CASE OF NEVADA TOURS 2004 AD AND BULGARIAN TOURIST COMPANY GLOBAL TOURS AD v. BULGARIA

THIRD SECTION

CASE OF NEVADA TOURS 2004 AD AND

BULGARIAN TOURIST COMPANY GLOBAL TOURS AD v. BULGARIA

(Applications nos. 4173/20 and 6186/20)

JUDGMENT
 

STRASBOURG

10 September 2024

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

In the case of Nevada Tours 2004 AD and Bulgarian Tourist Company Global Tours AD v. Bulgaria,

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

 Georgios A. Serghides, President,
 Oddný Mjöll Arnardóttir,
 Diana Kovatcheva, judges,
and Olga Chernishova, Deputy Section Registrar,

Having regard to:

the applications against the Republic of Bulgaria lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by two Bulgarian joint-stock companies, as listed in the appended table (“the applicant companies”), on the various dates indicated therein;

the decision to give notice of the applications to the Bulgarian Government (“the Government”), represented by their Agent, Ms M. Tsocheva from the Ministry of Justice;

the parties’ observations;

Having deliberated in private on 9 July 2024,

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

SUBJECT MATTER OF THE CASE

1.  The case is of the type examined in Kostov and Others v. Bulgaria (nos. 66581/12 and 25054/15, 14 May 2020) and concerns the adequacy of compensation for expropriation under the State Property Act. In 2019 the governor of Burgas Region expropriated two plots of land owned by the applicant companies, measuring 4,103 and 14,390 square metres, for the construction of a road. The companies had been using the plots under lease agreements since 2007, and had eventually purchased them in 2018. The lease agreements had been concluded since the applicants intended to develop the land, which, even though formally considered agricultural, was part of an industrial zone in the vicinity of the city of Burgas. Under the local urban development plan of 2011 the land was allocated for public and administrative services, commerce and small private enterprises.

2.  In the expropriation proceedings, which were concluded with two final judgments of the Burgas Administrative Court of 12 and 22 July 2019, the applicants’ land was considered agricultural, and in selecting comparable plots of land which had been subject to transactions in the period preceding the expropriation, in line with the criteria set out in the State Property Act (see Kostov and Others, cited above, §§ 25-26), the authorities took into account agricultural land. In particular, the Burgas Administrative Court relied on an expert report listing twenty plots of such land in the area of Burgas, which had been sold for prices varying from 0.42 Bulgarian levs (BGN) (0.21 euros – EUR) to BGN 88 (EUR 45) per square metre. The average value calculated on this ground, and accordingly the compensation awarded to the applicant companies, was equivalent of BGN 16.57 (EUR 8.47) per square metre.

3.  The applicant companies complained under Article 1 of Protocol No. 1, relying in addition on Article 13 of the Convention, that the amount of compensation was inadequate as it was considerably below the actual market value of their plots of land.

THE COURT’S ASSESSMENT

4.  Having regard to the similar subject matter of the applications, the Court finds it appropriate to examine them jointly in a single judgment.

5.  The applicant companies’ complaints fall to be examined under Article 1 of Protocol No. 1 (see Kostov and Others, cited above, §§ 94-96, and Hristova and Others v. Bulgaria [Committee], no. 56681/15, § 6, 5 September 2023).

6.  The applications are not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention or inadmissible on any other ground. They must therefore be declared admissible.

7.  The relevant domestic law and practice and the criteria concerning the adequacy of compensation for expropriation under the State Property Act have been described in Kostov and Others (cited above). In particular, the Court reiterated that the taking of property without payment of an amount reasonably related to its value would normally constitute a disproportionate interference, and that the amount of compensation had to be calculated on the basis of the value of the property at the date on which ownership of it was lost (ibid., §§ 62-63).

8.  In the individual cases examined in Kostov and Others (cited above, §§ 81-87 and 91), as well as in some of the follow-up cases (see Hristova and Others, cited above, §§ 11-18, and Bozhilov and Others v. Bulgaria [Committee], no. 56383/15, §§ 11-13, 5 September 2023), the Court found a violation of Article 1 of Protocol No. 1. It noted the amount of compensation awarded to the applicants in accordance with the rules of the State Property Act, but saw serious indications that the market value of the applicants’ land was likely to have been much higher. It concluded that the respondent State had not shown that the compensation awarded at the domestic level met the requirement of being reasonably related to the actual value of the applicants’ land.

9.  The Court therefore has to assess in the present case, on the basis of the facts submitted by the parties, whether there are sufficient indicators that the actual value of the applicant companies’ land could have been significantly higher than the compensation awarded at the domestic level.

10.  As noted, that compensation was equivalent to BGN 16.57 (EUR 8.47) per square metre (see paragraph 2 above).

11.  In order to justify such level of compensation, the Government pointed out that it had been reached in accordance with the requirements of the State Property Act. They noted additionally that the land had been agricultural, and considered it speculative to assume that the applicant companies could have developed it otherwise.

12.  The applicant companies, for their part, objected against the level of compensation, as well as the treatment of their land as purely agricultural. They put forward the arguments below.

