SECOND SECTION
DECISION
Application no. 19854/06
MUNCITORUL GROSUL
against the Republic of Moldova
The European Court of Human Rights (Second Section), sitting on 17 May 2016 as a Committee composed of:
Nebojša Vučinić, President,
Valeriu Griţco,
Stéphanie Mourou-Vikström, judges,
and Milan Blaško, Acting Deputy Section Registrar,
Having regard to the above application lodged on 21 April 2006,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,
Having deliberated, decides as follows:
THE FACTS
1. The applicant, Muncitorul Grosul, is a company registered in Moldova and located in Chişinău. It was represented before the Court by Mr A. Postica, a lawyer practising in Chişinău. The Moldovan Government (“the Government”) were represented by their Agent, Mr V. Grosu.
A. The circumstances of the case
2. The facts of the case, as submitted by the parties, may be summarised as follows.
3. On 2 November 1993 the applicant company concluded a contract with the Moldovan Institute of Cardiology (“MIC”), according to which it undertook to carry out major repairs to a building (a scientific laboratory measuring 125 sq. m) belonging to MIC and to carry out additional works on the underlying land in the amount of 101,800 Moldovan lei (MDL) (the equivalent of 8,144 euros (EUR) at that time). The parties agreed in general terms that in event of a change in the repair costs due to an increase in prices, inflation or a Government decision, the contractual price was to be recalculated accordingly. In a separate agreement of the same date the parties agreed that instead of receiving payment for the repair works, the applicant company had the right to rent half of the building and part of the land for ten years, without paying any rent as long as the cost of the repairs exceeded the rental price.
4. On the same date, the parties signed a contract for the rental of half of the building by the applicant company.
5. On 6 December 1995 the parties signed an annex to the rental contract, according to which they agreed that, in view of the serious increase in the repair costs, the repairs were to be finished by 30 December 1995, and a revaluation of the repair cost was to be carried out. The annex also noted that the rental price was to be determined, starting from 1 January 1996, in accordance with the decision of the Ministry of Economy no. 7 (10 March 1995) and no. 07- 478 (31 March 1995).
6. On 2 January 1996 half of the building was transferred to MIC.
7. In March 1999 MIC instituted court proceedings against the applicant company, seeking to increase the rental price – in accordance with the State Budget Law for 1996 – from MDL 963 (the equivalent of EUR 77 at that time) to MDL 3,475 (EUR 278 at that time) a month. The applicant company lodged a counter-action, claiming a revaluation of the repair costs in accordance with the contract and the annexes thereto considering the effects of inflation.
8. The first set of proceedings ended on 2 October 2002 with a final decision of the Supreme Court of Justice which remitted the case for fresh examination.
9. In the reopened proceedings, the Economic Court asked for an expert report to be made in order to revaluate the costs of the repair works carried out by the applicant company. The report of 9 April 2004 noted inter alia that MIC allegedly owed the applicant company MDL 685,279 (EUR 46,554 at that time) due to inflation.
10. On 7 April 2005 the District Economic Court partly accepted each of the parties’ claims, and also granted the applicant company’s claim that MIC should pay compensation for the effect of inflation. Thus, the court ordered the applicant company to pay MDL 277,465 (EUR 17,062 at that time) to MIC for rental, and MIC was bound to pay the applicant company MDL 139,831 (EUR 8,598 at that time) as costs for repair works. However, given that the compensation for the effects of inflation, as sought by the applicant company according to the above expert report, seriously exceeded the actual amount spent on the repairs, the court ordered MIC to pay only MDL 300,000 (EUR 18,448 at that time) in that respect.
11. On 21 May 2005 the Economic Court of Appeal partly quashed the judgment of 7 April 2005. It rejected the applicant company’s claim for compensation for the effect of inflation, while upholding the remainder of the lower court’s judgment. The appellate court found that – under Article 602 of the new Civil Code (in force since 12 June 2003) – in order to claim compensation for the effects of inflation, the aggrieved party should have proven that the other party had not fulfilled an obligation in due time, being thus also responsible for the delay. It went on noting that in the present case the modification of the rental price had not been decided unilaterally by MIC but had been decided by Parliament in the annual Budget laws. The court also noted that the applicant company continued to occupy the rented premises without paying rent. As to the expert report, the Economic Court of Appeal rejected it since it was not binding on the court, pointing that the expert had failed to expressly mention the legal provisions on which he had based his calculations on inflation.
12. In its appeal on points of law the applicant company argued that it was unfair for the courts to accept MIC’s power to increase the rental price and at the same time to refuse to increase the value of the repairs made with reference to inflation.
13. On 10 November 2005 the Supreme Court of Justice upheld the appellate court’s decision of 21 May 2005. In respect of the claim for compensation for the effects of inflation, it found that the law did not provide for a procedure to re-calculate the construction costs by taking inflation into account. The Supreme Court also rejected the expert report, because “the expert had not indicated the legal norm as the basis for his findings”. Moreover, it reiterated that the expert report was not binding on the court and was just one piece of evidence to be assessed alongside other evidence. The Supreme Court dismissed the applicant company’s complaint of unfair treatment in the refusal of its claim for compensation for the effects of inflation while accepting MIC’s right to raise the rental. It found that the decision to increase the rental price had been the result of the State Budget Law and the decision of the Ministry of Finance, and not merely a unilateral amendment by MIC.
