KORPORATIVNA TARGOVSKA BANKA AD v. BULGARIA + 1 other application

Communicated on 8 December 2020

Published on 11 January 2021

FOURTH SECTION

Applications nos. 46564/15 and 68140/16
Korporativna Targovska Banka AD against Bulgaria
lodged respectively on 17 September 2015 and 18 November 2016

STATEMENT OF FACTS

1.  The applicant in both applications is Korporativna Targovska Banka AD (“KTB”). KTB, a company limited by shares, is a bank. It has its registered office in Sofia.

2.  On 20 June 2014 the Bulgarian National Bank (“BNB”) placed KTB under special administration, removed all members of its management and supervisory boards from office, and appointed special administrators to run the bank (see paragraph 10 below). On 6 November 2014 BNB withdrew KTB’s licence and extended the special administrators’ mandate pending the appointment of liquidators by the competent court (see paragraphs 16 and 17 below). On 22 April 2015 the Sofia City Court declared KTB insolvent, made an order for it to be wound up, and appointed liquidators (see paragraph 66 below). The winding-up proceedings are still pending.

3.  Both applications were lodged on KTB’s behalf by its executive directors, Mr I. Zafirov, Mr O. Rusev, Mr G. Hristov and Mr A. Pantaleev, whom BNB had earlier removed from office (see paragraph 10 below). They in turn authorised Mr M. Menkov, a lawyer practising in Sofia, to represent KTB in the proceedings before the Court.

4.  The facts of the case, as submitted by the applicant and as apparent from the documents submitted by it, may be summarised as follows.KTB’s shareholders and management

5.  KTB was formed and obtained a banking licence in 1994.

6.  At the time of the events which gave rise to the applications, Bromak EOOD (“Bromak”) held 50.66% of KTB’s shares. It was in turn wholly owned by Mr Tsvetan Vasilev. Another limited liability company, Bulgarian Acquisition Company II Sarl, which has its registered office in Luxembourg, held 30.35% of KTB’s shares.

7.  At the time of the events which gave rise to the applications, KTB had a management board and a supervisory board, each consisting of four members. The management board’s members were the four executive directors (see paragraph 3 above). Mr Vasilev was a member of the supervisory board.KTB’s placement under special administration

8.  In mid-June 2014, following the opening of criminal investigations relating to KTB and a number of negative media publications about it, depositors began mass withdrawals of funds. On 16 June 2014 KTB asked the Bulgarian National Bank (“BNB”) to take steps to prevent the dissemination of false information about it and its destabilisation.

9.  The run on KTB continued, and at 10.51 a.m. on 20 June 2014 it advised BNB that it was experiencing liquidity problems and would soon become unable to honour all withdrawal requests, and asked BNB to take measures with respect to that, including placing KTB under special administration. A little over an hour later, at 12.06 p.m., KTB informed BNB that at 11.45 a.m. it had stopped making payments or any other banking transactions.

10.  Shortly after 12.30 p.m. the same day, 20 June 2014, BNB decided to (a) place KTB under special administration for three months, (b) appoint two special administrators to run KTB, (c) stay for three months the performance of all debts owed by KTB, (d) bar it from carrying out any further banking transactions, (e) remove all members of its management and supervisory boards from office, and (f) deprive all shareholders in KTB holding more than ten per cent of its shares – Bromak and Bulgarian Acquisition Company II Sarl (see paragraph 6 above) – of the right to vote for three months. The decision was immediately enforceable, and amenable to review by the Supreme Administrative Court. No such claim was lodged within the applicable time-limit, but later, in January 2015, KTB’s executive directors brought one on its behalf (see paragraphs 52 to 56 below).

11.  On 22 June 2014 BNB made minor technical corrections to its decision.

12.  On 25 July 2014 BNB replaced the two special administrators with new ones. It also commissioned an audit of KTB’s assets by three auditing companies.

13.  On 16 September 2014 BNB prolonged KTB’s special administration and all related measures (see paragraph 10 above) until 20 November 2014. It also instructed the special administrators to report on KTB’s assets. Their report was submitted on 20 October 2014.

14.  Meanwhile, between July and mid-October 2014 BNB also itself audited KTB. The audit report likewise became ready on 20 October 2014.

15.  On 4 November 2014 the special administrators submitted to BNB reports about KTB’s financial situation on 30 September 2014.BNB’s decision to withdraw KTB’s licence

16.  On 6 November 2014 BNB decided to withdraw KTB’s licence and apply to the competent court to declare it insolvent and wind it up. BNB set out the steps that it had taken with respect to KTB and the audits of KTB carried out since June 2014, and found that according to the reports about KTB’s situation, on 30 September 2014 its own funds, determined in the way laid down by Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms (“Capital Requirements Regulation”), were minus 3,745,313,000 Bulgarian levs (BGN) (equivalent to 1,914,948,129 euros (EUR)), and that KTB did not meet the capital requirements laid down in the Regulation. According to the special administrators’ report, the developments since 30 September 2014 – in particular a series of assignments and set offs carried out by some of KTB’s clients – had not materially improved that situation. Even if all those operations were to be reflected in KTB’s accounting records, they would reduce that sum by only BGN 161,468,000 (equivalent to EUR 82,557,277), and KTB’s own funds would remain a negative value. Pursuant to section 36(2)(2) of the Credit Institutions Act 2006 (see paragraph 92 below), BNB had to withdraw a bank’s licence if it found that its own funds were a negative value. KTB’s common equity tier one capital ratio was minus 188.03%, its tier one capital ratio was likewise minus 188.03%, and its total capital ratio was minus 180.10%. All those values were below the minimum levels required under Article 92 § 1 of the Capital Requirements Regulation. BNB also noted that its own audit of KTB, carried out between July and October 2014, had revealed that KTB’s management had engaged in “vicious banking and business practices” and had submitted misleading reports about the bank.

17.  BNB also extended the mandate of the two special administrators already running KTB (see paragraphs 10, 12 and 13 above) pending the appointment of liquidators by the competent court.Attempt to seek judicial review of BNB’s decision to withdraw KTB’s licence by the Supreme Administrative CourtAt first instance

18.  Bromak sought judicial review of BNB’s decision to withdraw KTB’s licence by the Supreme Administrative Court under section 151(3) of the Credit Institutions Act 2006 (see paragraph 95 below). In its statement of claim, it argued that it had standing to do so, as it was a majority shareholder in KTB and the withdrawal of KTB’s licence, which would inevitably trigger a winding up, would directly affect its rights pertaining to its shares in KTB.

19.  The three-member panel of the Supreme Administrative Court dealing with Bromak’s claim joined it to similar judicial review claims by three other shareholders in KTB, one of which was Bulgarian Acquisition Company II Sarl (see paragraph 6 above).

