FOMENKO AND OTHERS v. RUSSIA

THIRD SECTION

DECISION

Application no. 42140/05
Vasiliy Markovich FOMENKO against Russia
and 4 other applications
(see list appended)

The European Court of Human Rights (Third Section), sitting on 24 September 2019 as a Chamber composed of:

Paul Lemmens, President,
Paulo Pinto de Albuquerque,
Helen Keller,
Dmitry Dedov,
Alena Poláčková,
Gilberto Felici,
Erik Wennerström, judges,
and Stephen Phillips, Section Registrar,

Having regard to the above applications lodged on the various dates indicated in the appended table,

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

Having deliberated, decides as follows:

THE FACTS

1.  A list of the applicants is set out in the Appendix.

2.  The Russian Government (“the Government”) were represented by Mr P. Laptev and Ms V. Milinchuk, former Representatives of the Russian Federation to the European Court of Human Rights, and most recently by Mr M. Galperin, Representative of the Russian Federation to the European Court of Human Rights.

A.  The circumstances of the case

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

4.  The applicants are former employees of ZAO NPK(O) Energiya (the closed joint-stock company Research-and-Production Concern (Union) “Energiya”, «ЗАО Научно-производственный концерн (объединение) «Энергия» – “the debtor company”) in Voronezh.

1.  Background information about the debtor company and its housing programme in the 1980s

5.  The company was initially set up in the Soviet era as a State enterprise producing engines and turbogenerators for military purposes. It was one of the leading enterprises of the Soviet military industry and participated, notably, in the Buran Space Shuttle programme. For instance, it produced a turbogenerator power source for the space system Energiya‑Buran, as well as a power supply system for the functional cargo block of the international space station Alpha. The company owned various properties, including industrial and leisure premises (such as sports, cultural and health facilities) in Voronezh (including in the city centre) and the Voronezh Region.

6.  In the 1980s the company and the State launched a housing programme, which consisted of co-financing the construction of housing for the company’s employees. As stipulated by the contracts concluded in the late 1980s between the company’s management, its professional committee and several employees (including the applicants), the employees were to participate in construction works, and the management was to provide them with flats compliant with health and safety standards within six months.

7.  In 1989 the State stopped financing the programme (see paragraph 28 below).

2.  Judgments in the applicants’ favour against the company

(a)  Initial judicial awards

8.  The applicants brought court actions against the company for its failure to provide them with housing in accordance with the contracts.

9.  Between 1995 and 1998 (on the dates listed below) the Leninskiy District Court of the Voronezh Region ordered the defendant company to provide the applicants with flats. The judgments became final on the dates indicated in the Appendix.

10.  It appears that some 100 similar judgments obliging the company to provide employees with flats were issued by the domestic courts between 1995 and 1998.

(b)  Change of the manner of execution

11.  On various dates the applicants asked the court to change the manner of execution of the judgments.

12.  In particular, at some point Ms Vtorova and Mr Pipchenko applied to the District Court, seeking to change the manner of execution of the judgments. On 24 February 1999 the court allowed their application and ordered the defendant company to pay them the market value of the flats on the date of enforcement. As the changed operative part still remained imprecise, the applicants sought to further change the manner of execution of the judgments.

13.  Between 2001 and 2002 (on the dates indicated in the Appendix) Ms Vtorova and Mr Pipchenko, as well as the remaining three applicants in the present group of cases, obtained domestic decisions allowing their applications to change the manner of execution of the initial judgments. In all five cases the courts ruled that the debtor company was to pay the applicants monetary amounts (specified in the Appendix) instead of flats.

14.  Once the judgments were changed, writs of execution were issued by the bailiffs service and the enforcement proceedings were joined to “joint enforcement procedure no. 18” against the debtor company (see paragraph 44 below).

(c)  Applications to increase the awards in line with inflation

15.  Between 2003 and 2004 the applicants applied to the domestic courts to have their awards increased in line with inflation.

16.  On various dates in 2004 (listed in the Appendix) the domestic courts allowed the applications by Mr Fomenko, Mr Pipchenko and Mr Vorobyev and ordered that the amounts to be recovered from the debtor company be increased in line with inflation, as specified in the Appendix.

17.  Shortly after the increase of the awards, updated writs of execution were issued by the bailiffs service and the enforcement proceedings were joined to “joint enforcement procedure no. 18” against the debtor company (see paragraph 44 below).

18.  Ms Vtorova and Mr Romashov’s applications in this regard were unsuccessful. The latest first-instance court decisions in their cases were taken on 21 April 2005 and 6 September 2004 respectively. The applicants did not appeal.

(d)  Enforcement of the judgments

19.  In 2005 the debtor company started paying the debts in several instalments. By April 2007 (on the dates specified in the Appendix) the judgments in the applicants’ favour were executed in full.

3.  Information on the debtor company since 1991

(a)  The company’s incorporation as a closed company and available information about the period 1991 to 2003

(i)  Events between 1991 and 1996

20.  In 1991 the Ministry of the Electrotechnical Industry and Instrumentation of the USSR and representatives of the concern decided to convert the company into and incorporate it as a closed joint-stock company (закрытое акционерное общество), the scientific production concern Energiya. A closed joint-stock company was a legal entity whose shares were distributed among a limited number ‒ a maximum of fifty ‒ of shareholders. The parties did not provide information as to the initial owners of the company’s shares. Scarce bits of information submitted to the Court by the parties, including articles from local newspapers dated 2003 to 2004, suggest that the shares were initially owned by the company’s unspecified employees.

21.  The parties referred in general terms to the constituting documents of the company but did not submit any copies. In particular, the applicants submitted, with reference to the company’s charter, that it was a successor of the State enterprise’s obligations.

22.  In 1992 the Ministry of the Electrotechnical Industry and Instrumentation of the USSR ceased to exist. From then onwards the company was no longer in receipt of State funds.

23.  In the early 1990s the company’s management launched a large‑scale conversion programme. The company partially turned to manufacturing various types of civilian electromechanical equipment and consumer goods such as washing machines, refrigerators and repair parts, as well as electric power steering systems for passenger cars. It appears that the proportion of defence-related programmes was gradually reduced but preserved to an unknown extent, and that several military industry programmes, including the space shuttle programme, were de facto discontinued.

24.  It appears that in the meantime various assets, including property and plots of land, were transferred by the State to the debtor company, on conditions not specified by the parties. In particular, in 1992 the company received a right of perpetual use of land situated at 1a Voroshilova Street in Voronezh for the construction of a sports facility, and in 1995 entered into a twenty-year lease for an additional plot of land for the construction of a second building for the facility.

25.  According to a certificate issued by the Voronezh Town Committee of Housing Fund Management on 23 October 2006, at some point the debtor company, alone or together with private companies, commissioned the construction of five residential buildings, apparently apartment blocks, which were subsequently put into service between 1993 and January 1998. In 2000 a residential building at 4a Pobedy Avenue in Voronezh co‑commissioned by the debtor company and a private company, was put into service. No further details were provided.

(ii)  Status as a “federal scientific production centre”

26.  On 3 August 1996 by Decree no. 917 the Russian Government granted the company status as a “federal scientific production centre” (see paragraphs 146 to 151 below). Energiya was the first company in Russia to obtain that status. In 2000 the status was “confirmed” (extended) by the Government (see paragraph 151 below).

(iii)  The applicants’ submissions on tax preferences

27.  It appears that by a decision of 13 July 1998 the Voronezh Regional Duma (the regional parliament) included the company in the list of legal entities whose debts in respect of penalties and fines were to be written off, as the federal budget owed those companies for the defence order. According to the applicants, in November 1998 the Voronezh Municipal Council gave unspecified preferential advantages to enterprises providing public services in Voronezh, including the company. No details or documents were submitted.

(iv)  The company’s petition of 22 January 2002

28.  In a petition (no. 311) dated 22 January 2002 to the Ministry of Industry, Science and Technology the company’s management asked for State support in discharging its obligations towards the people involved in the construction programme, including the applicants. The company reiterated that it had been a leading enterprise in various areas crucial for the State military and space industry. However, as a result of a large-scale (лавинообразная) conversion of the defence industry, the company had suffered enormous losses exceeding 1 billion roubles (RUB) owing to the lack of regular defence orders, but also a growth in expenses related to putting into place civilian production and staff training combined with the need to maintain its industrial capacity for defence production. The company reiterated that the housing programme had been put in place when the company had been State-owned. As a State enterprise, the debtor company and the State had co-financed the housing construction for its employees. The State had stopped financing the housing construction in 1989. In 1995 the company had discontinued any construction works owing to financial difficulties. The courts had issued judgments in favour of the employees concerned, obliging the company to provide funds for the purchase of some 150 flats. However, the debt had been so significant that it could have only been repaid if the entirety of the company’s assets, including all production facilities, had been sold. The company’s assets had been regularly seized. That had created an “unfavourable climate” in the company and had put at risk the performance of its contractual obligations, including those that were defence-related. The company accordingly asked the Ministry (i) to apply to the Supreme Court to annul the judgment obliging the company to provide funds for housing[1], as the company was unable to perform its contractual obligations, under Article 451 of the Civil Code (material change of circumstances, see paragraph 155 below) and (ii) to ask the Government to allocate State funds for the purchase of 150 flats, on the proviso that the debt would be reimbursed within the next twenty‑five years.

29.  The parties did not provide any reply received by the company. The request was not granted by the Government.

(v)  Attempts to set in motion a supervision procedure

30.  On 5 March 2002 several creditors of the company (all private individuals) requested the Commercial Court of the Voronezh Region to set in motion a “supervision” procedure (процедура наблюдения) in respect of the company. On 19 April 2002 the Commercial Court refused to set the supervision procedure in motion.

31.  At some point before 23 October 2002 creditors of the company (a private individual, a municipal unitary enterprise and a private company) again requested the Commercial Court to set in motion a “supervision” procedure, seemingly in an unrelated set of proceedings (no relevant copies submitted). On 7 February 2003 the Commercial Court rejected the request. The refusal was subsequently upheld on appeal by a higher court.

(vi)  The company’s debts in 2001 to 2002 and the 2003 interview of the Head of the Bailiffs Service

32.  By August 2002 the debt of Energiya amounted to RUB 140,000,000 towards the budgets of different levels and RUB 115,000,000 towards extrabudgetary funds.

33.  On 7 March 2003 the Head of the Bailiffs Service of Voronezh, in an interview with the Novaya Gazeta-Voronezh newspaper (submitted by the applicants), stated that at some point the company had had about 200 subsidiary companies, with some of them actively involved in the alienation and sale of the company’s unspecified assets. Most of the subsidiaries had in the meantime been declared insolvent. This situation, coupled with the lack of transparency and significant debt to private creditors and budgets of various levels, had given rise to serious concern for the local authorities, who had considered putting in place insolvency proceedings in respect of Energiya. In 2002 the company’s employees had requested that insolvency proceedings be set in motion, but the Commercial Court of the Voronezh Region had rejected that request. The bailiff further assessed the company’s debts as “unrecoverable”. He stated that the company had consistently referred to a lack of funds but that, on the other hand, in 2001 its director had sold several properties at a significant undervalue to OOO I. (a joint-stock company), which he had co-founded and which had been owned at the material time by private individuals.

