CASE OF FIRM NIYAL v. AZERBAIJAN

THIRD SECTION

CASE OF FIRM NIYAL v. AZERBAIJAN

(Application no. 12748/13)

JUDGMENT
 

STRASBOURG

23 September 2025

This judgment is final but it may be subject to editorial revision.

In the case of Firm Niyal v. Azerbaijan,

The European Court of Human Rights (Third Section), sitting as a Committee composed of:

 Canòlic Mingorance Cairat, President,
 Lətif Hüseynov,
 Vasilka Sancin, judges,
and Olga Chernishova, Deputy Section Registrar,

Having regard to:

the application (no. 12748/13) against the Republic of Azerbaijan lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 4 February 2013 by Firm Niyal (“the applicant company”), a company based in Baku, which was represented by Mr A. Shahverdi, a lawyer based in Azerbaijan;

the decision to give notice of the application to the Azerbaijani Government (“the Government”), represented by their Agent, Mr Ç. Əsgərov;

the parties’ observations;

Having deliberated in private on 2 September 2025,

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

SUBJECT MATTER OF THE CASE

1.  The case concerns the allegedly unlawful expropriation by the Baku City Executive Authority (“the BCEA”) and the State Committee on Property Issues (“the SCPI”) of the applicant company’s property for the purpose of constructing a new presidential residence.

2.  According to an ownership certificate issued in 2000, the applicant company owned a complex of non-residential buildings (operating as a restaurant) with a total surface area of 201.4 sq. m. The property was located on a State-owned plot of land with a total surface area of 2,023.9 sq. m.

3.  It appears from the case file that in early 2008 representatives of the SCPI repeatedly contacted the applicant company and demanded that it vacate the property in question, since construction of a presidential residence was envisaged on the plot of land where the complex was located. In exchange, the applicant company was offered several non‑residential buildings and plots of land in various other locations. The applicant company accepted some of these offers and requested that the relevant authorities transfer the selected properties into its ownership. However, that request for transfer of ownership was never acted on.

4.  According to the applicant company, in February 2010 the BCEA and the SCPI demolished the property in question without prior notification or payment of compensation.

5.  By a decision of 21 July 2010, the Narimanov District Executive Authority (“the NDEA”), acting on a request from the applicant company, allocated it a 600 sq. m plot of land for the construction of a commercial building.

6.  On 14 December 2010 the applicant company brought proceedings against the BCEA and the SCPI, asking Baku Administrative-Economic Court no. 1 to declare those authorities’ actions unlawful and to award it compensation for pecuniary damage equivalent to the value of the non‑residential property and the profit lost as a result of its demolition. In support of its claim, the applicant company submitted a valuation report on the demolished property, prepared by a private company, which estimated its market value, as on 5 February 2008, at 4,300,000 Azerbaijani manats (AZN). It also submitted, in a general manner, that the State authorities had failed to formalise its property rights over the allocated plot of land (see paragraph 5 above).

7.  By a judgment of 7 April 2011, Baku Administrative-Economic Court no. 1 dismissed the applicant’s claim. It held that the BCEA and the SCPI’s involvement in the demolition of the applicant company’s property had not been established. The applicant company appealed.

8.  By a judgment of 6 September 2011, the Baku Court of Appeal dismissed the applicant company’s appeal. That judgment was, however, quashed by the Supreme Court on 21 December 2011, which remitted the case for fresh examination.

9.  By a judgment of 6 March 2012, the Baku Court of Appeal partially granted the applicant company’s appeal, awarding it AZN 302,100 (approximately 279,722 euros (EUR) at the relevant time). The court held that the demolition of the applicant company’s non-residential property by the BCEA and the SCPI, without compensation, and their actions violating the applicant company’s right to use the plot of land underneath it had been unlawful. In determining the compensation amount, the court rejected the valuation report submitted by the applicant company, merely noting that the estimates therein were “unreal”, and decided to award it AZN 1,500 per square metre of its property, that is, the amount previously awarded by the domestic courts in similar cases.

10.  The applicant company lodged a cassation appeal complaining that the appellate court had failed to take into account the findings of the property valuation report submitted by it (see paragraph 6 above). It did not submit any arguments or complaints regarding the plot of land.

11.  On 6 August 2012 the Supreme Court upheld the appellate court’s judgment.

12.  The applicant company complained under Article 6 of the Convention of a breach of its right to a reasoned judgment. It further complained under Article 1 of Protocol No. 1 to the Convention that the interference with its property rights had been unlawful and unjustified. It also alleged that the amount of compensation awarded for the demolition of its non‑residential property had been insufficient, and that the 600 sq. m plot of land allocated in exchange for the 2,050 sq. m plot of land previously in its use was in a less prestigious location.

THE COURT’S ASSESSMENT

13.  The Government submitted that the domestic courts’ finding of a violation of the applicant company’s property rights and the award of compensation in respect of pecuniary damage had constituted appropriate and sufficient redress and that it could not claim to be a victim of a violation of Article 1 of Protocol No. 1 to the Convention. The applicant company disagreed.

14.  The Court considers that, in the particular circumstances of the case, the Government’s objection concerning the applicant company’s victim status in respect of the non-residential property in question is so closely connected to the merits of the applicant’s complaint under Article 1 of Protocol No. 1 to the Convention that it should be joined to the merits (compare Khizanishvili and Kandelaki v. Georgia, no. 25601/12, § 44, 17 December 2019). The Court notes that this part of the complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention or inadmissible on any other grounds. It must therefore be declared admissible.

