CASE OF OLEYNIKOV v. RUSSIA
Remainder inadmissible;Violation of Article 6 - Right to a fair trial (Article 6 - Civil proceedings;Article 6-1 - Access to court);Pecuniary damage - claim dismissed
Dmitry Dedov;Erik Møse;Isabelle Berro-Lefèvre;Julia Laffranque;Linos-Alexandre Sicilianos;Mirjana Lazarova Trajkovska;Ksenija Turković
5. The applicant was born in 1946 and lives in Khabarovsk. 6. On 19 May 1997 the applicant lent the Khabarovsk Office of the Trade Counsellor of the Embassy of the Democratic People’s Republic of Korea (“the DPRK Trade Counsellor”) 1,500 United States dollars (USD). The money was to be repaid by 29 May 1997. A receipt of 19 May 1997 on the letterhead of the DPRK Trade Counsellor signed by Mr Chkhe Gym Cher reads as follows: “[This] receipt is given to the President of the private company Lord BV Oleynikov to the effect that the Khabarovsk Office of the Trade Counsellor of the DPRK Embassy has borrowed 1,500 (one thousand five hundred) US dollars converted into roubles. We undertake to repay the debt not later than 29 May [and] we pledge the Toyota Camry car, registration plate no. KhBB 1799 (ХББ 1799), engine no. 0073653, chassis no. 0062459, [together] with a complete set of documents for the car. In case of a failure to repay [the debt] within the indicated term, we shall pay 1% for each day of the delay.” 7. After the DPRK Trade Counsellor failed to repay the debt, in 19992000 the applicant sent several letters of claim which went unanswered. The applicant’s counsel also sent a letter of claim to the DPRK Trade Counsellor on 13 April 2001 and to the DPRK Embassy on 27 April 2001, which also went unanswered. 8. On 11 September 2001 the applicant’s counsel wrote to the Russian Ministry of External Affairs asking for assistance in settling the matter. 9. On 29 January 2002 the Ministry of External Affairs replied to the applicant that the DPRK Trade Counsellor was a constituent unit of the DPRK Embassy and, therefore, an organ of the DPRK which acted on its behalf. The DPRK Trade Counsellor thus enjoyed immunity from suit and immunity from attachment or execution in accordance with Article 435 of the 1964 Code of Civil Procedure. The Ministry of External Affairs advised the applicant that, should he decide to lodge a claim with a court, he would have to obtain consent to the examination of the case from a competent North Korean authority. 10. On 8 July 2002 the applicant wrote to the DPRK Embassy and asked for its consent to the examination of his claim against the DPRK Trade Counsellor by the domestic courts. The letter was received by the Embassy on 19 July 2002. It appears that the applicant received no reply. 11. On an unspecified date the applicant lodged a claim with the Supreme Court of Russia. On 21 February 2003 the Supreme Court returned the claim without examination on the grounds that it should have been lodged before a district court. 12. On 9 February 2004 the applicant lodged a claim against the DPRK with the Khabarovsk Industrialniy District Court. He sought repayment of the debt with interest. He claimed, furthermore, that Russia was responsible for the actions of foreign diplomats within its territory. 13. On 12 February 2004 the District Court returned the claim without consideration on the grounds that under Article 401 of the 2002 Code of Civil Procedure a claim against a foreign State could only be brought upon the consent of its competent authorities. The applicant appealed. 14. On 16 March 2004 the Khabarovsk Regional Court upheld the decision on appeal. The court held: “[The DPRK Trade Counsellor] is a subdivision of the trade representation of the DPRK in Russia the legal status of which is governed by the Annex to the Treaty on Trade and Navigation between the USSR and the DPRK of 22 June 1960. According to Article 2 of the Annex, the trade representation is an organ of the State (the DPRK) acting in its name. Therefore, taking into account the equality of States as a principle of international law, the trade representation as an organ of public authority of a sovereign State is entitled to judicial immunity as well as to immunity from measures of securing a suit and execution. The said immunities are based on State sovereignty, which does not allow a State to be subject to coercive measures of any kind. The principle of judicial immunity of a foreign state is enshrined in Article 401 § 1 of the Code of Civil Procedure, according to which lodging a claim in a court of the Russian Federation against a foreign State, the involvement thereof in court proceedings in the capacity of a defendant or of a third party, the seizure of property belonging to a foreign State and situated within the territory of the Russian Federation, taking other measures for securing of a suit, and levying execution upon such property by means of enforcement of judicial decisions, are allowed only upon the consent of the competent agencies of the State in question, unless otherwise provided by an international treaty of the Russian Federation or by a federal law. Therefore, [a] person may only lodge a claim against a foreign State upon the prior consent of the State. If [a] claim against a foreign State is not supported by ... documents confirming its consent to the examination of the case in court, [court] proceedings will not be instituted. As [Mr] V.B. Oleynikov failed to furnish [documents confirming] the consent of the [DPRK] to the examination of the dispute in court together with [his claim], the judge could not accept the claim because of the bar to [lodging such a claim before] a court. As the said bar is [not absolute], the judge returned the claim to [Mr] V.B. Oleynikov on valid grounds, having indicated how the circumstances that prevented the institution of the proceedings could be remedied. [Mr] V.B. Oleynikov’s arguments that the DPRK Embassy does not wish to reply to his and his counsel’s requests [and] is evading payment of the debt, on the basis of which [he submits that] it is for the court or the judge to request the DPRK’s consent to the examination of the case, may not be considered as grounds for setting aside the [decision of the District Court], as they contravene the provisions of the international treaty between the USSR and the DPRK of 22 June 1960 and Article 401 § 1 of the Code of Civil Procedure.” 