Ministers’ Deputies
        Information documents

        CM/Inf/DH(2006)19 rev3 4 June 20071
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        Non-enforcement of domestic judicial decisions in Russia: general measures to comply with the European Court’s judgments

        Memorandum prepared by the Department for the execution of the European Court’s judgments (Application of Article 46 of the ECHR)

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        EXECUTIVE SUMMARY

        The present document is a 3rd revised version of the Memorandum prepared with a view to finding a comprehensive solution to the structural problem of non-enforcement of domestic judicial decisions delivered against the public authorities in the Russian Federation. This solution is required by a great number of judgments of the European Court of Human Rights presently pending before the Committee of Ministers for supervision of their execution.

        At the outset, various Russian authorities acknowledged the existing structural problem and engaged in an in-depth reflection, in cooperation with the Council of Europe, on the ways and means to remedy it. A number of bilateral consultations and a high-level round table involving all authorities concerned were held in Strasbourg on the basis of previous versions of the Memorandum (CM/Inf/DH(2006)19 revised 2).

        The information received and discussions held in this context are taken into account in the present version, which is also based on the first experiences of the implementation of the new execution mechanism introduced since 2006. The current situation is analysed in the light of the European Convention’s requirements and of the rich experience of other member states in resolving similar problems in response to the Court's judgments.

        The Memorandum presents the progress so far achieved by the Russian authorities, points at a number of outstanding questions and proposes further measures with a view to a comprehensive solution of the problem. The main avenues of action proposed are

          o Improvement of budgetary procedures and of practical implementation of the budget decisions;
          o Identifying a specific state authority as a defendant;
          o Ensuring effective compensation for delays (indexation, default interest, specific damages, penalties for delays);
          o Increasing the effectiveness of domestic remedies for proper enforcement of judicial decisions;
          o Improvement of the legal framework governing compulsory execution against the public authorities;
          o Ensuring effective liability of civil servants for non-enforcement;

        Special consideration is given to possible ways of ensuring coherence of the present execution mechanisms by allowing the Treasury and the bailiffs to act in a complementary manner in their respective fields of competence and under appropriate judicial review. A strong emphasis is also put on possible ways of preventing litigation against the State through improved budgetary proceedings, which would allow the State to timely comply with its pecuniary obligations..

        INTRODUCTION 4
        PART I - Changes in the enforcement procedure since 1997 5
        PART II - Assessment of the current situation and key avenues for further improvement 6

        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 6§1 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 Court’s findings reveal important structural problems which must be resolved to comply with the judgments. The main elements at the origin of these problems are summarised below:

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

        3. 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. 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.

        4. The Russian authorities expressed at the outset 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 acknowledged 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”.

        5. The authorities have thus engaged in a process of finding effective solutions to the problems in close co-operation with the Council of Europe, including through a bilateral project with CEPEJ7. All relevant issues were discussed at a high-level round table held in Strasbourg in October 2006 and attended not least by the President of the Supreme Economic (Arbitration) Court, the Vice-President of the Supreme Court, the Head of the Federal Bailiffs’ Service, the Russian Representative to the European Court of Human Rights, senior officials of the Presidential Administration, the Ministries of Finance and Health, the Federal Treasury and Prokuratura. The conclusions of the round table, which contain specific proposals for improvement of the situation, were presented to the Committee of Ministers in December 2006.

        6. The Committee welcomed the positive outcome of the round table and the Secretariat was instructed to follow up the progress in the implementation of the general measures found to be necessary.

        7. The present version of the Memorandum contains an updated analysis of the situation in the light of the information and clarifications provided by the authorities following the round table of October 2006. The reflection on possible solutions goes along the key avenues of action identified in the previous versions. Without being exhaustive, the ideas and proposals presented in the Memorandum largely build upon the experience of other countries, which were confronted with similar problems when executing the Court’s judgments.

        PART I - Changes in the enforcement procedure since 1997

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

        9. Between 1997 and 2001, the bailiff service was by virtue of the 1997 Law on Enforcement proceedings - hereinafter the “1997 Law” - the only authority competent to ensure enforcement of all judgments, including of those delivered against the state, its regions, municipalities or their organs and legal entities of public law (hereinafter referred to altogether as “Public Authorities”). The 1997 Law 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 service8.

        10. Between 2001 and 2005, the enforcement of judgments against the public authorities was mainly based on a special execution procedure established by government decrees entrusting execution to the Ministry of Finance9. 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 No. 150-ФЗ of 27 December 2000).

        11. The bailiffs’ competence in this area under the 1997 Law was explicitly excluded as from 2003 (Law No. 176- ФЗ of 24 December 2002). No compulsory means existed to secure the execution of judgments.

        12. The Supreme Court held on several occasions between 2001 and 2003, that the existence of special execution procedure did not, in principle, prevent claimants from seeking enforcement through the bailiff service under the 1997 Law, if necessary. However, the enforcement of such decisions through bailiffs was not effective in practice.

        13. On 14 July 2005, the Constitutional Court challenged the government decree on special execution procedure adopted in 2002 - 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.

