The applicant, Ms Olga Ivanovna Sherstyuk, is a Ukrainian national who was born in 1965 and lives in the town of Popasnaya of the Lugansk region. The Ukrainian Government (“the Government”) were represented by their Agent, Mr Y. Zaytsev, of the Ministry of Justice of Ukraine.
The facts of the case, as submitted by the parties, may be summarised as follows.
In October 1988 the applicant opened a fixed-term deposit account in the USSR Savings Bank. Under the contract, the annual interest rate on the deposit was 3 %.
By a decision of 20 March 1991, the Verkhovna Rada (Parliament) of Ukraine declared the Ukrainian branches of the USSR Savings Bank being a property of the Ukrainian State. The operation of banks and banking activities was regulated by law (see Relevant domestic law, below).
Since 1992, Ukrainian economy experienced hyperinflation, with its peak in 1993.
On 30 June 1993 the regional branch of the Ukraine Savings Bank (hereinafter – “the Bank”) placed an announcement in the Lugansk Regional Council’s newspaper called “Nasha gazeta”. The announcement read as follows:
“The Savings Bank informs
As of 1 July this year the annual interest rate on fixed-term deposits and on special deposits for children is set at 220 per cent. No new formalities are required for previously opened fixed-term deposits and special deposits for children.”
According to the applicant, having read this announcement and having received confirmation in the local office of the Bank, the applicant decided, contrary to her initial intentions, not to withdraw her money deposited with the Bank.
In 1996 the Ukrainian authorities implemented a monetary reform intended to replace the former monetary unit, the karbovanets coupon, with a new currency, the Ukrainian hryvnia (українськa гривнa, UAH), at an exchange rate of 100,000 karbovanets coupons for 1 hryvnia.
According to the applicant, in June 2001, having difficulties in understanding the information written in her account statement records, she consulted an expert who, after having examined the above records, found out that since 1994 the annual interest rate on her deposit had been lower than 220%. According to the applicant the annual interest rate on her deposit was 194.7% in 1994, 86.8% in 1995, 29.9% in 1996, 13.7% in 1997, 6.9% in 1998, 7.3% in 1999, and 6.3% in 2000.
In July 2001 the applicant instituted proceedings in the Popasna District Court of the Lugansk Region against the Bank seeking compensation for damages caused by decreasing the annual interest rates on her deposit without informing her and without seeking her prior consent. She complained that the Bank fell short of its obligations to pay on her deposit the interests of 220% per year fixed in 1993 after publication of the announcement in the official newspaper of the regional council.
According to the applicant, during the hearing, the representative of the Bank, explained, among other things, that in accordance with the Bank’s Statute and instructions of 3 October 1980 and 8 July 1998, the Bank was not obliged to disseminate information about the applicable interest rates, but such information had always been available in branches of the Bank and the applicant could have consulted it there.
By its judgment of 25 December 2001, the court rejected the applicant’s claim as unsubstantiated, for the following reasons:
“...the defendant, having changed unilaterally the interest rates on the fixed-term deposit had acted in accordance with Article 41 of the Law of Ukraine “on Banks and Banking Activities” in the wording of 1991, under which the Savings Bank of Ukraine sets the interest rates on deposits within the maximum interest rates set by the National Bank of Ukraine.
At the same time, this Law does not foresee any other conditions for setting interest rates on deposits, including agreement of depositors.
Taking into account, that Laws ... have the highest legal force and are obligatory for implementation by all legal persons and citizens of Ukraine, the court considers that the defendant’s actions on unilateral changes of the interest rates on the fixed-term deposit of the applicant had been lawful, therefore the claims ... are unsubstantiated...”
The applicant appealed against this judgment to the Lugansk Regional Court of Appeal.
On 4 April 2002 the Lugansk Regional Court of Appeal upheld the judgment of the first instance court. In its decision the appellate court, having repeated the reasoning of the first-instance court, also noted that the applicant had deposited her money in 1988 with the interest rate of 3 per cent. Since 1 July 1993 the Bank had been changing the interest rate but the latter never went lower than the original rate of 3 per cent.
The applicant appealed in cassation.
On 23 June 2003 the panel of three judges of the Supreme Court of Ukraine rejected the applicant’s request for leave to appeal in cassation.
Article 41
“Everyone has the right to own, use and dispose of his or her property, and the results of his or her intellectual and creative activity...
No one shall be unlawfully deprived of the right of property. The right of private property is inviolable...”
Article 41. Interest rates of the Ukraine Savings Bank
“The Ukraine Savings Bank fixes the interest rates on the deposits of the population within the limits of the maximum interest rates, established by the National Bank.”