The applicants are French nationals1. They are all members of the French Association of Holders of Russian Bonds (“AFPER”), which has more than 15,000 members. They were represented before the Court by Mr M. de Guillenchmidt, a lawyer practising in Paris.
A. The circumstances of the case
The facts of the case, as submitted by the applicants, may be summarised as follows.
Between 1822 and 1914 some two million French families purchased bonds issued by the Russian State for a total sum of approximately twelve billion gold francs, which represented a capital of 3,480 tons of gold. In 1892 the French Government allowed the bonds to be listed on the Paris stock exchange. In a decree of 14 January 1918 the Soviet Central Committee decided to cancel all the bonds issued by the tsarist regime.
As soon as the Soviet Government took power – and over the following years – the French Government promised on a number of occasions to press the bondholders’ claims. After the signing of the Treaty of Versailles France secured the re-assignment to itself of forty-seven tons of gold, which was part of the gold paid by Russia to Germany under the Treaty of Brest-Litovsk. In a statement made to the Senate on 9 April 1924 the Prime Minister declared that the said gold had been definitively made over to France in reduction of Russia’s debt. In 1929 the French State held 648,000,000 gold francs worth of Russian bonds in France. In 1963 the above-mentioned forty-seven tons of gold were officially assigned to reducing Russia’s debt to France.
In a treaty of 29 October 1990 the French and Soviet Governments undertook to solve their financial dispute quickly. That treaty was not ratified, however.
In 1992, when the Russian regime changed, the French authorities initiated negotiations again. An agreement of 7 February 1992, which was ratified but not applied, set out a solution to the dispute relating to the financial and material aspects of the property and interests of individuals and legal entities in both countries.
In a memorandum signed 26 November 1996 the Government of the Federation of Russia undertook to pay 400,000,000 dollars (approximately 2.4 billion francs) in eight six-monthly instalments. Under the terms of that agreement
“The Government of the French Republic and the Government of the Federation of Russia agreed the following:
The Government of the Federation of Russia shall pay the Government of the French Republic the sum of 400,000,000 US dollars in full and final settlement of mutual debts between France and Russia accumulated prior to 9 May 1945.
The sum shall be paid as follows: eight six-monthly instalments of 50,000,000 US dollars payable on 1 February and 1 August 1997, 1998, 1999 and 2000.
Neither the French party nor the Russian party shall, on their own behalf or on behalf of French or Russian natural and legal persons, present to each other or support in any way any financial debts or debts in rem whatsoever accumulated prior to 9 May 1945.
All the debts shall be deemed to have been fully and finally settled by payment of the entire sum referred to in the present memorandum.
The parties agree that, on the basis of the present memorandum, they shall reach an agreement as soon as possible on the payment of France and Russia’s mutual debts.”
According to the applicants, that sum was less than 1% of the debts converted to current value.
By Decree no. 97-134 of 12 February 1997 a “monitoring commission” was set up within the Conseil d’Etat with the task of proposing to the Government a means of identifying the qualifying bondholders according to the Franco-Russian basis and agreements, a method of assessing the value of the qualifying bonds and arrangements for paying compensation.
On 27 May 1997 a supplementary agreement was signed between the French Government and the Russian Government. Article 1 of that agreement listed the Russian debts which France agreed to waive and Article 2 listed the French debts in respect of which Russia undertook to make no further claim. Article 3 set out the arrangements for repayment by Russia of its debts as established in the 1996 memorandum. Article 4 added that all the debts would be deemed to have been fully and finally settled by the payment of the entirety of the sum referred to. Article 5 provided that on the date of entry into force of the agreement neither of the parties would take action against the other on the basis of any financial debts or debts in rem whatsoever accumulated prior to 9 May 1945.
On 11 June and 1 August 1997, Russia paid the first two instalments provided for in the agreement in a total sum of 100,000,000 dollars. Further instalments were sent to France in 1998, on 3 February and 4 August 1999 and, lastly, in February 2000, amounting to seven instalments in all.
