FIFTH SECTION
DECISION
Application no. 9842/13
AGROSLUNCE, SPOL. S R.O.
against the Czech Republic
The European Court of Human Rights (Fifth Section), sitting on 15 September 2015 as a Committee composed of:
Boštjan M. Zupančič, President,
Helena Jäderblom,
Aleš Pejchal, judges,
and Milan Blaško, Deputy Section Registrar,
Having regard to the above application lodged on 4 February 2013,
Having deliberated, decides as follows:
THE FACTS
The applicant, Agroslunce, spol. s r.o., is a Czech limited liability company with its seat in Tupadly. It was represented before the Court by Mr E. Hanslik, a lawyer practising in Prague.
A. The circumstances of the case
The facts of the case, as submitted by the applicant company, may be summarised as follows.
By virtue of a contract concluded in December 2002, the applicant company bought several buildings and plots of land from three individuals who were at that time registered as the co-owners of the property in the land register, inter alia on the basis of a final decision on restitution taken by the Land Office on 5 February 2000. The applicant company’s ownership right was entered into the land register with effect from 27 December 2002.
In 2009, four other individuals instituted proceedings on determination of the ownership of several of those plots of land, claiming to have been their owners for fifty years and that the Land Office’s decision of 5 February 2000 was null and void. Apparently, by a mistake of the Land Registry spotted during a check in 2007, the disputed plots of land were registered twice, under different numbers, with both the applicant company and the four individuals as owners.
By a judgment of 22 February 2010, the Kutná Hora District Court declared that the plaintiffs were the sole owners of the disputed plots of land, which they have been renting to an agricultural cooperative, as a result of their and their ancestors’ adverse possession since 1957. The court observed that there was indeed a double registration of the plots and of the respective ownership rights in the land register. This was a consequence of the fact that, when deciding on the restitution request in 2000, the Land Office had not noticed that the plots in question had been re-numbered and owned by the plaintiffs; thus, its decision on restitution was null and void and so was the sales contract from which the applicant company inferred its ownership rights.
On 23 February 2011, the Prague Regional Court upheld the judgment.
By a judgment of 11 April 2012, the Supreme Court dismissed as unfounded the applicant company’s appeal on points of law. It observed that despite patrimonial wrongs suffered in the past by the individuals who had sought the restitution of the disputed plots of land, the formal continuity of the ownership acquired in 1948-1989 had to be respected, i.e. the plaintiffs who had acquired their property rights by a State decision in 1957 had priority over the claimants for restitution. Given that the plots could thus not be subject to restitution under Act no. 87/1991 and that, consequently, the Land Office was not competent to decide about them, its decision on restitution was null and void.
The applicant company introduced a constitutional appeal, complaining about a violation of its rights to a fair trial and protection of property. Relying on the Constitutional Court’s judgments nos. I. ÚS 398/04, I. ÚS 544/06 and IV. ÚS 42/09, it disputed the courts’ opinion that the decision of the Land Office was null and void and maintained that it had validly and in good faith concluded the sales contract with the individuals entitled to restitution, while relying on the data in the Land Registry.
On 6 August 2012, the Constitutional Court dismissed the constitutional appeal as being manifestly ill-founded. It did not identify any failing capable of causing the violation of the rights invoked by the applicant company and considered that the courts had duly examined the case and reasoned their decisions. It also considered that the impugned decisions were not contradictory to the conclusions reached in its judgments referred to by the applicant company because these were not applicable to the present case.
Later in 2012, the applicant company partly lost in the proceedings brought by a tenant to whom it had rented some of the above plots of land. The courts considered that the rent perceived by the applicant company in respect to the plots of land owned by the other persons amounted to an unjust enrichment which the applicant company had to reimburse to its tenant.
In 2015, the only representative of the applicant company, who is an Austrian national, asked the Czech Ministry of Finance for damages, claiming that the above conduct of the Land Office and the subsequent courts’ decisions had violated the bilateral agreement on promotion and protection of investments. The request was dismissed as unsubstantiated.
B. Relevant domestic law and practice
1. The [Old] Civil Code (Act no. 40/1964) as in force at the material time
Articles 420 et seq. regulate civil liability for causing damage. Everybody is liable for damage caused by his or her unlawful conduct. Only pecuniary damage (real damage and loss of earnings) can be claimed under those provisions.