34.  The case files contain no documents, court decisions or further details shedding light on the above-mentioned transactions, the initial and subsequent owners of the properties or any other information on the matter.

(b)  The 2003 sale of the company’s shares and events of 2003 to 2007

(i)  The company’s debts in 2003 and the State committee

35.  As the company continued to accumulate a considerable debt in respect of salaries and mandatory payments, in June 2003 a State committee consisting of representatives of the Ministry of Industry and Science, Ministry of Property, Ministry of Defence, the Rosaviakosmos (Russian Aviation and Space) agency and the Voronezh parliament and administration examined the company’s situation. According to a local newspaper article[2] referred to by the applicants, the committee concluded that there were no signs of insolvency, observed that the company had kept its industrial and technical potential and “gave recommendations as to the choice of investor”. The article continues by stating briefly that the recommendations were not taken into account by the management of the company.

(ii)  Sale of the company’s shares in summer 2003 and shares and assets in 2003 to 2005

36.  By the end of summer 2003 the private closed company ZAO Mezhbankovskaya Investitsionnaya Gruppa (the closed joint-stock company Inter-banks Investment Group  “the MIG group”) had purchased 51% of the company’s shares, while 28% of the shares had been purchased by the private company Evraziiskiye Investitsii (“the EI”), a subsidiary of a private bank. The applicants submitted, with reference to the local press articles and without providing further details, that immediately after the purchase “the bailiffs seized the entirety of the concern’s assets” for “all debts” in the amount of “approximately RUB 80 million”. It is unclear whether the seizure took place within the enforcement proceedings concerning the applicants’ cases.

37.  It appears that the company’s numerous assets were subsequently sold to different private purchasers and further resold on several occasions. In particular, it appears that the MIG group and the EI did not manage to find a consolidated approach to managing the company. They were subsequently involved in a series of sets of domestic proceedings challenging the validity of the minutes of meetings of the board of directors and various transactions concerning properties between private companies and, in particular, the debtor company’s title to various properties. In 2005 the EI sold its shares to the MIG group.

38.  The applicants submitted, with reference to an article in the local newspaper Kommersant-Chernozemye of 23 September 2005, that the MIG group, the key owner of the company’s assets at the material time, had withdrawn more than RUB 460 million from the debtor company. In 2004 “when the bailiffs seized the company’s shares” “pursuant to a request of a private company I.” the debtor company “had to transfer” a building on Krasnoarmeyskaya Street in Voronezh to I., as payment of its debts to the latter. It is unclear whether those actions were related to the joint enforcement procedure (see below).

(iii)  New attempt to set in motion a supervision procedure

39.  At some point between December 2004 and February 2005 the local tax authority asked the Commercial Court of the Voronezh Region to set in motion insolvency proceedings in respect of the company, for its failure to comply with its obligation to pay RUB 1.1 million in taxes and mandatory payments to budgets of different levels within three months. On 1 March 2005 an insolvency case was opened by the court (case no. A14‑2158/2005/7/16б). A number of private creditors, including other employees of the company seeking enforcement of judgments similar to those of the applicants, expressed their wish to join the proceedings as co‑petitioners. On 27 July 2006 the Commercial Court rejected the tax authority’s request to set in motion a supervision procedure.

40.  The applicants’ colleagues’ requests to put in place a supervision procedure were subsequently rejected by the domestic courts as incompatible ratione personae. On 8 November 2006 the 19th Commercial Court of Appeal found that the contracts between the ex-employees and the debtor company and the obligation to provide flats derived from “employment relationships”, while only “insolvency creditors” within the meaning of the Insolvency Act – that is, creditors having an unenforced monetary claim against the debtor – could seek to have a supervision procedure put in place. Even though the judgments were subsequently amended (that is, the obligation to provide flats was replaced by an obligation to pay amounts of money), the change of the manner of execution did not alter the legal nature of the initial obligation and did not make the petitioners “insolvency creditors” within the meaning of the Insolvency Act. It appears that no cassation appeal was lodged against the refusal.

41.  Case no. A14-2158/2005/7/16б was subsequently discontinued.

42.  While in 2003 Energiya had some 5,000 employees, by 2007 only sixty-one people continued working for the company.

(c) Available information on the company’s current status

43.  It appears that the debtor company has not become insolvent. At some point its financial situation improved. Having been incorporated at a later stage as a public joint-stock company, it is still operating.

4.  Enforcement proceedings

44.  Shortly after the initial judgments had become enforceable, the bailiffs of the Leninskiy District of Voronezh initiated enforcement proceedings. Since 20 January 1999 those proceedings were part of “joint enforcement procedure no.18” in respect of the company, comprising seventy-seven separate sets of enforcement proceedings and concerning the recovery of the company’s debts to State and regional budgets, private companies and individuals, including more than one hundred judgments similar to those in the applicants’ favour.

45.  Except in the specific cases mentioned below, the parties did not submit copies of any decisions of the relevant domestic courts or bailiffs or complaints of the parties concerning specific measures taken within the enforcement proceedings, such as their suspension or, for instance, the seizure of assets. However, the applicants regularly complained to several authorities, including the bailiffs service, the Ministry of Justice, the prosecutor’s office and the President of the Russian Federation about the non-enforcement, and received replies. On the basis of several replies received from the bailiffs, court decisions in the 2005 proceedings against the bailiffs (see below) and the Government’s observations, the progress of the enforcement proceedings may be summarised as follows.

(a)  Available information on the enforcement proceedings in respect of the initial obligation to provide housing (between 5 May 1998 and late 2001)

(i)  Stays of the enforcement proceedings in 2000 to 2001

46.  The parties submit that the enforcement proceedings were suspended on several occasions by the courts (in particular, between 26 December 2000 and August 2001 pending supervisory review proceedings brought by the debtor company; on 14 June and 21 August 2001 pending the examination of complaints by the debtor company about the bailiffs’ actions ‒ apparently a fine imposed on the managing director). Copies of the relevant decisions were not provided.

(ii)  The bailiffs’ actions

47.  The bailiffs identified the debtor company’s assets, made requests for information, attempted to seize its assets and warned and fined its higher management for failure to cooperate. In particular, in June 2000 the bailiffs seized ninety-four cars belonging to the debtor company. They could not be sold owing to multiple stays and adjournments of the enforcement proceedings (see above).

48.  On 3 May 2001 a bailiff of the Leninskiy district advised Ms Vtorova that the debtor company had on several occasions been fined for failure to comply with the judgment in her favour and 127 similar judgments. Otherwise, the bailiffs had frequently taken measures to identify the debtor company’s assets. They had established that the debtor company was building an apartment block at 4a Pobedy Avenue in Voronezh. The debtor company had asked TOO Tsentr-Service, a private company, to comply with its obligations towards the developers. TOO had accordingly been asked to provide information on the distribution of flats in the apartment block. A seizure order had been issued in respect of the building. Seven flats had been distributed to the claimants. TOO Tsentr-Service had been liquidated in 1999. The debtor company had no other available housing. The bailiff advised the applicant of her right to seek to change the operative part of the judgment to have the housing award replaced by a monetary amount. On 23 March 2001 the bailiffs had fined the debtor company again. The latter had challenged the fine in court.

49.  On 25 June 2001 the Voronezh Region deputy bailiff advised Ms Vtorova that the bailiffs had on nine occasions fined the debtor company for failing to execute the judgments. Some developers in a similar situation had sought the institution of criminal proceedings against the managing director of the debtor company, but their complaint had been refused. The bailiffs were collecting evidence to request the prosecutor’s office to bring criminal proceedings against the debtor company’s higher management (see also paragraphs 137-138 below).

(b)  Available information on the enforcement proceedings between 2002 and July 2003

50.  On 9 January 2002 the bailiffs seized various office and design items of the company. On the same date the enforcement proceedings were suspended by the regional prosecutor’s office while enquiries were carried out. On 23 January 2002 the bailiffs fined the managing director of the company for failing to comply with the judgments, including those issued in favour of the applicants.

51.  On 23 and 31 January 2002 the Leninskiy District Court further suspended the enforcement procedure in respect of the amended judicial decision (see paragraph 13 above), pending the examination of the merits of a request by the debtor company to extend the time-limit for the enforcement until 2003 and a complaint about the bailiffs’ actions. On 28 February 2002 the court rejected the request for an extension, and the adjournment was discontinued.

52.  In the meantime, on 17 February 2002 the Chief Bailiff of the Voronezh Region requested that the enforcement files in respect of the judgments in the applicants’ favour, along with several others, be transferred to the Voronezh Inter-District Department for Special Enforcement Proceedings. Once the manner of execution of the judgments was amended (see the appendix and paragraph 13 above), a new round of enforcement proceedings started, pursuant to a decision of the Inter-district bailiffs service within “joint enforcement procedure no. 18” (see paragraph 44 above).

53.  On 5 March 2002 the Commercial Court of the Voronezh Region suspended the enforcement proceedings pending determination of the request to set in motion the “supervision” procedure in respect of the company (see paragraph 30 above).On 21 March 2002 the President of the Voronezh Regional Court ordered yet another suspension of the enforcement proceedings, pending the examination of an appeal by the debtor company against the bailiffs’ actions lodged in the meantime. It appears that on 25 June 2002 the President of the Voronezh Regional Court revoked the suspension. On 19 April 2002 the Commercial Court refused to set the supervision procedure in motion (see paragraph 53 above). It appears that the enforcement proceedings were resumed in October 2002.

54.  According to the Government, in September 2002 the Inter-District bailiffs service was restructured, and enforcement functions were assigned to the Levoberezhnyy and Sovetskiy district departments of the bailiffs service of Voronezh. The archives of the Inter-district department had been destroyed by the time the Government’s observations were submitted. On 15 October 2002 the joint enforcement procedure was assigned to the Sovetskiy district bailiffs service.

55.  On 23 October 2002 the Kominternovskiy District Court granted yet another request by the debtor company for an adjournment and suspended all enforcement proceedings against it pending the examination by the Commercial Court of the Voronezh Region of a petition to set in motion the supervision procedure (see paragraph 31 above). As on 7 February 2003 the Commercial Court refused to start the supervision procedure in respect of the company (see paragraph 31 above), on 13 March 2003 a bailiff of the Sovetskiy district reminded the Kominternovskiy District Court of the refusal and asked for the suspension of the enforcement proceedings to be revoked. The parties did not provide a copy of the court’s reply.

56.  In the meantime, on 5 March 2003 the Leninskiy District Court granted a request by the debtor company to adjourn (отсрочка исполнения) execution of the judgments. The period of adjournment was not specified in the parties’ submissions.

(c)  Information on the enforcement proceedings from July 2003 to 2007

(i)  Events of June to August 2003

57.  On 19 June 2003 the Chief Bailiff of the Voronezh Region ordered that “joint enforcement procedure no. 18” be assigned to the Levoberezhnyy district bailiffs service (as upheld on 4 July 2003 by the Levoberezhnyy District Court).

58.  On 9 July 2003 the enforcement proceedings were resumed.

59.  At some point in 2003 the bailiffs ordered the seizure and withdrawal of monetary funds from the debtor company’s accounts opened at two private banks and subsequently issued warnings as one of the banks did not comply with the order.

