CASE OF ALBERGAS AND ARLAUSKAS v. LITHUANIA

SECOND SECTION

CASE OF ALBERGAS AND ARLAUSKAS v. LITHUANIA

(Application no. 17978/05)

JUDGMENT

STRASBOURG

27 May 2014

FINAL

27/08/2014

This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision.

In the case of Albergas and Arlauskas v. Lithuania,

The European Court of Human Rights (Second Section), sitting as a Chamber composed of:

Guido Raimondi, President,
András Sajó,
Nebojša Vučinić,
Helen Keller,
Paul Lemmens,
Egidijus Kūris,
Jon Fridrik Kjølbro, judges,
and Abel Campos, Deputy Section Registrar,

Having deliberated in private on 6 May 2014,

Delivers the following judgment, which was adopted on that date:

PROCEDURE

1. The case originated in an application (no. 17978/05) against the Republic of Lithuania lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by two Lithuanian nationals, Mr Eduardas Albergas (“the first applicant”) and Mr Jurijus Arlauskas (“the second applicant”), on 4 May 2005.

2. The Lithuanian Government (“the Government”) were represented by their Agent, Ms E. Baltutytė.

3. The applicants alleged that they had been deprived of their property by a decision of a domestic court and had not received adequate compensation, in breach of Article 1 of Protocol No. 1 to the Convention.

4. On 29 June 2012 the application was communicated to the Government.

THE FACTS

I. THE CIRCUMSTANCES OF THE CASE

5. The first applicant was born in 1949 and lives in Vilnius. The second applicant was born in 1955 and according to the most recently available data, also lives in Vilnius.

6. In 1994 the Vilnius City municipality assigned a plot of land measuring 0.08 hectares to the first applicant for the construction of an individual house. At the same time similar plots were assigned to other private persons. In accordance with the provisions of the domestic law in force and because of his status as a deportee’s family member, the first applicant was entitled to acquire the plot of land.

7. On 5 September 1995 the first applicant and the Vilnius Region Administration signed a contract by which he purchased the plot of land from the State. He paid 422 Lithuanian litai (LTL; approximately 122 euros (EUR)) and 423 “single-use investment vouchers” (investiciniai čekiai).

8. Subsequently, the first applicant registered the plot of land in his name in the land registry.

9. In 10 April 1997 the first applicant sold the plot for LTL 6,000 (about EUR 1,740) to the second applicant, who then registered the plot of land in his own name.

1. Civil proceedings concerning the annulment of the contracts

10. On an unspecified date the second applicant brought a claim before the courts against a private person, R.A., alleging that his right to peaceful enjoyment of his possession had been breached. The second applicant claimed that he had been unable to use his land because R.A., who lived next to the plot of land, had unlawfully put a fence around it.

11. R.A. lodged a counterclaim against both applicants, requesting the annulment of the land sale contracts of 1995 and 1997 (see paragraphs 7 and 9 above), together with the decisions of the authorities. R.A. claimed restoration in natura of her ownership rights to the disputed plot of land, as it was part of her father’s land which had been nationalised by the Soviet authorities. R.A. had requested the restoration of her property rights in 1991, and in 1999 her rights had been restored in natura, but only to a part of her father’s plot of land.

12. The courts at two instances granted the second applicant’s claim and dismissed R.A.’s counterclaim, noting that under the Law on the Procedure and Conditions of the Restoration of the Rights of Ownership to the Existing Real Property (įstatymas “Dėl piliečių nuosavybės teisių į išlikusį nekilnojamąjį turtą atstatymo tvarkos ir sąlygų”; hereinafter “Law on Restitution I”) in 1994, R.A. had been entitled to restitution in natura of not more than 0.2 hectares of land. The local authorities had taken this circumstance into consideration when assigning the plot of land to the first applicant. The fact that under the new Law on the Restoration of the Rights of Ownership of Citizens to the Existing Real Property (Piliečių nuosavybės teisių į išlikusį nekilnojamąjį turtą atkūrimo įstatymas; hereinafter “Law on Restitution II”) in force after 1 July 1997 R.A. was entitled to restoration in natura of up to 1 hectare of land was not considered as meaning that the decisions adopted by the local authorities in 1994-95 were automatically invalid.

