LONCA ORGANİZASYON ELEKTRONİK GIDA MEDYA YAYINCILIK SANAYİ VE TİCARET A.Ş. v. TURKEY

SECOND SECTION

DECISION

Application no. 54748/09
LONCA ORGANİZASYON ELEKTRONİK GIDA MEDYA YAYINCILIK SANAYİ VE TİCARET A.Ş.
against Turkey

The European Court of Human Rights (Second Section), sitting on 26 November 2019 as a Committee composed of:

Valeriu Griţco, President,
Egidijus Kūris,
Darian Pavli, judges,
and Hasan Bakırcı, Deputy Section Registrar,

Having regard to the above application lodged on 24 September 2009,

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

Having deliberated, decides as follows:

THE FACTS

1.  Lonca Organizasyon Elektronik Gıda Medya Yayıncılık Sanayi ve Ticaret A.Ş. (“the applicant company”) is a joint stock company established under the laws of Turkey. It was represented before the Court by Mr H. Temeltaş, a lawyer practising in Istanbul.

2.  The Turkish Government (“the Government”) were represented by their Agent.The circumstances of the case

3.  The facts of the case, as submitted by the parties, and as they appear from the documents submitted by them, may be summarised as follows.Background to the case

4.  On 20 November 1998 Istanbul Gas Distribution Company (İstanbul Gaz Dağıtım Sanayi ve Ticaret A.Ş. – “İGDAŞ”), a joint-stock company whose majority shareholder is the Metropolitan Municipality of Istanbul, signed with the applicant company a five-year contract to subcontract the services for remote reading of the natural gas meters in Istanbul and electronic transfer of the results (“the Contract”).

5.  Article 6 of the Contract read as follows:

Article 6 – Payments and Bonuses

“... Monthly progress [reports][1] shall be prepared by the 10th of the following month and [monthly progress payments] shall be made, after deductions, if any, by the 25th taking into account the payment dates of İGDAŞ.

6.  In addition, Article 9 of the Contract listed the qualifications that the applicant company’s employees had to possess and granted İGDAŞ power over the applicant company’s recruitment policy.

7.  On various dates in October and November 2003 the applicant company’s employees brought proceedings against the applicant company and İGDAŞ to recover, among others, their severance pay.

8.  After the Contract expired on 20 November 2003, İGDAŞ initially refused the pay the applicant company for the works it carried out in October and November 2003 on the grounds that the final accounts had not been drawn up.

9.  Subsequently, it made partial payments to some of the applicant company’s creditors. However, it blocked the unpaid balance of 1,422,962,699,273 Turkish liras (TRL) (approximately equivalent to 770,550 Euros (EUR) at the material time) referring to the claims made by the applicant company’s employees in the labour lawsuits and the penalty which it had imposed on the applicant company in the amount of TRL 328,997,369,400 (approximately equivalent to EUR 177,822 at the material time) pursuant to the penalty clause of the Contract.Proceedings against İGDAŞ

10.  On 28 September 2004 the applicant company started execution proceedings by serving a payment order (ödeme emri) on İGDAŞ. It claimed TRL 1,422,962,699,273 (approximately equivalent to EUR 770,550 Euros at the material time), which was the outstanding value of the works it had carried out in October and November 2003. It also claimed TRL 576,670,253,360 (approximately equivalent to EUR 312,263) as late payment interest covering the period between 25 December 2003, the due date under the Contract, and 28 September 2004, the date of the payment order.

11.  On 4 October 2004 İGDAŞ objected to the execution proceedings arguing that the final accounts were still not drawn up and that the applicant company’s claims were not due and liquidated.

