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    in Russian

    CM/Inf/DH(2006)19 revised 6 June 20061


    Non-enforcement of domestic judicial decisions in Russia: general measures to comply with the European Courts judgments

    Memorandum prepared by the Department for the execution of the European Courts judgments and first comments by the Russian authorities (Application of Article 46 of the ECHR)



    EXECUTIVE SUMMARY

    The present Memorandum has been prepared to assist the Committee of Ministers in its supervision of the execution by the Russian Federation of a number of judgments of the European Court relating to the public authorities' failure to comply with domestic judicial decisions against the state. These judgments reveal an important structural problem requiring an urgent and comprehensive solution.

    The Memorandum examines the special procedure set up in 2006 to improve the enforcement of such judicial decisions and raises a number of questions about its capacity to ensure that Russia meets its obligations under the Convention as established by the Court's judgments. It takes into account the experience of other member states in resolving similar problems in response to the Court's judgments and the conclusions reached by the CEPEJ on these issues.

    Following this examination, the Memorandum points at a number of outstanding problems and proposes a number of avenues that the Russian authorities may consider in their ongoing search for a comprehensive resolution of the aforementioned problem. The main avenues proposed are:

      1) Improvement of budgetary procedures within the Russian Federation;
      2) Establishment of a subsidiary mechanism of compulsory enforcement including seizure of state assets;
      3) Ensuring effective state liability for the non-enforcement of judgments through judicial remedies;
      4) Introducing adequate default interest in case of non-enforcement;
      5) Ensuring effective liability of civil servants for non-enforcement;
      6) Possible reconsideration of the bailiffs role and increasing their efficiency.

    The Russian authorities were encouraged to consider the Memorandum in the context of their preparation of the expected action plan regarding further general measures needed rapidly to prevent new violations and further applications to the Court.

    The Memorandum has been well received by the authorities and considered to be a positive contribution to the identification of the general measures to be taken. In view of the extent of the problem, the authorities suggested that certain areas be identified where the non-enforcement problems should be solved as a matter of priority taking into account specific circumstances involved.

    INTRODUCTION

    1. Since 2002 a number of judgments of the European Court of Human Rights (the Court) have found violations of the European Convention on Human Rights (the Convention) by the Russian Federation on account of the public authorities failure to comply with domestic judicial decisions delivered against them (violations of Articles 61 and 13 of the Convention and of Article 1 of Protocol No.1). Under Article 46 of the Convention, all these judgments have been transmitted to the Committee of Ministers for supervision of their execution, which notably implies the adoption of general measures preventing new similar violations.

    2. It was widely acknowledged in the Committee of Ministers that the Courts findings reveal important structural problems which must be resolved to comply with the judgments. The main elements at the origin of these problems at issue are summarised below:

      - the bailiffs inefficiency2;
      - lack of coordination between various enforcement agencies3;
      - lack of clarity in judgments to identify the debtor;
      - lack of funds on the debtors account4;
      - non-availability of budgetary funds5;
      - lack of clarity as to the documents to be sent to the Ministry of Finance6.

    The Committee of Ministers therefore invited the Russian authorities to inform it of the measures taken or envisaged to remedy these structural problems, thus preventing new, similar violations.

    3. The Russian authorities expressed their understanding for the concerns expressed in the Committee as regards the importance and complexity of the problems, the large number of people affected by them and the influx of similar applications before the Court (estimated at 40% of all admissible complaints against Russia). They also gave assurance that the current problem is not the lack of funds but the complicated budgetary relations between the federal authorities and the authorities of the subjects of the Russian Federation. Solutions to the problems are already being sought in close co-operation with the Council of Europe (notably through an ongoing bilateral project with CEPEJ).

    4. The Committee has acknowledged that priority should be given to finding urgent solutions to these structural problems and the Secretariat was asked to assist the Committee and the Russian authorities in this matter.

    5. The Secretariat has therefore prepared the present Memorandum with a preliminary description and analysis of the underlying problems and presenting certain possible key avenues for their resolution. Without being exhaustive, the Memorandum largely builds upon the experience of other countries, which were confronted with similar problems when executing the Courts judgments.