13. R.A. appealed against those court decisions to the cassation court. By a final decision of 27 November 2002 the Supreme Court overturned the decisions of the lower courts. By applying the principle of priority for former owners’ rights that had been developed in the civil case P. Roževičienė v. Panevėžio miesto valdyba and others, no. 3K-3-384/1999, the Supreme Court concluded that the local authorities in 1994-95 had not been allowed to sell plots of land to third persons before ownership rights had been restored. The court also indicated that the applicants had acted in “bad faith” (nesąžiningai) when purchasing the disputed plot of land; however, the court decision did not substantiate the first applicant’s “bad faith”. As concerns the second applicant’s “bad faith”, the Supreme Court assumed that he had known about the third persons’ rights to the land.

14. By the above-mentioned decision of the Supreme Court the contracts of 1995 and 1997, together with the decision of 1994 to assign the disputed plot, were annulled and the plot was returned to the State. The first applicant had to return LTL 6,000 to the second applicant, the amount which he had received from the latter for the plot. The State had to return LTL 422 to the first applicant; none of the “single-use investment vouchers” were returned to him, as they no longer had any pecuniary value at the time of the Supreme Court’s decision.

2. Administrative and civil proceedings for redress

15. Alleging that they had incurred a loss following the decision of the Supreme Court, the applicants applied to the National Land Service (Nacionalinė žemės tarnyba) in 2004 with requests to be assigned a new plot of land of the same size and value. Their requests were dismissed.

16. The applicants applied to the administrative courts. They argued that they had acquired the plot of land in good faith. The applicants had been deprived of the property by a decision of the Supreme Court, and the sums that had been awarded had not adequately compensated for the damage sustained. In particular, the first applicant alleged that the court had not awarded the full value of the property, given that part of the price had been paid in “single-use investment vouchers”. To compensate for their loss, the applicants asked to be assigned a new plot of land.

17. On 1 October 2004 the Vilnius Regional Administrative Court dismissed the claim. On 19 January 2005 the Supreme Administrative Court upheld that decision. The courts noted that the provisions of the domestic law under which the first applicant had been assigned the plot of land were no longer in force. As concerned the second applicant, he was not eligible under the domestic law to be assigned a plot of land either.

18. On 15 August 2005 the first applicant complied with the Supreme Court’s decision of 27 November 2002 and paid the second applicant LTL 6,000.

19. The applicants subsequently applied to the civil courts with a claim for damages against the Vilnius City municipality.

20. On 29 September 2005 the Vilnius City First District Court dismissed the applicants’ claim having reiterated that the applicants had purchased the plot of land in “bad faith”. It appears that the applicants did not appeal against that decision.

II. RELEVANT DOMESTIC LAW AND PRACTICE

1. Statutory provisions

21. The Constitution of the Republic of Lithuania provides:

Article 23

“Property shall be inviolable.

Rights of ownership shall be protected by law.

Property may be taken over only for the needs of society according to the procedure established by law and shall be justly compensated for.”

Article 30

“The person whose constitutional rights or freedoms are violated shall have the right to apply to court.

Compensation for material and moral damage inflicted upon a person shall be established by law.”

22. The Law on Restitution I, enacted on 18 June 1991 and amended on numerous occasions, provided that, in restoring property rights, priority would be given to restitution in natura. The State retained the right to purchase a property from the previous owners if the current social conditions and relations so required. In particular, Article 12 § 1 (3) of the Law on Restitution I provided that the land is considered to be reserved by the State in the public interest (valstybės išperkama žemė) if it had been allocated, pursuant to the existing laws, to persons building individual houses.

23. On 9 July 1997, after the Law on Restitution I had been annulled, the Law on Restitution II entered into force. Provisions of the new law continued to ensure the principle of priority of restitution of property rights in natura. With regard to the land which had been allocated to persons for building of individual houses, Article 12 (2) of the new law provided that such land was still considered to be the land reserved by the State in the public interest, thus the provision of Article 12 § 1 (3) of the Law on Restitution I has been maintained in the new law.

24. It is established in the Preamble to the Law on Restitution II that “the rights of ownership acquired by the citizens of the Republic of Lithuania before the occupation are not revoked and have continuity”, that “the Constitution of the Republic of Lithuania adopted by the will of the citizens of the Republic of Lithuania in 1992, guarantees and defends the rights and property of the State and its citizens”, that “the continuing restoration of the rights of ownership is based on the provisions of the 18 June 1991 Law of the Republic of Lithuania “On the Procedure and Conditions of Restoration of the Rights of Ownership to the Existing Real Property” – the existing real property shall be returned to citizens of the Republic of Lithuania, and in the event it is impossible to do so, they shall be compensated justly.”

25. Article 6.271 of the Civil Code, as in force from 1 July 2001, provides that damage caused by the unlawful acts of a public authority must be compensated for by the State, irrespective of any error by a particular public servant or other employee of the public authority.

