هيثم الفقى
07-16-2009, 01:10 PM
A., B., C., and D. v. THE UNITED KINGDOM - 3039/67 [1967] ECHR 34 (29 May 1967)
THE FACTSWhereas the facts presented by the Applicants' solicitors Messrs. ...,in London may be summarised as follows:The Applicants are British nationals living in England. They areholders as follows of 4 and 3/4 per cent debenture stock 1968/78 of theUnited Steel Companies Limited, a corporation incorporated under thelaws of the United Kingdom:Mr. A £ ...; Mr. B £ ...; Mr. C £ ...; Mrs. D £ ...;Under the Iron and Steel Act, 1953, an agency, the Iron and SteelHolding and Realisation Agency, was established to realise and thusdenationalize the undertaking and property of the British SteelIndustry which had been nationalised by the Iron and Steel Act, 1949.In exercise of its powers under the 1953 Act, this agency first of allsubscribed for the stock issued in 1953 in the amount of £ 10,000,000at £ 98 per cent. The funds for the subscription were provided by theTreasury and the account was under the control and management of theTreasury.By an offer for sale dated the 24th February, 1961, the agency sold thestock to the British public at £ 81 per cent.The following is a summary of the provisions as to the redemption ofthe stock:(a) The company was bound to repay the stock at par on the 31stDecember, 1978.(b) The company was bound to apply in each year, starting in 1959, £200,000 either in the redemption at par of £ 200,000 of stock selectedby drawing or by the purchase of the stock in the market (such stockcounting at par or at the cost of purchase).(c) The company had a right to redeem the stock at any time on or afterthe 31st December, 1968, at a premium of £ 2 per cent between the 31stDecember, 1968 and 31st December, 1970, at a premium of £ 1 per centbetween the 1st January, 1970 and the 31st December, 1976, andthereafter at par.(d) The company was free to purchase the stock in the market.(e) If the stock became payable by reason of the company's default, itwas payable at a premium of £ 2 per cent.Each of the Applicants (except Mr. A) bought his or her stock from theagency upon the terms of the offer for sale. Mr. A bought his stock inthe market on the faith of the terms of the offer for sale in March,1964.By the Iron and Steel Act of 22nd March, 1967, the stock will becompulsorily acquired on the vesting date appointed by the competentminister, i.e. 28th July, 1967. The "main purpose" of the Act as statedin the accompanying explanatory memorandum is "to bring into publicownership the principal companies concerned with the production ofsteel in Great Britain.On ...November, 1966, the Applicants' solicitors wrote to the Ministerof Power arguing that under the principles of English law and underArticle 1 of the Protocol to the Convention, the Government wasprecluded from depriving the stockholders of their right to hold thestock until redemption date. On .. January, 1967, the TreasurySolicitor's Department to which the letter had been transmitted repliedthat, according to Section 28 (1) of the 1953 Act, the Iron and SteelHolding and Realisation Agency was not to be regarded as the "servantor agent of the Crown", and that the Agency had only acted as theseller of the debentures but had not itself issued them. As to thequestion of compensation, the reply points out that the Iron and SteelAct fixes the compensation value of these debentures by reference tothe average of the prices at which they have been bought and sold byinvestors over the period of sixty-one months to April, 1966. On theGovernment's calculation this price is estimated to be £ 80. 18. 0. asagainst the current Stock Exchange price of about £ 76. 10. 0.In the House of Lords, both at the Committee stage on the 27thFebruary, and at the Report stage on the 9th March, 1967, an amendmentwas moved and, on the second occasion, carried to remove the Stock andother similar debenture stocks from the Bill. In the House of Commonson the 21st March, 1967, this amendment was negatived and debenturestocks were restored to the Bill for nationalisation.ComplaintsWhereas the Applicants claim that the proposed acquisition of theirstock against their will and at the price proposed in the Act when theyare entitled to hold the stock until due redemption under the TrustDeed is an infringement of Article 1 of the Protocol to the Conventionon the following grounds:(a) The agency was a body set up by the British Government as statedabove, it subscribed for the stock with moneys provided by theGovernment, it sold the stock to the Applicants and in thesecircumstances for the British Government to deprive the holders of thestock of their holdings infringes the following principle of theEnglish law and general justice: "If a party enters into an arrangementwhich can only take effect by the continuance of an existing state ofcircumstances, there is an implied engagement on his part that it shalldo nothing of his own motion to put an end to that state ofcircumstances under which alone the arrangement can be operative."