ELAGRA LLC AND SEDRAKYAN v. ARMENIA

FIFTH SECTION

DECISION

Application no. 62079/14
ELAGRA LLC against Armenia
and 2 other applications
 

The European Court of Human Rights (Fifth Section), sitting on 7 May 2025 as a Committee composed of:

 María Elósegui, President,
 Gilberto Felici,
 Kateřina Šimáčková, judges,
and Martina Keller, Deputy Section Registrar,

Having regard to:

the applications against the Republic of Armenia lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by an Armenian national (“the applicant”) and an Armenian limited liability company (“the applicant company”), whose personal details are set out in the appended table (together, “the applicants”), on the various dates indicated therein, represented by Mr G. Mughnetsyan, a lawyer practising in Yerevan;

the decisions to give notice of the complaints concerning the alleged interference with the right to the peaceful enjoyment of possessions and the premature termination of a lease to the Armenian Government (“the Government”) represented by their Agent, Mr Y. Kirakosyan, Representative of the Republic of Armenia on International Legal Matters, and to declare the remainder of the applications inadmissible;

the parties’ observations;

Having deliberated, decides as follows:

SUBJECT MATTER OF THE CASE

1.  The applications concern the annulment of the applicants’ lease rights, as well as the alleged interference with the applicant company’s right to the peaceful enjoyment of its possessions, arising from the authorities’ refusal to register fiscal cash registers, which were required for conducting business.

2.  On 27 April 2010 the Council of Elders of Bagratashen (“the Council”) – the local self-government body of a border village in Armenia – decided to lease a construction near the Armenian-Georgian border to the applicant, along with an adjoining plot of land designated for its use (collectively, “the Property”).

3.  Based on that decision, on 12 May 2010, the Head of Bagratashen village and the applicant concluded a ninety-nine-year lease agreement with an annual rent of 180,000 Armenian drams (approximately 360 euros), under which the Property was designated for use as a marketplace.

4.  On 12 October 2012 the applicant subleased the Property to the applicant company for use as a marketplace, with the same annual rent. The sublease rights were subsequently registered in the real estate register.

5.  On 5 September 2013 the Tavush Regional Administration – the governing body of the region – lodged a claim with the Administrative Court against the Council, seeking to annul the 27 April 2010 decision and the 12 May 2010 lease agreement. The claim maintained that the decision violated Section 22 § 1 of the State Border Act, as it had been adopted without the required prior authorisation from the border guard control troops of the National Security Service (“NSS border guard control troops”). This provision mandated prior authorisation for entry and temporary presence in the border area. The plaintiff also submitted a letter from the commander of the NSS border guard control troops which stated that the Property was located approximately fifty to one hundred metres from the State border, and that organising commercial activities in that area was deemed inappropriate.

6.  The applicants intervened in the proceedings as third parties.

7.  The Council and the applicants contested the claim, arguing, inter alia, that no legal provision required prior authorisation from the NSS border guard control troops for leasing the Property.

8.  On 20 December 2013 the Administrative Court ruled in favour of the Tavush Regional Administration, finding that the Council’s decision of 27 April 2010, and, by extension, the 12 May 2010 lease agreement, were unlawful and therefore null and void. The court reasoned that commercial activity at the Property necessitated movement in and out of the border area, and therefore the lease required prior authorisation from the NSS border guard control troops, as prescribed by Section 22 § 1 of the State Border Act.

9.  The Council and the applicants lodged an appeal.

10.  On 27 March 2014 the Administrative Court of Appeal dismissed their appeal and upheld the Administrative Court’s judgment.

11.  On 25 June 2014 the Court of Cassation declared their further appeal on points of law inadmissible for lack of merit.

12.  On 29 October 2012 the applicant company signed ten separate sublease agreements with private entrepreneurs, intending to sublease individual vendor spaces within the Property. However, under Article 3.1 § 4 of the Trade and Services Act, these sublease agreements could only take effect once the private entrepreneurs had successfully registered their fiscal cash registers with the tax authorities, a legal requirement for conducting business.