2. Lithuanian courts’ practice

26. In its ruling of 27 May 1994 the Constitutional Court held, inter alia, that possessions which had been nationalised by the Soviet authorities since 1940 should be considered as “property under the de facto control of the State”. The Constitutional Court also stated that, if possible, property rights should be restored in natura.

27. In rulings of 15 June and 19 October 1994, the Constitutional Court noted that the authorities of Lithuania, as a re-established State in 1990, were not responsible for the Soviet occupation half a century earlier, nor were they responsible for the consequences of that occupation. The Constitutional Court held that since the 1940s many private individuals had bought, in accordance with the legislation applicable at the material time, property which had previously been nationalised. It was impossible to ignore those factual and legal aspects, and the domestic legislation on restitution of property rights duly took into account the interests not only of the former owners, but also of the private persons who had occupied or purchased the property under lawful contracts.

28. In a ruling of 4 March 2003 the Constitutional Court reaffirmed that in the process of the restoration of the rights of ownership, one must coordinate the interests of both the former owners and society. It further reiterated the principle of a “restricted restitution”:

“The State of Lithuania, while striving to restore justice in part at least, i.e. to restore the violated rights of ownership, chose restricted restitution but not restitutio in integrum. The restoration of justice when the owners are compensated for the existing real property which has not been returned in natura has two sides: it is justice in respect of the owner as well as the entire society. The unlawful actions of the occupation government inflicted enormous damage not only on the owners whose rights of ownership were denied but also on the whole society and the entire State. While restoring justice in respect of the owners, one cannot ignore justice in respect of the entire society whose members are also the owners as well.

...

It has been mentioned that the State chose restricted restitution but not restitutio in integrum. The rights of ownership of citizens are restored not to the entire property which was unlawfully nationalised and expropriated by other unlawful ways, but to the existing real property.”

29. As concerns Article 30 of the Constitution and the right of persons to apply to court to defend their interests from interferences by the State, the Constitutional Court stated that the State authorities and their officials must act in conformity with the Constitution and law. They are obliged to protect human rights and freedoms and shall not themselves violate them. Public service should function so that not only is liability established for violations committed by the authorities but the persons who committed violations while in the public service would also be brought to justice. Otherwise, the confidence of people in the power of the State and the law would be ruined and “legal nihilism would flourish” (the rulings of 30 June 2000, 13 December 2004 and 19 August 2006).

30. Furthermore, the Constitutional Court has held that the laws must establish such legal regulation where a person who had incurred damage by unlawful actions would be able to claim just redress for that damage and to receive compensation which is in conformity with the principles of adequacy and proportionality (the ruling of 27 March 2009).

31. With regard to the status of an acquirer in good faith, the Constitutional Court held that, under the Constitution, the rights of a person who had sought to acquire property lawfully and in good faith, but who had acquired it without knowing that the owner had lost that property as a result of a crime committed by another person (or other persons), must be defended (ruling of 30 October 2008):

“While regulating the protection of the rights of ownership, the legislator must ensure the balance of values defended in and protected by the Constitution. The fact that the ownership rights of a person who has lost his property as a result of a crime committed by another person (other persons) must be defended does not mean that one does not also have to defend the rights of a person who sought to acquire property lawfully and in good faith but who acquired it without knowing that the owner had lost that property as a result of a crime committed by another person (other persons). The requirement to defend the rights of such a person stems from the Constitution, inter alia, the constitutional principle of a State under the rule of law and the constitutional principle of compensation for damage, which is enshrined in Article 30 of the Constitution. This constitutional principle is inseparable from the principle of justice inherent in the Constitution: all the necessary legal preconditions must be created by laws in order to justly compensate for the inflicted damage (Constitutional Court ruling of 19 August 2006).”

32. On numerous occasions in its jurisprudence the Constitutional Court emphasized the importance of protection of legitimate expectations which implied the duty of the State and its institutions to observe the obligations undertaken. In this connection it was concluded that “persons have the right to reasonably believe that their rights acquired under valid laws or other legal acts which are not in conflict with the Constitution will be retained for the established time and it will be possible to implement them in reality” and that a person could “reasonably expect that if he obeys law, and fulfils the requirements of the laws, his expectations will be held legitimate by the State and will be defended and protected”. The Constitutional Court also held that it is necessary to respect the norms and principles of the Constitution while changing the legal regulation, and inter alia the principle of lex retro non agit, and that the rights and legitimate expectations that had been acquired by a person may not be denied by changes in legal regulation (the rulings of 4 March 2003, 4 July 2003 and 13 December 2004).

