8 December 2008
FIFTH SECTION
Application no. 10640/05
by Industrial Financial Consortium “Investment Metallurgical Union”
against Ukraine
lodged on 22 March 2005
STATEMENT OF FACTS
THE FACTS
The applicant, the Industrial Financial Consortium “Investment Metallurgical Union”, is a Ukrainian joint venture based in Kyiv, with legal personality under Ukrainian law. It is represented before the Court by Mr V. Yasinskiy, the head of the executive board of the Consortium, Mr M. J. MacDougall and Ms N. H. Sprinzen, lawyers practicing in the United States of America.
A. The circumstances of the case
The facts of the case, as submitted by the applicant company, may be summarised as follows.
1. Background of the case
a. Privatisation of the Kryvorizhstal Enterprise
On 6 August 2003 the Cabinet of Ministers decided that the Kryvorizhstal State Metallurgical Enterprise, one of the world’s largest steel manufacturing companies employing about 60,000 people and producing about 20% of Ukraine’s annual supply of steel, was to be privatized. On 4 November 2003 the Ministry of Economy and European Integration included the Kryvorizhstal into the list of State-owned assets which were to be privatized. Subsequently, the Ministry of Industrial Policy and the State Commission on Securities and Stock Market adopted decisions aimed at ensuring the privatisation of that enterprise.
In April 2004 the applicant company was founded by nine private companies, five of which were owned or controlled by Mr Rinat Akhmetov, one of the leaders of the Party of Regions whose members held the majority of posts in the Cabinet of Ministers, including the post of Prime Minister, in 2003-2004. The remaining four companies were owned or controlled by Mr Victor Pinchuk, the son-in-law of Mr Leonid Kuchma, the second President of Ukraine who held the post from 19 July 1994 to 23 January 2005.
On 12 May 2004 the State Property Fund announced a bidding competition for the purchase of 93.02% of the share capital of the Kryvorizhstal. One of the conditions which a bidder had to satisfy was that it should have had a history of producing of one million tons of charred coal of Ukrainian origin and two million tons of steel in Ukraine in each of the three years prior to the competition. The applicant company took part in that competition.
Out of six offers submitted by various companies, the Fund selected the offers of the applicant company and of the Industrial Group Consortium, finding that these companies satisfied the conditions of the competition.
On 14 June 2004 the applicant company was declared a winner (successful bidder) of the bidding competition. On the same day the applicant concluded a purchase contract with the Fund and paid 4,260,000,000 Ukrainian hryvnas (UAH)[1] for the shares at issue. The shares were transferred to the applicant’s deposit account at the ING Bank Ukraine.
On 23 July 2004 the applicant company appointed Mr Trypolskyy to represent it as the owner of the Kryvorizhstal shares and to complete the formalities of the transfer pursuant to the contract of 14 June 2004.
The applicant company submitted, without any further specification, that during the period of its control over the Kryvorizhstal it invested substantial financial resources in that enterprise.
b. 2004 presidential election and the reprivatisation of the Kryvorizhstal Enterprise
The lawfulness and transparency of the privatization of the Kryvorizhstal was contested by the political opposition, whose leaders in 2004 were Mr Victor Yushchenko, Mrs Yuliya Tymoshenko and Mr Oleksandr Moroz. In their public statements the latter accused Messrs Kuchma, Pinchuk and Akhmetov of fraud and called for the return of the enterprise to the State.
During the 2004 presidential election campaign the issue was debated by two main rivals, Messrs Yushchenko and Yanukovych. Mr Yanukovych, whose candidature was openly supported by Messrs Akhmetov and Kuchma, insisted that the privatization of the Kryvorizhstal had been lawful and fair.
From late November 2004 to January 2005 a series of protests took place in the immediate aftermath of the run-off vote of the 2004 election which was compromised by massive corruption, voter intimidation and direct electoral fraud. These events are commonly known as the Orange Revolution.
Following the revote of 26 December 2004, Mr Yanukovych lost the election to Mr Yushchenko who became the third President of Ukraine. In February 2005 the Verkhovna Rada approved the appointment of the new Cabinet of Ministers headed by Mrs Tymoshenko. The Party of Regions formed the parliamentary opposition.