60.  In early July 2003 the bailiffs ordered the debtor company to provide a balance sheet and a list of its debtors and fixed assets. They further requested information on the debtor company’s end product and goods for resale, as well as its general ledger and securities’ ledger. Most of the requests were made repeatedly, as the company failed to cooperate, as confirmed by the relevant “acts” compiled by the bailiffs. The bailiffs also sent requests to the authorities aimed at identifying the company’s assets, and twice warned the managing director of the company about criminal liability for persistently failing to comply with judicial decisions.

61.  On 10 July 2003 the bailiffs issued seizure orders in respect of the debtor company’s funds in banks in the total amount of RUB 358,995. Some RUB 12,000 was transferred to the deposit account of the bailiffs service, pursuant to an attachment order.

62.  On the same date the bailiffs issued a seizure order in respect of the debtor company’s cash (находящиеся в кассе должника). By November 2003 no money had been transferred to the deposit account of the bailiffs service. According to the Chief Bailiff of the Voronezh Region (see paragraph 45 above), it was impossible to control the execution of the seizure order, as the debtor company’s management was refusing to cooperate. In July 2003 bailiffs were refused access to the debtor company’s premises. The ZAO did not comply with the bailiffs’ orders in good time and challenged nearly every action taken by the bailiffs in court.

63.  On 24 July 2003 the bailiffs seized a car belonging to the debtor company. As it did not let the relevant bailiff examine and seize it, the traffic police were asked to impound the car. In August 2003 ten more cars were seized.

64.  On 4 August 2003 the bailiffs issued a seizure order in respect of ten properties at 97 Moskovskiy Avenue, 9 Kirova Street, 3 Krasnoarmeyskaya Street and 1a Voroshilova Street (see further paragraphs 67-83 below).

65.  As the company had provided a list of debtors, in August 2003 the bailiffs obliged the company’s debtors to make payments in respect of their debts to the bailiffs service’s deposit account, and also ordered an assessment of the debts by an expert.

66.  On 25 August 2003 the expert concluded that the company lacked liquid assets (дебиторская задолженность неликвидна).

(ii)  Proceedings concerning unfinished buildings in Voronezh between August 2003 and 2006

67.  On 27 August 2003 the bailiffs decided to levy execution on various properties, including unfinished buildings at 1a Voroshilova Street in Voronezh (see paragraph 24 above) “registered [to] the company” (зарегистрированные за должником). On 3 September 2003 the bailiffs within joint enforcement procedure no. 18 complied “an inventory and seizure act” (акт описи и ареста) and seized the properties (the unfinished sports facility) at the above address for the total value of RUB 4,900,000.

68.  On 23 September 2003 an expert was appointed to carry out a valuation of the properties, and three days later he was replaced by an expert from a different company, apparently due to a conflict of interests. According to the expert report prepared in November 2003, the market value of those properties was RUB 1,804,334.

69.  The debtor company challenged the validity of the expert report. Accordingly, the properties were not referred for compulsory sale. On 26 January 2004 the Commercial Court dismissed the action.

70.  In the meantime, on 5 December 2003 the Commercial Court issued an interim injunction in respect of the unfinished buildings, restricting their transfer for sale (запрет на передачу на реализацию). On 26 January 2004 the same court cancelled the injunction.

71.  On 24 February 2004 the bailiff issued a seizure order in respect of the unfinished buildings, and on 26 March 2004 they were listed for sale. The debtor company challenged the bailiff’s actions in court.

72.  On 18 March 2004 the Sovetskiy District Court issued yet another adjournment order in respect of the joint enforcement procedure, at the debtor’s request. On 30 March 2004 the bailiffs received the decision and suspended the joint enforcement procedure. Two days later the bailiff informed the trade company of the suspension of the sales.

73.  On 20 September 2004 the Commercial Court issued another interim injunction, restricting the debtor company as well as other persons from alienating (запрет на отчуждение) the property at 1a Voroshilova Street. The debtor company challenged the restriction in court but its claim was refused at a later stage.

74.  On 8 October 2004 the bailiffs service ordered the seizure of a plot of land reserved for the construction of a sports facility and a separate unfinished building both situated at the above address, in order to preserve the debtor company’s assets.

75.  As more than six months had passed since the latest public offer in respect of the unfinished buildings (see paragraph 71 above), on 30 November 2004 the bailiffs ordered a new valuation, to be performed by another private property valuation company.

76.  In reply to a non-enforcement complaint by Mr Pipchenko, on 23 December 2004 the Voronezh regional prosecutor’s office advised him that the bailiffs were taking measures to enforce the judgments in his and his colleagues’ favour. However, their task had been complicated by the fact that the company was regularly challenging the bailiffs’ actions in court. The party’s right to appeal against a bailiff’s actions was set out in section 90 of the Enforcement Act, and the prosecutor’s office could not restrict the debtor company’s use of this right.

77.  On 11 April 2005 the bailiffs asked the Commercial Court of Voronezh for a progress report in respect of the interim measure. The court advised that the measure remain in force.

78.  It appears from the Government’s submissions that in late July 2005 the Commercial Court held a hearing in case “no. A-14-10899-2004/393-30 within which the alienation of the [properties] was suspended”. On 10 August 2005 the bailiff requested that the examination of the case be resumed. The reply is unknown.

79.  It appears that in early October 2005 yet another valuation of the properties was carried out, as more than six months had passed since the latest assessment.

80.  On 27 December 2005 the Commercial Court within unspecififed proceedings restricted the owner from alienating four properties at 1a Voroshilova Street. As the above-mentioned injunction appeared to only concern the assets’ owner, on 23 March 2006 the bailiff asked the Voronezh Regional Registration Authority whether it was possible to sell the four properties. The bailiff further asked the Commercial Court to clarify the decision of 27 December 2005 (see paragraph 80 above). On 10 April 2006 the court refused.

81.  On 13 March 2006 the debtor company appealed against the bailiffs’ actions in so far as the assessment procedure was concerned. On 20 March 2006 the Leninskiy District Court informed the bailiffs that the enforcement actions in respect of the sale of the seized unfunished buildings at 1a Voroshilova Street were suspended.

82.  On 17 April 2006 the Voronezh Regional Registration Authority advised the bailiffs in reply to their query (see paragraph 81 above) that it was in charge of the legal expert examination of the documents submitted for State registration. However, no assessment was possible until the restrictions put in place by the Leninskiy District Court (ibid) were dropped.

83.  On 7 April 2006 the bailiff again decided to request an updated valuation by a specialist of the property at 1a Voroshilova Street, as the previous assessment made more than six months before was no longer valid (see paragraph 79 above).

84.  The Government provided no information on the subsequent events concerning the above-mentioned assets.

(iii)  Information on the attempts to seize an engineering building and on its sale

85.  On 17 September 2003 the debtor company’s title to the non-residential premises (apparently an engineering building) at 90 20-letiye Oktyabrya Street in Voronezh was registered in the Consolidated State Register of Property Rights and Transactions (Единый государственный реестр прав на недвижимое имущество и сделок с ним).

86.  According to the Government, on 1 October 2003 the Committee on Land Resources and Land Planning (Комитет по земельным ресурсам и землеустройству) of Voronezh informed the bailiffs in reply to a request for updated information about the company’s registered assets (see paragraph 88 below) that the premises were registered to the debtor. Two days later the bailiffs issued a seizure order in respect of the building. However, on 13 October 2003 the Committee on Land Resources informed the bailiffs service that “a transfer of title in respect of the [property] had taken place”.

87.  According to an article in the local newspaper Kommuna of 28 July 2007 provided by the applicants, as well as a decision of the Presidium of the Supreme Commercial Court of 12 February 2008 in a tax-related case not involving the applicants or the debtor company, on 23 September 2003 the debtor company sold the non-residential premises at 90 20-letiye Oktyabrya Street to a private company, A.-T., for RUB 29,024,830. The transaction was registered on 29 September 2003 in the State Register of Property Rights and Transactions. Two weeks later, on 10 October 2003, A.-T. sold the building to a different private company for RUB 145,725,507.

(iv)  The bailiffs’ other activities from autumn 2003 to 2007

88.  On 15 September 2003 the bailiffs requested a local registration authority to provide updated information on the company’s registered assets.

89.  On 30 September 2003 the bailiffs seized the debtor company’s property at 54 Krasnoarmeyskaya Street in Voronezh.

90.  On 23 October 2003 the bailiff ordered the managing director of the company to transfer RUB 25,549,993 to the bailiffs’ deposit account as of the date of receipt of the order.

91.  At some point two debtors of the company, a private open joint‑stock company OOO V. and a municipal hospital transferred RUB 61,744 and 23,218 respectively to the bailiffs’ deposit account.

92.  On 3 November 2003 the bailiffs ordered the seizure of the debtor company’s accounts at private bank B. The bank returned the relevant seizure order unenforced, as there were no funds in the accounts.

93.  According to a certificate of 3 November 2003 issued by the company for the Levoberezhnyy District Court, property worth an overall value of approximately RUB 276 million was on the company’s books at the material time. At the end of November 2003, the company’s debt to its creditors amounted to RUB 25,471,403.

94.  On 8 December 2003 the Levoberezhnyy District Court suspended the enforcement proceedings on yet another occasion, pending the examination of a complaint by the debtor company about the bailiffs’ actions. It appears that on 23 November 2003 the Kominternovkiy District Court issued a similar decision in respect of the enforcement proceedings pending in the relevant district. No further details were provided.

95.  On the same date the Chief Bailiff of the Voronezh Region ordered that the joint enforcement procedure in respect of Energiya be transferred to the Sovetskiy district bailiffs service. On 5 February 2004 the proceedings were resumed.

96.  On 25 February 2004 the bailiff issued debt collection orders in respect of the debtor company’s bank accounts at three more banks. As it complained to the court, on 26 February 2004 the Sovetskiy District Court suspended the enforcement proceedings. They were resumed on 15 March 2004.

97.  According to the Government, between 27 April and late August 2004 the enforcement proceedings were suspended pursuant to decisions of the Sovetskiy District Court. The parties did not submit further documents or details.

98.  On 2 September 2004 the enforcement proceedings were resumed. The debtor company complained about the bailiffs’ actions to the prosecutor’s office. On 15 September 2004 the Levoberezhnyy district deputy prosecutor requested the enforcement file while enquiries were carried out. On 4 October 2004 the enforcement case was returned to the Levoberezhnyy district bailiffs service.

99.  From September to October 2004 the bailiffs reverified the company’s assets. On 14 and 18 October 2004 the bailiffs attempted to seize the company’s accounts in another private bank, G.K. The debt collection orders were returned to the bailiffs unexecuted on 29 November 2004 owing to a lack of funds, as the accounts had been closed.

100.  In October 2004 the bailiff sent a request to a local property registration authority about the debtor company’s registered title to any property. On 2 November 2004 the bailiff issued a seizure order in respect of the entirety of the debtor company’s property listed in the registering authority’s reply.

101.  From November 2004 to February 2005 the Levoberezhnyy district bailiffs service joined the enforcement proceedings opened pursuant to the amended judgments in the applicants’ favour (see paragraph 16 above) to the “joint enforcement procedure no. 18”.

102.  In November 2004 four of the five applicants complained to the President of the Russian Federation about the delayed enforcement, stating that the bailiffs had been “simply unable” to enforce the judgments. Their work had been “hindered by multiple constant complaints by [the debtor company]”, and the bailiffs had been subject to administrative pressures. It appears that their complaint was forwarded to the Ministry of Justice.

