KOTOVIČA AND OTHERS v. LATVIA

FIFTH SECTION

DECISION

Application no. 37536/16
Tatjana KOTOVIČA against Latvia
and 2 other applications
(see list appended)

The European Court of Human Rights (Fifth Section), sitting on 20 February 2024 as a Chamber composed of:

 Georges Ravarani, President,
 Lado Chanturia,
 Mārtiņš Mits,
 Stéphanie Mourou-Vikström,
 María Elósegui,
 Kateřina Šimáčková,
 Mykola Gnatovskyy, judges,
and Martina Keller, Deputy Section Registrar,

Having regard to:

the above applications lodged on the various dates indicated in the appended table,

the observations submitted by the respondent Government and the observations in reply submitted by the applicants,

Having deliberated, decides as follows:

Introduction

1.  The case concerns the applicants’ complaint under Article 1 of Protocol No. 1 to the Convention about the deprivation of their property which they believed to have acquired in good faith.

THE FACTS

2.  The applicants’ details are set out in the appendix. They were all represented by Mr A. Zeps, a lawyer practising in Riga.

3.  The Latvian Government (“the Government”) were represented by their Agent, Ms K. Līce.

4.  The facts of the case, as submitted by the parties, may be summarised as follows.

5.  On 8 September 1998, prior to the privatisation of a residential building in Riga, the Central Privatisation Commission of Residential Buildings (Centrālā dzīvojamo māju privatizācijas komisija – “the Privatisation Commission”) transferred the ownership rights until the privatisation (nodeva īpašumā līdz dzīvojamās mājas privatizācijai) in respect of the building’s attic – which was referred to as “an artist’s workshop” and measured 411.6 sq. m – to a private company, A (hereinafter “the LLC A”).

6.  On 27 October 1998 the State Land Service registered the LLC A as the owner of the above-mentioned premises until the privatisation of the residential building.

7.  On 12 May 1999 the LLC A gifted five undivided shares (out of thirty‑five) in the attic premises to Mr V.K., the first applicant’s late husband, as remuneration for assistance and services provided. The value of the gift was estimated at 1,000 euros (EUR).

8.  On 4 June 1999 the LLC A sold seven undivided shares in the attic premises to the third applicant for 2,000 United States dollars (USD).

9.  On 5 August 1999 the State Land Service registered the first applicant’s late husband and the third applicant as the owners of their respective shares until the privatisation of the residential building.

10.  On 19 September 2000 the Privatisation Commission, on the basis of the Law on the Privatisation of State and Local Self-Government Apartment Buildings (Par valsts un pašvaldību dzīvojamo māju privatizāciju), sold five undivided shares in the attic premises to the first applicant’s late husband, seven undivided shares to the third applicant, and the remaining twenty-three undivided shares to the LLC A, thereby completing the privatisation of the attic premises. Their respective property rights were entered in the land register.

11.  On 3 October 2003 the LLC A sold seven undivided shares in the attic premises to the second applicant for USD 10,000. His property rights were also entered in the land register.

12.  On 25 August 2008 the owners of the flats in the building brought civil proceedings against the applicants, the LLC A and the Privatisation Commission’s legal successor; the State Land Service was named as a third party in those proceedings. The flat owners sought the annulment of all the decisions, contracts and land register entries concerning the privatisation and subsequent sale of the attic premises of the building as “an artist’s workshop”. They argued that those premises constituted an unfinished attic of the residential building and therefore could not have been privatised as separate premises. Instead, it was the shared property of the apartment owners. Reference was made to the parts of the Civil Law regulating property claims, the Law on the Privatisation of State and Local Self-Government Apartment Buildings, the Law on Apartment Ownership (Par dzīvokļa īpašumu) and the Law on the Land Register (see paragraphs 14-20 below).

13.  On 23 February 2011 the Riga Regional Court (“the Regional Court”) granted those claims in full. It declared unlawful the privatisation of the attic premises as an artist’s workshop, declared void the decision of 8 September 1998, the certificate of 27 October 1998, the gift agreement of 12 May 1999, the purchase agreement of 4 June 1999, the certificates of 5 August 1999, the privatisation agreement of 19 September 2000 and the purchase agreement of 3 October 2003, annulled all the relevant entries in the land register, ordered the removal from the land register of the artist’s workshop as a separate item of property and held that the premises in question – the attic – formed part of the shared property of the flat owners.

14.  On 13 March 2014 the Civil Chamber of the Supreme Court (“the Civil Chamber”) upheld the judgment of the Regional Court on appeal. It outlined the subject matter of the dispute as follows:

“... the dispute in the case is about the privatisation of the artist’s workshop in the apartment building at [address], which the plaintiffs consider [to have been] illegal ... [and which] resulted in an unlawful decrease of the part of the building in their shared ownership.”

