Companies in privatization do not enjoy “sufficient independence from the state” to be exempted from liability under the Convention

In the case of Mastilović and others v. Montenegro (application no. 28754/10, 24.02.2022) the European Court of Human rights found a violation of Article 6 in respect of 19 of the applicants.

The applicants are 25 nationals of Bosnia and Herzegovina who were born between 1948 and 1976, and live in Bosnia and Herzegovina, Serbia and Canada. In 11 September 1994 the applicants were passengers on a bus operated by a “socially-owned” company (društveno preduzeće). The bus was involved in an accident in which the applicants suffered various injuries. The injured passengers were awarded compensation in civil proceedings against the Montenegrin state-owned bus company between 1996 and 2005. The case concerns the non-enforcement of subsequent judgments and court-approved settlements in favour of the applicants against the predominantly State-owned bus company, which has since become insolvent. The relevant decisions issued in favour of the applicants remain unenforced to date due to the insolvency proceedings in respect of the debtor company undergoing transition from a planned to a market economy. 

The applicants complained under Article 6 (right to a fair hearing within a reasonable time) and Article 14 (prohibition of discrimination) of the European Convention about the non-enforcement of the final court decisions and court-approved settlements against the debtor company.

The Court noted that the court judgments and court-approved settlements in respect of the above-mentioned applicants remain unenforced to date. The Court has frequently found violations of Article 6 of the Convention and/or Article 1 of Protocol No. 1 to the Convention in cases raising issues similar to those in the present case, particularly in cases concerning companies undergoing restructuring, privatisation and/or other forms of transition from a planned to a market economy. Such debtor companies, despite the fact that they are separate legal entities, do not enjoy “sufficient institutional and operational independence from the State” to absolve the latter from its responsibility under the Convention (see Mijanović v. Montenegro, no. 19580/06,, §§ 61-68).

After examining all the material submitted to it, the Court considered that the Government have not put forward any fact or argument capable of persuading it to reach a different conclusion in the present case. There has accordingly been a violation of Article 6 § 1 of the Convention. 

References from the official website of the European Court of Human Rights