Summary of a Judgment of the ECHR Concerning Protection of Property (Case of Knick v. Turkey)

Avrupa İnsan Hakları Mahkemesi’nin, Mülkiyetin Korunmasına İlişkin Bir Kararının (Knick / Türkiye) Özeti

Barış MESCİ

This article is a summary of the judgment of the European Court of Human Rights on the application (no. 53138/09) lodged by Dieter Claus Knick, a German national, against the Republic of Turkey.The applicant, through the German stock market, purchased some share certificates in Demirbank, a bank which was operating in Turkey. By a decision of the Banking Regulation and Supervision Board, the management and control of Demirbank were transferred to the Savings Deposit Insurance Fund. Thereafter, the bank was sold to the HSBC Bank. Proceedings were brought in the administrative courts by the main shareholders of Demirbank in order to annul the decision to transfer and sale agreement. Eventually, the decision to transfer Demirbank to the Fund was set aside and the sale agreement was annuled.Following the judgments of administrative courts, the applicant claimed that the judgments should be enforced and his rights as a shareholder of Demirbank should be reinstated otherwise he ought to be awarded compensation for the loss of his shares. The administrative courts dismissed the claims of the applicant on the grounds that the statutory time limit had lapsed and the applicant could not be considered as “concerned” as he had not been a party to the annulment proceedings brought by the main shareholders. The applicant complained that he had been illegally deprived of his shares in Demirbank and had been unable to obtain any compensation for his loss and consequently he alleged that his right to peaceful enjoyment of his property had been violated, relying on Article 1 of Protocol No.1 to the Convention for the Protection of Human Rights and Fundamental Freedoms.The Court, referring to a former judgment, i.e. Reisner case, stated that the Demirbank shares purchased on the stock market have an economic value and thus constitute “possessions” within the meaning of Article 1 of Protocol No.1. The Court noted that, the decision to declare the takeover and sale of Demirbank unlawful had consequences for both the main shareholders and small shareholders, whether they were parties to the annulment proceedings or not and it is clear that the applicant suffered pecuniary loss, no matter how small the number of his shares. The Court concluded that the applicant’s shares were removed from his possession on the basis of unlawful interference, yet he received no compensation for his loss and therefore Article 1 of Protocol No.1 to the Convention has been violated.

European Court of Human Rights, European Convention on Human Rights, Share Certificate, Shareholder, Possessions, Protection of Property, Concerned Person.

Bu çalışma, Alman vatandaşı Dieter Claus Knick’in Türkiye aleyhine Avrupa İnsan Hakları Mahkemesi’ne (“AİHM”) yapmış olduğu 53138/09 numaralı başvuru hakkında verilen kararın özetidir.Başvurucu, Alman menkul kıymetler borsası vasıtasıyla, Türkiye’de faaliyet gösteren Demirbank’tan hisse senetleri satın almıştır. Demirbank’ın yönetimi ve kontrolü, Bankacılık Düzenleme ve Denetleme Kurulu’nun kararıyla Tasarruf Mevduatı Sigorta Fonu’na devredilmiş ve ardından HSBC Bank’a satılmıştır. Demirbank’ın temel hissedarları tarafından, devre ilişkin kararın ve satışa ilişkin anlaşmanın iptali istemiyle idari yargı yoluna başvurulmuş, söz konusu karar ve anlaşma iptal edilmiştir.İptal kararlarının ardından başvurucu, iptale ilişkin mahkeme kararlarının icra edilerek Demirbank’ın bir hissedarı olarak haklarının iade edilmesini, aksi halde kendisine tazminat ödenmesini talep etmiştir. İdare mahkemeleri, davanın süresi içinde açılmadığı ve başvurucunun temel hissedarlar tarafından açılan iptal davalarına taraf olmaması nedeniyle “ilgili” kişi olarak değerlendirilemeyeceği gerekçeleriyle başvurucunun taleplerini reddetmişlerdir. Başvurucu, mülkiyetinin barışçıl bir şekilde korunması hakkının, Demirbank’taki hisselerinden kanuna aykırı bir şekilde yoksun kalması ve yaşadığı kayba ilişkin olarak herhangi bir tazminat alamaması sebebiyle ihlal edilmiş olduğu konusunda, Avrupa İnsan Hakları Sözleşmesi’ne Ek 1 No.lu Protokol’ün 1. maddesine dayanarak şikayette bulunmuştur.AİHM, aynı konuyla ilgili daha önce vermiş olduğu Reisner kararına atıfta bulunarak, borsa üzerinden satın alınan Demirbank hisselerinin ekonomik bir değere sahip olduğunu ve bu nedenle Sözleşme’ye Ek 1 No.lu Protokol’ün 1. maddesi anlamında mülkiyet teşkil ettiğini ifade etmiştir. AİHM, Demirbank’ın devralınması ve satılmasının hukuka aykırı olduğunun bildirildiği kararın, iptal davasına taraf olup olmadıklarına bakılmaksızın, hem temel hem de küçük hissedarlar bakımından bazı sonuçlar doğurduğunu, hisseleri ne kadar küçük olursa olsun başvurucunun maddi zarara maruz kaldığını, başvurucunun hisselerinin hukuka aykırı müdahale temelinde elinden alındığını fakat herhangi bir tazminat alamadığını belirterek Sözleşme’ye Ek 1 No.lu Protokol’ün 1. maddesinin ihlal edildiğine karar vermiştir.