Throughout 2005 the President and the Prime Minister made official statements that the privatization of the Kryvorizhstal had been unlawful and that the enterprise would be returned to the State and subsequently resold.
On 12 February 2005 the Cabinet of Ministers repealed its decision of 6 August 2003 by which the privatization of the Kryvorizhstal had been launched. On 15 February 2005 the State Property Fund also repealed its decisions concerning the privatization at issue.
On 8 June 2005 the State took control of the Kryvorizhstal pursuant to the commercial courts’ decisions declaring its privatization unlawful (see below, “Proceedings before the commercial courts instituted by the Industrial Group Consortium”). By the decree of 11 June 2005, the Cabinet of Ministers declared the contract of 14 June 2004 invalid and withdrew the shares of the Kryvorizhstal from the applicant company.
On an unspecified date the money paid for the shares of the enterprise in 2004 were returned to the applicant company.
By two decrees of 23 June 2005, the Cabinet of Ministers launched the procedures for resale of 93.02% of the Kryvorizhstal’s share capital. On 9 August 2005 it approved the bidding conditions. The next day the bidding competition was officially announced.
The applicant company did not participate in the competition. Instead, it challenged the decrees of 12 February, 8, 11 and 23 June 2005 before the commercial courts and the courts of general jurisdiction, but to no avail. The applicant company did not provide any further details of those proceedings.
On 24 October 2005 the bidding competition was completed by an auction which was live broadcasted by major television stations. The Mittal Steel Germany GmbH was declared a successful bidder. On 28 October 2005 it concluded a purchase contract with the State Property Fund and became the new owner of 93.02% of the Kryvorizhstal’s share capital for the price of UAH 24,200,000,000[2].
c. Events which concern one of the applicant’s owners after the 2004 election
According to the applicant company, Mr Akhmetov has been targeted for his political expression and association. In particular, companies which he owned or controlled were subjected to various checks by the authorities. Some of those companies the authorities attempted to nationalise, though unsuccessfully.
2. Proceedings before the courts of general jurisdiction instituted by private persons
a. Proceedings instituted by Ms Nazarova, Ms Semenyuk, and Mr Khmara
On 28 May, 3 and 11 June 2004, respectively, three private persons, Ms Nazarova, a lawyer practising in Kyiv, Ms Semenyuk and Mr Khmara, Members of Parliament, lodged with the Golosiivskyy District Court of Kyiv three separate administrative law complaints against the decisions of the State Property Fund and the State Commission on Securities and Stock Market concerning the organisation of the 2004 bidding competition, contending that these decisions violated every citizen’s right to participate in privatisation of State property.
On an unspecified date the President of the Kyiv City Court of Appeal transferred the case to the Pecherskyy District Court of Kyiv. By separate decisions of 8 and 14 June 2004, the latter court refused to consider these complaints and ordered immediate enforcement of its decisions. The reasons for those decisions were not specified by the applicant company.
On 2 August 2004 the Kyiv City Court of Appeal partially changed the decisions of 8 and 14 June 2004 by excluding the provisions concerning their immediate enforcement.
b. Proceedings instituted by Mr Ignatenko and Ms Nazarova
On 11 June 2004 Mr Ignatenko and Ms Nazarova lodged with the Shevchenkivskyy Court a claim against the State Property Fund, the State Commission on Securities and Stock Market, and the ING Bank Ukraine, challenging the validity of their decisions and actions in connection with the privatisation of the Kryvorizhstal. On an unspecified date the case was transferred to the Pecherskyy Court.
Upon the plaintiffs’ request, the applicant company was invited to participate as a third party in the proceedings. By letters of 20 October and 25 November 2004 the Pecherskyy District Prosecutor requested the court to grant him leave to participate in the case in the interests of Mr Ignatenko. The prosecutor’s request was granted.
3. Proceedings before the commercial courts instituted by the Industrial Group Consortium
On 25 June 2004 the Industrial Group Consortium, the loosing party in the 2004 bidding competition, instituted proceedings in the Kyiv City Commercial Court against the applicant company, the State Property Fund, the Ministry of Industrial Policy and the State Commission on Securities and Stock Market, challenging the validity of the authorities’ decisions adopted in connection with the privatisation of the Kryvorizhstal and of the contract of 14 June 2004. It contended that the 2004 bidding competition had been unlawful and unfair.