15.  The applicable principles under Article 1 of Protocol No. 1 to the Convention have been summarised, inter alia, in Scordino v. Italy (no. 1) ([GC], no. 36813/97, §§ 178-81, ECHR 2006‑V); Vistiņš and Perepjolkins v. Latvia ([GC], no. 71243/01, §§ 95-99 and 108-14, 25 October 2012); and Akhverdiyev v. Azerbaijan (no. 76254/11, § 73, 29 January 2015).

16.  In the present case, the domestic courts found that the applicant company’s property had been demolished unlawfully (see paragraph 9 above). They therefore acknowledged the violation of its property rights and awarded it compensation, the amount of which was contested. The Court will therefore consider the question whether the compensation awarded to the applicant company was adequate. While the domestic courts are normally in a better position to determine the existence and quantum of pecuniary damage (see Scordino, cited above, § 203), the Court has jurisdiction to assess whether compensation was appropriate and sufficient within the meaning of Article 1 of Protocol No. 1 to the Convention.

17.  During the domestic proceedings, the applicant company submitted a valuation report in respect of the property in question. The domestic courts deemed the report unreliable, without providing adequate reasons for their conclusion (see paragraph 9 above). Moreover, no reasoning was provided as regards the significant difference between the value of the property as determined by the report submitted by the applicant company and the amount of compensation established by the courts. It follows that the domestic courts failed to provide an explanation for the approach followed or the level of compensation achieved (compare Vistiņš and Perepjolkins, §§ 111-14, and Khizanishvili and Kandelaki, § 58, both cited above).

18.  In the light of the foregoing considerations, the Court concludes that the applicant company has not been awarded full compensation in respect of the unlawful demolition of its non-residential property. The Court therefore dismisses the Government’s objection concerning the applicant company’s victim status. There has accordingly been a violation of Article 1 of Protocol No. 1 to the Convention.

19.  The Government submitted that the land in question was State property and did not constitute the applicant company’s possession. The applicant company disagreed. However, the Court does not find it necessary to resolve this matter as, even assuming Article 1 of Protocol No. 1 to be applicable to the facts of the present case, this part of the complaint is in any event inadmissible for the following reason.

20.  It is clear from the case file that the applicant company, at its own request, was allocated another plot of land in exchange for the plot of land previously in its use (see paragraph 5 above). While the original plot was larger than the newly allocated plot of land, the applicant company never raised that issue in its claim and appeals before the domestic courts. Nor did it ask to be allocated another larger plot of land or to be awarded compensation in respect of the land (see paragraphs 6 and 10 above).

21.  It follows that this part of the complaint is manifestly ill‑founded and must be rejected pursuant to Article 35 §§ 3 (a) and 4 of the Convention.

22.  As concerns the applicant company’s complaint under Article 6 of the Convention (see paragraph 12 above), having regard to the facts of the case, the submissions of the parties and its findings above, the Court considers that it has dealt with the main legal question raised by the case and that there is no need to examine this complaint (see Centre for Legal Resources on behalf of Valentin Câmpeanu v. Romania [GC], no. 47848/08, § 156, ECHR 2014).

APPLICATION OF ARTICLE 41 OF THE CONVENTION

23.  The applicant company claimed AZN 4,357,900 in respect of pecuniary damage, including AZN 360,000 for lost profit. It relied on the report presented before the domestic courts (see paragraph 6 above). It also asked to be allocated, for its use, an additional plot of land measuring 1,450 sq. m. It further claimed EUR 50,000 in respect of non-pecuniary damage.

24.  The Government submitted that the amounts claimed were excessive and unsubstantiated.

25.  The Court firstly notes that the applicant failed to submit any supporting documents in respect of lost profit. It therefore rejects that part of the claim. It further refers to its conclusion as regards the part of the complaint concerning the plot of land (see paragraph 21 above), and notes that any award for pecuniary damage in the present case can be made in respect of the non-residential property only.

26.  As to the report submitted by the applicant company, the Court observes that its conclusions were based on the market value in February 2008 and not on the date on which the deprivation of property occurred (compare Ganiyeva and Others v. Azerbaijan [Committee], no. 62490/09, § 62, 18 February 2021, with further references). Moreover, it is not clear how the expert had arrived at the market value in question. In view of these considerations, and taking into account all the material in its possession and the amount already received by the applicant company, the Court awards it EUR 50,000 in respect of pecuniary damage, plus any tax that may be chargeable on this amount.

27.  Making its assessment on an equitable basis, as required by Article 41 of the Convention, the Court further awards the applicant company EUR 3,000 in respect of non-pecuniary damage, plus any tax that may be chargeable on this amount.

28.  The applicant company did not submit a claim in respect of costs and expenses. Accordingly, the Court considers that there is no call to award it any sum on that account.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

(a)  that the respondent State is to pay to the applicant company, within three months, the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement:

(i)  EUR 50,000 (fifty thousand euros), plus any tax that may be chargeable, in respect of pecuniary damage;

(ii)  EUR 3,000 (three thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;

(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 23 September 2025, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

 Olga Chernishova Canòlic Mingorance Cairat
 Deputy Registrar President