20.  On 13 December 2014 KTB’s executive directors, whom BNB had earlier removed from office (see paragraph 10 above) sought leave to intervene in the proceedings. They pointed out that they had also applied for judicial review of BNB’s decision to withdraw KTB’s licence (see paragraph 99 below), and argued that the two cases should be joined since they concerned the same decision.

21.  On 15 December 2014 Bromak filed written submissions in which it argued in detail why it had standing to seek review of BNB’s decision.

22.  The three-member panel heard the case in public on 15 December 2014. Bromak asked the court to join KTB itself to the proceedings, via its special administrators (see paragraphs 10 and 17 above). Noting that BNB’s decision had been addressed to KTB and affected its rights, the court allowed Bromak’s request.

23.  In the course of the hearing, Bromak asked the panel’s members to recuse themselves, but they refused.

24.  Bromak also informed the court that it had made a claim that BNB’s earlier decision to appoint special administrators be declared null and void, and requested that the proceedings be stayed pending the determination of that claim.

25.  The three-member panel refused the request by KTB’s executive directors for leave to intervene (see paragraph 20 above). It noted that they had appealed against the decision of another three-member panel to dismiss their own claim for review of BNB’s decision for lack of standing, and that that appeal was still pending (see paragraph 99 below).

26.  Lastly, the three-member panel found that KTB, which it had joined to the proceedings, had to be given an opportunity to comment on the issues in the case. The panel listed a further hearing for 9 February 2015.

27.  On 17 December 2014 the public prosecutor taking part in the proceedings ex officio and KTB’s special administrators urged the court to rule on the admissibility of the claims in private.

28.  Two days later, on 19 December 2014, KTB’s executive directors filed written submissions on the bank’s behalf. They argued that they were entitled to represent KTB in the proceedings. They pointed out that although they had been removed from office, their powers had not been terminated. Moreover, the special administrators had a conflict of interests with KTB. This was, inter alia, because (a) they had been appointed by and could be removed by – and were accountable to – the respondent in the proceedings, BNB; (b) BNB had withdrawn KTB’s licence on the basis of their reports; and (c) instead of trying to fix KTB’s financial situation after their appointment, they had acted in a manner leading to the withdrawal of its licence. The executive directors also urged the court to appoint a special representative ad litem for KTB under Article 29 § 4 of the Code of Civil Procedure (see paragraph 109 below).

29.  On 29 December 2014 KTB’s special administrators, acting on behalf of the bank, submitted that the shareholders had no standing to seek review of BNB’s decision to withdraw KTB’s licence, as it did not affect their rights directly and proximately.

30.  On 13 January 2015 the three-member panel refused to examine the claims of Bromak and the three other shareholders. It found that only KTB had been directly affected by BNB’s decision to withdraw its licence, and that the effects of that decision on its shareholders were only indirect. They did not therefore have standing to challenge it. It could be accepted that the shareholders had standing to protect KTB’s interests only if it was being run by persons who could not be controlled by them. But this was not the case, since the special administrators had been initially appointed as a result of a request that KTB be placed under special administration emanating from its own management, and since their appointment had not been challenged by the bank. The shareholders could protect their rights in the ensuing proceedings pursuant to BNB’s application that KTB be declared insolvent and wound up, in which they could intervene under section 11(4) of the Bank Insolvency Act 2002 (see paragraph 103 in fine below). Shareholders were in law distinct from the bank, which alone was the addressee of BNB’s decision to withdraw its licence (see опр. № 363 от 13.01.2015 г. по адм. д. № 14782/2014 г., ВАС, VII о.).

31.  One judge dissented. In her view, there were grounds to hold that KTB’s shareholders were, exceptionally, entitled to seek judicial review of the decision to withdraw its licence, because there was no one else who could effectively do so. KTB’s management had been removed from office, and the special administrators were under BNB’s control. To deny the shareholders standing meant leaving BNB’s decision without review, in spite of the statutory provision providing for that (see paragraph 95 below), and thus rendering KTB’s rights theoretical and illusory. It also had to be borne in mind in that connection that the withdrawal of the licence could not be scrutinised by the civil courts in the ensuing winding-up proceedings which would be triggered by it.On appeal

32.  Bromak appealed to a five-member panel of the Supreme Administrative Court. It reiterated its arguments that the withdrawal of KTB’s licence had affected its rights as a shareholder in it. It also pointed out, inter alia, that the three-member panel had omitted to rule on the request to appoint a special representative ad litem for KTB (see paragraph 28 in fine above).

33.  The other three shareholders in KTB also appealed.

34.  Bromak reiterated the request, made by KTB’s executive directors in the first-instance proceedings, that the court appoint a special representative ad litem for KTB under Article 29 § 4 of the Code of Civil Procedure (see paragraph 28 in fine above and paragraph 109 below). It pointed out that the special administrators, who were by law representing KTB, had a conflict of interest with it and a disincentive to challenge BNB’s decision to withdraw its licence, which they had already demonstrated by their conduct in the first-instance proceedings.

35.  Bromak also asked the five-member panel to seek a preliminary ruling by the Court of Justice of the European Union (“the CJEU”). In its view, the proper resolution of the case required an answer to the questions whether Article 72 of Directive 2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms (“Capital Requirements Directive”), read in conjunction with Article 47 of the Charter of Fundamental Rights of the European Union, (a) gave a bank’s former management or its majority shareholder standing to seek judicial review of the withdrawal of its licence, and (b) precluded national rules excluding such standing. Bulgarian Acquisition Company II Sarl also sought a preliminary ruling by the CJEU.

36.  Bromak further asked the Supreme Administrative Court’s president to draw lots for the selection of a judge rapporteur in the appeal proceedings in public. The president refused, saying that he had no reasons to doubt the integrity of the court’s system for the random selection of judge rapporteurs.

37.  At the suggestion of counsel for Bromak, made on 4 February 2015, on 10 March 2015 the Supreme Bar Council invited the Supreme Administrative Court’s plenary to give an interpretative decision on who had standing to seek judicial review under section 151(3) of the Credit Institutions Act 2006 (see paragraph 95 below) of a decision by BNB to withdraw a bank’s licence. On 19 March 2015 Bromak asked the five‑member panel to stay the examination of its appeal pending that interpretative decision.

38.  On 20 March 2015 a judge rapporteur was designated by random selection carried out in the presence of eleven judges of the Supreme Administrative Court. The Supreme Administrative Court’ president took on the role of chairman of the five-member panel.

39.  On 23 and 27 March 2015 Bromak sought the recusal of all five members of the panel. On 30 March 2015 the panel refused those requests.