In particular, the Industrial Group Consortium argued that the shares of the Kryvorizhstal had not been issued in accordance with the law; that the competition had not been announced in due time; that the conditions of the competition had been too narrow and restrictive, thereby limiting the circle of potential bidders and disrespecting every citizen’s statutory right to participate in privatisation of State assets; that the shares should have been sold through stock exchange; and that the total amount of its offer, including the money it had planned to invest in the Kryvorizhstal, had been higher than the amount paid by the applicant company for the shares of the enterprise. It also argued that, because of the fact that the complaints of three private persons against the decisions concerning the organisation of the 2004 bidding competition had been pending before the courts in May‑June 2004, any decision adopted during the period of 8 to 14 June 2004 in relation to the competition had been invalid.
On 5 July 2004 the applicant company introduced a counter-claim, asking the court to endorse its right over 93.02% of the Kryvorizhstal shares.
By a procedural ruling of 20 July 2004 the court found that the participation of the Office of the Prosecutor General in the proceedings was compulsory and ordered it to designate its representative before the court. Despite that ruling, in 2004 the prosecutors did not appear before the Kyiv City Commercial Court or the Higher Commercial Court.
The Kryvorizhstal Enterprise took part as a third-party in the proceedings.
On 19 August 2004 the Kyiv City Commercial Court, having considered the arguments of the Industrial Group Consortium in detail, rejected them as unsubstantiated and found that the privatisation of the Kryvorizhstal had been carried out in accordance with the relevant legislation. The court inter alia held that the rights of citizens to participate in the privatisation had not been restricted, since they had been free to establish companies and to participate in the competition through such companies. It also stated that the complaints of private persons against the competition had not been lodged in accordance with the law and, thus, they had had no suspensive effect. The court further endorsed the applicant’s property rights over the Kryvorizhstal shares and banned any actions of the defendants capable of violating these rights.
The Industrial Group Consortium appealed in cassation to the Higher Commercial Court.
On 22 October 2004 the Higher Commercial Court held a hearing in the presence of the parties’ representatives and upheld the judgment of 19 August 2004. The parties, whose representatives participated in the proceedings, did not appeal in cassation to the Supreme Court against the decision of 22 October 2004.
On 7 February 2005 the Prosecutor General lodged with the Supreme Court an appeal in cassation in the interests of the State, alleging that the contested decisions concerned the rights and obligations of the Cabinet of Ministers. The Prosecutor General sought the renewal of the time-limit for lodging his appeal, stating, without giving any further details, that he had missed it since he had become aware of the decision of 22 October 2004 in the course of the prosecutors’ inspection upon a request of Ms Semenyuk. His appeal also contained allegations of wrongful assessment of facts and incorrect application of law by the Kyiv City Commercial Court and the Higher Commercial Court. He finally stated that the courts had failed, in violation of procedural regulations, to invite the Cabinet of Ministers to take part in the proceedings.
On 17 February 2005 the Supreme Court granted the renewal requested and opened the proceedings on the merits of the prosecutor’s appeal in cassation. No details of that procedural ruling were provided by the applicant company.
On 1 March 2005 the Supreme Court allowed the appeal, quashed the decisions of the lower courts, and remitted the case for a fresh consideration. It found that both the Industrial Group Consortium and the applicant company had not qualified, under Ukrainian law, for participating in the 2004 bidding competition; that the competition had not been announced in due time; and that the lower courts in allowing the applicant’s counter-claim had erred in the application of the rules of procedure.
On 21 March 2005 the Deputy Prosecutor General lodged with the Kyiv City Commercial Court, to which the case had been remitted, a claim in the interests of the State and on behalf of the State Property Fund against the applicant company, the Ministry of Industrial Policy, and the State Commission on Securities and Stock Market. His claim was directed against the decisions concerning the privatisation of the Kryvorizhstal and the contract of 14 June 2004. He also sought the return of the Kryvorizhstal shares to the State Property Fund and requested the court to seize the shares as a temporary measure until the final resolution of the dispute.
The Deputy Prosecutor General argued that due to the failure of the State Property Fund the 2004 bidding competition had not been organised in a lawful and fair way, particularly regarding the conditions which the potential bidders had had to satisfy. He further submitted that the bidders, whose offers had been chosen, had not satisfied the legislative requirements for participating in that competition.
