MLADOST TURIST A.D. v. CROATIA

FIRST SECTION

DECISION

Application no. 73035/14
MLADOST TURIST A.D.
against Croatia

The European Court of Human Rights (First Section), sitting on 30 January 2018 as a Chamber composed of:

Linos-Alexandre Sicilianos, President,
Aleš Pejchal,
Krzysztof Wojtyczek,
Ksenija Turković,
Pauliine Koskelo,
Tim Eicke,
Jovan Ilievski, judges,
and Abel Campos, Section Registrar,

Having regard to the above application lodged on 13 November 2014,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant company,

Having deliberated, decides as follows:

THE FACTS

1. The applicant, Mladost Turist a.d. (hereafter “the applicant company”), is a commercial (joint stock) company incorporated under Serbian law, with its seat in Belgrade. It was represented before the Court by Ms R. Andrić, an advocate practising in Belgrade.

2. The Croatian Government (“the Government”) were represented by their Agent, Ms Š. Stažnik. The Government of Serbia, having been informed of their right to intervene (Article 36 § 1 of the Convention and Rule 44 § 1 (a) of the Rules of Court), did not avail themselves of this right.

A. The circumstances of the case

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

1. Background to the case

4. The legal system of the former Socialist Federal Republic of Yugoslavia (SFRY) distinguished between two types of ownership: private ownership (privatno vlasništvo) and social ownership (društveno vlasništvo). While owners of property in private ownership were private individuals (natural persons) and some private legal entities called “civil legal entities” (građanske pravne osobe) such as foundations, associations and religious communities, the owner of property in social ownership was not defined. Nevertheless, the federal State, the constituent Republics, municipalities being local government units and other various legal entities called “social legal entities” (društvene pravne osobe), among which the most important ones were companies, known at the time as “organisations of associated labour” (organizacije udruženog rada) and later on as “socially owned companies” (društvena poduzeća), were during the socialist period given certain quasi-ownership rights over property in social ownership, such as the right to use it (pravo korištenja), the right to administer it (pravo upravljanja) or the right to dispose of it (pravo raspolaganja).

5. The applicant company was established in 1978 in Belgrade as an “organisation of associated labour”. On 30 April 1991 it transformed itself under Serbian law into a commercial (joint stock) company whose shareholders were all private individuals.

6. The applicant company claimed that during the socialist period it had held a quasi-ownership right over eleven plots of land in social ownership (društveno vlasništvo) located in Tisno (Croatia), namely the right of use (pravo korištenja) of that land. At the time, the plots in question had formed the “Beograd” Children and Youth Resort operated by the applicant company.

7. On 8 October 1991 Croatia declared independence and severed all ties with the Socialist Federal Republic of Yugoslavia (hereafter “the SFRY”).

8. By a number of decrees adopted in the period between 17 July and 1 October 1991 the Government of Croatia prohibited companies or other legal entities with their seat in other republics of the former SFRY from undertaking any transactions involving assets (including immovable property) located in Croatia.

9. By Government of Croatia decree of 26 June 1992, which entered into force on the same day, all such assets of legal entities with their seats in Serbia or Montenegro were transferred to the State (see paragraph 23 below).

10. Relying on subsequent legislation that entered into force on 19 April 1994 (see paragraph 24 below), the Šibenik Municipal Court (Općinski sud u Šibeniku) on 8 June 1994 recorded in the land register the State as the owner of the plots of land at issue.

11. With the entry into force on 1 January 1997 of the Property Act, holders of existing quasi-ownership rights over socially-owned property (the rights to administer, use and dispose of it) ex lege became its owners (see paragraph 25 below). This did not apply to such rights which had been extinguished before that date, primarily by virtue of earlier legislative acts whereby social ownership of certain types of property (such as flats, agricultural land and sports facilities) was transformed into private ownership.

12. By a gift contract of 18 April 2001 the State transferred ownership of the land in question to the V.K. elementary school (hereafter “the elementary school”). On the basis of that contract, on 31 May 2002 the Šibenik Municipal Court registered the school as the owner of the land.