33. On the issue of the lawfulness of the sale of previously nationalised property, in its decisions nos. 3K-3-384/1999 of 6 September 1999 and 3K‑3‑698/2003 of 16 June 2003, the Supreme Court held that as long as the question of the restoration of the former owner’s property rights was pending and had not been definitively resolved, that property had to be considered as disputed. Accordingly, such properties could not be transferred to third parties, because this could result in successive violations of the former owner’s ownership rights.

THE LAW

I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION

34. The applicants complained that the State had unlawfully deprived them of their property and had not provided them with adequate compensation, in the form of either land or money. They relied on Article 1 of Protocol No. 1, which reads as follows:

“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 ...”

35. By a decision of the Supreme Court of 27 November 2002 the second applicant had to return to the State the plot of land which he had owned since 1997, and in exchange received 6,000 LTL (the price he had paid for the plot in 1997). At the same time the first applicant was ordered to pay 6,000 LTL, while receiving 423 LTL from the State.

A. As concerns the second applicant

36. The Court considers that it is unnecessary to continue the examination of the present case in respect of the second applicant for the reasons outlined below.

37. Having communicated the application to the respondent Government and received their observations, on 6 December 2012 the Court invited the second applicant to respond and to submit his claims for just satisfaction before 17 January 2013. The letter was sent to the applicant’s home address in Vilnius, which he had indicated as his address for correspondence.

38. As no reply was received, on 14 February 2013 the Court advised the second applicant, by a letter sent by registered mail that the deadline for submission of his observations had expired, but no observations from him had reached the Court. He was informed that in accordance with Article 37 § 1 (a) of the Convention, his failure to reply might lead the Court to conclude that he was no longer interested in pursuing his application and the Court could thus strike the case out of its list of cases. He received the letter on 25 February 2013. However, no response has been received from him.

39. The Court considers that, in the above circumstances, the second applicant may be regarded as no longer wishing to pursue his application, within the meaning of Article 37 § 1 (a) of the Convention (see Vainorius v. Lithuania (dec.), no. 15568/08, 12 February 2013). Furthermore, in accordance with Article 37 § 1 in fine, the Court finds no special circumstances regarding respect for human rights, as defined in the Convention and its Protocols, which require the continued examination of the case.

40. Having regard to the above, the case in respect of the second applicant must be struck out of the list.

B. As concerns the first applicant

1. Admissibility

41. The Government submitted that the applicants had not exhausted all the effective domestic remedies. He had not instituted new separate judicial proceedings, under Article 6.271 of the Civil Code, against the State to seek redress for the allegedly unlawful actions of the authorities and inadequate compensation. In this connection, the Government noted that the applicants had failed to appeal against the Vilnius City First District Court’s decision of 29 September 2005 with regard to their claim for redress.

42. The first applicant did not comment on that argument.

43. The Court reiterates that the rule of exhaustion of domestic remedies referred to in Article 35 § 1 of the Convention obliges applicants to use the remedies that are normally available and sufficient in the domestic legal system to enable them to obtain redress for breaches alleged to have taken place. The existence of the remedies must be sufficiently certain, in practice as well as in theory, failing which they will lack the requisite accessibility and effectiveness; it falls to the respondent State to establish that these various conditions are satisfied (see Vernillo v. France, 20 February 1991, § 27, Series A no. 198, and Aksoy v. Turkey, no. 21987/93, §§ 51-52, Reports of Judgments and Decisions 1996-VI).

44. It should be noted that the Supreme Court, in its decision of 27 November 2002, had already addressed the issue of payments between the parties and the State after the land sale contracts had been annulled. Moreover, the applicants’ new civil claim against the City of Vilnius for pecuniary damage in separate judicial proceedings was dismissed as unfounded by the first-instance court on 29 September 2005. The Court does not see how those new proceedings could effectively have offered a more favourable outcome to the first applicant, in particular, given that the Supreme Court had declared that the applicants acted in “bad faith”. Thus, it has not been demonstrated by the respondent Government that a claim under Article 6.271 of the Civil Code would have been an effective remedy in the first applicant’s case and would have had any prospect of success (see, mutatis mutandis, Beshiri and Others v. Albania, no. 7352/03, § 55, 22 August 2006, and Pyrantienė v. Lithuania, no. 45092/07, §§ 24-28, 12 November 2013).