Pursuant to Article 451, anybody who obtains unjust enrichment to the detriment of somebody else shall surrender the enrichment. Unjust enrichment is defined as a property benefit gained from a performance without a legal reason, performance based on a legal act which is null and void, performance based on a legal title that fell away as well as a property benefit gained from unfair sources.
Article 457 stipulates that if an agreement is null and void or has been cancelled, each party must return to the other party everything that it gained pursuant to the agreement. Pursuant to Article 458, the enriched person must surrender everything that was gained from the unjust enrichment or, if need be, pay pecuniary compensation.
2. Act no. 82/1998 on State liability for damage caused in the exercise of public authority by an irregularity in a decision or the conduct of proceedings
Under Sections 7 and 8 individuals who suffer loss because of a final unlawful decision that is later quashed or changed are entitled to claim damages.
Section 13 provides that the State is also liable for damage caused by an irregularity in the conduct of proceedings, including non-compliance with the obligation to perform an act or give a decision within the statutory time-limit.
3. Judgments of the Constitutional Court referred to by the applicant company
In all the judgments cited below, the Constitutional Court held that it was unacceptable, from the constitutional law perspective, after one public authority had examined and certified, i.e. constituted a certain right to the benefit of an individual, on the existence of which the latter relied as a consequence of good faith in the rightness of a State act, that another public authority in another proceedings deprives the same individual of the same right on the grounds that the original decision was allegedly defective.
By its judgment no. I. ÚS 398/04 of 29 August 2006, the Constitutional Court quashed the courts’ decisions determining the ownership of a person who had obtained the disputed property question by a court decision of 18 April 1995, rendered in supplementary inheritance proceedings. The Constitutional Court held that, given that the plaintiffs had acquired ownership rights to the property in question by virtue of the Land Office’s decision on restitution of 3 April 1995, the court was not entitled to decide on such property in the later inheritance proceedings. The Constitutional Court also observed that when the State causes damage by its conduct or a defective decision, it has to bear the responsibility therefor. The State cannot redress its failure in a way that causes damage to the ownership which it had earlier constituted or approved knowing that a third person was claiming his or her rights to the property.
By judgment no. I. ÚS 544/06 of 3 December 2007, the Constitutional Court quashed the courts’ decisions obliging the plaintiff to surrender to another individual a certain amount of money which the former had acquired by a decision rendered in inheritance proceedings on 29 April 2002. It underlined the good faith of the plaintiff who was not aware that the sum in question was subject to a different set of inheritance proceedings, following which it was awarded to the other individual on 11 April 2003, and thus could not influence the situation.
In its judgment no. IV. ÚS 42/09 of 29 December 2009, the Constitutional Court held that, from the objective point of view, the principle of good faith had its reflection in the principle of presumption of rightness of acts of public authority. In the case at stake, the Constitutional Court considered it inadmissible to put in question the property rights of the plaintiffs, who relied on the public register for the rightness of which the State was responsible and in which they were registered as owners, with reference to the fact that they could have obtained restitution in the past. In such situation, the claimants were thus entitled to use a general civil-law claim to protect their property.
COMPLAINTS
1. The applicant company complained under Article 6 of the Convention about a violation of its right to a fair trial, in particular because it considered that the courts deciding on its case had deviated from their previous case-law.
2. Relying on Article 1 of Protocol No. 1, the applicant company complained that the courts’ decisions deprived it, without any compensation, of its property acquired in good faith.
In his letter of 7 May 2015, the legal representative of the applicant company stated that the latter had not sought unjust enrichment according to the Old Civil Code. Such claim would have had even more damaging effects because it would have led to declaring the whole sales contract null and void and the applicant company would thus have had to return not only the disputed plots of land but the whole property transferred by the sales contract. He also maintained that the applicant company did not want to seek unjust enrichment but to obtain compensation for the damage (given that in 2011 the market price of the plots was much higher than the original purchase price) or similar plots. Concerning the compensatory remedy provided for by the State Liability Act no. 82/1998, the applicant company’s representative stated that such remedy could not be used by the applicant company because the decision of the Land Office (rendered in the restitution proceedings to which it had not been a party) had not been quashed pursuant to Section 8(1) of the State Liability Act.
