On 21 December 2017 the ECtHR (Fifth Section) issued a decision in the case of Feldman and Slovyanskyy Bank v. Ukraine on application n. 42758/05.
Facts of the case
The case originated in an application by a Ukrainian national, Mr Borys Mordukhovych Feldman, and Slovyanskyy Commercial Joint-Stock Bank. The first applicant was the vice-president, founder and majority shareholder of the applicant bank.
In March 2000 the first applicant was arrested as part of criminal proceedings for tax evasion and abuse of office. After five months the National Bank of Ukraine put the applicant bank under temporary administration, which involved suspending the functions of some of the bank’s managers, and on 11 January 2001 it issued a resolution on the liquidation of the bank; by the same resolution, it approved the composition of a liquidation commission for the bank.
On 5 March 2001 the first applicant, who was in detention at the time, brought a claim before the Pechersky District Court of Kyiv, challenging the National Bank of Ukraine’s decision, maintaining that the impugned resolution was unlawful and that the bank was being liquidated owing to its failure to fulfil its financial obligations, whereas that failure had been caused by the National Bank of Ukraine itself and the tax authorities. In particular, the first applicant emphasised that after the resolution had been adopted, the applicant bank had not been able to protect its rights and interests on its own.
The claim was dismissed by the court and the decision was upheld by the Kyiv City Court of Appeal. Eventually, on 21 April 2005 the Supreme Court of Ukraine quashed the decisions and terminated the proceedings, considering that the claim was inadmissible as the applicant acted in the interests of the bank without being duly authorised.
The liquidation process of the applicant bank was completed on 30 November 2012. The bank was removed from the legal entities official database on 4 August 2014.
In the application, the applicant bank maintained that it had not had access to a court to challenge the National Bank of Ukraine’s resolution of 11 January 2001.
Judgment of the ECtHR – Article 6
The Court noted that where decisions taken by administrative authorities which determine civil rights and obligations do not themselves satisfy the requirements of Article 6 of the Convention, it is necessary that such decisions be subject to subsequent control by a “judicial body that has full jurisdiction” and that provides the guarantees of that Article (see Albert and Le Compte v. Belgium; Ortenberg v. Austria; and Bryan v. the United Kingdom).
Facts of the case
The Court noted that the measures introduced by the National Bank of Ukraine’s resolution of 11 January 2001 had a crucial impact on the applicant bank’s civil rights and obligations. In particular, the resolution led to the applicant bank’s licence for all its operations being revoked, the powers of the applicant bank’s statutory bodies were terminated, and the applicant bank itself was put into liquidation.
The Court observed that the proceedings before the civil courts initiated by the first applicant did not ultimately result in any judicial review of the impugned measures.
In fact, the Supreme Court of Ukraine terminated the proceedings, rejecting the claim as inadmissible after finding that the first applicant had not been empowered to apply on behalf of the applicant bank and that the claim fell under the jurisdiction of the commercial courts.
As to the assumption that the applicant bank had failed to apply to the commercial courts, which had been competent to examine the matter, the Court noted that at the relevant time the applicant bank was under the control of the liquidation commission: the composition of the commission, which mostly consisted of employees from regional departments of the National Bank of Ukraine, clearly indicated that there was a conflict of interests between the commission and the applicant bank, making it unfeasible for the latter to lodge a claim with the commercial court challenging the National Bank of Ukraine’s resolution.
Similarly, the Court noted that it could not be reasonably assumed that the first applicant could lodge such a claim with the commercial courts. Those courts dealt with claims submitted by legal entities and individuals could only institute commercial proceedings if they were acting in the capacity of private entrepreneurs, which was not the first applicant’s case; in any event, the position of the Supreme Court of Ukraine in its decision of 21 April 2005 suggested that the first applicant, as a shareholder, had not been entitled to institute proceedings before any courts, including the commercial courts.
For these reasons, the Court held that there has been a violation of Article 6 in respect of the applicant bank, since the decision of the administrative authority had not been and could not have been reviewed by a judicial body with full jurisdiction and that provides the guarantees of Article 6.