(b) Applying that principle to the present case the agency on behalfof the British Government to the extent provided in the Iron and SteelAct, 1953, and in order to give effect to the policy of the BritishGovernment sold the stock to the Applicants and others upon the termsof the trust deed and the offer for sale. The implied engagement of theGovernment was that it would do nothing of its own motion to preventstockholders from enjoying their full contractual rights against thecompany.(c) A departure from this principle and indeed any acquisition bynationalisation of the Applicant's stock could only be justified, ifat all, under the Protocol as being in the general interest. While theGovernment has asserted such an interest, no grounds for this interesthave been given nor are any apparent for the reasons given below.(d) Holders of debenture stock such as the stockholders, do not own thecompany. The shareholders do. The stockholders are creditors. TheGovernment could therefore achieve the main purpose of the Act, namelyto bring the company into public ownership merely by the acquisitionof the shares.Debenture stocks represent debts and should be honoured, unless it wasnecessary to acquire debenture stocks in order to reorganise theindustry. The word "necessary" appears in Article 1 to the Protocol andis the right test. In Parliament it was urged by the Opposition thatit was not necessary to acquire debenture stocks. The rights ofdebenture stockholders depend on the terms of the trust deedsconstituting them, but in every case known to the Opposition the stocksbecome payable if the company goes into liquidation.Under English law, a company has a statutory right to go intoliquidation and if all the shares were owned by the corporation set upunder the Act, the necessary resolution could be passed in a few days.Every conceivable kind of reorganisation can be carried out in aliquidation. Accordingly no reorganisation would be held up if thedebenture stocks were left outstanding. In so far as their continuedexistence did not impede any reorganisation they would be paid off indue course. In so far as they did impede any reorganisation which wasconsidered in the future they could be easily disposed of and paid offby a reorganisation in liquidation.The Government declined to answer these arguments in any detail butmerely asserted that the rights of the stockholders would enable themto go to court to stop certain reorganisations and could delay orprevent reorganisations.This answer was rested on assertion rather than logical argumentbecause it does not bear examination as a matter of English law. Acompany can go into liquidation. This is a cheap and quick processwhere all the shares are owned. In every case known to the Oppositionor indeed to the Applicants, debenture stocks become immediatelyrepayable on liquidation. If they are repaid, the holders cease to becreditors and have no standing to make any application to the court.Every reorganisation of a company which can be carried out while acompany is a going concern can be carried out while it is inliquidation. The British Government never argued the contrary givingchapter and verse.(e) A further argument applicable to the stock is that under the trustdeed constituting it, the stock is repayable at the option of thecompany at the end of 1968. Acting under the powers conferred on himby Section 9 (5) of the Act, the Minister has appointed the 28th July,1967 to be the vesting date, that being the date upon which allsecurities of the steel companies are to vest in the corporationestablished under the Act. This corporation has to consider whatreorganisation to make. This must be a long process. It is thereforeunlikely that in any event the stock would be required to be disposedof before it becomes repayable in the ordinary course. It is,therefore, unnecessary to acquire the stock.In the circumstances, it is not necessary, nor could the BritishGovernment reasonably deem it to be necessary, to acquire the stock inorder "to control the use of property in accordance with the generalinterest" within the meaning of Article 1 of the Protocol.History of ProceedingsWhereas the proceedings before the Commission may be summarised asfollows:The Application dated 1st February, 1967, was received by theSecretariat of the Commission on 3rd February, 1967, and entered on thesame date in the special register provided for by Rule 13 of theCommission's Rules of Procedure.On 9th March, 1967, the President acting on behalf of