FIRST SECTION
DECISION
Application no. 22112/04
by MOSCOW NARODNY BANK LIMITED
against Russia
The European Court of Human Rights (First Section), sitting on 29 April 2008 as a Chamber composed of:
Christos Rozakis, President,
Nina Vajić,
Anatoly Kovler,
Elisabeth Steiner,
Khanlar Hajiyev,
Giorgio Malinverni,
George Nicolaou, judges,
and André Wampach, Deputy Section Registrar,
Having regard to the above application lodged on 7 June 2004,
Having regard to the decision to apply Article 29 § 3 of the Convention and examine the admissibility and merits of the case together,
Having regard to the observations submitted by the respondent Government,
Having deliberated, decides as follows:
THE FACTS
The applicant, Moscow Narodny Bank Limited, is a limited company incorporated in the United Kingdom of Great Britain and Northern Ireland. The applicant was represented before the Court by Mr A. Zhuk and
Mr R. Mazayev, lawyers practising in Moscow. The Russian Government (“the Government”) were represented by Mrs V. Milinchuk, the Representative of the Russian Federation at the European Court of Human Rights.
The facts of the case, as submitted by the parties, may be summarised as follows.
On 20 July and 23 and 28 November 1988 the applicant signed three loan agreements with the Intersectorial Foreign Trade Company “Eye Microsurgery” (“the Company”) under the terms of which the applicant was to provide the Company with a line of credit for working capital requirements.
Each agreement included an appendix (schedule) duly dated and signed by the head of the Intersectoral Research and Technology Complex “Eye Microsurgery” (“the Complex”), a legal entity owned by the Russian Federation. The Complex irrevocably and unconditionally guaranteed the repayment of all sums due to the applicant by the Company pursuant to the loan agreements, whether principal, interest or other amounts. Under the terms of the guarantees the Complex was liable as if it were the sole principal debtor and not merely a surety.
The parties also agreed that the loan agreements were expressly governed by and construed in accordance with English law and that the English courts had jurisdiction to settle any disputes which might arise out of or in connection with those agreements.
In November 1988 the applicant began executing its obligations under the agreements. On receiving faxed instructions from the Company the applicant transferred money in the form of separate disbursements to the Company’s accounts or to accounts opened in the names of various foreign‑based private legal entities with banks in Russia, Switzerland, Germany, Japan, Hungary, Italy, France, Austria and the United States.
The Company defaulted on its payments to the applicant on 29 May 1992 (in the case of the loan agreement of 20 July 1988) and on 30 June 1992 (in the case of the agreements of 23 and 28 November 1988). By a letter of 9 November 1994 the head of the Complex informed the applicant that the Complex had asked the Government of the Russian Federation to look into the possibility of the loans being repaid with the help of the State.
On 9 August 1999 the representatives of the applicant sent a letter of demand to the Director General of the Complex. In that letter they repeated the applicant’s demand that the Complex perform its obligations under the guarantees and make full payment of the total sums outstanding in respect of each of the loan agreements, plus additional interest accruing at the daily contractual rates until full payment.
As no response was received, on 14 October 1999 the proceedings were commenced in the Commercial Court in London.
On 16 October 2000 the Commercial Court granted the judgment. The judgment in its relevant part read as follows:
“It is this day adjudged that the Defendant pay to the Claimant the following amounts:
1) DM 14,660,461.33, FRF 5,792,432.29 and DM 8,061,786.53;
2) contractual interest accrued up to and including the day before the date of issue of proceedings in the amounts of DM 5,842,743.33, FRF 2,857,589.34 and DM 3,182,350.14;
3) contractual interest accrued from the date of issue of proceedings to 4th September 2000 inclusive in the amounts of DM 1,131,910.5, FRF 578,750.57 and DM 622,437.96 and further interest accruing at the daily rates of DM 3,461.50, FRF 1,769.91 and DM 1,903.48 respectively until the date of the judgment and thereafter at the judgment rate until the date of payment.
4) costs to be assessed on the standard basis if not agreed.”