In a government Bill (no. 229) filed on 24 September 1997, the Prime Minister acknowledged, in the statement of reasons, that the Franco-Russian agreements of 26 November 1996 and 27 May 1997 did not include any provision for others and produced no effects for the rights of third parties. On 20 November 1997 the National Assembly adopted a Bill, which was also adopted by the Senate on 10 December 1997, authorising approval of the above-mentioned agreements. In a Law of 19 December 1997 (no. 97-1160) Parliament authorised the ratification of those agreements.
Section 73 of Law no. 98-546 of 2 July 1998 and the Implementing Decree no. 98-552 of 3 July 1998 provided that the number of bondholders should be identified. This was done over a period of six months from the date of entry into force of the decree. On 9 February 1999 the provisional results obtained by the Ministry of the Economy, Finance and Industry showed 132,440 declarations in respect of a total of 3,760,98 bonds. On 23 March 1999 the Minister for the Budget stated that the number of bondholders was, to be more precise, 135,620 and the number of bonds 3,822,549. On 9 July 1999 the Ministry of the Economy, Finance and Industry declared that the number of bondholders stood at 300,000 and that there were more than 9,000,000 bonds.
According to the applicants, those figures were inaccurate. Their attempts to obtain clarification of this point remained fruitless. On 13 October 1999 the association representing the applicants (the AFPER) served official notice on the Minister for the Economy, Finance and Industry to publish, département by département, a monthly breakdown of the results of the survey, the number of bonds per category, a breakdown of the four thousand types of qualifying bonds taken into account and justification for the increase in the number of holders and bonds as compared to the figures given at the end of March. On 2 May 2000 an identical notice was served on the new Minister for the Economy, Finance and Industry.
On 26 July 1999 the AFPER served formal notice on the Federation of Russia to pay the sum of nine billion francs in honour of its debt plus interest.
On 27 August 1999 the embassy of the Russian Federation replied as follows:
“In accordance with the memorandum of agreement of 26 November 1996 between the Government of the French Republic and the Government of the Federation of Russia regarding final settlement of mutual financial debts and debts in rem accumulated before 9 May 1945, the French party undertook not to submit to its Russian counterpart, either on its own behalf or on the behalf of French natural or legal persons, or to support in any other manner financial debts or debts in rem of any kind accumulated prior to 9 May 1945.
The legal summons ... and service thereof on the embassy of the Federation of Russia constitute a breach of the above-mentioned undertakings.
It is for the French party to explain the above-mentioned provisions to the natural and legal persons concerned and to the courts in order to prevent any further misunderstandings in future.”
Various other legal actions instituted in France were equally unsuccessful.
On 18 December 1998 various bondholders applied to the judge of the Versailles tribunal de grande instance responsible for the execution of judgments for registration of a legal charge on real property situated in France belonging to the Russian State. In an order of 23 April 1999 the judge found that the bondholders’ claims were valid in theory. He considered that the debt subsisted and “was of undeniable public interest” despite payment of the sum of 400,000,000 dollars. However, he refused to charge the property in question because it was protected by diplomatic immunity.
On 19 September 1999 some members of the APFER lodged an application with the judge of the Paris tribunal de grande instance responsible for the execution of judgments for registration of a provisional interim legal charge on shares of the Banque commerciale pour l’Europe du Nord. However, that application was also dismissed on the ground that “the principle of the applicant’s claim cannot be considered valid ... it cannot be inferred from the Russian State’s inertia that recovery of the debt is in jeopardy”.
B. Relevant domestic law and practice
In a judgment of 30 March 1966 the Conseil d’Etat acknowledged that the public authorities were liable for the loss which international agreements to which the State was a party might occasion for individuals. In the Compagnie générale d’énergie radio-électrique case, the applicant, whose property had been requisitioned by the German army, claimed to be entitled to compensation from the French State on the basis that there had been a breach of equality vis-à-vis public burdens as a result of the signing by the French Government of international agreements which prevented it until an unspecified date from pursuing its claim against the German State.
