FIFTH SECTION
DECISION
Application no. 69584/11
IP-OMEKOM INVALIDSKO PODJETJE D.O.O.
against Slovenia
The European Court of Human Rights (Fifth Section), sitting on 23 September 2014 as a Chamber composed of:
Mark Villiger, President,
Angelika Nußberger,
Boštjan M. Zupančič,
Ann Power-Forde,
Vincent A. De Gaetano,
André Potocki,
Helena Jäderblom, judges,
and Claudia Westerdiek, Section Registrar,
Having regard to the above application lodged on 2 November 2011,
Having deliberated, decides as follows:
THE FACTS
1. The applicant, Ip-Omekom invalidsko podjetje d.o.o., is a limited company, whose registered office is in Jurovski Dol (“the applicant company”). It was represented before the Court by Mr J. Sladič, a lawyer practising in Ljubljana.
A. The circumstances of the case
2. The facts of the case, as submitted by the applicant company, may be summarised as follows.
3. On 6 November 1991, shortly after its declaration of independence in June 1991, the State concluded a contract with M.C., by which the latter allowed the authorities to build State border infrastructure on her property located in Jelšane, on the national border between Slovenia and Croatia. The State paid M.C. compensation and acquired actual possession of the land, but did not institute any legal proceedings in respect of the transfer of ownership. In the same year the State built a parking area for heavy goods vehicles and installed drainage on the relevant plots.
4. On 28 June 1994 the Convention came into force in respect of Slovenia.
5. On 12 December 2001 at the applicant company’s request, the Ilirska Bistrica municipality issued a certificate declaring that there was no right of pre-emption over the plots of land subject to the 1991 contract between M.C. and the State. In the certificate the municipality however indicated that it was anticipated that the plots would be included in the location plan for the Jelšane international border crossing.
6. On 26 March 2002 the applicant company bought the two plots of land subject to the contract between M.C. and the State for 1,300,000 Slovenian tolars (SIT) (approximately 7,600 euros (EUR)). The applicant company intended to use the plots for commercial purposes, namely to install advertising hoardings.
7. On 8 May 2003 the Government adopted a decision on the location plan for the Jelšane international border crossing (published in the Official Gazette, no. 43/2003). The decision also referred to the two plots bought by the applicant company.
8. On 26 May and 15 July 2003 the applicant company was invited on behalf of the State to conclude a sale contract in respect of the two plots. The applicant company rejected both offers.
9. On 20 August 2003 the Joint Services of the Government lodged a request to have expropriation proceedings initiated in respect of the two plots with the Ilirska Bistrica Administrative Unit in accordance with section 97 of the Spatial Management Act 2002.
10. On 25 August 2003 the Ilirska Bistrica Administrative Unit instituted expropriation proceedings. The applicant company demanded substitute land instead of monetary compensation.
11. On 13 October 2003 the Ilirska Bistrica Administrative Unit issued a decision using the expedited procedure under section 104 of the Spatial Management Act 2002 and expropriating the applicant company’s two plots. As no agreement had been reached between the parties in respect of compensation, the matter was referred to the civil courts to be dealt with as non-contentious proceedings.
12. On 28 June 2004 the Ilirska Bistrica Local Court held the first main hearing. Throughout the entire proceedings the applicant company maintained that it wished to be compensated with substitute land.
13. On 21 April 2008 the court decided to award the applicant company financial compensation, as it had not been possible to find adequate substitute land. The court explained that further negotiations on substitute land would be futile and that in view of the length of the proceedings – during which several hearings were postponed at the request of the applicant company – it would not be reasonable to seek further solutions. It ordered the State to pay the applicant company EUR 107,414 as compensation for the expropriation, comprising EUR 56,202 for the market value of the plots on 24 March 2003 and EUR 51,212 for the value of the infrastructure built by the State authorities before the applicant company had become owner. The court held that the applicant company was not entitled to any compensation for loss of opportunity, as it had never used the property for commercial purposes. The court noted that the applicant company had probably been aware of the contract concluded between the previous owner and the State authorities and might not have purchased the land in good faith. It however dismissed the arguments of the State that these circumstances should be relevant for determining the amount of compensation, as the State authorities had failed to institute any legal proceedings for the transfer of ownership after they had concluded the contract with M.C. in 1991. Both parties appealed.
