EHRM, 08-04-2008, nr. 21151/04

At the time of the events the applicant company was the largest internet provider in Moldova. According to it, it held approximately seventy percent of the market of internet services. While agreeing that the applicant company was the largest internet provider in the country, the Government disputed the ratio of its market share without, however, presenting any alternative figures.

The applicant company had two licences issued by the National Regulatory Agency for Telecommunications and Informatics (‘ANRTI’) for providing internet and fixed telephony services. The licences were valid until 18 April 2007 and 16 May 2007 respectively and the address 55, Armenească Street was indicated in them as the applicant company's official address.

The company had three offices in Chişinău. On 11 November 2002 its headquarters was moved from its Armenească street office to its Ştefan cel Mare street office. The change of address of the headquarters was registered with the State Registration Chamber and the Tax Authority was informed. However, the applicant company failed to request ANRTI to modify the address in the text of its licences.

On 20 May 2003 the applicant company requested a third licence from ANRTI indicating in its request the new address of its headquarters. ANRTI issued the new licence citing the old address in it, without giving any reasons for not indicating the new address.

On 17 September 2003 ANRTI held a meeting. According to the minutes of the meeting, it found that ninety-one companies in the field of telecommunications, including the applicant company, had failed to pay a yearly regulatory fee and/or to present information about changes of address within the prescribed time-limits. ANRTI decided to invite those companies to eliminate the irregularities within ten days and to warn them that their licences might be suspended in case of non-compliance.

On unspecified dates the ninety-one companies, including the applicant company, were sent letters asking them to comply within ten days of the date of receipt of the letter. They were also warned that their licences might be suspended in case of non-compliance in accordance with section 3.4 of the ANRTI Regulations. The applicant company was sent such a letter on 24 September 2003.

Following ANRTI's letters, only thirty-two companies, including the applicant company, complied with the request.

On 29 and 30 September 2003 the applicant company lodged documents with ANRTI indicating its new address, together with a request to modify its licences accordingly, and paid the regulatory fee.

On Friday 3 October 2003 ANRTI informed the applicant company that it had some questions concerning the documents submitted by it. In particular it had a question concerning the lease of the applicant company's new headquarters and about the name of the applicant company. ANRTI informed the applicant company that the processing of its request concerning the amendment of the licences would be suspended until it had submitted the requested information.

On Monday 6 October 2003 ANRTI held a meeting at which it adopted a decision concerning the applicant company. In particular it reiterated the content of section 15 of the Law on Licensing and of section 3.5.7 of the ANRTI Regulations, according to which licences which had not been modified within ten days should be declared invalid. ANRTI found that those provisions were applicable to the applicant company's case, and that its licences were therefore not valid.

On the same date ANRTI wrote to the Prosecutor General's Office, the Tax Authority, the Centre for Fighting Economic Crime and Corruption and the Ministry of Internal Affairs that the applicant company had modified its address on 16 November 2002 but had failed to request ANRTI to make the corresponding change in its licences. In such conditions, the applicant company had traded for eleven months with an invalid licence. ANRTI requested the authorities to verify whether the applicant company should be sanctioned in accordance with the law.

On 9 October 2003 ANRTI amended the Regulations concerning the issuing of licences in order to provide that an entity whose licence was withdrawn could re-apply for a new licence only after six months.

On 21 October 2003 ANRTI held a meeting at which it found that fifty-nine of the ninety-one companies which it had warned, in accordance with its decision of 17 September 2003, had failed to comply with the warning. It decided to suspend their licences for three months and to warn them that in case of non-compliance during the period of suspension, their licences would be withdrawn. It appears from the documents submitted by the parties that the applicant company was the only one to have its licence invalidated.

On 24 October 2003 the applicant company brought an administrative action against ANRTI arguing, inter alia, that the measure applied to it was illegal and disproportionate because the applicant company had always had three different offices in Chişinău of which ANRTI had always been aware. The change of address had only occurred because the applicant company's headquarters had transferred from one of those offices to another. The tax authority had been informed promptly about that change and thus the change of address had not led to a failure to pay taxes or to a drop in the quality of services provided by the applicant company. Moreover, ANRTI's decision of 6 October 2003 had been adopted in breach of procedure, because the applicant company had not been invited to the meeting and ANRTI had disregarded its own instructions given to the applicant company on 3 October 2003.

