Applications nos. 31833/06 and 37538/06

IpsofactoJ.com: International Cases [2015] Part 7 Case 15 [ECHR]


EUROPEAN COURT OF HUMAN RIGHTS

(Second Section)

Coram

Cingilli Holdings A.S.

and Cingilioğlu

- vs -

Turkey

András Sajó, President

Işıl Karakaş, Judge

Nebojša Vučinić, Judge

Helen Keller, Judge

Egidijus Kūris, Judge

Robert Spano, Judge

Jon Fridrik Kjølbro, Judge

Stanley Naismith, Section Registrar

21 JULY 2015


Judgment

The Court (Second Section)

PROCEDURE

  1. The case originated in two applications (nos. 31833/06 and 37538/06) against the Republic of Turkey lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”), lodged on 28 July 2006 and 13 September 2006 respectively. The first applicant, Cıngıllı Holding A.Ş., is a company registered in Turkey and located in Istanbul. It was represented before the Court by Mr H. Özcan, a lawyer practising in Istanbul. The second applicant, Ms Sema Cıngıllıoğlu, a Turkish national and one of the main shareholders of the applicant company, was born in 1951 and lives in Istanbul. She was represented before the Court by Mr G. Ayan, a lawyer practising in Istanbul. The Government were represented by their Agent.

  2. On 30 August 2011 the Chamber decided to join the applications and communicate them to the Government.

  3. THE FACTS

    I.  THE CIRCUMSTANCES OF THE CASE

  4. The applicants were the main shareholders of Demirbank, established in 1953. In 1999 Demirbank was ranked the fifth largest private bank in Turkey, with 193 branches and 3,885 employees.

  5. By a decision dated 6 December 2000 (no. 123), the Banking Regulation and Supervision Board (Bankalar Düzenleme ve Denetleme Kurulu – hereinafter referred to as “the Board”) decided to transfer the management and control of Demirbank to the Savings Deposit Insurance Fund (Tassarruf Mevduat Sigorta Fonu – hereinafter “the Fund”), pursuant to section 14(3) of the Banking Activities Act (Law no. 4389). In its decision, the Board held that the assets of Demirbank were insufficient to cover its liabilities and that the continuation of its activities would threaten the security and stability of the financial system. Accordingly, Demirbank’s management and control, and the privileges of its shareholders except for dividends, were transferred to the Fund. The Fund also confiscated all properties belonging to Demirbank.

  6. On 2 February 2001, the applicant company brought administrative proceedings against the Banking Regulation and Supervision Agency (Bankalar Düzenleme ve Denetleme Kurumu – hereinafter referred to as “the Agency”) before the Ankara Administrative Court, seeking the annulment of the decision of 6 December 2000 regarding the transfer of Demirbank to the Fund.

  7. The Ankara Administrative Court found that it lacked jurisdiction and transferred the case to the Supreme Administrative Court.

  8. In its submissions before the Supreme Administrative Court, the applicant company claimed that its property rights had been violated. It also raised a plea of unconstitutionality under section 14 of the Banking Activities Act. The applicant company further stated that prior to November 2000, Demirbank had never encountered major financial problems. It was pointed out that pursuant to section 14 (2) of the Act, a bank with financial difficulties should first be given a warning to strengthen its financial structure and be allowed time to take specific measures. However, no such warning had been given in the instant case. Secondly, the Board had not claimed that Demirbank’s financial situation was so weak that it could not be strengthened even if specific measures were taken. Lastly, the applicant company stated that following the transfer of the bank to the Fund, a General Assembly composed of the Fund’s officials had exonerated the former managers of Demirbank, holding that they had not been at fault in the incident leading to the bank’s transfer.

  9. After examining the file, on 3 June 2003 the Supreme Administrative Court dismissed the case. It held that the takeover of the bank by the Fund had been in accordance with section 14(3) of the Banking Activities Act. The applicant company lodged an appeal.

  10. On 18 December 2003 the Joint Administrative Chambers of the Supreme Administrative Court decided to quash the decision of 3 June 2003. In its judgment, the court held that prior to ordering the transfer of Demirbank to the Fund, the Board should have carried out an objective evaluation of the bank’s financial situation. The court also concluded that the Board should first have ordered Demirbank to take specific measures in accordance with section 14 (2) of the Banking Activities Act before applying section 14 (3) of the Act.