    I Changing enforcement procedure between 1997 and 2005

    The procedure for enforcement of domestic judicial decisions ordering the public authorities to pay money has changed several times since the entry into force of the Convention in respect of Russia (5 May 1998):

    Between 1997 and 2001, the bailiff service was the only authority competent to ensure enforcement of all judgments, including of those delivered against the state, its subjects, their organs, municipalities or its entities (hereinafter altogether the Public Authorities). The 1997 Law on enforcement proceedings empowered bailiffs to take all necessary measures to that effect, including the attachment of goods or accounts.

    The violations found by the Court during this period mainly originated from the inefficiency of the bailiff service7.

    Between 2001 and 2005, the enforcement of judgments against the public authorities was mainly based on a special procedure established by government decrees entrusting execution to the Ministry of Finance8. In addition, the Ministry of Finance was duly empowered to make the necessary payments by yearly Laws on the Federal Budget (starting with the Law n 150- of 27 December 2000). Bailiffs competence in this area was explicitly excluded as from 2003 (Law n 176- of 24 December 2002). No compulsory means existed to secure the execution of judgments.

    Notwithstanding these laws and regulations, the Supreme Court held on several occasions between 2001 and 2003, that the existence of a specific execution procedure did not, in principle, prevent claimants from seeking enforcement through the bailiff service, if necessary. However, the enforcement of such decisions through bailiffs did not appear to work effectively in practice.

    On 14 July 2005, the Constitutional Court challenged Government Decree No. 666, stating that the special system set up required a legislative basis. The Constitutional Court gave the authorities until 1 January 2006 to set up the appropriate enforcement procedure, respecting the following principles:

      enforcement of judicial decisions shall take place within a reasonable time;
      enforcement proceedings shall be subject to an effective not only formal judicial review making it possible to challenge acts by civil servants delaying or denying enforcement;
      non-compliance with a court decision shall give rise to debtors responsibility under the federal law and a special mechanism must exist to implement civil servants responsibility for lack of or delay in enforcement.

    In the wake of the Constitutional Courts judgment, Parliament adopted the Law of 27 December 2005 which confirmed the special enforcement procedure (Law n 197 - of 27 December 2005 amending the Budgetary Code, the Code of Civil Procedure, the Arbitration Code and the Federal Law on Enforcement proceedings, hereinafter referred to as the Law of 2005).

    II - Enforcement Procedure in force since January 2006

    The new procedure for enforcement of judgments delivered against the public authorities is largely based on the presumption that the new responsible authority, the Federal Treasury (with its territorial offices) will henceforth effectively ensure, upon the claimants request, compliance with judgments. It was not found necessary to introduce any right for claimants to use coercive enforcement mechanisms against the public authorities.

    The main elements of the new procedure are as follows:

    a) Bailiffs competence considerably restricted

      Bailiffs definitely have no competence for forcible recovery of funds deposited on accounts held with the Federal Treasury by the public authorities;

      Bailiffs conserve jurisdiction for forcible recovery of funds deposited by state entities with private banks;

    b) Uniform procedure introduced

      The competence for enforcement of judicial decisions ordering payment by the public authorities today rests with the Federal Treasury and its territorial offices;

      The Law introduced a uniform list of documents to be submitted by claimants to the Treasury offices with a view to enforcement of judgments (e.g. a writ of execution together with a certified copy of the judgment and claimants request including his bank details);

      The Law also specified an exhaustive list of grounds and upheld the previously existing 5-day time-limit for considering the claim and returning the file to the claimant;

      The time-limit for enforcement of the judgment has been extended from two to three months from receipt of the claim by the Treasury office;

    d) Measures foreseen to ensure enforcement

      If the debtor lacks funds to comply with a judgment, it shall request the budgetary authorities, within 3 months from receipt of the claim, to allocate the necessary budgetary funds; this request will specify the relevant judgment(s);

      Treasury offices have once again been empowered to freeze debtors accounts (i.e. to suspend all expense operations)9 until the sums awarded by judgments have been paid; It has also been specified that the enforcement is guaranteed by all the debtors funds deposited in the accounts held with the Treasury (including all incomes from non-budget sources);

    e) The subsidiary responsibility of the state and of civil servants in case of non-enforcement

      The Law provides for the states subsidiary responsibility for non-enforcement by different authorities within a three-month time-limit, provided that such responsibility is determined by a judge in a separate judgment;

      Civil servants responsibility for non-enforcement may also be engaged through court proceedings.