40.  The panel also declined to stay the proceedings pending an interpretative decision pursuant to the Supreme Bar Council’s request. It noted, inter alia, that no proceedings had yet been formally opened pursuant to that request.

41.  The panel also refused the request that a special representative ad litem be appointed for KTB (see paragraphs 28 in fine and 34 above). It noted that KTB, which was not a claimant but simply an interested party, was represented in the proceedings by its special administrators, as required by law. The special administrators had already commented on all requests by the claimants, and appointing a special representative ad litem would clash with their mandate.

42.  The following day, 1 April 2015, Bromak renewed its request for the recusal of the panel’s chairman.

43.  In a final decision of 2 April 2015 the five-member panel (a) refused the renewed recusal request, (b) declined to seek a preliminary ruling by the CJEU, and (c) upheld the three-member panel’s decision.

44.  The panel noted, inter alia, that section 151(3) of the Credit Institutions Act 2006 (see paragraph 95 below) expressly provided for judicial review of BNB’s decisions to withdraw a bank’s licence, which meant that there was no direct discrepancy between Bulgarian and European Union law, in particular Article 47 of the Charter of Fundamental Rights of the European Union. The specific question arising in the case – who had standing to seek such review – could be answered on the basis of CJEU’s abundant and settled case-law on the question which persons were directly and individually affected by a measure not addressed to them. The shareholders in a bank were not directly affected by a decision to withdraw its licence; any effects on them were indirect and depending also on intervening factors, some of which could fail to materialise. The mere fact that they had a pecuniary relationship with the bank was insufficient.

45.  Moreover, the Capital Requirements Directive did not subject the shareholders in a bank, but only the bank itself, to prudential supervision. That meant that the right under Article 72 of the Directive to appeal against decisions and measures taken pursuant to laws adopted in accordance with it belonged only to those directly affected by such decisions or measures.

46.  It could not be overlooked in that connection that the CJEU often referred to the case-law of the European Court of Human Rights, which had already ruled on an issue identical with that raised in the case at hand in Bakalov and Others v. Bulgaria ((dec.), no. 55796/00, 18 September 2007), holding that neither Article 6 nor Article 13 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) implied that the shareholders in a company, such as a bank, should have the right to bring or participate in proceedings in respect of acts prejudicial to “their” company. That ruling, entirely consistent with the CJEU’s case-law on directly affected persons, fully applied to the case at hand. The shareholders in KTB were not entitled to challenge BNB’s decision to withdraw its licence; only KTB itself was. According to the case-law of the European Court of Human Rights, an exception could be made if a majority shareholder carried out its business through a company and fully controlled it. But this was not the case of any of the claimants, who in any event, as could be seen from a careful reading of their submissions, were seeking to vindicate their own rights rather than those of KTB. The position in the case was thus different from that in Capital Bank AD v. Bulgaria (no. 49429/99, ECHR 2005-XII (extracts)), where the application before the European Court of Human Rights had been made on behalf of the bank itself.

47.  In so far as the requests to seek a preliminary ruling from the CJEU were based on the principle of efficiency, an analysis of the decisions of the CJEU showed that there was ample case-law defining the parameters of that principle in situations comparable to the case at hand.

48.  Lastly, there was no need to seek a preliminary ruling from the CJEU pursuant to the request by Bulgarian Acquisition Company II Sarl based on an alleged infringement of its freedom of movement of capital.

49.  In sum, the provisions of European Union law on which the claimants relied had already been analysed by the CJEU and could be construed without difficulty based on the overall content and context of the instrument of which they formed part. It was hence unnecessary to seek a preliminary ruling from the CJEU. For the same reasons, the claimants’ appeals against the three-member panel’s decision were unfounded (see опр. № 3725 от 02.04.2015 г. по адм. д. № 3438/2015 г., ВАС, петчл. с-в).Proceedings pursuant to the Supreme Bar Council’s request for an interpretative decision

50.  The Supreme Administrative Court’s president opened proceedings pursuant to the Supreme Bar Council’s request for an interpretative decision (see paragraph 37 above) on 28 September 2015.

51.  The court’s plenary examined the request in private on 29 March 2016, and on 14 June 2016 declined, against the dissent of eleven judges, to give an interpretative decision. It noted that section 151(3) of the Credit Institutions Act 2006 did not specify who was entitled to seek judicial review of BNB’s decision to withdraw a bank’s licence, and that any interpretation aiming to elucidate that point would amount to supplementing the provision rather than simply construing it, and thus be outside of the court’s remit. Under the rules governing judicial review, an administrative decision could be challenged by the persons whose rights, freedoms or legal interests were infringed or imperilled by it; this was a question falling to be determined in each individual case rather than in an abstract manner, as requested by the Supreme Bar Council. In as much as relied on provisions of European Union law, the Supreme Administrative Court had no jurisdiction to interpret those; solely the CJEU was competent to do so. But it was not possible to seek a preliminary ruling by CJEU in interpretative proceedings, as this could only be done with respect to a specific case (see опр. № 1 от 14.06.2016 г. по тълк. д. № 4/2015 г., ВАС, ОСС на І и ІІ к.).Attempt to seek judicial review of BNB’s decisions to appoint special administrators for KTB

52.  In the meantime, on 16 January 2015 KTB’s executive directors, acting on behalf of the bank, sought judicial review of BNB’s decisions to appoint special administrators (see paragraphs 10 and 12 above). They argued that the decisions were null and void, and asked the Supreme Administrative Court to make a declaration to that effect.

53.  On 8 July 2015 a three-member panel of the Supreme Administrative Court refused to examine the claim, on the basis that at the time when KTB’s executive directors had made it, they had already been removed from office and could not act on KTB’s behalf (see опр. № 8440 от 08.07.2015 г. по адм. д. № 1807/2015 г., ВАС, VIII о.).

54.  KTB’s executive directors appealed to a five-member panel of the Supreme Administrative Court.

55.  On 3 December 2015 the five-member panel stayed the proceedings pending the interpretative decision by the court’s plenary. After that interpretative decision came out (see paragraph 51 above), the appeal proceedings were resumed.