  11. On 29 April 2004 a request for rectification lodged by the Agency was refused.

  12. The case was remitted to the Supreme Administrative Court, which delivered its decision on 5 November 2004, upholding the decision of the Joint Administrative Chambers of the Supreme Administrative Court. In its decision the Supreme Administrative Court held that:

  13. .... Demirbank did not have any serious financial problems until the economic crisis in November 2000. The amount of the bank’s risky credit in Government Bonds for Domestic Borrowing aimed at securing Treasury debt was not too high compared to its total credit, its asset quality was high due to its five affiliate banks abroad, and furthermore, the major shareholders had not targeted the resources of the bank. Although Demirbank had been able to resolve its liquidity problem and it had fulfilled all obligations towards individual and corporate clients using its own assets, it was decided that it fell within the scope of section 14 of the Banking Activities Law. It is therefore understood that the administrative act pertaining to the taking over of Demirbank by the Savings Deposit Insurance Fund based on paragraphs (b) and (d) of section 14 of the Banking Activities Act, without investigating any further possible options or specific measures to enable the Bank to establish a balance of liquidity, was unlawful.

    ....

    In the light of the foregoing, the Banking Regulation and Supervision Board’s decision of 6 December 2000 ordering the takeover of Demirbank by the Fund is unanimously annulled.

  14. A further appeal and a request for rectification lodged by the Agency were rejected on 14 April 2005 and 15 December 2005 respectively. The final decision was served on the applicant company’s representative on 13 March 2006.

  15. In the meantime, while the proceedings against the Agency were still pending, on 20 September 2001 the Fund entered into an agreement with the HSBC bank, and sold Demirbank to the latter for 350,000,000 US Dollars.

  16. On 20 September 2001 the second applicant brought administrative proceedings against the Fund in the Ankara Administrative Court, seeking the annulment of the agreement to sell Demirbank to HSBC.

  17. Given that the transfer of Demirbank to the Fund had been found to be unlawful by the Joint Administrative Chambers of the Supreme Administrative Court, on 21 April 2004 the Ankara Administrative Court annulled the agreement entered into by the Fund and HSBC on 20 September 2001. In its decision the Ankara Administrative Court held that:

  18. .... It can be seen that, given the shareholding structure of Demirbank before the transfer, 72,55 % was owned by Cıngıllı Holding A.Ş., that the claimant who owned shares in this company was a shareholder of the aforementioned bank, that all shares of Demirbank were taken over by the Savings Deposit Insurance Fund pursuant to section 14 of the Law no. 4389, that the claim requesting the annulment of the Banking Regulation and Supervision Board’s decision dated 6 December 2000 regarding this taking over was dismissed by a judgment on 3 June 2003 delivered by the Supreme Administrative Court, and that this judgment was subsequently quashed by the judgment of 18 December 2003 of the Joint Administrative Chambers of Supreme Administrative Court.

    In its judgment, the Joint Chambers of the Supreme Administrative Court held that the taking over of Demirbank by the Savings Deposit Insurance Fund based on Section 14 paragraphs (b) to (d) of the Banking Activities Act was unlawful and it accordingly declared the act as null and void. It was decided that the decision regarding the taking over of the bank had been adopted without investigating the possible options to enable the bank to establish a balance of liquidity and taking the relevant precautions, given that it would have been possible for the bank to continue its banking activities since it did not have any serious financial problems until the financial crisis of November 2000, the amount of the bank’s risky credit in Government Bonds for Domestic Borrowing aimed at securing Treasury debt was not too high compared to its total credit, its asset quality was high compared to the five affiliate banks based abroad, the majority shareholders had not targeted the resources of the bank, the bank had been included within the scope of section 14 of Law no. 4389 to enable it to the resolve its liquidity problem and it had fulfilled all obligations towards individual and corporate clients using its own assets.

    It is therefore understood that, pursuant to the annulment of the decision pertaining the taking over of Demirbank by the Savings Deposit Insurance Fund by the Joint Chambers of the Supreme Administrative Court, the subsequent sale of Demirbank to HSBC Bank has also become unlawful and the decision that is the subject of these proceedings is therefore unlawful. This act is therefore declared null and void.

  19. An appeal and a request for rectification lodged by the Fund were rejected on 3 June 2005 and 24 February 2006 respectively.

  20. On 11 May 2006 the second applicant requested the Agency to comply with the Supreme Administrative Court’s judgments and to enforce them. Relying on the restitutio in integrum principle, she requested that Demirbank be returned to its previous owners.

  21. On 10 July 2006 the Agency informed the second applicant that it would be impossible to enforce the judgments as, following its sale to HSBC, Demirbank had been struck off the commercial register.