    III Clarifications sought and proposals to be considered

    A. Issues to be clarified in relation to the new enforcement procedure

    While the new procedure may have improved the situation concerning the enforcement of domestic judicial decisions to a certain extent, a number of points remain to be clarified.

    The following questions have arisen in particular:

      How are disputes settled between state subdivisions and the Federal authorities as regards the correctness of budgetary allocations that have been foreseen to meet expense needs (including those arising from judicial decisions)? Is there any judicial or other independent review?

      Does the new Law abolish the previous procedure in which the sums ordered by judicial decisions had to be first included in the following years budget and paid only after the adoption of this budget, thus causing systematic delays in execution?

      What mechanism is available if the Treasurys fails to fulfil its duties (including the freezing of accounts) and time-limits under the new Law in the same way as had happened under the previous rules (cf. non-compliance with Regulation No.143 of 22/02/2001 challenged by the Court in Shilyayev against Russia, judgment of 6/10/2005, final on 6/01/2006)?

      More generally, how is the judicial review required by the Constitutional Court (see 3.3 of its decision of 14 July 2005 above) over the enforcement proceedings exercised (e.g. relating to the Treasurys failure to respect its obligations or to challenge the lawfulness of acts of civil servants)?

      What are the mechanisms available to the Treasury to freeze the expense operations on debtors account in case of failure to execute a judgment? Have the necessary regulations or appropriate instructions already been issued, as foreseen by the Law of 2005 (Articles 242-3 3, 242-4 3 and 242-5 3)? How does this mechanism work in practice?

      How and at what stage may the proclaimed state subsidiary responsibility be materialised in case of non-enforcement by a specific authority? What remedies are available to individual creditors to that effect?

      How may the proclaimed responsibility of civil servants in case of non-enforcement be implemented? What is the role of the competent public authorities in this respect?

      Is there any statutory default interest applicable to state debts to ensure that delay in execution is automatically compensated without further recourse to court proceedings?

      How may the conflict of jurisdiction be resolved between the Treasury office and the bailiffs if the debtor institution holds accounts with both the Treasury and a private bank?

    The authorities detailed answers to the above questions would be most helpful to allow a thorough assessment by the Committee of the present situation and of the need for further measures to prevent new violations and the incessant flow of new complaints before the Court.

    Of particular importance in this respect is the detailed information about the implementation of the new procedures in practice, demonstrating changes in the deficient pattern revealed by the Courts judgments. This assessment of the current practice will be all the more necessary and important in that the Law of 2005 merely upheld some of the previous procedures that have not proved effective in practice. For example, the existence of the statutory time-limits in enforcement proceedings and the power to suspend operations of debtors accounts have not prevented non-enforcement of judicial decisions in the past, as has been amply demonstrated by a number of judgments of the Court (e.g. Bazhenov against Russia, judgment of 20/10/2005, final on 20/01/2006; Shilyayev against. Russia, judgment of 6/10/2005, final on 6/01/2006; Shvedov against Russia, judgment of 20/10/2005, final on 20/01/2006).

    B. Key avenues for improvement of the existing enforcement procedure

    It would appear to be common ground that the Law of 2005 has not have solved all the complex issues at the basis of the violations found by the Court. The Russian authorities themselves are thus actively pursuing their reflection on possible solutions, in particular through a bilateral project with the CEPEJ, on ways and means of improving the existing enforcement procedure.

    In the context of the Committees supervision of the implementation of the Courts judgments at issue, the Russian authorities were also invited to take into account the experience of other countries confronted with similar problems in the past (see in particular Heirs of J. Dierckx against Belgium and Hornsby against Greece, which were closed by final Resolutions DH(95)105 and DH(2004)81 respectively) and the Committees Recommendation Rec(2003)17 setting out guiding principles concerning the enforcement of judgments. The importance of the CEPEJs conclusions has also been highlighted.

    In order to provide additional assistance to the authorities in their reflection and to facilitate the Committees supervision of the execution of the judgments concerned, the Secretariat has identified below, on the basis of existing experience, some key avenues of interest with a view to ensuring Russias compliance with the Conventions requirements. The list is not exhaustive and may be subject to changes depending on the Committees assessment of the effectiveness of various measures adopted to comply with the judgments.