45. Furthermore, the applicants instituted administrative proceedings for redress against the State, which ended unsuccessfully for them with the delivery of the decision by the Supreme Administrative Court on 19 January 2005. Although the applicants claimed the right to be assigned a new plot of land and not pecuniary compensation as such, the aim of the claim was to cover the damage incurred because the sums awarded by the Supreme Court had not compensated for their alleged loss (see paragraphs 15-16 above).

46. Having regard to the above circumstances, the Court dismisses the Government’s objection that the first applicant failed to exhaust domestic remedies.

47. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.

2. Merits

(a) The parties’ observations

48. The first applicant alleged that the sum of LTL 422 awarded to him by the Supreme Court was unfair and inadequate compensation, as it did not cover his loss. The domestic court had not taken into consideration that in 1995 part of the price for the plot had been paid in single-use investment vouchers; in addition, he had been ordered to return LTL 6,000 to the second applicant, which he did in August 2005.

49. Mr Albergas further stressed that he had acted in good faith when purchasing the plot from the State in 1995 and had not been aware of any third person’s rights to that property. Given that land sale procedures were carried out by public authorities and civil servants in accordance with the domestic regulations, he should not have had to bear the negative consequences of the land sale contract being declared unlawful.

50. The Government admitted that the first applicant had been deprived of his property, but argued that such deprivation was in compliance with Article 1 of Protocol No. 1 to the Convention. The interference by the State had been justified as being “in the public interest”, namely in defence of the rights of the former owners, who had lost their title to the land during the communist regime. The decision of the court to declare the relevant administrative procedures and land sale contracts of 1994-97 unlawful was taken in accordance with the Restitution Act and the well-established practice of the Supreme Court and of the Constitutional Court of Lithuania. In the process of restoration of property rights, priority is given to the return of previously nationalised property to its former owners in natura; therefore, nationalised property cannot be transferred to other individuals if the question of the restoration of ownership rights of the former owners is still pending.

51. Furthermore, the Government maintained that the first applicant had paid an advantageous price when acquiring the disputed plot from the State. He had enjoyed his property for less than two years before selling it to the second applicant, and no major improvements had been made to the plot.

52. Lastly, the Government argued that the above-mentioned errors by the domestic authorities had occurred in the context of land reform, which was linked to the process of restoration of former owners’ rights to the property that had been previously nationalised by the Soviet regime. Therefore, according to the Court’s case-law in the context of central and eastern European States, the circumstances concerning the transition from a totalitarian regime to a democracy and the specific circumstances of each case have to be taken into account.

(b) The Court’s assessment

(i) General principles

53. The relevant general principles are set out in paragraphs 37-40 of Pyrantienė, cited above.

(ii) Application of the above principles in the present case

(α) Whether there has been an interference

54. The Court notes that when the Supreme Court adopted its decision of 27 November 2002, the first applicant was no longer the owner of the plot of land; he had sold it in 1997. However, by the same court decision a restitution transaction between the parties to the invalidated land sale contracts was applied and the first applicant was ordered to repay LTL 6,000 to the second applicant; he complied with that obligation in August 2005.

55. The Court finds that the decision of the domestic court clearly had the effect of depriving the first applicant of his property within the meaning of the second sentence of Article 1 of Protocol No. 1.

(β) Whether the interference has been prescribed by law

56. The decision of the Supreme Court to annul the administrative act and the land sale contracts was prescribed by law, as it was based on provisions of the Law on Restitution II and the Civil Code, and the jurisprudence of the Supreme Court (as interpreted by the Supreme Court in its decisions of 27 November 2002, and also of 6 September 1999 and 16 June 2003) that had established the priority of the rights of former owners in the event of disputes over nationalised property. The Court observes that although the Law on Restitution II did not explicitly intend to declare an earlier sale of the State’s land as invalid, there already existed the established practice of the Supreme Court (see paragraphs 13 and 33 above). The Court therefore finds that the deprivation was in accordance with the law, as required by Article 1 of Protocol No. 1.

(γ) Legitimate aim

57. As in Pyrantienė, the measure complained of was designed to correct the authorities’ mistake and to protect the interests of the former owners by restoring their ownership rights to the plot of land in natura. The Court thus considers that this interference pursued a legitimate aim (see ibid., §§ 44-48, and Bečvář and Bečvářová v. the Czech Republic, no. 58358/00, § 67, 14 December 2004).

(δ) Proportionality

58. The Court reiterates that any interference with property must, in addition to being lawful and pursuing a legitimate aim, also satisfy the requirement of proportionality. A fair balance must be struck between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights, the search for such a fair balance being inherent in the whole of the Convention. The requisite balance will not be struck where the person concerned bears an individual and excessive burden (see Sporrong and Lönnroth v. Sweden, 23 September 1982, §§ 69-74, Series A no. 52; and Brumărescu v. Romania [GC], no. 28342/95, § 78, ECHR 1999-VII).