  22. II.  RELEVANT DOMESTIC LAW

  23. Section 14 of the Banking Activities Act (Law no. 4389) reads:

  24. 1.

    Without prejudice to the Agency’s right to institute legal proceedings against liable persons, if the results of supervision reveal any transactions that are contrary to this Act or to decisions taken and legislation introduced under this Act or to the principles and customary practices of banking, and that could jeopardise the secure operation of the bank in question, the Agency shall warn the bank to correct the transactions in question within a period of time specified by it and to take such measures as are necessary to ensure that similar transactions are not allowed in the future. The bank must, within the periods specified, take the measures required by the Agency and notify it of the consequences of the actions it has taken. In the event that the required measures are not taken or that transactions jeopardising the secure operation of the bank are repeated, the Board shall be authorised, depending on the nature and significance of the transactions in question, to take and implement all such measures as are necessary for the secure operation of the bank and for the protection of depositors, including but not limited to the following:

    (a)

    to appoint new members to the Board by dismissing or replacing all or some of the members of the Board of Directors or by increasing the number of seats thereon;

    (b)

    to restrict the operations of the bank in such a manner as to cover its whole organisation or only those of its relevant branches or its relations with correspondent banks,

    (c)

    to increase the deposit insurance premium payable by the bank or to require provisions at the rate of up to one hundred percent for deposits it accepts.

    The remuneration of any member of the Board of Directors to be appointed to the bank pursuant to the present section shall be determined by the Board and paid from the Fund.

    2.

    (a)

    If the Agency, at its sole discretion, determines that the assets of a bank are insufficient, or are about to become insufficient, to cover its liabilities in terms of maturity or if the bank does not adhere to regulations governing liquidities, the Agency may instruct the bank to put in place a plan of action approved by the Agency to remedy the failure and may also, for the purpose of strengthening the liquidities, grant an appropriate period of time to the bank and require it:

    (aa)

    not to invest in long-term or fixed assets;

    (ab)

    to dispose of fixed assets such as real estate and equity holdings;

    and to take such other measures as may be deemed appropriate.

    (b)

    If the Agency, at its sole discretion, determines that a bank is about to fail or that it is failing to meet the minimum level of capital required to be maintained by the bank pursuant to the applicable regulations, the Agency may instruct the bank to put in place a capital restoration plan approved by the Agency to resolve the situation, and require the bank to increase its capital or to obtain funds that qualify as capital. The Agency may also, for the purpose of strengthening the capital, require it:

    (ba)

    not to pay dividends, or to cease additional payments such as honorary payments, bonuses, premiums, or in-kind or in-cash social assistance to members of the Board of Directors, general manager and assistant general managers,

    (bb)

    to limit or end operations which have caused losses,

    (bc)

    to liquidate assets which have poor returns or are inefficient,

    and to take such other measures as may be deemed to be appropriate.

    3.

    If the Agency at its sole discretion determines that

    (a)

    a bank has not taken the measures in part or in whole stated in subsection (2) above, the financial structure of the bank cannot be strengthened even though the measures have been taken in part or in whole, or the financial structure has become so weak that it could not be strengthened even if those measures were taken, or

    (b)

    a bank cannot honour its liabilities as they fall due, or

    (c)

    the value of the liabilities of the bank exceeds the value of the assets, in accordance with the valuation standards determined by the Board for the implementation of this section, or

    (d)

    the continuation of the bank’s activities would threaten the rights of depositors and the security and stability of the financial system,

    the Board may transfer the management and control and the privileges of shareholders, except dividends, of the bank to the Fund or revoke the licence of the bank to perform banking operations and/or to accept deposits, with an affirmative vote of at least five Board members.

    Article 138 § 4 of the Turkish Constitution provides:

    The bodies of executive and legislative power and the authorities must comply with court decisions; they cannot in any circumstances modify court decisions or defer the enforcement thereof.

    Article 28 § 2 of the Code of Administrative Procedure reads:

    Decisions and judgments in administrative law actions concerning a specific amount shall be enforced .... in accordance with the provisions of the ordinary law.

    Under section 82(1) of the Enforcement and Bankruptcy Act (Law no. 2004), State property cannot be seized.