103.  From 9 February 2005 the enforcement proceedings were the responsibility of the Leninskiy district bailiffs service.

104.  On 21 February and 2 March 2005 the bailiff seized the debtor company’s bank accounts and issued a debt collection order for approximately RUB 13,300,000. In March 2005 the bailiff recovered RUB 1,530,000 in taxes, which were to be recovered as a priority.

105.  On 21 February 2005 the bailiffs seized other bank accounts which the debtor company had opened in the meantime. They recovered approximately RUB 41,000. That amount was used for the payment of salary debts.

106.  By March 2005 joint enforcement procedure no. 18 concerned the recovery of the company’s debts to the State, private individuals and legal entities amounting to RUB 24,061,712.

107.  On 10 March 2005 the bailiffs service sent repeated enquiries to the local road inspection about any vehicles registered to the debtor company.

108.  On 13 April 2005 the bailiffs seized more securities, including promissory notes, which were further assessed and on 22 April 2005 sold for RUB 4,750,000 by the regional branch of the Federal Property Fund. The amount obtained was used for the repayment of taxes, duties and penalties. Claims of some fifth category creditors were also satisfied in part.

109.  On 18 April 2005 the bailiffs again asked the debtor company to produce a financial report, including information on its major assets, credit debt and asset history.

110.  On 27 April 2005 the bailiff identified and seized seven vehicles belonging to the debtor company. They were sold in June 2005 for RUB 197,600. That amount was used to pay debts in respect of taxes, duties and penalties.

111.  In May 2005 the bailiff forwarded a debt collection order for the recovery of RUB 10,000,000 from the debtor company’s bank account at another private bank.

112.  In May 2005 the bailiff sent a request to a local land management authority and the landlord of 10 Moiseyeva Street in Voronezh, for a coordinated decision concerning foreclosure on the lease in respect of the plot (запрос о согласовании с арендодателем обращения взыскания на право долгосрочной аренды земельного участка). At some point the authorities refused to approve the foreclosure.

113.  On 27 July 2005 the bailiff restricted the disposal of any monetary funds being received into the debtor company’s accounts (поступающие в кассу должника). The debtor company challenged the bailiff’s actions in court. On 24 November 2005 the complaint was rejected by a court decision.

114.  By June 2005 the bailiffs had managed to discharge RUB 9,296,743 of the debt accumulated in respect of taxes.

115.  The bailiffs regularly monitored any new information about any new assets of the debtor company and sent requests to that effect to the local authorities. The authorities confirmed at regular intervals that no relevant changes had occurred in the meantime (between April and August 2005).

116.  On 3 June 2005 the Leninskiy district prosecutor’s office dismissed a complaint by the applicants about non-enforcement, finding no violation of domestic laws in the bailiffs’ actions. The authority noted, in particular, that throughout the entire duration of the enforcement proceedings the bailiffs had taken steps aimed at the recovery of the debts, seized the debtor company’s property, regularly monitored its accounts and identified new assets that the execution could be levied upon.

117.  By 30 August 2005 the debtor company had paid RUB 14,729,680 of its debts in respect of tax arrears to the State budget. Once the tax arrears were paid in full, the remainder was distributed among the fifth category creditors in the amount of 8% of the respective claims. In particular, by August 2005 the first instalments in respect of parts of the judicial awards had been paid to the applicants.

118.  On 27 September 2005 the head of the Rossoshanskiy district bailiffs service authorised enforcement action in the district. On the same date, the bailiffs seized unspecified non-residential property in the town of Rossosh listed as an asset on the debtor company’s balance sheet. Two days later a specialist valued it at RUB 50,190,000 and informed the debtor company. As it did not have legal and technical documents in respect of the property in question, or title to the land the leased property was situated on, the seizure order was revoked.

119.  Once the bailiffs obtained copies of contracts, debt reconciliation statements signed by the debtor company’s chief accountant and other information on the assets, on 15 December 2005 they seized the the debtor company’s assets and on 16 December 2005 foreclosed on the lease of the land (наложен арест на право аренды земельных участков) at 41 and 45 Stankevicha Street in Voronezh.

120.  On 12 December 2005 a bailiff of the Leninskiy district asked the District Court to adjourn joint enforcement procedure no. 18. He reiterated that the local tax authority had lodged a petition to set in motion insolvency proceedings against the debtor company, noted that the tax authority had submitted to the bailiffs service an amended calculation of claims against the debtor company which it had challenged in court, and considered that those developments were liable to result in a distribution of the proceeds in violation of the other creditors’ rights.

121.  On 26 December 2005 the Leninskiy District Court granted the request as, firstly, the insolvency case was opened in respect of the debtor company (see paragraph 39 above) and, secondly, because it had challenged the execution documents prepared by the tax authority which, under law, constituted mandatory grounds for the adjournment of enforcement proceedings (Article 436 of the Code of the Civil Procedure, see paragraph 156 above). Having regard to the overall length of the enforcement proceedings, the need to respect the requirement to enforce the judgments within a reasonable time, and the interests of other parties  notably claimants whose claims had been submitted earlier than the updated claims by the tax authority  the court decided that the suspension should not exceed two months.

122.  On 27 February 2006 the enforcement proceedings were resumed.

123.  In reply to a request by the bailiffs concerning the premises at Stankevicha Street (see paragraph 119 above), on 16 February 2006 the landlord – the Department of City Planning and Land Relationships of the Voronezh Region – disapproved of the foreclosure on the long-term lease. The bailiffs accordingly removed the attachment from the plots of land.

124.  In March 2006 the bailiffs prepared the company’s vehicles for sale (by checking and registering them) and in May 2006 transferred ten seized vehicles to the specialist department of the regional branch of the Russian Federal Property Fund for sale.

125.  On 6 April 2006 the bailiffs requested G., the managing director of the debtor company at the material time, to produce the company’s financial documents and warned him of the criminal liability for persistently refusing to execute the judgments. The bailiffs further restricted the movement of funds and issued a decision thereupon.

126.  As the company still failed to produce any financial documents, on 12 May 2006 the bailiffs obtained explanations from the chief accountant of the company and imposed a fine on her. The bailiffs set yet another time‑limit for producing the documents and restricted the movement of funds by the debtor company (движение денежных средств на кассе). On 7 July 2006 a new time-limit was set, and another fine imposed on the accountant, as the company’s management still refused to cooperate.

127.  In June 2006 the bailiffs identified the company’s debtors, analysed the cash flow and identified the company’s end product.

128.  On 11 July 2006 the bailiff ordered the seizure of the debtor’s accounts receivable of a private debtor, the open joint-stock company OOO V. with a nominal value of RUB 3,499,704. On 20 July 2006 the bailiff seized the debtor’s accounts receivable of an outpatient clinic, a municipal institution. Their nominal value was assessed as RUB 711,372. The bailiff ordered that a market valuation of the assets be carried out by a specialist, and further obliged the companies to provide accounting documents to allow the valuation. V. complied with the order in August 2006 and the municipal institution in late September 2006, after several reminders by the bailiffs. The bailiffs launched another call for a specialist valuation of the seized assets.

129.  In August 2006 the bailiffs sent more requests for information on the cash flow to banks servicing the debtor company’s accounts.

130.  According to the Government, as a result of the enforcement proceedings a total of RUB 30,227,098 was recovered from the debtor company, including RUB 5,248,320 as a result of the assets sale and RUB 20,203,780 withdrawn from the debtor company’s accounts (расчетных счетов) and transferred to the creditors, including RUB 1,174,943 of the debt towards the fifth category creditors.

131.  In April 2007 (on the dates specified in the Appendix) the judgments in the applicants’ favour were executed in full.

5.  Proceedings against the bailiffs

132.  All five applicants complained to the courts of inaction on the part of the bailiffs in charge of the enforcement proceedings since February 2005 (see paragraph 103 above). Each applicant was dissatisfied with the failure to ensure the payment of the judicial awards within the two-month time‑limit set out in the Enforcement Act. Ms Vtorova complained in addition that the category of priority of her claims had been incorrectly determined by the bailiff.

133.  On various dates in 2005 (listed in the Appendix below) the domestic courts rejected their complaints as unfounded. In all cases, the courts found that the bailiffs had taken the necessary measures to enforce the judgments, but these measures had proved unsuccessful, owing to the debtor company’s lack of funds. Having analysed the actions taken by the bailiffs within the joint enforcement procedure since February 2005, the courts detected no indication of negligence on the part of the bailiffs service. In particular, in the second applicant’s case the domestic courts noted that bailiffs service had seized the debtor company’s assets and had duly arranged for them to be sold. As a result, debts had been recovered in favour of the company’s creditors in so far as salary and tax arrears were concerned. However, the funds recovered had not been sufficient at the material time to satisfy the fifth category creditors’ claims, including those of the applicant. The court noted that the order of priority had been determined correctly, in accordance with section 78 of the Enforcement Act. Similarly, in the cases concerning Mr Pipchenko, Mr Vorobyev and Mr Fomenko the domestic courts gave a detailed outline of the bailiffs’ actions between January and May 2005 (see paragraphs 77, 103-112 and 114-115 above) They also observed that the bailiffs had made several attempts to identify the debtor company’s newly opened bank accounts, inspected its assets and examined whether they were liquid, recovered RUB 4 million from the company in tax arrears, and recovered the relevant funds and satisfied the entirety of the claims in respect of salary arrears (seven sets of enforcement proceedings within the joint enforcement case). The courts concluded that the bailiffs had taken the required steps to enforce the judgments but the debts had not been paid owing to the debtor company’s lack of funds. The courts further noted that the applicants’ claims were part of a complex joint enforcement procedure comprising claims by various creditors. The company had accumulated debts in respect of mandatory payments towards various budgets, as well as creditors whose claims had precedence over those of the applicants.

6.  Claim for compensation in respect of non-pecuniary damage against the bailiffs service

134.  In 2009 to 2010 four of the applicants (Mr Fomenko, Ms Vtorova, Mr Pipchenko and Mr Vorobyev) claimed compensation in respect of non‑pecuniary damage caused by the delayed enforcement of the judgments which had allegedly resulted from the bailiffs’ inaction. They argued that the enforcement delays had been excessive and essentially due to the bailiffs’ failure to correctly establish the order of priority for the applicants’ claims. They submitted that they had been wrongfully regarded as fifth category creditors, whereas their claims had arisen from employment relationships with their former employer and should have been regarded as belonging to the second category, within the meaning of the Enforcement Act. Ms Vtorova pointed to the bailiffs’ manifest inability to enforce the judgment in good time, with reference to the interview of 7 March 2003 (see paragraph 33 above). She submitted that the bailiffs had acted in bad faith, as the debtor company had had assets to pay the debts but the authorities had failed to sell them in good time. For instance, the unfinished buildings at Voroshilova Street (see paragraphs 67-83 above) had been seized but not sold in the period 2003 to 2007. She also argued that the Ministry of Justice’s failure to intervene in the course of the manifestly long enforcement proceedings had contributed to the overall length of the enforcement.

