Communicated on 16 March 2015
FOURTH SECTION
Applications nos 69997/10 and 74793/11
PANORAMA LTD against Bosnia and Herzegovina
and Đuro MILIČIĆ against Bosnia and Herzegovina
lodged on 23 November 2010 and 18 November 2011 respectively
STATEMENT OF FACTS
The applicant in the first case, Panorama Ltd, is a private company with headquarters in the Brčko District of Bosnia and Herzegovina. It is represented before the Court by Mr H. Bahor, its owner and director.
The applicant in the second case, Mr Đuro Miličić, is a citizen of Bosnia and Herzegovina, who was born in 1950 and lives in Orašje. He is represented before the Court by Ms S. Redžepović, a lawyer practising in Orašje.
A. The circumstances of the cases
The facts of the cases, as submitted by the applicants, may be summarised as follows.
1. The facts concerning Panorama Ltd
On 22 December 1998 the applicant company initiated proceedings before the Sarajevo Municipal Court (“the Municipal Court”) against the Federation of Bosnia and Herzegovina (an Entity of Bosnia and Herzegovina; “the FBH”) seeking compensation in respect of war damage (for goods seized in April 1992).
On 10 May 2007 the Municipal Court ordered the FBH to pay the applicant company 521,556.20 convertible marks (BAM; approximately 266,370 euros) in respect of pecuniary damage, together with default interest at the statutory rate from April 1992 and legal costs.
On 23 January 2009 the Sarajevo Cantonal Court partially accepted the debtor’s appeal and altered the Municipal Court’s judgment in the part concerning the default interest. It ordered that it should be calculated from February 1996. The rest of the judgment of 10 May 2007 was upheld and it became final on the same day.
On 10 June 2010 the Supreme Court of the Federation of Bosnia and Herzegovina dismissed an appeal by the debtor on points of law.
On 4 March 2009 the Municipal Court issued a writ of execution ordering that the enforcement be carried out on the debtor’s bank account. On 28 May 2009 the Municipal Court dismissed the debtor’s objection and upheld its writ of execution of 4 March 2009.
On 16 March 2010 the bank informed the Municipal Court that the applicant had received BAM 24,244.78 in respect of legal costs.
On 9 December 2011 the applicant received BAM 521,556.20 in respect of principal debt.
On 28 January 2013 the Municipal Court requested information from the bank about the status of the enforcement.
On 14 February 2013 the bank informed the Municipal Court that the writ of execution of 4 March 2009 was still listed among the charges on the debtor’s bank account.
On 15 March 2013 the Municipal Court asked the FBH Ministry of Finance and the FBH Office of the Attorney General about the reasons for the failure to enforce fully the final judgment of 10 May 2007.
In the meantime, the applicant company complained of the non-enforcement to the Constitutional Court of Bosnia and Herzegovina (“the Constitutional Court”). On 12 June 2013 the Constitutional Court found a violation of Article 1 of Protocol No. 1 to the Convention on account of the excessive length of the enforcement proceedings. It ordered the Municipal Court to conclude the enforcement proceedings without delay. The relevant part of the decision reads as follows:
“39. ... from the material in the case file it is evident that the impugned enforcement proceedings had not been concluded either with a final procedural decision rejecting the appellant’s request for the enforcement or with full enforcement. Moreover, they were not suspended for any of the reasons prescribed by the Enforcement Procedure Act 2003... Under the Enforcement Procedure Act 2003, the enforcement court’s duty does not end with the issuance of a writ of execution and its delivery to the competent authority for enforcement.
40. Therefore, the failure of the Municipal Court to...terminate the enforcement proceedings in one of the ways prescribed by [the Enforcement Procedure Act 2003]...without any justification based in the relevant law, has led to an unlawful interference with the appellant’s right to the peaceful enjoyment of his possessions under Article II/3.k) of the Constitution of Bosnia and Herzegovina and Article 1 of Protocol No. 1 to the European Convention”.
It would appear that neither the judgment of 10 May 2007 (the amount due in respect of default interest) nor the Constitutional Court’s decision of 12 June 2013 has been fully enforced until the present day.