the Commissiondecided proprio motu to give precedence to the case under Rule 38,paragraph (1), of the Rules of Procedure.On 5th April, 1967, the case was submitted to a group of three membersfor a preliminary examination in accordance with Rule 34 of the Rulesof Procedure. On 8th April, 1967, the Commission examined theApplication and decided to adjourn its decision on admissibilitypending confirmation by the Applicants' solicitors that the Iron andSteel Bill had been enacted in the meantime.This information and the final text of the Act were received on 10thApril, 1967, and a further statement was submitted by the Applicants'solicitors on 10th May, 1967. A new preliminary examination on thebasis of these submissions was carried out by a group of three memberson 8th and 26th May, 1967. On 29th May, 1967, the Commission resumedits examination of the case and adopted the present decision.THE LAWWhereas it is necessary first to recall the precise terms of Article1 of the Protocol (P1-1) to the Convention which forms the basis of theApplicants'complaints:"Every natural or legal person is entitled to the peaceful enjoymentof his possessions. No one shall be deprived of his possessions exceptin the public interest and subject to the conditions provided for bylaw and by the general principles of international law.The preceding provisions shall not, however, in any way impair theright of a State to enforce such laws as it deems necessary to controlthe use of property in accordance with the general interest or tosecure the payment of taxes or other contributions or penalties.Whereas the compulsory acquisition of the Applicants' debenture stockis a deprivation of possessions and not a control of their use;whereas, therefore, the second paragraph on which the Applicants basetheir allegation that this measure was not "necessary in the generalinterest" is not applicable to the present case;Whereas the said compulsory acquisition is covered by the Iron andSteel Act 1967 (see Schedules 1 and 4, section 59 (1), to the Act) andtherefore in accordance with "the conditions provided for by law"within the meaning of the second sentence of the first paragraphof Article 1 (Art. 1);Whereas the qualification "except in the public interest" is one of theclauses of exception in the Convention similar to those in Articles 8to 11 (Art. 8, 9, 10, 11) and whereas the Commission in determiningwhether measures taken by a High Contracting Party are properly coveredby such clauses, has always stated that a "margin of appreciation"should be given to the High Contracting Party concerned, although itremains for the competent bodies under the Convention to investigatesuch measures and determine whether they are, in fact, consistent withthe Convention; whereas the Commission refers in this respect to itsdecisions concerning applications under Articles 8, 9 and 10(Art. 8, 9, 10) of the Convention (see for Article 8 (Art. 8),Applications Nos. 911/60, Yearbook, Volume IV, page 218, 1449/62,Yearbook, Volume VI, page 266, 2306/64, Collection of Decisions, Volume21, page 33; for Article 9 (Art. 9), Application No. 1068/61, Yearbook,Volume V, page 284; for Article 10 (Art. 10), Applications Nos. 753/60,Yearbook, Volume III, page 318, 1167/61, Yearbook, Volume VI, page218);Whereas, with regard to the question whether the compulsory acquisitionof the Applicants' debenture stock was a measure taken in the publicinterest the Commission observes that:(i) the Iron and Steel Act 1967 was, as is not contested by theApplicants, enacted by the legislature for the purpose of serving apublic interest, namely the establishment of a sound economic basis forthe British Iron and Steel industry,(ii) the reversal by the House of Commons of the House of Lordsamendments on the very measure in issue shows that it was the view ofthe legislature that this measure was essential for the implementationof the policy of the Act and therefore in the public interest,(iii) debenture stocks have been included also in previous acts ofnationalisation, for example, the Iron and Steel Act 1949 and theTransport Act 1947.Whereas, in view of these circumstances, the Commission is of theopinion that, in adopting the provisions of the Iron and Steel Act 1967affecting the Applicants' rights as debenture holders, the UnitedKingdom has not exceeded the margin of appreciation as to what measureswere "in the public interest";Whereas, consequently, the examination of the case does not discloseany appearance of a violation of the rights and freedoms set forth inthe Convention and Protocol and, in particular, in Article 1 of theProtocol (P1-1) and it follows that the Application is manifestlyill-founded within the meaning of Article 27, paragraph (2)(Art. 27-2), of the Convention.Now therefore the Commission declares this Application inadmissible.