56.  In a final decision of 6 October 2016, the five-member panel refused to examine the appeal, on the basis that it had been lodged by persons who no longer had the power to act on KTB’s behalf. The panel went on to note, with respect to the executive directors’ argument that in the circumstances they should, exceptionally, be granted standing to act on KTB’s behalf, that their claim had been made out of time. That meant that BNB’s decision to appoint special administrators had already become final, and that KTB could not be represented by the managers removed from office by virtue of that decision. Moreover, after the opening of proceedings against KTB pursuant to BNB’s winding-up application, KTB was to be represented in the manner laid down by the Bank Insolvency Act 2002 (see paragraphs 57 and 103 below), which did not envisage a residual power of a bank’s former management to keep on representing it in some types of proceedings. The Sofia City Court’s decision to declare KTB insolvent (see paragraph 66 below), which had been immediately enforceable and upheld on appeal, was a further factor precluding the executive directors from acting on KTB’s behalf (see опр. № 10401 от 06.10.2016 г. по адм. д. № 9467/2015 г., ВАС, петчл. с-в).Proceedings before the civil courts pursuant to BNB’s application that KTB be declared insolvent and wound upProceedings before the Sofia City Court

57.  Meanwhile, following its decision to withdraw KTB’s licence (see paragraph 16 above), on 7 November 2014 BNB applied to the Sofia City Court to declare KTB insolvent and order that it be wound up.

58.  On 13 November 2014 Bromak sought leave to intervene in the proceedings under section 11(4) of the Bank Insolvency Act 2002 (see paragraph 103 in fine below). So did the other big shareholder in KTB, Bulgarian Acquisition Company II Sarl (see paragraph 6 above).

59.  On 17 November 2014 the court set the case down for hearing on 24 November 2014, and directed that KTB be summoned via the special administrators previously appointed by BNB (see paragraphs 10, 12 and 17 above and paragraph 103 below).

60.  On 20 November 2014 Bromak asked the court to appoint a special representative ad litem for KTB under Article 29 § 4 of the Code of Civil Procedure, as it had done in the proceedings before the Supreme Administrative Court (see paragraph 34 above and paragraph 109 below). It pointed out that the applicant in the proceedings was BNB, and that KTB was being represented by the special administrators appointed by, and accountable to, BNB. BNB had, moreover, fixed their remuneration, and had withdrawn KTB’s licence on the basis of their reports. The special administrators and BNB had a common interest: to have winding-up proceedings opened against KTB. This ran against the interests of both KTB and its shareholders, which wanted to preserve the bank. There was thus a conflict of interests justifying the appointment of a special representative ad litem for KTB.

61.  At the hearing on 24 November 2014 the court allowed the intervention requests by Bromak and Bulgarian Acquisition Company II Sarl, and stayed the proceedings pending the determination of the claims for judicial review of BNB’s decision to withdraw KTB’s licence (see paragraphs 18 and 19 above).

62.  On 25 March 2015 the Deposit Insurance Fund, which was taking part in the proceedings ex officio, asked the court to appoint two provisional liquidators for KTB (see paragraphs 103 and 107 below). The court allowed the request the same day. It noted, inter alia, that whereas the special administrators were officers assisting BNB, the provisional liquidators were officers assisting the insolvency court.

63.  On 2 April 2015 Bromak appealed to the Sofia Court of Appeal against the appointment of the provisional liquidators. On 7 May 2015 the Sofia Court of Appeal held that the Sofia City Court’s decision to do so was not amenable to appeal. Bromak appealed against that decision to the Supreme Court of Cassation, but on 30 September 2015 the court upheld it (see опр. № 539 от 30.09.2015 г. по ч. т. д. № 2099/2015 г., ВКС, II т. о.).

64.  Meanwhile, following the final dismissal of the claims for judicial review of BNB’s decision to withdraw KTB’s licence (see paragraph 43 above), on 3 April 2015 the Sofia City Court resumed the main proceedings.

65.  The Sofia City Court heard the case in public on 15 April 2015.

66.  On 22 April 2015 the Sofia City Court allowed BNB’s application, and (a) declared KTB insolvent and fixed the date on which it had become insolvent, (b) opened winding-up proceedings with respect to it, (c) terminated the powers of its bodies, (d) divested it of the right to administer its property, and (e) ordered the sale of its assets. The court noted that BNB’s decision to withdraw KTB’s licence was facially valid, and held that it had no jurisdiction to check whether that decision, which could be judicially reviewed in separate proceedings, was correct. The only court which could do so was the Supreme Administrative Court, in proceedings under section 151(3) of the Credit Institutions Act 2006 (see paragraph 95 below). For the Sofia City Court, the only material consideration was that BNB’s decision had become final, which was indeed the case (see реш. № 664 от 22.04.2015 г. по т. д. н. № 7549/2014 г., СГС).

67.  The next day, 23 April 2015, the Deposit Insurance Fund appointed the two provisional liquidators as permanent liquidators (see paragraph 108 below).Proceedings before the Sofia Court of Appeal

68.  Bromak and the other shareholder in KTB, Bulgarian Acquisition Company II Sarl, appealed against the Sofia City Court’s judgment to the Sofia Court of Appeal. Bromak argued that it had standing to appeal in its own right because KTB’s special administrators could not and would not do so, because their mandate had been brought to an end with the appointment of provisional liquidators and because they were dependent on BNB. The liquidators would not appeal either, because they were dependent on BNB and the Deposit Insurance Fund, which was a creditor of KTB, and because their job depended on the existence of winding-up proceedings with respect to KTB. This conflict of interests meant that only a shareholder of KTB could vindicate its interests in the proceedings. That was the only way of obtaining judicial review of BNB’s decision to withdraw KTB’s licence. Bulgarian Acquisition Company II Sarl also asked the Sofia Court of Appeal to seek a preliminary ruling by the CJEU on whether the Sofia City Court’s refusal to scrutinise BNB’s decision to withdraw KTB’s licence (see paragraph 66 above) was contrary to European Union law.

69.  Bromak and KTB’s executive directors also appealed against the Sofia City Court’s judgment on behalf of KTB itself. In support of their contention that they had standing to do so, they raised arguments similar to those made in Bromak’s own appeal (see paragraph 68 above).

70.  KTB’s liquidators (acting on behalf of KTB), BNB and the Prosecutor’s Office (which was taking part in the proceedings ex officio) also appealed, but only against the Sofia City Court’s ruling as to the date on which KTB had become insolvent (see paragraph 66 (a) above).

71.  Bromak also appealed to the Sofia City Court against the decision of the Deposit Insurance Fund to appoint permanent liquidators for KTB (see paragraph 67 above).

72.  The Sofia Court of Appeal heard the appeals against the Sofia City Court’s judgment on 19 June 2015. It noted, inter alia, that BNB’s decision to withdraw KTB’s licence had not directly affected KTB’s shareholders such as Bromak. Moreover, that decision had been amenable to judicial review by the Supreme Administrative Court, and could not therefore additionally be scrutinised by the civil courts in the proceedings pursuant to BNB’s winding-up application against KTB.

