BESPALOV v. UKRAINE
Inadmissible
Karel Jungwiert;Margarita Tsatsa-Nikolovska;Mark Villiger;Peer Lorenzen;Rait Maruste;Snejana Botoucharova;Volodymyr Butkevych
The applicant, Mr Yuriy Borysovych Bespalov, is a Ukrainian national who was born in 1951 and lives in Kyiv. The Ukrainian Government (“the Government”) were represented by their Agent, Mr Y. Zaytsev. In 1995 the applicant entered into a civil contract, agreeing to solicit clients for A.N., a private company. Following expiration of the contract in January 1998, the Company was to pay the applicant a certain percentage of the revenue brought by the clients referred by him. Additionally, under the contract the Company was obliged to cover the applicant’s travel and accommodation expenses, and, in the event the Company would protract the payment, to pay default interest. By way of determining the method of calculating the default interest, the contract referred to a statute, which, in fact, did not exist. At the material time there existed, instead a Cabinet of Ministers regulation concerning calculation of the default interest, which was replaced by a statute in 1996. In May 1996 the applicant rented an apartment in Kyiv from Mr K. (a private person). The lease agreement was not registered with the authorities and the parties settled the payments in cash. In 1996 the applicant solicited for the Company a contract with Z.E.M., a commercial enterprise, which transferred the contractual payment directly to the Company’s Russian partner in Russian rubbles. The Russian partner transferred a certain payment back to the Company in karbovantsi (a transitional currency of Ukraine in circulation at the material time). Later that year a new Ukrainian currency (hryvnya) was introduced. On 30 April 1998, following expiration of the applicant’s contract with the Company, the parties co-signed an agreement on completion of the contract (акт прийняття-передачі), in which the Company acknowledged that the applicant had referred to it a certain list of clients, including Z.E.M., in pursuance of the contract of 1995, and fixed the amount of his remuneration in the United States dollars, to be converted into the hryvnya currency at the time of settlement. By December 1998 the Company had paid the applicant only a fraction of the payment due. On 2 December 1998 the applicant instituted civil proceedings against the Company, seeking various payments. In particular, he claimed the balance of remuneration under the agreement of 30 April 1998 and default interest allegedly accrued on this payment pursuant the contract. In the course of the ensuing proceedings, the applicant recalculated the amount of the compensation claimed on some ten occasions, taking account for the lapse of time, modifications of applicable financial and banking regulations and exchange rates. He further maintained that he had a labour relationship with the Company and sought salary arrears and various compensations based on labour law. The Company lodged a counter-claim, maintaining that Z.E.M. had defaulted on its payment, hence causing significant damages, which should be covered by the applicant, as he had solicited a contract with Z.E.M. On 11 December 1998 the Radyansky District Court of Kyiv (“the District Court”; Радянський районний суд м. Києва) disjoined the applicant’s claims based on labour law from his civil ones. There is no information on the outcome of the labour limb of the proceedings. As to the civil limb, the case was re-examined by the courts several times. On 7 April 1999 the District Court allowed the applicant’s claim for payment of commission balance and default interest. The court found that, having signed the agreement of 30 April 1998, the Company had undertaken a lawful obligation to settle the payment. The court further dismissed the counterclaim as unsubstantiated. The Company appealed in cassation, referring, inter alia, to numerous inconsistencies between the agreement of 30 April 1998, the contract of 1995, applicable legal norms and the Company’s financial and other documents and arguing that the agreement as such was not final and could not serve as a source of a civil law obligation. It further disputed the method of calculation employed by the applicant. On 2 June 1999 the Kyiv City Court (“the City Court”; Київський міський суд) quashed this judgment and remitted the case for a fresh consideration, instructing the District Court to explore further whether, in light of all the evidence adduced, the Company could be obliged to pay the remuneration as fixed in the agreement of 30 April 1998. In summer 1999 the applicant amended his statement of claim, additionally seeking compensation of his rental expenses under the lease agreement with Mr K. On 20 December 1999 the court ordered an auditor’s assessment of the financial documents submitted by the parties and Z.E.M., to clarify various inconsistencies between them. By the end of April 2000 the assessment was completed. On 28 July 2000 the District Court awarded the applicant commission balance in respect of all clients, listed in the agreement of 30 April 1998, except for Z.E.M. The court found that the applicant’s contract with the Company made him ineligible to a commission in respect of a non-paying client. The court further found that the applicant could not claim default interest, since the relevant contractual language lacked requisite clarity and the Company could not claim damages on account of Z.E.M.’s default, since the applicant had not been responsible for it. Lastly, the court dismissed the applicant’s claim for rental expenses, noting that the lease agreement had not been registered with the authorities as required by law and no documentary evidence of the rental expenses having in fact been incurred was available. The applicant appealed in cassation. On 1 October 2000 the