THE FACTSWhereas the facts presented by the Applicants' solicitors Messrs. ...,in London may be summarised as follows:The Applicants are British nationals living in England. They areholders as follows of 4 and 3/4 per cent debenture stock 1968/78 of theUnited Steel Companies Limited, a corporation incorporated under thelaws of the United Kingdom:Mr. A £ ...; Mr. B £ ...; Mr. C £ ...; Mrs. D £ ...;Under the Iron and Steel Act, 1953, an agency, the Iron and SteelHolding and Realisation Agency, was established to realise and thusdenationalize the undertaking and property of the British SteelIndustry which had been nationalised by the Iron and Steel Act, 1949.In exercise of its powers under the 1953 Act, this agency first of allsubscribed for the stock issued in 1953 in the amount of £ 10,000,000at £ 98 per cent. The funds for the subscription were provided by theTreasury and the account was under the control and management of theTreasury.By an offer for sale dated the 24th February, 1961, the agency sold thestock to the British public at £ 81 per cent.The following is a summary of the provisions as to the redemption ofthe stock:(a) The company was bound to repay the stock at par on the 31stDecember, 1978.(b) The company was bound to apply in each year, starting in 1959, £200,000 either in the redemption at par of £ 200,000 of stock selectedby drawing or by the purchase of the stock in the market (such stockcounting at par or at the cost of purchase).(c) The company had a right to redeem the stock at any time on or afterthe 31st December, 1968, at a premium of £ 2 per cent between the 31stDecember, 1968 and 31st December, 1970, at a premium of £ 1 per centbetween the 1st January, 1970 and the 31st December, 1976, andthereafter at par.(d) The company was free to purchase the stock in the market.(e) If the stock became payable by reason of the company's default, itwas payable at a premium of £ 2 per cent.Each of the Applicants (except Mr. A) bought his or her stock from theagency upon the terms of the offer for sale. Mr. A bought his stock inthe market on the faith of the terms of the offer for sale in March,1964.By the Iron and Steel Act of 22nd March, 1967, the stock will becompulsorily acquired on the vesting date appointed by the competentminister, i.e. 28th July, 1967. The "main purpose" of the Act as statedin the accompanying explanatory memorandum is "to bring into publicownership the principal companies concerned with the production ofsteel in Great Britain.On ...November, 1966, the Applicants' solicitors wrote to the Ministerof Power arguing that under the principles of English law and underArticle 1 of the Protocol to the Convention, the Government wasprecluded from depriving the stockholders of their right to hold thestock until redemption date. On .. January, 1967, the TreasurySolicitor's Department to which the letter had been transmitted repliedthat, according to Section 28 (1) of the 1953 Act, the Iron and SteelHolding and Realisation Agency was not to be regarded as the "servantor agent of the Crown", and that the Agency had only acted as theseller of the debentures but had not itself issued them. As to thequestion of compensation, the reply points out that the Iron and SteelAct fixes the compensation value of these debentures by reference tothe average of the prices at which they have been bought and sold byinvestors over the period of sixty-one months to April, 1966. On theGovernment's calculation this price is estimated to be £ 80. 18. 0. asagainst the current Stock Exchange price of about £ 76. 10. 0.In the House of Lords, both at the Committee stage on the 27thFebruary, and at the Report stage on the 9th March, 1967, an amendmentwas moved and, on the second occasion, carried to remove the Stock andother similar debenture stocks from the Bill. In the House of Commonson the 21st March, 1967, this amendment was negatived and debenturestocks were restored to the Bill for nationalisation.ComplaintsWhereas the Applicants claim that the proposed acquisition of theirstock against their will and at the price proposed in the Act when theyare entitled to hold the stock until due redemption under the TrustDeed is an infringement of Article 1 of the Protocol to the Conventionon the following grounds:(a) The agency was a body set up by the British Government as statedabove, it subscribed for the stock with moneys provided by theGovernment, it sold the stock to the Applicants and in thesecircumstances for the British Government to deprive the holders of thestock of their holdings infringes the following principle of theEnglish law and general justice: "If a party enters into an arrangementwhich can only take effect by the continuance of an existing state ofcircumstances, there is an implied engagement on his part that it shalldo nothing of his own motion to put an end to that state ofcircumstances under which alone the arrangement can be operative."