12.  On 11 October 2004 the applicant company brought an action before the Istanbul 11th Commercial Court of First Instance, seeking the annulment of the objection lodged by İGDAŞ and the continuation of the execution proceedings. It claimed that İGDAŞ still owed TRL 1,422,962,699,273 for the works carried out in October and November 2003. It argued that İGDAŞ, despite having acknowledged its debt, had refused to pay on frivolous grounds. It maintained first that İGDAŞ had no valid ground under the Contract to impose a penalty in the amount of TRL 328,997,369,400 (approximately equivalent to EUR 177,822 at the material time). It also contended that the lawsuits brought by its employees did not give İGDAŞ the right to block the amount of TRL 1,093,975,329,874 (approximately equivalent to EUR 592,728 at the material time). The applicant company further noted that it had claimed accrued late payment interest on the unpaid balance in its payment order of 28 September 2004. It added that it reserved its right to claim additional late payment interest on the amounts paid by İGDAŞ after 25 December 2003.

13.  On 7 April 2005 the first-instance court instructed expert witnesses to assess whether İGDAŞ was right to impose a penalty and to withhold the payment of an amount corresponding to the claims made by the applicant company’s employees in the labour lawsuits.

14.  In their report of 21 June 2005, the experts found that the penalty imposed by İGDAŞ had not been in conformity with the Contract. They further concluded that İGDAŞ had no statutory or contractual right to refrain from paying the applicant company on the grounds that the applicant company’s employees had filed lawsuits against it.

15.  Subsequently, on various dates in July and November 2005, the domestic courts found against the applicant company and İGDAŞ in the labour lawsuits brought by the applicant company’s employees. İGDAŞ, as the main contractor, paid the employees the amounts awarded by the courts.

16.  On 8 December 2005 the first-instance court appointed an accountant to calculate the amounts claimed by the applicant company’s employees and the amounts paid by İGDAŞ to them. The expert drew up three reports on 10 July 2006 and 10 April and 5 October 2007, respectively.

17.  The applicant made written submissions on the expert report of 10 April 2007. It requested the court to disregard the payments made by İGDAŞ after the introduction of the lawsuit and apply late payment interest on the totality of the unpaid balance starting from 25 December 2003.

18.  In its third and final report of 5 October 2007, the expert found that İGDAŞ had paid in total 1,214,028.51 new Turkish liras (TRY)[2]. Deducting that sum from the amount claimed by the applicant company, he concluded that İGDAŞ still owed the applicant company TRY 208,934.18.

19.  By a judgment of 8 November 2007, the first-instance court partially found in favour of the applicant company. It first noted that the applicant company had initiated execution proceedings against İGDAŞ to recover the unpaid balance of TRY 1,422,962.70 and claimed TRY 567,670.25 as accrued late payment interest. As concerns the merits of the case, it held that the penalty imposed by İGDAŞ was contrary to the Contract. As regards the labour lawsuits, it held that the applicant company had undertaken certain obligations vis-à-vis its employees under the Contract. İGDAŞ, as the main contractor under the Contract, had been jointly and severable liable for the claims made by the applicant company’s employees in the labour lawsuits. Relying on the expert report of 5 October 2007, it concluded that, after deducting the total amount of the payments made by İGDAŞ from the total amount blocked by İGDAŞ, the amount owed to the applicant company for the works was TRY 208,934.18 (approximately equivalent to EUR 120,830). As concerns late payment interest, it held that the applicant company’s receivable had not fallen due at the date of the payment order or the date of introduction of the lawsuit and therefore decided to apply late payment interest from the date of the judgment at fluctuating rates of advance interest.

20.  On an unknown date, the applicant company appealed against the first-instance court’s judgment to the Court of Cassation. Relying on a decision of the Court of Cassation, it submitted that it was entitled to late payment interest from 25 December 2003, which was the due date under the Contract. If this was not found acceptable then, the first-instance court should have applied late payment interest either from the date of the payment order or the date of the lawsuit. Accordingly, it asserted that the first-instance court was wrong to apply late payment interest from the judgment date holding that its receivable was not due. It submitted by way of example two payments made by İGDAŞ, while the proceedings before the first-instance court were pending: the payment of TRY 51,146 dated 24 March 2005 and the payment of TRY 241,561 dated 31 March 2005. It claimed that the first-instance court, by not applying late payment interest from 25 December 2003, allowed İGDAŞ to receive interest on those amounts for almost fifteen months.

21.  On an unspecified date the Court of Cassation held a hearing and subsequently, on 3 November 2008, dismissed the applicant company’s appeal, holding that the first-instance court’s judgment had been in accordance with the law and procedure.

