EHRM, 10-11-2009, nr. 30190/06, nr. 30216/06

The applicant, Mr Franz J. Sedelmayer, is a German national who was born in 1963 and lives in Irschenhausen.

The applicant complained in both applications that the German authorities had refused to enforce the arbitral award. He relied on Article 1 of Protocol No. 1, which reads:

The applicant complained that the refusal of the German courts to execute the arbitral award amounted de facto to an absolute immunity from execution, claiming that all his attempts to attach the assets of the Russian Federation had been unsuccessful. He also contended that when deciding that the Russian Federation had not waived its right to immunity the courts had incorrectly interpreted the relevant provisions of the Bilateral Investment Treaty between the Russian Federation and Germany and the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The applicant generally averred that the German courts had failed to correctly establish the facts, for example, as to whether the claims served a sovereign purpose.

The Court observes that the arbitral award had given rise to a debt in the applicant's favour that was sufficiently established to be enforceable. Therefore, the applicant had a ‘possession’ for the purposes of Article 1 of Protocol No. 1 (see Stran Greek Refineries and Stratis Andreadis v. Greece, 9 December 1994, § 59, Series A no. 301-B).

Any interference in the right to peaceful enjoyment of the applicant's possessions must be provided for by law and serve a legitimate aim in the public or general interest. In addition, the Court reiterates that the right guaranteed by Article 1 of Protocol No. 1 may result in positive obligations on the State to take reasonable and appropriate measures to protect the right of property. A State is, for example, under an obligation to afford judicial procedures that offer the necessary procedural guarantees and therefore enable the domestic courts and tribunals to adjudicate effectively and fairly any disputes concerning the right of property (see Sovtransavto Holding v. Ukraine, no. 48553/99, § 96, ECHR 2002-VII). Whether the case is analysed in terms of a positive duty on the State or in terms of an interference by a public authority, the applicable principles are broadly similar. In both contexts regard must be had to the fair balance that has to be struck between the competing interests of the individual and of the community as a whole (see, in relation to Article 8 of the Convention, Hatton and Others v. the United Kingdom [GC], no. 36022/97, § 98, ECHR 2003-VIII, and, in relation to Article 11 of the Convention, Demir and Baykara v. Turkey [GC], no. 34503/97, § 111, 12 November 2008).

In the present case, the Court will therefore ascertain whether the German courts struck a fair balance between the demands of the general interest of the community and the requirements of the protection of the individual's fundamental rights (see, among many other authorities, Sporrong and Lönnroth v. Sweden, judgment of 23 September 1982, Series A no. 52, p. 26, § 69).

The Court reiterates that the Convention has to be interpreted in the light of the rules set out in the Vienna Convention of 23 May 1969 on the Law of Treaties and that Article 31 § 3 (c) of that treaty indicates that account is to be taken of ‘any relevant rules of international law applicable in the relations between the parties’. The Convention should thus be interpreted in harmony with other rules of international law of which it forms part, including those relating to the grant of State immunity (see Fogarty v. the United Kingdom [GC], cited above, § 35, and Kalogeropoulou and Others v. Greece and Germany, cited above). In addition, the Court observes that the concept of possessions within the meaning of Article 1 of Protocol No. 1 is ‘subject to the conditions provided for … by the general principles of international law’.

Sovereign immunity of States is a concept of international law, developed out of the principle par in parem non habet imperium, by virtue of which one State shall not be subject to the jurisdiction of another State. The grant of sovereign immunity to a State in civil proceedings pursues the legitimate aim of complying with international law to promote comity and good relations between States (see Fogarty v. the United Kingdom [GC], no. 37112/97, § 34, ECHR 2001-XI (extracts), and Kalogeropoulou and Others v. Greece and Germany (dec.), no. 59021/00, ECHR 2002-X).

The Court has previously held that international legal instruments governing State immunity set forth the general principle that, subject to certain strictly delimited exceptions, foreign States enjoy immunity from execution in the territory of the forum State. The protection thus afforded to foreign States is increased with regard to property belonging to their diplomatic and consular missions in the forum State (see Manoilescu and Dobrescu v. Romania and Russia (dec.), no. 60861/00, § 73, ECHR 2005-VI). A State cannot be required to override against its will the rule of State immunity, which is designed to ensure the optimum functioning of diplomatic missions (ne impediatur legatio) and, more generally, to promote comity and good relations between sovereign States (see Manoilescu and Dobrescu, cited above, §§ 81 and 92, and Treska, cited above).

In the present case, the Court observes that in relation to the claims for VAT reimbursement, the Federal Court of Justice took into account the principle of diplomatic immunity, an essential element of effective international cooperation, weighing it against the applicant's interest in attaching the Russian Federation's VAT reimbursement claims. With respect to the air traffic fees, the Federal Court of Justice considered that they served sovereign purposes and that those fees arose within the sovereign territory of the Russian Federation, thus beyond the international competence of German courts. The Federal Court of Justice thus took into consideration the principle of diplomatic immunity and of sovereign territory when refusing the applicant's requests for attachment.

In so far as the applicant claimed that the refusal of the German courts to execute the arbitral award amounted to a de facto absolute immunity from execution as they had refused his attempts to attach the assets of the Russian Federation, the Court cannot concur. The domestic courts neither decided that the arbitral award was invalid nor that it would not be enforced at all in Germany; on the contrary they found the arbitral award to be enforceable. Relying on principles of international law, the German courts only excluded the execution of those assets that served the maintenance of the diplomatic missions' sovereign functions (the claims for VAT reimbursement) and of those which served sovereign functions and were not executable for lack of international competence, as they arose within the sovereign territory of the Russian Federation (the air traffic fees). The Court also notes the other attempts by the applicant to attach assets of the Russian Federation in Germany, which appear to have been approved by the German courts. The Court concludes that there is nothing to suggest that the German courts would not allow the attachment of assets that are not protected by principles of international law.

As to the applicant's contention that the German courts had failed to correctly establish the facts and had incorrectly interpreted the relevant treaty provisions, the Court reiterates that it is not its task to establish whether the Russian Federation's claims in fact served sovereign functions or whether the Russian Federation had in fact waived its immunity. Those questions are primarily for the domestic courts to decide. The German courts found that the claims had served sovereign purposes and that the Russian Federation had not waived its immunity from enforcement. The Court considers that the applicant has failed to demonstrate, and there is nothing to suggest, that the assets in question have not been used by the Russian Federation in accordance with its sovereign power, or that that State had consented to any measures of constraint, such as attachment, arrest or execution, which would justify lifting its immunity from enforcement.

In light of the foregoing, the Court concludes that the German courts struck a fair balance between the demands of the general interest of the community and the requirements of the protection of the individual's fundamental rights.

It follows that there is no appearance of a violation of Article 1 of Protocol No. 1 and this complaint must be rejected as manifestly ill-founded pursuant to Article 35 §§ 3 and 4 of the Convention.

As far as the applicant's complaints under Article 6, 13, and 14 are concerned, the Court finds, in the light of all the material in its possession, and in so far as the matters complained of are within its competence, that they do not disclose any appearance of a violation of the rights and freedoms set out in the Convention or its Protocols.

It follows that this part of the application is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.

For these reasons, the Court unanimously

Decides to join the applications, and

Declares the applications inadmissible.

Claudia Westerdiek

Registrar

Peer Lorenzen

President