CASE OF KNICK v. TURKEY
Remainder inadmissible;Violation of Article 1 of Protocol No. 1 - Protection of property (Article 1 para. 1 of Protocol No. 1 - Peaceful enjoyment of possessions);Just satisfaction reserved (Article 41 - Just satisfaction)
Jon Fridrik Kjølbro;Julia Laffranque;Nebojša Vučinić;Paul Lemmens;Stéphanie Mourou-Vikström;Ksenija Turković
5. The applicant was born in 1960 and lives in Bad Dürkheim, Germany. Through the German stock market, he purchased 81,529 Turkish and 737 German share certificates in Demirbank, which at the time was identified as the fifth largest private bank in Turkey. 6. By a decision dated 6 December 2000 (no. 123), the Banking Regulation and Supervision Board (Bankalar Düzenleme ve Denetleme Kurulu, hereinafter referred to as “the Board”) transferred the management and control of Demirbank to the Savings Deposit Insurance Fund (Tasarruf Mevduatı Sigorta Fonu – hereinafter “the Fund”), pursuant to section 14(3) of the Banking Activities Act (Law No. 4389). In its decision the Board held that the assets of Demirbank were insufficient to cover its liabilities and that the continuation of its activities would threaten the security and stability of the financial system. Accordingly, Demirbank’s management and control, and the privileges of its shareholders except for dividends, were transferred to the Fund. The Fund also confiscated all properties belonging to Demirbank. 7. On 31 January 2001 all of the bank’s equities were removed from its account at the Istanbul Stock Exchange (Istanbul Menkul Kıymetler Borsası – hereinafter “the Stock Exchange”) and transferred to the account of the Fund. Subsequently, on 20 September 2001 the Fund entered into an agreement with the HSBC bank and sold Demirbank to the latter for 350,000,000 United States dollars (USD). As a result, on 14 December 2001 Demirbank’s legal personality was extinguished and it was struck off the commercial register. 8. On 2 February 2001, the main shareholder of Demirbank, namely Cıngıllı Holding A.Ş., brought administrative proceedings against the Banking Regulation and Supervision Agency (Bankalar Düzenleme ve Denetleme Kurumu – hereinafter “the Agency”) before the Ankara Administrative Court, seeking a ruling setting aside the decision of 6 December 2000 to transfer Demirbank to the Fund. 9. The Ankara Administrative Court found that it lacked jurisdiction, and transferred the case to the Supreme Administrative Court. 10. In its submissions before the Supreme Administrative Court, the plaintiff claimed that its property rights had been violated. It also raised a plea of unconstitutionality under section 14 of the Banking Activities Act. The company further stated that prior to November 2000 Demirbank had never encountered major financial problems. It was pointed out that pursuant to section 14(2) of the Act, a bank with financial difficulties should first be given a warning to strengthen its financial structure and be allowed time to take specific measures. However, no such warning had been given in the instant case. Secondly, the Board had not claimed that Demirbank’s financial situation was so weak that it could not be strengthened even if specific measures were taken. Lastly, the company stated that following the transfer of the bank to the Fund, a General Assembly composed of the Fund’s officials had exonerated the former managers of Demirbank, holding that they had not been at fault in the incident leading to the bank’s transfer. 11. After examining the case file, on 3 June 2003 the Supreme Administrative Court dismissed the case. It held that the takeover of the bank by the Fund had been in accordance with section 14(3) of the Banking Activities Act. 12. On 18 December 2003 the Joint Administrative Chambers of the Supreme Administrative Court decided to quash the decision of 3 June 2003. In its judgment, the court held that prior to ordering the transfer of Demirbank to the Fund, the Board should have carried out an objective evaluation of the bank’s financial situation. The court also concluded that the Board should first have ordered Demirbank to take specific measures in accordance with section 14(2) of the Banking Activities Act before applying section 14(3) of the Act. 13. On 29 April 2004 a request for rectification lodged by the Agency was refused. 14. The case was remitted to the Supreme Administrative Court, which delivered its decision on 5 November 2004 applying the decision of the Joint Administrative Chambers of the Supreme Administrative Court. It accordingly set aside the Board’s decision of 6 December 2000 ordering the transfer of Demirbank to the Fund, holding that the takeover had been illegal. A further appeal and a request for rectification lodged by the Agency were rejected on 14 April 2005 and 15 December 2005 respectively. 15. On 20 September 2001 Ms S. Cıngıllıoğlu, the main shareholder of Cıngıllı Holding A.