ECHR ruling of June 26, 2018 in the case of the Industrial and Financial Consortium "Investment and Metallurgical Union" (Industrial Financial Consortium Investment Metallurgical Union) v. Ukraine (application N 10640/05).
In 2005, the applicant company was assisted in the preparation of the application. Subsequently, the application was communicated to Ukraine.
The case was successfully considered an application against the annulment of the court decisions on the privatization of the state-owned enterprise that had entered into legal force after public statements by the President and the Prime Minister. The case was a violation of Article 6 of the Convention.
THE CIRCUMSTANCES OF THE CASE
In 2004, the applicant company, a Ukrainian joint venture, was founded by private companies owned or controlled by one of the leaders of the then party in power and the son-in-law of the then President of Ukraine, LD D. Kuchma. In the same year, the state sold the metallurgical plant OAO Krivorozhstal (hereinafter referred to as Krivorozhstal), one of the world's largest steelmaking enterprises, to the applicant company. The legality of the sale was appealed in several trials in the courts of general jurisdiction and in the arbitration courts. At the end of 2004, the proceedings in the courts of general jurisdiction were completed, and the courts of three instances recognized the sale of the plant as legal. Proceedings in arbitration courts ended with the Supreme Arbitration Court of Ukraine also ruled in favor of the applicant company, which was not appealed.
The legality and transparency of the sale of Krivorozhstal were also questioned by the political opposition during the 2004 presidential election. After a series of protests that began immediately after the second vote, the events that were widely known as the Orange Revolution, the newly elected President of Ukraine V.A. Yushchenko and Prime Minister Yu.V. Tymoshenko made a public statement that the privatization of Kryvorizhstal was illegal and that the enterprise would be returned to the state and subsequently sold again.
In 2005, the enacted decisions of the courts of general jurisdiction were canceled on the supervisory appeal of a private person who did not participate in the main proceedings. The case was sent for a new trial, and as a result, the proceedings on it were discontinued without a decision on the merits. Decisions taken by arbitration courts were canceled at the suggestion of the Prosecutor General of Ukraine, acting on behalf of the state. The proceedings were resumed and ended with a decision in which the privatization of the plant in question was declared illegal. Control over Krivorozhstal was returned to the state, which declared the contract with the applicant company null and void, returned the money paid under the contract and sold Krivorozhstal to the German representative office of Mittal Steel GmbH following a new competition and for a higher price. than the first time, the price.
QUESTIONS OF LAW
Regarding compliance with paragraph 1 of Article 6 of the Convention. (a) Proceedings in courts of law. Proceedings in the courts of general jurisdiction ended with a final decision by the Supreme Court of Ukraine and subsequently resumed on the supervisory appeal of a private person who did not participate in the main proceedings and, therefore, according to the legislation in force at that time in Ukraine did not have the right to file this complaint. The complaint was a “imaginary complaint” rather than a “deliberate action to correct justice deficiencies” and was based mainly on an argument that was already considered during the main hearing and was rejected. There were no “material and insuperable circumstances” in the case, justifying interference with the final and binding court decision in favor of the applicant company.
(b) Proceedings in arbitration courts. The decision of the Supreme Arbitration Court of Ukraine was not appealed within the statutory monthly period, therefore, the decisions of the arbitration courts acquired the property of res judicata. However, at the suggestion of the Prosecutor General of Ukraine, filed more than two months after the expiration of the specified period, the court decisions referred to in the case were reversed. The proceedings were resumed with a delay of four months, which is significantly less than the delays considered in the Ponomaryov v. Ukraine case (European Court of Justice of April 3, 2008, complaint No. 3236/03) and in the case of Ustimenko v. Ukraine (Ustimenko v. Ukraine) (European Court of Justice of October 29, 2015, complaint No. 32053/13). At the same time, this did not mean that, for the purpose of clause 1 of Article 6 of the Convention, the Supreme Court of Ukraine used unlimited discretionary limits to consider whether to resume the proceedings on the filed by the Prosecutor General of Ukraine in violation of the deadline.