15.  The Civil Chamber noted that according to the technical inventory of the residential building in question carried out in April 1998, the disputed premises represented “a roof construction” and that no workshop had existed there at the time of the privatisation. It found, with reference to the case-law of the Senate of the Supreme Court, that the amendment to section 17 of the Law on the Privatisation of State and Local Self-Government Apartment Buildings of 14 December 2000 to the effect that an artist’s workshop had to have been built and declared operational to be suitable for privatisation by its tenants had only clarified the already existing privatisation procedure rather than introducing a new qualifying requirement: in other words, premises had first to exist in order to be privatised. The Civil Chamber concluded that at the time of the privatisation the attic premises had not corresponded to the definition of an artist’s workshop provided by section 1(8) of the Law on the Privatisation of State and Local Self-Government Apartment Buildings. It had formed a part of the building in shared ownership and could not have been privatised separately or been the subject of any subsequent transactions. The courts found that the defendants had acted in bad faith as they had all been aware that the artist’s workshop had not existed in reality and that the premises were instead an unfinished attic. The applicants’ contracts all contained an explicit statement that the acquirers had acquainted themselves with the items forming the subject of the relevant agreements. With respect to the argument of the first applicant’s late husband that he had invested in the property and had converted it into an actual artist’s workshop, the domestic courts noted that he had done so after the unlawful privatisation.

16.  On 28 December 2015 the Civil Cases Department of the Supreme Court refused to open cassation proceedings. It referred to eleven judgments of the Supreme Court (including a 2006 judgment in case no. SKC-241; see paragraph 22 below) and noted that there was settled case-law with respect to the privatisation of attics of residential buildings.

RELEVANT LEGAL FRAMEWORK

17.  For the provisions of the Civil Law (Civillikums) concerning the protection of property see Osipkovs and Others v. Latvia (no. 39210/07, §§ 36-37, 4 May 2017).

18.  Section 1 of the Law on the Privatisation of State and Local Self‑Government Apartment Buildings, as in force since 25 July 1995, reads as follows:

“...

(5)  the part of the building in shared ownership [shall mean] any part of an apartment building comprising external walls, flats, the partition walls separating non-residential premises or artists’ workshops, the roof, the attic, staircases, basements, as well as windows, doors, communications facilities and other functionally indivisible elements associated with the use of the building that do not belong to a flat, artist’s workshop or non-residential premises;

...

(8)  an artist’s workshop [shall mean] any non-residential premises in an apartment building which are marked as an artist’s workshop in the building inventory plan, which are not functionally associated with any of the flats existing in the building and which have their own walls, internal partition walls, ceilings, floors, interior, windows and doors, pipes, chimneys, parts of wires and other functionally indivisible parts of elements associated with the use of the building ...”

19.  Section 17 of the Law on the Privatisation of State and Local Self‑Government Apartment Buildings sets out the procedure for the privatisation of artists’ workshops. Up until 2000 it provided that such workshops could be privatised by their tenants:

“(1)  Any leased artist’s workshop shall be offered for privatisation to the lessee of the workshop.

(2)  A lessee of an artist’s workshop may privatise it if a claim for the termination of the lease contract has not been brought in court.

...”

20.  The amendments of 14 December 2000, which took effect on 31 December 2000, added that tenants of artists’ workshops could privatise the workshops if they had been built and declared operational pursuant to a building design approved in accordance with the procedures specified in regulatory enactments.

21.  Section 73 of the Law on the Privatisation of State and Local Self‑Government Apartment Buildings, as in force since 1 January 2000, provides that the privatisation of an artist’s workshop must be recognised as illegal if it was offered for privatisation in violation of the procedures for privatisation specified by that Law.

22.  On 10 May 2006 the Civil Department of the Senate of the Supreme Court in case no. SKC-241 ruled that the attic formed part of the shared property of a residential building and could not in itself be subject to privatisation as that would interfere with the rights and lawful interests of the flat owners. Property acquired by way of unlawful privatisation could not be the subject of any subsequent transactions, even if it had been converted into an artist’s workshop, because the rights of the flat owners prevailed.

23.  The instrument of ratification of the Convention and the Protocols thereto deposited by the Latvian Government on 27 June 1997 contains the following reservation:

“In accordance with Article 64 [now Article 57] of the Convention for the Protection of Human Rights and Fundamental Freedoms of 1950, the Republic of Latvia declares that the provisions of Article 1 of the First Protocol shall not apply to the laws on property reform which regulate the restoration or compensation to the former owners or their legal heirs of property nationalised, confiscated, collectivised or otherwise unlawfully expropriated during the period of Soviet annexation; and privatisation of collectivised agricultural enterprises, collective fisheries and of State and local self‑government owned property.

