SECOND SECTION
Application no. 21623/13
KÖNYV-TÁR KFT and Others
against Hungary
lodged on 26 March 2013
STATEMENT OF FACTS
The applicants, Könyv-Tár Kereskedelmi és Szolgáltató Kft, Suli-Könyv Kereskedelmi és Szolgáltató Kft and Tankönyv-Ker Kereskedelmi Bt, are companies registered under Hungarian law. They are represented before the Court by Mr P. Köves, a lawyer practising in Budapest.
A. The circumstances of the case
The facts of the case, as submitted by the applicants, may be summarised as follows.
The applicants are schoolbook distributor companies. In 2011-2012 Parliament adopted Acts no. CLXVI of 2011 and CXXV of 2012 (the “New Regulations”), which deal among other matters with schoolbook distribution. The Acts came into force in their present form on 1 October 2012.
The New Regulations centralised and monopolised the schoolbook distribution market without providing any compensation to the market participants, including the applicants. As a consequence, the applicants and other schoolbook distributors have been excluded from the market (which was either their exclusive or major field of activity) where they had been freely operating prior to the entry into force of the New Regulations. The applicants were given no notice or warning prior to the entry into force of the New Regulations, which were implemented over a transition period of less than a year, with purported effect for the 2013 school year.
The New Regulations state that the distribution and supply of schoolbooks is a public-interest responsibility of the State. The lawmaker’s intention is to discharge these duties through a single, State-owned book distribution company, Könyvtárellátó Kiemelten Közhasznú Nonprofit Kft (“Könyvtárellátó”), a non-profit entity with apparently little knowledge of the market and a minimum level of experience, evidenced by its marginal market share before the New Regulations.
Previous to the New Regulations’ entry into force, the schoolbook market was semi-regulated, whereby the legislator established some requirements of supply and price, based on the needs of schools. There were about thirty-five market-dominant schoolbook distributors (six large and about thirty medium-sized) operating in the country, most of which realised 1-5% operating profit. The majority of schoolbook distribution companies employed between 3-57 regular employees and an additional 10-30 seasonal workers. The applicants maintain that the New Regulations do not result in a more cost-efficient market operation, that the schoolbook distribution was previously a highly competitive market, and that this ensured the lowest possible book prices for schools.
Although the Constitutional Court does not award compensation to petitioners as such, the applicants submit that they have nevertheless submitted a complaint to the Constitutional Court, requesting the annulment of the New Regulations. They state however that even if the Constitutional Court overturns the New Regulations, they would need to re-invest a significant amount of money in order to re-establish their business and would be unable to recover the damage they have already suffered. Accordingly, they maintain that there is no effective domestic remedy available, given that the State has immunity vis-à-vis citizens in the event of civil-law damages caused by a piece of legislation.
A decision by the Constitutional Court is currently pending.
B. Relevant domestic law
Parliament adopted Act no. CLXVI of 2011 (the “First Amendment”) on 20 November 2011, amending, by its section 14, Act no. XXXVII of 2001 on the Schoolbook Market. The First Amendment was published in the Official Gazette on 9 December 2011. Parliament adopted Act no. CXXV of 2012 (the “Second Amendment”) on 12 July 2012, which was published in the Official Gazette on 24 July 2012. The relevant wording of the Second Amendment, in its section 4, is quasi-identical to the wording of section 14(1) of the First Amendment. Both amendments came into force on 1 October 2012.
Section 339 of the Civil Code establishes general tort liability. However, domestic jurisprudence has established that there is no civil-law relationship between the legislator and an injured party and that the legislator cannot possibly commit an act of unlawfulness by introducing new legislation. Therefore, legislative organs cannot be sued for damages in relation to the passing of laws.
Article 25 of the Basic Law of Hungary establishes the Constitutional Court as the supreme organ for the protection of the fundamental statute of Hungary, with competence to examine the constitutionality of laws and to review court decisions for conformity with the Fundamental Law. Since 2012, constitutional complaints may be submitted to the Constitutional Court if a right of the petitioner guaranteed by the Fundamental Law is allegedly violated by a final and binding court decision or by the application of an unconstitutional law in judicial proceedings; there is no procedure available for a legal remedy designed to repair the violation of rights. The only remedy the Constitutional Court can provide is a decision which declares that the measures applied are in breach of the Fundamental Law. No pecuniary compensation is available in these proceedings.
COMPLAINTS
The applicants submit that the New Regulations, by effectively eliminating their market shares, violated their property rights in a discriminatory fashion; and this without any possibility to obtain remedy or compensation. They rely on Articles 6, 13 and 14 of the Convention and Article 1 of Protocol No. 1.
QUESTIONS TO THE PARTIES
1. Have the applicants exhausted all effective domestic remedies, as required by Article 35 § 1 of the Convention, given that the Constitutional Court proceedings are still pending?
2. Is the impugned measure in compliance with the requirements of Article 1 of Protocol No. 1, read alone or in conjunction with Article 14 of the Convention? In particular, do the present measures which exclude market participants from the textbook distribution market constitute a deprivation of possessions per se? In other words, is a market share a protected possession under Article 1 of Protocol No. 1?
3. If a market share is considered a protected possession under Article 1 of Protocol No. 1, are there exceptional circumstances under which the lack of compensation for the elimination of a market share could be justified?
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