The Conseil d’Etat held that “the responsibility of the State is liable to be engaged on the basis of equality of citizens vis-à-vis public burdens to ensure that loss arising from agreements signed by France with other States and lawfully incorporated into domestic law is compensated, on condition that neither the Convention itself nor the Act authorising its ratification may be construed as having intended to exclude any compensation and that the loss in respect of which compensation is claimed is sufficiently serious and is individual in nature”. The Conseil d’Etat concluded that the condition relating to individuality had not been fulfilled “having regard to the generality of the above-mentioned agreements and the number of French citizens who were victims of damage analogous to the damage alleged by the applicant company” (Recueil du Conseil d’Etat, p. 257).
On 18 May 1992 the National Group for the Defence of Holders of Russian bonds (“GNDPTR”), which was a different association of holders of Russian bonds from the one of which the applicants were members, had sued the French State in the Paris Administrative Court for compensation for bondholders. On 17 December 1993 the Administrative Court dismissed the application for the following reasons:
“The applicant association seeks to establish responsibility on the part of the State on account of the conduct of the French authorities, who allegedly refused to engage in negotiations with the Soviet State and the succeeding States with a view to compensating its members; the Government’s decisions in that area are inextricably linked to the conduct of international relations between the two Governments; accordingly, the pleadings referred to above raise a question which, by its nature, is not a subject for contentious proceedings.
The provisions of Article 1 of Protocol No. 1 to the European Convention on Human Rights cannot usefully be relied upon where the interference or compliance with the right guaranteed by that Article are not imputable to the French State; similarly, a breach of the provisions of Article 14 of the said Convention combined with Article 1 of Protocol No. 1 cannot usefully be relied upon...
Lastly, the loss in respect of which the applicants seek compensation arises as a result of an act of a foreign State and cannot engage the responsibility of the French State even in the sphere of equality vis-à-vis public burdens; in any event, having regard to the risks attached to the realisation of financial operations with a foreign State, the damage in respect of which compensation is sought cannot be deemed to be abnormal or special...”
1. Relying on Article 1 of Protocol No. 1, taken alone and in conjunction with Article 14 of the Convention, the applicants complained that the provisions of the treaties of 26 November 1996 and 27 May 1997 resulted in the dispossession of their property.
2. Relying on Article 6 § 1 of the Convention, the applicants submitted that those treaties also infringed their right of access to a court.
The applicants alleged a breach of Article 1 of Protocol No. 1, taken alone or in conjunction with Article 14 of the Convention. The wording of these Articles is as follows:
Article 1 of Protocol No. 1
“Every natural or legal 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.”
Article 14 of the Convention
“The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”
The applicants stressed that they were the holders of bonds issued and underwritten by the Russian State and that neither the existence nor the validity of those bonds had been challenged either by the Russian State or the French State. Furthermore, the treaties of 26 November 1996 and 17 May 1997 had given rise to a right to compensation in their favour. There was therefore no doubt that they had title to “possessions” for the purposes of Article 1 of Protocol No. 1.
The agreement of 26 November 1996 seriously infringed the applicants’ possessions in so far as it provided that “all the debts shall be fully and finally settled by payment of the entirety of the sum referred to in the ... memorandum”. That sum corresponded to only 1% of the total amount of the debt, however. Not only was the amount a mere fraction of the compensation owed to holders of Russian bonds, but it was also in “full and final settlement” of France and Russia’s mutual debts and claims. As the applicant bondholders’ claims were not the only ones to have been extinguished by the terms of that agreement, they would receive only an infinitesimal part of their initial debt. With the payment of 400,000,000 dollars Russia had undertaken not to pursue any further claims against France and France had undertaken not to pursue any of its claims in rem in the future.
