CASE OF COOPERATIVA AGRICOLA SLOBOZIA-HANESEI v. MOLDOVA

1. The case originated in an application (no. 39745/02) against the Republic of Moldova lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by Cooperativa Agricola Slobozia-Hanesei (“the applicant”), a company registered in Moldova, on 23 October 2002.
2. The applicant was represented by Mr G. Botezat, a lawyer practising in Ştefan Vodă. The Moldovan Government (“the Government”) were represented by their Agent, Mr V. Pârlog.
3. The applicant complained that the failure to enforce the judgment of 26 April 2002 violated its right to have its civil rights determined by a court guaranteed by Article 6 of the Convention and its right to peaceful enjoyment of its possessions guaranteed by Article 1 of Protocol No. 1 to the Convention.
4. The application was allocated to the Fourth Section of the Court. On 24 September 2004 a Chamber of that Section decided to communicate the application to the Government. Under the provisions of Article 29 § 3 of the Convention, it decided to examine the merits of the application at the same time as its admissibility.
5. The applicant and the Government each filed observations on the admissibility and merits of the case (Rule 59 § 1).
I. THE CIRCUMSTANCES OF THE CASE
6. The applicant, Agrarian Cooperative “ Slobozia Hanesei ”, is a Moldovan registered company. It is represented before the Court by Mr G. Botezat, a lawyer practising in Ştefan Vodă.
7. The facts of the case, as submitted by the parties, may be summarised as follows.
8. According to the statute of the State- owned company “ Moldtranselectro ” (“M.”), as modified on 7 November 2000, the company is empowered to consolidate the debts accumulated in the energy sector of Moldova and is responsible both for lodging claims against entities indebted to the former (State) energy companies and for paying the debts that those companies owed to third persons. This is regulated by Law no. 336 on the restructuring of the debt of energy sector companies (see paragraph 1 3 below). In a letter dated 26 February 2002 the National Agency for Energy Regulation (NAER) stated, inter alia, that in accordance with Law no. 336-XIV (“Law no. 336”, see paragraph 13 below ) M. had acquired all debts and claims of legal persons in respect of Red Centru, a State-owned energy company which was privatised after 1999.
9. The applicant initiated court proceedings against M. and SA Red Centru as a third party. It claimed that SA Red Centru owed it 23,557 Moldovan lei ( MDL ) since 1999 and that its debts had become the debts of M. by virtue of Law no. 336. On 26 April 2002 the Chişinău Economic Court adopted a judgment by which M. was ordered to pay the applicant MDL 23,557 ( 1,943 euros ( EUR ) at the time). The court found that, in accordance with Article 6 of Law no. 336 both the debts of SA Red Centru and the debts owed to it had been transferred to M., as confirmed by an act of verification dated 8 February 2000. No appeal was lodged and the judgment became enforceable on 12 May 2002.
10. The applicant obtained an enforcement warrant which the Bailiff did not enforce. On 27 May 2002 it wrote to the Decision Enforcement Department of the Ministry of Justice requesting the execution of the judgment and the seizure of its debtor's property. On 1 September 2002 it wrote to “the Government” requesting the latter to take measures to execute the judgment. The applicant received no answer to any of these requests.
11. The judgment of 2 6 April 2002 has not been enforced to date. On 26 October 2006 the Parliament adopted the Law concerning the improvement of the economic-financial situation of the State Company “ Moldtranselectro ” by annulling certain obligations (no. 311-XVI). The law annulled a number of penalties resulting from delays in payments by M. towards the State budget.
12. The relevant provisions of domestic law have been set out in this Court's judgment in the case of Prodan v. Moldova ( no. 49806/99, ECHR 2004 ‑ III (extracts), § 31).
13. In addition, the relevant provisions of the Law on the restructuring of the debt of energy sector companies no. 336-XIV read as follows:
The following companies ... [RED Centru ] ... shall be privatised without their debts older than 60 days owed to or claimable against third parties ...
Pending the [privatisation] of energy sector companies, the following debts shall be frozen:
2) of [list of energy sector companies] owed to the State company “ Moldtranselectro ”;
Debts older than 60 days at the moment of [privatisation] of [private] companies owed to the energy sector companies which are to be privatised shall become debts owed to the State company “ Moldtranselectro ”.
1) shall become the legal successor:
b) in the person of the State Enterprise" Moldtranselectro" - of credit indebtedness of the electricity sector enterprises undergoing privatisation more than 60 days overdue as of the date of signing contracts for the sale of the majority stake in their shares, except for arrears of wages, contributions (payments) to the state social insurance fund and the debt written off pursuant to Article 4, paragraph 1);
... 3) shall formulate proposals identifying the sources of financing the difference between the debts owed to'Moldtranselectro'and accumulated by it in accordance with Article 5 of the present law and of paragraph 1 b) of the present Article. ”
14. The applicant complained that the failure to enforce the final judgment of 26 April 2002 had violated its rights guaranteed under Article 6 § 1 and Article 1 of Protocol No. 1 to the Convention.
Article 6 § 1 of the Convention, in so far as relevant, reads as follows:
“1. In the determination of his civil rights and obligations ... everyone is entitled to a fair hearing ... within a reasonable time by a tribunal ....”
Article 1 of Protocol No. 1 reads as follows:
“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.”
I. THE GOVERNMENT'S PRELIMINARY OBJECTION
15. The Government submitted that the applicant was itself responsible for the non-enforcement of the judgment. In particular, they claimed that, following two unsuccessful attempts to enforce the judgment, a court had decided to return the enforcement warrant to the applicant without enforcement due to the debtor's lack of assets. However, the applicant did not re-submit the warrant during the following year as it was entitled to do by law.
16. The applicant submitted that its debtor M. was a State company, as confirmed by its statute, and that the State should be held responsible for its debts.