14. On 9 December 2008 the Koper Higher Court quashed the decision of 21 April 2008 in so far as it granted to the applicant company compensation for the value of infrastructure built by the State, and remitted the case back to the first-instance court.
15. On 9 February 2009 the Ilirska Bistrica Local Court decided in the new proceedings that the applicant company was not entitled to compensation for the value of the infrastructure built by the State. The court highlighted the fact that the applicant company had already known at the time of the purchase that the infrastructure was built by the State, and that the State was in possession, not the previous owner. Under these circumstances, compensating the applicant company for the infrastructure would have been contrary to the rules governing good faith. It further described the applicant company’s case as a case of “reverse expropriation”, where the State had first obtained possession of the land and built infrastructure on it and only later had it been shown to be in the public interest and a decision on expropriation issued. According to the local court, “reverse expropriation” could not be considered arbitrary or unlawful. The applicant company appealed.
16. On 25 August 2009 the Koper Higher Court dismissed the appeal. The applicant company lodged an appeal on points of law, claiming that it should be awarded compensation to correspond not only to the market value of the land, but to the full value of the property, including the value of the infrastructure built by the State.
17. On 16 September 2010 the Supreme Court dismissed the appeal on points of law and thereby confirmed as compensation the award of EUR 56,202 which represented the market value of the plots. Contrary to the position of the lower courts, the Supreme Court acknowledged that “reverse expropriation” as in the applicant company’s case was not covered by domestic law and was therefore unlawful. In respect of the question of how to determine the appropriate compensation to be awarded in such cases, it noted that domestic legislation and practice did not provide any guidance; it would be insufficient however, to grant the owner only the amount foreseen for lawful expropriations. The Supreme Court therefore considered additional options. The first was awarding additional compensation for the owner’s inability to use the property in the relevant period; the second was giving additional compensation either in the form of an account of profits or default interest; the third was compensating the total value of the property, including the infrastructure built by the State. However, while the above options might be appropriate means of compensation for owners who were dispossessed arbitrarily, they would not be appropriate in respect of the applicant company, which was well aware of the contract concluded between the previous owner and the State in 1991 and that it was in the public interest. In any event, even if the applicant company was not aware of the contract, this would only have consequences for the relationship between the applicant company and M.C. Relying on the Court’s judgment in the case of Guiso-Gallisay v. Italy ((just satisfaction) [GC], no. 58858/00, 22 December 2009) the Supreme Court confirmed that the lower courts’ conclusions that the compensation due to the applicant company was equal to the revised market value of the land at the moment the applicant company could have known that it had lost possession of the property, and no additional compensation for the value of the infrastructure built by the State could be granted. The applicant company lodged a constitutional complaint.
18. On 12 April 2011 the Constitutional Court dismissed the constitutional complaint.
B. Relevant domestic law and practice
19. At the material time the expropriation proceedings were governed by the provisions of the Spatial Management Act 2002 (Official Gazette no. 110/2002).
20. For an overview of the remedies provided by the Protection of the Right to a Trial without Undue Delay Act 2006 (Official Gazette no. 49/2006 – “the 2006 Act”), see Grzinčič v. Slovenia (no. 26867/02, §§ 38-48, 3 May 2007).
COMPLAINTS
21. The applicant company complained under Article 6 § 1 of the Convention concerning the length of the proceedings. It further complained under Article 1 of Protocol No. 1 that it had been unlawfully deprived of its property without being awarded sufficient compensation.
THE LAW
A. Complaint under Article 6 of the Convention
22. The applicant company complained that the length of the civil proceedings in which the amount of compensation for expropriation had been determined was incompatible with the “reasonable time” requirement laid down in Article 6 § 1 of the Convention, which, as far as relevant, reads as follows:
“In the determination of his civil rights and obligations ..., everyone is entitled to a ... hearing within a reasonable time by a ... tribunal...”