On 23 March 2005 the court held a hearing in camera at which it decided to open the proceedings and invited the parties to submit their arguments on the case, and scheduled its next hearing for 1 April 2005.
On 1 April 2005 the court ordered that the ING Bank Ukraine, in which the shares at issue were deposited, participated in the case as a defending party. The Cabinet of Ministers took part in the case as a third party.
On 15 April 2005 the applicant requested the court to allow journalists to attend the hearings in the case. The court rejected the request, finding that they had not obtained official authorization from the court’s management.
Subsequently, journalists obtained the necessary authorisation and attended the hearings.
On 21 April 2005 a copy of the decision of the Pecherskyy Court of 21 April 2005 (see below) was included into the case-file and examined by the court at a hearing on the same day.
On 22 April 2005 the court delivered a judgment in the case by which it allowed the claims of the Industrial Group Consortium and of the Office of the Prosecutor General, which it found to be of the same nature. It annulled the authorities’ decisions concerning the 2004 privatisation and the contract of 14 June 2004 and ordered the State Property Fund to return the money paid by the applicant company for the Kryvorizhstal shares. The applicant’s counter-claim was rejected and it was ordered to return the shares to the State Property Fund and to pay UAH 1,903[3] to the State for costs and expenses.
The court held that the State Property Fund had failed to announce competition in due time; that it had unlawfully introduced a condition concerning the production of charred coal and steel; that the Fund had failed to envisage specific conditions of sale of up to 5% of the Kryvorizhstal shares; that its decisions adopted during the period of 8 to 14 June 2004 in relation to the competition had been invalid as the complaints of three private persons against the decisions concerning the organisation of the 2004 bidding competition had been pending before the courts during that period; and that the applicant company and the Industrial Group Consortium had been unlawfully allowed to participate in the competition.
By a procedural ruling of 28 April 2005 the same court seized the shares at issue. On the same day the Bailiffs started enforcement proceedings in respect of that ruling.
The applicant company appealed against the judgment of 22 April 2005 and the ruling of 28 April 2005, contending that the Kyiv City Commercial Court had wrongly established circumstances of the case and that it had erred in the application of law. It further challenged the lawfulness of the Bailiffs’ actions as regards the enforcement of the ruling of 28 April 2005.
In the proceedings on its appeal, the applicant company requested the Kyiv Commercial Court of Appeal to suspend the proceedings before the commercial courts pending the outcome of the proceedings before the courts of general jurisdiction (see below, “Joined proceedings before the courts of general jurisdiction”). The court of appeal rejected the request on the ground that the latter proceedings were not decisive for the outcome of the commercial case.
On 2 June 2005 the Kyiv Commercial Court of Appeal partially changed the judgment of 22 April 2005. In particular, the court of appeal found that the claims of the Industrial Group Consortium had to be rejected, as it had not qualified for participating in the 2004 bidding competition. The applicant’s appeal was dismissed as unsubstantiated.
By the same decision, the court of appeal annulled the ruling of 28 April 2005 for non-compliance with procedural rules and refused to consider the applicant’s complaints against the Bailiffs as falling outside its jurisdiction. The court further ruled to seize the Kryvorizhstal shares for the purpose of securing the claims of the Office of the Prosecutor General.
The applicant company appealed in cassation.
On 12 July 2005 the Higher Commercial Court scheduled a hearing on the merits of the appeal in cassation for 21 July 2005 and sent letters to the parties informing them of the hearing. On 21 July 2005 the court was informed that the letter addressed to the applicant company had not been delivered to it, because it had changed its address.
By a telegram of 21 July 2005 the applicant’s representative informed the court that he had found out about the hearing on 20 July 2005.
In the course of the hearing of 21 July 2005 the Higher Commercial Court considered that the applicant company had been duly informed of the hearing and decided, after consulting the parties present at that hearing, that it could hear the case in the absence of the applicant’s representatives.
On the same day the court rejected the applicant’s appeal in cassation as unsubstantiated.
On 31 August 2005 the panel of three judges of the Supreme Court rejected the applicant’s request for leave to appeal in cassation.