73.  On 3 July 2015 the Sofia Court of Appeal found the appeals by Bromak and Bulgarian Acquisition Company II Sarl in their capacity as shareholders in KTB inadmissible, on the basis that shareholders were not among the persons having standing to appeal under section 16(1) in fine of the Bank Insolvency Act 2002 (see paragraph 106 below). That provision’s list of persons entitled to appeal was exhaustive, and could not be construed expansively, in view of the special character of the proceedings in which BNB was seeking the winding up of a bank. For the same reason, the appeal by Bromak and KTB’s executive directors on behalf of KTB was likewise inadmissible. KTB’s executive directors had, moreover, been removed from office, and could not act on its behalf. As for Bromak, the 2002 Act did not provide for an exception to the general rule of civil procedure that the parties to a case were the claimant and the defendant, and that a person could vindicate another’s rights before a court only when enabled to do so by a special rule. By contrast, the appeals by BNB, the Prosecutor’s Office and KTB’s liquidators were admissible, and also well-founded (see реш. № 1443 от 03.07.2015 г. по т. д. н. № 2216/2015 г., САС).Proceedings before the Supreme Court of Cassation

(a)   First phase of the proceedings before the Supreme Court of Cassation

74.  Bromak appealed to the Supreme Court of Cassation against the Sofia Court of Appeal’s ruling that it had no standing. It also asked the Supreme Court of Cassation to seek a preliminary ruling from the CJEU on whether Article 72 of the Capital Requirements Directive (see paragraph 35 above), read in conjunction with Article 47 of the Charter of Fundamental Rights of the European Union, Articles 4 § 3 (2), 6 § 3 and 19 § 1 (2) of the Treaty on European Union, and Article 6 § 1 of the Convention, required that the management and the majority shareholder in a bank have standing to appeal against a judicial decision to wind up the bank based on the withdrawal of its licence on the ground of insolvency.

75.  Bromak and KTB’s executive directors, acting on behalf of KTB, also appealed against the Sofia Court of Appeal’s ruling that they did not have standing to appeal against the Sofia City Court’s decision on behalf of KTB itself. In that appeal, they also asked the Supreme Court of Cassation to seek a preliminary ruling from the CJEU. Their request was similar to that in the other appeal (see paragraph 74 above), the difference being that here they sought an answer to the question whether the same provisions of European Union law required that the management and the majority shareholder of a bank have standing to appeal on behalf of the bank itself rather than on their own behalf.

76.  KTB’s executive directors and Bromak, acting both in its own name and on behalf of KTB, also appealed on points of law against the Sofia Court of Appeal’s decision reversing the Sofia City Court’s ruling as to the date on which KTB had become insolvent.

77.  Bulgarian Acquisition Company II Sarl lodged similar appeals, and made a similar request for a preliminary reference to the CJEU, putting the emphasis on whether the same provisions of European Union law (see paragraph 74 above) in the circumstances required the insolvency court to scrutinise BNB’s decision to withdraw KTB’s licence.

78.  On 11 January 2016 the Supreme Court of Cassation refused to seek a preliminary ruling by the CJEU. It noted that according to Article 51 § 1 of the Charter of Fundamental Rights of the European Union, its provisions were addressed to the Member States only when they were implementing Union law, and that Articles 4 § 3 (2), 6 § 3 and 19 § 1 (2) of the Treaty on European Union only concerned rights deriving from EU law. The applicability of those provisions to the case at hand therefore depended on whether it turned on the application of other provisions of EU law. It was true that EU law regulated the activities and liquidation of credit institutions. But their liquidation was not governed by the Capital Requirements Directive (see paragraph 35 above), on whose Article 72 the claimants relied, but by Directive 2001/24/EC on the reorganisation and winding up of credit institutions. The Capital Requirements Directive did not contain rules on the liquidation of credit institutions. Nor did Directive 2001/24/EC govern the rights or obligations of a credit institution’s shareholders or management bodies. It followed that neither of the two Directives regulated the participation of a credit institution’s shareholders or management in the proceedings for its winding up. Nor did the Directives require that such proceedings comprise a right to appeal against any measures taken under national rules transposing the Capital Requirements Directive. The assessment of whether the Sofia Court of Appeal’s ruling on the question of standing was correct did not require an interpretation of the provisions of EU law cited by Bromak and Bulgarian Acquisition Company II Sarl. Nor did EU law require a national court to apply directly Article 6 § 1 of the Convention.

79.  By contrast, in the same decision the Supreme Court of Cassation decided to invite the Constitutional Court to declare sections 11(3) and 16(1) in fine of the Bank Insolvency Act 2002 (see paragraphs 103 and 106 below) unconstitutional and contrary to Article 6 § 1 of the Convention (see опр. № 4 от 11.01.2016 г. по т. д. № 3343/2015 г., ВКС, I т. о.).

(b)   Proceedings before the Constitutional Court

80.  On 4 February 2016 the Constitutional Court found the Supreme Court of Cassation’s request to declare sections 11(3) and 16(1) in fine of the Bank Insolvency Act 2002 unconstitutional admissible, but the concurrent request to find them contrary to Article 6 § 1 of the Convention inadmissible.

81.  On 14 June 2016 the Constitutional Court dismissed the request to declare sections 11(3) and 16(1) in fine of the Bank Insolvency Act 2002 unconstitutional. It underlined the specificity of bank insolvency, and held that misgivings that a bank’s special administrators and liquidators would not effectively protect its interests was not a sufficient reason to declare section 11(3) of the 2002 Act (see paragraph 103 below) unconstitutional. It noted in that connection that in case of doubt about a conflict of interest between a bank and those representing it in a set of proceedings it was possible to appoint a special representative ad litem under Article 29 § 4 of the Code of Civil Procedure (see paragraph 109 below). The court went on to say that the question whether a bank was insolvent was to be decided in proceedings for judicial review of BNB’s decision to withdraw its licence on that ground, not in the ensuing proceedings pursuant to BNB’s application that the bank be wound up. It was thus not unconstitutional to preclude the bank’s shareholders from appealing against the insolvency court’s decision on BNB’s winding-up application against the bank. Section 16(1) in fine of the 2002 Act (see paragraph 106 below) was therefore not unconstitutional either (see реш. № 6 от 14.06.2016г. по к. д. № 1/2016 г., КС, обн., ДВ, бр. 47/2016 г.).

82.  Three constitutional judges dissented in relation to section 16(1) in fine of the 2002 Act. In their view, that provision’s limitation on standing to appeal unjustifiably deprived bank shareholders of effective access to a court and of equality of arms in the proceedings pursuant to BNB’s application that the bank be wound up.