15. Article 127 of the Civil Code refers to the Law on State Immunity, which has not been adopted to date. The question is thus resolved by the courts on the basis of the relevant Codes of Procedure, with reference to the provisions of various bilateral and multilateral treaties. 16. Article 435 of the 1964 Code of Civil Procedure in force until 1 February 2003, based on absolute immunity, provided, in so far as relevant: “[F]iling a suit against a foreign State, securing of a suit or levying execution upon the property of a foreign State situated in the USSR may only be allowed upon the consent of the competent agencies of the respective State.” 17. Article 401 § 1 of the 2002 Code of Civil Procedure in force from 1 February 2003, reinstated absolute immunity of a foreign State. It reads as follows: “Filing a suit against a foreign State in a court of the Russian Federation, the involvement thereof in court proceedings in the capacity of a defendant or of a third party, the seizure of property belonging to a foreign State and situated within the territory of the Russian Federation, taking other property measures for securing of a suit, and levying execution upon such property by means of enforcement of judicial decisions, shall only be allowed upon the consent of the competent agencies of the State in question, unless otherwise provided by an international treaty of the Russian Federation or by a federal law.” 18. Article 213(1) of the 1995 Code of Commercial Procedure in force until 1 September 2002, provided for absolute immunity: “Filing a suit in a commercial court against a foreign State, the involvement thereof in court proceedings in the capacity of a third party, the seizure of property belonging to a foreign State and situated within the territory of the Russian Federation, and taking against it other measures for securing a suit, and levying execution upon such property by means of enforcement of a decision of a commercial court, shall only be permitted with the consent of the competent agencies of the respective State, unless otherwise provided by federal laws or by international treaties of the Russian Federation.” 19. Article 251 of the 2002 Code of Commercial Procedure in force from 1 September 2002, endorsed restrictive immunity. It reads as follows: “1. A foreign State, acting in the capacity of a bearer of authority [emphasis added], shall enjoy judicial immunity with respect to a suit filed against it with a commercial court in the Russian Federation, its involvement in court proceedings in the capacity of a third party, the seizure of property belonging to a foreign State and situated on the territory of the Russian Federation, and the taking against it by the court of other measures of securing a suit and property interests. Levying execution upon such property by means of enforcement of a judicial act of a commercial court shall only be permitted with the consent of competent agencies of the respective State, unless otherwise provided by international treaty of the Russian Federation or by a federal law. 2. The judicial immunity of international organisations shall be determined by international treaty of the Russian Federation and by federal law. 3. A waiver of judicial immunity shall be effected according to the procedure provided for by the law of the foreign State or by the rules of the international organisation. In this instance, the commercial court shall consider the case according to the procedure established by the present Code”. 20. Article 15 of the Constitution provides, insofar as relevant: “4. The generally recognised principles and norms of international law and the international treaties of the Russian Federation shall be an integral part of its legal system. If an international treaty of the Russian Federation establishes other rules than those provided for by the law, the rules of the international treaty shall apply.” 21. Article 435 of the 1964 Code of Civil Procedure was examined by the Constitutional Court in its ruling of 2 November 2000. The claimant, Ms Kalashnikova, a former employee of the information service of the United States Embassy in Russia, was dismissed under Article 33 section 1(2) of the 1971 Labour Code of the Russian Federation (non-conformity of the employee with the post held due to insufficient qualification or state of health, preventing further fulfilment of the work). Following her dismissal she instituted court proceedings seeking reinstatement and damages. In a ruling of 27 March 2000 the court of first instance rejected the claim, having applied Article 435(1) of the 1964 Code of Civil Procedure, as the claimant had failed to present any evidence of the United States’ consent to submit to the jurisdiction of the court. The Moscow City Court upheld the ruling on appeal. In her complaint to the Constitutional Court, Ms Kalashnikova argued that Article 435 of the 1964 Code of Civil Procedure had violated her constitutional right to judicial defence. 