By letter dated 22 January 2001 the applicant served the judgment and its Russian translation on the Complex. The judgment became effective 14 days after its service, that is, on 7 February 2001.
In a letter of 22 January 2001 the applicant’s representatives asked the Complex to revert to the applicant by 26 January 2001 with its proposals for settlement of the judgment debt. No response followed and the applicant did not receive payment of any part of the judgment debt from the Complex.
On 6 March 2002 the applicant’s representatives in Russia applied to a Russian court seeking enforcement of the judgment issued by the Commercial Court in London on 16 October 2000. The Moscow Commercial Court allowed the action and instituted the proceedings.
In the meantime, on 15 May 2003 a deputy prosecutor from the Moscow prosecutor’s office, acting on behalf of and in the interests of the Ministry of Health of the Russian Federation, lodged an action with the Moscow Commercial Court seeking invalidation of the guarantees given by the Complex on 20 July and 23 and 28 November 1988 in respect of the loan agreements concluded between the applicant and the Company.
On 19 August 2003 the Moscow Commercial Court upheld the deputy prosecutor’s action and declared the guarantees issued by the Complex on 20 July and 23 and 28 November 1988 null and void, as having been given ultra vires by the Complex. On 12 January 2004 the Commercial Court of the Moscow Circuit, at final instance, upheld the judgment of 19 August 2003, endorsing the reasons given by the lower court.
Following a line of favourable first-instance judgments and their subsequent quashing on appeal, on 3 February 2004 the Moscow Commercial Court dismissed the application for recognition and enforcement of the judgment of 16 October 2000 on the ground that the Russian courts had declared on 19 August 2003 (as upheld on 12 January 2004) the guarantees issued by the Complex null and void and the enforcement of the judgment of 16 October 2000 would therefore run counter to public order in the Russian Federation.
On 13 April 2004 the Commercial Court of the Moscow Circuit, upon the applicant’s appeal, upheld the judgment of 3 February 2004.
COMPLAINTS
The applicant complained under Articles 6 and 13 of the Convention and Article 1 of Protocol No. 1 taken in conjunction with Article 14 of the Convention that the Russian authorities had refused to enforce the final and binding judgment of 16 October 2000 of the Commercial Court in London, that the Russian courts had incorrectly interpreted the notion of “public order” and that they had therefore discriminated against foreign companies, that the principle of “equality of arms” had been breached in that a deputy prosecutor from the Moscow prosecutor’s office, a State official who had no interest in the case, had brought an action on behalf of and in the interests of the Ministry of Health of the Russian Federation, seeking invalidation of the guarantees given by the Complex, that the reasoning of the judgments of the Russian commercial courts had been insufficient and that he had not had an effective remedy against the unlawful actions of the Russian authorities owing to the absence of a clearly defined notion of “public order” and the unfairness of the proceedings before the Russian courts.
THE LAW
By the letter of 13 March 2008 the applicant informed the Court that it did not intend to pursue its application before the Court and it asked the Court to strike the application out of the list of cases.
The Court recalls Article 37 of the Convention which, in the relevant part, reads as follows:
“1. The Court may at any stage of the proceedings decide to strike an application out of its list of cases where the circumstances lead to the conclusion that
(a) the applicant does not intend to pursue his application;
...
However, the Court shall continue the examination of the application if respect for human rights as defined in the Convention and the Protocols thereto so requires.”
It follows from the applicant’s letters of 13 March 2008 that it does not intend to pursue its application. The Court further considers that respect for human rights as defined in the Convention and its Protocols does not require it to continue the examination of the case.
In these circumstances it considers that Article 29 § 3 of the Convention should no longer apply to the case and it should be struck out of the list in accordance with Article 37 § 1 (a) of the Convention.
For these reasons, the Court unanimously
Decides to discontinue the application of Article 29 § 3 of the Convention and to strike the application out of its list of cases.
André WampachChristos Rozakis
Deputy RegistrarPresident
Full & Egal Universal Law Academy