(c)   Second phase of the proceedings before the Supreme Court of Cassation

83.  After the Constitutional Court’s decision, the proceedings before the Supreme Court of Cassation were resumed.

(i)      Decision of the three-member panel

84.  On 6 July 2016 a three-member panel of the Supreme Court of Cassation (a) upheld the Sofia Court of Appeal’s decision not to examine the appeals lodged by Bromak and Bulgarian Acquisition Company II Sarl in their own name, and the appeal lodged by Bromak and KTB’s executive directors on behalf of KTB (see paragraphs 74, 75 and 77 above), and (b) refused to examine their appeals on points of law against the Sofia Court of Appeal’s ruling on the starting point of KTB’s insolvency (see paragraphs 76 and 77 above). The court noted that the Constitutional Court had dismissed its request to declare sections 11(3) and 16(1) in fine of the Bank Insolvency Act 2002 unconstitutional (see paragraph 81 above), and that it was bound by that decision and had to apply those provisions as they stood. It followed that the appeal against the Sofia City Court’s judgment lodged by KTB’s executive directors and Bromak on behalf of KTB was inadmissible because it had been lodged by persons who according to section 11(3) of the 2002 Act did not have power to act on KTB’s behalf, and that the Sofia Court of Appeal had been correct not to examine it. The appeals against the Sofia City Court’s judgment lodged by Bromak and Bulgarian Acquisition Company II Sarl in their capacity as shareholders in KTB were also inadmissible because under section 16(1) in fine of the 2002 Act a bank’s shareholders had no standing to appeal against the decision opening winding-up proceedings against the bank. The Sofia Court of Appeal had thus been correct not to examine those appeals. The appeals on points of law by KTB’s executive directors and by Bromak and Bulgarian Acquisition Company II Sarl against the Sofia Court of Appeal’s decision reversing the Sofia City Court’s ruling as to the date on which KTB had become insolvent were likewise inadmissible, for the same reasons (see опр. № 172 от 06.07.2016 г. по т. д. № 3343/2015 г., ВКС, I т. о.).

(ii)    Appeals against part of that decision to another three-member panel

85.  As possible under the rules of procedure, KTB’s executive directors and Bromak, acting both in its capacity as a shareholder in KTB and on behalf of KTB itself, appealed against the three-member panel’s refusal to examine their appeals on points of law against the Sofia Court of Appeal’s ruling on the starting point of the insolvency to another three-member panel of the Supreme Court of Cassation. They argued that they had standing to appeal against the Sofia Court of Appeal’s decision on that point under Article 72 of the Capital Requirements Directive (see paragraph 35 above), read in conjunction with Articles 21 and 47 of the Charter of Fundamental Rights of the European Union and Articles 4 § 3 (2), 6 § 3 and 19 § 1 (2) of the Treaty on European Union, and that the original three-member panel had failed to analyse that point. In their view, the refusal to grant them standing, coupled with the Supreme Administrative Court’s earlier refusals to grant them standing (see paragraphs 30 and 43-49 above and paragraph 99 below), meant that BNB’s decision to withdraw KTB’s licence would remain without any judicial review.

86.  Bulgarian Acquisition Company II Sarl lodged a similar appeal. It likewise argued that it had standing to appeal under EU law and Articles 6 § 1 and 14 of the Convention and Article 1 of Protocol No. 1. It also asked the three-member panel to seek a preliminary ruling by the CJEU on whether (a) the differential treatment flowing from section 16(1) in fine of the Bank Insolvency Act 2002 in relation to the right of appeal was permissible under Article 21 of the Charter of Fundamental Rights of the European Union, and whether (b) the absence of scrutiny of BNB’s decision to withdraw KTB’s licence in the proceedings pursuant to BNB’s application that KTB be wound up was permissible under Article 72 of the Capital Requirements Directive (see paragraph 35 above), read in conjunction with Articles 47 of the Charter of Fundamental Rights and Articles 4 § 3 (2), 6 § 3 and 19 § 1 (2) of the Treaty on European Union.

87.  On 9 November 2016 the other three-member panel of the Supreme Court of Cassation (a) refused to seek a preliminary ruling from the CJEU and (b) upheld the original three-member panel’s refusal to examine the appeals on points of law.

88.  The panel pointed out that the subject matter of the proceedings before it was limited to the question of standing, which meant that the issues relating to the possibility of reviewing BNB’s decision to withdraw KTB’s licence were irrelevant. Article 21 of the Charter of Fundamental Rights did not apply, since the Charter was addressed to the Member States only when they were implementing EU law. Article 72 of the Capital Requirements Directive (see paragraph 35 above) did not apply either, as already explained by the original three-member panel in its decision of 11 January 2016 (see paragraph 78 above).

89.  The panel went on to note that the original three-member panel had fully followed the Constitutional Court’s decision, and held that it had not erred by not applying directly EU law. The panel also found that all points relating to the question whether it had been proper to withdraw KTB’s licence were irrelevant in the proceedings before it (see опр. № 583 от 09.11.2016 г. по ч. т. д. № 1875/2016 г., ВКС, II т. о.). That decision was not amenable to further appeal.

Relevant LEGAL FRAMEWORKBNB’s supervisory powers in relation to banksTo place a bank under special administration

90.  By section 115(1) of the Credit Institutions Act 2006, as worded at the material time, BNB could place a bank under special administration if it was at a risk of insolvency. When placing a bank under special administration, BNB appoints special administrators and defines their powers (section 116(1)). BNB may also, inter alia, remove the bank’s management and supervisory boards from office (section 116(2)(6)), and provisionally deprive shareholders in the bank holding more than ten per cent of the voting shares of the right to vote, if it considers that with their actions or their influence on the running of the bank they have imperilled its stability (section 116(2)(7)). In any event, the special administrators take over all powers of the bank’s management and supervisory boards, unless BNB expressly stipulates otherwise in its decision to appoint them (section 107(1)).

91.  BNB may at any point dismiss or replace the special administrators, and its decisions in that respect are not amenable to judicial review (section 106(4)). BNB may also give them instructions (section 107(3)). They are accountable solely to BNB and must, upon request, immediately report to it about their activities (section 107(5)). Any actions taken on behalf of the bank without authority from the special administrators are null and void (section 107(6)).To withdraw a bank’s licence

92.  By section 36(2)(2) of the Credit Institutions Act 2006, as worded at the material time, BNB had to withdraw a bank’s licence if the bank’s own funds were a negative value. Section 36(4) says that the bank’s own funds are to be determined in the manner set out in Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms (“the Capital Requirements Regulation”).

93.  When withdrawing a bank’s licence, BNB must appoint special administrators if it has not already done so (section 36(5)). They continue in office until the competent court appoints a liquidator (section 106(3)).