2. The facts concerning Mr Miličić
On 5 June 2001 the applicant initiated proceedings before the Orašje Municipal Court against the FBH seeking compensation in respect of war damage (for destroyed property).
On 28 May 2007 the Orašje Municipal Court ordered the FBH to pay the applicant BAM 70,000 (approximately EUR 35,260) in respect of pecuniary damage together with default interest at the statutory rate from April 2003 and legal costs. That judgment became final on 7 November 2007.
On 14 November 2007 the applicant filed a request for the enforcement of the above judgment to the Municipal Court proposing that it be carried out on the debtor’s account with the UPI Bank Sarajevo (“the bank”).
On 14 December 2007 the Municipal Court issued a writ of execution.
On 13 February 2008 the Municipal Court dismissed the debtor’s objection and upheld its writ of execution of 14 December 2007.
On 26 October 2009 the applicant was issued government bonds in lieu of cash in respect of the principal debt in accordance with the provisions of the Domestic Debt Act 2004 (see “Relevant domestic law and practice” below).
In March 2010 he received BAM 2,477.25 in respect of legal costs.
On 10 December 2010 the bank informed the Municipal Court of the impossibility to continue with the enforcement. It submitted that it could not make any payments from the budgetary account without the approval from the FBH Ministry of Finance.
In the meantime, the applicant complained of non-enforcement to the Constitutional Court. On 8 June 2011 the Constitutional Court found a violation of Article 6 of the Convention and Article 1 of Protocol No.1 to the Convention in the applicant’s and three other cases on account of the excessive delay in the enforcement. It held that the enforcement scheme envisaged under the Domestic Debt Act 2004 (by way of government bonds; see “Relevant domestic law and practice” below) placed a disproportionate burden on the appellants. The FBH was ordered to enforce the final judgments in their favour without further delay.
On 4 November 2011 the FBH Ministry of Finance informed the applicant that, in accordance with the amendments of the Domestic Debt Act 2004, he would receive payment in cash for the nominal value of his government bonds which were not traded on the Stock Exchange, reduced by the amount paid in respect of interest (the bonds earned interest at an annual rate of 2,5%; see “Relevant domestic law and practice” below).
On 5 December 2011 the applicant received BAM 66,499.98 in respect of the principal debt. The applicant acknowledged that that payment fully settled the principal debt.
On 17 May 2012 the Municipal Court partially suspended the enforcement proceedings in view of the payments made in 2010 and 2011.
On 7 June 2012 the FBH Ministry of Finance informed the Municipal Court that the judgment of 28 May 2007 had been fully enforced as regards the principal debt and legal costs, and that there was no basis in law for the payment of default interest.
On 5 April 2013 the Municipal Court instructed the applicant to bring civil action for damages against the bank under the ordinary rules of tort law (section 175 of the Enforcement Procedure Act 2003; see “Relevant domestic law and practice” below), for the failure to comply with the writ of execution of 14 December 2007 and to fully enforce the judgment of 28 May 2007.
On 2 April 2014 the Municipal Court amended the writ of execution of 14 December 2007 as regards the means of enforcement in that it ordered the enforcement to be carried out on the debtor’s bank accounts in the Union Bank and the Sberbank.
B. Relevant domestic law and practice
1. Legislation on war damage
In 2001 the FBH created a general compensation scheme for war damage under the War Damage Act 2001 (Zakon o utvrđivanju i ostvarivanju potraživanja nastalih za vrijeme ratnog stanja i neposredne ratne opasnosti; Official Gazette of the Federation of Bosnia and Herzegovina ("OG FBH") no. 43/01; Uredba o načinu utvrđivanja i realiziranja javnog duga Federacije Bosne i Hercegovine nastalog za vrijeme ratnog stanja i neposredne ratne opasnosti, OG FBH no. 17/02; compare Čolić and Others v. Bosnia and Herzegovina, nos. 1218/07 et al., 10 November 2009, and Đurić and Others v. Bosnia and Herzegovina, nos. 79867/12 et al., 20 January 2015, concerning war damage in the Republika Srpska). The claims in respect of war damage were declared a part of public debt of the FBiH to which deafult interest does not apply (section 6 of the War Damage Act 2001).