After 1 March 2005 and while the case was considered by the commercial courts, the President and the Prime Minister made a number of public statements concerning the proceedings. In particular, at a press‑conference on 11 April 2005, Mrs Tymoshenko said that:
“... Such facilities as Kryvorizhstal ... I think that today the [authorities] are involved in the court proceedings on the return of those assets to the State. We are confident that we have a clear position [on the case], and these enterprises will be returned to the State ...”
In an interview of 14 April 2005 Mr Yushchenko stated that:
“... If the owners refuse to cooperate voluntary, we will go the route of law and will win it [the case] undoubtedly. Only this will take several months...
The facility has been stolen, and the cost of that theft is several billion dollars. As for me, this is a fact...
We prepare the terms of a new [bidding] competition...”
On 23 April 2005 Mrs Tymoshenko mentioned, commenting on a possibility that the applicant company would appeal against the judgment of 22 April 2005:
“... This will be an important decision by the [court of] appeal instance. It will be the evidence not only of the court’s objectivity, but also of the negotiations behind closed doors between various representatives of the authorities and business...”
In the course of the proceedings the applicant company challenged, on a number of occasions, impartiality of judges and courts dealing with its case, alleging that their decisions and actions were influenced by the governmental officials. Those allegations were all rejected as unsubstantiated.
4. Proceedings before the courts of general jurisdiction instituted by the Industrial Group Consortium
In July 2004 the Industrial Group Consortium instituted proceedings in the Pecherskyy District Court of Kyiv against the applicant company, the State Property Fund, the Ministry of Industrial Policy and the State Commission on Securities and Stock Market, challenging the validity of the authorities’ decisions adopted in connection with the privatisation of the Kryvorizhstal and of the contract of 14 June 2004. The Industrial Group Consortium relied mainly on the same circumstances and considerations as in its claims before the commercial courts. Its claims before the courts of general jurisdiction contained an additional element – the Industrial Group Consortium contested the validity of the appointment of Mr Trypolskyy on 23 July 2004 as the applicant company’s representative in the procedures which followed the 2004 bidding competition.
That person took part in the proceedings as one of the defendant parties. The Kryvorizhstal Enterprise participated in the proceedings as a third party.
On 25 August 2004 the court, having considered the arguments of the Industrial Group Consortium in detail, rejected them as unsubstantiated and found that the privatisation of the Kryvorizhstal had been carried out in accordance with the relevant legislation. The court inter alia held that the rights of citizens to participate in the privatisation had not been restricted, since they had been free to found companies and to participate in the competition through such companies. It also stated that the complaints of private persons against the competition had not been lodged in accordance with the law and, thus, the competition had not been suspended. On 25 August 2004 the court delivered a judgment rejecting the claims of the Industrial Group Consortium. It contained for the most part identical reasons as in the judgment of the Kyiv City Commercial Court of 19 August 2004.
On 1 and 27 December 2004, respectively, the Kyiv City Court of Appeal and the panel of three judges of the Supreme Court upheld the judgment of 25 August 2004.
On 9 February 2005 Ms Nazarova lodged with the Pecherskyy Court a request for re-opening of the above case in the light of newly-discovered circumstances. In particular, she argued that the findings concerning every citizen’s right to participate in privatisation of State assets contained in the judgment of 25 August 2004 had been contrary to the judgment of the Constitutional Court of 1 December 2004. She also contended that the courts had not been aware of the fact that the decisions of 8 and 14 June 2004 of the Pecherkyy Court had been challenged on appeal and, thus, had not been final before 2 August 2004.
The request of Ms Nazarova was dealt with by the same judge of the Pecherskyy Court who had been sitting in the main proceedings.
By a telegram of 15 February 2005, the court informed the applicant company that the next day it would hold a hearing on the request of Ms Nazarova. On 15 February 2005 the applicant company lodged with the court a motion for consultation of the case file. The motion was not granted.
On 16 February 2005 the court held a hearing on the merits of the request. Some of the parties to the main proceedings, including the Industrial Group Consortium, Mr Trypolskyy, the State Commission on Securities and Stock Market, and the Kryvorizhstal Enterprise did not take part in the hearing.
The representatives of the applicant company requested leave to consult the case file and adjournment of the hearing on the ground that they had not been informed about the merits of the request before the hearing and, accordingly, had not been able to prepare for it. They also sought withdrawal of the judge dealing with the case, challenging her impartiality.
