FIFTH SECTION
DECISION
AS TO THE ADMISSIBILITY OF
Application no. 34943/06
by PINDSTRUP MOSEBRUG A/S
against Denmark
The European Court of Human Rights (Fifth Section), sitting on 3 June 2008 as a Chamber composed of:
Rait Maruste, President,
Peer Lorenzen,
Karel Jungwiert,
Renate Jaeger,
Mark Villiger,
Isabelle Berro-Lefèvre,
Zdravka Kalaydjieva, judges,
and Claudia Westerdiek, Section Registrar,
Having regard to the above application lodged on 22 August 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
The applicant, Pindstrup Mosebrug A/S, is a private limited company registered in Denmark with its main office in Pindstrup. It was represented before the Court by Mr Per Magid, a lawyer practising in Copenhagen.
The Danish Government (“the Government”) were represented by their Agent, Mr Peter Taksøe-Jensen of he Ministry of Foreign Affairs.
A. The circumstances of the case
The facts of the case, as submitted by the parties, may be summarised as follows.
The applicant is a company, which since the beginning of the 1900s has extracted peat.
On 16 November 1954, the applicant company entered into a contract with Lindet State Forest District (Lindet Statsskovdistrikt) for the exclusive and irrevocable rights to extract peat for fifty years from a State-owned bog called Draved Bog (Draved Mose). The leased area amounted to 212 hectares and according to a study carried out at the relevant time, the amount of peat available at the bog exceeded 1,000,000 cubic metres.
The contract of 1954 contained, in so far as relevant, the following provisions:
Clause 1
“The term of the lease shall commence on 1 April 1955 and shall expire, without notice, on 1 April 2005. During the lease period, the contract shall not be revocable by either party, unless in the event of a breach (see clauses 14 and 16).”
Clause 2
“Prior to the conclusion of the lease contract, the leased area, which is a bog area of varying depth of peat, was analysed by the Danish Heath Society (Det Danske Hedeselskab), whose study including appendices is enclosed with this contract, although the State Forest District accepts no responsibility for the accuracy of the analyses and descriptions.
The [applicant company] is entitled to remove or cut the layer of peat, but in such a way as to ensure that the area can subsequently be used as meadow or farm land. However, permission is granted to remove the entire layer of peat in an area of approximately six hectares, in spite of the fact that henceforth this area may not be drained off, as the State Forest District agrees to convert this area into a lake after the peat has been removed. ...”
Clause 5
“The [applicant company] shall be entitled to sublease or sublet cultivated areas, although not after 1 April 2005. The ... State Forest District shall be informed in writing of the person to whom the areas are subleased or sublet, and the sublessees shall be obliged under their contracts to comply with the regulations in force ...”
Clause 9
“Upon expiry of the lease, all areas except the lake area shall be returned drained off and laid down in grass of a mixture suitable for the condition of the area at the time unless the Parties have agreed otherwise ...”
At the relevant time, the applicant company already extracted peat at other locations in Denmark. Draved Bog was thus added to its peat reserves for later extraction. Shortly thereafter, the applicant company commenced the extraction of about 12 hectares of Draved Bog. At the relevant time the extraction was used mainly in the production of peat briquettes, whereas later on it was used for the purposes of peat-based growing media to be sold to professional growers and for hobby gardening.
On 13 May 1966, the parties drew up an addendum to the leasing contract in which a sub-area was excluded and a new area included.
The applicant company ceased its extraction activities at Draved Bog in the summer of 1971.
In 1972, the Raw Materials Act (Råstofloven) was passed, subjecting the commercial extraction of raw materials to a permit. A transitional arrangement applied to individuals who had acquired such rights prior to 9 February 1972 and notified them prior to 1 April 1973.
Consequently, on 26 March 1973, the applicant company notified the Southern Jutland County Council (Sønderjyllands Amtsråd) of its rights at Draved Bog pursuant to the contract of 1954. It added that at the relevant time about 3,000 cubic metres were produced annually and that one to two persons were employed in production activities.