94.  Section 36(6) of the 2006 Act says that the provisions of Articles 26 § 1 and 34 of the Code of Administrative Procedure – which set out the general rules of administrative procedure that an administrative authority which intends to issue a decision must inform all persons concerned by it and give them an opportunity to make requests and representations – do not apply in proceedings for the withdrawal of a bank’s licence. That rule is nearly identical to that featuring the earlier banking legislation (see Capital Bank AD, cited above, § 53).Judicial review of BNB’s decision to withdraw a bank’s licenceStatutory provisions

95.  In contrast to the earlier banking legislation, which expressly excluded BNB’s decision to withdraw a bank’s licence from judicial review (see Capital Bank AD, cited above, § 56), section 151(3) of the 2006 Act provides that a decision by BNB to withdraw a bank’s licence is amenable to review by the Supreme Administrative Court.Relevant case-law of the Supreme Administrative Court

96.  Until 2014, there had been no cases under section 151(3) of the 2006 Act in relation to the withdrawal of a bank’s licence. After BNB’s decision in November 2014 to withdraw KTB’s licence (see paragraph 16 above), there was a raft of claims under that provision: many depositors in KTB, holders of bonds issued by it, its executive directors (see paragraph 3 above), and Mr Vasilev, in his capacity as member of KTB’s supervisory board (see paragraph 7 above), sought judicial review of BNB’s decision.

97.  In a series of decisions given between December 2014 and March 2015 three-member panels of the Supreme Administrative Court held that depositors in, and clients of, KTB had no standing to seek judicial review of BNB’s decision to withdraw its licence because it did not affect them directly (see, among many others, опр. № 14618 от 04.12.2014 г. по адм. д. № 14792/2014 г., ВАС, VII о.; опр. № 14765 от 09.12.2014 г. по адм. д. № 14794/2014 г., ВАС, VII о.; опр. № 14825 от 10.12.2014 г. по адм. д. № 14788/2014 г., ВАС, VII о.; опр. № 14834 от 10.12.2014 г. по адм. д. № 14799/2014 г., ВАС, VII о.; опр. № 14853 от 10.12.2014 г. по адм. д. № 14805/2014 г., ВАС, VII о.; опр. № 14859 от 10.12.2014 г. по адм. д. № 14866/2014 г., ВАС, VII о.; опр. № 14877 от 10.12.2014 г. по адм. д. № 14793/2014 г., ВАС, VII о.; опр. № 1336 от 05.02.2015 г. по адм. д. № 14790/2014 г., ВАС, VII о.; and опр. № 2467 от 09.03.2015 г. по адм. д. № 928/2015 г., ВАС, VII о.). Some of those rulings were appealed against, and in all cases five-member panels of the court upheld them (see опр. № 1378 от 09.02.2015 г. по адм. д. № 863/2015 г., ВАС, петчл. с-в; опр. № 1621 от 16.02.2015 г. по адм. д. № 1220/2015 г., ВАС, петчл. с-в; опр. № 2067 от 25.02.2015 г. по адм. д. № 1217/2015 г., ВАС, петчл. с-в; опр. № 2101 от 25.02.2015 г. по адм. д. № 1216/2015 г., ВАС, петчл. с-в; опр. № 2229 от 27.02.2015 г. по адм. д. № 1219/2015 г., ВАС, петчл. с-в; опр. № 2832 от 16.03.2015 г. по адм. д. № 2492/2015 г., ВАС, петчл. с-в; опр. № 2937 от 18.03.2015 г. по адм. д. № 2494/2015 г., ВАС, петчл. с-в; опр. № 3082 от 19.03.2015 г. по адм. д. № 1312/2015 г., ВАС, петчл. с-в; опр. № 3347 от 25.03.2015 г. по адм. д. № 2274/2015 г., ВАС, петчл. с-в; опр. № 3676 от 01.04.2015 г. по адм. д. № 1812/2015 г., ВАС, петчл. с-в; and опр. № 4053 от 09.04.2015 г. по адм. д. № 3395/2015 г., ВАС, петчл. с-в).

98.  The Supreme Administrative Court held the same in relation to the holders of bonds issued by KTB (see опр. № 15523 от 18.12.2014 г. по адм. д. № 15482/2014 г., ВАС, VII о., upheld by опр. № 1693 от 17.02.2015 г. по адм. д. № 1552/2015 г., ВАС, петчл. с-в).

99.  The court held that KTB’s executive directors, whom BNB had removed from office (see paragraphs 3 and 10 above), had no standing to seek judicial review of BNB’s decision to withdraw KTB’s licence either. They were not the decision’s addressees and it did not directly concern them. Also, following the appointment of special administrators, they no longer represented KTB (see опр. № 14630 от 04.12.2014 г. по адм. д. № 14813/2014 г., ВАС, VII о., upheld by опр. № 2038 от 25.02.2015 г. по адм. д. № 1813/2015 г., ВАС, петчл. с-в).

100.  The court held that Mr Vasilev, in his capacity as member of KTB’s supervisory board, likewise had no standing to seek judicial review of BNB’s decision to withdraw KTB’s licence, as he was not directly affected by it either (see опр. № 4124 от 14.04.2015 г. по адм. д. № 3732/2015 г., ВАС, петчл. с-в).

101.  In the wake of those decisions, at the suggestion of counsel for Bromak, in March 2015 the Supreme Bar Council asked the Supreme Administrative Court’s plenary to give an interpretative decision on who has standing to seek judicial review of a decision by BNB to withdraw a bank’s licence, but in June 2016 the plenary declined to do so (see paragraphs 37 and 51 above).Bank insolvencyOpening of the proceedings

102.  The regime of bank insolvency laid down in the Bank Insolvency Act 2002 has a number of special features. One of them is that only BNB, rather than the bank’s creditors, may apply to the competent court to open insolvency proceedings against the bank (section 8(3)). By section 8(1), as amended, such proceedings must be opened if BNB has withdrawn a bank’s licence pursuant to section 36(2) of the 2006 Act (see paragraph 92 above). In its application BNB need only set out the legal ground(s) under section 36(2) of the 2006 Act for which it has withdrawn the licence, rather than all the considerations prompting its decision (section 9(2)).

103.  By section 11(2) of the 2002 Act, the insolvency court examines BNB’s application at a non-public hearing to which it must summon a public prosecutor, BNB, the bank whose winding-up is being sought, and the Deposit Insurance Fund. The bank is to be represented by the special administrators previously appointed by BNB (see paragraphs 90 and 91 above), or by persons authorised by them (section 11(3)). With effect from 14 August 2015, court-appointed provisional liquidators (see paragraph 107 below) were added to that list (section 11(3), as worded since 14 August 2015). Shareholders holding more than five per cent of the bank’s shares at the time when its licence has been withdrawn may intervene in the proceedings (section 11(4)).