59. On several occasions in similar cases that concerned, as in the present case, the correction of mistakes made by the State authorities in the process of restitution, the Court has emphasised the necessity of ensuring that the remedying of old injuries does not create disproportionate new wrongs (see Velikovi and Others v. Bulgaria, nos. 43278/98, 45437/99, 48014/99, 48380/99, 51362/99, 53367/99, 60036/00, 73465/01 and 194/02, § 178, 15 March 2007). To that end, the legislation should make it possible to take into account the particular circumstances of each case, so that individuals who have acquired their possessions in good faith are not made to bear the burden of responsibility, which is rightfully that of the State which confiscated those possessions. In other words, the risk of any mistake made by the State authority must be borne by the State, and errors must not be remedied at the expense of the individual concerned (see Gladysheva v. Russia, no. 7097/10, § 80, 6 December 2011; and Pyrantienė, cited above, § 70). Moreover, those mistakes must be revealed and corrected in a due process of law.

60. In order to assess the burden borne by an applicant, the Court must take into consideration the particular circumstances of each case, namely the conditions under which the disputed property was acquired and the compensation that was received by the applicant in exchange for the property, as well as the applicant’s personal and social situation (see Pyrantienė, cited above, § 51).

61. The Court reiterates that the present case concerns the deprivation of the first applicant’s property, which took place in 2002 when the decision of the Supreme Court was delivered. The unlawful acts of the public administration in transferring the land from the State to the first applicant had taken place in 1994-95. Therefore, all of the above-mentioned acts are attributable to the authorities of the present State, and not those of the Soviet regime (see, mutatis mutandis, Gashi v. Croatia, no. 32457/05, §§ 27-34, 13 December 2007, and Pyrantienė, cited above, § 52).

62. The Government argued that the above-mentioned errors by the domestic authorities had occurred in the context of land reform, which was linked to the complex process of restoration of former owners’ property rights in Lithuania. In the Court’s view, although it is true that the State faces complex legal and factual issues when resolving such questions, in the present case the hindrance to the peaceful enjoyment of the property is attributable exclusively to the respondent State, and the existence of any justifying exceptional circumstances has not been demonstrated by the Government (see, Nekvedavičius v. Lithuania, no. 1471/05, § 88, 10 December 2013).

63. In examining the conformity with the Convention of the events indicated by the first applicant, the Court stresses the particular importance of the principle of good governance. It requires that where an issue pertaining to the general interest is at stake, especially when it affects fundamental human rights, including property rights, the public authorities must act promptly and in an appropriate and above all consistent manner (see Beyeler v. Italy [GC], no. 33202/96, § 120, ECHR 2000‑I, and Rysovskyy v. Ukraine, no. 29979/04, § 71, 20 October 2011).

64. The land sale contracts of 1995 and 1997 were declared null and void after the former owner lodged a civil claim, which was finally allowed by the Supreme Court. It was established that the local authorities had not been entitled to transfer the disputed property to the first applicant before the question of restoration of the rights of the former owners had been resolved. The procedures for the sale of the land were conducted by official bodies exercising the authority of the State (see paragraphs 6-7 above) and the land sale contract was signed between the first applicant and the Vilnius Region Administration under the standard conditions.

65. The Court considers that the first applicant had very limited opportunities, if any, to influence the terms of the contract or the purchase price, as this was within the State’s exclusive competence (see, mutatis mutandis, Gladysheva, cited above, § 79). Therefore, the authorities should have verified the applicant’s eligibility for allocation of the land and the conformity of the land sale with the procedures and laws in force.

66. In this connection, it should be noted that the Supreme Court indicated that the applicants had acted in “bad faith” when purchasing the disputed plot of land, although no reasons were given in the decision to explain the first applicant’s “bad faith”. The Court finds the Supreme Court’s assertion even more surprising given that the lower courts at two instances had accepted that the applicants had acted in good faith and in accordance with the laws applicable at the material time.

67. The Court reiterates that, according to its established case-law reflecting a principle linked to the proper administration of justice, judgments of courts and tribunals should adequately state the reasons on which they are based (see Suominen v. Finland, no. 37801/97, § 34, 1 July 2003). That was not the case with the above-mentioned assertion by the Supreme Court. The Government have not put forward any reasons or substantiation as to the first applicant’s “bad faith” either, although it falls within the Government’s responsibility to prove that the first applicant, who presumably had had trust and legitimate expectation that the authorities would take all measures to avoid mistakes in application of legislation, was not acting in good faith.

