THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
“Section 10 of the [Conversion Procedure] Act provides that the procedure for calculating the interest accrued on the Russian promissory notes and the procedure for servicing the [internal] debt would be set out in a special federal law, which has not yet been enacted. In this connection, actual payments in [Russian] roubles under the promissory notes – as provided in the [Conversion Procedure] Act – cannot be made and the determination of the value of the [‘promissory rouble’] would be of no practical significance since its application has not yet been defined by the legislator.
...
Once the legislation on the procedure for calculating the interest and the debt-servicing procedure has been adopted, the Ministry of Finance will make the necessary arrangements for the conversion of USSR securities... into promissory notes and the servicing of them; it will also launch an open tender for selection of the conversion agent ...”
“By virtue of the constitutional principle of separation of powers, the court may not, in civil proceedings, require the Government of the Russian Federation to enact a specific legal act if the law does not explicitly set out the duty of the Government to adopt appropriate regulation; the claim may not be accepted for examination by the court.”
II. RELEVANT DOMESTIC LAW AND PRACTICE
“1. To confirm succession of the Government of the Russian Federation in respect of obligations of the former USSR to Russian Federation citizens arising out of the bonds of the 1982 State internal premium loan.
2. Starting from 20 February 1992, to discontinue sale and purchase of bonds of that loan and holding of prize draws.
3. To issue the 1992 Russian internal premium loan.
...
6. To give Russian Federation citizens who are holders of bonds of the 1982 State internal premium loan the right to voluntary exchange of the bonds against State securities, including 1992 Russian internal premium loan bonds, shares in the Savings Bank of the Russian Federation, and also to credit the proceeds from sale of bonds to deposits open in the Savings Bank of the Russian Federation, from 1 October 1992...”
16. On 10 May 1995 the Savings Protection Act (no. 73-FZ, ФЗ «О восстановлении и защите сбережений граждан Российской Федерации») was enacted. The State guaranteed the protection of Russian citizens’ savings, including their investments in State securities issued by the USSR and RSFSR before 1 January 1992 (section 1). Guaranteed savings were recognised as part of the internal State debt of the Russian Federation secured with the entirety of the assets available at the disposal of the Government of Russia (sections 2 and 3). Soviet securities were to be converted into special promissory notes of the Russian Federation with a special promissory value (sections 5 and 7). Separate laws were to be enacted to determine the procedure for converting Soviet securities into Russian promissory notes and to determine their current value (section 12).
“The claims raised by Mr and Ms K. fall outside the courts’ competence; a court may not encroach on the competence of the executive body by requiring it to perform actions or to issue regulations which are within the competence of that body. The court may only ... assess the compliance of the Government regulations with Russian federal legislation. Besides, district courts have no competence over such claims. Pursuant to Article 220 § 1 of the Code of Civil Procedure, a court shall discontinue the proceedings if the claim may not be examined and determined in civil proceedings.”
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
A. Admissibility
1. Compatibility ratione temporis
2. Compatibility ratione materiae
3. Compatibility ratione personae
4. Exhaustion of domestic remedies
5. Conclusion as to the admissibility of the application
B. Merits
1. Arguments by the parties
2. The Court’s assessment
II. APPLICATION OF ARTICLE 41 OF THE CONVENTION
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
A. Pecuniary damage
B. Non-pecuniary damage
C. Costs and expenses
D. Default interest
FOR THESE REASONS, THE COURT UNANIMOUSLY
(a) reserves the said question;
(b) invites the Government and the applicant to submit, within six months of the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, their written observations on the matter and, in particular, to notify the Court of any agreement that they may reach;
(c) reserves the further procedure and delegates to the President of the Chamber the power to fix the same if need be;
(a) that the respondent State is to pay the applicant, within three months of the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, EUR 1,800 (one thousand eight hundred euros) in respect of non-pecuniary damage, plus any tax that may be chargeable, to be converted into Russian roubles at the rate applicable on the date of settlement;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points.
Done in English, and notified in writing on 2 December 2010, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
André Wampach Christos Rozakis
Deputy
Registrar President
In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the concurring opinion of Judge Malinverni is annexed to this judgment.
C.L.R.
A.M.W.
CONCURRING OPINION OF JUDGE MALINVERNI
(Translation)
In the present case I joined the rest of my colleagues in finding a violation of Article 1 of Protocol No. 1. However, I have considerable difficulty in subscribing to the reasoning which led the Court to that conclusion.
In paragraph 46 of the judgment, the Court points out that the present case could be considered either in terms of interference with the applicant’s right to the peaceful enjoyment of his possessions or in terms of the State’s positive obligations, given that “the boundaries between the State’s positive and negative obligations under Article 1 of Protocol No. 1 do not lend themselves to precise definition”.
One can only agree with this statement. However, I am of the view that, when faced with a choice between these two approaches, the Court must opt for whichever it considers more appropriate, and then adhere to its choice.
The judgment does not do this, however. In paragraph 47 already, it states that “[the] situation may well be examined in terms of a hindrance to the effective exercise of the right protected by Article 1 of Protocol No. 1 or in terms of a failure to secure the implementation of that right”.
Paragraphs 48 to 50 favour the interference approach, as they examine whether the conditions of lawfulness, pursuance of a legitimate aim and proportionality were met.
Paragraph 51, meanwhile, sees the Court revert to the positive obligations approach, stating that “[i]n the context of the present case, those principles required the Russian State to fulfil in good time, in an appropriate and consistent manner, the legislative promises it had made in respect of claims arising out of the 1982 bonds”. The same applies to paragraphs 52 to 54.
I find this shifting between one approach and another unsatisfactory. In my view, the present case should have been examined solely in terms of the State’s positive obligation to enact legislation. As the judgment itself states, “although the debt arising out of the bonds had been recognised by the Russian State in a series of legislative acts”, it was “the absence of implementing regulations” which made “redemption of the bonds impossible” (paragraph 45).
The Russian Supreme Court, moreover, did not err in refusing to examine the applicant’s claim on the ground that “[b]y virtue of the constitutional principle of separation of powers, the court may not, in civil proceedings, require the Government of the Russian Federation to enact a specific legal act...” (paragraph 12).