    1. Improvement of budgetary procedures within the Russian Federation

    a) The problem as acknowledged by the authorities

    The Russian authorities have repeatedly acknowledged, before both the Committee of Ministers and the CEPEJ that the non-enforcement of domestic decisions is not due to the lack of funds but results from complicated budgetary procedures within the Russian Federation.

    This general problem may obviously require more comprehensive solutions going far beyond the enforcement of judicial decisions. The following two specific issues would however appear of direct relevance to the problem of execution of court decisions:

      i) the lack of appropriate statutory basis for the budget planning, which would ensure the funds allocated correspond to the states payment obligations;

    It seems, for example, that the state minimal social standards criterion, which was effectively used for budget planning, had never been defined by law. As a result, effective budget planning was rendered impossible at all levels. This problem appears to have been recently remedied through the introduction of an expenditure obligation ( ) as a new basis for budget planning. More clarification in this respect would be useful.

      ii) Inadequate procedures for distribution of the budgetary funds to state organs and entities responsible for payment

    In other words, the federal funds allocated are often not sent in time to the state authority responsible for payment or the latter spends the federal funds received in an improper manner.

    b) Possible solutions to be envisaged

      i) Setting up a special federal fund and/or specific reserve budget lines to ensure that sums ordered by judicial decisions are rapidly made available to the debtor

    Given the inadequacies of the current budgetary procedures, there are inevitable shortfalls in the budgetary allocations to the state entities responsible for payment ordered by domestic courts. Accordingly, the CEPEJ experts have already proposed setting up special budget lines within the responsible departments to allow them rapidly to execute judicial decisions delivered against them. The condition of recourse to such funds should be the existence of a valid judgment ordering the payment of sums.

    Taking account of the changes introduced by the Law of 2005, the authorities may also consider setting up either a special federal fund or decentralised reserve lines within the Federal Treasury which would allow rapid payments ordered by the courts with a subsequent possibility to claim from the debtor the relevant sums together with default interest. The Federal authorities would thus be able forcibly to recover the sums while avoiding at the same time any delay in the execution of court decisions in the individuals favour.

      ii) Ascertaining the responsibility for the lack of funds judicial review of disputes between the federal and local authorities

    The establishment of the responsibilities of the state organs and officials by an independent judicial body would be most helpful to stop endless disputes between the federal and local authorities as to who is responsible for non-payment. While this role is played in some states by courts of audit, the existing Russian courts at a sufficiently high level could be given responsibility for deciding disputes of this kind. Establishing responsibility may in the longer run go further than merely establishing the identity of the debtor and could include penalties.

    2. Establishment of a subsidiary mechanism of compulsory enforcement including seizure of state assets

      i) Need for compulsory enforcement mechanism through seizure

    The present system, as upheld by the Law of 2005, seems virtually to exclude compulsory enforcement procedure against the public authorities in case of non-enforcement of court decisions through the existing procedure. While the Treasurys power to freeze debtors accounts may be an important enforcement tool, its effectiveness remains to be demonstrated. In any event it does not allow the attachment of sums for the individual claimants direct benefit.

    Yet the existence of a present enforcement mechanism as a principal one should not exclude a subsidiary mechanism of compulsory execution against the state and its entities. Indeed, the practice of certain states has convincingly shown that compulsory execution with the ensuing possibility of seizing state assets constitutes a powerful tool to render the states subsidiary responsibility for non-enforcement of judicial decisions effective (see Dierckx against Belgium, Resolution DH(95)105 and Hornsby against Greece, Resolution DH(2004)81). This furthermore constitutes an additional incentive for state officials to do everything in their power to comply with court decisions.

    The Russian authorities are therefore invited to consider the introduction of a similar mechanism in Russian Law.

      ii) Extension of enforcement guarantees to state assets

    In addition, the Law of 2005 only guarantees the execution of judicial decisions by funds held with either the Treasury or private banks. The extension of this guarantee to the other state assets (except those manifestly necessary for performing the states duties) may explicitly be envisaged. Indeed, Articles 126 and 214 of the Civil Code even seem to imply such a possibility. They provide that the Russian Federation guarantees its undertakings in particular those resulting from final judicial decisions with all assets which have not been granted to state companies or institutions.