On 13 November 1975 the Southern Jutland County Council acknowledged that the applicant company was entitled to continue extraction without permission under the Raw Materials Act.
In the meantime, on 25 May 1973 the applicant company sublet part of Draved Bog amounting to 110 hectares, which had been cultivated up to and including 1 March 1973, to a company called Pindstrup Foderindustri A/S. The cost of the annual lease was 50,000 Danish kroner (DKK). It appears that the sublease was in force until 1 March 1983.
In 1978, the applicant company made preparations to commence, in 1981, extracting peat in Draved Bog for a period of approximately fifteen years. It was estimated that the initial investment in production facilities would amount to DKK 6,000,000. At that time in Denmark, six raised bogs and an unspecified number of lowland bogs existed. The former were variously owned by the State, a natural protection foundation and private persons. The applicant company was the dominant producer of peat in Denmark and the only producer of peat from raised bogs. Over the years it had succeeded in acquiring rights to extract peat in most of the bogs suitable for extraction. The only other company which produced peat in Denmark did so from an area which had lost its character as a bog and none of the owners of the remaining five raised bogs had demonstrated any intention to extract peat.
On 21 December 1978, the Preservation Planning Committee for the County of Southern Jutland (Fredningsplanudvalget for Sønderjyllands Amt) instituted a preservation procedure regarding Draved Bog, covering 381.41 hectares, under section 13 of the Nature Preservation Act (Naturfredningsloven). The decision was made public on 28 December 1978. The Preservation Planning Committee for the County of Southern Jutland later stated that the procedure had been initiated at this point in time because its tasks would be transferred to the county councils (Amtsrådene) as of 1 January 1979.
On 1 January 1979 an amendment of the Nature Preservation Act entered into force, introducing a new provision (section 43, subsection 2) by which, inter alia, alterations of bogs (which included extraction of peat in bogs) could only take place with the permission of a county council (see relevant domestic law and practice, chapter 3).
Owing to the intended preservation of Draved Bog, on 23 May 1980 the applicant company produced a report in which it estimated its loss of expected profit at DKK 15,200,000.
Originally, the preservation procedure progressed independently on the assumption that section 43, subsection 2, did not apply to the applicant company since the procedure had been initiated on 21 December 1978, before that provision had came into force.
In a decision of 22 June 1982, however, the Superior Preservation Board (Overfredningsnævnet) held that section 43, subsection 2, had to be taken into account in relation to the applicant company. It noted that it could not have been possible for the applicant company to commence extraction in the short period between 21 December 1978 and 1 January 1979; thus, it should not be placed in a better situation than if the preservation procedure had been instituted after the latter date.
Subsequently, various administrative proceedings were pending.
Ongoing friendly-settlement negotiations as to a possible exchange of rights over another bog of equal value to Draved Bog failed.
A request of 28 July 1982 by the applicant company for a permit, under section 43, subsection 2, of the Nature Conservation Act, to extract peat in Draved Bog in an area amounting to 66 hectares was refused on 9 June 1983 (in a decision notified on 13 June 1983) by the County Council with regard to the southern part of the bog. In its decision, the County Council attached decisive weight to the fact that the southern part of the area in question consisted of unspoiled raised bog, described as nationally unique, geologically as well as biologically. The County Council was willing to grant permission, however, as regards the northern area of the bog, which contained approximately 56% of the peat. Unlike the southern area, peat had been extracted in the past in the northern area. Moreover, since the presence of a watercourse meant that there was no direct connection between the northern and southern parts of the bog, it was found that extraction of peat in the northern part would not cause irreparable damage to the bog area as a whole.
The applicant company appealed against the decision to the Preservation Agency (Fredningsstyrelsen) and maintained that the granting of permission to extract peat solely from the northern part of the bog was of insignificant value to it, because only so-called darker peat could be and had been extracted from there. In order to exploit the peat commercially, however, the darker peat had to be mixed with so‑called lighter peat, which was in short supply in general, but could be found in the southern part of the bog.
On 1 June 1984 the Preservation Agency upheld the decision by the County Council.