        14. As from the end of 2005, in the wake of the Constitutional Court’s judgment, the Law of 27 December 200510 introduced a new Chapter in the Budgetary Code confirming the special execution procedure, while entrusting execution at the federal level primarily to the Federal Treasury in respect of legal entities funded by the federal budget (hereinafter referred to as “budgetary institutions”), and to the Ministry of Finance in respect of the State itself, with corresponding systems at regional and municipal levels.

        15. The main principles underlying the new execution procedure are the following11:

          - judicial decisions against the public authorities shall be executed within 3 months;
          - the execution documents against budgetary institutions shall be sent to the Treasury which informs the debtor thereof;
          - if the debtor lacks funds in its account, it shall request the budgetary authorities to allocate the necessary budgetary funds to comply with the judgment;
          - if the debtor fails to do so, the treasury office is empowered to freeze the debtor’s account until the judgment is fully complied with.

        16. The new procedure enshrined in the Budgetary Code is largely based on the presumption that the responsible state organs (the Federal Treasury with its territorial offices, the Ministry of Finance, the financial departments of regions and municipalities) will henceforth effectively ensure, upon the claimant’s request, compliance with judgments.

        17. The Budgetary Code thus contains no right to use coercive enforcement mechanisms against the public authorities and excludes the bailiffs’ competence to forcibly recover budgetary funds deposited on accounts held within the Federal Treasury12.

        18. On 22 June 2006, the Supreme Arbitration Court attempted to clarify the interaction between the special execution procedure under the Budgetary Code and the compulsory enforcement procedure under the 1997 Law. It confirmed bailiffs’ competence to initiate enforcement proceedings in respect of the public authorities’ assets in case of their non-compliance with judicial decisions after the expiry of the 3-month period13.

        PART II - Assessment of the current situation and key avenues for further improvement

        19. It would appear to be common ground that the modifications brought to the Budgetary Code have not solved all the complex issues at the basis of the violations found by the Court. In this respect, they merely upheld some of the previous procedures that have not proved effective in practice. For example, the existence of the statutory time-limits in the procedure and the power to suspend operations of debtors’ accounts within the State Treasury had not prevented non-enforcement of judicial decisions, as has been amply demonstrated by a number of judgments of the Court (e.g. Bazhenov v. Russia, judgment of 20/10/2005; Shvedov v. Russia, judgment of 20/10/2005, all concerning situation post 2001).

        20. Although some improvement has been reported in the Treasury’s and the Ministry of Finance’s practice under the Budgetary Code, which is most welcomed, the need remains to set up an efficient and coherent mechanism for enforcement of judicial decisions by the public authorities. The prevention of new violations of the Convention is only possible through setting up effective remedies against non-execution at the domestic level. It would appear in the light of the last developments that special attention should be paid at the current stage to the harmonisation of the respective roles played by the bailiffs and by the Treasury.

        21. In doing so, it should be borne in mind that “it is incumbent on the State to organise its legal system in such a way that ensures co-ordination between various enforcement agencies and secures honouring of the State’s judgment debts in good time, irrespective of changes in the domestic law. It would impose an excessive burden on the applicant if he were to follow every such change and forward the writ of execution from one competent State agency to another” (see among many others, Reynbakh v. Russia, judgment of 29 September 2005, §23).

        22. While setting up efficient enforcement mechanisms is important, special emphasis should however be put on ensuring rapid ex officio execution prior to recourse to these mechanisms. The European Court’s consistent position in this respect is that “a person who has obtained an enforceable judgment against the State as a result of successful litigation cannot be required to resort to enforcement proceedings in order to have it executed” (see Koltsov v. Russia, judgment of 24 February 2005, §16; Petrushko v. Russia, judgment of 24 February 2005, §18; Metaxas v. Greece, judgment of 27 May 2004, §19).

        23. The avenues for further improvement identified below, based on the rich experience of other countries, aim to help the Russian authorities establish a coherent system of safeguards as required by the Convention. Most of these proposals have already been thoroughly considered by the authorities and have given rise to the adoption of concrete measures in some areas. The present version of the Memorandum takes stock of the current situation in each area of concern and points out the issues that remain to be considered with a view to ensuring the Russia’s compliance with the European Court’s judgments.

        1. Improvement of the statutory framework of budgetary procedures and practical implementation of budget decisions

        24. While budgetary planning and procedures raise certain issues going far beyond the enforcement of judicial decisions, some improvements in this area appear to be directly relevant to the prevention of violations of the Convention similar to those at issue.

        25. In addition, the authorities indicated that in many cases the litigation with ensuing non-enforcement, of domestic judicial decisions were due to the lack of specific procedures for implementing the state’s pecuniary obligations vis-à-vis the individuals. The authorities consequently provided detailed information regarding the measures taken with a view to preventing litigation in these sectors.

        a) Current situation

            i) Measures taken to prevent litigation arising from the state’s payment obligations

                    · introduction of an appropriate statutory basis for budget planning to ensure that funds allocated correspond to the state’s payment obligations

        26. It seems, for example, that the “state minimal social standards” criterion, which was used for the budget planning, had never been defined by law. As a result, effective and consistent budget planning was rendered impossible at all levels, contributing also to the non-execution of court judgments.