City Court quashed the judgment to the extent that the applicant’s claims had been dismissed and remitted the case for a fresh consideration in this regard. The court instructed the District Court, in particular, to determine whether the contractual language making the applicant’s remuneration conditional on the receipt by the Company of payment from the clients could be deemed fair under applicable law. On 4 April 2001 the District Court dismissed the remainder of the applicant’s claims. In particular, the court noted that the applicant had wilfully accepted a contractual term conditioning his remuneration on the receipt of payment from clients and that he had not brought an express claim seeking to annul this provision. In other regards, the court essentially relied on the reasoning adduced in its judgment of 28 July 2000. The applicant appealed in cassation. In his cassation appeal he emphasized, inter alia, that Z.E.M. had transferred the payment to the Company’s Russian partner and that the Company itself had never attempted to institute judicial proceedings against Z.E.M. to collect the alleged debt. He maintained that the signing of the agreement of 30 April 1998 constituted sufficient basis for payment of the commission. On 20 June 2001 the City Court allowed the applicant’s cassation appeal and remitted the case for a fresh consideration, in particular, having found unpersuasive the District Court’s analysis as to the fairness and lawfulness of the conditions concerning the remuneration, in particular, in view that the Company had never claimed Z.E.M.’s debt by way of judicial proceedings. On 24 September 2001 the District Court found that the contractual provision making the applicant responsible for the clients’ non-payment significantly undermined his lawful interests and, consequently, awarded the applicant compensation on account of having solicited a contract with Z.E.M. The court further found it unfair to make the applicant responsible for his landlord’s failure to register the lease and ruled that the applicant’s claim for rental expenses was sufficiently substantiated by witness testimonies and other evidence. The Company appealed pursuant a newly introduced appeal procedure. On 22 November 2001 the City Court quashed this judgment, having remitted the case for a fresh consideration. In particular, the court instructed the District Court to give further regard to certain inconsistencies between various documents and witness testimonies and to determine to what extent the parties’ dispute concerning the default interest could be covered by the new statute of 1996. The applicant lodged a cassation appeal against this decision with the Supreme Court. On 22 February 2002 the Supreme Court rejected the applicant’s request for leave to appeal in cassation. On 13 September 2002 the District Court awarded various payments to the applicant. In particular, the court attached weight to the fact that Z.E.M. had transferred the payment to the Company’s Russian partner. It further found that, although the parties had mistakenly referred in the contract to a non-existing statute in determining the method of calculation of default interest, the subsequent relevant legislation could be applied in the present case. Lastly, it found that the applicant could not be held responsible for his landlord’s failure to register the lease agreement with the authorities, especially since the relevant legal rules had also changed after the lease had been signed. The Company appealed. On 15 November 2002 the City Court reversed the judgment. Dismissing the applicant’s claims, it gave weight to the fact that the Company itself had never received Z.E.M.’s payment. If further ruled that the calculation of the default interest had to be governed by the regulations in place at the time, when the contract had been concluded, which gave the applicant no entitlement to the payment claimed, and that the failure of the parties to the lease agreement to register the lease, coupled with lack of documentary evidence of settling the payments, made it impossible to award the claimed reimbursement. The applicant appealed in cassation before the Supreme Court. On 28 May 2003 the panel of twenty judges of the Supreme Court heard the merits of the case and, having disagreed with both previous judgments (of 13 September and 15 November 2002), remitted the case for a fresh consideration. In particular, the Supreme Court found that the City Court had unfairly disregarded the fact that Z.E.M. had made the payment to the Company’s Russian partner and that the District Court had incorrectly calculated the final award due to the applicant, taking into account various currency exchange issues. On 3 February 2004 the District Court allowed the applicant’s claims in part. It found him entitled to the commission on account of having solicited a contract with Z.E.M. and calculated the amount due in hryvnya based on the dollar award previewed by the agreement of 30 April 1998. It further awarded the applicant rental expenses, but dismissed his claims for default interest as lacking proper basis on either statutory or contractual provisions. Both parties appealed. On 5 April 2004 the City Court amended the judgment, having dismissed the applicant’s claims for reimbursement of rental expenses. The court further diminished the amount of the commission due to the applicant, having taken into account the amount of Z.E.M.’s payment in Russian rubbles to the Company’s partner, the amount of payment in karbovantsi received by the Company in return, and a respective hryvnya rate. The applicant appealed in cassation. On 28 September 2004 the Supreme Court rejected the applicant’s request for leave to appeal in cassation. Subsequently, the applicant unsuccessfully sought to re-open the proceedings and have his claims reconsidered.