(b) Applying that principle to the present case the agency on behalfof the British Government to the extent provided in the Iron and SteelAct, 1953, and in order to give effect to the policy of the BritishGovernment sold the stock to the Applicants and others upon the termsof the trust deed and the offer for sale. The implied engagement of theGovernment was that it would do nothing of its own motion to preventstockholders from enjoying their full contractual rights against thecompany.(c) A departure from this principle and indeed any acquisition bynationalisation of the Applicant's stock could only be justified, ifat all, under the Protocol as being in the general interest. While theGovernment has asserted such an interest, no grounds for this interesthave been given nor are any apparent for the reasons given below.(d) Holders of debenture stock such as the stockholders, do not own thecompany. The shareholders do. The stockholders are creditors. TheGovernment could therefore achieve the main purpose of the Act, namelyto bring the company into public ownership merely by the acquisitionof the shares.Debenture stocks represent debts and should be honoured, unless it wasnecessary to acquire debenture stocks in order to reorganise theindustry. The word "necessary" appears in Article 1 to the Protocol andis the right test. In Parliament it was urged by the Opposition thatit was not necessary to acquire debenture stocks. The rights ofdebenture stockholders depend on the terms of the trust deedsconstituting them, but in every case known to the Opposition the stocksbecome payable if the company goes into liquidation.Under English law, a company has a statutory right to go intoliquidation and if all the shares were owned by the corporation set upunder the Act, the necessary resolution could be passed in a few days.Every conceivable kind of reorganisation can be carried out in aliquidation. Accordingly no reorganisation would be held up if thedebenture stocks were left outstanding. In so far as their continuedexistence did not impede any reorganisation they would be paid off indue course. In so far as they did impede any reorganisation which wasconsidered in the future they could be easily disposed of and paid offby a reorganisation in liquidation.The Government declined to answer these arguments in any detail butmerely asserted that the rights of the stockholders would enable themto go to court to stop certain reorganisations and could delay orprevent reorganisations.This answer was rested on assertion rather than logical argumentbecause it does not bear examination as a matter of English law. Acompany can go into liquidation. This is a cheap and quick processwhere all the shares are owned. In every case known to the Oppositionor indeed to the Applicants, debenture stocks become immediatelyrepayable on liquidation. If they are repaid, the holders cease to becreditors and have no standing to make any application to the court.Every reorganisation of a company which can be carried out while acompany is a going concern can be carried out while it is inliquidation. The British Government never argued the contrary givingchapter and verse.(e) A further argument applicable to the stock is that under the trustdeed constituting it, the stock is repayable at the option of thecompany at the end of 1968. Acting under the powers conferred on himby Section 9 (5) of the Act, the Minister has appointed the 28th July,1967 to be the vesting date, that being the date upon which allsecurities of the steel companies are to vest in the corporationestablished under the Act. This corporation has to consider whatreorganisation to make. This must be a long process. It is thereforeunlikely that in any event the stock would be required to be disposedof before it becomes repayable in the ordinary course. It is,therefore, unnecessary to acquire the stock.In the circumstances, it is not necessary, nor could the BritishGovernment reasonably deem it to be necessary, to acquire the stock inorder "to control the use of property in accordance with the generalinterest" within the meaning of Article 1 of the Protocol.History of ProceedingsWhereas the proceedings before the Commission may be summarised asfollows:The Application dated 1st February, 1967, was received by theSecretariat of the Commission on 3rd February, 1967, and entered on thesame date in the special register provided for by Rule 13 of theCommission's Rules of Procedure.On 9th March, 1967, the President acting on behalf of the Commissiondecided proprio motu to give precedence