CASE OF COSMOS MARITIME TRADING AND SHIPPING AGENCY v. UKRAINE

FIFTH SECTION

CASE OF COSMOS MARITIME TRADING AND SHIPPING AGENCY v. UKRAINE

(Application no. 53427/09)

JUDGMENT

STRASBOURG

27 June 2019

This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision.

In the case of Cosmos Maritime Trading and Shipping Agency v. Ukraine,

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

Angelika Nußberger, President,
Ganna Yudkivska,
André Potocki,
Síofra O’Leary,
Mārtiņš Mits,
Gabriele Kucsko-Stadlmayer,
Lado Chanturia, judges,
and Claudia Westerdiek, Section Registrar,

Having deliberated in private on 4 June 2019,

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

PROCEDURE

1.  The case originated in an application (no. 53427/09) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Turkish company, Cosmos Maritime and Foreign Trading Ltd. (“the applicant company”), on 25 September 2009.

2.  The applicant company was represented by Mr V.V. Vasko, a lawyer practising in Kyiv. The Ukrainian Government (“the Government”) were represented by their Agent, most recently Mr I. Lishchyna.

3.  The applicant company alleged, in particular, under Article 6 § 1 of the Convention that the domestic courts which had dealt with its case had lacked impartiality and that the proceedings concerning the recognition of its claims in bankruptcy proceedings against a State-owned company had been unreasonably lengthy. It also complained, under Article 1 of Protocol No. 1, that its right to peaceful enjoyment of its possessions had been breached in that the domestic courts had failed to recognise its claims in the bankruptcy proceedings and the bankruptcy proceedings had not in themselves been capable of protecting its interests.

4.  On 19 January 2018 notice of the above complaints was given to the Government and the remainder of the application was declared inadmissible pursuant to Rule 54 § 3 of the Rules of Court. The applicant company was called Cosmos Maritime Trading and Shipping Agency Ltd. when it lodged its application. After communication, it changed its name to Cosmos Maritime and Foreign Trading Ltd.

5.  The Turkish Government were informed of their right to intervene in the proceedings in accordance with Article 36 § 1. They chose not to avail themselves of that right.

THE FACTS

I.  THE CIRCUMSTANCES OF THE CASE

6.  The applicant company has its registered office in Istanbul.

7.  Its case before the Court concerns its unsuccessful efforts to have its claims against the Black Sea Shipping Company (“Blasco”), a Ukrainian State-owned company which is subject to bankruptcy proceedings, recognised and satisfied.

A.  Background information

8.  Blasco is the successor of a Soviet State-owned company which until the late 1980s was one the largest shipping companies in the world and operated hundreds of commercial vessels. Throughout the late 1980s and early 1990s Blasco encountered serious legal and economic difficulties, which resulted in the loss of a large proportion of its assets.

9.  From October 1996 to April 1997 Blasco, as shipowners, and Columbus − a Liberian company − as charterers, signed time charters for four of Blasco’s ships. In August 1997 the applicant company also entered into a bareboat charter agreement with Blasco for one of its ships.

10.  On 13 November 1997 Columbus assigned all of its claims against Blasco, without specifying their origin or amount, to the applicant company. Blasco was informed of the assignment.

11.  On 2 December 1997 and 22 October 1998 the applicant company and Blasco signed agreements under which Blasco acknowledged owing certain debts to the applicant company related to services provided to Blasco’s vessels amounting to 3,466,754.93 United States dollars (USD). Of that amount, USD 33,557.29 related to a ship not covered by the above‑mentioned charter agreements and USD 257,531.36 was identified as expenses relating to the settlement of unspecified claims and agency costs. The remainder of the claims had apparently arisen in the context of the legal relationship created under the charterparties.

12.  On 20 June 2001 the parties signed another agreement, reducing the overall debt to USD 2,021,370.13, apparently to take into account the fact that one of the ships to which the debt related had in the meantime been transferred to the applicant company in partial settlement.

13.  On 25 December 1998 bankruptcy proceedings were initiated in respect of Blasco. They were suspended on 2 July 1999. It appears that they were then reinitiated and discontinued at some point in 2001.

14.  On 11 July 2003 a certain Mr P., Blasco’s creditor, initiated bankruptcy proceedings against Blasco in the Odessa Regional Commercial Court (“the Commercial Court”). The notice announcing the initiation of proceedings was published, as required by law, in September 2003.

B.  From the lodging of the applicant company’s claim to its recognition

15.  On 29 September 2003 the applicant company lodged an application with the Commercial Court seeking recognition of the debt owed to it by Blasco in the amount stipulated in the agreement of 20 June 2001 (see paragraph 12 above).

16.  On 18 November 2004 the Commercial Court rejected the applicant company’s claim without considering it on the merits. It held that it was unsubstantiated and considered that the agreements provided by the applicant company were insufficient proof that it had valid claims. In order to show the latter, the applicant company would need to provide the original documents showing the basis on which the debts had arisen.

17.  On 14 March 2005, in an appeal, the applicant company explained that the debt had arisen on the basis of charterparties between it and Blasco in respect of a number of ships. Although under the terms of the charterparties certain costs had to be borne by Blasco as the ship owner, the latter had asked the applicant company to bear those costs and those sums had accordingly become Blasco’s debt.