Avrupa İnsan Hakları Mahkemesi, Avrupa İnsan Hakları Sözleşmesi, Hisse Senedi, Hissedar, Mülkiyet, Mülkiyetin Korunması, İlgili Kişi.

I. Introduction

This case originated in an application (no. 53138/09) lodged by a German national, Mr Dieter Claus Knick (“the applicant”), against the Republic of Turkey on 24 September 2009. The judgment of the Second Section of the European Court of Human Rights (“the Court”) became final on 17 October 2016.

The applicant, through the German stock market, purchased Turkish and German share certificates in Demirbank at a time when the bank was operating as the fifth largest private bank in Turkey.

On 6 December 2000, the Banking Regulation and Supervision Board (“the Board”) decided that the assets of Demirbank were insufficient to cover its liabilities and that the continuation of its activities would threaten the security and stability of the financial system. Accordingly, the Board transferred the management and control of Demirbank and the privileges of its shareholders except for dividends, to the Savings Deposit Insurance Fund (“the Fund”) pursuant to the following paragraph of article 14 of the Banking Activities Act¹ (Law No. 4389):

“If the Agency at its sole discretion determines that

(a) a bank has not taken the measures in part or in whole stated in subsection (2) above, the financial structure of the bank cannot be strengthened even though the measures have been taken in part or in whole, or the financial structure has become so weak that it could not be strengthened even if those measures were taken, or

(b) a bank cannot honour its liabilities as they fall due, or

(c) the value of the liabilities of the bank exceeds the value of the assets, in accordance with the valuation standards determined by the Board for the implementation of this section, or

(d) the continuation of the bank’s activities would threaten the rights of depositors and the security and stability of the financial system,

the Board may transfer the management and control and the privileges of shareholders, except dividends, of the bank to the Fund or revoke the licence of the bank to perform banking operations and/or to accept deposits, with an affirmative vote of at least five Board members.”

The Fund confiscated all properties belonging to Demirbank. All of the bank’s equities were removed from its account at the Istanbul Stock Exchange and transferred to the account of the Fund. Thereafter, the Fund sold Demirbank to the HSBC bank for 350,000,000 United States dollars (USD). Demirbank’s legal personality was extinguished on 14 December 2001 and it was struck off the commercial register.

II. Proceedings brought with respect to the decision of the Board and the sale agreement between the Fund and the HSBC Bank

Following the transfer of Demirbank to the Fund, the applicant applied to the Board claiming compensation but did not receive any reply. Subsequently, the applicant brought compensation proceedings against the Banking Regulation and Supervision Agency (“the Agency”) before the Administrative Court. He argued that he had lost his shares in Demirbank as a result of its transfer to the Fund and requested that the Board’s implied rejection of his compensation claim be reversed. On 29 December 2005 the Ankara Administrative Court dismissed the case as out of time. The court held that the applicant should have initiated proceedings within sixty days of the date on which Demirbank’s equities had been transferred to the Fund’s account at the Istanbul Stock Exchange, i.e. 31 January 2001. This judgment was upheld by the Supreme Administrative Court.

In the meanwhile, the main shareholder of Demirbank, namely Cıngıllı Holding A.Ş., brought administrative proceedings against the Agency, seeking a ruling setting aside the decision of the Board to transfer Demirbank to the Fund. In its judgment, the Joint Administrative Chambers of the Supreme Administrative Court held that prior to ordering the transfer of Demirbank to the Fund; the Board should have carried out an objective evaluation of the bank’s financial situation. The court also concluded that the Board should first have ordered Demirbank to take specific measures in accordance with paragraph 2² of article 14 of the Banking Activities Act before applying paragraph 3 of the same article. Consequently, the decision of the Board was set aside and the takeover was declared illegal.

In addition, Ms S. Cıngıllıoğlu, the main shareholder of Cıngıllı Holding A.Ş., brought administrative proceedings against the Fund before the Ankara Administrative Court, seeking the annulment of the agreement to sell Demirbank to HSBC. Given that the transfer of Demirbank to the Fund had been found to be illegal by the Joint Administrative Chambers of the Supreme Administrative Court, the Ankara Administrative Court annulled the agreement entered into by the Fund and HSBC. An appeal and a request for rectification lodged by the Fund were rejected.

