FELLNER A OSTATNÍ proti Turecku

SECOND SECTION

CASE OF FELLNER AND OTHERS v. TURKEY

(Application no. 13312/08 and 840 other applications)

(see list appended)

JUDGMENT

This version was rectified on 11 July 2023

under Rule 81 of the Rules of Court.

This judgment was revised in accordance with Rule 80 of the Rules of Court in a judgment of 12 September 2023.

STRASBOURG

10 October 2017

This judgment is final but it may be subject to editorial revision.

In the case of Fellner and Others v. Turkey,

The European Court of Human Rights (Second Section), sitting as a Committee composed of:

Nebojša Vučinić, President,
Valeriu Griţco,
Jon Fridrik Kjølbro, judges,
and Hasan Bakırcı, Deputy Section Registrar,

Having deliberated in private on 19 September 2017,

Delivers the following judgment, which was adopted on that date:

PROCEDURE

1. The case originated in 841 applications (see Annex) 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”) by nationals of States indicated in the annexed list (“the applicants”), on different dates between 4 March 2008 and 18 January 2012.

2. The applicants were represented by Ms J. Ertürk, a lawyer practising in Ankara. The Turkish Government (“the Government”) were represented by their Agent.

3. On 1 March 2016, 14 March 2016 and 26 April 2016 respectively, the applications were communicated to the Government.

4. Further to notification made under Article 36 § 1 of the Convention and Rule 44 § 1 (a) of the Rules of Court having regard to the fact that the applicants are their nationals, the German, the Austrian, the French, the Italian, the Spanish, the British, the Belgian, the Finnish, the Greek and the Liechtenstein Governments did not make use of their right to intervene in the proceedings.

THE FACTS

I. THE CIRCUMSTANCES OF THE CASE

5. The applicants, whose names, dates of birth and places of residence are shown in the Appendix, were all individual small shareholders of Demirbank, a private bank in Turkey. On different dates they purchased different amounts of Turkish and German share certificates in Demirbank through the German stock market.

6. By a decision dated 6 December 2000, the Banking Regulation and Supervision Board (Bankalar Düzenleme ve Denetleme Kurulu – hereinafter “the Board”) decided to transfer the management and control of Demirbank to the Savings Deposit Insurance Fund (Tasarruf Mevduatı Sigorta Fonu – hereinafter “the Fund”). 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.

7. On 6 December 2000 the Board of Directors of the Fund decided to take over the shares of Demirbank in exchange for paying Demirbank’s loss corresponding to its paid-up capital, namely 275,000,000 Turkish liras (TRY).

8. On 31 January 2001 all equities of Demirbank were removed from its account at the Istanbul Stock Exchange and were transferred to the account of the Fund.

9. On 2 February 2001, the main shareholder of Demirbank, namely Cıngıllı Holding A.Ş., brought administrative proceedings against the Banking Regulation and Supervision Agency (Bankalar Düzenleme ve Denetleme Kurumu – hereinafter “the Agency”) before the Ankara Administrative Court, seeking a ruling setting aside the decision of 6 December 2000 to transfer Demirbank to the Fund. The Ankara Administrative Court found that it lacked jurisdiction, and transferred the case to the Supreme Administrative Court. On 5 November 2004 the Supreme Administrative Court set aside the Board’s decision of 6 December 2000, holding that the takeover had been illegal. An appeal and a request for rectification lodged by the Agency were rejected on 14 April 2005 and 15 December 2005 respectively.

10. On 20 September 2001 the Fund entered into an agreement with HSBC Bank, and sold Demirbank to the latter. Accordingly, Demirbank’s legal personality was extinguished and it was struck off the commercial register on 14 December 2001.

11. On 20 September 2001 Ms S. Cıngıllıoğlu, the main shareholder of Cıngıllı Holding A.Ş., brought administrative proceedings against the Fund before the Ankara Administrative Court, seeking the annulment of the agreement to sell Demirbank to HSBC. On 21 April 2004 the Ankara Administrative Court annulled the agreement on the ground that the transfer of Demirbank to the Fund had been found to be illegal by the Supreme Administrative Court. An appeal and a request for rectification lodged by the Fund were rejected and the decision became final on 24 February 2006.