On 29 December 1986 the Preservation Board of Southern Jutland (Fredningsnævnet for Sønderjyllands amts sydlige fredningskreds) issued a preservation order covering an area of 381.41 hectares of Draved Bog. Having regard to the complexity of the matter, it refrained from deciding on the applicant company’s claim for compensation.
The applicant company complained to the Superior Preservation Board, before which the proceedings were suspended for some time pending the outcome of further friendly-settlement negotiations. When the latter proved to be in vain, on 31 July 1991 the Superior Preservation Board upheld the Preservation Board of Southern Jutland’s decision to preserve the bog and to refrain from deciding on the applicant company’s claim for compensation.
As part of the friendly-settlement negotiations the applicant company was offered the right to extract sphagnum from an area of 48.2 hectares, which was part of a different State-owned bog called Store Vildmose. A lease to that effect was entered into in July 1991. At the relevant time the applicant company therefore leased the majority of both State-owned and private areas where extraction of peat was possible.
On 27 August 1991 the applicant company appealed against the Superior Preservation Board’s decision regarding compensation to the Valuation Commission for Nature Preservation (Taksationskommissionen vedrørende Naturfredning), which upheld it on 27 January 1992.
On 14 April 1992 the applicant company claimed compensation under section 73 of the Constitution (Grundloven) in the amount of at least DKK 15,000,000.
On 21 June 1993 the claim was dismissed by the Forest and Nature Agency, which found that the amendment to section 43, subsection 2, of the Nature Preservation Act did not constitute expropriation of possessions belonging to the applicant company. It added:
“... [the applicant company] may possibly have a claim for recovery of some of the rent payments which the company has been paying since 1 January 1979 after deduction of the rent attributable to the area which, after reclamation, is being used for agricultural purposes and the area which is covered by the exemption. The Forest and Nature Agency is therefore ... willing to enter into negotiations with a view to reaching a settlement on this matter.”
On 30 October 1997 the applicant company instituted proceedings before the High Court of Western Denmark (Vestre Landsret) against the Forest and Nature Agency under the Ministry of the Environment, claiming compensation in the amount of DKK 15,200,000 or, in the alternative, a lesser amount to be fixed at the High Court’s discretion or, in the further alternative, a refund of the rent in respect of the 66 hectares in the southern part of Draved Bog (on average approximately DKK 13,600 annually) and property taxes, plus the interest accruing on these payments, paid in the period between 1979 and 30 October 1997 (amounting in total to approximately DKK 884,000, equivalent to approximately 117,000 euros (EUR)). The applicant company’s compensation claim relied on two legal bases, namely the Nature Preservation Act as then applicable and section 73 of the Constitution.
Before the High Court of Western Denmark, various witnesses were heard. In addition, three experts were appointed, who confirmed that extraction solely of the darker peat from the northern area of Draved Bog was of insignificant value.
In a judgment of 21 December 2001 the High Court of Western Denmark found for the applicant company, stating as follows:
“The provision of section 43, subsection 2, of the Nature Preservation Act to the effect that alterations of the state of bogs may only be effected with the permission of the County Council was inserted into the Act by Act No. 219 of 24 May 1978, which entered into force on 1 January 1979.
This provision meant that [the applicant company] was unable to exercise its extraction rights at Draved Bog without permission from the County Council from 1 January 1979. This also applies even though the extraction rights of [the applicant company] had previously been notified in accordance with the rules of the legislation on raw materials and even though the preservation procedure had been instituted before the amending Act entered into force.
The fact that [the applicant company] was already prevented from exercising its extraction rights when the preservation procedure was instituted on 21 December 1978 cannot lead to [the applicant company’s] achieving a better position in the determination of possible compensation for preservation than if the preservation procedure had been instituted after 1 January 1979 as the applicant company had not had the possibility in practice of initiating peat extraction in the 10 days prior to 1 January 1979.
The provision in section 43, subsection 2, of the Nature Preservation Act must be considered an objectively motivated part of the regulation which has been implemented in view of the general interest in preserving ... the Danish wetlands. The provision applies to everybody and entails only a limited interference as regards [the use of] bogs in general.
