THIRD SECTION
DECISION
Application no. 32846/07
DANIEL-P S.A.
against Moldova
The European Court of Human Rights (Third Section), sitting on 20 March 2012 as a Chamber composed of:
Josep Casadevall, President,
Corneliu Bîrsan,
Alvina Gyulumyan,
Ján Šikuta,
Luis López Guerra,
Nona Tsotsoria,
Mihai Poalelungi, judges,
and Santiago Quesada, Section Registrar,
Having regard to the above application lodged on 6 July 2007,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,
Having deliberated, decides as follows:
THE FACTS
1. The applicant, Daniel-P S.A., is a company registered in Cahul, Moldova. It was represented before the Court by Mr S. Cozma, a lawyer practising in Cahul. The Moldovan Government (“the Government”) were represented by their Agent, Mr V. Grosu.
A. The circumstances of the case
2. The facts of the case, as submitted by the parties, may be summarised as follows.
1. Privatisation by the applicant company
3. In 1997 the Government of Moldova submitted to parliament a bill “On the Privatisation Programme for 1997-1998”, which parliament enacted in 1997. The appendix to the Act listed the State property to be privatised, which included Zidarul-Cahul S.A. (“Z.”), a company specialised in producing environmentally friendly building materials. The state owned 97% of Z.’s shares. The Act provided that the Department for the Privatisation of State Property (“the Department”) would organise the privatisation of the property listed in the appendix.
4. The Department created an Auction Commission. The Auction Commission offered Z.’s shares belonging to the State on eight separate occasions, but no one was interested in buying them. On one such occasion, the starting price for the entire lot was 447,000 Moldovan lei (MDL).
5. Between July and September 2004 the Auction Commission again offered the State’s shares in Z. for sale, at a starting price of MDL 1,235,468 (approximately 84,700 euros (EUR) at the time). The applicant company was the only interested buyer and made an offer to buy the shares at their starting price set by the authorities. The applicant company provided a list of appended documents which it submitted together with its notification of intent to participate in the auction. Amongst the documents listed in the appendices were financial documents regarding the applicant company’s economic performance during the year prior to making the privatisation request. After additional negotiations, the applicant company agreed to pay MDL 2,500,000 for the lot (approximately EUR 171,500 at the time).
6. On 8 October 2004 the applicant company and the Department concluded the contract for the sale of Z.’s shares. Under the terms of the contract, the applicant company undertook to keep and further develop Z.’s production profile, to maintain the jobs of the 40 people working for Z. and to hire 210 more, as well as to reduce the ecological impact of production. According to the applicant company, it has fully complied with these undertakings.
7. In accordance with the privatisation certificate issued by the Department on 21 January 2005, Z.’s property bought by the applicant company included, inter alia, over thirty buildings and its own access to the railway network.
2. Annulment of the privatisation
8. On an unspecified date in 2005 the Agency for Construction and Development of Territory (“the Agency”), which was the central authority responsible for Z.’s management before its privatisation, initiated court proceedings against the applicant company and the Department, seeking the annulment of the sale of Z.’s shares.
9. On 11 May 2006 the Economic Court of Appeal allowed the Agency’s request and annulled the sale of Z.’s shares. The applicant company was ordered to return 97% of Z.’s shares to the State in exchange for the price paid for those shares. The court found that the sale had not taken place in accordance with the law. In particular, the central authority responsible for Z.’s management (the Agency) had not given its approval to the sale, contrary to the law. Moreover, Z. had not been correctly valued because an unfinished building belonging to it had not been reflected in the valuation. Finally, the applicant company had failed to submit financial documents regarding its economic performance during the year prior to making the privatisation request, as required by law.
10. The applicant company appealed. It stated, inter alia, that it had submitted all the necessary documents, and listed them in the appendices to its notification of intent to bid. Had it not submitted any of the documents required by law, the Auction Commission (which included a representative of the Agency, an authority opposed to the sale) would not have allowed it to participate in the auction. Also, Z.’s detailed valuation had been carried out in compliance with the relevant legislation. Moreover, it was clear from the financial documents that Z. had had significant debts and that expensive equipment had been unlawfully removed from it in the years before privatisation. The relatively low starting price of the sale had been the result of a lack of interest from potential buyers during the eight previous attempts to sell Z. Finally, even assuming that an unfinished building should have been included in the valuation, it could not have doubled the overall value of the company. Hence, any additional value from such a building would have been included in the final price paid for the shares, which was more than double their starting price set by the authorities.
