Α Court bought the courthouse housed by a defendant company while its case was pending! Lack of judicial impartiality.

JUDGMENT

Cosmos Maritime Trading and Shipping Agency v. Ukraine 27.06.2019 (no.53427/09)

see here 

SUMMARY 

In a trial between the plaintiff and the defendant company, the defendant transferred its ownership of the courthouse to the courts in the case. Lack of impartiality of courts.

The applicant shipping company appealed to the Ukrainian courts for recognition of its high monetary claim against a state-owned shipping company in bankruptcy. The claim was upheld, but the decision was reversed, and her appeal was heard when the debtor defendant company had transferred the property to the Courts. The whole process took over 15 years and no claim was recognized by the applicant company.

The ECtHR held that each national court had an obligation to examine whether it constituted a ‘non-discriminatory court’ within the meaning of that provision, when, as in the present case, a ground which does not appear to be manifestly unfounded is disputed and found that there had been a violation fair trial, because (a) the guarantees laid down in the contract to ensure impartiality were not complied with, and the applicant company’s claim for abstention was not adequately justified; and (b) because a period of 15 years during which the proceedings are pending cannot be regarded as a ‘reasonable time’.

No breach of the right to property was found, because the property status quoted by the applicant and not satisfied was in the nature of a claim, not a property.

PRINCIPAL FACTS 

The applicant company, Cosmos Maritime and Foreign Trading Ltd., is a Turkish company with its
registered office in Istanbul (Turkey).

The case concerned the company’s efforts to have claims recognised in bankruptcy proceedings
against a Ukrainian State-owned shipping company, the Black Sea Shipping Company (“Blasco”).
Blasco was one of the largest shipping companies in the world until the late 1980s when it ran into
legal and financial difficulties.

In 2003 the applicant company lodged an application with the Ukrainian commercial courts seeking
recognition of a debt of over two million United States dollars owed to it by Blasco for services
provided to its vessels. Those claims were recognised in 2012.

However, that decision was quashed in 2013. The courts found that the applicant company and
other charterers had presented unsubstantiated bills to Blasco for vessel operating costs, which had
in fact been their responsibility.

In their appeals in those proceedings, the applicant company expressed concerns that the courts
were not playing an active role in protecting the creditors’ interests. They alleged in particular that
that could be explained by the fact that the Commercial Court and the Court of Appeal were housed
in a building in Odessa that had been transferred from Blasco to the courts in 2005, while the
bankruptcy proceedings were pending. In that context, in 2013, the judge presiding over the
bankruptcy proceedings dismissed a request for her withdrawal from the case, ruling that she was
not affected by the transfer as she had only taken over the case much later, in 2011.

Relying in particular on Article 6 § 1 (right to a fair hearing within a reasonable time) of the European
Convention on Human Rights, the applicant company complained that the domestic courts which
had dealt with its case had lacked impartiality and that the proceedings concerning the recognition
of its claims had been too long. It also alleged that the failure to recognise its claims had breached its
rights under Article 1 of Protocol No. 1 (protection of property) to the European Convention.

THE DECISION OF THE COURT 

 Impartiality

In order to establish whether a tribunal can be considered to be “independent” within the meaning of Article 6 § 1, regard must be had, inter alia, to the manner of appointment of its members and their term of office, the existence of guarantees against outside pressures and the question whether the body presents an appearance of independence. The Court observes that the notion of the separation of powers between the executive and the judiciary has assumed growing importance in its case-law. However, neither Article 6 nor any other provision of the Convention requires States to comply with any theoretical constitutional concepts regarding the permissible limits of the powersinteraction.

The applicant company did not put forward any arguments to show that the domestic courts or judges that examined its case lacked independence from the executive in terms of the manner of their appointment, term of office or the existence of formal guarantees against outside pressures. Indeed, domestic law, as pointed out by the Government, provides guarantees in that respect.

The applicant company provided, both to the domestic court and this Court, prima facie evidence that the commercial court in charge of the bankruptcy case was itself housed in a building that had been transferred from the debtor to the courts not long before the launch of the bankruptcy proceedings, when the debtor was already in financial distress, and that that transfer was completed when the bankruptcy proceedings were already under way . There was no response to the applicant companys arguments in that respect, other than one judges ruling that she was not affected by that transfer as she had taken over the case at a later date.

In such circumstances the Court must conclude that, despite the absence of reasons to doubt the impartiality of the individual judges concerned, the applicant companys perception that the court dealing with its case lacked impartiality can be seen, by an objective observer, as not manifestly devoid of merit. This perception concerned the first-instance court itself, as opposed merely to any individual judge.

For that reason the only response of the domestic courts to the applicant companys concerns in that respect, to the effect that one individual judge of the Commercial Court was not personally affected by the transfer, cannot be seen as sufficient. The Court reiterates that Article 6 § 1 of the Convention imposes an obligation on every national court to check whether, as constituted, it is “an impartial tribunal” within the meaning of that provision where, as in the instant case, this is disputed on a ground that does not immediately appear to be manifestly devoid of merit. However, in the present case neither the Commercial Court nor the Court of Appeal conducted such a check which would have made it possible to remedy, if it proved necessary, a situation contrary to the requirements of the Convention.

Regard being had to the confidence which the courts must inspire in those subject to their jurisdiction, these considerations are sufficient for the Court to find that there has been a violation of Article 6 § 1 of the Convention in respect of the impartiality requirement.

Length of proceedings

The applicant company complained that the proceedings in its case had started in September 2003 and had still been ongoing when it had submitted its observations in reply to those of the Government (10 July 2018) and, therefore, in its estimation, the proceedings had been ongoing for fifteen years.

he Court reiterates that extraordinary appeals seeking the reopening of terminated judicial proceedings do not normally involve the determination of “civil rights and obligations” or of “any criminal charge” and therefore Article 6 is deemed inapplicable to them. However, should an extraordinary appeal actually result in reconsidering the case afresh, Article 6 applies to the “reconsideration” proceedings in the ordinary way.

 Having examined all the material submitted to it, the Court has not found any fact or argument capable of persuading it to reach a different conclusion. Having regard to its case-law on the subject, the Court considers that in the instant case the length of the proceedings was excessive and failed to meet the “reasonable time” requirement.

There has, therefore, been a violation of Article 6 § 1 of the Convention in respect of the length of proceedings.

ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1

The proprietary interest relied on by the applicant company was in the nature of a claim and cannot be characterised as an “existing possession” within the meaning of the Courts case-law. It remains to ascertain whether the applicant company nevertheless had a “legitimate expectation” to obtain recognition of that claim.

According to the Courts case-law, no “legitimate expectation” can be said to arise where there is a dispute as to the correct interpretation and application of domestic law and the applicants submissions are subsequently rejected by the national courts.

Therefore, this part of the application is incompatible with the Convention ratione materiae and must be rejected as inadmissible pursuant to Article 35 §§ 3 (a) and 4.

Just satisfaction: 10,000 euros (EUR) for non-pecuniary damage and EUR 650 for costs and expenses echrcaselaw.com).

 


ECHRCaseLaw

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