13. On 2 June 2004 the Agreement on Succession Issues between the successor States to the SFRY (hereafter “the Succession Agreement”) entered into force (see paragraph 26 below, and, for further details, Ališić and Others v. Bosnia and Herzegovina, Croatia, Serbia, Slovenia and the former Yugoslav Republic of Macedonia [GC], no. 60642/08, §§ 61-67, ECHR 2014). Annex G to the Agreement deals with private property and acquired rights. Article 2 § 1 of Annex G provides that successor States will recognise, protect and restore the rights to immovable property located on their territory to which citizens or other legal entities of the SFRY were entitled on 31 December 1990, and that anyone who is unable to enjoy such rights will be entitled to compensation. It also provides that any purported transfer of rights to immovable property made after 31 December 1990 will be deemed null and void (see paragraph 27 below).

14. Following an application by the relevant land-survey (geodetic) authorities of 21 November 2005, the Šibenik Municipal Court, by a decision of 22 February 2007, joined the eleven plots of land in question to form a single cadastral plot and recorded the change in the land register.

2. Proceedings in the present case

15. In 2007 the applicant company brought a civil action against the State and the elementary school (see paragraph 12 above) in the Šibenik Municipal Court, seeking restitution of the land in question. In particular, since all existing rights of use had been abolished and transformed into rights of ownership (see paragraph 11 above and paragraph 25 below), the applicant company sought to be declared the owner of the land. In the alternative, the company sought 4,000,000 euros (EUR) in compensation. It relied on Article 2 § 1 of Annex G to the Succession Agreement (see paragraph 12 above and paragraphs 26-27 below).

16. By a judgment of 30 September 2009 the Municipal Court dismissed the applicant company’s action. It found that during the socialist period the applicant company had held the right of use only in respect of one of the eleven plots of land which at the time had formed the “Beograd” Children and Youth Resort (see paragraph 6 above). During the socialist period the right of use in respect of the remaining plots had belonged to the Municipality of Belgrade (nine plots) and to the Belgrade Scouts Association (one plot). When the company had instituted civil proceedings in 2007, that plot had no longer existed as it had been joined to the remaining ten plots to form a single cadastral plot (see paragraph 14 above). This meant that the applicant company’s action had to be dismissed because it had been brought in respect of an inexistent item of property.

17. The applicant company appealed, arguing that during the socialist period the Municipality of Belgrade and the Belgrade Scouts Association had transferred to it the right of use in respect of the ten plots of land. It provided some documentary evidence to that effect. In any event, it was evident that the applicant company had operated and used the resort in the period before 1990 for more than ten years and thereby, under the legislation in force at the time, had acquired the right of use in respect of those ten plots by the operation of law. As regards the remaining plot in respect of which the Municipal Court had acknowledged that it had had the right of use, the applicant company argued that its civil action should not have been dismissed just because that plot had been joined with the remaining ten to form a single plot of land.

18. On 28 February 2011 the Šibenik County Court (Županijski sud u Šibeniku) dismissed the applicant company’s appeal and upheld the first‑instance judgment. It held that the applicant company had not provided sufficient evidence to overturn the Municipal Court’s finding that the company had not held the right of use in respect of the ten plots of land. The County Court, however, agreed with the applicant company’s argument that its civil action regarding the remaining plot of land should not have been dismissed on the grounds stated by the Municipal Court. Nonetheless, the applicant company’s action had to be dismissed because the State had lawfully become the owner of that plot on the basis of the decree of 26 June 1992 and the legislation of 19 April 1994 (see paragraphs 9-10 above and 21‑22 below). The applicant company’s right of use had thereby been extinguished and thus could not have been transformed into a right of ownership on the basis of the transitional provisions of the 1996 Property Act, which had entered into force on 1 January 1997 (see paragraphs 11 above and 25 below). Lastly, the applicant company could not have relied on Annex G of the Succession Agreement either, because that agreement was not directly applicable.

19. By a judgment of 16 January 2013 the Supreme Court (Vrhovni sud Republike Hrvatske) dismissed a subsequent appeal on points of law (revizija) lodged by the applicant company. The relevant part of that judgment reads as follows:

“Pursuant to section 362(1) of the Property Act the owner of a socially-owned immovable property is the [legal entity] recorded in the land register as the holder of the right to administer, use or dispose of that immovable property.

However, this statutory presumption does not operate in favour of the plaintiff.

The plaintiff’s right of use ... could not have been transformed into a right of ownership with the entry into force of the Property Act (1 January 1997) because the plaintiff had already lost the right of use before that, on the basis of section 3(1) of the [Government] Decree [of 26 June 1992].