17. The Court observes that it would appear from its statute and Law no. 336 mentioned above that M., while enjoying a certain degree of legal and economic independence from the State, has assumed some of the latter's functions. In particular, it was responsible, at the relevant time, for claiming the debts owed by third parties to privatised energy sector companies and for paying, with the means so acquired, the debts owed by those privatised companies to third parties. It was thus an instrument employed by the Government in the privatisation of the State's energy sector and in settling any subsequent claims with third parties. In addition, Law no. 336 expressly stated that the Government, through the State company M., had become the legal successor of the debts of energy sector companies owed to third parties. The applicant had claimed such a debt from a privatised energy sector company (see paragraph 9 above).
18. Moreover, the Government had to identify additional sources of funding, should the sums accumulated from debts owed to privatised companies prove insufficient to pay the debts taken over by M. by virtue of Law no. 336 (see paragraph 13 above). In addition, further measures aimed at improving M.'s financial situation by annulling its penalties were taken in 2006 (see paragraph 11 above). Accordingly, the Court considers that the State has a significant control over M.'s assets, increasing them by entrusting M. with the right to exercise claims against third parties or providing additional funding and annulling its penalties, as well as giving third parties the right to direct their claims against M.
19. In view of the delegation of some State functions to M. (see paragraph 17 above) and of the significant control over M.'s assets (see paragraph 1 8 above), the Court considers that the State is to be held responsible for any debts incurred by M. (see, mutatis mutandis, Mykhaylenky and Others v. Ukraine, nos. 35091/02, 35196/02, 35201/02, 35204/02, 35945/02, 35949/02, 35953/02, 36800/02, 38296/02 and 42814/02, § § 41-46, ECHR 2004 ‑ XII ). Hence, the enforcement warrant in favour of the applicant may be considered as having been issued against the State itself.
20. The Court recalls that “ a person who has obtained an enforceable judgment against the State as a result of successful litigation cannot be required to resort to enforcement proceedings in order to have it executed (see Koltsov v. Russia, no. 41304/02, § 16, 24 February 2005; Petrushko v. Russia, no. 36494/02, § 18, 24 February 2005; and Metaxas v. Greece, no. 8415/02, § 19, 27 May 2004). It follows that the Government's objection based on the failure of the applicant to re-submit the enforcement warrant cannot be accepted since the State had to ensure its enforcement when it was first submitted, if need be from its own funds.
21. In view of the above, the Court concludes that the application cannot be declared inadmissible for non-exhaustion of domestic remedies. Accordingly the Government's objection must be dismissed.
22. The Court considers that the applicant's complaints under Article 6 § 1 and Article 1 of Protocol No. 1 to the Convention raise questions of fact and law which are sufficiently serious that their determination should depend on an examination of the merits, and no other grounds for declaring them inadmissible have been established. The Court therefore declares these complaints admissible. In accordance with its decision to apply Article 29 § 3 of the Convention (see paragraph 4 above), the Court will immediately consider the merits of these complaints.
II. ALLEGED VIOLATION OF ARTICLE 6 § 1 AND ARTICLE 1 OF PROTOCOL NO. 1 TO THE CONVENTION
23. The applicant complained that the non- enforcement to-date of the judgment in its favour had violated its right under Article 6 § 1 of the Convention to have its case examined “within a reasonable time”, since examination of a case does not end with the adoption of a judgment but must also include the period of its enforcement.
24. The applicant also complained that that non-enforcement had violated its right to property guaranteed by Article 1 of Protocol No. 1 to the Convention and had caused it considerable pecuniary and non-pecuniary damage.
25. The Government submitted that the authorities had taken all reasonable steps to ensure enforcement and could not be held liable for the debtor's lack of assets.
26. The Court refers to its finding (see paragraph 19 above) that the State is to be held responsible for the debts of M. It also recalls that it is not open to a State authority to cite lack of funds as an excuse for not honouring a judgment. Admittedly, a delay in the execution of a judgment may be justified in particular circumstances. However, it may not be such as to impair the essence of the right protected under Article 6 § 1 of the Convention (see Immobiliare Saffi v. Italy [GC], no. 22774/93, § 74, ECHR 1999-V). In the instant case, the applicant should not have been prevented from benefiting from the success of its litigation.
27. The issues raised under Article 6 § 1 and Article 1 of Protocol No. 1 to the Convention are identical to those found to give rise to violations of those Articles in Prodan v. Moldova (cited above, §§ 56 and 62) and Sîrbu and Others v. Moldova ( nos. 73562/01, 73565/01, 73712/01, 73744/01, 73972/01 and 73973/01, § 40, 15 June 2004 ). There is no reason to depart from those findings in the present case.
28. There has, accordingly, been a violation of Article 6 § 1 and Article 1 of Protocol No. 1 to the Convention.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
29. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
30. In its initial application, the applicant claimed the payment of MDL 23,557 representing the award which had not been enforced. It also claimed EUR 50,000 in compensation for non-pecuniary damage.
31. The Court notes that the applicant submitted its observations on the merits of the case and its just satisfaction claims outside the time-limit set. It finds that the applicant's lawyer's explanations for this delay are unpersuasive, namely that the lawyer understood that he had to come for a hearing in Strasbourg and, since he had been away and could not arrive in time, he did not contact the Registry or take any other action in this regard. The Court decides not to award any compensation for any non-pecuniary damage caused.
32. However, in view of its finding that the authorities have not taken the necessary steps to ensure the enforcement of the judgment in the applicant's favour and that the judgment has still not been enforced, the Court finds that the applicant is still entitled to recover the judgment debt awarded in the domestic proceedings ( EUR 1,943).
33. The applicant did not make any claim for costs and expenses.
34. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Declares the application admissible;