68. The first applicant in the present case was an ordinary citizen and the purchase was based on laws which were applicable to all persons having the same status. Thus, the Court is of the opinion that his situation must be distinguished from those of individuals who have taken advantage of their privileged position or have otherwise acted unlawfully to acquire property.

69. In view of the above considerations and in the absence of any arguments to the contrary, the Court is satisfied that the first applicant acquired the property in good faith. It thus accepts that he was unaware that the State’s land had been sold to him in breach of the law and did not know that this was the result of omissions on the part of the administration; the unlawfulness of the land sale was not established until 27 November 2002 by the Supreme Court. The Court concludes that the first applicant was a bona fide owner and his proprietary interest in the enjoyment of the land had been sufficiently established before he sold it to the second applicant in 1997 (see Pyrantienė, cited above, § 60). For the Court, the fact that the first applicant paid for the disputed plot of land with investment vouchers is immaterial in terms of his rights of ownership (see, mutatis mutandis, Vistiņš and Perepjolkins v. Latvia [GC], no. 71243/01, § 121, 25 October 2012).

70. As to the first applicant’s legitimate expectations, those have to be examined with regard to his situation at the time when the disputed decision of 27 November 2002 was adopted.

71. After the first applicant had transferred his title to the plot in 1997 for the price of LTL 6,000, he became the owner of that sum of money. It has been stated above that he could not reasonably have anticipated the annulment of the land sale contract, which had even been registered with the Land Registry. Thus, the first applicant had a legitimate expectation of being able to continue to enjoy that possession.

72. The Court further observes that the first applicant was deprived of that amount to his detriment, given that in exchange he was awarded only LTL 422, that is, only a part of the price he had paid to the State in 1995. The Supreme Court did not take into consideration the entirety of the first applicant’s loss of property and did not award compensation for the remainder of the sum paid.

73. Compensation terms under the relevant legislation are material to the assessment of whether the contested measure respects the requisite fair balance and, notably, whether it imposes a disproportionate burden on the applicant. In this connection, the Court has already found that the taking of property without payment of an amount reasonably related to its value will normally constitute a disproportionate interference (see The Holy Monasteries v. Greece, 9 December 1994, § 71, Series A no. 301‑A; Former King of Greece and Others v. Greece [GC], no. 25701/94, § 89, ECHR 2000‑XII; Zvolský and Zvolská v. the Czech Republic, no. 46129/99, § 70, ECHR 2002‑IX; and, Vistiņš and Perepjolkins, cited above, § 110).

74. Turning to the case at hand, the Court holds that not only was the compensation awarded to the first applicant clearly disproportionate to his actual pecuniary loss, but the error made by the State authorities was remedied at the expense of the applicant, who appeared to be the victim of that omission (see paragraph 59 above).

75. The foregoing considerations are sufficient to enable the Court to conclude that an individual and excessive burden was imposed on the first applicant and that the authorities failed to strike a fair balance between the demands of the public interest on the one hand and the first applicant’s right to the peaceful enjoyment of his possessions on the other.

76. There has accordingly been a violation of Article 1 of Protocol No. 1 to the Convention.

II. APPLICATION OF ARTICLE 41 OF THE CONVENTION

77. Article 41 of the Convention provides:

“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”

A. Damage

78. The first applicant claimed 19,769 Lithuanian litai (LTL) (approximately 5,730 euros (EUR)) in respect of pecuniary damage and LTL 50,000 (approximately EUR 14,480) in respect of non-pecuniary damage.

79. The Government contested those claims as unsubstantiated and excessive.

80. The Court notes that the first applicant was deprived of his property in connection with the violation found. Among the matters which the Court takes into account when assessing compensation are pecuniary damage, that is, the loss actually suffered as a direct result of the alleged violation, and non-pecuniary damage, that is, reparation for the anxiety, inconvenience and uncertainty caused by the violation, and other non-pecuniary loss (see, among other authorities, Ernestina Zullo v. Italy, no. 64897/01, § 25, 10 November 2004).

81. In addition, if one or more heads of damage cannot be calculated precisely or if the distinction between pecuniary and non-pecuniary damage proves difficult, the Court may decide to make a global assessment (see Comingersoll S.A. v. Portugal [GC], no. 35382/97, § 29, ECHR 2000-IV).

82. The Court considers that the first applicant suffered certain pecuniary loss in connection with the failure of the State to award him adequate compensation for deprivation of his property.

