CASE OF BALASHOVA AND CHEREVICHNAYA v. RUSSIA

THIRD SECTION

CASE OF BALASHOVA AND CHEREVICHNAYA v. RUSSIA

(Application no. 9191/07)

JUDGMENT
 

STRASBOURG

29 September 2020

This judgment is final but it may be subject to editorial revision.

In the case of Balashova and Cherevichnaya v. Russia,

The European Court of Human Rights (Third Section), sitting as a Committee composed of:

Georgios A. Serghides, President,
Erik Wennerström,
Lorraine Schembri Orland, judges,
and Olga Chernishova, Deputy Section Registrar,

Having regard to:

the application (no. 9191/07) against the Russian Federation lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by two Russian nationals, Ms Margarita Viktorovna Balashova and Ms Galina Andreyevna Cherevichnaya (“the applicants”), on 24 May 2004;

the decision to give notice of the application to the Russian Government (“the Government”);

the parties’ observations;

Having deliberated in private on 8 September 2020,

Delivers the following judgment, which was adopted on that date:

INTRODUCTION

1.  A domestic judicial decision ordering a State institution to pay the applicants certain amounts has not been fully enforced.

THE FACTS

2.  The applicants were born in 1950 and 1947 and live in St Petersburg.

3.  The Russian Government ("the Government") were represented initially by Ms V. Milinchuk, Representative of the Russian Federation to the European Court of Human Rights, and then by her successor in that office, Mr M. Galperin.

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

5.  The applicants were employed by a State institution in charge of controlling of the quality of dairy products (ГУ Государственная инспекция по качеству молока и молочной продукции Северного и Северо-Западного экономических районов) (“the institution”).

6.  The institution was under the authority of the Ministry of Agriculture of Russia (“the Ministry”). According to the articles of association of the institution, it exercised state supervision over the quality of dairy products in St Petersburg. The articles further provided that the assets allocated to the institution were federal property. The institution was liable for its debts by all its monetary funds. In case of a lack of those funds, the owner of the property assigned to the institution bore vicarious liability for its obligations.

7.  In accordance with the Government Decree no. 600 of 17 June 1998 it was proposed to change the affiliation of the institution and to place it under the control of the Government of St Petersburg.

8.  In 1999 the Ministry stopped financing of the institution.

9.  In November 2000, while the process of transfer of the institution had not been completed and funding by the new owner had not commenced, the Ministry decided to initiate liquidation of the institution.

10.  On 27 August 2002 the applicants were dismissed due to the liquidation.Judgment of 16 December 2002 and its enforcement

11.  The applicants sued the institution and the Ministry for the unpaid annual leave, severance allowance and the outstanding arrears for the period from February 2001 to August 2002.

12.  By judgment of 16 December 2002, the Meshchanskiy District Court of Moscow (“the District Court”) awarded 150,532.75 Russian roubles (RUB) to the first applicant and RUB 165,811.67 to the second applicant, to be paid by the institution. The District Court dismissed the applicants’ claim in respect of the Ministry finding that the applicants had been employed not by the Ministry itself, but its subordinate, i.e. the institution, and noting that the liquidation proceedings in respect of the latter were still pending.

13.  On 23 December 2002 the Ministry paid RUB 36,039 and RUB 39,031.82 to the first and the second applicants respectively in salary arrears and severance allowance.

14.  On 28 March 2003 the Moscow City Court upheld the judgment of 16 December 2002. As regards the applicants’ arguments that the Ministry was vicariously liable for the debts of the institution, the court noted, in particular, that the Ministry was not the owner of the property allocated to the institution, and that the applicants did not meet the requirements under the Articles 120 and 399 of the Civil Code, and that, in any event, the monetary obligation stemmed from the labour relations to which those Articles did not apply.

15.  On 12 May 2003 the District Court issued a writ of execution. On various dates the applicants submitted the writ of execution to the Federal Treasury and to the bailiffs’ service.

16.  On 3 December 2003 the writ of execution was returned from the treasury without enforcement as the institution was not listed among the organisations in receipt of the federal budget funds.

17.  On 20 February 2004 the bailiffs terminated the enforcement proceedings for the debtor institution could not be found at its address, it had no property, its accounts had been closed, and, therefore, execution of the judgment was impossible.