13.  On an unspecified date the private entrepreneurs applied to the State Revenue Committee (“the SRC”) seeking the registration of their fiscal cash registers, listing the Property as their intended place of business.

14.  On 6 November 2012 the SRC refused the registration on the grounds that the applicant company was not authorised to operate a marketplace in that area.

15.  On 18 November 2012, the private entrepreneurs informed the applicant company that due to the SRC’s refusal, they were unable to conduct business and pay rental fees under their agreements.

16.  The private entrepreneurs lodged a claim with the Administrative Court, requesting an order compelling the SRC to register their fiscal cash registers. The applicant company intervened in the proceedings as a third party.

17.  On 9 July 2013 the Administrative Court granted the private entrepreneurs’ claims.

18.  The SRC lodged an appeal.

19.  On 8 January 2014 the Administrative Court of Appeal overturned the judgment and dismissed the claim, finding that the Property was not operational as a marketplace and that the private entrepreneurs could not conduct business there.

20.  The applicant company and the private entrepreneurs lodged an appeal on points of law.

21.  On 19 March 2014 the Court of Cassation declared their appeal inadmissible for lack of merit.

THE COURT’S ASSESSMENT

22.  Having regard to the common factual and legal background of the applications, the Court finds it appropriate to examine them jointly in a single decision (Rule 42 § 1 of the Rules of Court).

23.  In application no. 273/15, the applicant complained under Article 1 of Protocol No. 1 that he had been deprived of his lawfully acquired lease rights. In application no. 3214/15, the applicant company, relying on the same provision, complained that the allegedly unlawful annulment of the applicant’s lease rights automatically resulted in the cancellation of its sublease rights.

24.  The Court observes that the applicants’ property rights were retrospectively annulled. It considers that such an annulment amounted to deprivation of possessions within the meaning of Article 1 of Protocol No. 1 (see Gashi v. Croatia, no. 32457/05, § 22, 13 December 2007; Kryvenkyy v. Ukraine, no. 43768/07, § 41, 16 February 2017; and Belova v. Russia, no. 33955/08, § 32, 15 September 2020).

25.  The Court must therefore assess whether this deprivation was lawful, served a legitimate public interest, and struck a fair balance between public and private interests.

26.  The Court notes that the grounds for the annulment of the applicants’ lease rights were the lack of a prior authorisation as required by the State Border Act. In particular, any land within one kilometre of the State border falls within the border area (Article 21 § 2 of the State Border Act). The Property, located approximately fifty to one hundred metres from the border (see paragraph 5 above), fell well within this area. In accordance with Section 22 § 1 of the same Act, permission to enter and temporarily remain in the border area is granted by the NSS border guard control troops. The domestic courts interpreted this provision as also requiring a prior authorisation for leasing property situated in the border area.

27.  The Court reiterates that it has only limited power to deal with alleged errors of fact or law committed by the national courts, to which it falls in the first place to interpret and apply the domestic law (see Kopecký v. Slovakia [GC], no. 44912/98, § 56, ECHR 2004-IX, and Di Marco v. Italy, no. 32521/05, § 55, 26 April 2011). That said, the domestic courts’ interpretation does not appear arbitrary or manifestly unreasonable, given that permitting a lease agreement without prior authorisation could create a legal contradiction – where a person holds lease rights, but lacks permission to enter the property. This issue is particularly relevant given that the lease was intended for operating a marketplace, which inherently requires frequent entry and exit. Moreover, the commercial nature of these activities required the applicants to proceed with a high degree of caution in complying with the applicable regulations (see Lekić v. Slovenia [GC], no. 36480/07, § 97, 11 December 2018).

28.  The Court, therefore, accepts the domestic courts’ conclusion that leasing the property without prior authorisation breached the State Border Act. Given that under domestic law, administrative acts and contracts that contravene legal requirements are deemed null and void (Article 63 § 1 of the Fundamentals of Administrative Action and Administrative Procedure Act (“the APA”) and Article 305 of the Civil Code (“the CC”)), the Court considers that the annulment of the applicants’ lease rights was lawful.

