The change of management and the transfer of shares to the Guarantee Fund by the Government constitutes a violation of the company’s property
Yaşar Holding A.Ş. v. Turkey 04-04-2017 (no. 48642/07)
Right to property. Management and transfer of shares by decision of the Council of State. A limited liability company under Turkish law denounced the transfer of private bank management that consisted its key shareholder to the Deposit Guarantee Fund, as well as the transfer of the Bank’s shares to that fund following a decision by the Council of States. Referring to Article 1 of Protocol 1, the applicant claimed that this measure was contrary to its right to property protection and the Court ruled in favor.
Artilce 1 of the First Additional Protocol
The applicant company, Yaşar Holding A.Ş., is a limited liability company established under Turkish law. At the relevant time it was the majority shareholder in Türkiye Tütüncüler Bankası Yaşarbank A.Ş. (“Yaşarbank”), a private bank founded in 1924.
The case concerned the transfer of management of Yaşarbank to the Deposit Guarantee Fund and the transfer of the bank’s shares to that Fund.
Between 1994 and 1999, Yaşarbank was audited several times; the ensuing reports mentioned its financial difficulties and recommended a series of measures to improve and consolidate its situation. On 13 December 1999 an auditor submitted a report on the situation of Yaşarbank at 30 September 1999, noting that continuing its banking activities would present a risk to the rights and interest of investors and savers and to the reliability and stability of the financial system; she considered that the bank’s financial situation could no longer be consolidated.
On 21 December 1999 the Council of Ministers decided to transfer the management of Yaşarbank and all its share options to the Guarantee Fund (apart from dividends). It further ordered the transfer of ownership of the shares to the Fund. On the date of the transfer 48.48 % of overall shares in Yaşarbank were held by the applicant company. On 4 February 2000 Yaşarbank’s shareholding companies, including the applicant company, applied to the Council of State to set aside the Council of Ministers’ decision on the grounds that transferring ownership of the shares to the Fund, without valuable consideration, infringed their ownership rights. On 27 February 2002 the Council of State dismissed that application, finding that the bank had first of all been placed under close supervision on account of the serious decline in its financial situation, but that it had not properly implemented the measures indicated in the various audit reports and that its deficit had increased exponentially before its transfer to the Fund. The Plenary Administrative Divisions of the Council of State upheld that judgment on 29 April 2004.5
Relying in particular on Article 1 of Protocol No. 1 (protection of property), the applicant company complained about the transfer of management of Yaşarbank and of its shares to the Guarantee Fund.
THE DECISION OF THE COURT
Violation of Article 1 of Protocol No. 1
Just satisfaction: The Court held that the question of the application of Article 41 (just satisfaction) of the Convention was not ready for decision and reserved it for examination at a later date.