        27. A solution has been proposed through the introduction of an “expenditure obligation” (расходное обязательство) as a new basis for the budget planning, particularly so as to take into account expenditures foreseeable under the laws and regulations in force. Applicable since 1 January 2005, this principle was supposed to become fully effective for the purposes of budget planning from 1 January 2006 at all levels, throughout the Russian Federation.

                    · improvement of procedures for management of budgetary funds

        28. The federal funds allocated are often not sent in time to the state authority responsible for payments, or the latter spends the federal funds received in an improper manner, later invoking lack of funds to justify refusal to enforce judicial decisions.

        29. This situation was due to the fact that the budget used to be implemented through the private banking system (банковский способ исполнения бюджета). As a result, the Ministry of Finance, after transferring money at the beginning of the year to the account of a budgetary institution, had no way of monitoring how this money was used.

        30. In order to remedy the problem, the Budgetary Code (Article 215) changed the procedure by introducing an obligation for each budgetary institution to open an account with the Treasury, which ensures henceforth the management of the budgetary funds on behalf of those institutions (казначейское исполнение бюджета).

ii) Impossibility of paying social benefits if they are not foreseen in the budget

        31. In case of inconsistency between social laws providing the state’s obligation to pay and the silence of budgetary laws as regards the appropriate funding, the principle of supremacy of budgetary law made such payments impossible (Article 83 §5 of the Budgetary Code).

        32. This provision was criticised by the Constitutional Court on the ground that a loophole in the legislation could not prevent individuals from exercising their rights. According to the Court, in this case the payments shall be made at the expense of the federal budget until appropriate regulations are introduced14. This position was later followed by the Supreme Court with respect to the enforcement of judicial decisions over and above the allocations foreseen to this effect in the budget15.

            iii) New mechanisms ensuring payments ordered by judicial decisions over and above budgetary allocations

        33. Unlike the payments provided by social laws, the budgetary law provides that judicial decisions may be executed over and above the allocations provided to this end in the budget. The Budgetary Code provides a number of additional safeguards:

          - If the budgetary funds on the debtor’s account are not sufficient to execute a judicial decision, it shall be executed at the expense of sums resulting from commercial and other activities of the debtor. To this effect, accounts used for these activities had to be transferred to the Treasury before 1 January 1999 according to the Government Decree of 22 August 1998.
          - If the debtor nevertheless lacks funds to comply with a judgment, the debtor shall request the superintendent of budgetary funds to allocate the necessary funding.
          - Additional funding might be allocated through appropriate modifications to the general budgetary accounts entry (сводная бюджетная роспись) or, if need be, to the law on budget.

        b) Outstanding issues and proposals for further improvement

                i) Updated statistics required

        34. As regards the state’s compliance with its legal obligations to pay social benefits, information would be helpful on whether there are still outstanding debts in respect of pensions or children’s allowances, in particular in the regions mostly concerned by the European Court’s judgments, i.e. the Voronezh, Rostov and Arkhangelsk regions.

        35. As regards the compliance with payment of sums ordered by judicial decisions, on 19 December 2003 approximately 72 000 writs of execution for a total of 7,7 billion roubles (€ 220 million) remained unexecuted16.

        Debtor

        Number of writs of execution delivered

        Number of writs of execution unexecuted

        Global sum which remains to be paid
        (in roubles)

        Ministry of defence

        50,000

        23,000

        5,15 billion

        Ministry of the Interior

        20,000

        12,000

        1,66 billion

        Ministry of energy

        330

        182

        7,2 million

        Ministry of environment

        137

        35

        3,7 million

        Ministry of agriculture

        411

        177

        53,3 million

        Ministry of Labour

        286

        52

        131,1 million

        State transportation company

        808

        195

        59,2 million

        Ministry of assets

        2

        2

        3,4 million

        36. Updated, detailed statistics demonstrating the improvement of the situation since 2004 would be helpful.

                ii) 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 service

        37. To ensure public authorities’ compliance with their payment obligations arising from judicial decisions, it has been proposed to set 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 service the relevant sums together with default interest. The Federal authorities would thus be able forcibly to recover the sums while at the same time avoiding any delay in the execution of court decisions in the individuals’ favour.

        38. The main advantage of this mechanism would be to shift the burden of litigation to the authorities and to relieve the claimant from the need to multiple court proceedings.

        39. This proposal received broad support from the participants in the Round Table of 30-31 October 2007. Information is thus awaited on the follow-up subsequently given to this proposal at the national level and about current prospects for its implementation.

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

        40. The establishment of the responsibilities of state organs and officials by an independent judicial body could be helpful to avoid 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 service and could include penalties.

        2. Identifying a specific state authority as a defendant

        41. Delays in execution of judicial decisions are not only caused by the insufficiency of funds, they are also often due to the Ministry of Finance’s refusal to pay in response to execution writs because the defendant state authority is improperly identified and/or because the judicial decisions do not indicate the details necessary for their execution. The claimants thus have repeatedly to come back to courts to seek rectification of judicial decisions (see, among many others, Bogdanov v. Russia, judgment of 9 February 2006).