18.  On 15 March 2005 the Odessa Commercial Court of Appeal (“the Court of Appeal”) quashed the commercial court’s ruling, holding that − since the claim had been lodged within thirty days of publication of the bankruptcy proceedings notice − it could not be rejected without an examination of the merits but rather had to be examined on the merits and either allowed or dismissed. The case was remitted to the commercial court.

19.  On 7 February 2006 the applicant company made written submissions to the Commercial Court explaining the origin of the debt. It explained, in particular, that the claim had its basis in services provided to a number of vessels.

20.  On 24 February 2006 the Commercial Court rejected the applicant company’s claims as insufficiently substantiated. It held, in particular, that the actual charterparties on which the claims were supposedly based had not been submitted to the court.

21.  On the same day the court ordered the initiation of a financial rehabilitation procedure in respect of Blasco under a court-appointed receiver. Such procedures are governed by the Bankruptcy Act and are aimed at restoring a debtor’s solvency.

22.  The applicant company appealed against the rejection of its claim.

23.  On 12 August 2008 the Court of Appeal upheld the commercial court’s ruling of 24 February 2006 concerning the applicant company’s claims.

24.  On 10 September 2008 the applicant company appealed to the High Commercial Court (“the HCC”). Among other arguments the applicant company further submitted that the courts dealing with its case lacked impartiality. In that connection it referred to a number of letters from the president of the Commercial Court to various executive authorities:

(i)  A letter to the Ministry of the Economy of 19 January 2006 in which the court president asked the Ministry − which at the time was the body responsible for licensing bankruptcy receivers − for candidates to act as the receiver in the proceedings concerning Blasco. In that letter the court president referred to the instruction of the President to the Cabinet of Ministers, the Prosecutor General and the central bank concerning the audit of the debtor company;

(ii)  A letter to the Prime Minister of 26 April 2005 in which the court president stated that in the period prior to 2001, when the bankruptcy proceedings were suspended, a major part of the debtor’s assets had been transferred to the Ministry of Transport and certain State-owned and other companies. He complained that in the course of the bankruptcy proceedings the Ministry of Transport and Blasco’s management had failed to provide sufficient information about the debtor’s assets and obligations and that Blasco had been transferring assets to third parties outside of the bankruptcy proceedings. The court president went on to inform the Prime Minister that he had informed the law-enforcement authorities that there were indications that Blasco’s management was engaging in criminal activity, and in particular artificially driving the company into bankruptcy. Blasco’s management and their superiors at the Ministry of Transport were not interested in restoring the debtor’s solvency. The court president accordingly asked the Prime Minister for her intervention in order to compel those officials to comply with the law;

(iii)  A letter to the President of Ukraine of the same date and with similar content;

(iv)  A letter to the President of Ukraine of 3 March 2006. In that letter the court president pointed out that the President’s earlier instruction to the Cabinet of Ministers concerning the need to take steps to improve the Blasco situation had not been complied with and that the court had been unable to obtain information from the authorities about the debtor’s assets for more than seven years. In view of those facts the court president invited the President to create a “National Council for the Restoration of Ukraine’s Status as a Seafaring Nation”, which would be tasked with making proposals as to how to return vessels transferred by Blasco to foreign entities or to receive compensation for them. The President’s personal focus on this issue would permit the Ukrainian nation and State to restore their leading role as a seafaring nation among other countries of the world.

25.  For the applicant company, the statements in the above letters were evidence of the fact that the Commercial Court had failed to play an active role in protecting the creditors’ interests. The court was addressing the executive authorities as if it were their subordinate, merely reporting to them instead of exercising the function of a body with effective power over the process. The applicant company also pointed out that the decision of 24 February 2006 to initiate a rehabilitation procedure in respect of Blasco (see paragraph 21 above) referred to the instruction of the President of Ukraine in a way that suggested that it was a document that constituted guidance to be followed by the court.

26.  On the same day, 23 December 2008, the applicant company also lodged a separate application with the HCC asking it to discontinue the bankruptcy proceedings as they were unfair to the creditors and represented an inadequate tool for protecting their interests and, instead, to recognise the State’s direct responsibility for Blasco’s debts. The applicant company cited examples of transfers of the debtor’s assets prior to the initiation of the bankruptcy proceedings and the letters from the commercial court’s president indicating that similar activities could be continuing. The applicant company accordingly submitted that the State must bear full liability for the entire debt owed by Blasco to the creditors.

27.  On 21 January 2009 the HCC allowed the applicant company’s appeal in part, quashed the Court of Appeal’s decision of 12 August 2008, and remitted the case to the Court of Appeal on the grounds that the latter had essentially required the applicant company to comply with the requirements of domestic Ukrainian law concerning record-keeping and submit documentary proof to prove its claims, whereas it should have determined the applicable law and evaluated the claims in that light.

28.  The applicant company lodged an appeal with the Supreme Court, asking it to quash the HCC’s ruling, terminate the proceedings and hold the State fully liable for Blasco’s debts.

29.  On 2 April 2009 a panel of judges of the Supreme Court refused the applicant company leave to appeal to the full Commercial Chamber of that court.

