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15.12.2016 On December 15, 2016, the Constitutional Court of the Russian Federation reviewed the possibility of enforcement of the judgement of the European Court of Human Rights of 31 July 2014 in the case OAO Neftyanaya Kompaniya Yukos v. Russia

On 15 December 2016, the Constitutional Court of the Russian Federation (hereinafter – RCC) reviewed the possibility of enforcement of the judgement of the European Court of Human Rights (hereinafter – ECtHR) of 31 July 2014 in the case of OAO Neftyanaya Kompaniya Yukos v. Russia. This is the second case when the RCC is asked to decide whether a decision of an international human rights body can be enforced in accordance with the Constitution of the Russian Federation. In the judgement of 31 July 2014 the ECtHR held that Russian Federation was under an obligation to pay the applicant company’s shareholders as they stood at the time of the company’s liquidation and, as the case may be, their legal successors and heirs EUR 1 866 104 634 as compensation for violation of Article 1 Protocol No. 1 to the European Convention on Human Rights.

The Institute for Law and Public Policy has filed an independent expert opinion (amicus curiae brief) upon the request of a RCC judge in which it examined the ECtHR case-law on the issue of admissibility of individual applications submitted by company’s shareholders and affording them just satisfaction, as well as its case-law in relation to criteria for lawful levying of public dues (taxes, tax sanctions, administrative charges etc.). Moreover, the Institute examined the possibility of enforcement of the 31 July 2014 ECtHR judgement in accordance with the Constitution of the Russian Federation.

Analysis conducted by the Institute leads to the following conclusions:

1. Company’s shareholders can participate in the proceedings before the ECtHR either as applicants or as beneficiaries of a just satisfaction award. In the former case shareholders cannot normally act as applicants if company’s rights are violated save for exceptional circumstances. As for the latter situation, of which the OAO Neftyanaya Kompaniya Yukos v. Russia case is an example, under some circumstances shareholders, in their capacity as legal successors of a company liquidated in the course of proceedings before the ECtHR, are entitled to benefit from the ECtHR just satisfaction award despite not exhausting domestic remedies and not being a party to the proceedings before the ECtHR, and not qualifying as “victims” of a Convention violation.

2. The approach taken by the ECtHR in the case of OAO Neftyanaya Kompaniya Yukos v. Russia does not contradict its prior practice on Article 1 Protocol No. 1 standards governing lawful levying of taxes, tax sanctions and administrative charges. These standards, firstly, impose a requirement of clarity and foreseeability of the law (including both statutory law and case-law), which should normally allow a person to foresee the consequences of their actions, and, secondly, oblige a State-Party to assess whether levying public dues would lead to a person’s inability to resume economic activity after paying those dues.

3. Payment of compensation to Yukos shareholders is a constitutionally acceptable way of enforcing the judgement of the ECtHR of 31 July 2014 in the case of OAO Neftyanaya Kompaniya Yukos v. Russia. Payment of just satisfaction, afforded by the ECtHR for Convention violations, arising out of unlawful enforcement actions and decisions of national courts, not only does not contradict, but, quite the contrary, directly follows from general principles of the relation between the Constitution of the Russian Federation and judgements of the ECtHR. The ECtHR 31 July 2014 judgement bears no contradiction with fundamentals of the constitutional system of the Russian Federation and the Constitution provisions on rights and freedoms, and their interpretation by the RCC in its judgements of 14 July 2005 N 9-П and of 30 July 2001 N 13-П. The Russian Federation is entitled to establish any just satisfaction payment scheme within the boundaries set by paragraphs 2(a) and 2(b) of the operative part of the 31 July 2014 judgement. In doing so it may apply (by analogy and insofar as they are compatible with the essence of enforcement of the ECtHR just satisfaction award) provisions of the Russian Civil Code governing property distribution in bankruptcy proceedings.

Text of the amicus curiae brief (in English)

Appendix to the amicus curiae brief (in Russian)

Video of the session of the Russian Constitutional Court on December 15, 2016.

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