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Sovtransavto Holding v. Ukraine, (48553/99) [2002] ECHR 621, 25 July 2002

Facts: the applicant Sovtransavto is a Russian public company which owned shares in a Ukranian public company Lougansk. Sovtransavto-Lougansk passed a resolution which increased the company’s share capital and reduced the applicant company’s shareholding. Sovtransavto-Lougansk was thus able to sell part of its assets to various undertakings set up by its managing director. The applicant received a compensation after Sovtransavto-Lougansk liquidated, which was allegedly not commensurate with its original share in the company’s share capital.

Complaint: Violation of Article 6 § 1 (right to a fair trial) because of the excessive length of the proceedings and violation of Article 1 because of the loss of control over the management and assets of Sovtransavto-Lougansk following the ratification of the resolutions passed by its shareholders and that

Holding: the Court found a violation of article 1 (protection of property) and a violation of article 6§1 (right to a fair trial) of the Convention.

Reasoning: The ECHR found that none of the applicant’s demands had been recognized, which deprived the applicant of any possibility of obtaining a hearing of its claims; that the Ukrainian authorities’ activities were incompatible with the notion of an "independent and impartial tribunal" and that they failed to apply the relevant law correctly. Accordingly, there had been a violation of article 6§1. As to article 1, the Court found that the shares held by the applicant company constituted "possessions". Article 1 imposed positive obligations on State parties. The Ukrainian courts’ interpretation and application of the law was not compatible with the applicant company’s right to the peaceful enjoyment of its possessions. The manner in which the proceedings in issue had been conducted had upset the fair balance that had to be struck between the general interest and the need to protect the applicant company’s right to the peaceful enjoyment of its possessions.

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