“Kotov v. Russia”. Judgment of the Grand Chamber of the European Court
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Memorial.Rus
Apr 6, 2012, 8:30:16 AM4/6/12
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“Kotov v. Russia”. Judgment of the Grand Chamber of the European
Court
On April 3, 2012, the European Court of Human Rights (ECtHR) delivered its judgment on the case “Kotov v. Russia” (Kotov v. Russia, №54522/00).
The application was lodged with the Court on July 15, 1998. On January 14, 2010 the ECtHR Chamber passed the judgment acknowledging the violation of the Article 1 of the Protocol No. 1 (right to protection of property) of the Convention for the Protection of Human Rights and Fundamental Freedoms. However, at the request of the Russian government, which contested the decision, the case was submitted to the Court's Grand Chamber. The Human Rights Center “Memorial” (Moscow) and the European Human Rights Advocacy Center (EHRAC, London) started representing the victim in August 2011, after the case was referred to the Grand Chamber for new consideration. On January 12, 2011 “Memorial” and EHRAC lawyers took part in the hearings at the ECtHR in Strasbourg (France).
The applicant was Vladimir Mikhailovich Kotov, born in 1948, Russian citizen and resident of Krasnodar city. On April 15, 1994, Kotov made a one year term deposit of 3,330 rubles in the commercial private bank “YURAK” offering a 200% annual interest rate. After the bank informed about lowering its deposit interest rates in August 1994, Kotov went to its office in order to close his account. However the bank refused to close the account and did not pay him back the due amount of money. Kotov submitted an application to the Court. On February 20, 1995, the Court of the Oktyabrsky district of Krasnodar city ruled in favor of Kotov, obliging the bank to pay him 10,156 rubles for moral and material damages considering adjustment for inflation. On April 5, 1996, the compensation was raised up to 17,983 rubles as a result of the long-lasting non-implementation of the judgment.
On June 16, 1996, the bank declared bankruptcy under the decision of the arbitration court of Krasnodarsky region. While bankruptcy procedures were ongoing, there were a list of prioritized creditors (700 people), including invalids, war veterans and people actively involved in the bankruptcy procedures. They were remunerated with compensation for their deposits taking into account the interest rates and benefits.
The other creditors, including Kotov, had to be reimbursed when addition means would have been found. Kotov filled an application to be compensated with 17,983 rubles but he got only 140 rubles. Kotov appealed to the court and on August 26, 1998 the arbitrage court of Krasnodarsky region acknowledged that the list of the prioritized creditors was defined in violation of the law and that on the basis of the documents provided by the manager of the bank it was not possible to identify the group, which Kotov should be considered part of. The arbitration court gave the manager one month to rectify the violations. On June 17, 1999, bankruptcy procedures were completed as the bank was lacking financial means. Thus Kotov did not get his money back.
After the hearings, the Grand Chamber ECtHR held that there was no violation of the Article 1 of the Protocol No. 1 affecting the applicant.
The Court noted that at the national level the applicant had at his disposal all the necessary domestic remedies to defend his right to be compensated for the bank's default. However he didn’t use legal way to get the compensation in a due time limit.
The Court concluded that the State did not fail to fulfill its obligations under the Article 1 of the Protocol No. 1, as the applicant had the opportunity to protect his rights. As a result, there had been no violation of the applicant's rights.
Meanwhile, the ECtHR judgment on the case “Kotov v. Russia” was not unanimous. Five of the seventeen judges considered that there has been indeed a violation of Article 1 of the Protocol No. 1 . Their dissent opinions were based on the Court’s case-law recognizing that the State has an obligation, also in respect of interferences by a private individual (the Russian government, for its part, argued that it is responsible for interferences by commercial companies, in this case – the bank "YURAK"). Moreover, the judges considered that Kotov did not have the chance to defend his rights because at that time in the national legislation there was unclear legal situation, and that deprived the applicant of the possibility to obtain his compensation.