    A special legislative basis to ensure compulsory execution at the expense of state assets needs therefore to be set up, as appropriate. The authorities may wish to take account in this respect the experience of other countries which established a list of state assets which may be seized (see, inter alia, the abovementioned Resolution DH(95)105 in Dierckx against Belgium).

    3. Ensuring effective state liability for non-enforcement of judgments through judicial remedies

      i) Judicial review of the enforcement proceedings

    The need for efficient judicial review of enforcement proceedings under the Law of 2005 has already been raised above (e.g. in respect of refusals to freeze accounts or to postpone execution). As indicated it remains, however, unclear how this review is organised.

    More generally, the authorities are invited to pursue consideration in consultation with the judicial community of the ways and means of involving the courts in the enforcement process.

      ii) Other judicial remedies: improved compensation and acceleration

    Given the increasing number of similar cases pending before the Court, the Russian authorities may wish to consider a possibility of setting up at a national level a simplified judicial remedy allowing claimants to obtain prompt compensation (at least for non-pecuniary damages) proportionate to the delay in execution as compared to the statutory time-limits (over and above the statutory default interest dealt with below) or the acceleration of such proceedings, as had been done in other countries (e.g. Interim Resolutions ResDH(2005)114 and ResDH(2004)72 concerning certain judgments against Italy and Resolution ResDH(2005)60 concerning the Horvat against Croatia judgment).

    As regards the possibility of granting additional compensation covering all damages caused by the delay, it is noted that the present Russian Civil Code provides the civil liability of the state for acts or omissions of state organs, municipalities or their agents (Article 1069). It is also noted that the new Law 2005 upheld the states subsidiary responsibility for non-enforcement of judgments by different authorities within a three-month time-limit. However, it remains unclear how this responsibility may be implemented, given the difficulties encountered by the courts in applying these provisions.

    The Russian authorities may therefore also wish to consider further measures, legislative or other, to ensure that the states subsidiary responsibility becomes effective and may contribute more effectively to deter against and compensate for the non-execution of judicial decisions (e.g. Hornsby against Greece, Resolution DH(2004)81, Appendix, point 3).

    That said, the Committee's consistent position of principle concerning domestic remedies should be recalled: while setting up such remedies is important and contributes to states compliance with their obligations under the Convention, it does not dispense states from their general obligation to solve the structural problems underlying the violation (see the abovementioned Interim Resolution ResDH(2005)114).

    4. Introducing adequate default interest in case of non-enforcement

    It would appear that imposing default interest for the states failure to enforce court decisions will be instrumental in both avoiding multiple lawsuits in the same case and creating an additional incentive for state authorities to comply with court decisions.

      i) Possible change of practice under Article 395 of the Civil Code

    Article 395 of the Civil Code providing for default interest seems virtually never applied by courts to state debts. The imposition of default interest on the state may well be operated through a more generous interpretation of Article 395 of the Civil Code which may at the outset be prompted by possible interpretation guidelines of the Plenum of the Supreme Court.

      ii) Possible new legislation introducing various rates and forms of default interest

    Subsequently, along with the improvement of the situation, special legislation might provide for a higher interest rate penalising non-execution of judicial decisions, or at least unjustified non-execution established by a judicial decision.

    For greater effectiveness, future legislation might also provide that, if execution of a judicial decision is delayed or denied, the debtor or the Ministry of Finance should pay the claimant a standard sum for each day of delay as compensation. This sum may be calculated on the basis of a certain percentage of the sum that remains unpaid under the court decision.