12. On different dates the applicants applied to the Board and claimed compensation arguing that they had lost their shares in Demirbank, as a result of its transfer to the Fund. The Board did not respond to the applicants’ claims within the statutory period. The applicants therefore applied to the administrative courts and requested the annulment of the Board’s implied rejection of their compensation claims. However, the administrative courts dismissed the applicants’ cases as out of time on the ground that they should have initiated proceedings at the latest within sixty days following 31 January 2001, the date on which Demirbank’s equities had been transferred to the Fund’s account at the Stock Exchange. The administrative courts’ decisions were upheld by the Supreme Administrative Court and thus became final.

13. Following the annulment of the decision concerning the transfer of Demirbank to the Fund by the domestic courts in 2005, the applicants applied to the administrative courts. Relying on the restitutio in integrum principle, the applicants argued that the judgment of the court which annulled the Board’s decision dated 6 December 2000 had to be enforced and their rights as shareholders of Demirbank should be reinstated. On different dates the applicants’ requests were rejected by the administrative courts and the administrative courts’ decisions were upheld by the Supreme Administrative Court. The Supreme Administrative Court held that the judgment regarding the annulment of the Board’s decision of 6 December 2000 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. It also maintained that even if that was the case, 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 sale to HSBC.

14. Following the annulment of the agreement to sell Demirbank to HSBC, the applicants in the applications followed by an asterisk (*) in the annexed list, brought a third set of proceedings against the Fund and claimed compensation for their lost shares in Demirbank. The Istanbul Administrative Court dismissed the applicants’ compensation claims for being out of time on the ground that they should have brought their claims within sixty-day statutory time-limit after Demirbank’s equities had been transferred to the Fund’s account at the Stock Exchange on 31 January 2001. The decisions of the administrative courts were upheld, and the applicants’ requests for rectification of the decision were rejected.

II. RELEVANT DOMESTIC LAW

15. A description of the domestic law may be found in the judgment of Reisner v. Turkey (no. 46815/09, § 34, 21 July 2015).

THE LAW

I. JOINDER OF THE APPLICATIONS

16. The Court considers that, in accordance with Rule 42 § 1 of the Rules of Court, the applications should be joined, given their similar factual and legal background.

II. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION

17. The applicants complained that their right to peaceful enjoyment of their possessions had been violated. According to the applicants, they were illegally deprived of their shares in Demirbank and could not receive any compensation for their loss. In this connection, they relied on Article 1 of Protocol No. 1 to the Convention.

18. The Government contested the applicants’ allegation.

19. 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.”

A. Admissibility

20. The Government submitted that the applicants had failed to exhaust relevant domestic remedies within the meaning of Article 35 § 1 of the Convention.

21. In this regard the Government argued that since the applicants had not initiated proceedings within the sixty-day statutory time-limit following 31 January 2001, the date on which Demirbank’s equities had been transferred to the Fund’s account at the Stock Exchange, they could not be regarded as having duly exhausted domestic remedies in compliance with the applicable rules and procedures of domestic law.

22. They further argued that the applicants did not bring an action before the administrative courts to have the Fund’s decision dated 6 December 2000 set aside. According to the Government, in the present applications, the interference with the applicants’ property rights occurred with the Fund’s decision of 6 December 2000 to take over the shares of Demirbank and the applicants did not lodge a complaint against this decision. They therefore invited the Court to declare the applicants’ complaints under Article 1 of Protocol No. 1 to the Convention inadmissible for non‑exhaustion of domestic remedies.