11. The Department also appealed. It submitted, inter alia, that the Agency’s agreement had not been necessary for Z.’s privatisation. The decision to include an object in the list of privatised objects or to exclude it from that list belonged exclusively to the Government. Moreover, the initial starting price at which Z.’s shares had been offered for sale had been calculated in strict compliance with the relevant Government decision. Taking into consideration the eight failed attempts to sell Z.’s shares and that the starting price had at some point been MDL 447,000, the final price of MDL 2,500,000 for which the applicant company had eventually bought them had been acceptable and real. Finally, the unfinished building had been reflected in the valuation, despite the fact that the building had in fact been unlawfully transferred by the Cahul municipality for free to a private company. Hence, the building should not have been included in the valuation in any event.
12. By its final judgment of 25 January 2007 the Supreme Court of Justice upheld the lower court’s judgment. The court noted that the Agency had not agreed to the sale of Z.’s shares, as required by law. Without giving a reasoned response to the Agency’s position, the Department had decided to continue with the sale of Z.’s shares. Moreover, Z.’s unfinished building had not been reflected in the valuation of its shares, leading to a diminished sale price. There was nothing in the file to confirm the appellants’ contention that the building had in fact been reflected in the valuation.
13. The judgment of 11 May 2006 (as upheld by the judgment of 25 January 2007) was partly enforced on 30 July 2007 by transferring MDL 2,500,000 to the applicant company’s account. According to the Government, and undisputed by the applicant company, the State has never recovered any of Z.’s shares, which have been in the applicant company’s possession since their purchase. According to the applicant company, as a result of the actions taken by the State authorities in view of enforcing the judgment of 11 May 2006, its bank account had been frozen and other property seized since January 2005, leading to the disruption of the company’s activity.
3. Reopened proceedings
14. On 24 September 2009 the Supreme Court of Justice allowed the applicant company’s request for the reopening of the proceedings. It found that the applicant company had previously made similar requests, but that this time it had also invoked a violation of its Convention rights. The court therefore decided to apply the Court’s case-law in cases concerning the reopening of final judgments in order to remedy miscarriages of justice. It then directly relied on Article 1 of Protocol No. 1 to the Convention and found that the applicant company had fully complied with the conditions of the auction organised by the State authorities during Z.’s privatisation. Any irregularities established in the process of that privatisation had not been attributable to the applicant company. The court annulled the judgment of 25 January 2007 and decided that it would re-examine the applicant company’s appeal at a later stage.
15. On 15 October 2009 the Supreme Court of Justice examined the appeal lodged by the applicant company against the judgment of 11 May 2006 and annulled that judgment. It ordered that the parties be brought to the position in which they had been before the enforcement of the judgment of 11 May 2006. The court found that there had been no legal ground for annulling the sale of shares to the applicant company, the property right of which had been “gravely breached”, and that the lower court had allowed “a legal error”. Relying on domestic legal provisions and Article 1 of Protocol No. 1 to the Convention, it rejected all the claims against the applicant company.
B. Relevant domestic law
16. The relevant parts of the Civil Code read as follows:
“Article 267. The general limitation period.
1. The general limitation period for protection through a court action of a person’s rights is three years.
...
Article 1398. Grounds and general conditions for responsibility.
1. A person who intentionally acts illegally towards another shall compensate for any pecuniary damage caused, and in the cases provided for by law shall also compensate for any non-pecuniary damage caused through his or her action or failure to act.
2. Compensation for damage caused by lawful acts or in the absence of intent shall be paid only in the cases expressly provided for by law.
...”
COMPLAINT
17. The applicant company complained under Article 1 of Protocol No. 1 to the Convention that it had been unjustly deprived of its property even though it had complied with all the conditions for privatisation established by the authorities.
THE LAW
18. The Government argued that following the adoption of the judgments of 24 September and 15 October 2009 (see paragraphs 14 and 15 above) the applicant company could no longer claim to be a victim of a violation of its Convention rights.