The judge rejected the motions of the applicant’s representatives and read out the request of Ms Nazarova.
The applicant’s representatives objected to the request, arguing that Ms Nazarova was not entitled to ask for the review of the case, since she had not been a party to the proceedings, and that there were no newly- discovered circumstances or any other reason capable of warranting the re-opening of the proceedings.
The applicant’s representatives did not receive a copy of the request either before or during the hearing.
On 17 February 2005 the court allowed the request. It found that the right of every citizen, including Ms Nazarova, to participate in privatisation and to challenge its lawfulness had been confirmed by the judgment of the Constitutional Court of 1 December 2004. It also held that the ruling of 8 June 2004 on Ms Nazarova’s complaint concerning the 2004 competition had not entered into force at the time when the competition had taken place and, thus, it could not have served as one of the grounds for rejecting the claims of the Industrial Group Consortium.
The court quashed its judgment of 25 August 2004 and held that the higher courts’ decisions of 1 and 27 December 2004 were no longer valid.
On an unspecified date the case was transferred to another judge of the Pecherskyy Court.
5. Joined proceedings before the courts of general jurisdiction
On 28 February 2005, following the request of Ms Nazarova, the Pecherskyy Court decided to examine the claims of Mr Ignatenko and Ms Nazarova and the claims of the Industrial Group Consortium jointly, holding that they were of the same nature and concerned the same defendants.
On an unspecified date the applicant company lodged a request for review of the ruling of 17 February 2005 in view of newly-discovered circumstances.
On 21 April 2005 the court granted the request of the applicant company, quashed the ruling of 17 February 2005, and refused to consider the request of Ms Nazarova of 9 February 2005 on the ground that she had not participated in the proceedings on the claims of the Industrial Group Consortium.
By a separate ruling of the same date, the court refused to consider the claims of Mr Ignatenko and Ms Nazarova, finding that they had not participated in the 2004 bidding competition and that they did not have an arguable claim in respect of the subject-matter of the proceedings. The court held that their claims represented a disguised attempt to settle a dispute between legal persons falling within the jurisdiction of commercial courts.
By decisions of 20 and 27 July 2005 the Kyiv City Court of Appeal quashed the rulings of 21 April 2005, stating that the ruling of 17 February 2005 was not to be reviewed in the light of newly-discovered circumstances and, relying on Article 6 of the Convention, that the Pecherskyy Court had unlawfully limited Mr Ignatenko’s and Ms Nazarova’s right of access to a court.
On 15 October 2007 the Donetsk Regional Court of Appeal, acting as a court of cassation, upheld the decisions of 20 and 27 July 2005.
According to the applicant’s submissions of 19 March 2008, the case was remitted to the Pecherskyy Court before which it is currently pending.
B. Relevant domestic law and practice
1. Code of Commercial Procedure of 1991
The relevant provisions of the Code of Commercial Procedure may be summarised as follows.
Article 53 of the Code envisages that, upon a request of a party to the proceedings, a prosecutor or on its own initiative, the court may renew a time-limit if it considers that there were valid reasons for missing it.
Pursuant to Articles 111-14 and 111-16, parties to the case and the Prosecutor General are entitled to lodge an appeal in cassation with the Supreme Court against a resolution or ruling of the Higher Commercial Court within one month of its adoption. In case there are grounds for challenging the resolution or ruling of the Higher Commercial Court after the expiry of that time-limit, the Supreme Court is obliged to accept an appeal in cassation for its consideration.
Under Article 111-15, the Supreme Court of Ukraine reviews cassation appeals lodged against the resolutions or rulings of the Higher Commercial Court if they concern the application by the Higher Commercial Court of Ukraine of a law or normative act which contravenes the Constitution; the resolution’s or ruling’s incompliance with decisions of the Supreme Court or of a higher court of a different specialisation on the issue of the application of the norms of substantive law; the Higher Commercial Court’s inconsistent application of the same provision of the law or any other normative act in similar cases; the contradiction of the resolutions or rulings to the international treaties of Ukraine approved by the Parliament; and if an international judicial body whose jurisdiction is recognised by Ukraine finds that a resolution or a ruling has violated the international obligations of Ukraine.