23. The Court notes that the civil proceedings were pending before the first-instance court on 1 January 2007 when the 2006 Act became operational, and subsequently continued for more than four months. It was therefore open to the applicant company to effectively avail itself of the remedies provided for under the 2006 Act (see, Grzinčič, cited above, § 110, and Nezirovič v. Slovenia (dec.), no. 16400/06, §§ 27-42, 18 November 2008). However, the applicant company failed to try such remedies. In the absence of any plausible arguments as to why they would be ineffective in the applicant company’s case, the Court finds that this part of the application must be rejected for non-exhaustion of domestic remedies in accordance with Article 35 §§ 1 and 4 of the Convention.
B. Complaint under Article 1 of Protocol No. 1 to the Convention
24. The applicant company further complained that it had been unlawfully deprived of its property without being awarded sufficient compensation. It invoked 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.”
25. The applicant company submitted that since de facto or “reverse expropriations” were not allowed under domestic law, it should be entitled to a higher level of compensation than that provided for in the ambit of regular expropriation procedures. It disagreed with the reliance of the Supreme Court on the Grand Chamber judgment in the case of Guiso‑Gallisay (cited above), claiming that its situation was different from that of the above-mentioned case since Italian legislation and case-law allowed constructive expropriation and even provided that the compensation to be paid was 10% higher than in cases of expropriation in due form. It further argued that its rights under Article 1 of Protocol No. 1 had also been violated on account of the length of proceedings.
26. The Court first observes that it has addressed the question of the length of the compensation proceedings under Article 6 § 1 of the Convention and that no separate examination of this issue is required under Article 1 of Protocol No. 1 (see, mutatis mutandis, Capestrani v. Italy (dec.), no. 4661/99, 27 January 2005, and Contessa and others v. Italy (dec.), no. 11004/05, § 34, 17 September 2013).
27. As far as the amount of compensation is concerned, the Court has to determine whether the applicant company can still claim to be a “victim” of the facts complained of within the meaning of Article 34 of the Convention.
28. The Court refers to the principles governing the assessment of an applicant’s victim status in its judgment in the case of Scordino v. Italy (no. 1) ([GC], no. 36813/97, §§ 179-192, ECHR 2006‑V). It reiterates that under the principle of subsidiarity it falls first to the national authorities to redress any alleged violation of the Convention. It further reiterates that a decision or measure favourable to an applicant is not in principle sufficient to deprive him of his status as a “victim” unless the national authorities have acknowledged, either expressly or in substance, and then afforded redress for, the breach of the Convention (see, for example, Amuur v. France, 25 June 1996, § 36, Reports of Judgments and Decisions 1996‑III, and Dalban v. Romania [GC], no. 28114/95, § 44, ECHR 1999‑VI).
29. The Court notes that in its decision of 16 September 2010 the Supreme Court stated that the manner in which expropriation had been conducted in the applicant company’s case was unlawful (see paragraph 17 above). As the first and most important requirement of Article 1 of Protocol No. 1 is that any interference by a public authority with the peaceful enjoyment of possessions should be lawful (see Iatridis v. Greece [GC], no. 31107/96, § 58, ECHR 1999‑II), the Court considers that such a statement entailed an acknowledgment, at least in substance, of a violation of this provision.
30. The Court considers however, that the unlawfulness was based on the doctrine of reverse expropriation which generally applies to cases where the State had first taken possession of the land and started construction works on it before the expropriation proceedings begun. In the present case however, the development on the land took place with the consent of the previous owner and before the applicant company purchased the land.
31. Regardless of whether the case is one of reverse expropriation and as such indeed unlawful, the Court will further determine whether the compensation the applicant company received for the land was appropriate and sufficient (see, for instance, Zaharieva v. Bulgaria (dec.), no. 6194/06, §§ 67, 20 November 2012).
32. While the Court is satisfied that in cases of expropriation financial compensation is an appropriate form of redress, it must further determine whether the compensation awarded to the applicant company for the expropriation of its property was also sufficient. It will do so by taking into account its case-law under Article 41.
