LANCHAVA AND OTHERS v. GEORGIA
Inadmissible
Corneliu Bîrsan;Egbert Myjer;Ineta Ziemele;Ján Šikuta;Josep Casadevall;Kristina Pardalos;Nona Tsotsoria
1. The applicants are Georgian nationals. They were represented before the Court by Mr Simon Papuashvili, a lawyer practising in Tbilisi. 2. s, may be summarised as follows. 3. In 1991-92, the applicants, as members of a State-supported housing construction cooperative, paid various amounts of money in Soviet roubles, the then legal tender, to the Tbilisi municipality in exchange for the local authority’s undertaking to provide them, under privileged conditions, with newly built apartments. The payable amounts were calculated according to the prices prevailing on the Georgian real property market at the material time. The validity of that transaction was confirmed by a number of legal acts issued by the municipality during the same period. 4. Owing to financial crises which hit the country in the course of its transition from the old Soviet, State-controlled economy to a market one in the early 90s, the Tbilisi municipality failed to fulfil its contractual obligation. Thus, the construction of the relevant block of flats for the applicants never started. 5. The applicants’ case was not an isolated instance of non-fulfilment by the State of its contractual housing obligations. There were many other such housing construction cooperatives all over the country, which, despite having duly paid their contributions to the State, never received any dwellings in exchange. As disclosed by various legal acts contained in the case file, and notably by a Resolution of 9 October 1992 of the Government of Georgia, one of the major reasons for that civil liability of the State was a sudden and drastic depreciation of the Soviet rouble and a consequent rise in the prices of the relevant services and goods, which rendered the monetary contributions of the individual members of various housing cooperatives, such as the applicants, insufficient even for partial funding of house construction work. 6. In April 1993 the Georgian State withdrew the collapsed Soviet rouble from circulation, introducing instead a provisional currency, the socalled coupons, which then also suffered from hyper-inflation. In October 1995, the provisional currency was finally replaced by the Georgian lari, the current national legal tender. 7. On 4 December 2007 the applicants brought an action against the Ministry of Finance, requesting that the State fulfil its obligations under section 48 § 1 (g) of the Act of 5 March of 1998 on State Debt (“the Act on State Debt”) by paying them compensation for the undelivered apartments in an amount of more than 4 million euros. They explained that the amount claimed corresponded to the overall total value of similar apartments according to the current prices on the Georgian real property market. 8. In a judgment of 22 February 2008, the Tbilisi City Court dismissed the applicants’ action as manifestly ill-founded. At the outset, the court acknowledged that the State’s liability vis-à-vis the individual members of housing construction cooperatives constituted domestic public debt under section 48 § 1 (g) of the Act. The court also noted that the State had failed to develop a scheme for the settlement of that debt within the time-limit set by section 48 § 4 of the Act. 9. The City Court then recalled that on 15 November 2004 the Government of Georgia had established, on the basis of section 48 § 1 of the Act, an ad hoc ministerial Commission for the purpose of studying and drawing up recommendations for the problems related to the settlement of various forms of domestic public debt, including that owed to the individual members of housing construction cooperatives. However, that Commission was still in the process of working on the problems, without having submitted any specific recommendations to the Parliament and President of Georgia as yet. Consequently, in the absence of a clear legislative mechanism whereby the State should settle the debt, the court was not able to rule on the matter. Without such a mechanism it was not even possible, the City Court emphasised, to calculate amounts which were currently payable to the applicants as compensation for their old deposits. 10. On 11 July 2008 the Tbilisi Court of Appeal fully upheld the first instance court’s judgment of 22 February 2008. The appellate court reiterated that, in the absence of a legislative mechanism regulating the settlement of the relevant domestic public debt, there was no legal basis for the courts to entertain the applicants’ action for the time being. Since the repayment of that debt was intrinsically connected to its indexation and other complex financial calculations, the judiciary could not overstep the competence of the relevant ministerial Commission specifically created for that purpose. 11. On 14 January 2009 the Supreme Court of Georgia rejected the applicants’ cassation appeal as inadmissible, finally terminating the dispute. 12. On 5 March 1998 the Act on State Debt was enacted. Pursuant to its section 1 (b), domestic debt, which resulted from various types of Government liabilities, was represented by sums in fiat currency. 13. Pursuant to section 48 § 1 (g) of the Act on State Debt, the contractual obligations undertaken but not fulfilled by the State visàvis individual members of housing construction cooperatives were recognised, amongst other Government liabilities, as a form of domestic public debt. According to paragraph 4 of the same section, the Ministry of Finance was supposed to devise a mechanism for the repayment of that particular debt by 1 September 1998. 14. On 15 November 2004 the Prime Minister of Georgia issued Resolution no. 108, establishing an ad hoc Commission to address the problem of the settlement of the various forms of domestic public debt under section 48 § 1 of the Act. The Commission was composed of different Ministers and was initially supposed to submit specific recommendations for the resolution of the problem by 1 January 2009. Subsequently, that deadline was postponed several times. Pursuant to the Resolution as it currently stands, after having been amended for the last time on 1 December 2011, the Commission is expected to submit such recommendations by 1 January 2013.