CASE OF JAFARLI AND OTHERS v. AZERBAIJAN
Violation of Art. 6-1;Violation of P1-1;Remainder inadmissible
Christos Rozakis;Dean Spielmann;George Nicolaou;Giorgio Malinverni;Khanlar Hajiyev;Sverre Erik Jebens
5. The applicants are Azerbaijani nationals who were born in 1951, 1956 and 1978 respectively and live in Nakhchivan, Azerbaijan. 6. The applicants were members of a cooperative (“Əlincə” Kooperativi – “the Cooperative”) incorporated in Nakhchivan. The Cooperative was created by a decision of a general meeting of 5 April 1989 and was initially composed of five members, including the first applicant. 7. The Cooperative's charter was officially registered on 19 September 1994 by the Ministry of Justice of the Nakhchivan Autonomous Republic. According to this charter, the Cooperative was to be liquidated, inter alia, if the number of its members dropped to less than three. 8. According to the minutes of the Cooperative's general meetings available in the case file, there were subsequently some changes in the membership of the Cooperative. Following the departure of four members of the Cooperative, on 18 December 1996 the second and third applicants became its new members and the total number of the members amounted to three. In all these documents the first applicant was mentioned as the chairman of the Cooperative. 9. Pursuant to a number of contracts concluded in the period from 1997 to 2000, the Cooperative supplied one of the units of the Chief Department of Border Troops of the Ministry of National Security (“the Department of Border Troops”) with various foodstuffs. 10. Although the Cooperative had fulfilled its contractual obligations, it was not fully paid. 11. On an unspecified date the Cooperative brought an action against the Department of Border Troops and Border Troops Unit No. 2006, asking for payment of an accrued debt in the amount of 290,167,334 old Azerbaijani manats (AZM) plus 10% interest, as stipulated by the contract. 12. On 9 July 2002 Local Economic Court No. 1 dismissed the claim against the Department of Border Troops. However, Local Economic Court No. 1 upheld the claim against Border Troops Unit No. 2006 and ordered the latter to pay AZM 319,183,067 in total to the Cooperative. This amount included the principal debt of AZM 290,167,334 and the penalty charge of AZM 29,016,733. 13. No appeals were lodged against that judgment and, pursuant to the domestic law, it became enforceable within one month of its delivery. 14. On 21 October 2002 Local Economic Court No. 1 issued a writ of execution of the judgment. However, Border Troops Unit No. 2006 refused to comply with the judgment and, despite the applicants' complaints to various authorities, it was not enforced. 15. In the meantime the Department of Border Troops was reorganised and renamed as the State Border Service. 16. The documents in the case file show that, on the basis of a request by the Cooperative dated 9 March 2004, signed by the first applicant, the Cooperative's activity as a taxpayer was ceased and this fact was recorded by the Ministry of Taxes. 17. On an unspecified date in 2005 the Cooperative brought an action against the State Border Service and the Ministry of Finance complaining about the non-enforcement of the judgment of 9 July 2002. The Cooperative claimed AZM 58,033,446 for lost earnings, AZM 649,900,896 for material damage and AZM 300,000,000 for non-pecuniary damage. 18. On 7 November 2005 Local Economic Court No. 1 dismissed the claim, finding that neither of the defendants could be held responsible for the non-enforcement of the judgment, because the amount awarded to the Cooperative by the judgment of 9 July 2002 had not been paid due to the refusal of the State Treasury to allocate state funds for this purpose. 19. On 6 February 2006 the Economic Court and on 16 June 2006 the Supreme Court upheld the first-instance court's judgment. 20. In the period from March to August 2006, the judgment of 9 July 2002 was fully executed and the total amount of AZM 319,183,067 was paid into the bank account that the Cooperative held at the Kapital Bank. 21. By a decision of 1 May 2007 the Economic Court of the Nakhchivan Autonomous Republic terminated the enforcement proceedings owing to the execution of the judgment of 9 July 2002. 22. The Law on Cooperation in the USSR of 26 May 1988 of the USSR provided that a cooperative was established on a voluntary basis. The number of members of a cooperative could not be less than three (Article 11). 23. The Law of 28 October 1992 on the temporary remaining in force of former USSR laws on the territory of the Republic of Azerbaijan and their application provided a list of former USSR laws which would remain in force in Azerbaijan until the relevant laws of the Republic of Azerbaijan were adopted. The Law on Cooperation in the USSR of 26 May 1988 appeared on this list. This Law ceased to apply on 12 October 2001. 24. The Civil Code of 1 September 2000 provides that a cooperative is a type of commercial company which is a voluntary union of individuals or legal entities established for the purpose of satisfying material and other needs of its members through consolidation of their material contributions (Article 109.1). A cooperative can be established by at least five members (Article 109-1.1). 25. Members of a cooperative, in essence, enjoy rights similar to those of founders or shareholders of other types of legal entities, including the right to participate in the management of the cooperative and to receive a share of its profits (Articles 109.2 and 109.4 in fine). The cooperative's property is divided among the members in accordance with its charter (Article 110). The cooperative's profits are distributed to the members in accordance with their shares, as well as the extent of their participation in the function of the cooperative, by way of contributing personal labour or otherwise (Article 110-2). 26. The supreme management body of a cooperative is the general meeting of members. Each member has one vote at the general meeting regardless of the size of his or her contribution to the cooperative's capital fund (Articles 111.1 and 111.5). 27. The executive bodies of a cooperative are a management board and/or a chairman. A cooperative's chairman may only be elected from among the cooperative's members. The chairman is elected for a specified term at the general meeting of members and has the right to represent the cooperative (Articles 111.1 and 111.10). A cooperative may be voluntarily reorganised or liquidated by a decision of its members' general meeting (Article 113.1). 28. Article 69.2 of the Code of Civil Procedure provides that legal entities can be represented before courts by their bodies, acting within the scope of powers conferred on them by law, regulations or constitutive documents of the legal entity, or by representatives acting on the basis of a power of attorney.