, nos. 38767/07 et al., §§ 26-29, 18 October 2011; Vojtěchová v. Slovakia, no. 59102/08, §§ 26-28, 25 September 2012; and Davydov v. Russia, no. 18967/07, §§ 23-32, 30 October 2014).

(b) Application of the above principles to the present case

34. In view of the above principles the Court needs to examine the following interrelated questions (i) whether possibility to request reopening of domestic proceedings would constitute appropriate form of redress in the present case and (ii) whether a Court’s decision striking out a case on the basis of a unilateral declaration, as opposed to a Court’s judgment, would serve as a valid ground for the reopening of case under Ukrainian law. This is the first case against Ukraine in which the Court is confronted with this combination of questions.

35. In addressing the first question, the Court reiterates that, as a rule, where a violation of Article 6 is found, a retrial or the reopening of the proceedings, if requested, represents in principle an appropriate form of redressing the violation (see, for example, Petko Petkov v. Bulgaria, no. 2834/06, § 42, 19 February 2013, and, mutatis mutandis in the context of criminal proceedings, Moreira Ferreira, cited above, § 126). This is also the case, in principle, where a violation of the right to a tribunal established by law has been found (see Gurov v. Moldova, no. 36455/02, § 43, 11 July 2006, and Momčilović v. Serbia, no. 23103/07, § 41, 2 April 2013). Moreover, the Ukrainian courts have reopened proceedings in previous cases where this Court found violations of Article 6 identical to that in issue in the present case (see paragraph 17 above).

The Court finds no reason to hold otherwise and finds that, were a violation of the Convention alleged in the present case to be established, the appropriate form of redress would, in principle, be to provide the applicant with a possibility to request the reopening of proceedings. The provision of that possibility does not prejudge a domestic court’s decision on whether such a reopening should indeed be granted on the facts of the specific case (see Davydov, cited above, § 29).

36. This conclusion requires the Court to address the question of whether a procedure by which such a reopening can be requested is actually available. In this connection the Court welcomes the fact that Ukraine, in line with its obligation to abide by the Court’s final judgments, has established a procedure which allows for the examination of the question of whether reopening of proceedings is warranted in particular cases where the Court, in its judgment, has found a violation of the Convention. This demonstrates Ukraine’s commitment to the Convention and to the Court’s case-law (see Bochan, cited above, § 58).

37. However, the Court finds that it cannot be said with similar degree of certainty that such a procedure would be available were the Court to accept the Government’s unilateral declaration and strike the case out of its list. Moreover, as confirmed by the Supreme Court (see paragraph 13 above), there is no domestic case-law on the question of reopening of proceedings on the basis of this Court’s decisions approving unilateral declarations. In this respect the situation in Ukraine is similar to that in the cases referred to in paragraph 33 above.

38. Accordingly, the Court accepts the applicant company’s submission and finds that under Ukrainian law a unilateral declaration and a Court decision approving it do not provide the same assured access to a procedure allowing for examination of the question of reopening of domestic proceedings as would a Court judgment.

39. The parties have not made any submissions on the question whether, in light of the applicant company’s liquidation, East/West, even on the basis of a Court judgment, would have standing to request the reopening of domestic proceedings in which the applicant company, rather than East/West, was a party (see paragraphs 18 to 19 above). However, in view of its finding in paragraph 38 above, and of its conclusions below regarding compensation, the Court does not need to rule on this question as it is not decisive, in the particular circumstances of the case, for deciding whether the examination of the case should be continued.

40. As regards the payment of compensation, the Court observes that in its unilateral declaration the Government undertook to pay an amount in compensation to the applicant company (see paragraph 11 above). The declaration makes no mention of East/West. It is true that in its letter of 18 January 2016 the Government appeared to indicate that they would have no objection to paying the “awarded” compensation to East/West (see paragraph 14 above). However, that statement appears to be conditional and to suggest that it would apply in a case where the Court would “award” compensation by its judgment (compare Aleksentseva and Others v. Russia (dec.), nos. 75025/01 et al., 23 March 2006). The Court therefore cannot find it established that the party now claiming compensation, namely East/West, would be able to obtain payment under the unilateral declaration. Neither can the Court, without first examining the merits of the case, make any conclusive finding as to whether East/West can lay claim to any compensation for pecuniary or non-pecuniary damage in the particular circumstances of the case.

41. For the above reasons, the Court cannot find that it is no longer justified to continue the examination of the application. Moreover, respect for human rights as defined in the Convention and its Protocols requires it to continue the examination of the case. The Government’s request for the application to be struck out of the list of cases under Article 37 of the Convention must therefore be rejected.

II. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION

42. The applicant company complained that the Supreme Court had exceeded its competence in upholding the decision of the appellate court. It referred to Article 6 § 1 of the Convention, which reads as follows:

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

A. Admissibility

43. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.