THE LAW
A. As regards the alleged breach of Article 6 § 1 of the Convention
The applicant company complained about unfairness of the domestic proceedings under Article 6 § 1 of the Convention, which reads, in so far as relevant, as follows:
“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”
The applicant company argued that the courts deciding on its case had deviated from their previous case-law. It mainly referred to three judgments of the Constitutional Court nos. I. ÚS 398/04, I. ÚS 544/06 and IV. ÚS 42/09 (see the relevant domestic law and practice above) in which that court had granted protection to the complainants’ rights which they had acquired having faith in the correct nature of administrative decisions. In that context, the Constitutional Court stated that a final decision of a public authority which was constitutive of the ownership rights resulted, unless it had been quashed, in the extinction of the ownership of the previous owner.
The Court reiterates that when dealing with allegations concerning conflicting decisions of domestic courts, it must determine in the first place whether the allegedly conflicting decisions concerned identical factual situations (see Rakić and Others v. Serbia, nos. 47460/07 and foll., § 43, 5 October 2010). Where the facts are identical but the application of the law by a domestic court or courts differs, the Court must be guided in its examination of the issue by the following criteria: whether “profound and long-standing differences” exist in the case-law of a supreme court, whether the domestic law provides for machinery for overcoming these inconsistencies, whether that machinery has been applied and, if appropriate, to what effect (see Nejdet Şahin and Perihan Şahin v. Turkey [GC], no. 13279/05, §§ 49-58, 20 October 2011).
Turning to the present case, the Court notes that the above Constitutional Court’s case-law concerns different factual and legal situations and therefore does not contradict the decision in the applicant company’s case. The legal issue raised by the present case relates rather to a situation where domestic courts have given effect to the domestic legislation and standard legal principles by applying it to cases in which different factual circumstances arose. In the Court’s view, it has not been demonstrated that there existed “profound and long-standing differences” in the case-law of the Supreme Court or of the Constitutional Court in respect of the legal issues at stake (see, mutatis mutandis, Nejdet Şahin and Perihan Şahin, cited above). In any event, the Court has already considered that the Czech legal system provides for a mechanism capable of overcoming inconsistencies in the judicial practice (see Schwarzkopf and Taussik v. the Czech Republic (dec.), no. 42162/02, 2 December 2008). Furthermore, the Court notes that the applicant company had the benefit of adversarial proceedings, in which it was able to adduce evidence, and that its arguments were properly examined by the courts.
Thus the Court sees no call to intervene in the present situation under Article 6 § 1 of the Convention in the field of interpretation of domestic legislation.
Accordingly, this part of the application must be declared inadmissible as being manifestly ill-founded pursuant to Article 35 §§ 3 (a) and 4 of the Convention.
B. As regards the alleged breach of Article 1 of Protocol No. 1
In its second complaint the applicant company alleged a violation of its property rights as guaranteed by Article 1 of Protocol No. 1, which provides:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
The Court recalls that the concept of “possessions” in the first part of Article 1 has an autonomous meaning which is not limited to ownership of physical goods and is independent from the formal classification in domestic law: the issue that needs to be examined is whether the circumstances of the case, considered as a whole, may be regarded as having conferred on the applicant title to a substantive interest protected by that provision (see Öneryıldız v. Turkey [GC], no. 48939/99, § 124, ECHR 2004‑XII). The fact that the domestic laws of a State do not recognise a particular interest as a “right” or even a “property right” does not necessarily prevent the interest in question, in some circumstances, from being regarded as a “possession” within the meaning of Article 1 of Protocol No. 1 (see Brosset-Triboulet and Others v. France [GC], no. 34078/02, § 71, 29 March 2010).
Turning to the present case, the Court observes that on the basis of the sales contract concluded in December 2002, the property in question which formed a part of a bigger whole had been registered in the land register as being owned by the applicant company, who had possessed it for several years and was considered as its owner for all legal purposes. In similar cases, the Court has held that the applicants had a “possession” within the meaning of Article 1 of Protocol No. 1 to the Convention even if their title was null and void ab initio (see Gashi v. Croatia, no. 32457/05, § 22, 13 December 2007; Orel - jednota Hranice v. the Czech Republic (dec.), no. 1002/09, 10 September 2013). In light of this case-law, the applicant company can be considered as having had a “possession” within the meaning of Article 1 of Protocol No. 1.
It appears however that, due to a mistake of the Land Registry, some of the plots of land covered by the above sales contract were registered twice, under different numbers, with both the applicant company and four other individuals as owners. The Court has already noted that before 1993 the land register was not kept meticulously and that it contained many mistakes, including parallel records concerning the same property (see Žáková v. the Czech Republic, no. 2000/09, § 53, 3 October 2013). In the present case, it was therefore incumbent on the State, with a view of achieving legal certainty and correcting wrong entries in the land register, to provide a forum for the determination of the rights and obligations of the parties concerned.