On 25 November 2003 the Court of Appeal ordered a stay of the execution of ANRTI's decision of 6 October 2003. It also set 16 December 2003 as the date of the first hearing in the case. Later, at the request of ANRTI, that date was changed to 2 December 2003.

On 1 December 2003 the representative of the applicant company lodged a request for adjournment of the hearing of 2 December on the ground that he was involved in a pre-arranged hearing at another court on the same date and at the same time.

On 2 December 2003 the Court of Appeal held a hearing in the absence of the representative of the applicant company and dismissed the latter's action. The court considered, inter alia, that since the applicant company had failed to inform ANRTI about the change of address, the provisions of section 3.5.7 of the ANRTI Regulations were applicable.

The applicant company appealed against the decision arguing, inter alia, that it had not been given a chance to participate in the hearing before the first-instance court. It submitted that, according to the Code of Civil Procedure, the court had the right to strike the case out of the list of cases if it considered that the applicant had failed to appear without a plausible justification, but not to examine the case in its absence. It also submitted that by declaring the licences invalid, ANRTI had breached its own decision of 17 September 2003. It was ANRTI's usual practice to request information concerning changes of address and to sanction companies which did not comply by suspending their licences. The applicant company drew attention to two other decisions of that kind dated 12 June 2003 and 17 July 2003. In this case, however, the applicant company had fully complied with ANRTI's decision of 17 September 2003 by submitting information about the new address within the prescribed time-limit. Notwithstanding, ANRTI had asked for supplementary information on Friday 3 October 2003 and without waiting for it to be provided by the applicant company, had decided to declare the licences invalid on Monday 6 October 2003.

The applicant company also argued that ANRTI's decision of 6 October 2003 had been adopted in serious breach of procedure because the applicant company had not been informed three days in advance about the meeting of 6 October 2003 and had not been invited to it.

Lastly, the applicant company argued that ANRTI's decision to declare its licences invalid was discriminatory since the other ninety companies listed in ANRTI's decision of 17 September 2003 had not been subjected to such a severe measure.

On 3 March 2004 the Supreme Court of Justice dismissed the applicant company's appeal and found, inter alia, that it had been summoned to the hearing of 2 December 2003 and that its request for adjournment could not create an obligation on the part of the Court of Appeal to adjourn the hearing. Moreover, the decision of 6 October 2003 was legal since the applicant company admitted to having changed its address, and according to section 3.5.7 of the ANRTI Regulations a failure to request a modification of an address in a licence led to its invalidity. The Supreme Court did not refer to the applicant company's submissions about its discriminatory treatment, ANRTI's usual practice of requesting information about changes of address and ANRTI's breaching of its own decision of 17 September 2003.

One of the members of the panel of the Supreme Court, Judge D. Visterniceanu, disagreed with the opinion of the majority and wrote a dissenting opinion. He submitted, inter alia, that the first-instance court had failed to address all the submissions made by the applicant company and had illegally examined the case in its absence. Moreover, only one provision of the ANRTI Regulations had been applied, whereas it was necessary to examine the case in a broader light and to apply all the relevant legislation. Finally, ANRTI's decision of 6 October 2003 contravened its decision of 17 September 2003. Judge Visterniceanu considered that the Supreme Court should have quashed the judgment of the first-instance court and remitted the case for a fresh re-examination.

In the meantime, the applicant company has transferred all of its contracts with clients to a company which was part of the same group, Megadat.com International, which had valid licences. However, the State-owned monopoly in telecommunications, Moldtelecom, refused to sign contracts with the latter company and made it impossible for it to continue working.

On 16 March 2004 ANRTI and Moldtelecom informed the applicant company's clients that on 17 March their internet connection would be shut down and offered them internet services from Moldtelecom without any connection charge.