    THE LAW

    I.  ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION AND ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION

  25. The applicants complained of the prolonged failure of the domestic authorities to comply with the binding judgments of the Supreme Administrative Court, annulling the agreement to transfer Demirbank to the Savings Deposit Insurance Fund and its subsequent sale by the latter to the HSBC bank. They alleged that the continuing non-enforcement of the judgments amounted to a breach of their right to a fair trial and to peaceful enjoyment of their possessions. The applicants further alleged that the unlawful administrative acts had constituted a breach of their right to peaceful enjoyment of their possessions. In this connection with their complaints, they relied on Article 6 of the Convention and Article 1 of Protocol No. 1 to the Convention.

    Article 6, as far as relevant, reads as follows:

  26. In the determination of his civil rights and obligations .... everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.

    Article 1 of Protocol No. 1 to the Convention reads as follows:

    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.

  27. The Government contested those arguments.

  28. A.  Admissibility

    1.  Victim status

  29. The Government argued in the first place that the second applicant, Ms Sema Cıngıllıoğlu, did not have victim status. In this connection, they stated that the proceedings seeking the annulment of the agreement by the Fund to take over Demirbank had been instituted by the applicant company, and the second applicant had not been a party to that set of proceedings. They further argued that the second applicant was a minor shareholder and had no right to lodge an application with the Court in respect of Demirbank.

  30. The Court notes that the first application (no. 31833/06) was introduced by Cıngıllı Holding, the main shareholder of Demirbank. Cıngıllı Holding was a party to the domestic proceedings that were brought against the Agency seeking the annulment of the decision to take over Demirbank. The second application (no. 37538/06) was lodged by Ms Sema Cıngıllıoğlu, who complained that the decision to annul the sale of Demirbank to HSBC had never been enforced. It is clear that the second applicant was a party to that set of proceedings before the domestic courts (see paragraph 13 above) and was also a shareholder of Demirbank.

  31. The Court reiterates that in order to be able to file a petition by virtue of Article 34 of the Convention, a person, non-governmental organisation or group of individuals must be able to claim to be a victim of a violation of the rights set forth in the Convention. To claim to be a victim of such a violation, a person must be directly affected by the impugned measure: the Convention does not, therefore, envisage the bringing of an actio popularis for the interpretation of the rights set out therein or permit individuals to complain about a provision of national law simply because they consider, without having been directly affected by it, that it may contravene the Convention (see Burden v the United Kingdom [GC], no. 13378/05, § 33, ECHR 2008, and Tănase v Moldova [GC], no. 7/08, § 104, ECHR 2010).

  32. Consequently, the existence of a victim who was personally affected by an alleged violation of a Convention right is indispensable for putting the protection mechanism of the Convention into motion, although this criterion is not to be applied in a rigid and inflexible way (see Bitenc v Slovenia (dec.), no. 32963/02, 18 March 2008). The question of whether the applicant can claim to be a victim of the alleged violation of the Convention is relevant at all stages of the proceedings under the Convention (see Burdov v Russia, no. 59498/00, § 30, ECHR 2002-III).

  33. The Court interprets the concept of “victim” autonomously and irrespective of domestic concepts such as those concerning an interest or capacity to act (see Sanles Sanles v Spain (dec.), no. 48335/99, ECHR 2000-XI), but it should also bear in mind whether the applicant was a party to the domestic proceedings (see Micallef v Malta [GC], no. 17056/06, § 48, ECHR 2009).

  34. The Court observes that in the circumstances of the present case, the second applicant’s financial interests were undoubtedly affected as a shareholder of Demirbank. Furthermore, there was no dispute in the domestic proceedings regarding the second applicant’s standing before the court. Hence, the merits of her case were examined at three levels of jurisdiction.

  35. In view of the foregoing and given the need to apply the criteria governing victim status in a flexible manner (see Aksu v Turkey [GC], nos. 4149/04 and 41029/04, § 54, ECHR 2012), the Court accepts that the second applicant can be considered a victim of the facts complained of within the meaning of Article 34 of the Convention. It therefore rejects the Government’s preliminary objection that the second applicant lacked victim status.

  36. 2.  Non-exhaustion of domestic remedies

  37. The Government further stated that the application should be rejected for non-exhaustion of domestic remedies, as the applicants had failed to bring compensation proceedings before the domestic courts pursuant to Article 12 of the Administrative Procedure Code and Article 125 of the Constitution.