Although Article 1 of Protocol No. 1 did not guarantee the right to full compensation, the level and terms and conditions of compensation had to respect the requisite fair balance. However, both the statement of reasons for the Act ratifying the agreement of 26 November 1996 (which provides that financial disputes between the two parties shall be fully and finally settled by the extinction of public debts and a waiver of claims relating to private debts) and Article 4 of the agreement of 27 May 1997 imposed an excessive burden on the holders of Russian bonds, including the applicants. The aforementioned Act and agreement deprived the applicants of the possibility of seeking compensation. France refused to consider itself substituted for the Russian State in its capacity as debtor vis-à-vis French private creditors and Russia considered itself discharged of all liability on account of the signing of the 1996 and 1997 agreements.
The applicants submitted, under Article 14 of the Convention, that they had been arbitrarily deprived of their right of property and, accordingly, discriminated against.
The Court reiterates that Article 1 of Protocol No. 1 in substance guarantees the right of property and comprises three distinct rules: the first rule, set out in the first sentence of the first paragraph, is of a general nature and enunciates the principle of the peaceful enjoyment of property; the second rule, contained in the second sentence of the first paragraph, covers deprivation of possessions and subjects it to certain conditions; the third rule, stated in the second paragraph, recognises that the Contracting States are entitled, amongst other things, to control the use of property in accordance with the general interest (see, among other authorities, the Marcks v. Belgium judgment of 13 June 1979, Series A no. 31, p. 28, § 64, and the Sporrong and Lönnroth v. Sweden judgment of 23 September 1982, Series A no. 52, p. 24, § 61).
In the first place the Court notes that the applicants, who are the holders of Russian bonds which were all unconditionally repudiated by a decree of 28 January 1918, found themselves in a position which should normally fall outside the jurisdiction ratione personae and ratione temporis of the Court.
However, in the memorandum of agreement of 26 November 1996 Russia agreed to pay France 400,000,000 dollars in full and final settlement of the two parties’ debts accumulated before 9 May 1945. Article 3 § 2 of the agreement of 27 May 1997 gave France the responsibility of “distributing the sums received in accordance with that agreement among the French natural and legal persons concerned”, including the applicants. The decree of 12 February 1997 set up a commission to monitor the 1996 agreement, whose task was, among other things, to propose to the French Government the arrangements for compensating the bondholders. It follows that those two texts gave rise to a right of the applicants to compensation which can be considered as a “possession” within the meaning of Article 1 of Protocol No. 1 (see, mutatis mutandis, the Beaumartin v. France judgment of 24 November 1994, Series A no. 296-B, § 28). The Court had held in that judgment, where no complaint had been lodged under Article 1 of Protocol No. 1, that Article 6 § 1 of the Convention was applicable on account of the pecuniary nature of a debt analogous to that of the holders of Russian bonds.
Secondly, the Court observes that the applicants did not complain of a deprivation of possessions within the meaning of the first paragraph of Article 1 of Protocol No. 1 or control of the use of property provided for in the second paragraph of that Article. The Court will therefore examine the applicants’ complaint under that Article from the standpoint of the first sentence of the first paragraph, that is, the applicants’ right to peaceful enjoyment of their possessions.
In that connection the Court must determine whether a fair balance was struck between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights (see the Phocas v. France judgment of 23 April 1996, Reports of Judgments and Decisions 1996-II, p. 542, § 53). Compensation terms under the relevant legislation are material to the assessment whether the contested measure respects the requisite fair balance and, notably, whether it does not impose a disproportionate burden on the applicants. Even in the event of deprivation of property, Article 1 of Protocol No. 1 does not guarantee a right to full compensation in all circumstances, since legitimate objectives of public interest may call for less than reimbursement of the full market value (see the case of the Holy Monasteries v. Greece of 9 December 1994, Series A no. 301-A, p. 35, § 71).
The applicants alleged that the provisions of the agreements of 26 November 1996 and 27 May 1997 did not fulfil the condition of proportionality because the sums granted corresponded to less than 1% of the total amount of their debt and France had waived any future action in support of private claims.