On 17 March 2004 Moldtelecom carried out the disconnection of the applicant company and of Megadat.com International from the internet and all of their equipment on the Moldtelecom premises was disconnected from the power supply.

In July 2004 the licences of Megadat.com International were withdrawn by ANRTI.

As a result of the above, the applicant company and Megadat.com International were forced to close down the business and sell all of their assets. One week later, the applicant company's chairman, Mr Eduard Muşuc, was arrested for peacefully demonstrating against his company's closure.

Following ANRTI's letter of 6 October 2003 (see paragraph 17 above) the Tax Authorities imposed a fine on the applicant company for having operated for eleven months without a valid licence and the CFECC initiated an investigation as a result of which all the accounting documents of the applicant company were seized.

On 18 March 2004 the Embassies of the United States of America, the United Kingdom, France, Germany, Poland, Romania and Hungary, as well as the Council of Europe, the IMF and World Bank missions in Moldova issued a joint declaration expressing concern over the events surrounding the closure of the applicant company. The declaration stated, inter alia, the following: ‘Alleged contraventions of registration procedures do not appear to justify a decision to put a stop to the functioning of a commercial company. … We urge Moldtelecom and the relevant authorities to reconsider this question. This seems all the more important in view of the commitment of the public authorities of Moldova to European norms and values.’

The applicant company argued that the licences for running its business constituted a possession for the purposes of Article 1 of Protocol No. 1 and that ANRTI's decision of 6 October 2003 amounted to an interference with its right to property.

According to the applicant company, the measure applied to it had not been lawful because ANRTI had breached its own decision of 17 September 2003. In particular, on 17 September 2003 ANRTI had decided to institute a ten-day time-limit for the ninety-one companies concerned in order to allow them, inter alia, to present information about the change of their addresses. However, even though the applicant company had complied with the time-limit and presented all the necessary information, ANRTI had decided to disregard its own decision and to invalidate its licences.

Referring to the general interest served by the interference, the applicant company submitted that it agreed that in general terms the State was justified in its intention to secure to its inhabitants rapid and efficient telecommunications services at a reasonable cost. Therefore, the applicant company agreed that it could be said that the interference served a general interest.

In the applicant company's opinion, the measure had not been proportionate to the allegedly protected general interest. According to it, the invalidation of the licences had had extremely serious consequences which had finally resulted in the closure of its business. Moreover, the company had started to be persecuted by the Centre for Fighting Economic Crime and Corruption and the tax authorities. Due to the concerted efforts of the State authorities and Moldtelecom, all the companies from the Megadat.com group had been prevented from taking over the business and all of the clients were abusively taken from it by Moldtelecom. As a result of that, the goodwill and the value of the company had suffered serious repercussions.

The applicant company accepted that it had breached the regulations in so far as its obligation to inform ANRTI within ten days of its change of address was concerned. However, that had been a very minor breach which had not had any adverse consequences. In particular, the address had only been changed from one of its offices to another and the Registration Chamber and the Tax Authorities had been informed immediately. Accordingly, such a minor technical breach could not justify a sanction of such severity.

The fact that the sanction was disproportionate was also proved by the subsequent amendment of section 3.5.7 of the ANRTI regulations (see paragraph 38 above) which took place one year after the invalidation of the applicant company's licences.

Moreover, the authorities had done everything they could in order to prevent the applicant company from obtaining new licences. In particular, they had modified the ANRTI Regulations so that it would not be able to apply for new licences sooner than after six months (see paragraph 37 above).

In reply to the Government's submission that it was open to it to apply for a new licence (see paragraph 58 below), the applicant sent the Court minutes of the ANRTI meetings, according to which company S.'s licence to run an internet café had been invalidated on 8 December 2003 and its application for a new licence had been rejected by ANRTI on 26 December 2003 on the basis of section 3.8.6 of the Regulations. It was only on 8 June 2004 that company S.'s application for a new licence had been upheld.

In the light of the above, the applicant company expressed the view that the conduct of the authorities showed that they had not been motivated by any genuine policy considerations.