...

In the light of the foregoing, the right of use ... was extinguished and was transformed into a right of ownership of the first defendant [i.e. the State] before the entry into force of the Property Act.

Lastly, as regards the application of Annex G to the Succession Agreement, on which the plaintiff relies, its provisions do not entitle the plaintiff to seek from the [first] defendant recognition of its [i.e the plaintiff’s] right of ownership, ... deletion of the [second] defendant’s right of ownership or [to make] further claims under the law of obligations [i.e. to seek compensation].

...

The plaintiff did not acquire the right of ownership on the basis of the Succession Agreement itself because that right still needs to be recognised. This clearly follows from the last sentence of Article 2 § 1 subparagraph (a) of Annex G which reads: ‘Persons unable to realise such rights shall be entitled to compensation in accordance with civil and international legal norms.’

Therefore, the plaintiff’s right of ownership still has to be recognised, whereupon the competent authority should decide either to return the property or to recognise the right to compensation.

In this connection it should be mentioned that under section 3(1) of the Succession Agreement Ratification Act, its implementation is within the jurisdiction of the State authorities citied therein and not of the courts.”

20. The applicant company then lodged a constitutional complaint against the Supreme Court’s judgment. It relied on Articles 48 and 50 of the Croatian Constitution (see paragraph 22 below) and on Article 1 of Protocol No. 1 to the Convention.

21. By a decision of 14 May 2014 the Constitutional Court (Ustavni sud Republike Hrvatske) declared inadmissible the applicant company’s constitutional complaint. It held that the case did not raise any constitutional issues.

B. Relevant domestic and international law and practice

1. The Constitution

22. The relevant Articles of the Constitution of the Republic of Croatia (Ustav Republike Hrvatske, Official Gazette no. 56/90, with subsequent amendments) read:

Article 48

“The right of ownership shall be guaranteed.

Ownership entails obligations. Owners and users of property shall contribute to the general welfare.”

Article 50

“1. Ownership may be restricted or taken in accordance with the law and in the interests of the Republic of Croatia, subject to the payment of compensation equal to the market value.

2. Entrepreneurial freedom and ownership rights may, on an exceptional basis, be restricted by law for the protection of the interests and security of the Republic of Croatia, nature, the environment or public health.”

Article 134

“International agreements in force which have been concluded and ratified in accordance with the Constitution and made public shall be part of the internal legal order of the Republic of Croatia and shall have precedence over the [domestic] statutes. ...”

2. Relevant legislation

(a) Legislation governing the transfer of property of legal entities established in Serbia or Montenegro to the State

23. The relevant provision of the Government Decree of 26 June 1992 prohibiting transactions with, and taking over assets of, certain legal entities on the territory of Croatia (Uredba o zabrani raspolaganja i preuzimanja sredstava određenih pravnih osoba na teritoriju Republike Hrvatske, Official Gazette no. 40/92 with subsequent amendments), reads as follows:

Section 3

“The assets of business units and other organisational forms of legal entities with their seat in the territory of Serbia or Montenegro and the autonomous provinces of Kosovo and Vojvodina ... are [hereby] transferred to the Republic of Croatia.”

24. On 24 March 1994 Croatian Parliament passed legislation with the same name (Zakon o zabrani raspolaganja i preuzimanju sredstava određenih pravnih osoba na teritoriju Republike Hrvatske, Official Gazette no. 29/94). The relevant provision of that Act reads as follows:

Section 10

“The courts shall of their own motion record [in the land register] the immovable property of which the Republic of Croatia became the owner on the basis of section 3(1) of the [Government] Decree [of 26 June 1992].”

(b) Property Act

25. The relevant transitional provisions of the Ownership and Other Rights in Rem Act (Zakon o vlasništvu i drugim stvarnim pravima, Official Gazette no. 91/96 with subsequent amendments – “the 1996 Property Act”), in force since 1 January 1997, are set out in the case of Trgo v. Croatia, no. 35298/04, § 28, 11 June 2009.

3. Agreement on Succession Issues

26. The relevant articles of the Agreement on Succession Issues between the successor States to the SFRY read as follows:

Article 4

“(1) A Standing Joint Committee of senior representatives of each successor State, who may be assisted by experts, is hereby established.