to the case under Rule 38,paragraph (1), of the Rules of Procedure.On 5th April, 1967, the case was submitted to a group of three membersfor a preliminary examination in accordance with Rule 34 of the Rulesof Procedure. On 8th April, 1967, the Commission examined theApplication and decided to adjourn its decision on admissibilitypending confirmation by the Applicants' solicitors that the Iron andSteel Bill had been enacted in the meantime.This information and the final text of the Act were received on 10thApril, 1967, and a further statement was submitted by the Applicants'solicitors on 10th May, 1967. A new preliminary examination on thebasis of these submissions was carried out by a group of three memberson 8th and 26th May, 1967. On 29th May, 1967, the Commission resumedits examination of the case and adopted the present decision.THE LAWWhereas it is necessary first to recall the precise terms of Article1 of the Protocol (P1-1) to the Convention which forms the basis of theApplicants'complaints:"Every natural or legal person is entitled to the peaceful enjoymentof his possessions. No one shall be deprived of his possessions exceptin the public interest and subject to the conditions provided for bylaw and by the general principles of international law.The preceding provisions shall not, however, in any way impair theright of a State to enforce such laws as it deems necessary to controlthe use of property in accordance with the general interest or tosecure the payment of taxes or other contributions or penalties.Whereas the compulsory acquisition of the Applicants' debenture stockis a deprivation of possessions and not a control of their use;whereas, therefore, the second paragraph on which the Applicants basetheir allegation that this measure was not "necessary in the generalinterest" is not applicable to the present case;Whereas the said compulsory acquisition is covered by the Iron andSteel Act 1967 (see Schedules 1 and 4, section 59 (1), to the Act) andtherefore in accordance with "the conditions provided for by law"within the meaning of the second sentence of the first paragraphof Article 1 (Art. 1);Whereas the qualification "except in the public interest" is one of theclauses of exception in the Convention similar to those in Articles 8to 11 (Art. 8, 9, 10, 11) and whereas the Commission in determiningwhether measures taken by a High Contracting Party are properly coveredby such clauses, has always stated that a "margin of appreciation"should be given to the High Contracting Party concerned, although itremains for the competent bodies under the Convention to investigatesuch measures and determine whether they are, in fact, consistent withthe Convention; whereas the Commission refers in this respect to itsdecisions concerning applications under Articles 8, 9 and 10(Art. 8, 9, 10) of the Convention (see for Article 8 (Art. 8),Applications Nos. 911/60, Yearbook, Volume IV, page 218, 1449/62,Yearbook, Volume VI, page 266, 2306/64, Collection of Decisions, Volume21, page 33; for Article 9 (Art. 9), Application No. 1068/61, Yearbook,Volume V, page 284; for Article 10 (Art. 10), Applications Nos. 753/60,Yearbook, Volume III, page 318, 1167/61, Yearbook, Volume VI, page218);Whereas, with regard to the question whether the compulsory acquisitionof the Applicants' debenture stock was a measure taken in the publicinterest the Commission observes that:(i) the Iron and Steel Act 1967 was, as is not contested by theApplicants, enacted by the legislature for the purpose of serving apublic interest, namely the establishment of a sound economic basis forthe British Iron and Steel industry,(ii) the reversal by the House of Commons of the House of Lordsamendments on the very measure in issue shows that it was the view ofthe legislature that this measure was essential for the implementationof the policy of the Act and therefore in the public interest,(iii) debenture stocks have been included also in previous acts ofnationalisation, for example, the Iron and Steel Act 1949 and theTransport Act 1947.Whereas, in view of these circumstances, the Commission is of theopinion that, in adopting the provisions of the Iron and Steel Act 1967affecting the Applicants' rights as debenture holders, the UnitedKingdom has not exceeded the margin of appreciation as to what measureswere "in the public interest";Whereas, consequently, the examination of the case does not discloseany appearance of a violation of the rights and freedoms set forth inthe Convention and Protocol and, in particular, in Article 1 of theProtocol (P1-1) and it follows that the Application is manifestlyill-founded within the meaning of Article 27, paragraph (2)(Art. 27-2), of the Convention.Now therefore the Commission declares this Application inadmissible.