  38. The Court notes in particular that the administrative actions brought by the applicants were concluded in their favour and the ex tunc nullity of the disputed administrative acts was upheld by the domestic courts. The second applicant also sought the enforcement of the said decisions, but no action was taken by the administrative authorities, which were constitutionally bound to take all necessary measures to restore the de facto and de jure situation that was likely to have prevailed had Demirbank not been unlawfully transferred to the Fund. Under those circumstances, the applicants cannot be expected to have brought further actions against the State. The Court also notes that it has examined a similar objection in the past and has rejected it (see Süzer and Eksen Holding A.Ş. v Turkey, no. 6334/05, §§ 95-98, 23 October 2012). It sees no reason to depart from those findings in the instant application and concludes that the applicants have complied with the requirement of exhaustion of domestic remedies.

  39. It therefore rejects the Government’s preliminary objection in this respect.

  40. 3.  Compliance with the six-month time-limit

  41. Lastly, the Government argued that the application should be rejected for non-compliance with the six-month time-limit. In this connection, they argued that the first set of proceedings had ended on 13 March 2006 and the second set of proceedings on 24 February 2006.

  42. The Court notes that the first set of proceedings, concerning the taking over of Demirbank, ended on 13 March 2006, and the first application was lodged with the Court on 28 July 2006. The second set of proceedings concerning the annulment of the sale of Demirbank to HSBC, ended on 24 February 2006 and the second applicant’s request for the enforcement of the impugned decision was rejected on 10 July 2006. The second application was lodged with the Court on 13 September 2006. Accordingly, both applications complied with the six-month time-limit and the Government’s preliminary objection should be dismissed.

  43. The Court notes that the present application is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.

  44. B.  Merits

  45. Relying on Article 6 of the Convention and Article 1 of Protocol No. 1 to the Convention, the applicants complained of the administrative authorities’ failure to enforce the series of judgments in their favour by the Supreme Administrative Court.

  46. The Government maintained that the enforcement of the impugned court decisions had not been delayed; rather, it had been impossible de jure and de facto to enforce them because Demirbank had been struck off the records and its legal personality had therefore ceased to exist. They further maintained that it had been impossible to revive Demirbank as the authorities had had no authority to do so.

  47. 1.  Article 6 of the Convention

  48. The Court reiterates that the enforcement of a judgment given by any court must be regarded as an integral part of a “hearing” for the purposes of Article 6 (see Hornsby v Greece, 19 March 1997, § 40, Reports of Judgments and Decisions 1997-II). It refers to its extensive case-law concerning the non-enforcement or the delayed enforcement of final domestic judgments (see, amongst many other cases, Tacea v Romania, no. 746/02, 29 September 2005; Jeličić v Bosnia and Herzegovina, no. 41183/02, §§ 38-39, ECHR 2006-XII; Yuriy Nikolayevich Ivanov v Ukraine, no. 40450/04, §§ 51-57, 15 October 2009; and Süzer and Eksen Holding A.Ş., cited above, § 114).

  49. The above principles are of even greater importance in the context of administrative proceedings concerning a dispute whose outcome is decisive for a litigant’s civil rights. By lodging an application for judicial review with the State’s highest administrative court, the litigant seeks not only the annulment of the impugned decisions but also and above all the removal of its effects. The effective protection of a party to such proceedings and the restoration of legality presuppose an obligation on the administrative authorities’ part to comply with the judgment of that court. The administrative authorities form one element of a State subject to the rule of law and their interests accordingly coincide with the need for the proper administration of justice. Where administrative authorities refuse or fail to comply, or even delay doing so, the guarantees under Article 6 enjoyed by a litigant during the judicial phase of proceedings are rendered devoid of purpose (see Hornsby, cited above, § 41).

  50. The complexity of the domestic enforcement procedure or of the State budgetary system cannot relieve the State of its obligation under the Convention to guarantee to everyone the right to have a binding and enforceable judicial decision enforced within a reasonable time. Nor is it open to a State authority to cite lack of funds or other resources (such as housing) as an excuse for not honouring a judgment debt (see Burdov v Russia (no. 2), no. 33509/04, § 70, ECHR 2009, and Süzer and Eksen Holding A.Ş., cited above, § 116).

  51. The Court notes that in the present case the domestic courts annulled the decision to transfer Demirbank to the Savings Deposit Insurance Fund and its subsequent sale by the latter to the HSBC bank.

  52. The Court accepts that a situation may exceptionally arise where the restitutio in integrum enforcement of a court judgment, declaring administrative acts unlawful and void, may, as such, prove objectively impossible due to insurmountable factual or legal obstacles. However, in such situations and in accordance with the right of access to court, guaranteed by Article 6 § 1 of the Convention, a Member State must, in good faith and on its own motion, examine other alternative solutions that can remedy the unlawful effects of its acts, in particular the awarding of compensation.