(2) This Committee shall have as its principal tasks the monitoring of the effective implementation of this Agreement and serving as a forum in which issues arising in the course of its implementation may be discussed. The Committee may as necessary make appropriate recommendations to the Governments of the successor States.

...”

Article 5

“(1) Differences which may arise over the interpretation and application of this Agreement shall, in the first place, be resolved in discussion among the States concerned.

(2) If the differences cannot be resolved in such discussions within one month of the first communication in the discussion the States concerned shall either

(a) refer the matter to an independent person of their choice, with a view to obtaining a speedy and authoritative determination of the matter which shall be respected and which may, as appropriate, indicate specific time-limits for actions to be taken; or

(b) refer the matter to the Standing Joint Committee established by Article 4 of this Agreement for resolution.

(3) Differences which may arise in practice over the interpretation of the terms used in this Agreement or in any subsequent agreement called for in implementation of the Annexes to this Agreement may, additionally, be referred at the initiative of any State concerned to binding expert solution, conducted by a single expert (who shall not be a national of any party to this Agreement) to be appointed by agreement between the parties in dispute or, in the absence of agreement, by the President of the Court of Conciliation and Arbitration within the OSCE. The expert shall determine all questions of procedure, after consulting the parties seeking such expert solution if the expert considers it appropriate to do so, with the firm intention of securing a speedy and effective resolution of the difference.

(4) The procedure provided for in paragraph (3) of this Article shall be strictly limited to the interpretation of terms used in the agreements in question and shall in no circumstances permit the expert to determine the practical application of any of those agreements. In particular the procedure referred to shall not apply to

(a) The Appendix to this Agreement;

(b) Articles 1, 3 and 4 of Annex B;

(c) Articles 4 and 5(1) of Annex C;

(d) Article 6 of Annex D.

(5) Nothing in the preceding paragraphs of this Article shall affect the rights or obligations of the Parties to the present Agreement under any provision in force binding them with regard to the settlement of disputes.”

Article 6

“The Annexes to this Agreement and the Appendices to the Agreement and Annexes are an integral part of the Agreement.”

Article 7

“This Agreement, together with any subsequent agreements called for in implementation of the Annexes to this Agreement, finally settles the mutual rights and obligations of the successor States in respect of succession issues covered by this Agreement. The fact that it does not deal with certain other non-succession matters is without prejudice to the rights and obligations of the States parties to this Agreement in relation to those other matters.”

Article 8

“Each successor State, on the basis of reciprocity, shall take the necessary measures in accordance with its internal law to ensure that the provisions of this Agreement are recognised and effective in its courts, administrative tribunals and agencies, and that the other successor States and their nationals have access to those courts, tribunals and agencies to secure the implementation of this Agreement.”

Article 9

“This Agreement shall be implemented by the successor States in good faith in conformity with the Charter of the United Nations and in accordance with international law.”

27. The relevant Articles of Annex G to the Succession Agreement read as follows:

ANNEX G

Private Property and Acquired Rights

Article 1

“Private property and acquired rights of citizens and other legal persons of the SFRY shall be protected by successor States in accordance with the provisions of this Annex.”

Article 2

(1) (a) The rights to movable and immovable property located in a successor State and to which citizens or other legal persons of the SFRY were entitled on 31 December 1990 shall be recognised, and protected and restored by that State in accordance with established standards and norms of international law and irrespective of the nationality, citizenship, residence or domicile of those persons. This shall include persons who, after 31 December 1990, acquired the citizenship of or established domicile or residence in, a State other than a successor State. Persons unable to realize such rights shall be entitled to compensation in accordance with civil and international legal norms.

(b) Any purported transfer of rights to movable or immovable property made after 31 December 1990 and concluded under duress or contrary to sub-paragraph (a) of this Article shall be null and void.

...”

Article 4

“The successor States shall take such action as may be required by general principles of law and otherwise appropriate to ensure the effective application of the principles set out in this Annex, such as concluding bilateral agreements and notifying their courts and other competent authorities.”

28. Section 3(1) of the Succession Agreement Ratification Act (Zakon o potvrđivanju Ugovora o pitanjima sukcesije, Official Gazette – International Agreements no. 2/04) entrusts its implementation to the Ministry of Finance, the Croatian National Bank, the Ministry of Foreign Affairs, the Ministry of Defence, the Ministry of Health and Social Welfare, the Ministry of Justice, the Ministry of Culture, the State Archive and other State authorities responsible for the issues covered by the Agreement.