22.   On 4 December 2008 İGDAŞ paid the applicant company TRY 208,934 (approximately equivalent to EUR 105,567 at the material time), the amount awarded by the first-instance court. Subsequently, on 29 December 2008, it paid TRY 52,090 (approximately equivalent to EUR 24,149 at the material time), the late payment interest which accrued from the date of the first-instance court’s judgment. The Government submitted a breakdown of transactions between İGDAŞ and the applicant company, as proof of those payments.

23.  On an unknown date, the applicant company requested rectification of the Court of Cassation’s decision of 3 November 2008. It asserted that the significant losses that it had suffered while the proceedings before the first-instance court had been pending had remained uncompensated due to its decision to award late payment interest from the date of the judgment. It further maintained that the decision had been particularly unjust in that the court had also refused to apply late payment interest on the sum that corresponded to the penalty imposed by İGDAŞ despite concluding that İGDAŞ had unlawfully enforced the penalty clause under the Contract.

24.  On 20 April 2009 the Court of Cassation dismissed the applicant company’s request for rectification without giving any answer to the applicant company’s objections.Proceedings for the reinstatement of the applicant company

25.  In their submissions, the Government informed the Court that, after the present application had been lodged, the applicant company had been struck off the companies’ register on 9 October 2014, on account of its failure to hold general assembly meetings for five consecutive years under Provisional Article 7 § 1 (d) of the Turkish Commercial Code (Law no. 6102), which entered into force on 14 February 2011, (“the TCC”).

26.  The applicant company informed the Court that, on 20 April 2018, its former shareholder and chairman of the board, Mr H. Pınarcık, had filed an action for the company’s reinstatement (ihya davası) before the Istanbul 4th Commercial Court of First Instance under Provisional Article 7 § 15 of the TCC. It submitted a document dated 8 May 2018 and signed by the registrar of the court confirming the lodging of the action.

27.  The Government also confirmed that the reinstatement action had still been pending before the first-instance court and provided a document showing that the first hearing had been scheduled to be held on 13 September 2018. They further provided the Court with the submissions made by Mr H. Pınarcık to the first-instance court. In his submissions, Mr H. Pınarcık referred to the on-going proceedings before the Court in respect of the present application and a car had registered in the applicant company’s name. He argued that in order for the applicant company to have standing in the proceedings it must be reinstated to the companies register.

28.  On 7 October 2019 the applicant company informed the Court that the Istanbul 4th Commercial Court of First Instance granted the request for its reinstatement to the companies’ register. By a decision of 15 November 2018, the Istanbul 4th Commercial Court of First Instance held that the applicant company was reinstated, pursuant to Section 547 of the TCC, in order to grant it standing in the proceedings before the Court and to allow it to dispose of the company car registered in its name. It appointed Mr H. Pınarcık as the liquidator.

29.  The decision became final on 15 January 2019 as the parties decided not to appeal to the appellate court.Relevant domestic law and practiceCode of Obligations

30.  Section 101 § 2 of the former Code of Obligations, in force at the material time, (Law no. 818) stipulated that a debtor would be considered to have defaulted on its obligation if it failed to pay the debt by the date which was agreed by the parties or set by any of the parties by serving a notice to that effect. Section 103 further stipulated that a debtor, who defaulted on an obligation involving the payment of a certain sum of money, was required to pay late payment interest on that sum.

2.Turkish Commercial Code

31.  Section 547 of the TCC entitles the members of the board of directors, shareholders or creditors of a liquidated company to request from the commercial court, which is located in the city of the company’s registered office, the reinstatement of the company.

32.  Provisional Section 7 § 1 (d) of the TCC provides that joint stock companies which have failed to hold their ordinary general assembly meetings for five consecutive years, for whatever reason, as of 1 July 2015, would be struck off the companies’ register.

33.  Provisional Section 7 § 15 allows creditors and individuals, who have a legal interest, to file an action for reinstatement of a company which has been removed from the companies’ register within five years of its removal.