        42. Accordingly in the Conclusions adopted at the October 2006 Round Table, the participants proposed to remedy excessive formalities for individuals both when identifying the relevant authority to execute the decision and when rectifying writs of execution and to further develop simplified mechanisms in this respect at the level of the administration and courts17.

        a) Current situation

        43. The two Supreme Courts of the Russian Federation attempted to resolve this problem in their joint Ruling of 1 July 1996 No 6/8 (§12) according to which:

          - the appropriate defendant in tort claims is the Russian Federation, a region concerned or a municipality represented by a relevant financial organ or by another entitled organ;
          - courts shall summons ex officio the relevant financial organ or an other organ entitled, if need be;
          - courts shall indicate that the payment of sums awarded shall be made at the expense of the relevant budget or, in case of lack of funds, at the expense of other assets which are also part of the treasury.

        44. However it would appear that, since this joint Ruling, each of the Supreme Courts separately provided their lower courts with different guidelines, taking account in particular of several legislative changes introduced in the meantime. As a result, there is no longer a single set of guidelines for all courts on how the existing legislation should be interpreted. This situation obviously leads to inconsistencies in judicial practice.

        i) Identifying the right organ to summons

                Ø claims against the treasury of the Russian Federation, of a region, of a municipality, their organs or officials

        45. It seems that courts continue to consider the Ministry of Finance as a defendant in all claims of this kind on the basis of Article 1071 of the Civil Code, notwithstanding an explicit provision that the state’s, region’s or municipality’s representation in courts may be entrusted to other organs according to Article 125§3 of the same Code.

        46. This seems to refer inter alia to Article 158 §10 of the Budgetary Code in force since 1 January 2000, according to which this representation shall be ensured by the superintendents of budgetary funds depending on the departmental affiliation of the debtor.

        47. This rule was confirmed by the 2005 Law (e.g. Article 242.2 of the Budgetary Code) and by the guidelines of the Plenum of the Supreme Arbitration Court which advised lower courts not only to identify the proper defendant authority, but also to ensure that the identified defendant is notified of the hearing18.

                    Ø Claims against budgetary institutions

        48. On the contrary, claims lodged against budgetary institutions should apparently be directed against those institutions themselves, the superintendent of the budgetary funds concerned being only a subsidiary defendant. The Supreme Arbitration Court recalled in this respect that if the claim is only lodged against the superintendent, the courts shall ex officio call the budgetary institution into the proceedings, as principal defendant (Article 46 §2 of the Code of arbitration procedure)19.

            ii) identification of the assets at the expense of which the sums should be recovered

        49. It would appear that there is divergence in the case-law which either contains no indication of the source from which the sums shall be recovered or refers to various sources, such as the budget, the treasury or the assets of the Ministry of Finance.

                Ø claims against the treasury of the Russian Federation, of a region, of a municipality, their organs or officials

        50. Both Supreme Courts emphasised that sums awarded cannot be recovered from the own assets of a state or municipal organ or of the Ministry of Finance, but from the treasury of the relevant subdivision20.

        51. The Supreme Court drew lower courts’ attention to their obligation, under Article 198 §5 of the Code of Civil Procedure, to indicate in the operative part of a judicial decision a source from which the sums awarded should be recovered 21.

        52. Later, the Supreme Arbitration Court specified that the source from which the sums awarded should be recovered was not limited to the budget of the relevant subdivision. The mere mention of the budget in the operative part of a judicial decision violates Articles 126, 214 and 215 of the Civil Code which refer to the treasury, a broader concept that includes not only the budget of a public entity but also to assets belonging to it22.

                    Ø claims against budgetary institutions

        53. Budgetary institutions are only responsible for monetary sums at their disposal (Article 120 §2 of the Civil Code). If these sums are insufficient, the only possibility to execute judicial decisions is to lodge a subsidiary claim against the owner, i.e. the Russian Federation, regions or municipalities respectively represented by a superintendent of budgetary funds (see e.g. Article 242.3 § 10 of the Budgetary Code).

        54. Accordingly, the Supreme Arbitration Court specified that a subsidiary defendant may be called into the initial proceedings and invited the courts to indicate from the beginning in their judgments that the sums they grant should be recovered from the budgetary institution and in case of the insufficiency of sums available to this institution from the assets of the subsidiary defendant23.

        b) Outstanding issues and proposals for further improvement

        55. The efforts recently made by the Supreme Arbitration Court to provide courts with detailed instructions as regards the identification of defendants on behalf of the public authorities and to specify the courts’ obligations in this area are welcome.

        56. However, the Supreme Court has not yet issued similar consolidated guidelines to ensure coherence in the identification of the source from which the sums awarded by judicial decisions shall be recovered. Such guidelines are even more important since the 1996 joint Ruling (see § 43) is obviously outdated.

        57. In addition, the authorities may wish to consider the possibility that the Supreme Courts sends to all courts a circular letter (to be prepared in cooperation with the Ministry of finance) with a view to facilitating the proper identification of the state organs/authorities to be summonsed as defendants. A proposal for such a circular letter received definite support in the Conclusions adopted at the October 2006 Round Table (see § 42 above).

        3. Ensuring effective compensation for delays

        58. While it is important to improve budget procedures, it is also important to set up adequate incentives to induce the authorities responsible to comply with their payment obligations. One such incentive is the duty to pay adequate compensation to the individuals who suffer losses because of the non-respect of domestic judgments.