135.  By separate decisions given on various dates (see the Appendix), the Leninskiy District Court rejected the applicants’ claims. In all cases, the court observed that the judgments in the applicants’ favour had been enforced in full in 2007. The domestic court noted that, by operation of law, compensation for non-pecuniary damage caused by the actions or inaction of bailiffs was not payable in the absence of fault on the part of the tortfeasor. However, the applicants had failed to prove that the bailiffs had been at fault and, as an essential element of that, the unlawfulness of their acts. They had been unable to produce a court decision establishing that the bailiffs’ actions or inaction had been unlawful – on the contrary, their claims to that effect had been duly examined and rejected as unfounded by the domestic courts in 2005 within the proceedings concerning the bailiffs’ inaction (see paragraph 133 above). In the case of Ms. Vtorova, the court also noted that the determination of the order of priority had been assessed as lawful in the 2005 proceedings (ibid.), and the court was bound by that decision in the proceedings at hand. Otherwise, the court found nothing in the applicants’ cases to suggest that the bailiffs’ actions throughout the enforcement period had been unlawful. The judgments had been enforced with a delay for objective reasons.

136.  The applicants appealed. In particular, Ms Vtorova argued, referring to the Court’s judgment in Makarova v. Russia (no. 23554/03, §§ 52-53, 1 October 2009) and the case-law cited therein concerning the State’s obligations in enforcement proceedings against private debtors, that the authorities had not provided her with the requisite assistance in the enforcement of the judgment in her favour. All judgments were further upheld by the Voronezh Regional Court, as specified in the Appendix.

7.  Attempts to bring criminal proceedings against the managing director of the debtor company

137.  On 19 July 2002 the chief investigator of the investigation department of the bailiffs service of the Voronezh Region refused to bring criminal proceedings against P., the managing director of the company, for failure to comply with the judgments. The investigator found that from 1993 to 1998 the company had continued granting flats to developers, but compliance with all the housing orders had proved impossible owing to a lack of funds and housing. The payment of the market price for the flats had been impossible at the material time, as the debtor company had lacked funds. Between 2001 and 2002 the enforcement proceedings had been suspended on several occasions pursuant to court decisions. Accordingly, the investigator established no direct intent in P.’s actions to avoid enforcement.

138.  On 22 September 2002 the investigator refused to bring criminal proceedings against P. following a complaint by the five applicants about non-enforcement, on the same grounds as above. The investigator noted that in order to bring a case concerning persistent failure to comply with a judgment, it had to be established that the person concerned had assets which could have been transferred to the claimants. However, the bailiffs had on several occasions inspected the debtor company’s assets and established that it had no housing. On 30 September 2002 the Leninskiy district prosecutor’s office quashed the above-mentioned decision and ordered an additional investigation. It appears that the proceedings were subsequently discontinued.

139.  In 2007 the prosecutor’s office decided to bring criminal proceedings against the company’s new management on suspicion of unlawful action during the insolvency proceedings and in connection with an alleged failure to declare debts to creditors, the sale of non-residential premises in 2005 and forgery of documents in the context of the insolvency proceedings. At some point the proceedings were discontinued.

8.  Proceedings under the Compensation Act

140.  In 2017 some of the applicants attempted to claim compensation for the delayed enforcement under the amended Compensation Act.

141.  On various dates the domestic courts rejected their claims. The courts found no indication that the judgments in the applicant’s favour established debts to be recovered from the State budgets, or that the judgments had been given against federal, regional or local authorities or other bodies and organisations endowed with specific State or other public powers. They further noted, with reference to the findings in the 2005 proceedings concerning the bailiffs’ inaction, that the bailiffs had taken all reasonable steps to obtain enforcement of the judgments.It appears that the appeal proceedings against some of the decisions under the Compensation Act are currently pending.

B.  Relevant domestic law and practice

1.  Closed companies and the limited liability of shareholders

142.  For a summary of the provisions governing joint-stock companies prior to 1995, see, in so far as relevant, Oleshkevich v. Russia ((dec.), no. 27568/04, 30 March 2010).

143.  Articles 48, 66 and 96 of the Civil Code of 30 November 1994 (no. 51­FZ, in force as of 1 January 1995) define a joint-stock company as a legal entity that owns its property and is capable of acquiring rights and carrying out obligations in its own name.

144.  Section 2(1) of the Joint-Stock Companies Act (Law no. 208-FZ of 26 December 1995, as in force at the material time) provided, among other things, that a joint-stock company was a commercial organisation whose capital was divided into a definite number of shares of stock certifying the rights and obligations of the members (shareholders) vis-à-vis the company. Shareholders were not liable for the obligations of the company and bore the risk of losses associated with its activity, to the extent of the value of their shares. The shareholders could alienate the shares they owned without the consent of the other shareholders and the company. Section 2(3) provided that a company owned separate assets which were recorded in a separate balance sheet, and could, in its own name, acquire and exercise property and personal non-property rights, incur obligations, and be a plaintiff or defendant in court. Section 3(1) stipulated that the company was liable to the extent of its assets.

145.  Section 7(1) clarified that a company could be open or closed, which had to be reflected in its charter and company name. A company whose stock was only distributed among its founders or another previously determined range of persons was deemed to be a closed company. A company of this type could not hold open subscriptions to the stock it was issuing or otherwise offer the same for acquisition to an unlimited number of persons (section 7(3) of the Act). The shareholders of a closed company enjoyed a preferential right to acquire shares sold by the other shareholders of the company at a price offered to a third party pro rata to the quantity of the shares they each owned, unless another procedure was provided for in the company’s charter for exercising this right. The charter of a closed company could also provide for the company’s preferential right to acquire shares sold by its shareholders if the shareholders did not use their preferential right to acquire the shares (ibid.). Companies whose founders were, in the cases stipulated by federal law, the Russian Federation, a subject of the Russian Federation or a municipality (except for companies formed in the process of the privatisation of State and municipally owned enterprises) could only be open companies (section 7(4) of the Act).

2.  Decree no. 983 of 9 October 1995

146.  Decree no. 983 of the Government “On federal scientific production centres” (as in force at the material time) granted a special status to certain enterprises and organisations of the defence, rocket and space and nuclear industries, which performed a “State order” (госзаказ)[3], and which were the main developers and manufacturers of the most important types of weapons, military and space equipment and components (paragraph 1 of the Decree). Status as a federal scientific production centre had no impact on either the form of ownership or legal status of an enterprise or organisation. It meant that centres of this kind received special support from the State (paragraph 3).

147.  Until 9 November 2005 the decree stipulated that the special funding of work and programmes performed by a centre was provided, mainly, from funds allocated from the federal budget to the following entities: the Ministry of Defence for research and development, as State defence expenses; the Ministry of Science and Technical Policy, for fundamental research and contribution to scientific progress; and the Ministry of Nuclear Energy, for national and international targeted programmes. The centres also received funds from non-budget sources (paragraph 4, no longer in force as of 9 November 2005).

148.  Until 9 November 2005 the decree recommended that the executive authorities of the federal entities of the Russian Federation register in accordance with the law the rights of centres to use on a permanent basis land previously granted to enterprises and organisations, as well as land plots allotted for construction (paragraph 5, no longer in force as of 9 November 2005). In the initial version of the decree the Government invited the ministries concerned to make proposals in respect of measures of State support of the activity of centres. Such measures could include guarantees by the Government of the obligations of a public contracting authority in fundraising for unique development works, aimed at developing the military industry’s potential, as well as ensuring State security (paragraph 5, suspended on 27 November 2000 and no longer in force as of 9 November 2005).

149.  The decree further obliged the federal executive authorities to provide the requisite assistance to centres for compliance with their tasks.

150.  The Annex to the initial decree set out rules for granting the status of a “federal science production centre”. The status could be attributed to enterprises and organisations of the defence, rocket and space and nuclear industries which developed, manufactured, tested, repaired and disposed of the most important types of weapons, military and space equipment and the major components thereto in compliance with the State Defence Order. Such enterprises and organisations could be incorporated as state unitary enterprises, joint-stock companies where a controlling stake or a “golden share” was owned by the State at the time of emission, or a joint-stock company participating in the implementation of federal and inter-State targeted programmes. The amendments of 9 November 2005 stipulated that enterprises and organisations could be incorporated as federal unitary enterprises or joint-stock companies whose shares were owned by the State.

151.  Status of such a centre was granted by the Government, on submission by the State Committee on the Defence Industry, the State Space Agency and the Ministry of Nuclear Energy in coordination with the Ministries of Defence, Finance and Science and Technical Policy, as well as the Property Committee of the Russian Federation. Centres had to act in compliance with Russian law. Their activities were assessed once every two years by the State Committee on the Defence Industry, the State Space Agency and the Ministry of Nuclear Energy in cooperation with the Ministry of Science and Technical Policy. They decided, in each case, whether it was appropriate to extend the status of a centre and made relevant proposals to the Government.

3.  Claims for compensation of damage caused by bailiffs

152.  The provisions of domestic law and relevant practice regarding compensation for damage caused by public authorities and their officials at the material time are summarised in Smagilov v. Russia (no. 24324/05, §§ 17-31, 13 November 2014).

4.  Compensation Act

153.  For a summary of the relevant provisions of the Compensation Act as amended as of 1 January 2017, see Shtolts and Others v. Russia ((dec.), nos. 77056/14 and 2 others, §§ 30-41, 30 January 2018)

5.  Civil Code provisions referred to by the parties

154.  Article 399 § 1 of the Civil Code provides that, before claiming a debt from a person whose liability is vicarious, a creditor shall first claim the debt from the principal debtor. If the principal debtor refuses to satisfy the claim or no reply is received within a reasonable time, the claim may be brought against the vicariously liable person.

155.  Article 451 deals with the change and dissolution of a contract due to a material change in circumstances. A change in circumstances is deemed material where the change was of such importance that, if the parties could reasonably foresee it, the contract would not have been concluded by them or it would have been concluded under significantly different conditions (Article 451 § 1). If the parties have not agreed on the bringing of the contract in conformity with the materially changed circumstances or the dissolution thereof, the contract may be dissolved, or changed by a court under certain conditions (Article 451 § 4).

6.  Code of Civil Procedure

156.  Article 436 of the Code of Civil Procedure (as in force at the material time) provided that a judge was obliged to stay enforcement proceedings if a commercial court opened proceedings concerning the debtor’s insolvency (bankruptcy) or where the debtor challenged the enforcement document in court, where such a challenge was permitted by law.

7.  1997 Enforcement Act (Law no. 119-FZ of 21 July 1997)

157.  Under section 20 of the Enforcement Act (“Mandatory stay of enforcement proceedings”), enforcement proceedings should be stayed, in particular, if the commercial court opens the proceedings in a case of the debtor’s insolvency (bankruptcy) (section 20(1)); or if the debtor challenges the writ of execution in court, where such a challenge is permitted by law (section 20(4)); or if a complaint has been lodged concerning the actions of the authorities (officials) competent to examine cases about administrative offences (section 20(5)); or pursuant to a decision of an authority competent to stay enforcement (section 20(6)); or if a court action has been lodged about the exclusion of the inventory (the release of impounded/seized property) of the assets upon which the execution of the enforcement document is levied (section 20(7)).

158.  Enforcement proceedings may be adjourned, in particular, if a bailiff applies to the court for clarification of the judicial decision or enforcement document (section 21(1)); or if a complaint against the bailiff or against the refusal of its challenge has been lodged (section 21(5)).