3.Enforcement and Bankruptcy Law

34.  Section 62 of Enforcement and Bankruptcy Act (Law no. 2004) allows a debtor to object to a payment order within seven days of the receipt of the payment order. Section 67, which governs the proceedings for the annulment of an objection made by a debtor, provides that a creditor is entitled to bring an action to request the annulment of an objection within one year.

4.Law no. 3095 on Statutory and Late Payment Interest

35.  Section 2 § 1 of Law on Statutory and Late Payment Interest (Law no. 3095) provides that, unless otherwise agreed in the contract, a debtor who defaults on its obligation to pay a certain sum of money is required to pay late payment interest on that sum.

36.  Section 2 § 2 provides that, in transactions of commercial nature, a creditor may claim interest at rates set by the Central Bank of the Republic of Turkey for short-term advances, which is commonly referred to as advance interest.

37.  According to the information available on the Turkish Central Bank’s website, the rates applied to advance interest between 25 December 2003, the date when the unpaid amounts under the Contract became allegedly due, and 29 December 2008, the date on which İGDAŞ fully paid the amount awarded by the first-instance court, were as follows:

Period

Rate of Advance Interest

8 October 2003 – 15 June 2004

48%

15 June 2004 – 13 January 2005

42%

13 January 2005 – 25 May 2005

35%

25 May 2005 – 20 December 2005

30%

20 December 2005 – 20 November 2006

25%

20 November 2006 – 28 December 2007

29%

28 December 2007 – 9 April 2009

27%

5.Code of Civil Procedure

38.  Section 74 of the former Code of Civil Procedure (Law no. 1086), in force at the material time, (“the former CCP”) provided that a judge was bound by the parties’ claims and defence submissions and could not award more or any other than what was sought by the parties.

6.Case-law of the Court of Cassation

(a)   Decisions submitted by the Government

39.  The Government provided seven different decisions illustrating the Court of Cassation’s approach on the subject of late payment interest.

40.  By a decision of 5 April 2000, in a dispute concerning interim alimony (tedbir nafakası) to be awarded in divorce proceedings, the General Assembly of the Court of Cassation in Civil Matters held that late payment interest should run from the date of the first-instance court’s judgment (Docket no. E.2000/12-739 K. 2000/746).

41.  In the remaining decisions, the Court of Cassation, depending on the nature of the legal relationship between the parties, applied late payment interest from the date of introduction of the lawsuit, the date of the payment order or the due date under the contract.

(b)   Decisions submitted by the applicant company

42.  The applicant company provided the Court with three decisions of the Court of Cassation.

43.  The first decision, delivered by the 15th Chamber of the Court of Cassation on 1 May 2003, is the same decision referred to by the applicant company in its appeal submissions. The Court of Cassation held that the first-instance court should have ascertained the amount of interest accrued between the due date and the date of the lawsuit and then make a separate award of late payment interest starting from the date of the lawsuit (Docket no. E. 2003/1094 K. 2003/2348).

44.  The remaining two decisions were delivered by the 12th and 19th Chambers of the Court of Cassation on 27 April 1998 and 16 February 2009 respectively. In both decisions, the Court of Cassation referred to Section 101 § 2 of the former Code of Obligations and held that if the contract provided a due date a debtor who fails to repay the amount owed by that date should be considered to have defaulted on its obligations and no further action is required on the part of the creditor. In the second decision, the Court of Cassation specified that in such case late payment interest should be calculated from the contractually agreed due date (Docket nos. E. 1998/1486 K. 1998/2835 and E. 2008/22469 K. 2009/2656).

COMPLAINTS

45.  The applicant complained under Article 6 of the Convention that the domestic courts, in particular, the Court of Cassation, had failed to provide adequate reasons for applying late payment interest on the unpaid balance from the date of the first-instance court’s judgment.

46.  The applicant company also complained, in substance, under Article 1 of Protocol No. 1 about the losses it had suffered due to the domestic courts’ decision to apply late payment interest from the date of the first‑instance court’s judgment.