        59. Such compensation also constitutes a direct requirement of the Convention (in particular Article 1 of Protocol No. 1). The European Court has thus held that the mere fact of enforcing a domestic judgment does not deprive the applicant of his/her victim status under the Convention since no redress or compensation has thereby been offered to him/her for the delay (see e.g. Petrushko v. Russia, judgment of 24/02/2005, §15).

        60. The adequate compensation eventually paid after the delay has to take into account various circumstances with a view to compensate the gap between the sum due and the sum finally paid to the creditor and to compensate for losses of use (see e.g. Akkus v. Turkey, judgment of 9/07/1997; Angelov v. Bulgaria, judgment of 22/04/2004; Eko-Elda Avee v. Greece, judgment of 9/03/2006). Also compensation for non-pecuniary damages may be required (see e.g. Sandor v. Romania, judgment of 24/03/2005). The absence of state responsibility for delay under these different heads of prejudice could not be justified by the impossibility of establishing any culpa or fault on the part of public authorities (cf. Solodyuk v. Russia, judgment of 12/07/2005, §16).

        61. This compensation required by the Convention may be achieved in different ways: indexation, default interest or damages. Also sanctions may be required in certain circumstances to provide adequate protection against unjustified delays or payment refusals.

        62. The present legal situation in Russia still has to be improved in order entirely to satisfy the Convention’s requirements.

        a) Current situation

        i) Regular indexation of the principal sum awarded by a judicial decision

        63. According to the current judicial practice developed under Article 208 of the Code of Civil Procedure, indexation is granted notwithstanding the defendant’s fault24. Furthermore, courts recall that the debtors have an obligation voluntarily to index sums awarded to individuals without having additional recourse to courts25

        64. It seems however that these principles are not systematically applied by all authorities. For example, the Ministry of the Interior considers that indexation of sums awarded as compensation for damages caused by its agents or departments is only due when delays in execution arise from the Ministry’s fault. Consequently, if the delay occurred because of the claimant’s sending the execution documents to the wrong debtor, indexation for this delay will not be applied26.

        65. The arbitration courts’ practice is less clear. Article 183 of the Code of Arbitration Procedure only allows indexation if the contract or federal laws so provide. These laws are listed in the Supreme Arbitration Court’s letter of 25/05/2004 No C1-7/УП-600.

        66. Besides these laws applicable to certain very specific areas, the letter provides that in all other cases indexation is granted by virtue of Article 395 of the Civil Code (default interest).

          ii) Appropriate default interest - Article 395 of the Civil Code

        67. The current state of judicial practice regarding granting of default interest in case of delay in execution of judgments by the public authorities may be summarised as follows:

          - default interest and indexation do not cover the same losses and should thus be applied simultaneously 27.
          - default interest is applicable to the sums awarded by a judicial decision in case of delay in their payment28.
          - default interest is applicable to the debts of budgetary institutions which do not enjoy any immunity against responsibility provided by civil law.
          - default interest is applicable notwithstanding the debtor’s lack of funds29.

            iii) Compensation of specific damages (pecuniary and non-pecuniary) which may result from delays

        68. A complementary avenue to obtain adequate compensation is the civil liability of the state. The present Russian Civil Code also provides for state civil liability for “acts or omissions of state organs, municipalities or their agents” (Article 1069).

        b) Outstanding issues and proposals for further improvement

        i) Regular indexation of the principal sum awarded by a judicial decision

        69. Clarifications would be useful as to whether Russian law allows automatic indexation by different state authorities in case of delay in execution of judgments delivered against them. Otherwise the Russian authorities are invited to envisage the introduction, either in the Budgetary or the Civil Codes, an appropriate legal basis to this effect.

        70. In addition, it should be noted that the reference to Article 395 of the Civil Code made by arbitration courts for indexation purposes is somewhat misleading since it deprives indexation of its objective character irrespective of the debtor’s fault. Therefore the Supreme Arbitration Court may wish to modify its guidelines accordingly.

            ii) Appropriate default interest - Article 395 of the Civil Code

        71. Mere indexation, even if automatically applied to state debts, is insufficient for the purposes of the Convention as it appears only to cover inflation losses. It does thus not compensate for the loss of use of the sums owed during the time of delay. Yet compensation for such loss is also required under the Convention (see e.g. Popescu Sabin v. Romania, judgment of 24/03/2005, § 92) and would in general appear to contribute to create adequate incentives for relevant state authorities to execute outstanding judgments in a timely manner. The way of achieving this goal is default interest.