In its submissions concerning the alleged violation of Article 14, the applicant company also pointed to the fact that none of the ninety-one companies which had been warned by ANRTI on 24 September 2003 were treated in the same way.

The applicant disputed the Government's submission that its situation was different from that of the other ninety companies (see paragraph 59 below) and argued that while ANRTI did not specify in the minutes of its meetings the precise irregularities committed by each company in the list of ninety-one companies, it was clear that at least two of those companies had their licences suspended on 21 October 2003 on account of their failure to present information about the change of their addresses. The applicant sent the Court a copy of a document originating from ANRTI which supported the above submission and the authenticity of which had not been contested by the Government.

Referring to the Government's submissions concerning companies A. N. and S. (see paragraph 60 below), the applicant company disagreed, and, relying on official documents from ANRTI, argued that while being part of the group of ninety-one companies, contrary to its own situation company A. had not complied with ANRTI's warning. Nevertheless, its licence had been invalidated on the basis of section 3.5.7 of the ANRTI regulations only on 13 August 2004.

As to company N. the applicant submitted that its licence had been suspended along with those of fifty-nine other companies on 21 October 2003 (see paragraph 19 above) for failure to comply with ANRTI's warning. The three-month suspension had been lifted on 25 May 2004.

Referring to company S., the applicant company argued that it had not been in a similar situation to them either. In the first place, it had not been on the list of ninety-one companies warned by ANRTI. Secondly, the Government had not submitted any information to show whether it had been warned in the same manner as Megadat.com and whether it had been given a ten-day time limit with which it had complied. Moreover, company S. had been running an internet café, which was not comparable to the business run by the applicant company.

The Government did not dispute the fact that the licences constituted a possession within the meaning of Article 1 of Protocol No. 1. Nor did they expressly disagree with the applicant concerning the existence of an interference with its right to property. However, they expressed the view that nobody had withdrawn the applicant's licences; rather the licences had become invalid by the effect of the law a long time before 6 October 2003. According to them, the licences would have become invalid without ANRTI's involvement, at the moment when the ten-day time limit provided for by section 3.5.2 of the Regulations had expired, that is, some ten or eleven months before the decision of 6 October 2003.

At the same time, the Government argued that ANRTI had drawn the applicant company's attention to this irregularity and asked it to remedy it by letters of 11 July 2003 and 22 August 2003. They did not submit, however, copies of those letters.

The Government argued that the measure had been in accordance with section 3.5.7 of the ANRTI Regulations, which stated in very clear terms that failure to apply for modification of the address in a licence within ten days of the date of such modification gave rise to the invalidation of the licence.

They further argued that the company had been providing internet services to a large number of users and that its clients had to enjoy a good quality service. The lack of provision of adequate and timely information to clients gave reason to suspect the existence of illegal acts. Section 3.5.7 of the ANRTI Regulations was designed in the general interest to contribute to the reduction and elimination of violations of the law by companies operating in the field of internet services. The measure applied by ANRTI was in the general interest because ANRTI had to know where to contact the applicant company if a client lodged a complaint against it.

The Government argued that it was open to the applicant company to apply for a new licence. According to them the new section 3.8.6 only referred to situations where a licence had been withdrawn but not invalidated. They submitted the example of company S., which, according to them, being in exactly the same situation as the applicant company, had obtained a new licence within one month.

According to the Government, the situation of the applicant company had been different from that of the other ninety companies which had been warned by ANRTI on 24 September 2003. According to the Government, the other companies had been warned on account of other irregularities, namely failure to present to ANRTI annual reports and failure to pay regulatory taxes.

In support of their submission that the applicant company had not been discriminated against, the Government relied on the example of companies A., N. and S., which, according to them, were in a similar situation, and whose licences had also been invalidated by ANRTI.

The Government invoked for the first time before the Court new reasons to explain why the applicant company's licence had been invalidated. In particular, they argued that one of the reasons for the invalidation was the fact that the applicant company had failed to inform ANRTI in due time why it had changed its name by adding the letters I.M. in front of it.