18.  The applicants sued the Ministry for the outstanding amounts.

19.  By the judgment of 19 May 2006, the Justice of the Peace in the 382nd Circuit of the Krasnoselskiy District of Moscow granted their claims against the Ministry, finding it vicariously liable for the debts under the initial judgment. The court also found that since the institution was no longer funded through the federal budget the judgment of 16 December 2002 could not be executed via the Federal Treasury. The judge further noted that the Ministry had already paid a part of the debt under the judgment. Thus, she concluded that the relevant judgment could have been enforced directly by the Ministry prior to the applicants’ claim concerning the vicarious liability from the federal budget sources. The judge, inter alia, index-linked the amounts due to the applicants under the judgment of 16 December 2002. On 25 June 2006 the same judge issued an additional judgment adding the amounts of the principal debts to the awards made on 19 May 2006.

20.  On 25 December 2006 the District Court set aside the above‑mentioned judgments and rejected the claims. The court considered that the question of vicarious liability of the Ministry had been already examined on 16 December 2002. The appeal court further cited the Government’s decrees in force at the time of the judgment of 19 May 2006 from which it followed that the debtor institution was not listed among the bodies supervised by the Ministry. In addition, the court mentioned that Articles 120 and 399 of the Civil Code were not applicable to that case as it concerned the labour rather than civil matters.

21.  As of the time of the parties’ submissions in 2008 the liquidation proceedings against the institution were still pending, and the judgment of 16 December 2002 remained partly unenforced.Other proceedings

22.  The applicants sought an adjustment for inflation and penalties for the delay in the payment of their salaries in 1999-2001. On 3 June 2003 the Meshchanskiy District Court of Moscow rejected their claims partly as time-barred and partly as having no basis in the domestic law. On 16 December 2003 the Moscow City Court upheld the judgment.

RELEVANT LEGAL FRAMEWORK

23.  As in force at the material time, Article 120 § 2 of the Civil Code of Russia provided that an institution was liable under its obligations to the extent of its cash funds. If it lacked sufficient cash funds, the owner of the property assigned to it incurred vicarious liability.

24.  Article 399 § 1 provided that, before claiming a debt from a person whose liability is vicarious as described above, a creditor shall bring a claim before the principal debtor. If the principal debtor refuses to satisfy the claim or if no reply is received within a reasonable time, the claim may be brought against the person vicariously liable.

THE LAWALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION

25.  The applicants complained about non-enforcement of the judgment of 16 December 2002. They referred to Article 6 of the Convention, which reads as follows:

“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”

26.  The Government contested that argument. They submitted that the applicants did not follow the prescribed procedure for submitting the writs of execution. In particular, they did not forward the documents to the Ministry of Finance of Russia. Referring to the findings of the domestic courts the Government argued that the Ministry of Agriculture was not vicariously liable for the debts of the institution. In particular, they noted that the applicants failed to show that they had claimed the debts from the primary debtor prior to lodging their vicarious liability claim, and confirmed that the relevant provisions of the Civil Code did not apply to labour relations.

27.  In their additional observations the Government submitted that the liquidation commission accepted the creditors’ claims until 1 March 2001 for their inclusion into the overall list of the creditors of the institution. However, the applicants, being aware of that time-limit, lodged their civil claim against the institution after that date. The Government further submitted that the judgment could still be executed if the applicants submit the writs of execution to the Ministry of Finance, and that the latter procedure had been explained to the applicants on several occasions. The Government reiterated their argument that the applicants did not exhaust the domestic remedies for they had not challenged in courts the acts of the authorities responsible for enforcement of the judgment concerned.

28.  The applicants argued in reply that they submitted the enforcement documents to the bailiffs’ service and the treasury. However, they had not been instructed that the writs had to be forwarded to the Ministry of Finance. Moreover, they considered that since the institution was no longer funded through the federal budget and the vicarious liability of the Ministry of Agriculture was denied, it would not be possible in their case to execute the judgment via the Ministry of Finance of Russia. The applicants claimed that the underlying problem of alleged non-enforcement was the fact that the Ministry of Agriculture had stopped financing of the institution and no steps were taken by the authorities with the view of organizing further managing and funding for the institution. They also claimed that the institution performed public functions and had not carried out any commercial activities and, thus, was entirely dependent on the State. As regards of the argument about the non-civil nature of the relations between the applicants and the institution, the applicants claimed that their employer was in fact the Ministry itself.Admissibility

29.  The Court notes that in the present case the Government cannot be understood as arguing that the debts under the judgment were, in principle, not attributable to the State. On the contrary, their submissions suggest that they assume the State’s responsibility for the payments in accordance with the judgment. While claiming that the particular Ministry was not vicariously liable for the debts concerned the Government submitted that the execution could still be carried out at the expense of the public budget should the applicants send their writs of execution to the Ministry of Finance. They alleged, therefore, that it was the lack of the applicants’ cooperation that prevented the enforcement. The Court also notes in this regard the partial enforcement of the judgment by the Ministry of Agriculture in December 2002.