        72. Accordingly, the conclusions of the October 2006 Round Table pointed out the need to introduce a mechanism for automatic compensation for delays in execution through appropriate default interest to be determined by a specific act and reviewed at regular intervals so as to remain at a reasonable rate (e.g. in line with the Central Bank's rate); this default interest should be calculated and imposed automatically without obliging individuals to go back to court. Information on measures taken in this respect is awaited.

            iii) Compensation of specific damages (pecuniary and non-pecuniary) which may result from delays

        73. The extent of this civil liability and its effects in practice remain to be demonstrated. The state’s subsidiary responsibility under the Budgetary Code does not include the obligation to pay damages resulting from prolonged non-enforcement. In addition, the possibility to obtain non-pecuniary damage for the frustration caused by non-enforcement remains to be clarified. Application by all courts of the Article 1069 consonant with the Convention requirements appears, in principle, possible. However, in order to ensure effective application of this provision in practice, the issuing of common guidelines by the Supreme Court and the Supreme Arbitration Court would appear necessary.

            iv) Obligation to pay penalties in case of delays

        74. Merely ensuring full compensation for losses caused by delays may not be sufficient to ensure timely compliance by public authorities with court judgments and more coercive measures have also been introduced by states (see for example the new system introduced in Greece following the Hornsby group of judgments and explained in the Committee of Minister’s Final Resolution, ResDH(2004)81).

        75. In view of the size of the non-execution problem in Russia, the Russian authorities might consider similar measures. Such measures would appear to require new legislation introducing, for example, punitive default interest, money penalties or extra-ordinary damages.

        76. Amendments to the Budgetary Code, might provide for a higher interest rate penalising non-execution of judicial decisions, or at least unjustified non-execution established by a judicial decision.

        77. Future legislation might alternatively provide that, if the execution of a judicial decision is delayed or denied, the debtor body or the Ministry of Finance should pay the claimant a standard sum for each day of delay as compensation. This sum might be calculated on the basis of a certain percentage of the sum remaining unpaid under the court decision concerned.

        4. Increasing the effectiveness of domestic remedies to ensure proper execution of judicial decisions

        78. Article 13 of the Convention requires that effective remedies be set up at the national level to enforce all rights and freedoms enshrined in the Convention. Thus any arguable claim of violation of these rights and freedoms must be examined by a national authority capable of granting relief. The authority referred to in Article 13 does not necessarily need to be a judicial authority, but its powers and procedural guarantees are relevant in determining whether the remedy is effective (see e.g. Leander v. Sweden, judgment of 27 March 1987, §83).

        79. Also, even if a single remedy does not by itself entirely satisfy the requirements of Article 13, the aggregate of remedies provided for under domestic law may do so (see, among many other authorities, the Silver and Others v. the United Kingdom judgment of 25 March 1983, § 113, and the Chahal v. the United Kingdom judgment of 15 November 1996, § 145). In addition, the authority concerned must be sufficiently independent of the body being challenged and the remedy shall not be discretionary or unenforceable (see Khan v. the United Kingdom, judgment of 12 May 2000).

        a) Current situation

            i) Remedies available under the Budgetary Code

        80. The new Chapter introduced in the Budgetary Code (see §§ 14 and seq. above) confirmed Treasury offices’ power to freeze debtors’ accounts - i.e. to suspend all expense operations30 - until the sums awarded by judgments have been paid. This power applies without distinction to all funds deposited in the accounts open with the Federal Treasury, i.e. the budgetary funds and to the funds resulting from commercial and other activities of the debtor. Accordingly, this power may be exercised

          - if the debtor fails to provide the Treasury with the necessary information for the execution of a judicial decision (Article 242.3 § 3 of the Budgetary Code);
          - if the debtor fails to execute a judicial decision within the statutory 3-month time-limit (Article 242.3 § 8).

        81. Besides the Treasury power to freeze the debtors’ accounts, the claimant may also seek subsidiary civil liability of the superintendent of the budgetary funds of the debtor.

            ii) Recourse to bailiffs with a view to ensuring compulsory execution

        82. The bailiffs’ statutory obligation to ensure timely compliance with judicial decisions is provided by Article 7 of the 1997 Law and Article 12 of the Law On Bailiffs. According to the Supreme Courts’ decisions (see § 12 and § 18 above), bailiffs may now play an important role in enforcement proceedings against public authorities after the expiry of the 3-month time-limit provided by the Budgetary Code.

        iii) Judicial remedies

        83. The 1997 Law, as well as the Code of Civil Procedure and the Code of Arbitration Procedure, provides a basis for courts’ intervention in the enforcement proceedings through a special accelerated procedure. The courts’ powers relate especially to:

          - modification of execution modalities if there are obstacles to the proper enforcement of the decision (Articles 434 of the Code of Civil Procedure, 325 of the Code of Arbitration Procedure and 18 of the 1997 Law);
          - granting of indexation (Articles 208 and 203 of the Code of Civil Procedure);
          - granting damages for bailiffs’ inefficiency (Articles 441 of the Code of Civil Procedure and 90 of the 1997 Law).

        b) Outstanding issues and proposals for further improvement

        84. All these remedies taken separately are not considered to be effective under the Convention (see mutadis mutandis , as regards the subsidiary responsibility of the superintendent of budgetary funds, Petrushko v. Russia, judgment of 24 February 2005, §7; see also, as regards bailiffs, the Lositskiy v. Russia, judgment of 14 December 2006, §§ 29-30 and Yavorivskaya v. Russia, decision of 13 May 2004).

        85. It is indicative that the continuous influx of new applications before the European Court has not decreased despite the Federal Treasury frequently using its power to freeze debtors’ accounts in various regions (4 106 times in 2005 and 806 times within the first 3 months of 2006).

