FOURTH SECTION
DECISION
Application no. 15883/10
KALUSH NAFTOKHIM, TOV
against Ukraine
The European Court of Human Rights (Fourth Section), sitting on 29 January 2019 as a Committee composed of:
Georges Ravarani, President,
Marko Bošnjak,
Péter Paczolay, judges,
and Andrea Tamietti, Deputy Section Registrar,
Having regard to the above application lodged on 8 March 2010,
Having deliberated, decides as follows:
THE FACTS
1. The applicant company, Kalush Naftokhim, TOV, is a Ukrainian joint venture based in Kalush with legal personality under Ukrainian law.
2. The facts of the case, as submitted by the applicant company, may be summarised as follows.
3. A State-owned enterprise, O., had financial difficulties and, inter alia, could not repay its debt to a foreign bank. As the debt was guaranteed by the Ukrainian Government, on 10 August 2000 they decided to find a private investor to help O. to pay the debt and to restart its activities by means of creating a new company whose main assets would be O.’s property and a proportionate contribution of a private investor in exchange for 50% of the share capital of the newly created company.
4. To that end, a tender process was announced. As required by the Government’s decision of 10 August 2000, one of the principal conditions of the tender process was that the contribution of the successful bidder had to be in two forms: firstly, a specified amount of cash and, secondly, products or equipment in kind to ensure that the new company would be profitable.
5. In 2000 the applicant company won the tender and a new company, L., was created. In 2001 the applicant company paid the specified amount of cash as required by the tender conditions. However, instead of providing L. with products or equipment in kind as its contribution to the latter’s share capital, the applicant company transferred the shares it owned in a third company to L., a transaction which was permitted by certain provisions of L.’s memorandum and articles of association that had been adopted after the tender. The transfer was approved by a resolution in a general meeting of L.’s shareholders on 5 November 2001.
6. In March 2008 the Deputy General Prosecutor, acting on behalf of the Government, instituted proceedings before the Ivano-Frankivsk Commercial Court, challenging the validity of the provisions of L.’s memorandum and articles of association, according to which a contribution to its share capital could be made by means other than those specified in the Government’s decision of 10 August 2000 (see paragraph 4 above) and the tender conditions, and the validity of the related resolution of L.’s general meeting of 5 November 2001 (see paragraph 5 above). The Deputy General Prosecutor also argued that the information about the provisions of the memorandum and articles of association and the resolution had only become available to the General Prosecutor’s Office in February 2008, when it had been checking the applicant company’s compliance with the tender conditions upon a request from the Government of 13 February 2008.
7. The applicant company took part in the proceedings as a defendant and submitted its written objections, arguing, inter alia, that the Deputy General Prosecutor had missed the statutory time-limit of three years for bringing such a claim, as the Government and the Prosecutor’s Office would have become aware of the disputed provisions within the memorandum and articles of association and the resolution in February 2005 at the latest.
8. On 27 June 2008 the Ivano-Frankivsk Commercial Court found for the Deputy General Prosecutor and invalidated both the disputed provisions within the memorandum and articles of association and the resolution. The court found that it had been duly established that the Deputy General Prosecutor had acted in the State’s interests and that the information about the disputed provisions within the memorandum and articles of association and the resolution of 5 November 2011 had only become available to the General Prosecutor’s Office in February 2008. Thus, the court held that the three-year time-limit had been missed for “justifiable reasons”. As to the merits, the court held that domestic law had required that L.’s memorandum and articles of association, and any resolutions made at a general meeting regarding contributions to L.’s share capital be in full compliance with the Government’s decision of 10 August 2000 (see paragraph 4 above) and tender conditions.
