The liquidation of a bank due to the tax evasion of its legal representatives was found to be illegal
JUDGMENT
Feldman and Slovyanskyy Bank v. Ukraine 21.12.2017 (no. 42758/05)
SUMMARY
The examination of legal representatives of a bank for tax evasion and misuse of power. Withdrawal of authorization and liquidation of a bank. Illegal decision and lack of possibility of questioning. Violation of the right to fair trial and protection of property.
PROVISIONS
Article 6§1
Article 1 of the First Additional Protocol
PRINCIPAL FACTS
The case concerned the liquidation of a bank, Slovyanskyy Commercial Joint-Stock Bank, based in Zaporizhzhya in Ukraine. The applicants are the bank and its founder and majority shareholder, Borys Feldman, a Ukrainian national who was born in 1958 and lives in Dnipro, Ukraine.
In 2000 the Ukrainian authorities brought criminal proceedings for tax evasion and abuse of office by the management of the applicant bank. Mr Feldman was arrested as part of those proceedings.
An administrative procedure ensued, which was entrusted to the National Bank of Ukraine (“the NBU”). As a preliminary measure, the NBU suspended the applicant bank’s licence. It was then put under temporary administration until 2001 when the NBU issued a resolution revoking the licence, terminating the powers of the bank’s statutory bodies and ordering the bank’s liquidation. A liquidation commission, essentially composed of NBU employees, was thus approved and set up.
This eventually led to the bank’s complete liquidation in 2012.
In the meantime, Mr Feldman attempted to challenge the NBU’s decision revoking the licence before the courts, to no avail. Ultimately in April 2005 the Supreme Court of Ukraine rejected his claim as inadmissible because it found that he did not have standing to institute proceedings on behalf of the applicant bank and the claim fell under the jurisdiction of the commercial courts.
Relying on Article 6 § 1 (access to court) of the European Convention on Human Rights and Article 1 of Protocol No. 1 (protection of property) to the Convention, the applicants complained about the decision to liquidate the applicant bank, alleging that it had been unlawful and that they had been unable to challenge it in court.
THE DECISION OF THE COURT…
Violation of Article 6 § 1 – in respect of Slovyanskyy Bank
Violation of Article 1 of Protocol No. 1 – concerning the interference with Slovyanskyy Bank’s property rights by the NBU
Just satisfaction: The Court dismissed Slovyanskyy Bank’s claim for just satisfaction(echrcaselaw.com editing).