23. The applicants disagreed with the Government.

24. The Court notes that the complaints intended to be made subsequently before the Court should have been made to the appropriate domestic body, at least in substance and in compliance with the formal requirements laid down in domestic law (see Vučković and Others v. Serbia (preliminary objection) [GC], nos. 17153/11 and 29 other cases, § 72, 25 March 2014). However non-exhaustion of domestic remedies cannot be held against the applicant if, in spite of the latter’s failure to observe the forms prescribed by law, the competent authority has nevertheless examined the substance of the claim (Vladimir Romanov v. Russia, no. 41461/02, § 52, 24 July 2008, and Gäfgen v. Germany [GC], no. 22978/05, § 143, ECHR 2010).

25. The Court also reiterates that Article 35 § 1 must be applied with some degree of flexibility and without excessive formalism and that, when a remedy has been pursued, use of another remedy which has essentially the same objective is not required (Kozacıoğlu v. Turkey [GC], no. 2334/03, § 40, 19 February 2009).

26. Turning to the present cases, the Court observes that the applicants did not bring an action within sixty days following 31 January 2001, the date on which Demirbank’s equities had been transferred to the Fund’s account at the Stock Exchange, and for the same reason, their first compensation claims had been dismissed as being out of time by the domestic courts. The applicants also did not have recourse to any domestic remedy against the Fund’s decision of 6 December 2000 to take over the shares of Demirbank. Nevertheless, following the annulment of the transfer of Demirbank to the Fund by the domestic courts in 2005, the applicants initiated a fresh set of proceedings seeking the reinstatement of their shareholder rights and the domestic courts have examined the merits of their cases.

27. In these circumstances, the Court finds that since the domestic courts have examined the substance of their complaints regarding their property rights deriving from the shares in Demirbank, the applicants could not have been expected to bring another action against the State and they thus cannot be said to have failed to exhaust domestic remedies within the meaning of Article 35 § 1 of the Convention.

28. The Court notes that this complaint 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.

B. Merits

29. The applicants complained that they had been deprived of their shares in Demirbank as a result of the illegal actions of the State and that they had not been compensated for their loss.

30. The Government firstly argued that the applicants had not had any “possession” within the meaning of Article 1 of Protocol No. 1 to the Convention as they could only submit the photocopies of their share certificates instead of the originals of them and the shares in Demirbank had no monetary value at the time when it had been taken over by the Fund. They further maintained that the interference by the public authorities in the operation of Demirbank had a legal basis in domestic law and pursued a legitimate aim, namely to maintain financial stability of the economic system and that regard must be had to all the circumstances of the cases as a whole. They therefore invited the Court to find no violation of Article 1 of Protocol No. 1 to the Convention.

31. The Court notes at the outset that a person who complains of a violation of his or her right to property must firstly show that such a right existed (Pištorová v. the Czech Republic, no. 73578/01, § 38, 26 October 2004, and Zhigalev v. Russia, no. 54891/00, § 131, 6 July 2006). The Court observes in the present cases that, in order to substantiate that they had held shares in Demirbank, the applicants submitted the copies of their share certificates to the Court. Even though the Government expressed doubts about their authenticity, they did not adduce any evidence in support of their doubts, nor did they indicate any concrete reason as to why the authenticity of those documents should be questioned. In these circumstances, and bearing in mind that the applicants had already been considered as shareholders of Demirbank during the proceedings before the domestic courts, the Court sees no reason to doubt the validity of the documents submitted by the applicants and rejects the Government’s objection in this respect.

32. The Court further notes that it has recently examined a similar complaint and found a violation of Article 1 of Protocol No. 1 to the Convention in the case of Reisner v. Turkey (no. 46815/09, §§ 45-51, 21 July 2015), where it concluded that the Demirbank shares purchased on the stock market had had an economic value and thus constituted possessions within the meaning of Article 1 of Protocol No. 1. In that case, the Court also reiterated that the complexity of the domestic enforcement procedure or of the State budgetary system could not 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 (see Burdov v. Russia (no. 2), no. 33509/04, § 70, ECHR 2009, and Süzer and Eksen Holding A.Ş. v. Turkey, no. 6334/05, § 116, 23 October 2012). It also noted that the applicant, whose shares had been removed from his possession on the basis of administrative actions that were subsequently found to have been unlawful, had received no compensation for his loss and had thus had to bear a disproportionate individual burden (see Reisner, cited above, § 50).