It has to be noticed that the case “Kotov v. Russia” deals with a complex legal issue of the State's responsibility for the behavior of private banks. The case also concerns the systemic problem of “depositors-victims of frauds” in Russia.
April 6, 2012
On April 3, 2012, the European Court of Human Rights (ECtHR) delivered its judgment on the case “Kotov v. Russia” (Kotov v. Russia, №54522/00).
The application was lodged with the Court on July 15, 1998. On January 14, 2010 the ECtHR Chamber passed the judgment acknowledging the violation of the Article 1 of the Protocol No. 1 (right to protection of property) of the Convention for the Protection of Human Rights and Fundamental Freedoms. However, at the request of the Russian government, which contested the decision, the case was submitted to the Court's Grand Chamber. The Human Rights Center “Memorial” (Moscow) and the European Human Rights Advocacy Center (EHRAC, London) started representing the victim in August 2011, after the case was referred to the Grand Chamber for new consideration. On January 12, 2011 “Memorial” and EHRAC lawyers took part in the hearings at the ECtHR in Strasbourg (France).
The applicant was Vladimir Mikhailovich Kotov, born in 1948, Russian citizen and resident of Krasnodar city. On April 15, 1994, Kotov made a one year term deposit of 3,330 rubles in the commercial private bank “YURAK” offering a 200% annual interest rate. After the bank informed about lowering its deposit interest rates in August 1994, Kotov went to its office in order to close his account. However the bank refused to close the account and did not pay him back the due amount of money. Kotov submitted an application to the Court. On February 20, 1995, the Court of the Oktyabrsky district of Krasnodar city ruled in favor of Kotov, obliging the bank to pay him 10,156 rubles for moral and material damages considering adjustment for inflation. On April 5, 1996, the compensation was raised up to 17,983 rubles as a result of the long-lasting non-implementation of the judgment.
On June 16, 1996, the bank declared bankruptcy under the decision of the arbitration court of Krasnodarsky region. While bankruptcy procedures were ongoing, there were a list of prioritized creditors (700 people), including invalids, war veterans and people actively involved in the bankruptcy procedures. They were remunerated with compensation for their deposits taking into account the interest rates and benefits.
The other creditors, including Kotov, had to be reimbursed when addition means would have been found. Kotov filled an application to be compensated with 17,983 rubles but he got only 140 rubles. Kotov appealed to the court and on August 26, 1998 the arbitrage court of Krasnodarsky region acknowledged that the list of the prioritized creditors was defined in violation of the law and that on the basis of the documents provided by the manager of the bank it was not possible to identify the group, which Kotov should be considered part of. The arbitration court gave the manager one month to rectify the violations. On June 17, 1999, bankruptcy procedures were completed as the bank was lacking financial means. Thus Kotov did not get his money back.
After the hearings, the Grand Chamber ECtHR held that there was no violation of the Article 1 of the Protocol No. 1 affecting the applicant.
The Court noted that at the national level the applicant had at his disposal all the necessary domestic remedies to defend his right to be compensated for the bank's default. However he didn’t use legal way to get the compensation in a due time limit.
The Court concluded that the State did not fail to fulfill its obligations under the Article 1 of the Protocol No. 1, as the applicant had the opportunity to protect his rights. As a result, there had been no violation of the applicant's rights.
Meanwhile, the ECtHR judgment on the case “Kotov v. Russia” was not unanimous. Five of the seventeen judges considered that there has been indeed a violation of Article 1 of the Protocol No. 1 . Their dissent opinions were based on the Court’s case-law recognizing that the State has an obligation, also in respect of interferences by a private individual (the Russian government, for its part, argued that it is responsible for interferences by commercial companies, in this case – the bank "YURAK"). Moreover, the judges considered that Kotov did not have the chance to defend his rights because at that time in the national legislation there was unclear legal situation, and that deprived the applicant of the possibility to obtain his compensation.
It has to be noticed that the case “Kotov v. Russia” deals with a complex legal issue of the State's responsibility for the behavior of private banks. The case also concerns the systemic problem of “depositors-victims of frauds” in Russia.
April 6, 2012
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