22. The Constitutional Court noted that the right to engage in individual labour disputes was provided in Article 37(4) of the Constitution and the procedure for the examination of claims for reinstatement was governed by Chapter XIV of the Labour Code, while application of the provisions of the 1964 Code of Civil Procedure was of subsidiary nature, intended to fill in gaps in the procedural rules of labour legislation. It further observed that the purpose of Article 435(1) was to ensure State immunity in accordance with generally recognised principles and norms of international law and international treaties of the Russian Federation. 23. The Constitutional Court found that “when considering the case of [Ms] Kalashnikova, the courts of general jurisdiction did not pay attention to the fact that the employer – the Embassy of the United States as an agency of the accrediting State – applied the legislation of the Russian Federation ..., and without requesting necessary documents refrained from investigating the issue of whether such an application could be regarded as the United States’ waiver of jurisdictional immunity in this particular case”. On these grounds it reached the conclusion that: “the formalistic application of Article 435(1) of the 1964 Code of Civil Procedure by the courts of general jurisdiction, which refused to accept the claim of [Ms] Kalashnikova on the basis of this article, led to an inadmissible limitation of the claimant’s rights with regard to an individual labour dispute ... and thus to a violation of the right to judicial defence provided for in Article 46(1) of the Constitution of the Russian Federation”. 24. However, the Constitutional Court did not examine Ms Kalashnikova’s complaint on the merits. It found that her rights had not been violated by Article 435(1) of the 1964 Code of Civil Procedure, but rather by its application by the domestic courts, which fell outside its competence. At the same time, the Constitutional Court stated that the Article was to be applied henceforth “taking into account the legal position set forth by the Constitutional Court in the present ruling”. 25. The application of the State immunity rule in commercial proceedings was addressed by the Presidium of the Supreme Commercial Court in an Information Letter of 18 January 2001. By way of information letters the Supreme Commercial Court provides lower courts with instructions on the interpretation and application of domestic law. 26. The Information Letter firstly referred to a case where a Russian construction company had filed a claim against a foreign embassy for recovery of a debt arising under a contract concerning the construction of a hotel attached to the embassy in Moscow. The commercial court had granted the claim. However, the Supreme Commercial Court had set aside the decision and remitted the case for fresh consideration. The commercial court was instructed to review the issue of State immunity, taking into account that construction of the hotel was for the public, and non-commercial, activity of the foreign State in Russia, and was therefore instructed to consider termination of the proceedings under Article 213(1) of the 1995 Code of Commercial Procedure. 27. On the basis of its findings in the above case, the Presidium of the Supreme Commercial Court made the following general recommendation: “A commercial court shall terminate proceedings in a case concerning an investment dispute, the defendant in which is a foreign State acting in the capacity of a sovereign”. 28. The second case referred to in the Information Letter also concerned a foreign embassy and a Russian construction company involved in a dispute arising out of a construction contract. However, in this case the proceedings had been initiated by the embassy and the construction company had filed a counter-claim. The Court of Cassation had held that bringing a claim constituted an implied waiver of immunity and therefore that the embassy of a foreign State was not immune with respect to a counter-claim. 29. The recommendation of the Presidium of the Supreme Commercial Court based on the above case reads as follows: “A commercial court shall accept a claim in a commercial dispute, the defendant in which is a person entitled to international immunity”. 30. State immunity was touched upon in the Opinion on the Draft Federal Law on the Administration of State Foreign Financial Assets Inherited by the Russian Federation, sent by the President of the Russian Federation, B N Yeltsin, to the Chairman of the State Duma, G N Seleznev, and published in the Rossiyskaya Gazeta on 13 May 1998 (“the Opinion”). 