33. The Court observes that in the present cases the applicants were all small shareholders of Demirbank and the domestic courts dismissed their respective claims based on restitutio in integrum principle on the ground, inter alia, that the restitution of their rights as shareholders had been legally impossible as, following its sale to HSBC, Demirbank had been struck off the commercial register. The Court notes that the present cases concern the same subject matter as that at issue in the case of Reisner v. Turkey (cited above) and it therefore finds no particular circumstances in the instant cases which would require it to adopt a different conclusion from the one reached in Reisner (cited above, §§ 45-51).

34. In this connection, the Court notes that the decisions to declare the takeover and sale of Demirbank unlawful had consequences for both the main shareholders and small shareholders, whether they were parties to the annulment proceedings or not. It is clear that the applicants suffered pecuniary loss, no matter how small the number of their shares. The authorities were under an obligation to compensate them for the loss, which was clearly the result of illegal administrative actions that were subsequently declared unlawful by the Supreme Administrative Court (see paragraphs 9 and 11 above). The applicants’ shares were removed from their possession on the basis of unlawful interference, yet they received no compensation for their loss and were made to bear a disproportionate individual burden.

35. In view of the foregoing considerations, the Court holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention.

III. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION

36. In the applications followed by an asterisk (*) in the annexed list, the applicants also complained of a violation of Article 6 § 1 of the Convention in connection with the third set of proceedings (see paragraph 14) in that the Istanbul Administrative Court had dismissed their respective cases as being out of time and had thus deprived them of their right of access to a court.

37. The Government contested that argument, arguing that the applicants’ cases were dismissed due to their own negligence in complying with the procedural rules of domestic law on time-limits.

38. The relevant part of Article 6 § 1 of the Convention reads as follows:

“In the determination of his civil rights and obligations ... everyone is entitled to a fair and public hearing ... by [a] ... tribunal.”

39. The Court notes that this complaint 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.

40. The Court notes that it has already examined the same complaint and found a violation of Article 6 § 1 of the Convention in its Reisner judgment (cited above, §§ 52-61). In that judgment, the Court held that, having regard to the fact that the restitution of the applicant’s shares had proved to be impossible due to the sale of Demirbank to HSBC, that the sale agreement entered into by the Fund and HSBC had been annulled by a final decision on 24 February 2006 and that it would have been unreasonable to expect the applicant to lodge a compensation claim before that date, the domestic court’s strict interpretation of the time-limit had precluded a full examination of the merits of the case and impaired the very essence of the applicant’s right of access to a court (ibid., §§ 55-61).

41. The Court has examined the present applications and finds no particular circumstances which would require it to depart from its findings in the aforementioned Reisner case.

42. The Court therefore concludes that the applicants’ right of access to court, in the third set of proceedings, has been breached and that there has been a violation of Article 6 § 1 of the Convention.

IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION

A. Damage

43. In respect of the pecuniary damage, the applicants claimed compensation amounting to the average market value of their shares in Demirbank on 5 December 2000, the day before the taking over of Demirbank by the State. They argued in this respect that the average market value of a Demirbank share should be determined according to its trade price at the time on the Munich Stock Exchange as the applicants purchased share certificates in Demirbank through the German stock market.

44. In respect of non-pecuniary damage, the applicants asked the Court to award them an amount which it would deem appropriate.

45. The Government contested the claims. Referring to several expert reports, the Government argued that at the time when Demirbank had been taken over by the Fund, it had had no monetary value. In their view, the applicants had not suffered any pecuniary loss. They further claimed that there had been no causal link between the damage allegedly sustained by the applicants and the actions or inactions of the public authorities.

