It is strange conventional wisdom In Ukraine that rule of law and human rights are a completely different story to business practice. Around the world the evidence shows that these basic values fundamentally shape the corporate modus operandi. It is no wonder that business also calls for appropriate assurance of its rights and access to efficient justice. Denys Ovcharov and Kseniya Proko- nova, Juscutum Attorneys Association, explained to us that business also requests humane treatment towards it.
UJBL: It is known that the ECHR is authorized to defend the rights of business in cases when its rights are violated by the state. What are the most common reasons for a business to become an applicant to the ECHR?
Denys Ovcharov: The European Court of Human Rights is, in the first place, a reputational court. Its rulings, unlike those of the infamous “Pechersk international court”, do not require any further explanations. When deciding to seek justice with the ECHR, the primary reasoning for business is not looking to enforce judgments and make the state compensate damages. Big business in Ukraine is, in one way or another, always connected with politics. The ECHR’s decisions are a trump card in the political game, a signal to investors that a company is as clean as a whistle in the eyes of the law. Upon a positive decision, a company’s reputation does not need white-washing by crisis managers.
Kseniya Prokonova: Business may apply to the ECHR faced with an unfair trial, violation of the principle of adversarial process, unjust decisions, or deprivation of property rights, etc. Most often, applicants address the Court in relation to alleged violations of Article 6 (right to a fair trial), Article 1 of Protocol No. 1 (right to peaceful enjoyment of property), and Article 13 (right to an effective remedy). Before speaking about violation of property rights in case of interference, one should define whether it is in line with Article 1 of Protocol No. 1 of the European Convention. We can do so by applying a test based on the text of the Convention and the Court’s case, namely to assess whether:
— it is prescribed by law
— it is in the public interest, and
— it is necessary in a democratic society (striking a fair balance).
In the client’s perception, the ECHR is in many cases simply a next court of higher instance. This perception is fundamentally false. Each case should be analyzed in the context of both domestic and international law so that a particular situation is also considered through the prism of the Convention. The things seen by the majority of people as human rights violations are usually nothing more than aggravating the realities of life in a particular State Party to the Convention.
UJBL: Do your clients consider taking their cases to the ECHR? What advantages and reservations can you identify from your perspective as an attorney?
K. P.: Today the niche of preparing and supporting applications from business is occupied by international law firms and national human rights organizations. Both have their drawbacks. It would be naive to expect the former to be familiar with our national legislation. It is difficult to explain why courts of the first instance may continuously issue warrants for arrest (seizure) of property despite the requirements of the Criminal Procedure Code. The latter ones specialize in submission in relation to the top-ranking Article for individuals — protection against torture and ill-treatment. It is indeed a burning issue. At the same time, business is “tortured” in a different way — through searches and arrests. “Rehabilitation” following this type of torture is also a long-lasting and demanding process. Most often, national courts do not provide an effective remedy.
UJBL: The ECHR is accused of being overloaded with work, and applications may take years to consider. And for obvious reasons a business simply cannot wait too long. Do you know of any mechanism to facilitate this process? In a nutshell, is it advisable for Ukrainian applicants to initiate these procedures?
D. O.: The ECHR is more than overloaded with complaints. There is an avalanche of applications. In order to decrease their number, bureaucratic instruments are used. Complaints are rejected on the formal grounds. Therefore, when preparing a complaint, it is necessary to contact experts who understand how to use the space provided in the form to the applicant’s advantage. You have a limited number of pages for everything. Often, a lawyer has an impossible task to fit the description of the facts and violations into several pages. National courts do not encourage brevity. We are all used to bulky legal volumes. On the contrary, the ECHR requires an explanation of the essence. The Court will return the favor since the court is entitled to go beyond the requirements, to question witnesses, and to send a fact-finding mission. Application to the ECHR is not a quick solution for a company’s problems. It does not suspend the execution of judgments of domestic courts. Rule 39 of the Rules of the Court on interim measures comes to the aid of defense counsels of persons in custody; however, it is almost inapplicable to business. Nevertheless, it is necessary to remember that achieving immediate results is not the main purpose of the application. Other international institutions and tribunals may also use the Court’s findings.
UJBL: The ECHR imposed stricter requirements for applications from 1 January 2014. How does it affect legal work? What are the most complicated stages of the procedure?
D. O.: Imposing stricter requirements is the response to an increasing flow of applications. The six-month period for lodging an application was reduced to four months after exhausting all domestic remedies.
Accordingly, there is not much time for considerations and decisions. I guess it will also affect the quality of complaints, as there will be less time for choosing an attorney and preparing a justified complaint. Since the ECHR has no application fee, they can decrease the flow only by introducing standards and strict rules. The application form has changed. In general, those who had previously worked with the ECHR do not note significant changes. The most difficult part of this procedure is writing a complaint. It must be “sexy”. The ECHR divides the rights according to their “attractiveness”, and the right to a fair trial is the leader. It is worth using, but it means that your complaint must draw tears from the very first page.
K. P.: In this case, there is a chance of careful examination of 20 extra pages of additional explanations and all accompanying documents. A complaint must undergo initial analysis and be declared admissible. At any stage of proceedings, there is an opportunity resolve an issue through a friendly settlement. Upon admission of the application, the Court also invites the applicants to submit the claims for just satisfaction. While assessing damages, the court takes into account reasonability of claims and whether they are referable to the violation. There expenses are divided into pecuniary and non-pecuniary damages. There is an additional bonus: the costs of legal assistance are also subject to reimbursement. For this purpose, you should maintain documentation and timesheets.