9. Ultimately, on 20 November 2008 that judgment was upheld by the Higher Commercial Court. On 10 December 2009 the Supreme Court rejected a cassation appeal lodged by the applicant company, which was based on arguments alleging the incorrect and inconsistent application of domestic law, as unsubstantiated. The applicant company’s cassation appeal contained no argument that there had been a breach of the legal-certainty principle in that the Deputy General Prosecutor’s claim had been adjudicated despite the fact that it had been lodged outside the statutory time-limit of three years. On 31 December 2009 the Supreme Court’s decision was dispatched to the applicant company.
COMPLAINTS
10. In its original submissions lodged with the Court on 8 March 2010, the applicant company complained of a violation of Articles 6 § 1, 13 and 17 of the Convention and of Article 1 of Protocol No. 1 to the Convention, essentially disagreeing with the legal assessment of the dispute by the first- and cassation-instance courts.
11. In particular, the applicant company argued that it had complied with the tender conditions and could not have foreseen that, nine years after the termination of the tender process, its actions would be considered to be incompatible with the Government’s decision of 10 August 2000 (see paragraph 4 above), which had not formed part of the tender conditions. It also argued that the authorities had unlawfully intervened in the corporate relations governed by L.’s memorandum and articles of association and had restricted its right to contribute to that company’s initial share capital. Furthermore, the invalidation of L.’s memorandum and articles of association and the related resolution of the company made at a general meeting had resulted in a disproportionate deprivation of the applicant company’s property – amounting to 42.45% (out of a total of 50%) of L.’s share capital – and in its loss of indirect control of L.
12. In its submissions of 20 May 2010, the applicant company complained under Article 6 § 1 that there had been a breach of the legal-certainty principle in that the Deputy General Prosecutor’s claim had been adjudicated despite the fact that it had been lodged outside the statutory time-limit of three years.
13. In its submissions of 25 November 2010, the applicant company essentially reiterated its original complaints and also raised a new complaint. In particular, it complained under Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 that the domestic courts had lacked independence and impartiality, as it had been the Prime Minister who had publicly instructed the General Prosecutor’s Office to bring the civil action in this case in March 2008.
THE LAW
14. The Court notes that the applicant company’s original grievances under Articles 6 § 1, 13 and 17 of the Convention and Article 1 of Protocol No. 1 (see paragraphs 10-11 above) are principally based on its disagreement with the domestic courts’ legal assessment of the dispute. In this regard, in particular in so far as this concerns Article 6 § 1, the Court reiterates that that it is primarily for the domestic courts to resolve problems of interpretation of national legislation (see Perez v. France [GC], no. 47287/99, § 82, ECHR 2004-I). The Court notes that the contested court decisions are well-reasoned and based on a proper assessment of all the relevant facts and legal arguments. Furthermore, the applicant company did not demonstrate that those decisions had amounted to an arbitrary and disproportionate interference with its possessions. In particular, there is no evidence that it had been deprived, either formally or de facto, of its allotment of L.’s share capital. Nor did it demonstrate that it had suffered pecuniary damage in connection with the outcome of the case. Consequently, even assuming that Article 1 of Protocol No. 1 is applicable to the facts of the present case, the Court rejects these complaints as being manifestly ill-founded, pursuant to Article 35 §§ 3 (a) and 4 of the Convention.
15. In so far as the applicant company complained under Article 6 § 1 that there had been a breach of the legal-certainty principle (see paragraph 12 above), the Court notes that this complaint was not raised in the applicant company’s cassation appeal (see paragraph 9 above). Thus, it must be rejected for non-exhaustion of domestic remedies, pursuant to Article 35 §§ 1 and 4 of the Convention.
16. Finally, the Court finds that the applicant company’s new complaint raised in its submissions of 25 November 2010 (see paragraph 13 above) should be rejected as lodged out of time, pursuant to Article 35 §§ 1 and 4 of the Convention, since the final domestic decision was dispatched to the applicant company on 31 December 2009 (see paragraph 9 above), more than six months before that date.
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Done in English and notified in writing on 21 February 2019.
Andrea TamiettiGeorges Ravarani
Deputy RegistrarPresident
Full & Egal Universal Law Academy