AS TO THE ADMISSIBILITY OF
Application no. 37658/03
by Olga Ivanovna SHERSTYUK
The European Court of Human Rights (Fifth Section), sitting on 18 September 2006 as a Chamber composed of:
Mr P. Lorenzen, President,
Mrs S. Botoucharova,
Mr V. Butkevych,
Mrs M. Tsatsa-Nikolovska,
Mr R. Maruste,
Mr J. Borrego Borrego,
Mrs R. Jaeger, judges,
and Mrs C. Westerdiek, Section Registrar,
Having regard to the above application lodged on 30 October 2003,
Having regard to the decision to apply Article 29 § 3 of the Convention and examine the admissibility and merits of the case together,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,
Having deliberated, decides as follows:
The applicant, Ms Olga Ivanovna Sherstyuk, is a Ukrainian national who was born in 1965 and lives in the town of Popasnaya of the Lugansk region. The Ukrainian Government (“the Government”) were represented by their Agent, Mr Y. Zaytsev, of the Ministry of Justice of Ukraine.
A. The circumstances of the case
The facts of the case, as submitted by the parties, may be summarised as follows.
In October 1988 the applicant opened a fixed-term deposit account in the USSR Savings Bank. Under the contract, the annual interest rate on the deposit was 3 %.
By a decision of 20 March 1991, the Verkhovna Rada (Parliament) of Ukraine declared the Ukrainian branches of the USSR Savings Bank being a property of the Ukrainian State. The operation of banks and banking activities was regulated by law (see Relevant domestic law, below).
Since 1992, Ukrainian economy experienced hyperinflation, with its peak in 1993.1
On 30 June 1993 the regional branch of the Ukraine Savings Bank (hereinafter – “the Bank”) placed an announcement in the Lugansk Regional Council’s newspaper called “Nasha gazeta”. The announcement read as follows:
“The Savings Bank informs
As of 1 July this year the annual interest rate on fixed-term deposits and on special deposits for children is set at 220 per cent. No new formalities are required for previously opened fixed-term deposits and special deposits for children.”
According to the applicant, having read this announcement and having received confirmation in the local office of the Bank, the applicant decided, contrary to her initial intentions, not to withdraw her money deposited with the Bank.
In 1996 the Ukrainian authorities implemented a monetary reform intended to replace the former monetary unit, the karbovanets coupon, with a new currency, the Ukrainian hryvnia (українськa гривнa, UAH), at an exchange rate of 100,000 karbovanets coupons for 1 hryvnia.
According to the applicant, in June 2001, having difficulties in understanding the information written in her account statement records, she consulted an expert who, after having examined the above records, found out that since 1994 the annual interest rate on her deposit had been lower than 220%. According to the applicant the annual interest rate on her deposit was 194.7% in 1994, 86.8% in 1995, 29.9% in 1996, 13.7% in 1997, 6.9% in 1998, 7.3% in 1999, and 6.3% in 2000.
In July 2001 the applicant instituted proceedings in the Popasna District Court of the Lugansk Region against the Bank seeking compensation for damages caused by decreasing the annual interest rates on her deposit without informing her and without seeking her prior consent. She complained that the Bank fell short of its obligations to pay on her deposit the interests of 220% per year fixed in 1993 after publication of the announcement in the official newspaper of the regional council.
According to the applicant, during the hearing, the representative of the Bank, explained, among other things, that in accordance with the Bank’s Statute and instructions of 3 October 1980 and 8 July 1998, the Bank was not obliged to disseminate information about the applicable interest rates, but such information had always been available in branches of the Bank and the applicant could have consulted it there.
By its judgment of 25 December 2001, the court rejected the applicant’s claim as unsubstantiated, for the following reasons:
“...the defendant, having changed unilaterally the interest rates on the fixed-term deposit had acted in accordance with Article 41 of the Law of Ukraine “on Banks and Banking Activities” in the wording of 1991, under which the Savings Bank of Ukraine sets the interest rates on deposits within the maximum interest rates set by the National Bank of Ukraine.
At the same time, this Law does not foresee any other conditions for setting interest rates on deposits, including agreement of depositors.
Taking into account, that Laws ... have the highest legal force and are obligatory for implementation by all legal persons and citizens of Ukraine, the court considers that the defendant’s actions on unilateral changes of the interest rates on the fixed-term deposit of the applicant had been lawful, therefore the claims ... are unsubstantiated...”
The applicant appealed against this judgment to the Lugansk Regional Court of Appeal.
On 4 April 2002 the Lugansk Regional Court of Appeal upheld the judgment of the first instance court. In its decision the appellate court, having repeated the reasoning of the first-instance court, also noted that the applicant had deposited her money in 1988 with the interest rate of 3 per cent. Since 1 July 1993 the Bank had been changing the interest rate but the latter never went lower than the original rate of 3 per cent.
The applicant appealed in cassation.
On 23 June 2003 the panel of three judges of the Supreme Court of Ukraine rejected the applicant’s request for leave to appeal in cassation.
