Communicated on 8 September 2020
Published on 28 September 2020
FIRST SECTION
Application no. 66688/14
NOE METAL CONSTRUCTIONS S.A.
against Greece
lodged on 6 October 2014
SUBJECT MATTER OF THE CASE
The application concerns the alleged unjustified deprivation of the applicant company’s possession consisting of the legitimate expectation that the contracts concluded with public companies would have been respected and executed (Article 1 of Protocol No. 1).
Between 2009 and 2011, the applicant company entered into twelve contracts for the sale of electricity generated by solar panels with the Hellenic Transmission System Operator (“DESMIE”). DESMIE was a corporation whose stock was held by the Greek State and the Greek Public Electricity Company. Four of them were executed in November 2009, four others in December 2010, three in January 2011 and one in June 2011. By Law 4001/2011, DESMIE was replaced, as far as the above contracts were concerned, by a newly created company, the Operator of Electricity Market (“LAGIE”).
According to Law 3468/2006 in force at the time, producers of electricity from renewable energy sources, notably from solar panels, could sell the electricity they produced at a rate calculated on a reference/base price and the ongoing inflation. The base price, which was expressly mentioned in the above Law, as well as the purchase from the Operator of the whole amount of electricity made available to it by solar panels, were guaranteed for a period of at least 20 years. These Law provisions were reflected in the terms of the contracts (Article 6 as regarded the duration of the contract – 20 years - and Article 7 as regarded the pricing of the electricity). The contracts’ terms were identical since they were prescribed by decision of the Minister of the Environment published in the Government Gazette.
On 7 April 2014, Law 4254/2014, published in the Government Gazette, amended the provision on the base prices concerning contracts in force, drastically reducing them. According to the applicant company, following enactment of Law 4254/2014, the loss of the company’s annual income for year 2013 amounted to EUR 2 000 000. For the remaining 15 years in the contracts, total loss of income would amount to more than EUR 30 000 000.
Moreover, Law 4254/2014 provided that solar panel producers should reduce their pricing retroactively for the year 2013, offering a discount of 34% for solar panels connected to the energy transmission system prior to 31 December 2009 and 35% for the panels connected in 2010 and 2011. As a result, a debt of EUR 1 386 485.08 that LAGIE owed to the applicant company (out of a total of EUR 3 857 195.83) was erased by the aforementioned provision.
The applicant company asserted that no remedy is available in Greece to challenge an Act of the legislature such as Law 4254/201.
The applicant company complained that, although it had the legitimate expectation to sell electricity to the State on a fixed price and for a 20 years period, the reduction of the base price initially guaranteed by Law 3468/2006, and the haircut of the debt owned by LAGIE, both prescribed by the provisions of Law 4254/2014, resulted in a violation of Article 1 of Protocol No. 1.
QUESTIONS TO THE PARTIES
1. Was the applicant company under the obligation to exhaust domestic remedies in the present case? In particular, was it possible for the applicant company to introduce an action before the domestic courts and directly invoke the alleged violation of Article 1 of Protocol No. 1?
2. Did the reduction of the base price initially guaranteed by Law 3468/2006, and the haircut of the debt owned by LAGIE, both prescribed by the provisions of Law 4254/2014, resulted in a violation of Article 1 of Protocol No. 1 to the Convention?
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