THE LAWThe Government’s objections on the applicant company’s removal from the companies’ register

47.  The Government submitted that the applicant company could longer claim to be a victim of a violation of its rights guaranteed by the Convention and its Protocols because it had been removed from the companies’ register and had ceased to exist as a legal entity. They further maintained that the applicant company’s failure to inform the Court that it had been struck off the companies’ register constituted an abuse of the right of application.

48.  The applicant company argued that, at the time it had lodged the present application it had been a victim of a violation of its rights guaranteed by the Convention and its Protocols. It added that, upon receipt of the Government’s observations, its former shareholder and chairman of the board had filed a lawsuit for its reinstatement.

49.  The Court notes that under Turkish law, a company which was struck off the companies’ register could be reinstated if an action for reinstatement was filed within five years (see paragraphs 31 and 33 above). It observes that the former shareholder and chairman of the board of the applicant company, Mr H. Pınarcık filed an action for reinstatement before the Istanbul 4th Commercial Court of First Instance. In his submissions, he referred to the proceedings before the Court as a reason justifying the reinstatement of the applicant company (see paragraph 27 above).

50.  The Court takes note of the Istanbul 4th Commercial Court’s decision of 15 November 2018, which ordered the reinstatement of the applicant company to allow it to have standing in the proceedings before the Court. As the parties decided not to appeal, the said decision became final on 15 January 2019 (see paragraphs 28 and 29 above). The Court therefore finds that the applicant company, having regained its legal personality by a final domestic court decision, has standing to pursue the proceedings before it.

51.  In the light of the foregoing considerations, the Court also considers that the applicant company’s failure to inform the Court about its removal from the companies’ register, which could have a decisive impact on the outcome of the case if it had not been reinstated, cannot be considered as an abuse of the right of application in breach of Rules 44A and 47 of the Court, which require the applicants to cooperate fully in the conduct of the proceedings and to keep it informed of all circumstances relevant to the application.The Government’s remaining preliminary objections

52.  The Government argued that the applicant company had lost its victim status on the grounds that İGDAŞ had paid the amount awarded to the applicant company together with interest after the first-instance court’s judgment. They further submitted that its failure to inform the Court of its the payments made by İGDAŞ and to disclose that its representative had chosen not to object to the expert report of 5 October 2007 at the hearing of 9 October 2007 constituted an abuse of the right of application.

53.  The Court first notes that the crux of the applicant company’s complaint is the calculation of the late payment interest applied on the unpaid balance by the domestic courts. The payment of the sum awarded by the court is not sufficient to deprive the applicant company of its victim status in the proceedings before the Court. For the same reason, the applicant company’s omission to inform the Court about the payment cannot be interpreted as an abuse of the right of application.

54.  Secondly, it observes that the first-instance court had instructed the expert to calculate the amounts paid by İGDAŞ in the name of the applicant company to third parties (see paragraph 16 above). None of the reports prepared by the expert contained any calculation of late payment interest to be applied on the amount owed by İGDAŞ. Accordingly, non-disclosure of the failure to challenge to an expert report which did not contain any assessment on late payment interest is not relevant for the Court’s examination and therefore cannot be regarded as a sign of bad faith on the applicant company’s part in pursuing the proceedings before the Court.

55.  The Court therefore dismisses the Government’s remaining preliminary objections.Alleged violation of Article 6 of the Convention

56.  The applicant company submitted that the domestic courts’ failure to give satisfactory reasons for their calculation of late payment interest amounted to a violation of its right to a fair hearing guaranteed under Article 6 § 1 of the Convention, which reads, in so far as relevant as follows:

“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”

57.  The Government argued that the amount claimed by the applicant company had not been liquidated and due. They maintained that the domestic courts had correctly applied the law to the facts of the case. They also pointed out that the Court of Cassation assessed late payment interest on a case-by-case basis and in its decision of 5 April 2000 it applied late payment interest from the judgment date.