83. Moreover, the Court also finds that the first applicant must have suffered uncertainty and frustration as a result of the violation found.

84. Making its assessment on an equitable basis, as required by Article 41 of the Convention, the Court awards the first applicant a lump sum of EUR 8,000 in respect of pecuniary and non-pecuniary damage.

B. Costs and expenses

85. The first applicant also claimed LTL 668 (approximately EUR 190) for the costs and expenses incurred before the domestic courts.

86. The Government contested that claim as unsubstantiated.

87. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. In the present case, regard being had to the documents in its possession and the above criteria, the Court considers it reasonable to award the sum of EUR 190 for costs and expenses in the domestic proceedings.

C. Default interest

88. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

1. Decides to strike the application out of its list of cases in so far as it concerns the complaint of the second applicant;

2. Declares the remainder of the application admissible;

3. Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention in respect of the first applicant;

4. Holds

(a) that the respondent State is to pay the first applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts, to be converted into Lithuanian litai at the rate applicable at the date of settlement:

(i) EUR 8,000 (eight thousand euros), plus any tax that may be chargeable, in respect of pecuniary and non-pecuniary damage;

(ii) EUR 190 (one hundred and ninety euros), plus any tax that may be chargeable to the first applicant, in respect of costs and expenses;

(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points.

Done in English, and notified in writing on 27 May 2014, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Abel CamposGuido Raimondi
Deputy RegistrarPresident

In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the separate opinion of Judge Lemmens is annexed to this judgment.

G.R.A.
A.C.

CONCURRING OPINION OF JUDGE LEMMENS

I agree with my colleagues that there has been a violation of Article 1 of Protocol No. 1. However, I would have preferred a different reasoning.

I think that the reasoning in our judgment unnecessarily discusses a number of questions of fact and domestic law, both of which are, in principle, not a matter for the Court.

In my opinion, the issue in this case is relatively simple. The Supreme Court found in 2002 that the City of Vilnius and the Region of Vilnius had taken decisions, in 1994 and 1995, that were unlawful under domestic law. As a result, the Supreme Court ordered that the plot of land be returned by the second applicant to the State, that the first applicant return to the second applicant the sum he had received from the latter (LTL 6,000), and that the State reimburse the first applicant for part (LTL 422) of the sum it had received from him (LTL 422, plus 423 “single-use investment vouchers”). The first applicant was not compensated for the 423 vouchers he had transferred to the State. Nor was he compensated for the loss of the profit that he had made in 1997, when he managed to sell the land to the second applicant at a much higher price than that at which he himself had bought it from the State.

The first applicant complained that he had been deprived of his “property” without receiving adequate compensation.

I agree with the majority that, while the interference in the first applicant’s right to peaceful enjoyment of his possessions was in compliance with the conditions provided for by law and was in the public interest (see the conditions explicitly set out in Article 1, first paragraph, second sentence, of Protocol No. 1), it did not strike a fair balance between the demands of the public interest and the applicant’s individual right.

The majority arrives at that conclusion after explicitly disagreeing with the Supreme Court that the first applicant had bought the plot of land in bad faith (see paragraphs 66-69). The majority may be right, but I would have preferred that our Court did not enter into an assessment of the applicant’s conduct in 1995 and did not substitute its own assessment for that of the Supreme Court. Indeed, I am not sure that we are in possession of all the relevant elements that would allow this Court to come to a conclusion on this issue, in one sense or another.

Moreover, the majority considers that, when the Supreme Court handed down its decision in 2002, the first applicant had a “legitimate expectation” of being able to continue to enjoy the sum of money he had received in 1997 when he sold the land to the second applicant (see paragraph 71). I see no need to make a factual assessment of this nature. And again, I wonder whether we have available all the necessary elements to pronounce on what expectations were “legitimate” in 2002.

I am afraid that by including these findings in its reasoning, the majority is acting more like a domestic court than a supervisory European court. In my opinion, it would have been sufficient simply to note that, because of the unlawful acts committed by the local and regional authorities (in 1994 and 1995), the first applicant had to return a sum of LTL 6,000 to the second applicant, while being reimbursed by the State only up to LTL 422. The compensation thus received for the consequences of mistakes committed by the public authorities was not in a reasonable relationship of proportionality with the loss suffered by the first applicant. Even if the applicant could legitimately be required to make a sacrifice “in the public interest”, the individual burden actually placed on him was, as the Court finds, excessive (see paragraph 75). The interference was therefore not proportionate to the aim pursued.

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