Ş., brought administrative proceedings against the Fund before the Ankara Administrative Court, seeking the annulment of the agreement to sell Demirbank to HSBC. 16. Given that the transfer of Demirbank to the Fund had been found to be illegal by the Joint Administrative Chambers of the Supreme Administrative Court, on 21 April 2004 the Ankara Administrative Court annulled the agreement entered into by the Fund and HSBC on 20 September 2001. An appeal and a request for rectification lodged by the Fund were rejected on 3 June 2005 and 24 February 2006 respectively. 17. Following the transfer of Demirbank to the Fund, the applicant applied to the Board claiming compensation. He did not receive any reply. 18. Subsequently, on an unspecified date in 2002, the applicant brought compensation proceedings against the Agency before the Supreme Administrative Court. He argued that he had lost his shares in Demirbank as a result of its transfer to the Fund and requested that the Board’s implied rejection of his compensation claim be reversed. 19. On 26 June 2003 the Supreme Administrative Court dismissed the applicant’s case. On the basis of a previous judgment it had rendered on 3 June 2003 (see paragraph 11 above), the court found that the takeover of the bank by the Fund had been in accordance with section 14(3) of the Banking Act. 20. The applicant lodged an appeal. 21. On 21 October 2004 the Joint Administrative Chambers of the Supreme Administrative Court decided to quash the judgment. It indicated that the previous judgment dated 3 June 2003, which had constituted the basis of the latter, had been quashed on 18 December 2003 (see paragraph 12 above). 22. A rectification request lodged by the Agency was rejected on 26 May 2005. 23. On 19 September 2005 the Supreme Administrative Court held that it lacked jurisdiction ratione materiae, as the applicant’s case merely concerned an implied rejection by the Board, which should be assessed by the Ankara Administrative Court. 24. On 29 December 2005 the Ankara Administrative Court dismissed the case as out of time. The court held that the applicant should have initiated proceedings within sixty days of the date on which Demirbank’s equities had been transferred to the Fund’s account at the Stock Exchange, namely 31 January 2001 (see paragraph 7 above). 25. The Supreme Administrative Court upheld the first-instance court’s judgment on 12 March 2007. 26. Following the two judgments in respect of the main shareholders (see paragraphs 8-16 above), on 10 and 11 May 2006 the applicant applied to the Agency and the Fund respectively, requesting the restitution of his rights as a shareholder. Relying on the restitutio in integrum principle, he claimed that the above-mentioned judgments of the Supreme Administrative Court should be enforced and his rights as a shareholder of Demirbank reinstated. 27. The Agency did not respond to the applicant’s request within the statutory time-limit. 28. On 15 June 2006 the Fund refused the applicant’s request, stating that restitution was legally and practically impossible. 29. Subsequently, the applicant initiated another set of proceedings before the Ankara Administrative Court, claiming that the Agency should enforce the above-mentioned judgments and that his rights as a shareholder of Demirbank should be reinstated. He argued that the bank still owned a certain amount of assets following its sale to HSBC and that restitution was therefore possible to a certain extent. He further claimed that in the event that his rights were not reinstated, he ought to be awarded compensation for the loss of his shares. 30. On 30 November 2007, the Ankara Administrative Court dismissed the case. It pointed out that under Articles 12 and 28 of the Code of Administrative Procedure only “those concerned” had the right to bring proceedings seeking to remedy the situation in full (tam yargı davası). It found that the applicant could not be considered as “concerned” as he had not been a party to the annulment proceedings (iptal davası) brought by the main shareholders. The court held that if the annulled administrative act had been regulatory (düzenleyici işlem), the concept of “concerned persons” would have applied to anyone who had been affected by it, whereas in the case of an individual act (bireysel işlem), it applied only to those who had been parties to the annulment proceedings. Holding that the annulled administrative acts were individual acts, the court considered that the applicant had not been “concerned” by the annulment. Lastly, it indicated that the decisions of the Agency and the Fund to reject the applicant’s requests had been lawful and that restitution would not be possible. 31. On 23 October 2008 the Ankara Regional Administrative Court upheld that judgment and on 26 February 2009 it rejected the applicant’s request for rectification.