19. The applicant company claimed that it had suffered damage as a result of the actions taken by the State authorities in view of enforcing the judgment of 11 May 2006 (see paragraph 13 above).
20. The Court reiterates that under Article 34 of the Convention it may receive applications from any person claiming to be the victim of a violation by one of the High Contracting Parties of the rights set forth in the Convention or the Protocols thereto. It falls first to the national authorities to redress any alleged violation of the Convention. In this regard, the question whether an applicant can claim to be a victim of the violation alleged is relevant at all stages of the proceedings under the Convention (see, among others, Burdov v. Russia (no. 2), no. 33509/04, § 54-60 and 100, ECHR 2009 (extracts)). A decision or measure favourable to an applicant is not, in principle, sufficient to deprive him of his status as a “victim” unless the national authorities have acknowledged, either expressly or in substance, and then afforded redress for, the breach of the Convention (see Dalban v. Romania [GC], no. 28114/95, § 44, ECHR 1999-VI). As to the redress which is appropriate and sufficient in order to remedy a breach of a Convention right at national level, the Court has generally considered this to be dependent on all the circumstances of the case, having regard, in particular, to the nature of the Convention violation at stake (see, as recent authorities, Gäfgen v. Germany [GC], § 116 et seq., ECHR 2010, and Sakhnovskiy v. Russia [GC], no. 21272/03, §§ 76-84, 2 November 2010).
21. Turning to the circumstances of the present case, the Court notes that the applicant company had fully exhausted available domestic remedies before lodging its application with the Court. It therefore did not have to attempt to exhaust any other remedy available at the domestic level (see, for example, Airey v. Ireland, 9 October 1979, § 23, Series A no. 32). Nonetheless, it lodged a request with the Supreme Court of Justice asking for the reopening of the proceedings. That court fully accepted the applicant company’s request and quashed the final judgment in the original proceedings (see paragraphs 14 and 15 above). In doing so, it also expressly established a violation of the applicant company’s right protected under Article 1 of Protocol No. 1 to the Convention (see paragraph 14 above). The above-mentioned decisions were taken prior to communication of the present application to the respondent Government.
22. The Court needs to verify whether the applicant company was offered redress for the damage caused to it by the established violation, so as to determine whether it has lost its victim status. It notes first that the applicant company was offered partial redress in the form of restoration of its ownership of the disputed property.
23. In respect of monetary compensation, it appears from the materials in the file that the applicant company has never asked for compensation from the State for any damage caused to it as a result of the proceedings against it. The Supreme Court of Justice adopted a well-reasoned judgment in which it relied on the Convention and clearly found a violation of the applicant company’s rights. However, it could not award any compensation in the absence of a claim and supporting evidence, since it would then act ultra petita. Under domestic law (see paragraph 16 above) and practice (see paragraphs 14-15 above, where the Supreme Court of Justice directly applied the Convention), the applicant company had the right to claim compensation for the decisions of the domestic courts, which have been established as wrongful by the Supreme Court of Justice. Since the general limitation period in Moldova for claiming damages is three years, the applicant company can still lodge with the domestic courts a claim for damages from the State until 24 September 2012 (see paragraph 16 above).
24. The Court observes that it has already declared inadmissible complaints where a violation of Convention rights had been fully established by the domestic courts and where the applicant had not attempted to obtain compensation at the domestic level (see, mutatis mutandis, Mătăsaru and Saviţchi v. Moldova, no. 38281/08, §§ 75-76, 2 November 2010, and Bisir and Tulus v. Moldova, no. 42973/05, §§ 36-37, 17 May 2011). It has also found in the past that the domestic courts’ decisions awarding no compensation in the absence of a claim or awarding only a part of the sum claimed in compensation corresponding to the evidence submitted to them, could be accepted as offering sufficient redress (see, for instance, Vladimir Kolobov v. Russia (dec.), no. 26528/03, 28 June 2011). It does not see any compelling reason to depart from its findings in the above-mentioned cases.
25. In view of the foregoing, the applicant company should be considered as having lost its victim status in relation to the present application. Thus, the Court concludes that the applicant company is no longer a victim of the alleged violation and that the application must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
For these reasons, the Court unanimously
Declares the application inadmissible.
Santiago QuesadaJosep Casadevall
RegistrarPresident
Full & Egal Universal Law Academy