The [applicant company], however, whose request for a permit to extract peat [in Draved Bog] had been refused in part, was affected in a substantial and atypically severe manner by the regulation, since the sole purpose of the company’s lease of the bog had been to extract peat, which inevitably would result in a change of the state of the bog.
On this basis, in relation to the [applicant company], the legislation has the character of expropriation, for which reason compensation must be awarded in accordance with section 73 of the Constitution.
The calculation of the amount of compensation takes as its starting point the report of 1980, produced by the managing director ... According to the information provided, since 1979 the applicant company has extracted, processed and sold peat from other bogs in Denmark as well as abroad, thereby being able to meet its market demands. The profit thus acquired is to be subtracted when determining the loss for which the [applicant company] may claim compensation. Having regard to the expert opinion, however, the compensation should not be reduced on account of the fact that the [applicant company] has obtained permission by the Preservation Agency’s decision of 1 June 1984 to extract the dark peat north of the stream in accordance.
Taking all circumstances into account, the [applicant company] ... should be awarded compensation in the amount of DKK 5,000,000.”
On 12 February 2002, the Forest and Nature Agency lodged an appeal against the judgment with the Supreme Court (Højesteret). The applicant company reiterated its claims and their legal bases, namely the Nature Preservation Act as then applicable and section 73 of the Constitution. Various witnesses and experts were heard, including the applicant company’s managing director, who stated, among other things, that extraction of peat in Draved Bog had ceased “in about 1971”.
A report of 19 May 2005 was also submitted, prepared by the Ministry of the Environment on bogs in Denmark, stating that in 1940 raised bogs had covered 65,180 hectares, whereas in 1978/1979 they had covered approximately 6,150 hectares. Only six examples of raised bogs over 10 hectares remained, including Draved Bog.
In a judgment of 28 February 2006 the Supreme Court, by a majority of three to two, overturned the judgment of the High Court of Western Denmark. First the Supreme Court stated as follows:
“For the reasons stated by the High Court, the Supreme Court endorses the finding that it was not the preservation, but the general prohibition in section 43, subsection 2, of the Nature Preservation Act that was the reason why [the applicant company] was prevented from exercising its right to extract peat (sphagnum) from Draved Bog, and that the [applicant company] is therefore not entitled to compensation for preservation under the rules of the Nature Preservation Act.”
Thereafter the majority of the Supreme Court (three judges) found as follows:
“Section 43, subsection 2, of the Nature Preservation Act, which took effect on 1 January 1979, entailed a general prohibition against changing the state of bogs. It follows from the preparatory works that the object of the provision was to introduce a regulation to protect the bogs as ‘a highly significant part of our freshwater wetlands’ without having to pay compensation – see Folketingstidende 1977-78, Supplement A, p. 2629, and Supplement B, p. 730.
The prohibition resulted in [the applicant company] being unable as of 1 January 1979 to exercise its rights of extraction in Draved Bog without the permission of the County Council.
The County Council’s refusal of 13 June 1983 to grant permission to continue peat extraction states, inter alia, that ‘the southern part of the area in question consists of unspoiled raised bog, which must be described as nationally unique, geologically as well as biologically’. When on 1 June 1984 the Preservation Agency confirmed the decision, it stated, inter alia, that ‘Draved Bog is nationally of the greatest value in terms of nature preservation’.
Whether or not the refusal can justify a claim for compensation for expropriation is to be determined on the basis of an overall assessment of the interference with [the applicant company’s] right of extraction.
The interference was motivated by significant nature and environmental interests. It was part of a general programme to preserve bogs and included a general restriction on the right to extract peat in Denmark. This affected all manufacturers of sphagnum, and it has not been shown that [the applicant company], which at the relevant time had not invested in production facilities for the purpose of exercising its extraction rights at Draved Bog, and which, moreover, had access to the extraction of considerable amounts of peat [elsewhere] in this country, was affected in a particularly severe manner.
Against this background, we find no basis for awarding [the applicant company] compensation under section 73 of the Constitution. Accordingly, we vote in favour of the claims of the Ministry for the Environment.”