B. Relevant domestic law
14. The relevant provisions of the old Civil Code, in force before 12 June 2003, read as follows:
“Article 157.
A contract shall be considered as concluded if the parties have agreed, in the form required for the relevant cases, on all of its essential points.
... A contract can be concluded by accepting to execute an order ...”
“Article 215.
In the case of a failure to fulfil or of an incorrect fulfilment of an obligation by the debtor, he shall compensate for the damage caused to the creditor.
Damages shall include the creditor’s expenses, the loss or deterioration of his property, as well as lost income, which the creditor could have obtained had the obligation been fulfilled by the debtor.”
15. Article 602 of the new Civil Code, in force since 12 June 2003, reads as follows:
“(1) If he fails to fulfil an obligation, the debtor shall compensate the creditor for the damage caused if he does not prove that he could not be held responsible for that failure.
(2) Failure to fulfil [the obligation] shall include any breach of the obligation, including incorrect or belated fulfilment. ...”
COMPLAINTS
16. The applicant company complained under Article 6 of the Convention of a violation of the principle of equality of arms.
17. The applicant company also complained of a violation of Article 1 of Protocol No. 1 to the Convention due to the domestic courts’ refusal to award the requested amount considering the inflation.
THE LAW
A. Alleged violation of Article 6
18. In its initial application the applicant company made a complaint under Article 6 of the Convention. However, in its subsequent observations it did not make any comments in that respect and asked the Court to find a violation of Article 1 of Protocol No. 1 to the Convention alone. In view of the fact that the applicant company did not pursue its complaint under Article 6 of the Convention, the Court will not examine it.
B. Alleged violation of Article 1 of Protocol No. 1
1. The parties’ submissions
19. The applicant company submitted that it had had a legitimate expectation of obtaining the sum claimed in court since it corresponded to the effects of inflation on its initial investment into the repair of MIC’s building.
20. The Government claimed that the applicant’s complaint was inadmissible as manifestly ill-founded arguing that the applicant company could not have a legitimate expectation of obtaining compensation for the effect of inflation in the circumstances of the present case because there had been no legal provision in that respect.
2. The Court’s assessment
21. The Court reiterates that an applicant can allege a violation of Article 1 of Protocol No. 1 only in so far as the impugned decisions related to his “possessions” within the meaning of this provision. “Possessions” can be either “existing possessions” or assets, including claims, in respect of which the applicant can argue that he or she has at least a “legitimate expectation” of obtaining effective enjoyment of a property right. Where the proprietary interest is in the nature of a claim, it may be regarded as an “asset” only where it has a sufficient basis in national law, for example where there is settled domestic case-law confirming it (see, amongst many authorities, Gratzinger and Gratzingerova v. the Czech Republic (dec.) [GC], no. 39794/98, § 69, ECHR 2002‑VII; Brosset-Triboulet and Others v. France [GC], no. 34078/02, § 66, 29 March 2010; and Maria Atanasiu and Others v. Romania, nos. 30767/05 and 33800/06, §§ 134 and 137, 12 October 2010). Similarly, no legitimate expectation can be said to arise where there is a dispute as to the correct interpretation and application of domestic law and the applicant’s submissions are subsequently rejected by the national courts (Kopecký v. Slovakia [GC], no. 44912/98, § 50, ECHR 2004‑IX, and Anheuser-Busch Inc. v. Portugal [GC], no. 73049/01, § 65, ECHR 2007‑I). As the Court has stated many times, there is a difference between a mere hope, however understandable that hope may be, and a legitimate expectation, which must be of a more concrete nature and be based on a legal provision or have a solid basis in the domestic case-law (Von Maltzan and Others v. Germany (dec.) [GC], nos. 71916/01, 71917/01 and 10260/02, § 112, ECHR 2005‑V).
22. Turning to the circumstances of the present case, under the old and the new legislation, i.e. Article 215 of the old Civil Code, and Article 602 of the new Civil Code (see paragraphs 14 and 15 above), one mandatory condition for claiming any compensation would be a failure by the other contracting side to fulfil its obligations. However, as established by the domestic courts, MIC had not undertaken any measures not to fulfil all of its obligations under the 1995 contract. The increase in the rent was not a result of its own decision but that of Parliament, being yearly included in the State Budget Law. Therefore, as confirmed by the domestic courts, MIC could not be blamed for such changes.
23. The domestic courts adopted well-reasoned decisions, and rejected the expert findings since the latter had not indicated the legal basis which had served for the respective calculations. Moreover, the applicant company did not prove the existence of a constant domestic case-law in its favour in the circumstances of the present case.
24. In view of the above considerations, the applicant company clearly had neither a “possession” under Article 1 of Protocol No. 1 nor a legitimate expectation under the relevant domestic law, as duly applied and interpreted by the domestic authorities, of obtaining compensation for the effect of inflation on its initial investment into the repair of MIC’s building. Consequently, the facts of the case do not fall within the ambit of Article 1 of Protocol No. 1.
25. It follows that the applicant’s complaint under Article 1 of Protocol No. 1 to the Convention is incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3 (a) of the Convention and must be rejected in accordance with Article 35 § 4 of the Convention.
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Done in English and notified in writing on 9 June 2016.
Milan BlaškoNebojša Vučinić
Acting Deputy RegistrarPresident
Full & Egal Universal Law Academy