SHESTAKOV v. RUSSIA
Inadmissible
Nicolas Bratza
The applicant, Valeriy Filippovich Shestakov, is a Russian national, who was born in 1945 and lives in Pskov, Russia. The facts of the case, as submitted by the parties, may be summarised as follows. In May 1998 the applicant placed 2,200 US dollars on a three-month deposit account in the Pskov branch of the SBS-Agro Bank («СБС-Агро»), then one of the largest banks in Russia. In August 1998, during a financial crisis and rapid currency devaluation, the applicant requested the Bank to refund the capital with interest. The Bank refused. On 8 October 1998, at the applicant's request, the Pskov City Court ordered the Bank to pay him the money owed together with interest. In its judgment, the Pskov City Court excluded from the time for calculating interest the period from 28 August 1998 to 20 September 1998, pursuant to decisions of the Russian Central Bank temporarily to halt all operations on private deposits due to a banking crisis. The applicant appealed that part of the decision, and requested the Pskov branch of the Bank to be named as respondent, and not its Moscow headquarters. The Pskov Regional Court rejected the applicant's appeal and confirmed the decision of the City Court on 17 November 1998. The decision was forwarded by the Pskov City Court for enforcement to the Moscow Bailiff's service, as the Bank's headquarters were situated in Moscow. The applicant complained about this decision to various judicial and executive authorities, including the Pskov City Court, the Pskov Regional Court, the Pskov Regional and General Prosecutor's Office and the Ministry of Justice. On 22 and 28 April 1999 the applicant was informed by the Bailiff Service of the Moscow City Department of Justice that enforcement proceedings (исполнительное производство) had been initiated by a bailiff in Moscow on 8 January 1999. The applicant did not receive a copy of that decision. The applicant was also informed that the bailiff in charge of the case had taken measures under the Law on Enforcement Procedure (Закон «Об исполнительном производстве»), including the freezing of the Bank's assets, funds and real estate. However, the Bank's funds were not sufficient to satisfy the numerous creditors who also had enforcement proceedings pending against Bank. The applicant was informed that he had to wait until the Bailiff Service had money on its account to enforce the decision. On 7 May 1999 the applicant was informed by the Bailiff Department of the Russian Ministry of Justice that, by the end of March 1999, over 2,000 enforcement proceedings had been initiated against the Bank, with an additional 70-80 being initiated every week. The applicant was informed that the bailiffs had seized the Bank's cars, real property and other assets. The Department also informed the applicant that it was monitoring the enforcement of the court decisions against the Bank, and that the applicant would be notified as soon as funds were available to pay him. On 13 August 1999 the applicant was informed by the Moscow Bailiff Service that the consolidated enforcement proceedings were continuing, and that the applicant's number in the list of creditors was 430. The letter further stated that the applicant would be informed of developments in his case. On 16 August and 15 September 1999 the Central Bank of Russia declared a moratorium until 17 November 1999 on execution of all creditors' demands against the Bank. On 16 November 1999 the management of the Bank was taken over temporarily by the “Agency on Restructuring of Lending Agencies” (ARKO), set up by the State in accordance with the Law on Restructuring of Lending Agencies (Закон «О реструктуризации кредитных организаций»). On 16 November 1999, in accordance with the same Law, a moratorium was f all creditors' demands against the Bank for a year. This period was prolonged by ARKO on 17 November 2000 for another six months, until 17 May 2001. On 3 July 2001 the Constitutional Court found unconstitutional the legislative provision that allowed ARKO unilaterally to extend the moratorium for another six months, and ruled that such decisions should be subject to judicial control. After the communication of the complaint to the Russian Government on 22 March 2000, the applicant continued his efforts to have the court decision enforced. In particular, he sued the Moscow City Department of Justice for compensation for pecuniary and non-pecuniary damage. His claim was rejected in the final instance by the Moscow City Court on 4 July 2001. He also filed a request with the Moscow Commercial Court (Арбитражный Суд г. Москвы) for the Bank to be declared bankrupt, but his request was rejected on 16 August 2000 for lack of standing under national law. It also appears that the applicant attempted to complain about the actions of the Bailiff Service. On 15 May 2000 and on 19 June 2000 the Presnenskiy District Court of Moscow adjourned consideration of the complaint, as the applicant failed to distinguish between a complaint and a claim for damages. On 30 October 2000 the same court rejected the applicant's request to have the requirement to pay a fee for bringing his civil claim against the Bailiff Service lifted. On 1 August 2000 the same court adjourned the applicant's complaint concerning the actions of ARKO on account of his failure to comply with formal requirements. In October 2001 the Meshchanskiy District Court of Moscow rejected the applicant's claim for compensation against the Central Bank for pecuniary and non-pecuniary damage On 8 May 2001 the Moscow Commercial Court approved the text of a tripartite friendly settlement involving the Association of the Bank's Creditors, the Bank and ARKO. The text of the friendly settlement was adopted at the