B. Relevant domestic law
1. Constitution of Ukraine, 1996
“Everyone has the right to own, use and dispose of his or her property, and the results of his or her intellectual and creative activity...
No one shall be unlawfully deprived of the right of property. The right of private property is inviolable...”
2. The Law on Banks and Banking Activities of 1991 (replaced by a new law on 17 January 2001)
Article 41. Interest rates of the Ukraine Savings Bank
“The Ukraine Savings Bank fixes the interest rates on the deposits of the population within the limits of the maximum interest rates, established by the National Bank.”
The applicant complained under Article 1 of Protocol No. 1 that the State interfered with her property rights. She maintained that the adoption of the Law “on Banks and Banking Activities” was in contradiction with the Constitution and the civil legislation, as it allowed the Bank to break the terms of contract between the Bank and the clients by unilateral change of the statutory interest rates and this without their consent.
The applicant complained that the State interfered with her property rights by allowing its Bank to change the interest rate on deposits unilaterally and, therefore, deprived her of a certain amount of money by reducing the interest rate on her deposit without her consent. She invoked Article 1 of Protocol No. 1 that provides as relevant:
“Every natural ... person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
The Government maintained that the applicant’s complaint concerned neither an “existing possession” nor a “legitimate expectation” to receive such a possession. The applicant could not therefore claim to be a victim of a violation of her property rights.
The applicant disagreed. She maintained that the newspaper announcement about the interest rate on deposits constituted an obligation of the Bank to pay her annually 220 per cent interest rate on her deposit. From her part, the applicant had agreed to such conditions by not withdrawing her money from the Bank. The applicant considered that this constituted an agreement between herself and the Bank that the interest rate on her deposit would not be changed without her prior consent. Therefore, she maintained that the Bank had breached the terms of their agreement and violated her property rights.
The Court reiterates that, according to the established case-law of the Convention organs, “possessions” within the meaning of Article 1 of Protocol No. 1 can be “existing possessions” (see Van der Mussele v. Belgium, judgment of 23 November 1983, Series A no. 70, p. 23, § 48) or assets, including claims, in respect of which the applicant can argue that he has at least a “legitimate expectation” of obtaining effective enjoyment of a property right (see Pine Valley Developments Ltd. and Others v. Ireland, judgment of 29 November 1991, Series A no. 222, p. 23, § 51; and Pressos Companía Naviera S.A. v. Belgium, judgment of 20 November 1995, Series A no. 332, p. 21, § 31). However, Article 1 of Protocol No. 1 does not guarantee any right to acquire the ownership of property (Linde v. Sweden, application no. 11628/85, Commission decision of 9 May 1986, DR 47, p. 270). Consequently, it does not impose any general obligation on States to maintain the purchasing power of sums deposited through the systematic indexation of savings (see Gayduk and Others v. Ukraine (dec.), nos. 45526/99 and foll., ECHR 2002-VI (extracts); Rudzińska v. Poland (dec.), no. 45223/99, ECHR 1999-VI).
The Court notes that in the present case the applicant’s claim before the domestic authorities and her complaint before this Court were based on the assumption that following the newspaper announcement in 1993, as confirmed by a representative of the Bank, according to which an annual interest rate of 220% would apply as of 1 July 1993, no reduction of this rate could be operated without her prior consent. Consequently, in her view, the reduction of the interest rate in question in subsequent years violated her property rights. The Court observes that the applicant’s arguments were carefully examined by the judicial authorities to whom the applicant had submitted her claim. The domestic courts found that the interest rate had never gone below the initially agreed rate of 3% and that all changes of the applicable interest rate had been made in compliance with domestic law. The Court considers that the applicant has failed to demonstrate that the reasoning of the authorities was arbitrary or that any elements which might lead to a different conclusion were disregarded by them. Furthermore, the Court notes that the changes of the interest rates were operated at a time when Ukraine was facing serious inflation problems involving a monetary reform in 1996. The newspaper announcement in 1993 informed about one of the successive adaptations of the interest rates fixed in accordance with the domestic law without having any effect on the contractual relations between the applicant and the Bank, based on the relevant Ukrainian law.
In these circumstances the applicant has not shown that she has any relevant "existing possessions" or any legally recognised claims, which could be regarded as "legitimate expectations" of enjoying property rights. The application is therefore incompatible ratione materiae with the provisions of the Convention and must be rejected under Article 35 § 4 of the Convention.
Accordingly, the application of Article 29 § 3 of the Convention in the present case must be discontinued.
For these reasons, the Court unanimously
Declares the application inadmissible.
Claudia Westerdiek Peer LORENZEN
1 According to the official statistics, the annual inflation rate in Ukraine was: 2,100% in 1992, 10,256% in 1993, 501% in 1994, 281.7% in 1995, 139.7% in 1996, 110.1% in 1997, 120% in 1998, 119.2% in 1999, and 125.8% in 2000.
SHERSTYUK v. UKRAINE DECISION
SHERSTYUK v. UKRAINE DECISION