        86. In addition, the Treasury’s power to freeze debtors’ accounts cannot be considered as fully satisfying the Convention’s requirements for the following reasons:

          - the lack of independence of the Treasury from the public authorities raises doubts as to the full effectiveness of this mechanism in all circumstances;
          - the limited scope of the Treasury’s powers since the Ministry of finance cannot be subject to this measure (e.g. Shilayev v. Russia, judgment of 06/10/2005);
          - the applicant is unable to request the use of this power by the Treasury, which enjoys unlimited discretion in this respect; moreover, the exercise of this power is not subject to any time-limit.

        87. However, should all those remedies be organised in a coherent system, it could not be excluded that they would offer appropriate redress to claimants and thus be considered as effective under Article 13 of the Convention in the light of the European Court’s case-law cited in §§ 78-79 above. In order to achieve this positive result, the following issues would need to be solved.

        i) Harmonisation of the roles of the Treasury and of the bailiffs

        88. According to the recent decision of the Plenum of the Supreme Arbitration Court (see § 18 above), the bailiffs are competent to enforce judicial decisions against public authorities after expiry of the statutory 3-month period provided by the Budgetary Code. However the Budgetary Code provides that Treasury offices may, after the expiry of that period, freeze the debtor’s accounts until the judgment is fully complied with.

        89. This conflict of competence may be solved in various ways. One of the possibilities may be to refer the case, if after the expiry of the 3-month period a judicial decision remains unexecuted, to a court with a view to considering possible modification of the execution modalities. It would be useful if in such proceedings the responsible Treasury office is invited, if appropriate, to demonstrate whether there is still a possibility for the judicial decision at issue to be executed under the Budgetary Code. It should be open to the court to consider the Treasury’s explanations unsatisfactory and to order bailiffs to initiate enforcement proceedings on the basis of the 1997 Law. The advantage of this solution would be that the prolong uncertainty for the claimant is avoided.

        ii) Improvement of means allocated to bailiffs

        90. However, the effectiveness of the bailiffs’ intervention will be contingent on the powers of bailiffs, i.e. in particular the possibility for them to use coercive means of enforcement. In this respect, the European Court has already found on numerous occasions that the recourse to bailiffs was not an effective remedy in case of lack of funds available to the Ministry of finance as this would produce the same repetitive result (see e.g. Yavorivskaya v. Russia, decision of 13 May 2004; Petrushko v. Russia, judgment of 24 February 2005). Therefore, the reform of the relevant legislation as well as other measures to make the institution of bailiffs more efficient would appear appropriate.
        iii) Widening of the scope of the existing judicial remedies

        91. In order to make the existing judicial remedies fully effective from the Convention’s perspective, courts should award not only indexation on the basis of the current provisions but also, and at the very least, default interest (see §§ 58 and seq.). It seems to be common ground that the mere existence of a delay in the execution of a monetary obligation, arising not least from a judicial decision, gives rise to the payment of default interest. Thus, an application for default interest should not in principle require full judicial review (see § 67 above).

        92. The Russian authorities may wish to go even further and to consider the possibility of setting up at the national level a simplified judicial remedy allowing claimants to obtain prompt compensation proportionate to the delay in execution as compared to the statutory time-limits (over and above the statutory default interest dealt with above) or the acceleration of execution 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 v. Croatia judgment). This measures could be also applied to the cases already pending before the European Court.

        5. Improvement of the legal framework governing compulsory execution against the state and its entities

        93. In order to stress the legal obligation to respect court judgments and make it fully effective, a number of states have accepted that state assets may be seized. 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 state’s subsidiary responsibility for non-enforcement of judicial decisions effective (see Dierckx v. Belgium, Resolution DH(95)105 and Hornsby v. 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.

        a) Current situation

            i) Budgetary Code: execution only possible at the expense of budgetary and other funds held with the Treasury

        94. The Budgetary Code, as amended by the 2005 Law, provides that Treasury offices are only competent to ensure execution of judgments at the expense of the funds, either budgetary or resulting from commercial or other activities, deposited in the accounts held by the public authorities within the Treasury.

            ii) The 1997 Law: execution possible at the expense of all debtors’ assets except those explicitly excluded by law

        95. According to the 1997 Law, bailiffs, after having established the debtor’s lack of monetary resources, are empowered to enforce a judicial decision through compulsory mechanisms at the expense of all debtor’s assets except those explicitly excluded by law (Articles 46 §5, 57 and 58).

        96. While the current legislation does not explicitly provide a list of assets which cannot be seized, some of them may be identified by reference to the general provisions of the Civil Code concerning the legal regime of certain state assets or the liability of the state and its entities31

        b) Outstanding issues and proposals for further improvement

        97. The Russian Supreme Courts have already emphasised that judicial decisions awarding payments by the public authorities shall explicitly indicate that the sums awarded are to be recovered from the relevant treasury, which is not limited to the budgetary funds and includes in principle state assets. However, it would appear that these guidelines are difficult to follow in practice given uncertainties about the assets which can and can not be seized. Special legislation may accordingly be helpful clearly to establish a list of state assets which cannot be seized (e.g. those manifestly necessary for the performance of state duties) thus opening clear possibilities for compulsory execution in case of non-execution of judicial decisions by the state or its entities.

