THIRD SECTION
DECISION
Applications nos. 3752/08 and 22723/09
Viktor Ivanovich SOLONSKIY against Russia
and Valentina Viktorovna PETROVA against Russia
The European Court of Human Rights (Third Section), sitting on 17 March 2020 as a Chamber composed of:
Paul Lemmens, President,
Paulo Pinto de Albuquerque,
Dmitry Dedov,
Alena Poláčková,
María Elósegui,
Gilberto Felici,
Lorraine Schembri Orland, judges,
and Milan Blaško, Section Registrar,
Having regard to the above applications lodged on 21 November 2007 and on 21 February 2009 respectively,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicants,
Having deliberated, decides as follows:
THE FACTS
1. The applicants are Russian nationals. Their personal details are set out in the appendix.
2. The Russian Government ("the Government") were represented initially by Mr G. Matyushkin, Representative of the Russian Federation to the European Court of Human Rights, and then by his successor in that office, Mr M. Galperin.The circumstances of the case
3. On various dates the applicants obtained binding judicial decisions ordering municipal institutions (the “debtor institutions”) to make certain payments in their favour. According to the information available to the Court, the judgments became final but remained unenforced.
4. The relevant details in respect of the judgments and the enforcement proceedings are listed in the appendix.Relevant domestic law and practiceCivil Code
5. Before 1 September 2014 (the date on which Law no. 99-FZ of 5 May 2014, amending the Civil Code, entered into force) the status of institutions was regulated by Articles 120 and 296 of the Civil Code of Russia. Since that date their status has been as set out in Articles 123.21-123.22 of the same code. The content of those provisions is summarised below.
6. Institutions (учреждения) are non-profit organisations created by their owners to perform managerial, socio-cultural or other functions of a non-commercial character.
7. Institutions have the right of “operational management” (оперативное управление) of property allocated to them by their owner. That means that they possess and use such property in accordance with the goals set for their activity and the purpose of the property. If not otherwise established by law, they may dispose of it with the approval of the property’s owner.
8. An institution may be created by an individual or a legal entity (a private institution), by a federal or regional authority (a State institution) or by a local authority (a municipal institution).
9. Article 120 § 2, as in force at the material time, provided that if an institution did not fulfil its obligations, it was liable to the extent of its funds. If it lacked sufficient funds, the owner of the property assigned to it incurred vicarious liability.
10. As of 8 May 2010 the Civil Code distinguishes between several types of State and municipal institution: autonomous (автономное), budget‑funded (бюджетное), or treasury (казенное).
11. A treasury institution meets its debts with the funds at its disposal. If those funds are insufficient, the owner of the property incurs vicarious liability for those debts.
12. Article 399 § 1 provides that, before claiming a debt from a person whose liability is vicarious as described above, a creditor must bring a claim before the principal debtor. If the principal debtor refuses to satisfy the claim or if no reply is received within a reasonable time, the claim may be brought against the person with vicarious liability.Budget Code
13. The Budget Code of the Russian Federation contains a list of entities “in receipt of budget funds” (получатели бюджетных средств).
14. Prior to 8 May 2010 the list included, in particular, budget-funded institutions. As of 8 May 2010 the list includes treasury institutions.
15. Under Article 161 of the Budget Code (as in force before 8 May 2010), a budget-funded institution was an organisation established by the Russian Federation, by a constituent subject of the Russian Federation or by a municipal entity to perform managerial, socio-cultural or other non-profit functions. Its activities were funded from the relevant budget. Organisations to which State or municipal property was allocated for operational management, except for treasury enterprises (казенные предприятия) and autonomous institutions, were considered as budget-funded institutions for the purposes of the Budget Code.Ruling no. 21 of 22 June 2006 adopted by the Plenary of the Supreme Commercial Court of Russia
16. Section 4 of Ruling no. 21 concerned certain aspects for consideration by the commercial courts in disputes involving State and municipal institutions as regards the application of Article 120 of the Civil Code of Russia. The Supreme Commercial Court gave the following explanations.
17. Under Article 399 of the Civil Code, a creditor can lodge a claim in respect of a vicariously liable debtor only after having done so in respect of the principal debtor. Only if the latter refuses to fulfil its obligations or if the creditor receives no reply within a reasonable time can the creditor lodge a claim in respect of the person with vicarious liability.