46. The Court reiterates at the outset that a judgment in which it finds a breach imposes on the respondent State a legal obligation to put an end to the breach and make reparation for its consequences in such a way as to restore, as far as possible, the situation existing before the breach (see Brumărescu v. Romania (just satisfaction) [GC], no. 28342/95, § 19, ECHR 2001‑I). The Contracting States that are parties to a case are in principle free to choose the means whereby they will comply with a judgment in which the Court has found a breach. This discretion as to the manner of execution of a judgment reflects the freedom of choice attaching to the primary obligation of the Contracting States, under Article 1 of the Convention, to secure the rights and freedoms guaranteed. If the nature of the breach allows restitutio in integrum, it is for the respondent State to implement it. If, however, national law does not allow – or allows only partial – reparation to be made for the consequences of the breach, Article 41 empowers the Court to afford the injured party such satisfaction as appears to it to be appropriate (see Papamichalopoulos and Others v. Greece (Article 50), 31 October 1995, § 34, Series A no. 330-B).

47. The Court observes that, in its judgment in the case of Reisner v. Turkey ((just satisfaction), no. 46815/09, §§ 15-24, 1 December 2016) which had been brought before the Court by another small shareholder of Demirbank, it held that an award of compensation for his pecuniary loss was the most appropriate just satisfaction for the applicant and that the average market value of a Demirbank share on the day prior to the taking over of Demirbank, namely on 5 December 2000, in the Istanbul Stock Exchange should be taken into account when determining the applicant’s pecuniary loss. Given the fact that the applicants in the present cases are in the same situation as the applicant in Reisner v. Turkey case (cited above), the Court sees no reason to depart from that approach.

48. In this connection, noting that the average value of one Demirbank share on 5 December 2000 was equal to 756 Turkish liras (TRL[1] at the time) according to the Istanbul Stock Exchange Market and that one German certificate was the equivalent of 500 Turkish shares (see Reisner v. Turkey (just satisfaction), cited above, § 24), the Court finds it appropriate to award each applicant an amount of just satisfaction based on the multiplication of TRL 756 by the total number of his or her shares in Demirbank which was then updated according to the inflation calculator of the Central Bank of the Republic of Turkey (http://www.tcmb.gov.tr) and converted into euros (EUR) in accordance with the current rates (ibid., §§ 24-26).

49. Accordingly, the Court awards each applicant the sum indicated in the appended table for pecuniary damage (a total sum of EUR 9,679,799.26 in respect of all the applicants).

50. As regards the applicants’ claim for non-pecuniary damage, having regard to the facts of the present cases, the Court considers that the finding a violation of Article 6 § 1 and Article 1 of Protocol No. 1 constitutes in itself sufficient just satisfaction for any non-pecuniary damage sustained by the applicants.

B. Costs and expenses

51. The applicants claimed different amounts ranging between EUR 1,286.25 and EUR 273,335.31 in respect of costs and expenses incurred in the domestic proceedings and before the Court. They further asked the Court to award them an amount which it would deem appropriate for their lawyer’s fee during the proceedings before the Court.

52. The Government contested the claims.

53. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum.

54. In the present case, regard being had to the documents in its possession and to its case-law, the Court considers it reasonable to award a total sum of EUR 25,000 in respect of costs and expenses incurred by the applicants.

C. Default interest

55. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

1. Decides to join the applications;

2. Declares the applications admissible;

3. Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention in the present applications;

4. Holds that there has been a violation of Article 6 § 1 of the Convention in respect of the third set of proceedings in applications followed by an asterisk (*) in the annexed list;

5. Holds

(a) that the respondent State is to pay the applicants, within three months, the amounts for pecuniary damage as indicated in the Annex (a total sum of EUR 9,679,799.26 in respect of all the applicants), and a total sum of EUR 25,000 in respect of costs and expenses incurred by all the applicants in the proceedings before the Court;

(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;

6. Holds that the finding of a violation constitutes in itself sufficient just satisfaction for the non-pecuniary damage sustained by the applicants;

7. Dismisses the remainder of the applicants’ claims for just satisfaction.

Done in English, and notified in writing on 10 October 2017, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Hasan Bakırcı Nebojša Vučinić
Deputy Registrar President

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