30.  The Court further takes into account the applicant’s submissions and the documents available in the case-file concerning the status of the institution, its activities, as well as the events preceding its liquidation (see paragraphs 5-10 and 28 above).

31.  The Court observes that the Government decided in 1998 to change the affiliation of the institution and transfer it from the control of the Ministry to the Government of St Petersburg. The Ministry stopped funding the institution and started the liquidation process. There is no information available to the Court as to whether and when the Government of St Petersburg undertook the supervision of the institution. The applicants sued the institution and the Ministry in this context (see paragraphs 5-10 and 27 above). However, the domestic courts rejected the vicarious liability claim as regards the Ministry (see paragraphs 12, 14 and 20 above).

32.  Having said that, the Court will not assess the domestic courts’ findings as to the Ministry’s vicariously liability for the debts of the institution. Neither will it examine which other body supervised or had to supervise the institution after the changes introduced in 1998-1999. Taking into account the relevant factors (for an overview of the applicable principles see Liseytseva and Maslov v. Russia, nos. 39483/05 and 40527/10, §§ 184-92, 9 October 2014, with further references), the Court considers that the facts of the case and the materials in its possession reveal that the institution did not enjoy sufficient institutional and operational independence from the State to absolve the latter from its responsibility under the Convention for its acts and omissions (see, mutatis mutandis – and with reference to Article 34 of the Convention – Radio France and Others v. France (dec.), no. 53984/00, ECHR 2003-X (extracts)).

33.  The Court notes, in particular, the fact that the Ministry of Agriculture transferred part of the awards in the applicants’ favour in the absence of any formal acceptance of its vicarious liability (see paragraph 13 above). In the Court’s view, this and the Government’s suggestion to the applicants to receive the outstanding amounts through the Ministry of Finance (see paragraph 27 above) should be interpreted as acceptance by the State of its responsibility for the debts concerned (see, mutatis mutandis, Khachatryan v. Armenia, no. 31761/04, §§ 51-54, 1 December 2009). The Court, therefore, considers that the debts under the judgment of 16 December 2002 against that institution are attributable to the State.

34.  As regards the Government non-exhaustion plea (see paragraph 27 above), the Court notes that in 2009 it concluded that there was no effective domestic remedy in Russia, either preventive or compensatory, that allowed for adequate and sufficient redress in the event of violations of the Convention on account of prolonged non-enforcement of judicial decisions delivered against the State or its entities (see Burdov v. Russia (no. 2), no. 33509/04, § 117, 15 January 2009). The Court therefore dismisses the Government’s objection.

35.  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.Merits

36.  The Court reiterates that an unreasonably long delay in the enforcement of a binding judgment may breach the Convention (see Burdov v. Russia, no. 59498/00, ECHR 2002‑III). To decide if the delay was reasonable, the Court will look at how complex the enforcement proceedings were, how the applicant and the authorities behaved, and what the nature of the award was (see Raylyan v. Russia, no. 22000/03, § 31, 15 February 2007).

37.  The Court has consistently held that a delay of less than one year in payment of a monetary judicial award was in principle compatible with the Convention, while any longer delay was prima facie unreasonable (see, among many others, Kosheleva and Others v. Russia, no. 9046/07, § 19, 17 January 2012).

38.  It has been the Court’s constant position that the burden to ensure compliance with a judgment against the State lies primarily with the State authorities starting from the date on which the judgment becomes binding and enforceable (see Burdov (no. 2), cited above, § 69). At the same time, the Court has accepted that a successful litigant may be required to undertake certain procedural steps in order to recover the judgment debt (see Shvedov v. Russia, no. 69306/01, § 32, 20 October 2005).

39.  The Court observes that in the present case the judgment of 16 December 2002 came into force on 28 March 2003. It is not disputed between the parties that as of January-April 2008 it remained enforced only in part. It follows that the delay in enforcement exceeds four years and nine months.

40.  Turning to the Government’s argument that the applicants themselves were responsible for the delay, the Court notes that the applicants submitted the writs of execution to the bailiffs’ service and to the Federal Treasury. Neither of those authorities managed to enforce the judgment as the debtor’s accounts could not be found. The Court was not provided with any documents confirming that after the adoption of the judgment of 16 December 2002 the applicants were instructed to forward the writs of execution to the Ministry of Finance, as claimed by the Government. The foregoing considerations are sufficient to enable the Court to conclude that the applicants took reasonable procedural steps in order to enforce the judgment in their favour (compare with Gadzhikhanov and Saukov v. Russia, nos. 10511/08 and 5866/09, § 29, 31 January 2012), and cannot be said to have obstructed the enforcement of the judgment in question (compare with Belayev v. Russia (dec.), no. 36020/02, 22 March 2011).