18. Under Article 120 of the Civil Code, the owner of the property allocated to an institution can be held vicariously liable only if the institution lacks funds. The Supreme Commercial Court further held that the owner could not be held liable without a judicial claim in respect of the principal debtor having been lodged before a court.Domestic case-law concerning vicarious liability
19. On 24 March 2011 the Moscow Regional Court, in case no. 33-6594, upheld a decision rendered by the Noginsk Town Court of 26 January 2011 to hold the Noginsk district authority vicariously liable for a debt (arrears of wages) owed by one of their municipal institutions, a women’s football club.
20. On 6 April 2011 the Commercial Court of Sverdlovsk Region, in case no. A60-42252/2010, granted a claim to hold the Kamensk-Uralskiy town authority vicariously liable for a debt incurred by one of its institutions, a housing maintenance office. On 20 May 2011 the same court, in case no. A60-5112/2011, applied, inter alia, Articles 120 and 399 of the Civil Code and ordered that the Tavdinskiy district municipal authority pay a debt incurred by one of its municipal institutions.
21. On 13 July 2010 the Moscow Regional Court, in case no. 33-18526, upheld a decision rendered by the Tverskoy District Court of Moscow of 13 May 2010 asserting that the Ministry for Economic Development, the public treasurer and the authority responsible for the funding of liquidation proceedings in respect of a federal institution (the Federal Property Fund), were vicariously liable for the institution’s debts.
22. From other examples of domestic case-law submitted by the Government it follows that the domestic courts satisfy the claims when an action is initially lodged against both an institution and the authority that owns the relevant property as a vicarious debtor[1].Compensation Act
23. Section 1(1) of the Compensation Act (Federal Law no. 68-FZ) of 30 April 2010 (in force as of 4 May 2010) deals with compensation for violations of the right to a trial within a reasonable time or of the right to the enforcement of a judgment within a reasonable time. On 14 December 2016 the Russian Parliament enacted Federal Law no. 450-FZ amending the Compensation Act. For a summary of the provisions of the new Law, see Shtolts and Others v. Russia (dec.) (nos. 77056/14 and 2 others, §§ 31‑41, 30 January 2018).
COMPLAINTS
24. The applicants complained under Article 6 of the Convention and Article 1 of Protocol No. 1 thereto of the non-enforcement of the judgments in their favour. Mr Solonskiy (application no. 3752/08) further complained, under Article 13 of the Convention, of the lack of a domestic remedy in that regard.
THE LAWJoinder of the applications
25. Given that the applications at hand concern similar facts and complaints and raise identical issues under the Convention, the Court decides to join them pursuant to Rule 42 § 1 of the Rules of Court.Alleged violation of Articles 6 and 13 of the Convention and Article 1 of Protocol No. 1
26. The applicants complained under Article 6 of the Convention and Article 1 of Protocol No. 1 thereto of the non-enforcement of the judgments in their favour. The Articles referred to, in so far as relevant, read as follows:
Article 6
“1. In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”
Article 1 of Protocol No. 1
“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.”
27. Mr Solonskiy (application no. 3752/08) complained, under Article 13 of the Convention, that he had had no effective remedy for his non-enforcement complaint. Article 13 reads as follows:
“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”The parties’ arguments
28. The Government submitted that under national law the owners of property assigned to institutions (that is, State and municipal authorities) were always vicariously liable for the debts of the relevant institutions if the institutions lacked funds (see “Relevant domestic law” above). In the present cases, however, the applicants had not lodged a claim seeking to hold the relevant authorities liable. The Government further argued that such a claim was an effective remedy against non-enforcement of domestic judgments in respect of institutions, and was widely used in Russia. They enclosed relevant examples of the national courts’ practice.
29. In application no. 3752/08 the Government argued that Mr Solonskiy was entitled to use the Compensation Act (see “Relevant domestic law” above). They submitted examples of domestic case-law on the matter.
30. In the case of Ms Petrova (application no. 22723/09) the Government confirmed that the debtor was a budget-funded institution. They submitted that the applicant’s action for compensation under the Compensation Act had been returned to her on 22 October 2010 on the grounds that the judgment did not concern recovery of the public budget funds. Without commenting further on the applicability of the Compensation Act to the present case, they submitted examples of domestic case-law showing that the national courts awarded compensation for delayed enforcement of judgments ordering various institutions and vicariously liable authorities to make certain payments.