159.  Under section 22 (which concerns time-limits for the stay of execution), where insolvency proceedings are opened in respect of the debtor, the execution is stayed until the decision is taken in the case (section 22(1)(1)); where the enforcement actions or documents are challenged, until a final decision on the matter (section 22(1)(3)); where the refusal to accept the bailiffs’ challenge is appealed against, until the examination of the appeal by the court (section 22(1)(4)); and in other cases, until the circumstances which led to the stay cease to exist (ibid.) Once those circumstances cease to exist, the execution is resumed at the claimant’s request or the bailiff’s initiative (section 22(2)).

160.  Once informed that action has been taken by the Federal Tax Service with a view to initiating insolvency proceedings against a debtor organisation, the bailiff applies to a court with a request to adjourn (об отсрочке) the enforcement proceedings until the commercial court initiates the proceedings concerning the debtor’s insolvency (bankruptcy) (section 60(1)). Under section 60(4) of the Enforcement Act, if a commercial court opens insolvency (bankruptcy) proceedings in respect of a debtor organisation, the enforcement proceedings and the sale of the property on which execution is levied are stayed pending the examination of the case by a commercial court on the merits.

161.  Section 78 of the Enforcement Act (as in force at the material time) provided that creditors’ claims under enforcement documents had to be satisfied in the following order of priority, if the amount recovered from the debtor was insufficient:

-  first: alimony payments, compensation of health damage and damage caused by a breadwinner’s loss;

-  second: among others, claims arising out of employment relationships;

-  third: pension contributions to the Pension Fund and the Social Security Fund of the Russian Federation;

-  fourth: claims in respect of payments to budgets of all levels and State extra-budgetary funds;

-  fifth: all other claims.

162.  Claims of a category are paid in full before funds are allocated to the next. If the recovered funds are insufficient for full satisfaction of the creditors’ claims, they are satisfied proportionately to the amount due to each claimant (section 78 § 3).

163.  The parties may challenge a bailiff’s decision in court (section 90).

COMPLAINTS

164.  The applicants complained under Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 to the Convention about the non‑enforcement of the judgments in their favour. They further complained under Article 13 of the Convention about the lack of an effective remedy in respect of the non‑enforcement complaint.

THE LAW

A.  Joinder of the applications

165.  In accordance with Rule 42 § 1 of the Rules of Court, the Court decides to join the applications, given their factual and legal similarities.

B.  Complaint about the non-enforcement of the domestic judgments under Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 to the Convention

1.  The parties’ submissions

(a)  The Government

166.  In the case of Mr Romashov (no. 23216/06) the Government argued that the bailiffs had taken all necessary measures to assist the applicant in enforcement of the judgment. They could not submit documents concerning the enforcement action taken between 1996 and 6 March 2001, as the storage time-limit had expired. In the cases of Mr Fomenko, Ms Vtorona, Mr Pipchenko and Mr Vorobyev the Government stated that the debtor had been a private company, a legal entity governed by provisions of private law. The judgments could not be enforced in good time as the debtor company had lacked funds. The measures to assist the creditors in obtaining the judgment debts taken by the State – and, in particular, by the bailiffs service – had been adequate and sufficient. In 2005 the domestic courts had assessed the state of the enforcement proceedings following the applicants’ complaints and had confirmed that the delays in enforcement had been due to circumstances unrelated to the bailiffs’ conduct, whilst no omissions or unlawful action on the part of the bailiffs could be detected. The enforcement proceedings were very complex, and the delay in enforcement had arisen notably by the debtor company’s active stance in those proceedings. Indeed, Energiya had appealed against nearly all the enforcement action, which had resulted in the adjournment of the enforcement proceedings on numerous occasions and had led to an aggregated delay of two and a half years. They also argued that the complaints were incompatible ratione temporis as the judgments in the applicants’ favour had been issued before 5 May 2008, the date when the Convention entered into force in respect of the Russian Federation. Furthermore, the applicants had been able to claim compensation in respect of pecuniary and non-pecuniary damage resulting from the delayed enforcement, but had failed to do so.

(b)  The applicants

167.  The applicants argued that the State was responsible for the company’s debts. The company enjoyed special status as a federal scientific production centre, extended in 2000. It was not insolvent and was operating; however, it had failed to discharge its obligations. At some point in 1998 it had enjoyed tax benefits (see paragraph 27 above). The applicants argued that in line with its charter the company was the State’s successor in respect of the obligations towards the company’s employees, in particular, in so far as the housing programme was concerned. They claimed that the State was a legal successor in respect of the housing construction contracts, along with the debtor company, and had subsidiary liability for the company’s debts under Article 399 of the Civil Code (see paragraph 154 above),

168.  They further submitted that until 24 February 1999 the bailiffs had not taken any steps to enforce the judgments ordering that the applicants be provided with flats. During that period the company had managed to build three houses which had been put into service, and had had assets sufficient to meet the creditors’ claims. The enforcement proceedings had on several occasions been suspended for bogus reasons. The courts had protracted the enforcement; for instance, on 23 October 2002 the Kominternovskiy District Court had suspended the enforcement proceedings pending determination of the issue as to whether a “supervision” procedure was to be launched, and had only authorised the reopening of the proceedings five months after the commercial court’s refusal to put the supervision in place (see paragraphs 55 and 58 above). On at least one occasion, between 12 December 2005 and 27 February 2006, the proceedings had been suspended at the request of the bailiffs. They further submitted that their claims had been unlawfully determined as being in the fifth category of creditors, whereas they should have been included in the second category (claims arising out of employment relationships), as those of their ex‑colleagues in the insolvency-related proceedings (see paragraph 40 above) . The applicants further argued, with reference to a local newspaper article describing the events of 2003 to 2004 (see paragraph 38 above), that during the period of non-enforcement, and despite the pending enforcement proceedings, the MIG group had withdrawn assets from the company, and the debtor company had sold two more properties to private purchasers at a price lower than the assets’ market value. The bailiffs had failed to pay the debts to the applicants from the proceeds of the above-mentioned transactions. Furthermore, in 2003 the debtor company had sold non‑residential premises at 90 20-letiye Oktyabrya Street to the private company at a manifestly low price (see paragraphs 85-87 above) but no creditors’ claims had been satisfied from the proceeds of that transaction.

2.  The Court’s assessment

(a)  Compatibility ratione temporis

169. The Court is competent ratione temporis to examine the facts of the present case for their compatibility with the Convention only in so far as they occurred after 5 May 1998, the date of ratification of the Convention by the Russian Federation and its entry into force in respect of that State. It may, however, have regard to the facts prior to ratification inasmuch as they could be considered to have created a situation extending beyond that date or may be relevant for the understanding of facts occurring after that date (see, among many other authorities, Lyubov Stetsenko v. Russia, no. 26216/07, §§ 75-77, 17 April 2014, and Broniowski v. Poland (dec.) [GC], no. 31443/96, §§ 74-77, ECHR 2002-X).

170.  The judgments in the applicants’ favour, issued between 1995 and 1998, were enforced in 2007. Therefore, the period after 5 May 1998, that is almost nine years, falls within the scope of the Court’s jurisdiction ratione temporis. The Court may also take into account the authorities’ conduct occurring after the judgment became binding, even though it happened before the entry of the Convention into force in respect of the Russian Federation (see, among many other authorities, Lyubov Stetsenko, cited above, §§ 75-76, with references contained therein). Accordingly, the objection is to be rejected.

(b)  Compatibility ratione personae - whether the ZAO’s debts are attributable to the State

171.  The Court reiterates that, where an applicant complains of the inability to enforce a court order in his or her favour, the extent of the State’s obligations under Article 6 of the Convention and Article 1 of Protocol No. 1 varies depending on the debtor in the specific case (see Anokhin v. Russia (dec.), no. 25867/02, 31 May 2007). Where a judgment is against the State, the latter must take the initiative to enforce it fully and in due time (see Akashev v. Russia, no. 30616/05, §§ 21‑23, 12 June 2008, and Burdov v. Russia, no. 59498/00, §§ 33-42, ECHR 2002‑III). In contrast to the obligation of a High Contracting Party to comply expediently with the judgments against it, within the domain of enforcement of a final and binding judicial decision against a private party a State’s obligations are limited to providing a creditor with the necessary legal assistance and ensuring the effective operation of the procedure (see Fuklev v. Ukraine, no. 71186/01, § 84, 7 June 2005; Anokhin, cited above; and Kunashko v. Russia, no. 36337/03, § 38, 17 December 2009).

172.  Since the applicants argued that the State should be held directly responsible for the debts of the respondent company, a private law entity, the first issue to be examined is whether the debts of the respondent company were owed by the State within the meaning of Article 34 of the Convention at the time of the events, that is after the ratification date and until the enforcement of the judgments in 2007 (see Anokhin, cited above). The key criteria to determine whether the State was indeed responsible for such debts are as follows: the company’s legal status (under public or private law); the nature of its activity (a public function or an ordinary commercial business); the context of its operation (such as a monopoly or heavily regulated business); its institutional independence (the extent of State ownership); and its operational independence (the extent of State supervision and control) (see, mutatis mutandis, Ališić and Others v. Bosnia and Herzegovina, Croatia, Serbia, Slovenia and the former Yugoslav Republic of Macedonia [GC], no. 60642/08, § 114, ECHR 2014). Additional factors to be taken into consideration are whether the State was directly responsible for the company’s financial difficulties, siphoned the corporate funds to the detriment of the company and its stakeholders, failed to keep an arm’s-length relationship with the company or otherwise acted in abuse of the corporate form (see Ališić and Others, cited above, § 115, and references to Anokhin, cited above, and Khachatryan v. Armenia, no. 31761/04, §§ 51-55, 1 December 2009 contained therein).

173.  Turning to the company’s activity and the context of its operation, the Court observes that initially the company conducted its activities in the highly regulated area of national defence. It participated in various programmes of crucial importance, such as the Buran space shuttle project, and developed and produced military and space equipment in compliance with the State Defence Order (see paragraph 5 above). It is clear that, as one of the leading and, indeed, cornerstone companies in the sector, back in the Soviet era “Energiya” was placed under strict governmental control. In so far as the post-ratification period is concerned, it appears that after 5 May 1998 the debtor company continued to perform at least some of those functions – apparently along with other activities – until at least 2000, when its status as a “federal scientific production centre” was extended by the authorities (see paragraph 26 above), even though some of the most important programmes had been discontinued (see paragraph 23 above). However, it also appears that in the early 1990s ‒ that is, years before ratification of the Convention by the Russian Federation ‒ the company’s activity was to a significant extent converted to the production of consumer goods (see paragraph 23 above). It appears that the military defence order production was not entirely discontinued but its scope and proportion at the material time is unknown. The Court notes that in early 2000s the company’s management assessed the conversion as “large-scale”, considerably affecting the production capacity and resulting in “enormous losses” for the debtor company (see paragraph 28 above).