  53. The Court recalls that on 11 May 2006 the second applicant requested the Agency to comply with the Supreme Administrative Court’s judgments and to enforce them. Relying on the restitutio in integrum principle, she requested that Demirbank be returned to its previous owners. On 10 July 2006 the Agency simply responded that it would be impossible to enforce the judgments as, following its sale to HSBC, Demirbank had been struck off the commercial register (see paragraphs 17-18 above).

  54. The Court observes that the Government have thus not demonstrated that any actions were taken by the Agency in an attempt to remedy the applicants’ situation in the light of the judgments annulling the transfer of Demirbank and its sale to HSBC. In this regard, the Court notes that in separate proceedings, which are the source of a related application to the Court (see Reisner v Turkey, no. 46815/09, 21 July 2015), the Supreme Administrative Court held in a judgment of 16 March 2009 that the enforcement of the judgment of 5 November 2004 (see paragraph 11 above) could be secured by the return of the supervisory and executive rights to Demirbank’s shareholders, and did not require the restitution of the actual shares which would, in any event, be impossible.

  55. In the light of the above, the Court finds that the complete inaction by the Agency in responding to the second applicant’s request for the enforcement of the Supreme Administrative Court’s judgments effectively deprived the applicants of their rights of access to court.

  56. Accordingly, there has been a violation of Article 6 of the Convention.

  57. 2.  Article 1 of Protocol No. 1 to the Convention

  58. The Court refers to its established case-law on the structure of Article 1 of Protocol No. 1 and the manner in which the three rules contained in that provision are to be applied (see, among many other authorities, J.A. Pye (Oxford) Ltd and J.A. Pye (Oxford) Land Ltd v the United Kingdom [GC], no. 44302/02, § 52, ECHR 2007-III; Bruncrona v Finland, no. 41673/98, §§ 65-69, 16 November 2004; and Broniowski v Poland [GC], no. 31443/96, § 134, ECHR 2004-V).

  59. The Court reiterates that any interference by a public authority with the peaceful enjoyment of possessions should be lawful, must be in the public interest, and must pursue a legitimate aim by means reasonably proportionate to the aim sought to be realised (see Doğrusöz and Aslan v Turkey, no. 1262/02, § 27, 30 May 2006; and Moskal v Poland, no. 10373/05, §§ 49-50, 15 September 2009).

  60. An interference with the peaceful enjoyment of possessions must therefore strike a “fair balance” between the demands of the public or general interest of the community and the requirements of the protection of the individual’s fundamental rights.

  61. The Court observes that in the present case, the applicants were the shareholders of Demirbank, which was taken over by the State authorities, and accordingly, there has indisputably been an interference with their right of property (see Süzer and Eksen Holding A.Ş., cited above, § 143; Capital Bank AD v Bulgaria, no. 49429/99, § 130, ECHR 2005-XII (extracts)). As regards which provision of Article 1 of Protocol No. 1 applies in the instant case, the Court observes that the Board’s decision to takeover Demirbank was clearly taken as a measure to control the banking sector in the country. It is true that it involved a deprivation of property, but in the circumstances the deprivation formed a constituent element of a scheme for controlling the banking industry. It is therefore the second paragraph of Article 1 of Protocol No. 1 which is applicable in the present case (see Süzer and Eksen Holding A.Ş., cited above, §§ 146 and 147).

  62. The Court is now called on to determine whether the interference met the requirement of lawfulness, pursued a legitimate aim and was proportionate to the aim pursued. In this connection, it observes that the domestic courts annulled the decision pertaining to the takeover of Demirbank by the Savings Deposit Insurance Fund and its subsequent sale by the latter to the HSBC bank. In doing so, the courts respectively held that the administrative acts had been unlawful (see paragraphs 11 and 15 above). The Court further observes that the impugned administrative acts were declared null and void with retrospective (ex tunc) effect. Under these circumstances, it therefore considers that the interference with the applicants’ right to enjoyment of their possessions cannot be considered as lawful within the meaning of Article 1 of Protocol No. 1 to the Convention (see Süzer and Eksen Holding A.Ş., cited above, § 148).

  63. That being so, the Court is not required to determine whether the interference with the applicants’ right to the peaceful enjoyment of their possessions pursued a legitimate aim and, if so, whether a fair balance has been struck between the demands of the general interest of the community, and the protection of the individual’s fundamental rights.