30.  On 27 October 2009 the Court of Appeal allowed the applicant company’s application and recognised its claims against Blasco. However, at the same time it refused to include them in the register of creditors’ claims, holding that the latter had to be done in separate proceedings. The Ministry of Transport appealed, but on 10 November 2010 its appeal was dismissed by the HCC. The ruling of 27 October 2009 then became final.

C.  From recognition of the applicant’s claims to the quashing of that decision

31.  On 27 November 2009 the applicant company applied to have its claims included in the register of creditors’ claims. Following an initial rejection and appeals against that decision, on 11 January 2012 the Commercial Court included the claims in the register. On 8 August 2012 the Court of Appeal dismissed an appeal by the receiver and upheld that ruling.

32.  On 22 February 2013 the applicant company requested the withdrawal of Judge B., who was presiding over the bankruptcy proceedings at the time, and all the judges of the Commercial Court. It referred to the correspondence of the court president with the various executive authorities (see paragraph 24 above). In addition, the applicant company stated that the Commercial Court was operating in a building in Odessa that had previously belonged to Blasco. It referred to a newspaper article published in 2001. The article reported Blasco’s then CEO saying, at a press conference, that the company was transferring that building to the court in order to secure the court’s cooperation in accelerating the examination of the company’s cases (see paragraph 42 below). For the applicant company, those circumstances raised doubts as to the Commercial Court’s impartiality.

33.  On the same day Judge B. dismissed that request on the grounds that she had only taken over the case in July 2011 and so was not affected by the circumstances referred to by the applicant company, which dated back to 2006 and earlier. Moreover, the judge held that under domestic law it was not possible to request the withdrawal of all the judges of a court, only the judge sitting in the case.

34.  On 29 March 2013 the Court of Appeal’s registry received Blasco’s application requesting the court to set aside its ruling of 27 October 2009 to recognise the applicant company’s claims (see paragraph 30 above) in the light of “newly discovered circumstances”. In particular, according to Blasco, the documents sent to Blasco by the prosecutor’s office on 18 October 2012 showed that the claims presented by the applicant company were unfounded.

35.  On 15 May 2013 the applicant company requested the withdrawal of the panel of the Court of Appeal considering Blasco’s application for reopening. It mainly focussed on the allegation that the debtor had missed the three-year time-limit for lodging the application (see paragraph 49 below) and that, by examining such a belated request, the court was discriminating against it and favouring a State debtor over a foreign company.

36.  On 30 May 2013 the Court of Appeal quashed its own decision of 27 October 2009 in the light of the “newly discovered circumstances”. The court stated that the application had been lodged by Blasco within the statutory three-year time‑limit. On the substance, it found that the applicant company’s claims had been based only on agreements signed by Blasco’s managers between 1997 and 2001 acknowledging certain debts. However, the documents discovered by the prosecutor’s office in 2012 showed that there was no basis in fact for the alleged underlying debt: the applicant company had acquired its claims from Columbus. Columbus’s claims, in turn, had been based on charterparties for Blasco’s vessels (see paragraphs 9 and 10 above). The Court of Appeal found that charterers had presented unsubstantiated bills to Blasco for vessel operating costs which were the charterers’ responsibility to bear. The court concluded that the applicant company’s claims could not be recognised in the bankruptcy proceedings.

37.  On 17 June 2013 the applicant company appealed. It argued, in particular, that it had acquired only Columbus’s claims against Blasco and not its obligations vis‑à-vis Blasco. Moreover, the charterparties to which the Court of Appeal referred had been governed by English law and subject to London arbitration. However, the Court of Appeal had failed to establish that Blasco did in fact have valid claims against Columbus under those contracts and, if so, whether it had attempted to settle them through arbitration. Moreover, the circumstances on which the Court of Appeal had based its decision were not really “newly established” as the courts had been aware of them since at least 24 February 2006 (see paragraph 20 above).

38.  On 8 October 2013 the HCC dismissed the appeal and upheld the decision of 30 May 2013. The applicant company was served with the earlier decision on 12 November 2013.

39.  On 31 December 2013 the applicant company lodged an application for a review of the HCC ruling by the Supreme Court (see the relevant provisions of domestic law in paragraph 47 below). It argued that: (i) the lower courts’ assessment that there were “newly established” circumstances in the case justifying reopening had been erroneous, in particular because Blasco had failed to prove that it had been unaware of the circumstances it had cited as “newly established”; (ii) the courts had erred in their assessment of the evidence in finding that Blasco had not missed the three-year time-limit to request reopening; (iii) the courts’ conclusions concerning the nature and origin of its claims against Blasco had been erroneous as they had not been supported by the evidence in the file; (iv) the HCC had applied the general provisions of the Code of Commercial Procedure concerning evidence and the requirement that judicial decisions be lawful in a divergent manner; (v) the applicant company had been discriminated against in breach of international treaties.

40.  On 11 February 2014 an HCC panel declared the applicant company’s application for Supreme Court’s review inadmissible. It held that the HCC’s ruling concerned the question of whether it was appropriate to reopen proceedings in light of the newly established circumstances, which was a matter of procedural rather than substantive law. There were, therefore, no grounds to examine the petition by the Supreme Court (see paragraph 47 below for the relevant provisions of the domestic law).