The minority of the Supreme Court (two judges) found as follows:
“It can be established as a fact that Denmark has a shortage of sphagnum and that, owing to transportation costs, the import of sphagnum is significantly more expensive than extraction in Denmark. On this basis, it can also be established as a fact that the sphagnum which could have been extracted in Draved Bog represented substantial value to [the applicant company]. This applies even though extraction had not commenced on 1 January 1979, when the prohibition in section 43, subsection 2, of the Nature Preservation Act took effect. In addition, [the applicant company] was in an extraordinary situation as the Raw Materials Act allowed the company to extract peat from Draved Bog and the company had leased the area from the State for a period of fifty years for this sole purpose. Thus, despite the fact that the prohibition in section 43, subsection 2 of the Nature Preservation Act was justified by substantive preservation interests, we find, in concurrence with the High Court, that in relation to [the applicant company] the legislative interference was to be regarded as expropriation and that, consequently, the [applicant] company is entitled to compensation under section 73 of the Constitution.
Having regard to the expert opinions submitted before the Supreme Court, [we find it established] that since 1 January 1979 [the applicant company] has only had limited opportunities for increasing its sale, as compared to its actual sale, at least until the mid-1990s. On the other hand, it must be taken into consideration that extraction in Draved Bog would have reduced the extraction – and thus increased the reserves – of peat at the company’s other production sites in Denmark. On this basis, and considering the reasons by the High Court, compensation must be awarded on a discretionary basis, which we, like the High Court, find should be set at DKK 5,000,000.
Accordingly, ... we vote in favour of upholding the judgment of the High Court.”
Finally, the Supreme Court ordered the applicant company to pay costs to the Ministry of the Environment in the amount of DKK 1,400,000.
B. Relevant background information
1. General conditions pertaining to bogs and the exploitation of bogs in Denmark
With regard to the background of the case, it is important to be aware of the difference between lowland bogs, which are sustained by groundwater, and raised bogs, which are sustained exclusively by atmospheric precipitation. In both types of bog, peat is formed primarily from sphagnum, but the remaining flora, and thus also fauna, differs significantly, as raised bogs are nutrient-poor with high acidity.
As a general rule, the peat in lowland bogs is dark brown with a high degree of decomposition of organic substances. This quality of peat is suitable for use as fuel, although less suitable for soil improvement and horticultural purposes (referred to below as “soil improvement” as a single category).
In raised bogs, apart from dark peat there is also light raised-bog peat which is suitable for soil improvement, but less suitable as fuel.
The formation of a peat layer happens over a long period of time. A one- metre-thick layer of light raised-bog peat will form over a period of 1,000 to 1,500 years. A similar layer of dark peat will typically form over a period of 2,000 to 3,500 years.
Subsequent to peat extraction, it will not be possible to regenerate the quantity of peat that has been removed through nature restoration, and extraction of peat can therefore not be considered to involve sustainable exploitation of natural resources.
Originally, bogs took up such a big part of the area of Denmark that it was considered beneficial to drain and cultivate bog areas. In around 1800, land in Denmark was so humid that peat had formed on 20 to 25% of the total area.
During the 1800s and the first half of the 1900s a large area of the bogs was drained and cultivated. Furthermore, peat was extracted for use as fuel and, to a lesser extent, for bedding in livestock stables.
The production of peat for fuel purposes increased rapidly during and just after the two world wars, when imports of foreign fuel were limited.
By 1966, the production of peat for fuel had almost ceased. The total Danish production of fuel peat was thus down to 9,000 tonnes in 1966, whereas the annual production on average over the period from 1940 to 1948 had reached 3-4 million tonnes.
The production of peat for soil improvement (including horticultural purposes) was insignificant until the end of the 1950s, when it increased and reached about 40,000 tonnes annually by the mid-1960s. In the following decades, production increased slightly and currently amounts to about 65,000 tonnes annually.
There is no ongoing registration of the size of Danish bog areas, particularly in the case of raised bogs. A survey carried out in around 1940 showed that raised bogs, and bogs including areas of raised bog, constituted 49,300 hectares, or about 1.1% of the total surface area of Denmark.
