Communicated on 6 April 2018
FIRST SECTION
Application no. 2512/15
OTIAK CJSC
against Armenia
lodged on 18 December 2014
STATEMENT OF FACTS
The applicant, Otiak, a closed joint-stock company (hereafter “the applicant company”), was established in 1995 and has its registered office in Yerevan. It is represented before the Court by its founder and director, Mr M. Serobyan.
A. The circumstances of the case
The facts of the case, as submitted by the applicant company, may be summarised as follows.
On 1 November 2007 the Government issued Decree no. 1607-A declaring land and the buildings on that land belonging to the applicant company subject to expropriation for public needs.
On 5 May 2008 the applicant company and the Government concluded an agreement on the expropriation of the applicant company’s property and the Government’s compensation for it in the amount of 200,113,800 Armenian drams (AMD).
On 20 May 2008, following an oral demand by officials from the State Revenue Committee (SRC), the applicant company transferred AMD 29,002,000 and AMD 4,350,000 to the SRC as value-added tax (VAT) for the amount of compensation for the expropriation of its property.
On 27 June 2008 the applicant company transferred AMD 10,000,000 and AMD 500,000 to the SRC as partial payments for profit tax.
It appears that the applicant company refused demands of the SRC for payment of the remaining amount of profit tax on the grounds that, under the Law on the Expropriation of Property for the Needs of the State and Society (“the Expropriation Act”), the owner of expropriated property was not liable to pay taxes on the amount of compensation received.
In 2009 the SRC initiated administrative proceedings against the applicant company, seeking to oblige it to pay AMD 22,354,300 in profit tax.
On 11 December 2009 the Administrative Court rejected the SRC’s claim on the grounds that the applicant company was not liable to pay profit tax on the amount of compensation received for its expropriated property.
The SRC appealed against that judgment.
On 27 May 2010 the Court of Cassation, sitting as the final-instance court on the matter, dismissed the appeal lodged by the SRC.
On 30 September 2010, relying on the final judgment of 11 December 2009, the applicant company initiated civil proceedings against the SRC and the Government before the Kentron and Nork-Marash District Court of Yerevan, seeking to recover the AMD 33,352,200 that it had paid in VAT and the AMD 10,500,000 that it had paid in profit tax. It also sought to have civil fines imposed on the SRC and the Government for the unlawful levy of taxes and unjust enrichment, on the basis of Article 411 of the Civil Code.
On 17 March 2011 the Kentron and Nork-Marash District Court of Yerevan granted the applicant company’s claim and obliged the Government to pay the applicant company AMD 43,852,300, which included civil fines calculated from 5 May 2008 until the date the main award was paid in full.
The Government appealed against that judgment.
On 30 June 2011 the Civil Court of Appeal rejected the appeal.
The Government lodged an appeal on points of law.
On 23 March 2012 the Court of Cassation upheld the applicant company’s position that it was not liable to pay VAT and profit tax on the amount of compensation it had received for its expropriated property. Nevertheless, it decided to discontinue the case for lack of jurisdiction in relation to the subject matter, reasoning that the case was within the jurisdiction of the Administrative Court.
Relying on the decision of the Court of Cassation of 23 March 2012, on 4 June 2012 the applicant company initiated proceedings before the Administrative Court, seeking to recover the unlawfully levied taxes and requesting that civil fines be imposed.
On 20 June 2013 the Administrative Court granted the applicant company’s claim with respect to the recovery of the unlawfully levied taxes. As regards civil fines under Article 411 of the Civil Code, it discontinued the claim for lack of jurisdiction, reasoning that that claim was of a civil-law nature and thus within the jurisdiction of the courts of general jurisdiction.
The applicant company lodged an appeal against the judgment in relation to the part concerning the discontinuation of its claim for civil fines.
On 19 December 2013 the Administrative Court of Appeal upheld the contested judgment.
The applicant company filed an appeal on points of law.
On 18 June 2014 the Court of Cassation declared the appeal on points of law inadmissible for lack of merit.
B. Relevant domestic law and practice
1. The Civil Code (in force since 1999)
Article 411 provides that interest at a rate determined by the Central Bank may be calculated on the sum of assets in cases of unlawful retention; where there has been a refusal to return monetary assets belonging to another person; where such assets have been used after a delay in payment obligations; or in cases of unjustified acquisition or saving at the expense of assets belonging to another person.
2. The Code of Administrative Procedure (as amended on 7 January 2014)
In accordance with Article 11, when a case contains several interconnected claims, one of which is within the jurisdiction of the Administrative Court, while the other claims are within the jurisdiction of the courts of general jurisdiction, the case should be examined by the court that has jurisdiction over the main claim. The “main claim” is the one whose resolution predetermines the outcome of the subsidiary claims.
3. Decision of the Constitutional Court of 3 February 2009 (ՍԴՈ‑787)
In accordance with that decision, pursuant to the constitutional rights to an effective remedy and a fair trial, if the Administrative Court has jurisdiction over a main claim, then it should also examine the subsidiary claims of a civil-law nature which emanate from the main claim. The Constitutional Court reasoned that the practice of the Administrative Court in refusing to examine subsidiary claims of a civil nature emanating from a main claim within its jurisdiction amounted to imposing a disproportionate burden on individuals, as they were deprived of the possibility to resolve their interconnected claims within one judicial case, and therefore had to initiate separate proceedings for each claim.
4. Decision of the Council of Court Chairmen No. 123 (issued on 22 December 2008)
In accordance with that decision, when a judicial case contains several interconnected claims, the whole case should be examined by the court that has jurisdiction over the main claim. The “main claim” is the one whose resolution predetermines the outcome of the subsidiary claims.
COMPLAINT
The applicant company complains under Article 6 § 1 of the Convention that its right of access to a court was breached, as it was deprived of the opportunity to have some of its claims determined by the domestic courts.
QUESTION TO THE PARTIES
Was there a breach of the right of access to court, as guaranteed by Article 6 § 1 of the Convention, in respect of the applicant company’s civil claim under Article 411 of the Civil Code?
Full & Egal Universal Law Academy