41.  According to the applicant company, it only became aware of the ruling of 11 February 2014 on 15 July 2014.

D.  The Commercial Court’s building

42.  In May 2005 the Commercial Court and the Court of Appeal moved into an office building at 29 Shevchenko Boulevard in Odessa. According to the applicant company, that building used to belong to Blasco and remained on Blasco’s balance sheet. According to a clipping from an Odessa newspaper submitted by the application company, at a press conference in 2001 Blasco’s then CEO stated that, while the bankruptcy proceedings were pending against Blasco, the Commercial Court was looking for new premises. Accordingly, Blasco transferred that building to the court in order to secure the court’s cooperation in accelerating the examination of the company’s cases.

II.  RELEVANT DOMESTIC LAW

A.  Constitution of 1996

43.  Article 126 of the Constitution declares the principle of the independence of judges and provides that they can be removed only in the cases explicitly defined in the Constitution, such as expiry of term of office, disability and so forth.

B.  Code of Commercial Procedure of 1991

44.  At the material time the Code contained the following rules.

45.  Article 17 of the Code provided that where, in the case of a successful request for the withdrawal of a judge, a commercial court is unable to examine a case, the case shall be transferred to the closest other court.

46.  Article 20 required judges who were related to the parties or whose impartiality could be doubted for other reasons to withdraw. The parties could request the withdrawal of the judges on the same grounds. In such cases the judicial formation dealing with the case decided the request.

47.  The Law of 7 July 2010 reformed the procedure for the review of decisions in commercial cases.

The reformed provisions provided for the examination of commercial cases at first instance by regional commercial courts, on appeal by commercial courts of appeal and, in cassation, by the High Commercial Court (“the HCC”).

Following a review in cassation by the HCC, the parties could lodge an application for a review of the case by the Supreme Court in the following cases:

(i) in the event of a divergent application of the same provisions of substantive law by the courts of cassation (at the time HCC, High Administrative Court and the High Court on Civil and Criminal Matters) which led to divergent decisions on the merits of cases; or

(ii) in the event of finding of a violation of an international treaty by an international judicial institution in the course of the examination of the case (Article 111-16).

Applications could be lodged within three months of the delivery of the relevant decision of the HCC or, if the divergence in the case-law occurred after the delivery of that decision, within a year of its delivery (Article 111‑17 § 1 of the Code).

The question of whether an application was to be admitted for examination by the Supreme Court was assessed by a panel composed of five HCC judges. The panel examined the application in camera and had to give its ruling, which had to be reasoned, within fifteen days of the applicant’s submission (Article 111-21).

48.  The provisions which governed the review of decisions in commercial cases prior to the 2010 reform can be found in MPP Golub v. Ukraine ((dec.), no. 6778/05, 18 October 2005).

49.  Article 112 § 2 (1) of the Code defined “newly established circumstances” as circumstances material for the case which were not known and could not be known to the party requesting a reopening of proceedings at the time the case was examined. Article 113 § 1 of the Code provided that a reopening could only be requested based on such circumstances within three years of the judicial decision in the case becoming final.

THE LAW

I.  SCOPE OF THE APPLICATION TO THE COURT

50.  In its application form of 25 September 2009 the applicant company alleged, in particular, under Article 6 § 1 of the Convention that the domestic courts which had dealt with its case had lacked impartiality, because they were allegedly using the debtor’s building and because the first-instance court president had corresponded with executive authorities (as described in paragraphs 24 and 42 above). They also complained that the proceedings concerning the recognition of its claims in the bankruptcy proceedings had been unreasonably lengthy.

The applicant company also complained in the same application form, under Article 1 of Protocol No. 1 to the Convention, that its right to peaceful enjoyment of its possessions had been breached in that (i) the domestic courts had failed to recognise its claims against Blasco in the bankruptcy proceedings and (ii) the bankruptcy proceedings had not in themselves been capable of protecting its interests.

51.  In letters of 19 November 2010, 29 April and 13 September 2011, 29 February, 25 July and 28 December 2012, 30 April and 30 July 2013 and 21 January and 7 July 2014 the applicant company maintained those complaints, stating in particular that there had been “no substantial developments” in the bankruptcy proceedings and that the “Ukrainian courts at all instances [had] failed to provide fair, adequate and lawful bankruptcy proceedings and to protect the property rights of the applicant”.

52.  In its letter of 10 December 2014 the applicant company complained that its rights under Article 6 § 1 and Article 1 of Protocol No. 1 had been breached on account of the quashing of the final decision of the Court of Appeal of 27 October 2009 which recognised the applicant company’s claims.

II.  ALLEGED VIOLATIONS OF ARTICLE 6 OF THE CONVENTION

53.  The applicant company complained that the domestic courts which had dealt with its case had lacked impartiality and that the proceedings concerning the recognition of its claims in the bankruptcy proceedings against Blasco had been unreasonably lengthy. It relied on 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 within a reasonable time by an independent and impartial tribunal established by law.”

