Communicated on 18 March 2014
THIRD SECTION
Application no. 71306/11
Suren OSMANYAN and others
against Armenia
lodged on 11 November 2011
STATEMENT OF FACTS
The applicants Mr. Suren Osmanyan, Mr. Serob Osmanyan, Mr. Bakur Osmanyan, Ms. Mane Osmanyan and Mrs. Donara Amiraghyan are Armenian nationals born in 1935, 1961, 1988, 1990 and 1966 respectively. They are represented before the Court by Mr K. Tumanyan, a lawyer practising in Vanadzor.
A. The circumstances of the case
The facts of the case, as submitted by the applicants, may be summarised as follows.
1. Background to the case
In the 1970s a copper-molybdenum deposit (‘Teghout’) was discovered about four and six km from the villages of Teghout and Shnogh respectively, in the Lori Region.
In 2001 a private company, Armenian Copper Programme CJSC, was granted a mining licence for the exploitation of the Teghout copper‑molybdenum deposit for a period of twenty-five years.
On 1 November 2007 the Government adopted Decree no. 1279-N approving the expropriation zones of territories situated within the administrative boundaries of the rural communities of Shnogh and Teghout in the Lori Region to be taken for State needs and changing the category of land use. According to the Decree, Armenian Copper Programme CJSC or Teghout CJSC, founded by the former for the implementation of the Teghout copper-molybdenum deposit exploitation project, were to acquire the units of land listed in its annexes. The plot of land belonging to the applicants was listed among the units of land falling within these expropriation zones.
2. Proceedings concerning the expropriation of the applicants’ property
The applicants, a family of five, live in Teghout village and earn their living from agriculture. They jointly owned a plot of arable land in the village measuring 0.383 ha. The land was used for growing crops for the family, gardening and feeding their livestock.
On an unspecified date Teghout CJSC addressed a letter to the applicants containing an offer to buy their plot of land for AMD 188,000 (approximately EUR 409) plus an additional 15% as required by law, making the final offer AMD 216,200 (approximately EUR 470).
The applicants did not reply to the offer, not being satisfied with the amount of compensation. It appears that they were unable to obtain an evaluation of their property by another company. They claim that no other evaluation company was willing to make an independent evaluation of the market value of their land.
On 12 May 2008 Teghout CJSC lodged a claim against the applicants and L., the first applicant’s late wife, seeking to oblige them to sign the agreement on the taking of their property for State needs. The company based its claim, inter alia, on the evaluation report prepared at its request by Oliver Group LLC, a licensed evaluation company. According to the report the market value of the applicants’ plot of land was estimated at AMD 188,000 (approximately EUR 409).
In the proceedings before the Lori Regional Court the applicants argued that the market value of their land had been underestimated and that the court should order a forensic expert examination to determine the real market value of their property.
In the course of the proceedings Teghout CJSC submitted another evaluation report of the applicants’ property stating that Oliver Group LLC had prepared a corrected report according to which the market value of the land was AMD 194,000 (approximately EUR 422). The final amount of compensation, together with the additional 15% required by the law, would thus be equal to AMD 223,100 (approximately EUR 485).
On 6 October 2008 the Regional Court granted Teghout CJSC’s claim, awarding L. and the applicants a total of AMD 223,100 (approximately EUR 485) in compensation.
The applicants lodged an appeal complaining, inter alia, that the third applicant had not been duly notified about the proceedings and that L. had died before the proceedings before the Regional Court had started. They further argued that they had not been duly notified about the dates and times of the rescheduled hearings.
On 27 February 2009 the Civil Court of Appeal quashed the Regional Court’s judgment and remitted the case for a fresh examination.
On 2 June 2009 the Regional Court granted Teghout CJSC’s claim finding, inter alia, that the evaluation reports prepared by Oliver Group LLC should be considered lawful and acceptable evidence to determine the market value of the applicants’ property to be taken for State needs. The Regional Court stated that the first applicant, as L.’s successor, should be awarded her share in the amount of compensation and awarded the applicants a total of AMD 223,100 (approximately EUR 485) in equal shares as compensation.
The applicants lodged an appeal claiming, inter alia, that the amount of compensation was not adequate and that no account had been taken of their fruit trees and their profitability. They argued that the Regional Court had accepted the reports submitted by their opponent as established proof of the market value of their property. Also, they argued that the Regional Court should have exercised its statutory discretion to order an expert examination since such a necessity had risen in the course of the proceedings and they had no possibility to provide an alternative evaluation themselves.
On 31 July 2009 the Civil Court of Appeal quashed the Regional Court’s judgment, stating that it should have granted the applicants’ request by ordering a forensic expert examination to determine the market value of the property.
On 21 April 2011 the Regional Court granted Teghout CJSC’s claim. In doing so, it relied on the corrected evaluation report prepared by Oliver Group CJSC and two forensic expert examinations conducted on 12 August 2010 and 17 December 2010 respectively. According to the first forensic examination report, the applicants had four fruit trees on their plot of land and the market value of the property was estimated to be AMD 230,000 (approximately EUR 500). According to the second report, the market value of the applicants’ plot of land was AMD 209,100 (approximately EUR 500) and the four fruit trees could not have any bearing on the determination of this amount. Also, the report stated that the first forensic examination report and the evaluation report by Oliver Group CJSC had produced quite realistic results. The Regional Court granted the applicants AMD 264,500 (approximately EUR 500) by taking the highest market value out of the three evaluations at its disposal and adding to that amount the additional 15% as required by law.