29.  The Court further finds that the interference with the applicants’ property rights served a legitimate public interest, namely the enforcement of State border protection regulations.

30.  It remains to be determined whether the interference was proportionate to the above-mentioned interest. Notably, the applicants did not present specific arguments contesting its proportionality.

31.  The Court observes that the judicial proceedings provided the applicants with a reasonable opportunity to put their case to the competent courts, which duly examined their principal arguments (see G.I.E.M. S.r.l. and Others v. Italy [GC], nos. 1828/06 and 2 others, § 302, 28 June 2018).

32.  The Court reiterates that authorities should be able to correct their mistakes, but not in a situation where the person concerned is required to bear an excessive burden (see Belova, cited above, § 37). In the present case, the domestic authorities rectified an administrative error by annulling the applicants’ lease rights, which they reasonably deemed necessary for enforcing State border protection regulations. Furthermore, the Court finds no indication, nor did the applicants suggest, that there was a less intrusive alternative capable of achieving that aim (see, mutatis mutandis, Pine Valley Developments Ltd and Others v. Ireland, 29 November 1991, § 59, Series A no. 222).

33.  Lastly, the applicants have not demonstrated that they paid the rental fees specified in their lease and sublease agreements (see paragraph 3-4 above) for the period before their annulment, nor have they provided evidence of any investments made in the Property following the acquisition of their lease rights. In any event, under Article 304 § 2 of the CC, when an agreement is annulled, each party must, in principle, return what was received or provide monetary compensation if restitution in kind is impossible. Additionally, Articles 95 of the APA entitles victims of unlawful administrative actions to seek compensation. Nothing suggests that the applicants were unable to claim compensation for any losses (see Belova, cited above, § 42).

34.  In these circumstances, the Court finds no basis to conclude that the applicants were made to bear a disproportionate and excessive burden.

35.  It follows that this part of the applications is manifestly ill‑founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

36.  In application no. 62079/14, the applicant company complained under Article 1 of Protocol No. 1 that the authorities’ refusal to register the private entrepreneurs’ fiscal cash registers prevented it from receiving rental income under the sublease agreements, constituting an interference with its possessions.

37.  The Court is not persuaded that the refusal in question amounted to an interference with the applicant company’s possessions within the meaning of Article 1 of Protocol No. 1. First, the refusal was addressed to the private entrepreneurs, not to the applicant company. Moreover, the parties agree that the sublease agreements never actually took effect, as their entry into force was conditional on the registration of fiscal cash registers (see paragraph 12 above). Finally, future income does not qualify as a “possession” under Article 1 of Protocol No. 1 unless it has already been earned or is definitely payable (see, for example, Anheuser-Busch Inc. v. Portugal [GC], no. 73049/01, § 64, ECHR 2007-I, and Eder v. Germany (dec.), no. 11816/02, 13 October 2005). In the present case, the applicant company had no enforceable right to the rental income, as it has neither been earned nor was it definitely payable.

38.  Accordingly, this part of the applicant company’s complaint is incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3 (a), and must be rejected pursuant to Article 35 § 4.

For these reasons, the Court, unanimously,

Decides to join the applications;

Declares the applications inadmissible.

Done in English and notified in writing on 30 May 2025.

 Martina Keller María Elósegui
 Deputy Registrar President

Appendix

List of cases:

No.

Application no.

Case name

Lodged on

Applicant
Place of Residence
Nationality

1.

62079/14

Elagra LLC v. Armenia

10/09/2014

ELAGRA LLC
Bagratashen
Armenian

2.

273/15

Sedrakyan v. Armenia

18/12/2014

Erik Anastasi SEDRAKYAN
Abovyan
Armenian

3.

3214/15

Elagra LLC v. Armenia

18/12/2014

ELAGRA LLC
Bagratashen
Armenian