The enforcement of final judgments awarding war damages has been suspedned since 16 October 1998 pursuant to the Postponement of Enforcement Act 1998 and the Temporary Postponement of Enforcement Act 2004 (Zakon o privremenoj obustavi od izvršenja potraživanja nastalih za vrijeme ratnog stanja i neposredne ratne opasnosti, OG FBH no. 39/98, and Zakon o privremenom odlaganju od izvršenja potraživanja na osnovu izvršnih odluka na teret budžeta Federacije Bosne i Hercegovine, OG FBH no. 9/04).
In accordance with the settlement plan envisaged under the Domestic Debt Act 2004 (Zakon o utvrđivanju i načinu izmirenja unutrašnjih obaveza Federacije Bosne i Hercegovine, OG FBH nos. 66/04, 49/05, 35/06, 31/08, 32/09, 65/09 and 42/11; see also Odluka o emisiji obveznica Federacije Bosne i Hercegovine po osnovu ratnih potraživanja fizičkih i pravih lica, OG FBH no. 47/09) principal debt in respect of war damages was to be paid in government bonds, which were to be amortised in ten annual instalments, would earn interest at an annual rate of 2,5% and could be traded on the Stock Exchange. Their maturity was 14 years. Legal costs were to be paid in cash. Default interest awarded by the final judgments was written off (see section 17(4) of the the Domestic Debt Act 2004).
Subsequently, following numerous decisions of the Constitutional Court finding such a legislative solution to be contrary to Article 6 and Article 1 of Protocol No. 1 to the Convention (see, for example, decisions nos. AP 703/04 of 23 March 2005, AP 1084/06 of 11 March 2008 and AP 1307/08 of 9 July 2010), the Domestic Debt Act 2004 underwent several amendments. The most important one, introduced in November 2011, envisages the enforcement of final judgments awarding war damages in cash. The provision concerning deafult interest, however, remained unchanged.
2. The case-law of the Constitutional Court on default interest in cases concerning war damages
In a decision concerning compensation for war damage in the Republika Srpska (no. AP 774/04 of 20 December 2005), the Constitutional Court considered that default interest awarded by the final judgments constituted "possessions" within the meaning of Article 1 of Protocol No. 1 to the Convention.
In a recent case, similar to the present ones, the Constitutional Court held the following as regards default interest (decision no. AP 3940/13 of 7 October 2014):
“28. The Constitutional Court notes that the debtor’s objections in the enforcement proceedings concerning the application of the War Damage Act 2001 and the Domestic Debt Act 2004 [on default interest], which the appellant sees as an obstacle to the full enforcement of the final judgment [in his favour], were already examined and rejected as ill-founded by the Municipal Court. The banks were ordered to continue with the enforcement ...”
3. Enforcement Procedure Act 2003
Section 175 of the Enforcement Procedure Act 2003 (Zakon o izvršnom postupku, OG FBH nos. 32/03, 52/03, 33/06, 39/06 and 39/09) provides that a bank is liable, under the ordinary rules of tort law, for damage caused by its failure to comply with a writ of execution.
COMPLAINT
The applicants complain of the domestic authorities’ failure to enforce fully the final judgments in their favour. They rely on Article 6 and Article 1 of Protocol No. 1 to the Convention.
QUESTION TO THE PARTIES
Has there been a violation of Article 6 of the Convention and Article 1 of Protocol No. 1 to the Convention arising from the non-enforcement of the Sarajevo Municipal Court’s final judgment of 10 May 2007 and the Orašje Municipal Court’s final judgment of 28 May 2007 in the applicants’ favour (see, for example, Milisavljević v. Bosnia and Herzegovina, no. 7435/04, 3 March 2009, and Đukić v. Bosnia and Herzegovina, no. 4543/09, 19 June 2012)?
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