The applicants lodged an appeal arguing, inter alia, that the second forensic examination report was not credible since the expert had failed to specify the sources of information he had used to reach his conclusions and moreover no account had been taken of the number of the applicants’ trees and their profitability. They further argued that they had filed a motion with the Regional Court seeking to exclude this piece of evidence and assign an additional forensic examination but their motion was dismissed.
On 7 July 2011 the Civil Court of Appeal upheld the Regional Court’s judgment finding that the amount of compensation had been correctly determined based on the existing evidence.
The applicants lodged an appeal on points of law. They raised similar complaints to those raised before the Court of Appeal.
On 31 August 2011 the Court of Cassation declared the applicants’ cassation appeal inadmissible for lack of merit.
B. Relevant domestic law
1. The Constitution of 1995 (following the amendments introduced on 27 November 2005 with effect from 6 December 2005)
According to Article 31, everyone shall have the right to dispose of, use, manage and bequeath his property in the way he sees fit. No one can be deprived of his property, save by a court in cases prescribed by law. Property can be expropriated for the needs of society and the State only in exceptional cases of paramount public interest, in a procedure prescribed by law and with prior equivalent compensation.
2. The Law on Alienation of Property for the needs of Society and the State (in force from 30 December 2006)
According to Article 3 § 1, the constitutional basis for alienation of property for the needs of society and the State is the prevailing public interest.
According to Article 3 § 2, the constitutional requirements for alienation of property for the needs of society and the State are the following:
a) alienation must be carried out in accordance with a procedure prescribed by the law,
b) prior adequate compensation should be provided for property subject to alienation.
According to Article 4 § 1, the public interest must prevail over the interests of the owner of property subject to alienation and alienation of that property must be essential to implementation.
According to Article 4 § 2, the prevailing public interest may pursue, inter alia, the implementation of mining projects having important State or community significance. The aim of securing additional income for the State or community budget is not by itself a prevailing public interest.
According to Article 11 § 1, adequate compensation should be paid to the owner of property subject to alienation. The market value of the property plus an additional 15% is considered to be an adequate amount of compensation.
According to Article 11 § 3 the determination of the market value of real estate and property rights in respect of real estate is carried out in accordance with the procedure set out by the Law on Real Estate Evaluation Activity.
3. The Law on Real Estate Evaluation Activity (as in force at the material time)
According to Article 8, evaluation is obligatory in case of alienation of immovable property for State or community needs.
According to Article 15 § 1 (1), persons engaged in real estate evaluation have the right to use independent methods of real estate evaluation in compliance with the evaluation standard.
4. Government Decree No. 1279-N of 1 November 2007 approving the expropriation zones of certain territories situated within the administrative boundaries of rural communities of Shnogh and Teghout in the Lori Region to be taken for State needs and changing the category of land use (ՀՀ Կառավարության 2007 թ. նոյեմբերի 1-ի թիվ 1279-Ն որոշումը Հայաստանի Հանրապետության Լոռու մարզի Շնողի և Թեղուտի գյուղական համայնքների վարչական սահմաններում որոշ տարածքներում բացառիկ՝ գերակա հանրային շահ ճանաչելու և հողերի նպատակային նշանակությունը փոփոխելու մասին)
For the purpose of the implementation of the Teghout copper‑molybdenum deposit exploitation project, and in the perspective of building and operating a mining plant, the Government decided to approve the expropriation zones of agricultural land situated within the administrative boundaries of the rural communities of Shnogh and Teghout in the Lori Region to be taken for State needs, with a total area of 81.483 ha. According to the Decree, the public interest in the development of the economy and infrastructure and the interest in higher levels of production and export prevailed over the private interests of the proprietors.
COMPLAINT
The applicants complain under Article 1 of Protocol No. 1 to the Convention that the deprivation of their property did not satisfy the requirement of lawfulness, did not pursue any public interest and that the amount of compensation awarded was inadequate. In particular, they complain that the law is not sufficiently foreseeable in that it does not specify the criteria for determining the market value of property to be taken for State needs.
QUESTIONS TO THE PARTIES
1. Was the deprivation of the applicants’ property compatible with the requirements of Article 1 of Protocol No. 1 to the Convention? In particular:
a) was the deprivation of their property carried out under the conditions provided for by law? In particular, is the Law on Alienation of Property for the Needs of Society and the State sufficiently precise and foreseeable as regards the evaluation of property in case of expropriation?
b) did the deprivation of their property strike a ‘fair balance’ between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights? In particular:
i. were the means employed proportionate to the aim sought to be achieved?
ii. did the applicants bear an ‘individual and excessive burden’ due to the manner in which the amount of compensation was determined, given that the courts refused to assign an additional forensic examination of their property?
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