31. With regard to certain provisions relating to State immunity which were included in the Draft Federal Law under discussion, the Opinion states that “foreign State property enjoys functional immunity”. The statement is further detailed as follows: “If a State uses its ownership for the purposes of ensuring its sovereignty or fulfilling State political functions, that is, as a subject of international law, for example, for the maintenance of diplomatic and consular representations, this property always enjoys immunity against the jurisdiction of the State of its location. However, if the State (through specially empowered agencies) takes part in property turnover or in commercial activity, then it is regarded as a foreign private person and its State ownership does not enjoy immunity. The turnover of such property is regulated by norms of international private law and by legislation of the country where the property is located, the foreign State with respect to the country of location of the property acting on the basis of equal rights with other participants of these relations – with foreign juridical and natural persons. This approach has been consolidated in the European Convention on State Immunity, 16 May 1972, which, in accordance with generally recognised international practice, the Russian Federation may regard as a codified digest of customary norms of international law.” 32. State immunity was also referred to in letter no. Pr-795 of 23 June 1999 sent by the President of the Russian Federation, B N Yeltsin, to the Chairman of the Federal Assembly, E S Stroev (“the Letter”). The Letter substantiates the rejection by the President of the Federal Law on the Administration of the Russian Federation’s Property Located Abroad. Paragraph 6 of the Letter states: “The Civil Code of the Russian Federation (Article 127) provides that the specific responsibilities of the Russian Federation and the subjects of the Russian Federation in relations regulated by civil legislation with the participation of foreign juridical persons, citizens and States are to be determined by the Law on the Immunity of the State and of its Property. Therefore, it is hardly legitimate to include Article 8 on the immunity of the Russian Federation’s property located abroad in the Federal Law. Moreover, it should be noted that the concept of absolute immunity of a foreign State and of its property was reflected in Article 8 of the Federal Law. This concept does not find recognition in either the legislation of the Russian Federation (Article 213, 1995 Code of Commercial Procedure of the Russian Federation, Articles 22 and 23, Federal Law on Production Sharing Agreements), or in international treaties of the Russian Federation (treaties on the encouragement and mutual protection of capital investments). It should be taken into consideration that in modern circumstances absolute immunity may not be realised in practice and its adoption in the legislation of the Russian Federation will only impede the development of civil law relations with State participation.” 33. Following the establishment of the foreign trade monopoly in the Soviet Union by the Decree on Nationalisation of Foreign Trade of 22 April 1918, the State, through the USSR Ministry of Foreign Trade and its predecessors, carried out and controlled foreign trade. It established the types of entities entitled to participate in foreign trade and set limits on their participation, such as the nature of transactions they could enter into, the goods they could trade and import and export volumes. Trade with foreign States was to be carried out by Trade Representations, which constituted agencies of the Ministry of Foreign Trade. 34. In the exercise of the foreign trade monopoly, the Soviet Union entered into numerous treaties on the legal status of Soviet Trade Representations in other States. Treaties concluded by the USSR with socialist States provided for the mutual establishment of Trade Representations, such as the following treaty concluded with the DPRK. 35. According to Article 13 of the Treaty on Trade and Navigation between the USSR and the DPRK of 22 June 1960, either party can open a trade representation in the capital of the other party. The legal status of the representation is governed by the Annex to the Treaty. 36. The Annex on the Legal Status of the USSR Trade Representation in the DPRK and the DPRK Trade Representation in the USSR contains four Articles. Article 1 provides that the Trade Representations would contribute to the development of trade between the two States. According to Article 2 the Trade Representation is a constituent part of the Embassy of its State. The trade representative and his/her deputies enjoy full diplomatic immunities and the premises of the Trade Representation enjoy extraterritoriality. The Trade Representation may open branches upon the parties’ agreement. 37. The Annex further provides: “The Trade Representation acts on behalf of its Government. The Government is only responsible for the foreign trade transactions concluded or guaranteed by the Trade Representation in the State of sojourn and signed by a competent person. Names of persons competent to perform legal acts on behalf of the Trade Representation, as well as the scope of the competence of each such person, shall be published in an official organ of the State of sojourn.” “The Trade Representation shall enjoy all immunities belonging to a sovereign State which relate to foreign trade, with the following exceptions agreed upon by the parties: (a) disputes arising out of foreign trade transactions concluded or guaranteed by the Trade Representation in accordance with Article 3 within the territory of the State of sojourn, in the absence of an arbitration agreement or an agreement [to submit to] a different jurisdiction, are subject to the jurisdiction of the courts of that State. At the same time, the courts cannot apply preliminary attachment measures; (b) enforcement of final judgments that have entered into force against the Trade Representation with regard to such disputes is only allowed in respect of goods and claims outstanding to the credit of the Trade Representation.” 38. The Treaty and the Annex remain in force for the Russian Federation. 