33. The Court notes that the lawfulness of dispossession inevitably affects the criteria to be used for determining the reparation owed by the respondent State (see, Former King of Greece and Others v. Greece [GC] (just satisfaction), no. 25701/94, § 75, 28 November 2002). In this respect it wishes to refer to the criteria to be used for determining the compensation in cases of lawful (see, of Scordino (no. 1) (cited above)) and of unlawful dispossessions (see, Guiso-Gallisay (cited above) as laid down in its case-law.
34. In the case of Guiso-Gallisay (cited above, §§ 104-105), the Grand Chamber adopted a new approach to the method for determining compensation in respect of pecuniary damage in cases of unlawful deprivation of property, and considered it appropriate to award the applicants as pecuniary damage the full market value of the land at the date they lost their right of ownership. The Grand Chamber further held that automatically assessing the additional losses sustained by the applicants as the equivalent of the gross value of the building erected by the State could not be justified. It stressed that in order for compensation to be adequate it should refer to various circumstances liable to reduce its value, such as the lapse of a considerable period of time, and that the amount obtained will have to be converted to the current value to offset the effects of inflation. In addition, simple statutory interest (applied to the capital progressively adjusted) should be paid (see also Borghesi v. Italy, no. 90890/00, § 35, 22 May 2012).
35. Thus, the Grand Chamber adopted, for unlawful expropriations, the same method of calculation used in lawful expropriations (see Scordino (no. 1) (cited above, §§ 250-254) but added to the non-pecuniary assessment the amount of damage arising from loss of opportunity.
36. Turning to the present case, the Court notes that according to the domestic courts its circumstances were considered to be similar to those of the case of Guiso-Gallisay (cited above; see also Guiso-Gallisay v. Italy, (merits), no. 58858/00, §§ 82-97).
37. The Court is not required to determine the lawfulness of the expropriation, as even assuming that in the present case the expropriation was indeed unlawful, the Court notes the following.
38. It observes that the applicant company was awarded compensation in the amount of EUR 56,202, which represented the full market value of the property on 24 March 2003 (see paragraph 13 above). It is true that no sum for loss of opportunity was awarded to the applicant company. However, the domestic courts took into account a number of specific circumstances, which, in the present case, justified a restrictive approach. Notably, the applicant company was already at the time of purchase of the land aware of the fact that the authorities had, in agreement with the previous owner, built border-crossing infrastructure on the land and had the intention to include it in the location plan for the Jelšane international border crossing (see paragraph 5 above). Moreover, the expropriation proceedings were initiated by the authorities shortly after the applicant company had become owner. The Court also notes that in the period between the purchase of the plots and the institution of the expropriation proceedings the applicant company had not used the land for commercial purposes nor demonstrated that it was planning any commercial activity on it (see, mutatis mutandis, Casa missionaria per le Missioni estere di Steyl v. Italy (dec.), no. 75248/01, 13 May 2004, and Galtieri v. Italy (dec.), no. 72864/01, 24 January 2006). In addition, in the course of domestic proceedings the applicant company did not dispute the fact that it had not been awarded additional compensation for loss of opportunity.
39. The Court further notes that the applicant company was not explicitly awarded statutory interest – a fact it also did not dispute in the domestic proceedings. In any case, however, as the amount of compensation the applicant company was awarded was more than seven times higher than the amount it had itself paid for the plots shortly before the expropriation proceedings were instituted, the Court considers that the effects of inflation were, at least implicitly, taken into account.
40. In the light of the above, the Court is satisfied that the compensation awarded to the applicant company was in conformity with the criteria established by its case-law and considers that it constituted fair and sufficient redress for the taking of the applicant company’s land.
41. It follows that the applicant company can no longer claim to be the victim of a violation of its rights under Article 1 of Protocol No. 1, and that its complaint in that regard is incompatible ratione personae with the provisions of the Convention within the meaning of Article 35 § 3 (a) and must be rejected in accordance with Article 35 § 4.
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Claudia WesterdiekMark Villiger
RegistrarPresident
Full & Egal Universal Law Academy