29. At the meetings of the Standing Joint Committee, established under Article 4 of the Succession Agreement (see paragraph 23 above) held on 17‑18 September 2009 and 11-12 November 2015, the committee adopted recommendations concerning, inter alia, Annex G to the Agreement. The committee noted that the application of the provisions of Annex G was not efficient enough, and recommended that the interested successor States conclude bilateral agreements for the purpose of the efficient implementation of those provisions. It also advised them to refrain from passing any legislation or undertaking any steps contrary to the provisions of Annex G, and to adopt, should they deem it necessary, measures intended to enable the effective application of Annex G standards.

4. The Constitutional Court’s practice

30. In decision no. U-I-1777/2003 of 17 March 2009 the Constitutional Court held as follows:

“... The Constitutional Court notes that the entry into force of the [Succession] Agreement did not remove the legal effects associated with taking over the assets of certain legal entities on the territory of Croatia produced by the entry into force of the [Government of Croatia] Decree [of 26 June 1992] ... nor did the Contracting Parties by that Agreement explicitly undertake to return those assets. They only established the principle of equal protection of the property of natural [persons] and legal [entities] with the nationality of, or their seat in, the territory of the other Contracting party [thereby granting them the same level of protection] as the one enjoyed by their nationals and legal entities.

The said Agreement merely constitutes a basis for the conclusion of further agreements between the Contracting Parties with a view to regulating the procedure for exercising the right to compensation for damaged, destroyed or lost property, but is not an instrument suitable for direct application in each particular case.

...

The Constitutional Court ... reiterates that Annex G stipulates only the fundamental principles underlying the succession issues related to private property and acquired rights of citizens and other legal entities. This undoubtedly stems from Article 4 of Annex G, which stipulates that the successor States should take such measures as may be required by general principles of law and otherwise appropriate to ensure the effective application of the principles set out in that Annex, such as concluding bilateral agreements and notifying their courts and other competent authorities.

... [these] measures entail the adoption of appropriate legislation and subordinate legislation, concluding international agreements and the like. In so doing, all the successor States are obliged to implement the Agreement in good faith, in accordance with the UN Charter and international law.”

COMPLAINTS

31. The applicant company complained under Article 1 of Protocol No. 1 to the Convention that it had been deprived of its property, and that the Croatian authorities had refused to return it pursuant to the Succession Agreement.

32. The applicant company further complained under Article 14 of the Convention that it had been discriminated against as a Serbian company.

33. Lastly, the applicant company complained that it had not had an effective remedy to protect its right to peaceful enjoyment of its possessions.

THE LAW

A. Alleged violation of Article 1 of Protocol No. 1 to the Convention

34. The applicant company complained that the Croatian authorities had first deprived it of its property in Croatia and transferred it to the Croatian State, and had subsequently, after the Succession Agreement had entered into force, refused to return the property or to pay appropriate compensation for it. It relied on Article 1 of Protocol No. 1, which reads as follows:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

35. The Government disputed the admissibility of this complaint, arguing that it was incompatible ratione temporis and materiae with the provisions of the Convention.

1. Submissions by the parties

(a) The Government

36. The Government first submitted that the applicant company’s property complaint was incompatible ratione temporis. Regardless of whether, during the socialist period, the applicant company had held the right of use in respect of one or all of the plots forming the children and youth resort, that right had been extinguished when the land at issue had passed into State ownership by virtue of the decree of 26 June 1992 and the legislation of 24 March 1994 (see paragraphs 23 and 24 above). That had been before the Convention entered into force in respect of Croatia on 5 November 1997. Even assuming that the applicant company had thereby been deprived of its “possessions” within the meaning of Article 1 of Protocol No. 1 to the Convention, according to the Court’s case-law deprivation of property was in principle an instantaneous act which did not produce a continuing situation. The Government referred in this connection to Malhous v. the Czech Republic ((dec.) [GC], no. 33071/96, ECHR 2000‑XII) and Ostojić v. Croatia ((dec.), no. 16837/02, ECHR 2002‑IX). Furthermore, the domestic courts’ decisions in the applicant company’s case had merely highlighted the legal effects which that decree and that legislation had already produced before Croatia’s ratification of the Convention. Those decisions had therefore not been acts “constitutive of the interference” within the meaning of the Court’s case-law (Blečić v. Croatia [GC], no. 59532/00, § 77, ECHR 2006‑III).