In the proceedings on determination of the ownership launched by the four individuals, the domestic courts reached the conclusion that the plaintiffs have owned the disputed plots of land since 1957 and that the Land Office’s decision granting restitution of these plots to the applicant company’s legal predecessors was null and void. Consequently, the sales contract from which the applicant company inferred its ownership rights was to be considered as being null and void ab initio. Referring inter alia to the above findings under Article 6 § 1 of the Convention, the Court observes that the national courts proceeded pursuant to domestic law, giving comprehensible reasons for their decisions, and their assessment of the case cannot be regarded as having been arbitrary or manifestly unreasonable.
The applicant company mainly complained that it had been deprived of the disputed property without any compensation. It is true that while the courts acknowledged, in the proceedings on determination of the ownership, that there had been a discrepancy in the land register, i.e. a double record concerning the same but re-numbered plots, which had misled the Land Office dealing with the request for restitution, they were not called upon, in the context of the proceedings in issue, to award any compensation. Thus the question arises as to whether the domestic law offered the applicant company the opportunity to claim compensation separately, in order for it not to bear a disproportionate and excessive burden within the meaning of Article 1 of Protocol No. 1.
First, the Court notes that, since the sales contract between the applicant company and the private individuals was considered to be null and void, Article 457 of the Old Civil Code obliged them to return to each other everything that they had gained pursuant to the agreement. Thus the applicant company had in principle right to reimbursement of the purchase price but, according to its legal representative, did not want to seek it.
Second, and also in regard of the applicant company’s argument that it rather wanted to obtain compensation for the damage, the applicant company could have claimed damages from the State under the State Liability Act (no. 82/1998) on the ground that either the Land Office or the Land Registry had misled it (see the Government’s observations in Žáková, cited above, § 61). It is true, as stated by the applicant company’s representative in his letter of May 2015, that the decision of the Land Office, rendered in the restitution proceedings to which the applicant company had not been a party, had not been cancelled within the meaning of Section 8(1) of the State Liability Act. Nevertheless, the Court observes that the courts dealing with the action on determination of the ownership clearly held that this decision on restitution was null and void. Moreover, pursuant to Section 13 of the State Liability Act, proceedings for damages can also be brought on the ground of an irregularity in the conduct of a public authority. It has not been argued before the Court that the double record in the land register could not qualify as an irregular conduct. In any event, the existence of mere doubts as to the prospects of success of a particular remedy which is not obviously futile is not a valid reason for failing to exhaust domestic remedies (see, among many others, Akdivar and Others v. Turkey, 16 September 1996, § 71, Reports of Judgments and Decisions 1996‑IV). The Court has also held that where there is a doubt about the effectiveness of a remedy, the issue should be tested before the national courts (see Ignats v. Latvia (dec.), no. 38494/05, § 114, 24 September 2013).
The Court reiterates that it is not its role to substitute its own assessment for that of the State in order to determine which provisions of the domestic law on liability should be applicable to a certain case. It is therefore up to the domestic courts to make this assessment and draw conclusions accordingly (see, mutatis mutandis, Lesní společnost Přimda v. the Czech Republic (dec.) no. 11997/05, 21 September 2010, in which the fact that compensation proceedings brought by the applicant company were pending led the Court to the conclusion that domestic remedies had not been exhausted).
In these circumstances, the Court considers that the applicant company should have attempted to obtain redress under the relevant provisions of the domestic law. It is only in the light of any decision as to such compensation and the reasons given for it that the Court would be able to determine the extent of the applicant company’s loss, if any (see, mutatis mutandis, Lesní společnost Přimda (dec.), cited above; Umlaufová v. the Czech Republic (dec.), no. 3794/08, 29 January 2013).
Consequently, the Court considers that, having failed to bring any compensation proceedings under the State Liability Act, the applicant company has not exhausted domestic remedies within the meaning of Article 35 § 1 of the Convention. It follows that this complaint must be declared inadmissible in accordance with Article 35 § 4 of the Convention.
For these reasons, the Court unanimously
Declares the application inadmissible.
Done in English and notified in writing on 8 October 2015.
Milan BlaškoBoštjan M. Zupančič
Deputy RegistrarPresident
Full & Egal Universal Law Academy