The reservation concerns ... the Law on the Privatisation of State and Local Self‑Government Apartment [Buildings] (Latvijas Vestnesis 1995, No. 103; 1996, No. 149; 1996, No. 223), ... and their wording being in force at the moment the Law on Ratification entered into force.”

24.  The Annex to the instrument of ratification provides a brief summary of the law in question:

“The Law on the Privatisation of State and Local Self-Government Apartment [Buildings] establishes the procedure for privatising State and local self-government apartment [buildings], and the goal is to develop the real estate market and stimulate the upkeep of apartment [buildings], while protecting the interests of residents.”

COMPLAINT

25.  The applicants complained under Article 1 of Protocol No. 1 to the Convention that they had been deprived of property that they had acquired in good faith.

THE LAW

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

27.  The Government argued that the applicants’ complaint fell outside the Court’s jurisdiction ratione materiae by virtue of Latvia’s reservation in respect of Article 1 of Protocol No. 1 to the Convention. In particular, the applicants’ complaint was covered by the second ground mentioned in the reservation – the privatisation of State and local self-government-owned property (see paragraphs 23-24 above). The applicants maintained their complaint.

28.  The Court recalls that it has found that the reservation at issue was valid under Article 57 of the Convention (see Kozlova and Smirnova v. Latvia (dec.), no. 57381/00, ECHR 2001-XI). In these circumstances, in order to conclude that it does not have jurisdiction to decide on a complaint under Article 1 of Protocol No. 1 by virtue of the reservation, the Court has to be satisfied that the following conditions have been fulfilled: (i) the laws on property reform mentioned in the reservation were applied in the domestic proceedings (in the present case the Law on the Privatisation of State and Local Self-Government Apartment Buildings); and (ii) the subject matter of the proceedings was the privatisation of the listed entities or property (see Liepājnieks v. Latvia (dec.), no. 37586/06, § 50, 2 November 2010).

29.  Applying the criteria for limitations on its jurisdiction arising from the reservation, the Court observes the following. First of all, the Civil Chamber of the Supreme Court determined the subject matter of the proceedings in the instant case as a “dispute ... about the privatisation of the artist’s workshop in the apartment building at [address], which the plaintiffs consider [to have been] illegal ... [and which] resulted in an unlawful decrease of the part of the building in their shared ownership” (see paragraph 14 above). The issue of privatisation was therefore determined by the domestic court to be the crux of the proceedings, regardless of the difference between the individual situations of the first applicant’s late husband and the third applicant, who were direct parties to the privatisation process (see paragraph 10 above), and the second applicant, who bought his shares in the “artist’s workshop” after the privatisation process was completed (see paragraph 11 above). Given that the domestic courts are better placed to establish the facts and interpret domestic law, the Court accepts the above finding of the Civil Chamber of the Supreme Court.

30.  Secondly, the Court further observes that the law on property reform mentioned in Latvia’s reservation, namely the Law on the Privatisation of State and Local Self-Government Apartment Buildings, was relied on by the flat owners (see paragraph 12 above) in support of their claim against the applicants. The law in question was also examined, interpreted and applied by the domestic courts (see paragraph 15 above).

31.  The Court notes, therefore, that both conditions excluding its jurisdiction ratione materiae by virtue of Latvia’s reservation in respect of Article 1 of Protocol No. 1 to the Convention have been met, making the reservation applicable to the particular circumstances of the instant case (compare and contrast, in the context of laws on property reform in Latvia which regulate the restoration or compensation to the former owners or their legal heirs of property nationalised, confiscated, collectivised or otherwise unlawfully expropriated during the period of Soviet annexation, Liepājnieks, cited above, §§ 43-57; Dzirnis v. Latvia, no. 25082/05, §§ 48-52, 26 January 2017; and Osipkovs and Others, cited above, §§ 55-59).

32.  It follows that the applicants’ complaint is incompatible ratione materiae with the provisions of the Convention and the Protocols thereto within the meaning of Article 35 § 3 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 14 March 2024.

 Martina Keller Georges Ravarani
 Deputy Section Registrar President

Appendix

List of cases

No.

Application no.

Case name

Lodged on

Applicant
Year of birth
Place of residence
Nationality

Represented by

1.

37536/16

Kotoviča v. Latvia

22/06/2016

Tatjana KOTOVIČA
1951
Riga
Latvian

Armands ZEPS

2.

37570/16

Maksimovs v. Latvia

22/06/2016

Andrejs MAKSIMOVS
1972
Riga
Latvian

Armands ZEPS

3.

37579/16

Ivanovs v. Latvia

22/06/2016

Kaspars IVANOVS
1970
Riga
Latvian

Armands ZEPS