A.  Admissibility

1.  The parties’ submissions

54.  The Government submitted that the applicant company’s complaints concerning the quashing of the Court of Appeal’s decision of 27 October 2009 had been lodged out of time as they had been submitted on 10 December 2014 (see paragraph 52 above), that is to say more than six months from the HCC’s final decision on the matter, adopted on 8 October 2013 (see paragraph 38 above).

55.  The applicant company argued that its submissions in respect of the quashing of the decision which had recognised its claims were merely an elaboration and development of the original complaints contained in its application form (see paragraph 50 above). The quashing itself had merely been another episode in what it believed was a continuing situation  the ineffectiveness of bankruptcy proceedings as a process. In any event, a further appeal lay against the HCC’s decision to the Supreme Court (see paragraph 47 above). That remedy was effective in theory even though it had proven without result in practice as the HCC had refused it leave to apply for a Supreme Court review and it had only become aware of that decision on 15 July 2014 (see paragraph 40 above). As there was still no decision by the Supreme Court on the substance of its application for review, the situation of unfairness still persisted.

2.  The Court’s assessment

(a)  Reconsideration of the decision to recognise the applicant company’s claim in the bankruptcy proceedings

56.  The Court reiterates that it is the facts alleged by the applicant and not their legal characterisation under the Convention proposed by the applicant that are key to the application of the six-month rule (see Radomilja and Others v. Croatia [GC], nos. 37685/10 and 22768/12, §§ 115 and 120, 20 March 2018). The mere fact that the applicant invoked Article 6 in his or her application is not sufficient to constitute introduction of all subsequent complaints made under that provision where no indication has initially been given of the factual basis of the complaint and the nature of the alleged violation (see Ramos Nunes de Carvalho e Sá v. Portugal [GC], nos. 55391/13 and 2 others, § 103, 6 November 2018). The complaints the applicant proposes to make under Article 6 of the Convention must contain all the parameters necessary for the Court to define the issue it will be called upon to examine, as will the Government should the Court decide to invite them to submit observations on the admissibility and/or merits of the case (ibid., § 104).

57.  The applicant company did not provide the Court with any information concerning the quashing of the ruling recognising its claims until 10 December 2014 (see paragraph 52 above). Before that date, the Court had no factual information related to the quashing of that decision. Indeed, the original application was based on quite a different factual basis since, at the time it was lodged, on 25 September 2009, the courts were still refusing to recognise the applicant company’s claims. Fundamental changes in that situation occurred on 27 October 2009, when the claims were recognised, and on 30 May 2013, when that decision was quashed (see paragraphs 30 and 36 above).

58.  The applicant company’s argument that the quashing was a mere episode in the “overall situation” of ineffectiveness of the bankruptcy proceedings is unconvincing. The Court considers that the two questions are quite distinct: before asking the question of whether the proceedings were an effective tool for the protection of the rights of creditors it had to be determined whether the applicant company was such a creditor.

59.  It remains to be determined whether the applicant company’s new complaint, lodged on 10 December 2014, was lodged within the six-month time-limit. The ruling recognising the applicant company’s claim was quashed on 30 May 2013 and that ruling was upheld by the HCC on 8 October 2013 (see paragraphs 36 and 38 above respectively). That decision was served on 12 November 2013, more than six months before the introduction of this new complaint. Therefore, the answer to the question of whether the new complaint was lodged out of time depends on whether an application for review to the Supreme Court was an effective remedy to be exhausted at the relevant time.

60.  The applicant company submitted that it was, but the Court is not convinced by that argument. The rules applicable to such applications at the relevant time were analogous to those examined in Karuna v. Ukraine ((dec.), no. 43788/05, 3 April 2007). In that case the Court concluded that at the relevant time, applications for a rehearing by the Supreme Court were akin to requests for a reopening of the proceedings and Article 6 did not apply to the proceedings concerning them. In Bulanov and Kupchik v. Ukraine (nos. 7714/06 and 23654/08, § 32, 9 December 2010) the Court found that such applications were not an effective domestic remedy to be used in administrative cases.

61.  The Court sees no reason to reach a different conclusion in the present case. While prior to the legislative changes of 2010 an appeal in cassation to the Supreme Court was an effective remedy in commercial cases (see MPP Golub v. Ukraine (dec.), no. 6778/05, 18 October 2005), the legislative changes of 2010 (see paragraph 47 above) made the situation of the Supreme Court in commercial proceedings fully analogous to the one which it had previously played in administrative proceedings.

62.  In fact, under the provisions which were applicable in the present case the role of the Supreme Court was even more restricted than its role in administrative proceedings as analysed in Karuna and Bulanov: while in administrative proceedings, as examined in those two cases, the only grounds for a review by the Supreme Court was divergence in the case-law of higher courts (including on matters of both substantive and procedural law), in the post-2010 commercial proceedings, such a divergence had to be limited to substantive law only, to the exclusion of procedural matters.

63.  To be sure, there can be circumstances where even a request to reopen proceedings which ended in a final decision can exceptionally be considered an effective remedy, in the light of particular features of the domestic law (see, for example, Barać and Others v. Montenegro, no. 47974/06, § 28, 13 December 2011). However, that was not the case here. The applicant company’s application for review did not meet the very restrictive criteria for the admissibility of such applications, as it concerned matters of fact and the application of procedural law in the company’s case rather than any divergence in the high courts’ interpretation of the substantive law (see paragraphs 39 and 40 above).