Res judicata (lat.) - mandatory, availability of a court decision that has already entered into force on a specific issue.
First, the General Prosecutor’s Office of Ukraine was notified of the initial proceedings in the case at the beginning of July 2004, but none of its representatives was present at the hearings, despite the relevant ruling of the arbitral tribunal in this regard. Secondly, representatives of various state bodies that took part in the proceedings did not appeal against the decision of the Supreme Arbitration Court of Ukraine. In its submission, the Prosecutor General of Ukraine did not argue that the said representatives would not have had the opportunity to protect state interests or that there were problems between the state authorities in the field of information transfer, which would have led to the outcome of the case being not known to interested parties. Thirdly, no explanation was given as to why the submission was filed more than a month after the prosecutor general of Ukraine was allegedly notified of this decision. The Government did not argue that the Supreme Arbitration Court of Ukraine did not consider the above important aspects. Moreover, the submission did not contain information that would demonstrate that the lower courts made a judicial error of this kind, which led to improper administration of justice or to significant shortcomings in the course of the proceedings.
In conclusion, the statements of the president and the prime minister of the respondent state regarding the privatization of Kryvorizhstal and the subsequent unjustified decision of the Supreme Arbitration Court of Ukraine to review the case objectively questioned the independence and impartiality of the domestic arbitration courts.
As a result, the annulment of court decisions violated the principle of legal certainty and the contested court proceedings, considered on the whole and taking into account the statements of the President and the Prime Minister, did not meet the requirements of justice within the meaning of Article 6 § 1 of the Convention.
Regarding compliance with Article 1 of Protocol No. 1 to the Convention. Even though the appealed annulment of decisions of domestic courts did not directly lead to a change in the applicant company’s right to own (or actually own) Kryvorizhstal shares, it rightly interfered with the company’s right to the said assets by creating a legal uncertainty situation. In any case, unlike the applicants in the cases of Agrotechservice v. Ukraine (Agrotehservis v. Ukraine) (European Court of Justice of July 5, 2005, complaint No. 6208/00), Ivanova v. Ukraine (Ivanova v. Ukraine) (Resolution of the European Court of September 13, 2005, complaint No. 74104/01) and Timotiyevich v. Ukraine (Timotiyevich v. Ukraine) (Resolution of the European Court of November 8, 2005, complaint No. 63158/00), the applicant company was compensation for lost assets. Although she argued that the amount of compensation did not cover the amount of damage caused to the company, no evidence was provided to support this argument.
Moreover, not every procedural violation during the consideration of a case by the court would mean interference with the right to respect for property in violation of the “principle of legality”. In contrast to several exceptional cases in which the European Court found a violation of Article 1 of Protocol No. 1 to the Convention in connection with the “apparent interference” of the highest state authorities in the judicial proceedings, the present case was not related to this kind of interference (see comparisons The decision of the European Court in the case of Sovtransavto Holding v. Ukraine (Sovtransavto Holding v. Ukraine) dated September 27, 2001, complaint No. 48553/99, and the European Court ruling in the case of Agrocomplex v. Ukraine (Agrokompleks v.Ukraine) of October 6, 2011, complaint N 23465/03). Furthermore, no grounds were given for concluding that the proceedings complained of were so prejudiced that the outcome of the proceedings could no longer be taken by the parties or that the decisions made by the arbitration courts would contradict the “principle of legality”. The applicant company did not demonstrate that it was denied the opportunity to effectively protect its property rights during the retrial in arbitration courts. The applicant company did not dispute the Government’s argument that the interference complained of was carried out in the public interest, and it did not prove that the intervention was carried out with the aim of placing an excessive individual burden on the parties to the dispute.
The case did not violate the requirements of Article 1 of Protocol No. 1 to the Convention (adopted unanimously).
Claims for compensation for material damage were rejected.