  64. The Court therefore concludes that there has been a violation of Article 1 of Protocol No. 1 to the Convention.

  65. II.  APPLICATION OF ARTICLE 41 OF THE CONVENTION

  66. Article 41 of the Convention provides:

  67. 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.

  68. As regards pecuniary damage, the applicants stated that Cıngıllı Holding had held 74.9 % of the shares in Demirbank and Ms Cıngıllıoğlu had held 0.023 % of its shares. At the time, the bank was ranked the fifth largest private bank in Turkey, with 193 local and 35 foreign branches and 3,885 employees. The applicants primarily requested restitutio in integrum of the assets they had held on 6 December 2000. In the alternative, they proposed that the Government compensate them for their pecuniary loss by way of compensation. In this connection, the applicant company requested 742,000,000 euros (EUR) and the second applicant requested EUR 2,200,000 in respect of pecuniary compensation.

  69. As regards non-pecuniary damage, the applicants jointly claimed a total of EUR 100,000.

  70. Lastly, the applicants claimed EUR 50,000 for costs and expenses, without submitting any supporting documents.

  71. The Government contested the claims. They argued that it had been impossible to enforce the domestic court decisions and that the finding of a violation should be considered as sufficient redress.

  72. In the circumstances of the case the Court considers that the question of the application of Article 41 is not ready for decision. It is therefore necessary to reserve the matter, due regard being had to the possibility of an agreement between the respondent State and the applicants (Rule 75 §§ 1 and 4 of the Rules of Court).

  73. FOR THESE REASONS, THE COURT,

    1. Declares, unanimously, the applications admissible;

    2. Holds, by six votes to one, that there has been a violation of Article 6 of the Convention;

    3. Holds, unanimously, that there has been a violation of Article 1 of Protocol No. 1 to the Convention;

    4. Holds, unanimously, that the question of just satisfaction under Article 41 of the Convention is not ready for decision, and accordingly:

      1. reserves the said question in whole;

      2. invites the Government and the applicants to submit, within three months from 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;

      3. reserves the further procedure and delegates to the President of the Chamber the power to fix the same if need be.

    Judge Sajó

    (concurring)

  74. In the present case the Joint Administrative Chambers of the Supreme Administrative Court held that prior to ordering the transfer of Demirbank to the Savings Deposit Insurance Fund, the Banking Regulation and Supervision Board should have carried out an objective evaluation of the bank’s financial situation. The Supreme Administrative Court held that the administrative act pertaining to the taking over of Demirbank by the Savings Deposit Insurance Fund was unlawful. Nevertheless the present judgment considered that the Board’s decision to takeover Demirbank was clearly taken as a measure to control the banking sector in the country. It is true that it involved a deprivation of property, but in the circumstances the deprivation formed a constituent element of a scheme for controlling the banking industry. I see it differently. The Board abused the control power and it confiscated property: It does not matter that it happened under the guise of control.

    Judge Kjøbro

    (dissenting)

  75. I respectfully disagree with the majority that there has been a violation of Article 6 of the Convention (see paragraphs 40-45 of the judgment).

  76. Execution of a court’s judgment is an integral part of the “trial” for the purposes of Article 6 of the Convention, and Article 6 imposes an obligation on administrative authorities to comply with a court judgment. Where administrative authorities refuse or fail to comply, or even delay doing so, the guarantees under Article 6 enjoyed by a litigant during the judicial phase of the proceedings are rendered devoid of purpose (see Hornsby v Greece, 19 March 1997, § 40, Reports of Judgments and Decisions 1997-II).

  77. The Court has in numerous cases found a violation of Article 6 where administrative authorities have failed to comply with or execute a judgment. By way of example, such cases have related to failure to:

  78. That being said, it also follows from the case-law that the obligation to comply with or execute a judgment cannot be interpreted in a way that will impose an impossible burden on an administrative authority. In other words, there may be exceptional circumstances that can justify a failure to execute a judgment. Thus, in practice it may be impossible de facto or de jure to execute a judgment (see Loiseau v France, no. 46809/99, § 19, 28 September 2004; Manoilescu and Dobrescu v Romania and Russia (dec.), no. 60861/00, §§ 67-82, ECHR 2005-VI; Treska v Albania and Italy (dec.), no. 26937/04, ECHR 2006-XI (extracts); Société Cofinfo v France (dec.), no. 23516/08, 12 October 2010; Sofiran and BDA v France, no. 63684/09, §§ 50-56, 11 July 2013; and Süzer and Eksen Holding A.Ş. v Turkey, no. 6334/05, § 123, 23 October 2012).