31. The applicants reiterated their complaints without addressing the Government’s argument concerning the availability of the vicarious liability claim.The Court’s assessment
32. The Court reiterates that Article 13 of the Convention guarantees the availability at national level of a remedy to enforce the substance of the Convention rights and freedoms in whatever form they may happen to be secured in the domestic legal order. The effect of Article 13 is thus to require the provision of a domestic remedy to deal with the substance of an “arguable complaint” under the Convention and to grant appropriate relief before lodging an application with the Court (see Kudła v. Poland [GC], no. 30210/96, § 157, ECHR 2000‑XI, and Kurić and Others v. Slovenia [GC], no. 26828/06, § 369, ECHR 2012 (extracts)).
33. The rule of exhaustion of domestic remedies is set out in Article 35 of the Convention. That rule is based on the assumption, reflected in Article 13 of the Convention – with which it has close affinity – that there is an effective remedy available in respect of the alleged breach in the domestic system. The only remedies which Article 35 § 1 of the Convention requires to be exhausted are those that relate to the breaches alleged and at the same time are available and sufficient (see Vučković and Others v. Serbia (preliminary objection) [GC], nos. 17153/11 and 29 others, §§ 69‑77, 25 March 2014). It is incumbent on the Government claiming non-exhaustion to satisfy the Court that the remedy was an effective one available in theory and in practice at the relevant time, that is to say, that it was accessible, was one which was capable of providing redress in respect of the applicant’s complaints and offered reasonable prospects of success (see, mutatis mutandis, Selmouni v. France [GC], no. 25803/94, § 76, ECHR 1999‑V and Liseytseva and Maslov v. Russia, nos. 39483/05 and 40527/10, § 156, 9 October 2014).
34. In the present case, the Court observes that the Government did not contest the State’s responsibility for the debts under the domestic judgments in the applicants’ favour. Rather, they submitted that the applicants had failed to follow the procedure for bringing a claim for vicarious liability against the relevant authority (see paragraph 28 above). The Court notes that this objection as to non-exhaustion is closely linked with the question whether the remedy proposed by the Government complied with the requirements of Article 13 of the Convention.
35. The Court further observes that the present case is different from previous cases where it rejected a similar objection by the Government. In the case at hand the Government have provided a number of relevant examples from national case-law (see paragraphs 19-22 above) (compare with Yavorivskaya v. Russia (dec.), no. 34687/02, 13 May 2004). Thus the Court will examine the remedy concerned.
36. It follows from the available documents that the applicants had been informed that they were entitled to hold the authorities vicariously liable (see the appendix). They did not contest the availability of that remedy (see paragraph 31 above).
37. As to the effectiveness of the remedy, the Court notes that domestic law provided for a rather straightforward procedure for applying the vicarious liability provisions in cases similar to the present ones. It follows from the relevant provisions that the condition for holding an authority that owned the property assigned to an institution vicariously liable for the debts of that institution was a lack of funds on the part of the institution. Thus, any creditor who had unsuccessfully claimed the debt from the principal debtor institution could lodge a vicarious liability claim in respect of the owner of the property used by that institution (see paragraphs 5-18 above).
38. The Court further observes that in the examples of domestic practice provided by the Government, the claimants were not required to prove that an institution’s failure to fulfil an obligation or the non-enforcement of a judgment against an institution had been caused by the acts of the respective authority. In the given examples, the domestic courts applied, inter alia, Articles 120 and 399 of the Civil Code and granted claims against the institutions. In the event of a lack of funds, they held the owners of the property assigned to the institutions vicariously liable for debts incurred by the institutions stemming from various relationships. In cases concerning non-enforcement of a judicial decision against an institution, the national courts granted claims against the relevant municipal or federal authorities, having established the fact of non-enforcement, and that the authority was the owner of the property used by the institution (see paragraphs 19-22 above).
39. Consequently, the Court finds no reason to consider that a claim for vicarious liability would not have reasonable prospects of success in the applicants’ cases. In application no. 3752/08 the reason for non-enforcement was clearly lack of funds on the part of the debtor institution. In application no. 22723/09 it was established during enforcement proceedings that the debtor institution had ceased its activities, since its accounts had been closed and there was no known successor. In these circumstances, the Court considers that obtaining judicial decisions finding the authorities directly liable for the relevant debts could have facilitated payment of the amounts awarded in the applicants’ favour. Moreover, the Court considers that lodging a claim for vicarious liability would not have imposed an excessive burden on the applicants.