B. Merits

44. In Sokurenko and Strygun v. Ukraine (nos. 29458/04 and 29465/04, 20 July 2006), the Court noted that the Supreme Court’s competence under the Code of Commercial Procedure was limited to review of the decisions of the Higher Commercial Court, given that it could only have quashed the resolution of the Higher Commercial Court, remitted the case for fresh consideration or nullified the proceedings. Instead, the Supreme Court had upheld the decision of the lower court although no such course of action was provided for under the Code of Commercial Procedure. The Court concluded that the Supreme Court had acted contrary to Article 6 § 1 of the Convention, and not as a “tribunal established by law”, as it had overstepped the limits of its jurisdiction, which were clearly laid down in the Code of Commercial Procedure (see ibid., §§ 26-28). The Court reached the same conclusions in Bazalt Impeks TOV v. Ukraine (no. 39051/07, 1 December 2011), Veritas v. Ukraine (no. 39157/02, 13 November 2008), and Firma Veritas (cited above).

45. In the Court’s view, the factual and legal circumstances of the present case are identical to those already examined in the above cases. The Court sees no reasons which would justify departure from its previous case‑law and concludes that there has also been a violation of Article 6 § 1 of the Convention in the present case.

III. OTHER ALLEGED VIOLATIONS OF THE CONVENTION

46. The applicant company also complained under Article 1 of Protocol No. 1 about the outcome of the domestic proceedings. This complaint was lodged on 22 February 2008, outside of the six-month period, more than six months after the conclusion of the domestic proceedings.

Accordingly, the Court concludes that this complaint must be rejected in accordance with Article 35 §§ 1 and 4 of the Convention for being lodged outside the six-month time-limit.

47. Lastly, the applicant company also complained under Article 6 § 1 about the excessive length of proceedings. The applicant company further complained, under Article 6 § 1, about the outcome of the proceedings, disagreeing with the interpretation by the domestic courts both of evidence and of domestic administrative regulations in the field of aviation safety.

Having considered the applicant’s submissions in the light of all the material in its possession, the Court finds that, in so far as the matters complained of are within its competence, they do not disclose any appearance of a violation of the rights and freedoms set out in the Convention. It follows that this part of the application is manifestly ill‑founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION

48. Article 41 of the Convention provides:

“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”

A. Damage

49. The applicant company claimed 102,523,038.01 Ukrainian hryvnia (UAH) by way of compensation in respect of pecuniary damage and UAH 1,000,000 in respect of non-pecuniary damage. The pecuniary damage claim was composed of the amount of damages awarded to the applicant company by the first-instance court, affirmed by the Higher Commercial Court (see paragraph 9 above), indexed in line with inflation, plus statutory interest provided by domestic law at three per cent per annum.

50. The Government argued that since the case concerned an Article 6 § 1 complaint, there was no causal link between the violation and the alleged damage. Moreover, the claim was unsubstantiated.

51. The Court does not discern any causal link between the violation found and the pecuniary damage alleged and it therefore rejects this claim. On the other hand, ruling on an equitable basis, the Court awards EUR 1,500 in respect of non-pecuniary damage (see Firma Veritas, cited above, § 36), to be paid to East/West. This holding is without prejudice to the rights of any creditors whose rights may be recognised under domestic law.

B. Costs and expenses

52. The applicant also claimed UAH 5,178,154.15 in respect of the costs and expenses incurred before the Court. It submitted a copy of the agreement for legal services between the applicant company and its law firm, according to which the applicant company undertook to pay the law firm a fixed fee for representation before the Court equal to five per cent of any amounts of just satisfaction paid to the company as a result of a finding of a violation by the Court.

53. The Government considered those claims unfounded.

54. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. In the present case, regard being had to the above criteria, the Court considers it reasonable to award EUR 1,200 under this head.

C. Default interest

55. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

1. Rejects the Government’s request to strike the application out of its list of cases;

2. Declares the complaint under Article 6 § 1 of the Convention concerning the scope of the powers of the Supreme Court in the applicant company’s case admissible and the remainder of the application inadmissible;

3. Holds that there has been a violation of Article 6 § 1 of the Convention;

4. Holds

(a) that the respondent State is to pay the applicant company’s shareholder, East/West Alliance Limited, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts:

(i) EUR 1,500 (one thousand five hundred euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;

(ii) EUR 1,200 (one thousand two hundred euros), plus any tax that may be chargeable to East/West Alliance Limited, in respect of costs and expenses;

(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;

5. Dismisses the remainder of the applicant’s claim for just satisfaction.

Done in English, and notified in writing on 5 October 2017, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Milan BlaškoAngelika Nußberger
Deputy RegistrarPresident

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