64.  To recap, the applicant company lodged its complaint concerning the quashing of the final judicial decision recognising its claims in the bankruptcy proceedings on 10 December 2014, more than six months after 12 November 2013, the date when the HCC’s decision dismissing its appeal in that respect was served on it (see paragraphs 52 and 38 respectively).

65.  It follows that this part of the application it was lodged outside of the six-month time-limit and must therefore be rejected as inadmissible pursuant to Article 35 §§ 1 and 4 of the Convention.

(b)  Independence, impartiality and the length of proceedings

66.  However, the same conclusion cannot be reached in respect of the applicant company’s complaints concerning the independence and impartiality of the domestic courts and the length of proceedings. Those complaints, including all the key arguments and facts on which the applicant company continues to rely, were included in the application form lodged on 25 September 2009 (see paragraph 50 above).

67.  The Court notes that this part of the application 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

1.  Impartiality

(a)  The parties’ submissions

68.  The applicant company submitted that the courts which had dealt with its case had not been independent and impartial. In its application form, it pointed to the wording of the letters from the president of the Commercial Court to various executive authorities (see paragraph 24 above), which showed, according to the applicant company, the court’s servile rather than impartial attitude towards the executive. It also alleged that the Commercial Court and the Court of Appeal were using as their offices the building which used to belong to the debtor, Blasco, and which had been made available for the court’s use in 2005, while the bankruptcy proceedings were pending (see paragraph 42 above).

69.  The Government described the constitutional and legislative guarantees of the judges’ independence and impartiality, notably the procedures for their appointment and removal, as well as their duty to be impartial and to withdraw if there are any justified doubts in that respect (see paragraphs 43 and 46 above). In their view, those provisions adequately secured the judges’ independence and impartiality. There was no evidence that the judges in charge of the case had failed to comply with their duties in that respect or that the guarantees were insufficient. As to the court president’s letters referred to by the applicant company, they merely showed the efforts of the court president to ensure the lawful conduct of the debtor and State authorities in the context of the bankruptcy proceedings. The applicant company had repeatedly requested the withdrawal of the judges and those requests had been duly examined and found to be groundless.

(b)  The Court’s assessment

(i)  Relevant general principles

70.  In order to establish whether a tribunal can be considered to be “independent” within the meaning of Article 6 § 1, regard must be had, inter alia, to the manner of appointment of its members and their term of office, the existence of guarantees against outside pressures and the question whether the body presents an appearance of independence. The Court observes that the notion of the separation of powers between the executive and the judiciary has assumed growing importance in its case-law. However, neither Article 6 nor any other provision of the Convention requires States to comply with any theoretical constitutional concepts regarding the permissible limits of the powers’ interaction (see Ramos Nunes de Carvalho, cited above, § 144).

71.  The existence of impartiality for the purposes of Article 6 § 1 must be determined according to both (i) a subjective test, where regard must be had to the personal conviction and behaviour of a particular judge (that is to say whether the judge held any personal prejudice or bias in a given case); and (ii) an objective test – that is to say by ascertaining whether the tribunal itself (and, among other aspects, its composition) offered sufficient guarantees to exclude any legitimate doubt in respect of its impartiality (see, for example, Morice v. France [GC], no. 29369/10, § 73, ECHR 2015). As to the objective test, it must be determined whether, quite apart from the judge’s conduct, there are ascertainable facts which may raise doubts as to his or her impartiality. This implies that, in deciding whether in a given case there is a legitimate reason to fear that a particular judge, or a body sitting as a bench, lacks impartiality, the standpoint of the person concerned is important but not decisive. What is decisive is whether this fear can be held to be objectively justified (ibid., § 76). The objective test mostly concerns hierarchical or other links between the judge and other protagonists in the proceedings. In this connection even appearances may be of a certain importance or, in other words, “justice must not only be done, it must also be seen to be done”. What is at stake is the confidence which the courts in a democratic society must inspire in the public (ibid., § 77 and 78).

72.  The concepts of independence and objective impartiality are closely linked and, depending on the circumstances, may require joint examination (see Ramos Nunes de Carvalho, cited above, § 150).

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

73.  The applicant company did not put forward any arguments to show that the domestic courts or judges that examined its case lacked independence from the executive in terms of the manner of their appointment, term of office or the existence of formal guarantees against outside pressures. Indeed, domestic law, as pointed out by the Government, provides guarantees in that respect (see paragraph 43 above).

74.  There is no material before the Court which would call into doubt the impartiality of the judges who dealt with the applicant company’s case under the subjective test.

75.  It remains to ascertain whether the judges and the courts met the test of objective impartiality.

(α)  Commercial court’s president’s correspondence with executive authorities

76.  The Court observes that the correspondence in question (see paragraph 24 above) was mainly dedicated to the court president’s efforts to ensure that the bankruptcy proceedings unfolded in a lawful manner. In that regard the situation in the present case is different from those cases where the Court found violations of the principle of impartiality because executive authorities made direct interventions in cases and the court presidents responded to them with reports on measures taken (see Sovtransavto Holding v. Ukraine, no. 48553/99, § 80, ECHR 2002‑VII, and Agrokompleks v. Ukraine, no. 23465/03, § 130, 6 October 2011). That being said, certain formulations used in the court president’s correspondence in the present case can be seen as open to cricitism. However, there is no need for the Court to take a definitive stance on this issue in view of its conclusion below that the principle of impartiality has, in any case, been breached for other reasons.