In recent statements under the European Union (EU) Habitats Directive, a total of 6,150 hectares, corresponding to about 0.14% of the total area of Denmark, has been classified under the habitat types “active raised bogs” (No. 7110) and “degraded raised bogs still capable of natural regeneration” (No. 7120).
Since bogs became a protected habitat type from 1 January 1979 as a result of the entry into force of Act no. 219, no permits for extracting from, or any permits to otherwise alter raised-bog areas with natural vegetation have been issued. Until then, peat production took place in the significant areas of peat deposits, which, by the end of 1978, had already lost the characteristics of bogs in their natural state.
The area of raised bogs in their natural state has thus remained the same from 1979 to the present day.
The majority of the remaining raised bogs are small in area. Larger coherent areas of active raised bog (areas of more than 10 hectares) exist in six places in Denmark. Draved Bog is among these.
2. Protection of bogs in Denmark
Several bog areas are covered by preservation that interferes to a greater or lesser extent with the owners’ options for use of the land.
The possibility of protecting areas through specific rulings on nature preservation has been available in Denmark since 1971.
In 1972 general protection of habitat types without compensation was introduced as regards the habitat types of lakes and public streams and in 1978 the habitat types of private streams and bogs were added (for further details as to the latter, see relevant domestic law and practice, chapter 3).
3. International protection of bogs
In most European countries, bogs are endangered to about the same extent as in Denmark. Less than 10% of the original bog area is left. This has enhanced the focus on the significance of bogs for society, not only as natural areas with a high degree of biodiversity, but also as factors in the hydrological cycle (abating flooding from large European rivers) and as regulators of climate.
The UN Convention on Biological Diversity, the Bonn Convention (Convention on Migrating Species) and the Bern Convention (Convention on the Conservation of European Wildlife and Natural Habitats) are of special significance for bogs.
Within the EU, the Birds Directive and the Habitats Directive are important. In the Habitats Directive, “active raised bogs” are considered a prioritised natural habitat, meaning that Member States have a duty to launch preservation and improvement measures especially promptly.
Draved Bog has been designated as a preservation area under both directives.
C. Relevant domestic law and practice
1. The Administration of Justice Act
The Administration of Justice Act (retsplejeloven) provides, in so far as relevant:
Section 312
“(1) The losing party shall compensate the opponent for the expenses incurred by the opponent as a result of the proceedings, unless otherwise agreed by the parties.
(2) The court may decide that the losing party shall not or shall only partially compensate the opponent for the expenses incurred if particular reasons make this appropriate.
(3) ...”
In a Supreme Court decision of 24 April 2003, published in the Weekly Law Reports (Ugeskrift for Retsvæsen) 2003, p. 1550 (see Hansen and Others v. Denmark (dec.), no. 26194/03, 29 May 2006), section 312, subsection 2 was applied in a case between individuals and a public authority. The case was filed by a child and its parents against a county council and the Supreme Court upheld the High Court’s judgment. Even though the plaintiffs lost the case, in consideration of the extraordinary length of the legal proceedings, the Supreme Court applied section 312, subsection 2, and exempted the plaintiffs from compensating the county council for its legal costs.
The relevant chapter of the Administration of Justice Act was amended by Act no. 554 of 24 June 2005. The preparatory works on section 312, subsection 2, as in force from 1 July 2005, contained no reference to Article 6 of the Convention, nor is the length of the proceedings mentioned as a potential “particular reason” for reducing costs in accordance with the provision in question.
2. The Constitution
The Constitution (Grundloven) provides, in so far as relevant:
Section 73, subsection 1
“(1) The right of property shall be inviolable. No person shall be ordered to surrender his property except where required in the public interest. This shall be done only as provided by statute and in return for full compensation.”
Public interference with private property rights covered by section 73, subsection 1, does not always give rise to compensation. In the public interest, the legislature may lay down general provisions limiting property rights without providing compensation.