    5. Ensuring effective liability of civil servants for non-enforcement

    a) Present background

    The Law of 2005 provides that non-enforcement of court decisions gives rise to responsibility under federal law. The large range of provisions governing the responsibility for non-compliance with judicial decisions is recalled below:

      The Code on Administrative Offences provides liability for not complying with decisions taken by courts or bailiffs (Art. 17.3) and for interfering with legitimate acts of bailiffs (Art. 17.8) or for late compliance with an order from the supervising organ (Art. 19.5);

      The Law on enforcement proceedings of 1997 authorises bailiffs to hold state agents directly liable (Art. 85 and 87);

      The Criminal Code, in particular Article 315 (Non-enforcement of a conviction, judgment or a court decision), constitutes a powerful tool to ensure the enforcement of judicial decisions;

      The Budget Code includes an entire section dedicated to the responsibility of the civil servants for breaches of the budgetary law.

    b) Possible measures to be taken

      i) The effectiveness of the existing provisions yet to be assessed

    While these provisions appear to constitute a solid basis for the state officials responsibility for non-enforcement of judicial decisions, their effectiveness remains to be demonstrated in practice. The authorities are therefore invited to provide detailed statistics and examples of domestic judgments showing how the said responsibility is implemented in practice.

      ii) Clarify the roles and competences for engaging responsibility for non-enforcement

    Prior to the entry into force of the new Law, bailiffs were the main actors in the implementation of the above-mentioned sanctions as their reports served as grounds for further prosecution of persons responsible for the lack of or delay in enforcement.

    Given the radical restriction of bailiffs competence by the Law of 2005, the authorities are invited to clarify the respective roles of the Bailiffs Department, the Federal Treasury and the Prosecutors Office in effective implementation of state officials responsibility in this area.

      iii) Closer supervision of compliance and zero tolerance towards deliberate non-compliance with court decisions

    As one of the urgent measures, the competent authorities may be encouraged, through the appropriate means, closely to supervise and to take the appropriate proceedings against deliberate violations of state officials duty to execute court decisions.

    6. Possible reconsideration of the role of bailiffs and of increasing their efficiency

    The procedure governing the activities of the Bailiffs department and insufficient means allocated to it also appear to be problems at the basis of the non-execution or inefficient execution of domestic judgments. As bailiffs conserve a certain role, albeit a very limited one, in the enforcement of court decisions against the state, their inefficiency remains an issue of current interest. The reform of the relevant legislation as well as other measures to make the institution of bailiffs more efficient would appear appropriate.

    IV The Russian authorities comments

    The Russian authorities welcomed the present Memorandum inasmuch as it gives an accurate picture of the existing situation and may positively contribute to the adoption of general measures required by the European Courts judgments.

    They further highlighted the complexity of the problem which requires comprehensive and thorough reforms at all levels over a longer period. Therefore, the authorities suggested that certain areas be identified where the non-enforcement problems should be solved as a matter of priority taking into account specific circumstances involved, such as

      the kind of the non-complying entity (Federal Treasury, States subdivisions, municipalities) and/or
      the kind of obligation imposed by domestic judgments (welfare payments, pension increases, disability allowance increases, etc).

    This area-by-areaapproach did not seem, however, to preclude the parallel consideration and adoption of more comprehensive reforms aiming at improving the existing enforcement procedures in general along the avenues proposed in the present Memorandum.

    Note 1 This document has been classified restricted at the date of issue. It was declassified at the 966th DH meeting of the Ministers Deputies (6-7 June 2006).
    Note 2 E.g. Timofeyev (58263/00), judgment of 23/10/2003, Wasserman (15021/02), judgment of 18/11/2004
    Note 3 E.g. Reynbakh, judgment of 29/09/2005, 23405/03
    Note 4 E.g. Plotnikovy (43883/02), Makarova & others (7023/03), Poznakhirina (25964/02), judgments of 24/02/2005; OOO Rusatommet (61651/00), judgment of 14/06/2005,; Yavorivskaya (34687/02), judgment of 21/07/2005; Gerasimova (24669/02), judgment of 13/10/2005
    Note 5 E.g. Gorokhov and Rusyayev (38305/02), judgment of 17/03/2005; Bazhenov (37930/02), judgment of 20/10/2005;
    Note 6 E.g. Shilyayev (9647/02), judgment of 6/10/2005
    Note 7 E.g. Timofeyev (58263/00), judgment of 23/10/2003, Wasserman (15021/02), judgment of 18/11/2004
    Note 8 The Decree of 22 February 2001 N 143 concerning the Rules of enforcement of the judgments on the basis of writs of execution delivered by courts against the entities which receive their funds from the federal budget followed by the Decree N666 of 22/09/2002.
    Note 9 Previously foreseen by the Decree of 22 February 2001 N 143 and not explicitly mentioned by the Decree N666

     

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