58.  The Court reiterates that, under Article 19 of the Convention, its task is to ensure the observance of the obligations of the Contracting Parties under the Convention. In particular, it is not for it to know errors of fact or law allegedly committed by an internal court, unless and insofar as they could have infringed the rights and freedoms safeguarded by the Convention (see, in particular, García Ruiz v. Spain [GC], no. 30544/96, § 28, ECHR 1999‑I). The Court should not act as a fourth-instance body and will therefore not question under Article 6 § 1 the national courts’ assessment, unless their findings can be regarded as arbitrary or manifestly unreasonable (see, as a recent example, Moreira Ferreira v. Portugal (no. 2) [GC], no. 19867/12, § 83, 11 July 2017).

59.  The Court, moreover, affirms that reflecting a principle related to the proper administration of justice, judicial decisions must indicate in sufficient detail the grounds on which they are based. The extent of this duty may vary according to the nature of the decision and must be analysed in the light of the circumstances of each case (see Hiro Balani v. Spain, 9 December 1994, § 27, Series A no. 303‑B). Although Article 6 § 1 obliges courts to give reasons for their decisions, it cannot be understood as requiring a detailed answer to every argument. Thus in dismissing an appeal, an appellate court may, in principle, simply endorse the reasons for the lower court’s decision (see García Ruiz, cited above, § 26). However, the notion of a fair procedure requires that an appellate court which has given sparse reasons for its decisions, whether by incorporating the reasons of a lower court or otherwise, did in fact address the essential issues which were submitted to its jurisdiction and did not merely endorse without further ado the findings reached by a lower court. This requirement is all the more important where a litigant has not been able to present his or her case orally in the domestic proceedings (see Ruminski v. Sweden, no. 17906/15, § 30, 2 May 2017 with further references).

60.  In the present case, the Court notes that, by a decision of 8 November 2007, the Istanbul 11th Commercial Court of First Instance applied late payment interest on the outstanding debt owed by İGDAŞ to the applicant company from the date of the judgment. It held that the applicant company’s receivable could not be deemed to have fallen due at the date of the payment order or the date of the lawsuit (see paragraph 19 above).

61.  The Court observes that under Turkish civil procedural law judges are strictly bound by the claims made by the claimant and may not award late payment interest that was not expressly claimed by the claimant (see paragraph 38 above). Having regard to the material submitted to the Court by the applicant company, it notes that the applicant company, in its statement of claim, chose to reserve its right to claim late payment interest (see paragraph 12 above). The court-appointed expert witness laid out in great detail the dates of the payments made by İGDAŞ while the proceedings were pending and their amounts in his reports. However, the applicant company did not formulate in a sufficiently clear and precise manner its claim for late payment interest on each of those payments covering the period between the due date under the Contract and the payment date. Instead, it requested that the objection to the payment order be annulled and interest be applied on its receivable in its entirety (see paragraph 17 above).

62.  In the Court’s view, the applicant company, despite having ample opportunity to particularise its claims for interest on the late payments made by İGDAŞ, failed to do so in its submissions to the first-instance court. In such circumstances, the Court considers that even though the reasons given by the first-instance court to calculate the late payment interest from the date of the judgment were succinct and further clarification would have been desirable in view of the Court of Cassation’s case-law on the subject matter, the first-instance court cannot be reproached for applying late payment interest from the date of the judgment.

63.  Regarding the applicant company’s complaint of lack of adequate reasoning in the Court of Cassation’s decision, the Court notes that it was only before the Court of Cassation that the applicant company made detailed arguments about the calculation of late payment interest and expressly requested late payment interest on amounts initially withheld by İGDAŞ (see paragraph 20 above). However, in the Court’s view, it was too late to raise these arguments at that stage since the scope of the Court of Cassation’s review was limited to ascertaining whether the legal grounds for appeal had been made out against the first-instance court’s judgment. The Court of Cassation, after hearing the representatives of the parties, found that the Istanbul 11th Commercial Court of First Instance had correctly interpreted the law and had come to correct conclusions (see paragraph 21 above). The Court considers that the fact that the Court of Cassation endorsed the findings of the Istanbul 11th Commercial Court of First Instance does not suggest that it failed to adopt a reasoned decision (see, among others, Helle v. Finland, 19 December 1997, §§ 59-60, Reports of Judgments and Decisions 1997‑VIII and compare and contrast Deryan v. Turkey, no. 41721/04, § 41, 21 July 2015). It therefore finds no indication that the Court of Cassation failed to fulfil its obligation to state reasons.