174.  In any event, and most importantly, as early as in 1992 the debtor company was incorporated as a private company – a closed joint-stock entity with separate legal personality, which owned assets that were distinct from the property of its shareholders and had delegated management (see paragraphs 144 and 145 above). It was a corporate body which carried out commercial activities subject to the ordinary law of Russia (see, mutatis mutandis, Islamic Republic of Iran Shipping Lines v. Turkey, no. 40998/98, § 80, ECHR 2007‑V). It is even unclear from the case files whether any of the company’s shares were owned by the State at all (see, by contrast, Anokhin, cited above; Khachatryan v. Armenia, no. 31761/04 § 5, 1 December 2009, where the State was a majority shareholder of the debtor incorporated as a closed joint-stock company). It rather transpires from the parties’ scarce submissions that the company’s shares initially belonged to the company’s unspecified employees, and then were on several occasions sold and re-sold to various private actors who were, in their turn, involved in a series of disputes over the company’s assets (see, notably, paragraphs 20 and 33above). By 2003 the company’s shares – apparently already owned by that time by numerous private shareholders – were sold to two private companies (see paragraphs 36-38 above; see further, by contrast, Khachatryan, cited above, § 51).

175.  Further, the cases do not contain sufficient information to conclude that that the company’s assets were controlled and managed by the State to a decisive extent – or even at all – at the material time (see, by contrast, Khachatryan, cited above, § 51, and Lisyanskiy v. Ukraine, no. 17899/02, § 19, 4 April 2006). All the transactions concerning the company’s estate referred to by the parties were concluded by private actors, most of which, in addition, were not clearly identified by the parties in the submissions to the Court – it appears that the company had some 200 subsidiaries (see paragraph 33 above) which were actively involved in multiple instances of redistribution of the former State enterprise’s assets. Further, even though the State clearly acted as one of the company’s creditors in so far as the recovery of ZAO Energiya’s debts to various budgets was concerned, there is nothing to suggest that it intervened in the enforcement proceedings, by means of any assets transfers, or, for instance, an interference in the distribution of proceeds, or otherwise (see, by contrast, Khachatryan, cited above, §§ 51-52). The Court further notes that in 2003 the committee consisting of representatives of various domestic authorities considered the company’s situation and gave unspecified “recommendations as to the choice of investor”. It appears, however, that those recommendations were not followed by the company (see paragraph 35 above).

176.  Likewise, the Court finds nothing in the case files to demonstrate, at least as regards the period after 5 May 1998 that the State was directly responsible for the company’s financial difficulties (see Anokhin, cited above, with further references). It rather appears that they resulted from the overall effect of unfavourable conditions in the defence industry triggered by a change in the defence policy in the early 1990s (ibid.; see paragraph 28 above).

177.  Lastly, contrary to the applicants’ allegations to the effect that the State had subsidiary liability at the domestic level for the company’s debts under Article 399 of the Civil Code (see paragraph 154 above), the Court notes that such responsibility was not established by either the initial judgments in the applicants’ favour or in any subsequent proceedings. The State stopped financing the programme long before the ratification date (see paragraph 7 above). It appears that the request by the company’s management for State assistance (see paragraph 28 above) remained without a response. Therefore, there is nothing to suggest that the State at any stage accepted responsibility for the debts of the company, including the debts under the domestic judgments at stake, either fully or in part (see, by contrast, Khachatryan, cited above, § 53).

178.  Against this background, the Court considers that the company’s status as a federal scientific production centre did not automatically trigger State responsibility for the company’s debts in the present cases. The Court notes from the relevant decree that status as a federal scientific production centre had no impact on either the form of ownership or legal status of an enterprise or organisation (see paragraph 146 above). In the absence of any other information, the Court considers that the company enjoyed that status as a “joint-stock company participating in the implementation of federal and inter-State targeted programmes,” in terms of the Annex to the decree as in force before the amendments of 9 November 2005 (see paragraph 150 above). The Court further notes that federal scientific production centres were supposed to receive special support from the State (paragraph 146 above). However, the Court does not have any information in its possession on the scope of this assistance – on the contrary, the parties agreed that the State had stopped financing the company in 1992 (see paragraph 22). The remainder of the submissions regarding the State assistance allegedly provided to the company in the post-ratification period (see, for instance, paragraph 27 above) remain vague and general. It is unclear whether and how the alleged support was actually provided by the authorities in the present case.

179.  In these circumstances, the Court does not have sufficient information to conclude that the company “did not enjoy sufficient institutional and operational independence from the State authorities” at the material time, that is, after the ratification date and up to the dates of the full enforcement of the respective domestic judgments (see, mutatis mutandis, Samsonov v. Russia (dec.), no. 2880/10, 16 September 2014, and Anokhin, cited above; see further, by contrast, Voronkov v. Russia, no. 39678/03, § 52, 30 July 2015). Accordingly, the Court can only conclude that the State is not directly liable for the company’s debts.

180.  Therefore, the State’s responsibility for the company’s failure to execute the judgment should be assessed in the light of the principles related to the non-enforcement of judgments against private parties (see Kunashko, §§ 38-40, and Samsonov, §§ 82-85, both cited above).

(c)  Non-enforcement of the judgments in the applicants’ favour

181.  The judgments in the applicants’ favour were enforced in full, albeit with very significant delays, between eight years and eleven months and twelve years. As the Court has established that the State was not directly liable for those debts, the next issue to be determined is whether the State provided the necessary assistance to the creditors in the enforcement of the respective judgments, for example, through a bailiff service or bankruptcy procedures (see the case-law cited in paragraph 171 above, as well as Fociac v  Romania, no. 2577/02, § 69, 3 February 2005; Kesyan v. Russia, no. 36496/02, §§ 64-65, 19 October 2006; Smagilov, cited above, § 37; and Krivonogova v. Russia (dec.), no. 74694/01, 1 April 2004). In various instances the Court has previously noted that the assistance must be adequate, sufficient, and diligent, and that it should form part of the legal arsenal (l’arsenal juridique) available to an individual (see Dachar v. France (dec.), no. 42338/98, 10 October 2000; Fociac v. Romania, no. 2577/02, § 69, 3 February 2005; and Fuklev, cited above, § 84). In the context of the Russian legal system, the principles cited above are applicable, in the first place, to the bailiffs service, which is required to perform its functions diligently and thoroughly with a view to ensuring the effective execution of judgments issued against “private” defendants (see Pelipenko v. Russia, no. 69037/10, § 50, 2 October 2012).

182.  The Court notes that the applicants’ complaint comprises two distinct aspects: repetitive stay orders issued by the domestic courts and the bailiffs’ alleged inability to assist the applicants in the enforcement proceedings.

(i)  As regards the multiple orders to stay execution

183.  The parties agreed that the enforcement proceedings had been stayed by the domestic courts on several occasions which resulted in an additional enforcement delay of almost three years.

184.  As regards the only suspension of the enforcement proceedings pursuant to the request of a bailiff, granted on 26 December 2005 – and the only stay in respect of which a copy of the respective request and the relevant court decision was submitted – the Court notes that the applicants complained about it for the first time in the Strasbourg proceedings, apparently without having brought it to the authorities’ attention. In any event, the Court notes that the bailiff’s request was lodged in the interest of the fifth category creditors including the applicants, to prevent the proceeds being distributed in violation of those creditors’ rights as a result of the submission of the updated claims by the tax authority against the debtor company (see paragraph 120 above). In any event, the domestic court clearly had no discretion as to whether to stay execution, as it was to be suspended on the two simultaneously present grounds: the pending insolvency case and the debtor company’s challenge of the enforcement document produced by the tax authority (see paragraphs 121 and 156-157 above). Furthermore, the Court is satisfied that the domestic court balanced the interests of the creditors of different categories when deciding on the stay period, noted the overall duration of the enforcement proceedings and limited the suspension period to two months (see paragraph 121 above), which, in the Court’s view, did not exceed what was strictly necessary in the circumstances of the case.

185.  Otherwise, the Court notes that, while referring to multiple domestic courts decisions ordering the stays of execution, the parties did not submit copies. The Court can only discern from the provisions of the Enforcement Act in force at the material time that in some cases a stay appeared to be mandatory by operation of law: for instance, where a case concerning a company’s insolvency was opened by a commercial court (see paragraph 157 above; and, for information on the attempts to initiate the supervision procedure, paragraphs 46, 51, 53 above), or, for instance, where a party sought the release of impounded property (see paragraph 157 above). In other cases – where, for instance, a debtor challenged the bailiffs’ actions – the courts appear to have had discretion as to whether to order a stay of execution (see paragraph 158 above). In the absence of any relevant judicial decisions (including concerning the events until 9 July 2003 referred to by the applicants, see paragraphs 55-58 above), the Court is unable to analyse the reasoning behind the repetitive decisions to suspend the enforcement proceedings, the scope of the courts’ discretion or establish the exact delays set out by the courts, let alone speculate whether the proceedings had been stayed for such periods as were strictly necessary (see, mutatis mutandis, Immobiliare Saffi v. Italy [GC], no. 22774/93, § 69, ECHR 1999‑V). The Government, the applicants themselves (see paragraph 102 above), the bailiffs (see, for instance, paragraphs 33, 49, 60 and 62 above) and the prosecutor’s office (see paragraph 76 above) considered the debtor company’s uncooperative behaviour a major obstacle to the enforcement and pointed specifically to its long history of challenging nearly each and every “act” issued by the bailiffs throughout the entire duration of the joint enforcement procedure (see paragraphs 46, 51, 62, 69, 71, 81, 94, 97, above). In these circumstances, the Court accepts that the multiple stays of execution were initiated by the debtor company, which made use of the procedural opportunities available to it under the domestic law (see paragraph 163 above). In the absence of any further information, the Court is unable to conclude that the conduct of the private debtor company could be regarded as attributable to the authorities, or that the courts’ granting of the stays amounted to a breach of the Convention requirements.

(ii)  As regards the bailiffs’ conduct

186.  In assessing the bailiffs’ actions, the Court cannot lose sight of the context of the case: as established above, the debtor was a privately owned company which was going through a long-lasting period of financial difficulties and longstanding lack of assets at the material time. Throughout the entire duration of the enforcement proceedings it was involved in a number of disputes with various private actors concerning its shares and assets. The Court further notes that the enforcement of the judgments in the applicants’ favour constituted part of a very complex joint enforcement procedure concerning dozens of claimants, as the company accumulated debts owed to private creditors as well as the State and municipal budgets, and these claims had been gradually satisfied in accordance with the order of priority depending on the nature of the claims and once the funds became available (see paragraphs 117 and 131 above). Finally, the parties agree that the debtor company’s uncooperative attitude generated serious delays in enforcement of the judicial awards (see, for example, paragraphs 60, 62, 63, 69-76 above).

(α)  Enforcement proceedings concerning the obligation to provide flats

187.  The Court notes that the applicants specifically complained about the bailiffs’ failure to take measures to provide them with flats until 2001‑2002, when the initial judgments were amended to allow for the payment of the flats’ value (see paragraph 13 above and the Appendix).

188.  The Court is only in possession of scarce bits of information as regards the authorities’ conduct during the initial years following the delivery of the initial judgments in the applicants’ favour. It appears that the bailiffs’ actions consisted essentially of adjourning the enforcement proceedings pursuant to the court orders, identifying the debtor company’s assets and, on the basis of that inventory, informing the applicants of the lack of prospects of enforcement due to a lack of flats. Indeed, it is common ground between the parties that during the initial enforcement period – and at least after 5 May 1998 – the debtor company clearly lacked the available housing (see paragraphs 48, 49, 133, 137, 138 above). Since the early 1990s, when the housing construction programme was discontinued, only seven flats had been identified and allocated to the company’s creditors (see paragraph 48 above) – the applicants, as well as more than a hundred of their colleagues in a similar situation, were not among them. The applicants’ reference to a certificate of 23 October 2006 (see paragraph 25 above) cannot be accepted as evidence to the contrary: in so far as the only building put into service after 5 May 1998 was concerned, it was precisely the apartment block at 4a Pobedy Avenue which had been identified and seized by the bailiffs, and the available flats distributed to the claimants (see paragraph 48 above). As regards the other buildings listed in the certificate, the document contains no information capable of elucidating the buildings’ status and, indeed, relevance to the enforcement proceedings at hand.