  79. Where a court’s judgment imposes a specific obligation on an administrative authority (to pay a specified amount of money or take certain actions), compliance with the judgment can easily be assessed. However, where a court’s judgment annuls an administrative decision as being unlawful, it may be less clear what the administrative authority has to do in order to comply with and give effect to the judgment. Where the administrative authority has unlawfully rejected an application for a permit, authorisation or benefit, the same authority may have to reassess the application in the light of the domestic court’s findings. Where the administrative authority has unlawfully rejected a request or imposed an obligation on an individual, the administrative authority may also be liable to pay compensation for damage caused by the unlawful decision. The administrative authority may also have to change its future conduct or practice in the light of the court’s decision. Thus, the way in which an administrative authority will have to comply with a court’s judgment annulling a decision will depend on the specific circumstances of the case, including the nature of the decision in question, the factual situation after the annulment and the request made by the plaintiff in the proceedings.

  80. In the present case the Supreme Administrative Court annulled the decision to transfer Demirbank to the Fund and its subsequent sale by the latter to the HSBC bank. The Supreme Administrative Court’s judgments annulled the transfer and declared the sales agreement null and void, but they did not impose specific obligations on the Agency, for example to restore the bank to its previous situation. Nevertheless, the Agency was required to comply with the findings of the judgments.

  81. The second applicant requested the Agency to comply with the judgments and enforce them by returning Demirbank to its previous owners (see paragraph 17 of the judgment). In other words, the second applicant requested restitutio in integrum. However, as Demirbank had been sold to and merged with the HSBC bank and no longer existed as a legal entity, the Agency informed the second applicant that it was impossible to enforce the judgments as requested by her (see paragraph 18 of the judgment). The second applicant did not request compensation for damage, nor did she institute proceedings to challenge the alleged impossibility of enforcing the judgments.

  82. In the specific circumstances of the case the Agency cannot be blamed for not returning Demirbank to its previous owners. As mentioned, the bank had been sold to and merged with another private bank and had itself ceased to exist and had been struck off the commercial register.

  83. As mentioned in the judgment (see paragraph 43), the Supreme Administrative Court assessed the transfer and subsequent sale of Demirbank in separate proceedings, which are the source of a related application to the Court (see Reisner v Turkey, no. 46815/09, § 28, 21 July 2015). In its judgment of 16 March 2009 the Supreme Administrative Court stated that “the judgment could not be executed, as Demirbank’s shares had ceased to exist as a result of the loss of its legal personality following its merger with HSBC”. In other words, the domestic courts explicitly recognised that restitutio in integrum was impossible.

  84. The fact that it was impossible to restore the situation existing before the unlawful – and subsequently annulled – decisions does not imply that the Agency did not have to comply with the judgments. The impossibility de facto and de jure of restoring the bank to its previous situation, with all its assets and liabilities, and returning it to its previous owners would imply that the Agency could be held liable to pay compensation for damage suffered as a consequence of its unlawful decisions.

  85. In the view of the majority, the “complete inaction by the Agency in responding to the second applicant’s request for the enforcement of the Supreme Administrative Court’s judgments effectively deprived the applicants of their rights of access to court” (see paragraph 44 of the judgment). I respectfully disagree with this statement. The second applicant only asked the Agency to return the bank to its previous owners. She never asked for compensation for damage.

  86. In my view the Agency cannot be blamed for not “examining other alternative solutions” (see paragraph 41 of the judgment) of its own motion, for example by offering to pay compensation for damage to the second applicant, who made no request to that effect.

  87. Furthermore, the case is distinguishable from Süzer and Eksen Holding A.Ş. (cited above), where the Court did find a violation of Article 6 in a case concerning the transfer of another bank in Turkey (see §§ 119-133). In that judgment the domestic authorities had exhibited persistent and total inactivity irrespective of final judgments annulling the transfer of the bank in question and irrespective of subsequent requests from the applicants to execute the judgments, as well as subsequent court decisions finding that the previous owners should be granted the necessary authorisation to establish a new bank (see, in particular, §§ 122, 124, 127 and 130).

  88. Therefore, having regard to the nature of the court’s judgments (annulling administrative decisions), the impossibility of restoring the situation existing before the unlawful decisions were taken, and the lack of a claim for compensation or of any requests other than restitutio in integrum, there has, in my view, been no violation of Article 6 of the Convention.


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