Following the judgments of the administrative courts regarding the illegality of the takeover and annulment of the sale agreement, the applicant applied to the Agency and the Fund, requesting the restitution of his rights as a shareholder. Relying on the restitutio in integrum principle, he claimed that the above-mentioned judgments should be enforced and his rights as a shareholder of Demirbank reinstated. The Agency did not respond to the applicant’s request within the statutory time limit and the Fund refused the applicant’s request, stating that restitution was legally and practically impossible. Subsequently, the applicant initiated another set of proceedings before the Ankara Administrative Court, claiming that the Agency should enforce the above-mentioned judgments and that his rights as a shareholder of Demirbank should be reinstated. He argued that the bank still owned a certain amount of assets following its sale to HSBC and that restitution was therefore possible to a certain extent. He further claimed that in the event that his rights were not reinstated, he ought to be awarded compensation for the loss of his shares. The Ankara Administrative Court dismissed the case by pointing out that under Articles 12 and 28 of the Code of Administrative Procedure only “those concerned” had the right to bring proceedings seeking to remedy the situation in full. It found that the applicant could not be considered as “concerned” as he had not been a party to the annulment proceedings brought by the main shareholders. The Administrative Court held that if the annulled administrative act had been regulatory, the concept of “concerned persons” would have applied to anyone who had been affected by it, whereas in the case of an individual act, the concept of “concerned persons” includes only those who had been parties to the annulment proceedings. Since the annulled administrative acts in the present case were individual acts, the Administrative Court ruled that the applicant could not be considered as a “concerned person”. The Administrative Court also indicated that the decisions of the Agency and the Fund to reject the applicant’s requests had been lawful and that restitution would not be possible. This judgment of the local Administrative Court was upheld by the Regional Administrative Court.

III. Alleged violation of Article 1 of Protocol No.1 to the Convention

The applicant complained that he had been illegally deprived of his shares in Demirbank and had been unable to obtain any compensation for his loss and consequently he alleged that his right to peaceful enjoyment of his property had been violated, relying on Article 1³ of Protocol No.1 to the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”).

The Government contested the applicant’s allegation based on two arguments. First, the Government argued that the applicant, as a minor shareholder, had not had any “possession” within the meaning of Article 1 of Protocol No.1. Second, the Government maintained that it had been impossible de jure and de facto to enforce the court decision in question, because Demirbank had been struck off the commercial register and its legal personality had therefore ceased to exist. They also submitted that it had been impossible to revive Demirbank or the shares, as the authorities had had no authority to do so.

The Court noted that it has recently examined a similar complaint and found a violation of Article 1 of Protocol No.1 to the Convention in the case of Reisner v. Turkey⁴, where it concluded that the Demirbank shares purchased on the stock market had had an economic value and thus constituted “possessions” within the meaning of Article 1 of Protocol No.1. In the Reisner case, the Court had also reiterated that the complexity of the domestic enforcement procedure or of the State budgetary system could not relieve the State of its obligation under the Convention to guarantee to everyone the right to have a binding and enforceable judicial decision enforced within a reasonable time. The Court noted that both applications concern the very same subject matter and therefore found no particular circumstances in the instant case which would require the Court to adopt a different conclusion from the one reached in Reisner.

According to the Court’s observation, in the present case, the applicant was a small shareholder of Demirbank. The Court noted that, however, the decision to declare the takeover and sale of Demirbank unlawful had consequences for both the main shareholders and small shareholders, whether they were parties to the annulment proceedings or not. It is clear that the applicant suffered pecuniary loss, no matter how small the number of his shares. The authorities were under an obligation to compensate him for the loss, which was clearly the result of illegal administrative actions that were subsequently declared unlawful by the Administrative Court. The applicant’s shares were removed from his possession on the basis of unlawful interference, yet he received no compensation for his loss and was made to bear a disproportionate individual burden.

As a result, the Court unanimously held that there has been a violation of Article 1 of Protocol No.1 to the Convention.

It is also worth to mention that, on 4 January 2018 and 8 February 2018 the Court received friendly settlement declarations signed by the parties under which the applicant agreed to waive any further claims against Turkey in respect of the facts giving rise to this application against an undertaking by the Government to pay him EUR 631.42 (six hundred and thirty-one euros and forty-two cents) to cover any and all pecuniary and non-pecuniary damage and EUR 100 (one hundred euros) to cover any and all costs and expenses. The Court found the agreement equitable within the meaning of Rule 75 § 4 of the Rules of Court and that it is based on respect for human rights as defined in the Convention or its Protocols. Consequently, the Court took formal note of the friendly settlement and considered it appropriate to strike the case out of the list pursuant to Article 37 § 1(b) of the Convention.