64.  Insofar as the applicant company’s complaint can be understood to challenge the outcome of the proceedings, the Court sees no cogent reason to substitute its own views for those of the domestic courts and is satisfied that their decision to apply late payment interest from the date of the first-instance court’s judgment was not arbitrary or manifestly unreasonable.

65.  It follows that the applicant company’s complaint under Article 6 § 1 must be rejected as manifestly ill-founded, pursuant to Article 35 §§ 3 and 4 of the Convention.Alleged violation of Article 1 of Protocol No. 1

66.  The applicant company also complained, in substance, under Article 1 of Protocol No. 1 about the domestic courts’ decision to apply late payment interest from the date of the first-instance court’s judgment, which reads as follows:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

67.  The Government contested the applicant company’s arguments. They submitted that the applicant company cannot be considered to have “possessions” within the meaning of Article 1 of Protocol No. 1. They added that, if the Court were to find that the said provision applied, there had been no interference with the applicant company’s right to peaceful enjoyment of property. They argued that İGDAŞ withheld the payment of the unpaid balance because it had had to pay the amounts awarded to the applicant company’s employees in the labour lawsuits brought against it.

68.  The Court reiterates at the outset that an applicant can allege a violation of Article 1 of Protocol No. 1 only in so far as the impugned decisions relate to “possessions” within the meaning of that provision. “Possessions” can be either “existing possessions” or assets, including claims, in respect of which the applicant can argue that he or she has at least a “legitimate expectation” of obtaining effective enjoyment of a property right. Where the proprietary interest is in the nature of a claim, it may be regarded as an “asset” only where it has a sufficient basis in national law, for example where there is settled case-law of the domestic courts confirming its existence. No legitimate expectation can be said to arise where there is a dispute as to the correct interpretation and application of domestic law and the applicant’s submissions are subsequently rejected by the national courts (see, among many authorities, Gratzinger and Gratzingerova v. the Czech Republic (dec.) [GC], no. 39794/98, § 69, ECHR 2002‑VII, and Kopecký v. Slovakia [GC], no. 44912/98, §§ 50-52, ECHR 2004‑IX).

69.  In the instant case, the Court observes that the property interest evoked by the applicant company concerned the late payment interest it would have received had the domestic courts calculated it from the date of the payment order or the date when it brought the annulment proceedings. It therefore did not relate to an “existing property” but to a claim. The Court must therefore examine whether the applicant company’s claim for late payment interest, covering the period during which the proceedings before the first-instance court lasted, constituted an “asset” within the meaning of Article 1 of Protocol No. 1.

70.  The Court notes that the Istanbul 11th Commercial Court of First Instance concluded that the applicant company’s claim had not fallen due at the date of the payment order or the date of the lawsuit and on that basis applied late payment interest from the date of the judgment. The Court of Cassation, by a decision of 3 November 2008, upheld the first-instance court’s judgment, holding that it was in accordance with the law and procedure.

71.  Having regard to the domestic courts’ decisions, the Court concludes that there was no legal basis for the applicant company’s claim for late payment interest covering the period during which the proceedings before the first-instance court lasted.

72.  In view of the above considerations, the Court finds that the applicant company did not have a “possession” within the meaning of Article 1 of Protocol No. 1. The applicant company’s complaint is therefore incompatible ratione materiae within the provisions of the Convention, within the meaning of Article 35 § 3, and must be rejected in accordance with Article 35 § 4.

For these reasons, the Court, unanimously,

Declares the application inadmissible.

Done in English and notified in writing on 19 December 2019.

Hasan BakırcıValeriu Griţco
Deputy RegistrarPresident

[1].  The term “progress report” is used under Turkish law to describe interim statements sent by a contractor or service provider to its client as the work progresses and entitling it to progress payments.

[2].  On 1 January 2005 the Turkish lira (TRY) entered into circulation, replacing the former Turkish lira (TRL). TRY 1 = TRL 1,000,000.

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