13.  First, they had themselves bought the land at significantly higher prices shortly before the expropriation – namely, at BGN 88 (EUR 45) per square metre in application no. 4173/20, and BGN 80 (EUR 41) per square metre in application no. 6186/20. Second, already after taking possession of the land in 2007 the applicant company in application no. 4173/20 had obtained the municipal authorities’ consent to modify the land’s status and render it constructible; no formal decision had however been taken afterwards, apparently because of the emerging plans for the construction of a road. Third, in the proceedings initiated by the applicant company in application no. 6186/20 the court-appointed expert had been additionally tasked, upon a request by the applicant, with calculating an average price based on transactions with plots with the same characteristics as the applicant’s, namely agricultural land allocated for the development of an industrial and commercial zone (see paragraph 1 above). The expert thus selected four transactions of the twenty meeting the formal requirements of the State Property Act (see paragraph 2 above), and calculated on their basis an average value of BGN 57.5 (EUR 29) per square metre. Such a calculation was considered irrelevant by the Burgas Administrative Court, which held that it had to abide by the criteria established by the State Property Act. Fourth, in April and May 2018 the municipality had valued plots of agricultural land situated close to those of the applicant companies at BGN 60 (EUR 30.1) and BGN 162 (EUR 83) per square metre, in administrative proceedings concerning a change in that land’s status. And fifth, in 2018 experts retained by the applicants and the lessor (see paragraph 1 above on the lease agreements entered into by the applicants) had valued their land at about BGN 130 (EUR 66) per square metre.

14.  The Court is satisfied that the circumstances referred to by the applicant companies are sufficient for it to conclude that the real market value of the expropriated land could have been substantially higher than the compensation awarded at the national level. In particular, it does not consider the labelling of the applicants’ land as agricultural to be of a decisive character. It is obvious that the land had a potential beyond agricultural use, seeing that it was situated in an industrial zone and allocated under the local urban development plan for industrial and commercial development (see paragraph 1 above). In addition, the Court has held in similar circumstances that what mattered was not the land’s formal status, but its actual value (see Bozhilov and Others, cited above, § 12).

15.  As to the Government’s argument that the compensation at the domestic level was calculated in accordance with the requirements of the State Property Act (see paragraph 11 above), the Court has no reason to doubt that this was so. Furthermore, it has previously held that the approach under the national law could not be seen as incapable a priori of leading to the determination of adequate compensation (see Kostov and Others, cited above, § 80). However, the fact remains that in the case at hand the lack of flexibility of the domestic legislation and the failure of the domestic authorities to take sufficient account of the individual characteristics of the applicant companies’ land led to what the Court sees as a problematic result.

16.  Accordingly, the Court concludes that the compensation awarded to the applicant companies for their expropriated land was not reasonably related to that land’s value, which means that the requirements of Article 1 of Protocol No. 1 have not been met, and that the deprivations of the applicants of their property was a disproportionate measure.

17.  There has accordingly been a violation of Article 1 of Protocol No. 1.

APPLICATION OF ARTICLE 41 OF THE CONVENTION

18.  The applicant companies claimed the value of their land. They submitted valuations prepared in December 2023, according to which the fair market value of the land was between 68 and 70 euros (EUR) per square metre. On that ground, the applicant in application no. 4173/20 claimed EUR 279,988 in respect of pecuniary damage, and the applicant in application no. 6186/20 claimed EUR 1,104,207.

19.  As to non-pecuniary damage, each company claimed EUR 15,000. They pointed out that they had acquired the disputed plots of land with a view to developing them.

20.  The Government contested the claims.

21.  In a case such as the present one the Court is to make an award which is, as far as possible, “reasonably related” to the market value of the expropriated land at the time the applicant lost ownership thereof (see Vistiņš and Perepjolkins v. Latvia (just satisfaction) [GC], no. 71243/01, § 36, ECHR 2014, and Kostov and Others, cited above, § 102).

22.  However, the Court is unable in the case at hand to determine precisely such a value. While the applicants submitted valuations (see paragraph 18 above), the Court is not satisfied that the values indicated therein were definitely established market values at the time when the applicants lost ownership of their land. It is significant in that regard that the examples used above to cast doubt on the adequacy of the compensation awarded by the domestic authorities refer to different values (see paragraph 13 above).

23.  Consequently, as in Kostov and Others (cited above, § 105), the Court is of the view that the most appropriate means to remedy the violation found in the case would be to reopen the proceedings at the domestic level and re-examine the applicant companies’ claims in compliance with the requirements of Article 1 of Protocol No. 1. Domestic law provides clearly for such a possibility (ibid., § 104).

24.  The Court thus dismisses the claims for pecuniary damage.

25.  As to non-pecuniary damage, it awards each of the applicant companies EUR 3,000 (see Comingersoll S.A. v. Portugal ([GC], no. 35382/97, § 35, ECHR 2000‑IV).

26.  As concerns costs and expenses, the applicant company in application no. 4173/20 claimed the reimbursement of EUR 7,200 paid for its legal representation before the Court and EUR 17 for postage. The applicant company in application no. 6186/20 claimed, for its part, EUR 4,800 for its legal representation, EUR 17 for postage, and EUR 115 for translation. The applicants submitted the relevant invoices and receipts.

27.  The Government contested the claims.

28.  Having regard to the documents in its possession and to the nature of the case, the Court considers it reasonable to award to each applicant company EUR 2,000 covering costs under all heads, plus any tax that may be chargeable to the applicants.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

(a)  that the respondent State is to pay each 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 3,000 (three thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;

(ii)  EUR 2,000 (two thousand euros), plus any tax that may be chargeable to the applicants, 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 10 September 2024, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

 Olga Chernishova Georgios A. Serghides
 Deputy Registrar President

APPENDIX

List of cases:

No.

Application no.

Case name

Lodged on

Applicant
Year of Registration
Place of Registered Seat

Represented by

1.

4173/20

Nevada Tours 2004 AD v. Bulgaria

11/01/2020

NEVADA TOURS 2004 AD
2003
Nesebar

M. Ekimdzhiev

K. Boncheva

M. Dokova-Kostadinova

2.

6186/20

Bulgarian Tourist Company Global Tours AD v. Bulgaria

21/01/2020

BULGARIAN TOURIST COMPANY GLOBAL TOURS AD
1999
Burgas

M. Ekimdzhiev

K. Boncheva

M. Dokova-Kostadinova