40. In view of the foregoing and in the absence of any arguments on behalf of the applicants, the Court concludes that the applicants were required to pursue a vicarious liability claim prior to lodging their applications before the Court.
41. It follows that the non-enforcement complaints under Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 must be rejected pursuant to Article 35 §§ 1 and 4 of the Convention for non-exhaustion of domestic remedies.
42. In the view of the above findings concerning the remedy proposed by the Government in the present case the Court considers that Mr Solonskiy’s complaint (application no. 3752/08) under Article 13 is manifestly ill-founded. It therefore must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
43. As regards the Government’s objection, which might be understood as a plea for non-exhaustion, concerning the use of the Compensation Act, the Court does not find it necessary to examine it, as the present applications are in any event inadmissible.
For these reasons, the Court, unanimously,
Decides to join the applications;
Declares the applications inadmissible.
Done in English and notified in writing on 9 April 2020.
Milan BlaškoPaul Lemmens
RegistrarPresident
APPENDIX
No.
Application no.
Lodged on
Applicant name
Year of Birth
Place of Residence
Debtor institution
Judgment by
Date of the judgment, its entry into force
The award
(in Russian roubles)
Further proceedings the applicant was involved in and other relevant details
1
3752/08
21/11/2007
Viktor Ivanovich SOLONSKIY
1948
Shakhty
Municipal institution “The Directorate of Municipal Economy” of Shakhty (МУ “Управление городского хозяйства” г. Шахты)
Justice of the Peace of the 9th Court Circuit of the Town of Shakhty of the Rostov Region
15/06/2006,
18/07/2006
To pay the applicant RUB 28,019
On 26/07/2007 the enforcement proceedings were terminated and the writ of execution was returned to the applicant as the debtor had been found to have no funds. The finance department of the town confirmed that the funding for the institution had not been authorised in the local budget for 2007.
On 11/09/2007 the bailiffs service informed the applicant, in particular, that if a debtor institution lacked funds, the owner of the property assigned to it was vicariously liable for the debt. However, for such liability to come into play, a judicial decision was required. The applicant was informed of his right to lodge a vicarious liability claim.
2
22723/09
21/02/2009
Valentina Viktorovna PETROVA
1955
St Petersburg
Municipal institution “Lomonosovskaya Central District Hospital” of the Lomonosovskiy District municipal authority (МУ “Ломоносовская центральная районная больница” Муниципального Образования “Ломоносовский район”)
Lomonosovskiy District Court of St Petersburg
27/04/2006,
06/06/2006
To pay the applicant RUB 70,000
On 30/12/2007 the enforcement proceedings were terminated and the writ of execution was returned to the applicant as the debtor institution could not be found at the address mentioned in the writ. There was another institution (also a hospital, but not a legal successor of the debtor) situated at the address.
On 07/07/2008 the bailiffs service informed the applicant that in 2006 the debtor institution had practically ceased its activities: its accounts had been closed, the senior accountant and the head doctor had been dismissed, and, following an order by the head of the municipal authority, the contract concerning the relevant property had been annulled.
In a letter to the applicant of 21/08/2008 the municipal authority contested its vicarious liability for the debt of the debtor institution. However, on 24/10/2008 the prosecutor’s office, citing the statute of the debtor institution, explained to the applicant that the founder of the institution, i.e. the Lomonosovskiy District municipal authority, was vicariously liable for the debts of its institution. The prosecutor suggested that the applicant apply for substitution of the defendant.
On 22/09/2010 the St Petersburg City Court dismissed the applicant’s application lodged in accordance with the Compensation Act on the grounds that the judgment in her favour did not order recovery from the public budget. There is no information on an appeal lodged against that decision.
[1] See the decision by the Moscow Regional Court of 2 November 2010, in case no 33‑21045, concerning a claim in respect of pecuniary and non-pecuniary damage against a recreational municipal institution and the Kolomna municipal authority, and the decision of 5 July 2011, in case no 33-10216, concerning a claim in respect of non‑pecuniary damage and for a certain refund as regards an educational institution and the Klimovsk municipal authority See the ruling by the 10th Commercial Court of Appeal of 16 June 2011, in case no A41-8359/11, concerning the financial obligations (payment of arrears for certain services) of a municipal educational institution and the relevant authority, as well as the ruling of the same court of 25 April 2011, in case no A41‑21965/10, concerning an electricity bill of a municipal institution and the relevant authority.
Full & Egal Universal Law Academy