104.  By section 11(6), the insolvency court must stay the proceedings until the determination of any claim for judicial review of BNB’s decision to withdraw the bank’s licence (see paragraph 95 above). When that decision becomes final, the insolvency court must open winding up proceedings (section 11(5)).

105.  If the insolvency court allows BNB’s application, it, inter alia, terminates the powers of the bank’s bodies (section 13(1)(4)).

106.  By section 16(1) in fine, as in force until August 2015, only BNB, the special administrators appointed by it, and the public prosecutor could appeal against the insolvency court’s decision on BNB’s winding-up application against the bank. In August 2015 the bank’s provisional liquidators (see paragraph 107 below) were added to that list.Provisional and permanent liquidators

107.  By section 12(1)(2) of the 2002 Act, as amended with effect from 24 March 2015, if BNB has appointed special administrators before deciding to withdraw a bank’s licence, the insolvency court may appoint a provisional liquidator for the bank at the request of the Deposit Insurance Fund. The provisional liquidator must be someone featuring on a list of qualified persons drawn up by BNB (section 25(1)(12)). If the provisional liquidator is struck off that list by BNB, the court must dismiss him or her, at the Fund’s proposal (section 12a(3) read in conjunction with section 29(1)(6)). He or she continues in office until a permanent liquidator is appointed (section 12a(1), added with effect from 24 March 2015). His or her remuneration is fixed by the Fund (ibid.). He or she represents the bank, takes part in any proceedings to which it is party, and brings proceedings on its behalf (section 12a(2)(1) and (2)(7), added with effect from 24 March 2015).

108.  Permanent liquidators must be appointed by the Deposit Insurance Fund as soon as possible after the insolvency court’s decision to open winding-up proceedings against the bank (sections 13(4) and 26(1)). The Fund must choose from among the people featuring on the above-mentioned list of qualified persons drawn up by BNB (sections 25(1)(12) and 26(1)). If a liquidator is struck off that list by BNB, the Fund must dismiss him or her (section 29(1)(6)). The Fund may also dismiss the liquidator if it finds, acting of its own motion or on the basis of a report by BNB or a creditor of the bank, that the liquidator, inter alia, acts against the creditors’ interests or unduly delays the winding-up proceedings (section 41(1)(3) and (1)(4) and (2)(6)). The Fund’s decision to appoint or dismiss a liquidator is not amenable to judicial review (section 39(4)). The liquidator’s powers include taking part in proceedings to which the bank is party and bringing proceedings on the bank’s behalf (section 31(1)(7)).Special representative ad litem in cases of conflict of interest between a party and its representative

109.  Article 29 § 4 of the Code of Civil Procedure provides that if there is a conflict of interest between a party and its representative, the court appoints a special representative ad litem. By Article 144 of the Code of Administrative Procedure, this provision also applies in proceedings before the administrative courts.

COMPLAINTS

110.  In application no. 46564/15, a complaint is made on behalf of KTB under Article 6 § 1 of the Convention that, owing to the Supreme Administrative Court’s position on who had standing to seek judicial review of BNB’s decision to withdraw KTB’s licence, KTB was not able to obtain such review.

111.  In the same application, a complaint is made on behalf of KTB under Article 1 of Protocol No. 1 that BNB’s decision to withdraw its licence was unlawful and disproportionate. In particular, BNB’s findings about KTB’s own funds were based on unreliable evidence and were incorrect. BNB’s findings in relation to the other irregularities serving as a basis for its decision were also incorrect. Yet, it was impossible to obtain a review of those findings. Also, the decision to withdraw KTB’s licence was a result of a range of actions and omissions by the prosecuting authorities, BNB, the special administrators appointed by BNB, the Government, and various members of Parliament.

112.  Lastly, the application contains a complaint on behalf of KTB under Article 13 of the Convention that it did not have an effective remedy in respect of the alleged breaches of its rights under Article 6 § 1 of the Convention and Article 1 of Protocol No. 1.

113.  In application no. 68140/16, complaints are made on behalf of KTB under Article 6 § 1 of the Convention that:

(a)  in the proceedings opened pursuant to BNB’s application that KTB be declared insolvent and wound up, KTB was represented exclusively by the special administrators appointed by BNB, and then by the provisional and permanent liquidators who were also dependent on BNB; and

(b)  the Sofia City Court refused to scrutinise BNB’s decision to withdraw KTB’s licence even though it had not been reviewed by the Supreme Administrative Court either.

114.  In the same application, a complaint is made on behalf of KTB under Article 1 of Protocol No. 1 that the decision to declare it insolvent and wind it up, and to take a range of resulting measures with respect to it, was unlawful and disproportionate, owing in particular to the absence of proper safeguards. It is pointed out in this connection, in particular, that when dealing with BNB’s winding-up application against KTB, the Sofia City Court refused to scrutinise BNB’s decision to withdraw KTB’s licence and the considerations underpinning that decision.

115.  Lastly, the application contains a complaint on behalf of KTB under Article 13 of the Convention that it did not have an effective remedy in respect of its complaint under Article 1 of Protocol No. 1, as it was unable to obtain any review of BNB’s decision to withdraw its licence and of the Sofia City Court’s decision to declare it insolvent.

QUESTIONS TO THE PARTIES

1.  Was it possible for Korporativna Targovska Banka AD (“KTB”) to obtain judicial review of the decision of the Bulgarian National Bank (“BNB”) to withdraw its licence, as required by Article 6 § 1 of the Convention (see Capital Bank AD v. Bulgaria, no. 49429/99, §§ 98-116, ECHR 2005-XII (extracts), and International Bank for Commerce and Development AD and Others v. Bulgaria, no. 7031/05, § 116, 2 June 2016)?

2.  Did the fact that in the proceedings pursuant to BNB’s ensuing application that KTB be declared insolvent and wound up KTB was represented exclusively at first by its special administrators and then by its (provisional and then permanent) liquidators, impinge on the fairness of the proceedings, in breach of Article 6 § 1 of the Convention (see Capital Bank AD, §§ 117-19, and International Bank for Commerce and Development AD and Others, § 115, both cited above)?

3.  Was BNB’s decision to withdraw KTB’s licence, which triggered the ensuing court decision to declare it insolvent and wind it up, lawful within the meaning of Article 1 of Protocol No. 1? In particular, was it surrounded by sufficient guarantees against arbitrariness (see, mutatis mutandis, Capital Bank AD, §§ 130-40, and International Bank for Commerce and Development AD and Others, §§ 106-07, both cited above)?

4.  Did KTB have effective domestic remedies with respect to its complaints under Article 6 § 1 of the Convention and Article 1 of Protocol No. 1, as required by Article 13 of the Convention?

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