37. As regards their second inadmissibility objection based on incompatibility ratione materiae (see paragraph 35 above), the Government first submitted that the Convention imposed no specific obligation on the Contracting States to provide redress for wrongs or damage caused prior to their ratification of the Convention. They referred in this connection to Kopecký v. Slovakia ([GC], no. 44912/98, § 38, ECHR 2004-IX). The Government then went on to argue that the applicant company’s claim seeking to have the land in question returned to it or, in the alternative, to receive appropriate compensation, had not had a sufficient basis in national or international law for the land to be regarded as an “asset” and therefore a “possession” attracting the guarantees of Article 1 of Protocol No. 1 to the Convention. In particular, the applicant company had not acquired any right amounting to a “possession” by virtue of the ratification of Annex G to the Succession Agreement. That was so because:

- the applicant company’s right over the land at issue could not have been transformed into the right of ownership;

- Annex G of the Succession Agreement was not directly applicable, that is, it did not confer any rights to natural persons or legal entities within the territory of the former SFRY; and

- even if Annex G was directly applicable, it was far from clear whether the applicant company would have had any right to restitution of or compensation for the land in question.

38. As regards the first argument, the Government referred to the findings of the domestic courts, according to which during the socialist period the applicant company had held the right of use only in respect of one of the eleven plots of land which at the time formed the children and youth resort (see paragraphs 16 and 18 above). It thus could not have become the owner of all the remaining plots by transforming its right of use in respect of that one plot, it being understood that all eleven plots had eventually been joined to form a single plot of land (see paragraph 14 above). The applicant company’s arguments to the contrary (see paragraph 42 below in conjunction with paragraph 17 above) challenged the factual findings and the application of the domestic law by the domestic courts, which was not for the Court to examine.

39. As regards the second argument, the Government referred to the reasons advanced by the domestic courts in the present case as to why Annex G of the Succession Agreement was not directly applicable (see paragraphs 18-19 above). The Government added that from the Court’s decision in the case of Croatian Chamber of Economy v. Serbia ((dec.), no. 819/08, § 14, 25 April 2017) it was evident that the Serbian courts had adopted the same view.

40. Lastly, as regards the third argument, the Government emphasised that in the socialist period the land in question had been in social ownership, it being understood that private ownership (including that of land) was also recognised in the former SFRY. That being so, it was far from obvious that Annex G of the Succession Agreement applied to the rights which various public entities had held during the socialist period in respect of socially‑owned property.

41. For those reasons, the Government urged the Court to declare the applicant company’s property complaint inadmissible as incompatible ratione temporis and materiae with the provisions of the Convention.

(b) The applicant company

42. The applicant company first submitted that on 30 April 1991 it had transformed itself under Serbian law from a socially-owned company into a commercial (that is, privately-owned) joint stock company (see paragraph 5 above). That had entailed the transformation of its existing rights of use into ownership rights. The applicant company argued that under the rules of private international law, such transformation was governed by the laws of the State where the legal entity undergoing the transformation had its registered office. In the present case this was the Serbian law, the effects of which had therefore also extended to the applicant company’s land located in Croatia. Thus the decree of 26 June 1992 and the legislation of 24 March 1994 (see paragraphs 23-24 above) had unjustifiably deprived the applicant company of its private ownership of the land in question, and not of its earlier right of use held while the land had been in social ownership.

43. The applicant company further contested the Government’s argument that Annex G of the Succession Agreement applied only to property in private ownership (see paragraph 40 above). On the contrary, its title, which referred not only to private property but also to acquired rights, suggested the opposite.

44. The applicant company submitted that its property complaint was compatible ratione temporis because deprivation of ownership had given rise to a continuing situation, which still persisted to the present day.