41.  There has accordingly been a violation of Article 6 of the Convention on account of non-enforcement of the judgment of 16 December 2002.OTHER ALLEGED VIOLATIONS OF THE CONVENTION

42.  The applicants also lodged several other complaints, referring to Articles 4, 6 and 13 of the Convention.

43.  However, in the light of all the material in its possession, and in so far as the matters complained of are within its competence, the Court finds that they do not disclose any appearance of a violation of the rights and freedoms set out in the Convention or its Protocols. It follows that this part of the application is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 1, 3 and 4 of the Convention.APPLICATION OF ARTICLE 41 OF THE CONVENTION

44.  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.”Damage

45.  The applicants claimed 583,917 Russian roubles (RUB) (approximately 15,914 Euros (EUR)) and RUB 646,577.2 (approximately EUR 17,621.7) respectively in compensation for pecuniary damage. The amounts constitute the outstanding debt under the judgment in respect of each applicant multiplied by 5.1, an index representing the increase in the minimum monthly wages in Russia during the period of non-enforcement. The applicants further claimed RUB 500,000 (approximately EUR 13,627) and RUB 733,840 (approximately EUR 20,000) respectively for non‑pecuniary damage.

46.  The Government contested these claims. In respect of the pecuniary damage they submitted that the applicants’ claims were unsubstantiated arguing that the index-linking had to be made in accordance with the official coefficients of inflation. They further submitted that the rate of living wage in the appropriate region of Russia had to be used for that purpose. According to the Government, such calculations had to be made by the national courts. However, the applicants’ claims for indexation of wages had been dismissed by the domestic courts (see paragraphs 19-20 and 22 above).

47.  The Court observes that the parties disagree as to the method of calculation of the losses for the period of non-enforcement. The Court is ill‑equipped to engage in or verify how the outstanding amounts under the judgment should be index-linked. In these circumstances and in the absence of a judicial decision of a national court determining an index to be used, the Court does not accept the applicants’ claim in so far as the adjustment of the debt is concerned.

48.  The Court recalls that in general the most appropriate form of redress in respect of violation found is to put applicants as far as possible in the position they would have been in if the Convention requirements had not been disregarded (see Piersack v. Belgium (Article 50), 26 October 1984, § 12, Series A no. 85; and, mutatis mutandis, Gençel v. Turkey, no. 53431/99, § 27, 23 October 2003; and also Dovguchits v. Russia, no. 2999/03, § 48, 7 June 2007). The Court therefore considers that the Government shall pay the outstanding amounts in accordance with the judgment of 16 December 2002.

49.  In respect of non-pecuniary damage the Government argued that the applicant’s claims were excessive.

50.  The Court considers that the applicants must have suffered certain distress and frustration resulting from the authorities’ failure to enforce the judgments in their favour in good time. The Court takes into account the applicants’ claims for non-pecuniary damage, the nature of the awards at stake in the present case, the length of the enforcement proceedings and other relevant aspects. Making its assessment on an equitable basis, it awards the applicant EUR 3,500 to each applicant in respect of non‑pecuniary damage, plus any tax that may be chargeable on that amount.Costs and expenses

51.  The applicants also claimed EUR 850 for the costs and expenses incurred before the domestic courts and before the Court.

52.  The Government contested this claim as unsubstantiated. They argued that the submitted documents only in part confirmed the expenses for postage to the Court and for translation.

53.  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.

54.  Regard being had to the documents in its possession and to its case‑law, the Court considers it reasonable to award the sum of EUR 450 jointly under this head. The Court rejects the remainder of the claim for costs and expenses.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,Declares the complaint under Article 6 of the Convention concerning non-enforcement of the judgment of 16 December 2002 admissible and the remainder of the application inadmissible;Holds that there has been a violation of Article 6 of the Convention on account of non-enforcement of the judgment of 16 December 2002;Holds

(a)  that the respondent State is to pay the applicants, within three months, the outstanding amounts due to them under the judgment of 16 December 2002;

(b)  that the respondent State is to pay the applicants, within three months, the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement:

(i)  EUR 3,500 (three thousand five hundred euros), plus any tax that may be chargeable, to each applicant in respect of non‑pecuniary damage;

(ii)  EUR 450 (four hundred and fifty euros), plus any tax that may be chargeable to the applicants, jointly to both applicants in respect of costs and expenses;

(c)  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;Dismisses the remainder of the applicants’ claim for just satisfaction.

Done in English, and notified in writing on 29 September 2020, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Olga Chernishova Georgios A. Serghides
Deputy RegistrarPresident

 

Full & Egal Universal Law Academy