(β)  Alleged use of the debtor’s building

77.  Turning to the question of the alleged use by the court of the debtor’s former building, the Court finds it particularly relevant that the proceedings in question concerned bankruptcy, a procedure in which the function of the domestic courts was to ensure an orderly distribution of the debtor’s assets between its creditors.

78.  The applicant company provided, both to the domestic court and this Court, prima facie evidence that the commercial court in charge of the bankruptcy case was itself housed in a building that had been transferred from the debtor to the courts not long before the launch of the bankruptcy proceedings, when the debtor was already in financial distress, and that that transfer was completed when the bankruptcy proceedings were already under way (see paragraphs 42 and 32 above). There was no response to the applicant company’s arguments in that respect, other than one judge’s ruling that she was not affected by that transfer as she had taken over the case at a later date (see paragraph 33 above).

79.  It is notable that the judge, even in dismissing the request for withdrawal, did not question that the transfer had indeed happened as alleged by the applicant company.

80.  In such circumstances the Court must conclude that, despite the absence of reasons to doubt the impartiality of the individual judges concerned, the applicant company’s perception that the court dealing with its case lacked impartiality can be seen, by an objective observer, as not manifestly devoid of merit (compare, for example, Belukha v. Ukraine, no. 33949/02, § 54, 9 November 2006, where a violation was found because a court president had requested and received free of charge equipment for the court from the defendant in Ms Belukha’s case). This perception concerned the first-instance court itself, as opposed merely to any individual judge (see, mutatis mutandis, Boyan Gospodinov v. Bulgaria, no. 28417/07, § 55, 5 April 2018).

81.  For that reason the only response of the domestic courts to the applicant company’s concerns in that respect, to the effect that one individual judge of the Commercial Court was not personally affected by the transfer, cannot be seen as sufficient. The Court reiterates that Article 6 § 1 of the Convention imposes an obligation on every national court to check whether, as constituted, it is "an impartial tribunal" within the meaning of that provision where, as in the instant case, this is disputed on a ground that does not immediately appear to be manifestly devoid of merit. However, in the present case neither the Commercial Court nor the Court of Appeal conducted such a check which would have made it possible to remedy, if it proved necessary, a situation contrary to the requirements of the Convention (see, mutatis mutandis, Remli v. France, 23 April 1996, § 48, Reports of Judgments and Decisions 1996‑II).

82.  Regard being had to the confidence which the courts must inspire in those subject to their jurisdiction, these considerations are sufficient for the Court to find that there has been a violation of Article 6 § 1 of the Convention in respect of the impartiality requirement.

2.  Length of proceedings

(a)  The parties’ submissions

83.  The applicant company complained that the proceedings in its case had started in September 2003 and had still been ongoing when it had submitted its observations in reply to those of the Government (10 July 2018) and, therefore, in its estimation, the proceedings had been ongoing for fifteen years.

84.  The Government submitted that the subject matter of the proceedings was complex – the bankruptcy case file ran to 120 volumes, and there were many parties involved. The applicant company had itself contributed to the length of the proceedings by lodging various applications and requests.

(b)  The Court’s assessment

85.  The applicant company sought recognition of its claim against the debtor company on 29 September 2003. Those claims were finally recognised on 8 August 2012 (see paragraphs 15 and 31 above). However, then the proceedings for a reopening in view of “newly established circumstances” started on 29 March 2013, when the debtor lodged a request to that effect. They ended on 8 October 2013, when the HCC upheld the decision to quash the decision recognising the applicant company’s claims (see paragraphs 34 and 38 above).

86.  The Court reiterates that extraordinary appeals seeking the reopening of terminated judicial proceedings do not normally involve the determination of “civil rights and obligations” or of “any criminal charge” and therefore Article 6 is deemed inapplicable to them (see Bochan v. Ukraine (no. 2) [GC], no. 22251/08, § 44, ECHR 2015). However, should an extraordinary appeal actually result in reconsidering the case afresh, Article 6 applies to the “reconsideration” proceedings in the ordinary way (ibid., § 46).

87.  It follows that in the present case Article 6 was applicable to the proceedings for review in the light of the newly established circumstances and that, including those proceedings, the proceedings overall lasted for ten years and one month.

88.  The Court reiterates that the reasonableness of the length of proceedings must be assessed in the light of the circumstances of the case and with reference to the following criteria: the complexity of the case, the conduct of the applicants and the relevant authorities and what was at stake for the applicants in the dispute (see Frydlender v. France [GC], no. 30979/96, § 43, ECHR 2000-VII).

89.  In Svetlana Naumenko v. Ukraine (no. 41984/98, 9 November 2004), the Court already found a violation in respect of issues similar to those in the present case.

90.  Having examined all the material submitted to it, the Court has not found any fact or argument capable of persuading it to reach a different conclusion. Having regard to its case-law on the subject, the Court considers that in the instant case the length of the proceedings was excessive and failed to meet the “reasonable time” requirement.