2. Code of Civil Procedure of 1963 (repealed as of 1 September 2005)
The relevant provisions of the Code of Civil Procedure may be summarised as follows.
As it was envisaged in Article 4 of the Code, every interested person was entitled to apply to the court for defense of a violated or disputed right or interest protected by law.
Article 248-1 of the Code established that every citizen was entitled to lodge with a court a complaint if he or she considered that his rights, freedoms or lawful interests had been infringed by a decision, actions or inactivity of a public authority or official. According to Article 248-4, the introduction of such a complaint suspended the execution of the disputed decision.
Pursuant to Article 347-2 of the Code, judgments and rulings of courts of first, appeal and cassation instances might be reviewed in the light of newly‑discovered circumstances. The same article envisaged five grounds for such a review:
1) substantial circumstances which were not and could not have been known to the person who applies for a review;
2) intentionally false testimony of a witness, intentionally incorrect conclusions of experts, intentionally incorrect translation, forged documentary or material evidence which led to the adoption of the unlawful judgment, as established by a final judgment in a criminal case;
3) criminal offences committed by parties, other persons, who participated in the case, or criminal offences committed by judges in the course of the consideration of the case, as established by a final judgment in a criminal case;
4) annulment of a judgment, a ruling (resolution) of a court or of a decision of another authority, on which the judgment or ruling at issue was based;
5) declaration of unconstitutionality of the law, which was applied by the court in the determination of the case.
Article 347-3 of the Code contained a list of those who were entitled to apply for a review of judgments and rulings of courts in the light of newly‑discovered circumstances. These were parties to the case, other persons participating in the proceedings, and a prosecutor. They might do so within three months following the discovery of one of the grounds for such a review.
Under Article 347-6, an application for a review had to be examined in a hearing of which parties, other persons participating in the case and a prosecutor were to be informed. Their failure to appear at that hearing did not prevent the court from examining the request. If the court decided to allow the request and to annul a judgment or ruling, the case was to be considered in accordance with the procedures set by the Code.
According to Article 347-7 of the Code, the decision to grant a request for review of a judgment or ruling of a court in the light of newly‑discovered circumstances was final and might not be challenged on appeal.
3. Judgment of the Constitutional Court of 1 December 2004
The relevant provisions of the Constitutional Court’s judgment read as follows:
“1... [The Members of Parliament] of Ukraine lodged with the Constitutional Court of Ukraine a request for the official interpretation of the notion “interest protected by law” as used in the first paragraph of Article 4 of the Code of Civil Procedure ... and for the [official] explanation “whether this notion concerns an interest of a physical person – shareholder of a joint-stock company, who applies to a court with a view of defending violated rights of the joint-stock company ... taking into account the fact that, because of the violation of the rights of the joint-stock company, the rights of the company’s shareholder, envisaged by the current legislation of Ukraine and/or the company’s articles of association, were also infringed”.
...
the Constitutional Court decided:
1. The notion “interest protected by law” ... is to be understood as an inclination to use concrete material and/or immaterial benefits ... which is a separate object of judicial protection and of other remedies aimed at satisfying individual and collective needs which are not contrary to the Constitution and laws of Ukraine, social interests, [the principles of] fairness, good faith, reasonableness, and other fundamental principles of law.
2. In the context of the question raised in the constitutional request, the provisions of the first paragraph of Article 4 of the Code of Civil Procedure of Ukraine is to be understood that a shareholder may defend his rights and interests protected by law through an application to a court if they were violated, disputed or unrecognised by the joint-stock company [the shares of which that person held], its organs or by other shareholders of that company.
The law shall determine the procedure of judicial protection of the joint-stock company’s rights and interests ... violated by any person, including third persons, which [the company’s rights and interests] may not be considered identical to a simple totality of individual interests ... of its shareholders.
...”
COMPLAINTS
The applicant company complained of a violation of Articles 6 § 1 and 13 of the Convention as regards the proceedings before the courts of general jurisdiction and the commercial courts for various reasons.
First, it alleged that that the courts dealing with its cases had not been impartial and independent and that their decisions, unfavourable to the applicant, had been politically motivated and influenced by the top governmental officials.