UJBL: The ECHR considers the spirit of the law to be higher than the letter of the law. What does this mean in practice?
D. O.: The logic of ECHR is not always clear to those accustomed to national courts. The Court’s judges are genuinely interested in the arguments and claims that are simply dismissed by their Ukrainian counterparts. The constitutional provisions are believed to be the source of law and not empty phrases in documents as they are seen by national courts. The parties may be asked to give explanations in a hearing. It is an exceptional practice, but the Court may decide to hold a public hearing in the case. One should not expect, however, the permissiveness that governs court hearings in Ukraine. The respondent government cannot blindly invoke the presence of a certain norm of national legislation if it runs counter to the Convention.
UJBL: How does recent ECHR court practice affect the Ukrainian judiciary?
D. O.: Among interesting decisions on Ukraine, we may name the decision in the case of Ünal Akpinar İnşaat Sanayi Turizm Madencilik Ve Ticaret S.A. v. Turkey (application No.41246/98). The court stated that even the full-scale enforcement of a court decision is not always a fair and sufficient measure for protecting the rights of an individual at the times of unstable economic situation in the country. The Turkish public company in 1981 won a tender held by the Ministry of Energy and Natural Resources of Turkey for the construction of the water supply system Sanliurfa, which was supposed to become a part of the Southeast Anatolia Development Project. The corporate applicant signed the contract with the state body. Following several years, the applicant suspended the work under the contract since the terms and conditions thereof were no longer profitable with the view to the unstable economic situation in the country. Along with the suspension, the applicant filed a lawsuit in the national court against the state body for the compensation of damages and debt repayment. The applicant undertook multiple attempts to seek justice in national courts. The courts awarded damages in different sums. Domestic remedies were exhausted in 2004. Similar to Ukraine, the state would not compensate the awarded amount prior to completion of the process. The Applicant referred to Article 1 of Protocol 1 of the Convention stating the company was not able to compensate for incurred expenses, in the view of inflation and fluctuating exchange rate, because of the delays in payments on decisions of national courts, which were intentionally initiated by the state. The ECHR found a violation of Article 1 of Protocol 1 of the Convention and awarded EUR 1 million in pecuniary damages and EUR 5,000 in non-pecuniary damages. Why should it present any interest to Ukraine? The court indicated that in unstable economic situation, even the sum awarded by a court might not always be just and sufficient. Therefore, when deciding on cases, the courts should look at not only the law and terms of the contract, but also at the economic situation in the country. In addition, deliberate delay of the execution of court judgments in such case may also constitute a violation of the right to property.
UJBL: What kinds of Ukrainian applications do you expect to be received for consideration at the ECHR in the near future?
K. P.: The PJSC Naftogazvydobuvannya will submit an application in November, and, in our opinion, one can draw parallels with the Yukos case. The situation around the company has long shifted from political to, frankly, illegal one. The company suffered the pressure and “professionalism” of the system. For three years, the Prosecutor-General’s Office has not carried out pre-trial investigation and, instead only initiated new arrests that paralyzed the company’s activities. The judges of Pechersk District Court, co-starring with the Court of Appeal, granted illegal petitions from the prosecution. Neither did the search of the Court of Appeal contribute to independent administration of independent justice. Interestingly, it was also conducted by the Prosecutor-General’s Office.
In our case, the state cannot refer to national legislation to justify these actions since Articles 170-174 and 276-278 of the CPC prohibit seizing this type of property. In the view of the ECHR, there are no legal grounds for arrest in this case. The property of the company has been arrested several times in relation to ongoing criminal proceedings in the case of the kidnapping of Oleh Seminsky. Neither incorrect qualification of kidnapping under Article 115 of the Criminal Code (homicide), nor subsequent appearance of Seminsky in person stopped the professional judges. The arrests continued. I would like to remind you that this also relates to wells. Halting their operations results in damages incurred by the state. At present, they total approximately UAH 1.7 billion. PJSC Naftogazvydobuvannya was unlawfully deprived of the right to use its property and conduct business activities. Neither national legislation nor international legal norms provide grounds for such interference. Ukrainian courts have repeatedly violated the right to a fair trial, set out in Article 6 of the Convention through holding unjustified closed hearings, denying access to the media, speedy 5-minute trials, and blatant corruption.
In this situation, one can also draw an analogy with the Yukos case in Russia and speak about the political aspect, hence violation of Article 18 of the Convention. According to this Article, the restrictions permitted under the Convention shall not be applied for any purpose other than those for which they have been prescribed. The incumbent President of Ukraine, Petro Poroshenko, and Nikolay Rudkovsky founded PJSC Naftogazvydobuvannya in 1999. Since then, the balance of powers has altered substantially. Since inauguration, there has been a flood of petitions on seizing the company’s property. The Kiev Court of Appeal chaired by Anton Chernushenko sided with the company. Later, criminal proceedings were brought against its chairman as punishment for taking this stance.
He repeatedly told the press about the pressure exerted on him to make him issue an opposite ruling. The Prosecutor-General’s Office is subordinate directly to the President. Thus, we can speak of the use of administrative resource for personal business interests. The true goal of the arrests is freezing the company’s activities, undermining its strength and driving down the share prices with the aim of purchasing the company at a lower cost in the future. That is, arrest as a restriction on the right to property is applied not for ensuring pre-trial investigation, but as an administrative resource.
D. O.: We do not hope to get a quick examination. However, we rely on the “spirit of justice”, that has long vanished from national courts, but remains a respected tradition for the ECHR.
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Core practice areas
- White-collar crime
- Tax law
- Corporate law
- Dispute resolution