39. The relevant provisions of the 1972 European Convention on State Immunity (“the Basle Convention”) read as follows: “1. Subject to the provisions of Article 5, a Contracting State cannot claim immunity from the jurisdiction of the courts of another Contracting State if the proceedings relate to an obligation of the State, which, by virtue of a contract, falls to be discharged in the territory of the State of the forum. 2. Paragraph 1 shall not apply: in the case of a contract concluded between States; if the parties to the contract have otherwise agreed in writing; if the State is party to a contract concluded on its territory and the obligation of the State is governed by its administrative law.” 40. Russia is not a party to the Basle Convention. 41. In 1979 the United Nations International Law Commission was given the task of codifying and gradually developing international law in matters of jurisdictional immunities of States and their property. In 1991 the International Law Commission adopted the Draft Articles on Jurisdictional Immunities of States and Their Property based on restrictive immunity, that is a distinction between acts of sovereign authority (acte jure imperii) and acts of a private law nature (acte jure gestionis). The Draft Articles that were used as the basis for the text adopted in 2004 dated back to 1991. The relevant part of the text then read as follows: “1. ... (c) “commercial transaction” means: (i) any commercial contract or transaction for the sale of goods or supply of services; (ii) any contract for a loan or other transaction of a financial nature, including any obligation of guarantee or of indemnity in respect of any such loan or transaction; (iii) any other contract or transaction of a commercial, industrial, trading or professional nature, but not including a contract of employment of persons. 2. In determining whether a contract or transaction is a “commercial transaction” under paragraph 1 (c), reference should be made primarily to the nature of the contract or transaction, but its purpose should also be taken into account if, in the practice of the State which is a party to it, that purpose is relevant to determining the non-commercial character of the contract or transaction. ...” “1. If a State engages in a commercial transaction with a foreign natural or juridical person and, by virtue of the applicable rules of private international law, differences relating to the commercial transaction fall within the jurisdiction of a court of another State, the State cannot invoke immunity from that jurisdiction in a proceeding arising out of that commercial transaction. 2. Paragraph 1 does not apply: (a) in the case of a commercial transaction between States; or (b) if the parties to the commercial transaction have expressly agreed otherwise. 3. The immunity from jurisdiction enjoyed by a State shall not be affected with regard to a proceeding which relates to a commercial transaction engaged in by a State enterprise or other entity established by the State which has an independent legal personality and is capable of: (a) suing or being sued; and (b) acquiring, owning or possessing and disposing of property, including property which the State has authorized it to operate or manage.” 42. In December 2004 the United Nations General Assembly adopted the Convention on Jurisdictional Immunities of States and their Property. It was opened for signature on 17 January 2005. The final versions of Article 2 § 1(c) and 2 and Article 10, as set out in the Convention, read as follows: “1. ... (c) “commercial transaction” means: (i) any commercial contract or transaction for the sale of goods or supply of services; (ii) any contract for a loan or other transaction of a financial nature, including any obligation of guarantee or of indemnity in respect of any such loan or transaction; (iii) any other contract or transaction of a commercial, industrial, trading or professional nature, but not including a contract of employment of persons. 2. In determining whether a contract or transaction is a “commercial transaction” under paragraph 1 (c), reference should be made primarily to the nature of the contract or transaction, but its purpose should also be taken into account if the parties to the contract or transaction have so agreed, or if, in the practice of the State of the forum, that purpose is relevant to determining the non-commercial character of the contract or transaction.” “1. If a State engages in a commercial transaction with a foreign natural or juridical person and, by virtue of the applicable rules of private international law, differences relating to the commercial transaction fall within the jurisdiction of a court of another State, the State cannot invoke immunity from that jurisdiction in a proceeding arising out of that commercial transaction. 2. Paragraph 1 does not apply: (a) in the case of a commercial transaction between States; or (b) if the parties to the commercial transaction have expressly agreed otherwise. 3. Where a State enterprise or other entity established by a State which has an independent legal personality and is capable of: (a) suing or being sued; and (b) acquiring, owning or possessing and disposing of property, including property which that State has authorized it to operate or manage, is involved in a proceeding which relates to a commercial transaction in which that entity is engaged, the immunity from jurisdiction enjoyed by that State shall not be affected.” 43. Russia signed the Convention on 1 December 2006. However, it has not ratified it yet.