However, the Court reiterates that the applicants were deprived of their possessions in 1918 and that the opportunities of retrieving their savings, which had been invested and lost in that country, remained very slim for eighty years despite the efforts deployed by the French Government on their behalf. The signing of the above-mentioned agreements, by which the Government of the Federation of Russia acknowledged the ex-USSR’s debt to the French bondholders and undertook to pay France 400,000,000 dollars to that effect, was possible only following the recent political change in Russia and was the result of long and difficult negotiations.
Nor does the Court lose sight of the fact that the applicants, who had acquired Russian bonds at the time, had undertaken a financial operation, and therefore necessarily a risky one, from which they stood either to gain or lose. The possibility made available by these agreements to receive part of their or their family’s savings, which had been lost for so many years, as part of a financial package negotiated between France and Russia was, on the contrary, achieved against all the odds and constitutes compensation – even if it did not meet their expectations – for an infringement of their right to respect for their property for which the respondent State was not responsible and for which it would be paradoxical to attribute liability now.
To that has to be added the large number of bondholders and the concern of the French authorities to distribute the sum received among all the beneficiaries in the least inequitable way possible, irrespective of the value of each individual’s portfolio.
Lastly, the terms and conditions of compensation of the holders of the Russian bonds do not show a total lack of compensation which could only be justified by exceptional circumstances (see the Lithgow and Others v. the United Kingdom judgment of 8 July 1986, Series A no. 102, p. 50, § 121, and the Thivet v. France decision, no. 57071/00, Section III, 24 October 2000).
In these circumstances the fair balance which must prevail between the protection of the right to respect for property and the requirements of the general interest was not upset.
With regard to the complaint under Article 14 of the Convention, the Court notes that it does not add anything to the one submitted under Article 1 of Protocol No. 1.
It follows that this part of the application must be rejected as manifestly ill-founded, in accordance with Article 35 §§ 3 and 4 of the Convention.
The applicants also alleged a violation of Article 6 § 1 of the Convention, the relevant part of which provides:
“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal...”
The applicants stressed that the dispute concerned rights of a civil nature: an action for repayment of bonds issued by the Russian State was of a pecuniary nature.
They submitted that, as a result of the agreements signed between France and Russia in 1996 and 1997, they were deprived of all remedies in those States. Since France had undertaken not to support any financial debts or debts in rem arising prior to 9 May 1945, they could not pursue their claim in any French court. Moreover, on 17 December 1993 the Paris Administrative Court had dismissed an application by an association of bondholders for an order requiring the French State to pay compensation. Furthermore, on 23 April 1999 and 22 September 1999 the judges of the Versailles tribunal de grande instance and the Paris tribunal de grande instance responsible for the execution of judgments had refused an application for registration of interim legal charges on Russian property in Paris and shares in the Banque commerciale pour l’Europe du Nord held by the Russian Central Bank.
The Court considers that even if the agreements between France and Russia had not been signed the applicants had never had and would never have any chance of success in the courts of the Federation of Russia because it did not accept that its responsibility could be engaged vis-à-vis individuals for debts contracted (before 1917) by the tsarist regime.
Similarly, those agreements did not have the effect of breaching the applicants’ right of access to the French courts, which, as early as 1993, had refused any responsibility of the French State in that domain.
As regards a wider infringement of the right of access to the French courts, the Court reiterates that, eighty years after the applicants had been despoiled, France negotiated and obtained a settlement which allowed them compensation, albeit symbolic, but without which they could not have hoped to claim any compensation whatsoever. It also reiterates that the wrongful act at the origin of the infringement of the right guaranteed by Article 1 of Protocol No. 1 was not attributable to the French State.
Accordingly, the Court cannot conclude that the lack of an effective remedy against the French State which would have allowed the applicants to claim higher compensation than that which they received constitutes in the present case a disproportionate infringement of their right of access to a tribunal.
It follows that this part of the application must also be rejected as manifestly ill-founded, in accordance with Article 35 §§ 3 and 4 of the Convention.
For these reasons, the Court unanimously
Declares the application inadmissible.
S. Dollé L. Loucaides
ABRIAL AND OTHERS v. FRANCE DECISION
ABRIAL AND OTHERS v. FRANCE DECISION