91.  There has, therefore, been a violation of Article 6 § 1 of the Convention in respect of the length of proceedings.

III.  ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1

92.  The applicant company complained that the domestic courts had quashed the final domestic decision recognising its claims in the bankruptcy proceedings and had failed to recognise its claims. It also complained that the bankruptcy proceedings had been ineffective as a tool for protecting the creditors’ rights. It relied on Article 1 of Protocol No. 1, which reads, in so far as relevant:

“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.

...”

93.  The Government contested those arguments. Subject to their submissions on admissibility (see paragraph 54 above), they were prepared to acknowledge that the quashing of the final decision in the applicant company’s favour had constituted an interference with its right to peaceful enjoyment of its possessions. However, that interference had been lawful, had pursued the public interest in the legality of the bankruptcy proceedings and protection of the interests of the debtor’s other creditors, and had been proportionate.

94.  As far as the first aspect of the complaint is concerned, it was lodged outside of the six-month time-limit for the same reasons as the analogous complaint under Article 6 (see paragraphs 56 to 65 above) and must therefore be rejected as inadmissible pursuant to Article 35 §§ 1 and 4 of the Convention.

95.  Even assuming that the second element of applicant company’s complaint under Article 1 of Protocol No. 1, namely that the bankruptcy proceedings were an ineffective tool for protecting the creditors’ rights, can be seen as distinct and, therefore, assuming that it was not lodged out of time, the Court still needs to ascertain that the applicant company had a “possession” so as to make Article 1 of Protocol No. 1 applicable in respect of that complaint.

96.  Article 1 of Protocol No. 1 does not guarantee the right to acquire property. An applicant can allege a violation of Article 1 of Protocol No. 1 only in so far as the impugned decisions related to his “possessions” within the meaning of this provision. “Possessions” can be either “existing possessions” or assets, including claims, in respect of which the applicant can argue that he or she has at least a “legitimate expectation” of obtaining effective enjoyment of a property right (see Kopecký v. Slovakia [GC], no. 44912/98, § 35, ECHR 2004‑IX).

97.  The proprietary interest relied on by the applicant company was in the nature of a claim and cannot be characterised as an “existing possession” within the meaning of the Court’s case-law (ibid., § 41). It remains to ascertain whether the applicant company nevertheless had a “legitimate expectation” to obtain recognition of that claim.

98.  The domestic courts eventually concluded that its claim was unfounded. The operation of the six-month rule, which marks out the temporal limit of the supervision exercised by the Court (see Sabri Güneş v. Turkey [GC], no. 27396/06, § 40, 29 June 2012) prevents the Court from reviewing the merits of that decision (see paragraphs 56 to 65 above).

99.  According to the Court’s case-law, no “legitimate expectation” can be said to arise where there is a dispute as to the correct interpretation and application of domestic law and the applicant’s submissions are subsequently rejected by the national courts (see Béláné Nagy v. Hungary [GC], no. 53080/13, § 75, 13 December 2016).

100.  Therefore, this part of the application is incompatible with the Convention ratione materiae and must be rejected as inadmissible pursuant to Article 35 §§ 3 (a) and 4.

IV.  APPLICATION OF ARTICLE 41 OF THE CONVENTION

101.  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

102.  The applicant company claimed 3,895,026.33 United States dollars (USD) in respect of pecuniary damage, comprising the amount of the original claim, USD 2,021,370.13 (see paragraphs 12 and 15 above), increased to compensate for the delay in payment. The applicant company also claimed EUR 65,000 in respect of non-pecuniary damage.

103.  The Government submitted that those claims were excessive and unsubstantiated and that there was no causal link between the violations the applicant company alleged and its pecuniary damage claim.

104.  The Court does not discern any causal link between the violations found and the pecuniary damage alleged; it therefore rejects this claim. On the other hand, ruling on an equitable basis, it awards the applicant company EUR 10,000 in respect of non-pecuniary damage.

B.  Costs and expenses

105.  The applicant company also claimed 17,365.44 hryvnias (UAH – approximately EUR 558) for the costs and expenses incurred before the domestic courts and UAH 15,791.72 (approximately EUR 507) for those incurred before the Court. It submitted documentary evidence in support of the claims.

106.  The Government considered that those claims were unsubstantiated.

107.  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 documents in its possession and the above criteria, the Court considers it reasonable to award the sum of EUR 650 covering costs under all heads.

C.  Default interest

108.  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.  Declares the complaints under Article 6 § 1 of the Convention in respect of the independence and impartiality of the domestic courts and in respect of the length of proceedings admissible and the remainder of the application inadmissible;

2.  Holds that there has been a violation of Article 6 § 1 of the Convention in respect of the impartiality requirement;

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

4.  Holds

(a)  that the respondent State is to pay the applicant company, 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 10,000 (ten thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;

(ii)  EUR 650 (six hundred and fifty euros), plus any tax that may be chargeable to the applicant company, 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 company’s claim for just satisfaction.

Done in English, and notified in writing on 27 June 2019, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Claudia Westerdiek Angelika Nußberger
RegistrarPresident

 

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