45. Moreover, under both Croatian and international law, notably under the Croatian Constitution (see paragraph 22 above) and Annex G of the Succession Agreement (see paragraph 27 above), the taking of property by the State entailed an obligation to pay fair compensation. That obligation had thus either continued to exist under the domestic law, or had arisen on the basis of the Succession Agreement, after the ratification of the Convention by Croatia on 5 November 1997. The ways in which the corresponding right to such compensation could be exercised were set out in the existing domestic legislation containing general rules of civil law. Annex G of the Succession Agreement had thus not required any implementing measures. What is more, had the Annex required implementing measures, the States signatories would have agreed on time‑limits for the adoption of such measures. Annex G did not contain any such time-limits.

46. The foregoing arguments (see the preceding paragraph) demonstrated that Annex G was directly applicable. The Government’s argument to the contrary (see paragraph 39 above), relying on the reasons given by the domestic courts which had established that Annex G required the adoption of a bilateral agreement, could not be accepted because such agreement had not been concluded for more than thirteen years after the Succession Agreement’s entry into force and might never be concluded. To accept that argument by the Government would mean to allow Annex G to remain unenforced for many years or even forever, and to allow the States signatories to obstruct its enforcement without sanction. That was contrary to the principle that the Convention was intended to guarantee rights that were practical and effective.

47. The applicant company also contested the Government’s related argument that the Serbian courts had, like the Croatian authorities, considered that Annex G was not directly applicable (see paragraph 39 above). That argument by the Government had been based on only a few cases, whereas it was a well-known fact that the Serbian authorities (a special commission of the Government of Serbia and the commercial courts) had adopted several decisions whereby property located in Serbia had been returned to Croatian legal entities to which it had previously belonged.

48. In sum, the applicant company concluded, their claim to receive appropriate compensation for the land in question had a sufficient basis in national or international law for it to be regarded as an “asset” and therefore a “possession” attracting the guarantees of Article 1 of Protocol No. 1 to the Convention.

2. The Court’s assessment

49. The Court does not find it necessary to decide whether the right (be it the right of use or the right of ownership) the applicant company claimed to have had in respect of the land in question could be considered a “possession”, thus attracting the guarantees of Article 1 of Protocol No. 1 to the Convention. Nor does the Court find it necessary to decide whether the applicant company held that right in respect of only one plot or all eleven plots of land that were joined to form a single plot in 2005 (see paragraph 14 above). In the present case that right was, or would have been in any event, extinguished on 26 June 1992 when the Government decree of the same date entered into force with the effect of the State becoming the owner of the land (see paragraphs 8-9 and 23-24 above). That was before Croatia’s ratification of the Convention on 5 November 1997.

50. It follows that in so far as this complaint concerns the alleged deprivation of property, it is incompatible ratione temporis with the provisions of the Convention within the meaning of Article 35 § 3 (a) and must be rejected pursuant to Article 35 § 4 thereof.

51. The applicant company, relying on Annex G to the Succession Agreement, also complained that the domestic authorities had refused either to return the land in question or to pay compensation for it. In this connection, the Court first reiterates that the Convention imposes no specific obligation on the Contracting States to provide redress for wrongs or damage caused prior to their ratification of the Convention (see Kopecký, cited above, § 38). Therefore, Article 1 of Protocol No. 1 cannot be interpreted as imposing any general obligation on the Contracting States to restore property which was transferred to them before they ratified the Convention (ibid, § 35, and Preußische Treuhand GmbH and Co. KG a.A. v. Poland (dec.), no. 47550/06, 7 October 2008).

52. However, once a Contracting State, having ratified the Convention including Protocol No. 1, enacts legislation providing for the full or partial restoration of property appropriated before ratification, such legislation may be regarded as generating a new property right protected by Article 1 of Protocol No. 1 for persons satisfying the requirements for entitlement (ibid.). The Court notes that the applicant company derives its proprietary interest from an international agreement, from which certain provisions would give, in the applicant’s view, rise to property rights. It follows that, to the extent that the applicant company relies on the Succession Agreement (see paragraphs 15, 26-27, 30, 34 and 45-47 above), its proprietary interest cannot be characterised as an “existing possession” within the meaning of the Court’s case-law.

53. The Court reiterates in this regard that where a proprietary interest is in the nature of a claim, it may be regarded as an “asset” and therefore a “possession” attracting the guarantees of Article 1 of Protocol No. 1 to the Convention, only if there is a sufficient basis for that interest in national law, that is, when the claim is sufficiently established to be enforceable (ibid, §§ 49 and 52, and Stran Greek Refineries and Stratis Andreadis v. Greece, 9 December 1994, § 59, Series A no. 301‑B).