        98. In this respect, the authorities may wish to take account the experience of other countries which established a list of state assets which may be seized (see the abovementioned Resolutions DH(95)105 in Dierckx v. Belgium and DH(2004)81 in Hornsby v. Greece).

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

        a) Current situation

        99. The 2005 Law 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 Budgetary Code (Chapter 28, Articles 281-306) includes an entire section dedicated to the responsibility of the civil servants for breaches of the budgetary law.

        b) Outstanding issues and proposals for further improvement

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

        100. While these provisions appear to constitute a solid basis for 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 provisions are implemented in practice.

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

        101. Prior to the entry into force of the 2005 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.

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

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

        103. For the time being, the authorities have indicated that there were only two cases in which criminal proceedings were initiated against state officials responsible of delays in execution (Article 315 of the Criminal Code). In both cases the proceedings were discontinued due to the active repentance of the accused. Information would be helpful on the measures taken by the authorities to increase the effectiveness of criminal remedies in cases of abusive refusals to comply with judicial decisions.

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

Note 1 This document has been classified restricted at the date of issue. It was declassified at the 997th (DH) meeting of the Ministers’ Deputies (5-6 June 2007).
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 CEPEJ – European Commission for the efficiency of justice
Note 8 E.g. Timofeyev (58263/00), judgment of 23/10/2003, Wasserman (15021/02), judgment of 18/11/2004
Note 9 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 NO.666 of 22/09/2002.
Note 10 Law No. 197 - ФЗ of 27 December 2005 amending the Budgetary Code, the Code of Civil Procedure, the Arbitration Code and the Federal Law on Enforcement proceedings.
Note 11 For the detailed description of the new execution mechanism see the previous version of the Memorandum CM/Inf/DH(2006)19 revised 2.
Note 12 According to the Budgetary Code, bailiffs only conserved such competence in respect of funds deposited by the public authorities with private banks.
Note 13 Ruling No.23 delivered by reference to Articles 46§5 of the 1997 Law and 242.2 of the Budgetary Code and confirming previous case-law of the Supreme Court.
Note 14 see the Constitutionnal Court decision No68-O of 9 April 2002.
Note 15 see Overview of judicial practice in civil case for the 3rd quarter of 2004
Note 16 Source: INTERFAX-AFI, publication of 23/12/2003.
Note 17 Round table on non-enforcement of court decisions against the state and its entities in the Russian Federation: remaining problems and solutions required, Conclusions of the Round Table of 30-31 October 2006 (CM/Inf/DH(2006)45), http://wcd.coe.int/ViewDoc.jsp?id=1069031&BackColorInternet=9999CC&BackColorIntranet=FFBB55&BackColorLogged=FFAC75
Note 18 Plenum Ruling No. 23 of 22/06/2006 On certain issues raised in relation to the application by arbitration courts of the provisions of the Budgetary Code (see in particular its §1).
Note 19 For more detail see the Ruling of the Plenum of the Supreme Arbitration Court No. 21 of 22/06/2006.
Note 20 see Certain issues arising out of judicial practice in civil case (Bulletin of the Supreme Court No10 of 15/10/1997) et the Plenum Ruling No. 23 of 22/06/2006 referred to above (§ 2).
Note 21 Plenum Ruling No. 23 of 19/12/2003 On judicial decision and an overview of the judicial practice of the Supreme Court for 3rd quarter of 2004.
Note 22 Its Ruling N°23 of 22 June 2006.
Note 23 Plenum Ruling No. 21 of 22/06/2006 referred to above, § 4.
Note 24 See in this respect the decision the Civil Chamber of the Supreme Court of 26/12/2003; in this case the défendant was a territorial department of the Ministry of the Interior.
Note 25 See in this respect point 5 of an Overview of judicial practice of the Supreme Court of the Russian Federation for third quarter of 2003 (civil matters) adopted by the Rulings of the Presidium of 3/12/2003 and 24/12/2003.
Note 26 The guidelines of the Ministry of the Interior on the execution of judgments delivered against it.
Note 27 see the decision of the Civil Chamber of the Supreme Court of 14/02/2006 in which a distinction has been made between Article 395 of the Civil Code corresponding to the civil liability for non-execution of a payment obligation and indexation which is aiming at the restoration of the purshasing power of the sums awarded.
Note 28 According to the point 23 of the common Ruling of the Supreme Court and of the Supreme Arbitration Court No.13/14 of 8/10/1998, the default interest is due as from the date when the judgment became final.
Note 29 In its decision of 14/02/2006 referred to above, the Civil Chamber of the Supreme Court indicated that according to the spirit of the law the mere violation of the payment obligation entails the application of Article 395 of the Civil Code and the defendant’s lack of funds is irrelevant in this respect.
Note 30 Previously foreseen by the Decree of 22 February 2001 N 143 and not explicitly mentioned by the Decree NO.666
Note 31 For example, as regards State-owned lands, see Article 126§1 2) and Article 129§3; as regards the special regime of the assets granted to the legal persons of public law created by the State or its entities, see Article 126§2, etc.


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