189.  The Court concludes that the judgments could not be enforced during the impugned period as the debtor lacked flats. While the enforceability of the initial domestic judgments delivered in 1995 to 1998 clearly falls outside the scope of the Court’s analysis in the present cases by virtue of the application of the six-month rule (Article 35 § 1 and 4 of the Convention), the Court detects no specific action or omissions on the part of the bailiffs which, in the situation described above, could have made it impossible to enforce the judgment debt, or had a decisive impact on the debtor company’s realisable assets (see, in so far as relevant, Krivonogova v. Russia (dec.), no. 74694/01, 1 April 2004).

(β)  The bailiffs’ conduct in the proceedings concerning the modified order to pay the applicants the amounts of money

190.  As regards the subsequent period from 2002 to 2007, after the judgments were modified to pay the applicants the amounts of money, there is nothing to suggest that the bailiffs were inactive. For years, they seized the debtor company’s multiple assets, made requests for information, took measures to identify the company’s assets, initiated the assessment procedures and organized public sales, issued warnings and claimed financial documentation, recovered the proceeds of sales and gradually obtained execution of the claims of various creditors, including the applicants (see paragraphs 50-131 above).

191.  This conclusion is also corroborated by the domestic courts’ findings in each case in two sets of proceedings: in the proceedings against the bailiffs in 2005, when the applicants chose to bring complaints concerning the bailiff’s conduct in the first half of 2005 (see paragraph 132 above), and subsequently in the compensation proceedings lodged from 2009 to 2010, where the applicants sought a review of the bailiffs’ actions throughout the entire duration of the enforcement proceedings as a whole (see paragraph 134 above). In 2005 the domestic courts gave a detailed account of the numerous steps taken by the bailiffs to assist creditors in receiving the judgment debts during the impugned period (as outlined in paragraphs paragraphs 77, 103-112 and 114-115 above), and concluded that those measures were adequate and sufficient (see paragraph 133 above and compare to Kunashko, cited above, § 43, and Fuklev, cited above, § 84), Otherwise, in the two sets of proceedings the courts did not find any evidence that the bailiffs had acted unlawfully, and confirmed that the judgments could not have been enforced for objective reasons but not as a result of the bailiffs’ actions or failure to act (see paragraphs 133 and 135 above). In the light of the material in its possession, the does not consider the domestic courts’ assessment arbitrary or manifestly unreasonable.

192.  In particular, the complaint concerning the order of priority was assessed in substance in the domestic proceedings against the bailiffs in Ms Vtorova’s case and rejected as unfounded (see paragraph 133 above). It appears that the other applicants only raised this grievance in the compensation dispute between 2009 and 2010, two years after the enforcement proceedings ended. In all cases, their argument was rejected (see paragraph 135 above), and the Court does not consider the domestic courts’ reasoning arbitrary or manifestly unreasonable, given that it is primarily for the national authorities, notably the courts, to interpret and apply domestic law (see Centro Europa 7 S.r.l. and Di Stefano v. Italy [GC], no. 38433/09, § 140, ECHR 2012, and Kopp v. Switzerland, 25 March 1998, § 59, Reports of Judgments and Decisions 1998-II). Otherwise, the Court notes that in the proceedings of 2005 the applicants did not point to any additional specific steps which the enforcement authorities had failed to take in order to ensure the enforcement of the judgments in their favour but rather complained of excessively long delays in the execution (see paragraph 132 above).

193.  The remainder of the applicants’ allegations, however serious, were not subject to examination by the domestic courts. The applicants’ allegations of a failure in 1998 to 2003 to either prevent the number of property transactions with the company’s assets or to pay the judgment debts with the proceeds of these transactions were essentially based on articles in the local press (see paragraph 38 above), while no documents allowing for the identification of the parties to the transactions, the owners of the assets subject to the sale agreements, the scope of the authorities’ activity, the effect on the overall progress of the enforcement or the relevance to the enforcement proceedings, were submitted. The only documented instance of property alienation despite a seizure order was the sale of the building at 20-letiye Oktyabrya Street (see paragraphs 85-87 above). It appears that the bailiffs received confirmation of the debtor company’s ownership rights in respect of the building two days after it had been actually sold. They issued a seizure order which was already futile, as the building had already been alienated to A.-T. It appears, however, that at no stage of the proceedings was this issue subject to scrutiny by the domestic courts in the context of the lawfulness of the bailiffs’ or other authorities’ actions. Otherwise, the Court was not provided with any information on the matter to allow an assessment of the effect of the transaction with the building on the conduct and duration of the enforcement proceedings.

194.  Furthermore, in the absence of either further details or any findings of the domestic courts, the Court is unable to identify any documented action or omissions on the part of the respondent State authorities which could have made it impossible to enforce the judgment debt or entailed detrimental consequences for the enforcement proceedings as a whole (see Krivonogova (dec.), cited above; compare and contrast to Kotov, cited above, § 90).

195.  To sum up, even though the enforcement delays in the present case were, to say the least, regrettable, the Court sees no reason to depart, on the basis of the parties’ submissions, from the domestic courts’ findings on the matter. The material submitted by the parties is insufficient to conclude that the bailiffs’ assistance was not adequate or sufficient, or that the bailiffs had not acted diligently in order to assist the applicants in execution of the judgments in their favour. Given the complexity of the enforcement proceedings, the number of claimants, the overall amount of the debt to be recovered, the debtor company’s attitude and the available information on the bailiffs’ activities, the Court considers that the global effect of the measures employed by the bailiffs in the present case was compatible with the requirements imposed on the State by both Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 to the Convention.

196.  It follows that this complaint must be rejected as being manifestly ill-founded pursuant to Article 35 §§ 3 (a) and 4 of the Convention.

C.  Complaint about the lack of an effective remedy in respect of the non-enforcement complaint

197.  In view of its finding in paragraphs 195-196 above, the Court considers that the applicants have no arguable claim under the Convention or its Protocols which would require a remedy within the meaning of Article 13. Consequently, this complaint is also manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention and must be rejected pursuant to Article 35 § 4 of the Convention.

For these reasons, the Court, unanimously,

Decides to join the applications;

Declares the applications inadmissible.

Done in English and notified in writing on 17 October 2019.

Stephen PhillipsPaul Lemmens
RegistrarPresident

APPENDIX

No.

Application

no. and

date of introduction

Applicant’s name,

year of birth

Dates of the initial judgments in the applicants’ favour,

final on

Amount

awarded, in Russian roubles (RUB)

Enforcement status

Refusal to grant the applicants’ complaints about the bailiff’s inaction

Claim for compensation of non‑pecuniary damage caused by the bailiffs’ inaction 

42140/05

24/10/2005

Vasiliy Markovich Fomenko

1955

Leninskiy District Court of Voronezh

21/04/1998

21/07/1998,

Manner of execution changed, housing award replaced by a monetary payment on

11/07/2002,

Increased in line with inflation on

30/09/2004,

11/10/2004

Grant a flat,

as replaced on 11/07/2002 by a monetary award,

RUB 380,957.04,

as increased in line with inflation, so that the final amount to be paid was

RUB 488,767.88[4]

Enforced in full.

RUB 39,351.38 paid on18/01/2006,

the remainder in April 2007

Complaint of inaction on the part of the bailiffs rejected on

23/06/2005,

refusal further upheld in late 2005, apparently on

03/11/2005, by the Voronezh Regional Court

Claim for compensation for non-pecuniary damage rejected on

07/08/2009

(as upheld by the Voronezh Regional Court on

11/02/2009) 

43424/05

27/10/2005

Irina Nikolayevna Vtorova

1953

Leninskiy District Court,

31/05/1995

05/09/1995,

Manner of execution changed

27/03/2001

06/04/2001

Grant a flat,

as replaced on 27/03/2001 by

RUB 432,000

(application to increase in line with inflation refused)

Enforced in full.

RUB 34,780.92 paid on 18/01/2006;

the remainder on 10/04/2007

Complaint of inaction on the part of the bailiffs rejected on

21/09/2005,

refusal upheld on

07/02/2006

Claim for compensation for non-pecuniary damage rejected on

15/07/2009,

(refusal upheld on 02/02/2009) 

4588/06

19/11/2005

Vasiliy Vitaliyevich Pipchenko

1927

Leninskiy District Court,

08/09/1995

18/09/1995,

The way of execution modified

12/03/2002

(entered into force ten days later)

Index-linked on

11/10/2004

(entered into force on 22/10/2004)

Grant a flat,

as replaced on 12/03/2002 by

RUB 462.960,

replaced by the decision of 11/10/2004 awarding the amount as index-linked in line with inflation:

RUB 607.403,52

Enforced in full.

RUB 48,902.90 paid by 18/01/2006; remainder paid on 10/04/2007

Complaint of inaction on the part of the bailiffs rejected on

12/07/2005,

refusal upheld on

27/10/2005

The applicant’s claim for compensation of non-pecuniary damage rejected

27/05/2010

(as upheld by the Voronezh Regional Court on

05/10/2010) 

4656/06

16/12/2005

Vladimir Ivanovich Vorobyev

1962

Leninskiy District Court,

27/11/1996

09/12/1996

The way of execution modified, 28/08/2002

(entered into force on 07/09/2002)

Index-linked on

22/09/2004

(entered into force ten days later, the amount further corrected by the court’s decision on 05/05/2005)

Grant a flat,

as replaced on 28/08/2002 by

RUB 380,957.04,

as index-linked in line with inflation on 22/09/2004 (corrected on 05/05/2005), as index-linked in line with inflation, so that the final amount to be paid increased to

RUB 490,453.86

Enforced in full.

RUB 39,487.12 paid on 05/05/2005;

remainder paid on 10/04/2007

Complaint of inaction on the part of the bailiffs rejected on

15/06/2005,

refusal upheld on

13/10/2005

The applicant’s claim for compensation of non-pecuniary damage rejected

10/06/2010

(as upheld by the Voronezh Regional Court on

19/10/2010) 

23216/06

30/12/2005

Ivan Petrovich Romashov

1943

Zheleznodorozhnyy District Court of Voronezh,

18/04/1996

29/04/1996

The way of execution modified

06/03/2001

(final on 19/03/2001)

Grant a flat,

as replaced on 06/03/2001 by a monetary award,

RUB 462.960

(Claim for index-linking refused)

Enforced in full.

RUB 20,168.10 paid on 08/09/2005; remainder paid on 05/03/2007

Complaint of inaction on the part of the bailiffs rejected on

27/05/2005

01/12/2005

No information available

[1].  The letter refers to a judgment of the Leninskiy District Court of Voronezh of 12 October 2001. Its scope is not specified in the letter, and no copy is provided.

[2].  “Komunna” newspaper, 28 July 2007

[3].  That is, directives and norms set out by State determining volume and nature of industrial production

[4].  Approximately EUR 13,700.00.

Full & Egal Universal Law Academy