Secondly, according to the applicant, the principle of legal certainty had not been observed in its cases in view of the following circumstances:
a. annulment of the final judgment of the Pecherskyy Court of 25 August 2004, together with the decisions of the Kyiv City Court of Appeal and the Supreme Court of 1 and 27 December 2004;
b. review of the case finally determined by the commercial courts on 22 October 2004 following an appeal of the Prosecutor General, who had not been a party to the proceedings;
c. failure of the Commercial Court of Kyiv and the Commercial Court of Appeal to take into account the findings contained in the final judgment of 25 August 2004 delivered as regards the same parties, facts and arguments;
d. conflicting approaches to the interpretation of domestic law by the commercial courts and the courts of general jurisdiction dealing with the applicant’s cases.
Thirdly, the applicant company submitted that the review proceedings before the Pecherskyy Court in February 2005 had not been fair. In particular, it alleged that the request for re-opening of the proceedings in view of newly-discovered circumstances had been lodged by a person who had not participated in the main proceedings and there had been no reason for re-opening of the case. It further alleged that the Pecherskyy Court had failed to respect the principle of equality of arms in the course of consideration of that request in that the applicant’s lawyers had not been timely informed of the hearing of 16 February 2005 or provided with a copy of the request for re-opening of the proceedings together with the documents in support of that request in order that they could have prepared for that hearing and to comment effectively on the merits of the request.
Fourthly, the applicant company complained that the proceedings before the Supreme Court in February-March 2005 had also been unfair, stating that the General Prosecutor’s appeal in cassation had been considered on the merits, although it had been lodged out of time. The applicant further alleged that its lawyers had not had an opportunity to submit their arguments at the hearing of 23 March 2005 before the Commercial Court of Kyiv, that journalists had not been allowed to attend that hearing, and that the judgment of 23 March 2005 lacked reasons.
The applicant company further complained under Articles 10, 11, and 14 of the Convention alleging that it had been a victim of persecutions by the authorities for political activities of its owners.
The applicant company complained that the limitations on its right of access to a court, as applied in the proceedings of February 2005 before the Pecherskyy Court, had not pursued the legitimate aims set out in Article 6 § 1 and, thus, had been contrary to Article 18 of the Convention.
The applicant company finally complained of a violation of Article 1 of Protocol No. 1 on account of the allegedly unlawful deprivation of its asset, 93.02% of the Kryvorizhstal’s share capital, and the authorities’ failure to reimburse it for the improvements it had made to that asset. The applicant company maintained that it had been deprived of its property because of its owners’ political opposition to the authorities.
In its submissions of 19 March 2008 the applicant company elaborated on its complaints under Articles 6, 10, 11, 13, 14 of the Convention and Article 1 of Protocol No. 1 and also raised new complaints under Article 6. In particular, it complained of the unfavourable outcome of its request for review of the resolution of the Pecherskyy Court of 17 February 2005 and of the failure of the authorities to inform it of the hearing of 21 July 2005 before the Higher Commercial Court and that it had been held in the absence of its lawyers.
QUESTIONS TO THE PARTIES
1. Did the applicant company have a fair hearing in the determination of its civil rights and obligations, in accordance with Article 6 § 1 of the Convention?
a. In particular, were the principles of the rule of law and legal certainty respected as regards the review and subsequent annulment of the decisions delivered in favour of the applicant company by the commercial courts and the courts of general jurisdiction in the cases concerning the privatisation of the Kryvorizhstal Enterprise (cf. Ponomaryov v. Ukraine, no. 3236/03, 3 April 2008, and Pravednaya v. Russia, no. 69529/01, judgment of 18 November 2004)?
b. Were these principles observed in that the dispute concerning the lawfulness of the privatisation of the Kryvorizhstal by the applicant company was being dealt with by the commercial courts and the courts of general jurisdiction?
c. Were the commercial courts which dealt with the applicant’s case independent and impartial, as required by Article 6 § 1 of the Convention?
2. Has the applicant company been deprived of its possessions in the public interest, in accordance with the conditions provided for by law and in accordance with the principles of international law, within the meaning of Article 1 of Protocol No. 1? Did that deprivation impose an excessive individual burden on the applicant (see Immobiliare Saffi v. Italy, [GC], no. 22774/93, § 59, ECHR 1999-V)?
[1]. About 608,000,000 euros (EUR).
[2]. About EUR 3,964,021,752.
[3]. About EUR 291.
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