54. The Court notes that in the applicant company’s case, the Šibenik County Court and the Supreme Court held that the Succession Agreement, in particular its Annex G, required the adoption of measures to facilitate implementation (see paragraphs 18-19 above). This interpretation is generally in line with the one adopted by the Constitutional Court, according to which the Succession Agreement was not an instrument suitable for direct application, as it required implementing measures in the form of legislation, bilateral agreements and the like (see paragraph 30 above).

55. The Court also notes that the Standing Joint Committee, established under Article 4 of the Succession Agreement recommended that interested successor States conclude bilateral agreements for the purpose of the efficient implementation of its Annex G (see paragraph 29 above).

56. The Court reiterates in this connection that it is primarily for the national authorities, notably the courts, to interpret and apply domestic law. This also applies where international treaties are concerned; it is for the implementing party to interpret the treaty. In this respect it is not the Court’s task to substitute its own judgment for that of the domestic authorities, even less to settle a dispute between the parties to the treaty as to its correct interpretation (see Slivenko v. Latvia [GC], no. 48321/99, § 105, ECHR 2003‑X).

57. That being so, the Court notes that Croatia has not yet concluded any bilateral agreements or adopted any implementing legislation to give effect to Article 2 of Annex G to the Succession Agreement. It thus considers that neither the applicant company’s claim to be declared the owner of the land in question nor its claim for compensation has a sufficient basis in national law, or in the international agreements which are part of the internal legal order (see Article 134 of the Croatian Constitution in paragraph 22 above), to be regarded as an “asset” and therefore a “possession” attracting the guarantees of Article 1 of Protocol No. 1 to the Convention (compare with, for example, X, Y and Z v. Germany, no. 7694/76, Commission decision of 14 October 1977, Decisions and Reports (DR) 12, p. 131; and S.C. v. France, no. 20944/92, Commission decision of 20 February 1995, DR 80, p. 78).

58. It follows that to the extent that this complaint concerns the domestic authorities’ refusal to return the property to the applicant company or pay compensation for it, it 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 thereof.

B. Other alleged violations of the Convention

59. The applicant company also complained of discrimination on account of it being a Serbian company, and of the lack of an effective remedy to protect its property rights. It relied on Articles 13 and 14 of the Convention, which read as follows:

Article 13

“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”

Article 14

“The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”

60. The Government disputed the admissibility of these complaints by raising the same objections as those raised in respect of the applicant company’s main complaint above (see paragraph 35). In addition, the Government disputed the admissibility of the discrimination complaint by arguing that the applicant company had failed to exhaust domestic remedies. The applicant company contested those arguments.

61. The Court does not find it necessary to reproduce the parties’ arguments in detail, as these complaints are in any event inadmissible for the following reasons.

62. The Court notes that Article 13 of the Convention does not contain a general guarantee of legal protection of all substantive rights. It relates exclusively to those cases in which an applicant alleges, on arguable grounds, that one of his rights or freedoms set forth in the Convention has been violated (see, for example, Gavella v. Croatia (dec.), no. 33244/02, ECHR 2006‑XII (extracts)).

63. Likewise, Article 14 of the Convention has no independent existence since it has effect solely in relation to “the enjoyment of the rights and freedoms” safeguarded by other substantive provisions of the Convention. Although the application of Article 14 does not presuppose a breach of those provisions – to this extent it is autonomous – there can be no room for its application unless the facts at issue fall within the ambit of one or more of the latter (see, for example, Jantner v. Slovakia, no. 39050/97, § 40, 4 March 2003).

64. The Court further refers to its findings above (see paragraphs 49-58) according to which the applicant company’s main complaint under Article 1 of Protocol No. 1 to the Convention is outside its competence ratione temporis and materiae.

65. It follows that this part of the application is also incompatible ratione temporis and materiae with the provisions of the Convention within the meaning of Article 35 § 3 (a) and must be rejected pursuant to Article 35 § 4 thereof.

For these reasons, the Court, unanimously,

Declares the application inadmissible.

Done in English and notified in writing on 22 February 2018.

Abel CamposLinos-Alexandre Sicilianos
RegistrarPresident

Full & Egal Universal Law Academy