general meeting of the Association of Creditors on 9 February 2001 by a majority of votes. The applicant, who had been invited to the meetings in November 2000 and February 2001, did not participate and it is not clear if he submitted his vote by post. According to the agreement, the applicant is entitled to the immediate refund in cash of 10 per cent of his deposit, and to two bonds of 1,000 USD each with maturity dates in 2007 and 2008. On 22 June 2001 the Appeal Chamber of the Moscow Commercial Court (апелляционная инстанция Арбитражного Суда г. Москвы по проверке законности и обоснованности решений арбитражных судов, не вступивших в законную силу), and on 11 August 2001 the Federal Commercial Court for the Moscow Region (Федеральный Арбитражный Суд Московского округа) confirmed the decision of 8 May 2001. In the same set of proceedings the courts reviewed the complaints of those creditors who were dissatisfied with various aspects of the friendly settlement. The courts found the settlement and the procedures leading to its conclusion to be in accordance with national legislation. In particular, the courts rejected the complaint that the moratorium, and later the friendly settlement, conflicted with the principles of compulsory execution of judgments and inviolability of property rights. The courts referred to the decision of the Russian Constitutional Court of 3 February 2000 on the constitutionality of a legislative provision allowing the Central Bank to declare a moratorium on the execution of a lending agency's debts. It noted that the aim of these provisions was to ensure a fair division of assets among all the creditors of a bank, which would not be possible if the “first-come-first-served” principle were to be applied. The courts also noted that the Law on Enforcement Procedure allowed closure of enforcement proceedings once a friendly settlement between the parties had been approved by a court. On 23 July 2001, following an order of the Basmanny District Court of Moscow, the Moscow Bailiff Service closed the consolidated enforcement proceedings on court decisions against the Bank. The applicant appealed against this order, and on 8 April 2002 the Basmanny District Court found the bailiff's actions lawful, as they were based on a previous court order. Throughout 2001 the applicant was informed by ARKO, the Bank and the Central Bank about the terms of the agreement. In December 2001 ARKO informed the applicant that over 97% of the total number of debtors had presented their claims and benefited from the terms of the agreement. The scheme would remain open until 1 April 2002, after which date the remaining liabilities would be deposited with a public notary. In an unrelated set of proceedings, the applicant complained that in 1997 his apartment was burgled. The burglars, G. and V., were convicted in December 1997, sentenced to prison terms and ordered to compensate the applicant for the value of the stolen items. These sums were not paid until October 1999, as the debtors were in prison and did not have any assets. The applicant applied to the Pskov City Court to have the amount adjusted to take account of inflation. The Pskov City Court rejected the claim on 6 May 1999. Its decision was confirmed by the Pskov Regional Court on 10 June 1999. On 17 March 2000 the Presidium of the Pskov Regional Court, acting upon a request for supervisory review lodged by the Pskov Regional Prosecutor, quashed the decisions of 6 May 1999 and 10 June 1999 and remitted the case for a new consideration. On 20 March 2001 the Pskov Regional Court awarded the applicant 6,700 roubles, to be paid jointly by G. and V. On 26 April and 7 May 2001 the Pskov Bailiff Service opened enforcement proceedings. On 17 July 2001 these proceedings were adjourned in respect of debtor G. as his location was unknown. The applicant did not appeal against this order. Article 9 of the Law on Enforcement Procedure provides that the bailiff shall issue within three days after receiving a court order an act initiating enforcement procedure (постановление о возбуждении исполнительного производства). Copies of the act are to be forwarded to the parties and to the court which made the order. Article 11 provides that the enforcement proceedings take place at the location of the debtor or his property. Article 13 provides that the bailiff shall enforce the order within two months from the date of receiving it. Article 90 provides that complaints about actions of the bailiff should be submitted to the district court for the area where the bailiff is located. The Law on Insolvency (bankruptcy) of Lending Agencies (Закон «О несостоятельности (банкротстве) кредитных организаций»), Article 26 thereof, provides that the Bank of Russia may introduce a three-month moratorium on execution of all debts of a bank/lending agency if there is a threat of bankruptcy. The Law on Restructuring of Lending Agencies gives details on the transfer of the management of a lending agency to the Agency on Restructuring of Lending Agencies (ARKO). Article 13 states that when ARKO takes over management of a bank/lending agency which is under threat of bankruptcy, a moratorium of 12 months is declared on execution of all its debts. ARKO may extend the moratorium for another six months. On 3 July 2001 the Constitutional Court adopted a decision (Постановление Конституционного Суда Российской Федерации № 10-П) by which it found unconstitutional the legislative provisions which allowed ARKO to extend a moratorium for six months. The Court noted that ARKO was not a public authority and that it enjoyed an unlimited discretion in this decision, which could interfere with the rights of creditors. It further noted that ARKO's actions should be subject to judicial control.