An overall balancing exercise must be carried out to determine whether interference with protected rights not intended to transfer the exercise of the rights to the State or to others is to give rise to compensation for expropriation or is to be considered general regulatory legislation without compensation. The factors to be emphasised in this assessment are particularly whether the interference is general or particular, how burdensome the interference is and what interests to society the interference is to serve.
3. The Nature Preservation Act
The Nature Preservation Act (Naturfredningsloven), no. 520 of 1 October 1975, was amended by Act no. 219 of 24 May 1978, henceforth referred to as Act no. 219, which took effect on 1 January 1979, introducing inter alia a new provision, section 43, subsection 2, which read as follows:
“Alterations of private watercourses with a bed width of at least 1.5 metres, and of the state of bogs, may only take place with the permission of the County Council ...”.
According to the preparatory works, wetlands were diminishing so rapidly that private watercourses and bogs had to be included in the protection hitherto confined to lakes and publicly owned watercourses. Moreover, the protection of bogs was found to be necessary with reference to their special fauna and flora and to interests relating to landscape conservation, education and recreation (Folketingstidende 1978-79, Supplement A, pp. 2624-25). Accordingly, bogs were no longer considered reserves of raw materials (peat) but part of a general campaign for the protection of the remaining Danish wetlands. The aim of the Act was to include all private watercourses and bogs in this protection.
Act no. 219 also reformed the preservation procedure and the administrative framework. On 1 January 1979 the local preservation planning committees were abolished and their powers transferred to the county councils.
4. The Raw Materials Act
Pursuant to the Raw Materials Act (Råstof-loven, no. 287 of 7 June 1972), extraction of raw materials was subject to a permit being granted by the County Council, unless rights had been acquired prior to 9 February 1972 and notified to the County Council prior to 1 April 1973.
5. Organisation chart within the Ministry of the Environment
State Forest Districts were the responsibility of the Forest and Nature Agency (Skov- og Naturstyrelsen), which was ultimately attached to the Ministry of the Environment (Miljøministeriet).
6. Legal developments in the general regulatory legislation based on nature and environmental protection interests
General regulations to limit the exercise of property rights without providing compensation may be found as early as 1849, when the first Danish Constitution was adopted and laws on agricultural land, forests, sand dunes and hedges were in place to limit landowners’ rights. Similarly, legislation to regulate activities harmful to human health was implemented in the 1850s.
In 1937 legislation on landscape protection through the prohibition of construction along forests and beaches (later expanded to areas along watercourses and lakes and around churches and ancient monuments) was enacted through amendments to the 1917 Nature Preservation Act. The first Urban Planning Act authorising local authorities to lay down spatial plans with legal effect on landowners’ rights was passed in 1938.
Subsequently, a significant amount of legislation on planning, environmental protection and nature preservation was passed within a relatively short period in the 1960s and 1970s. Among the instruments enacted were the Zoning Act (1969), the Summerhouse and Camping Act (1972), the Raw Materials Act (1972), the National and Regional Planning Act (1973), the Environmental Protection Act and the Municipal Planning Act (1975). A number of existing acts were comprehensively amended during this period, including the Water Supply Act (1969), the Nature Conservation Act (1969) and the Watercourses Act (1973). Since then the legislation mentioned above has been updated or amended on numerous occasions.
The legislation was enacted as a response to the growing pressure on nature and natural resources from, for example, industrialisation, agricultural intensification, urbanisation and the consequent degradation of the environment and nature. A similar development occurred in other western European countries from around 1970. This development was also a response to a growing number of international obligations either through EU legislation or through international treaties, including a number of generally accepted principles, such as the precautionary principle, the polluter-pays principle and the principle of sustainable development.
In addition to general regulations governing private property rights, general regulations have been passed with a view to protecting specific habitat types in Denmark. First and foremost, a number of habitat types which had been in serious decline during the century were covered by the general preservation scheme under the Nature Preservation Act in 1972. Thereafter, any alteration of an area covered by the scheme was prohibited without an exemption having been granted by the relevant authority.
The scheme was successively extended. In 1972 it covered lakes and public watercourses, and in 1978 it was extended to cover private watercourses and bogs. In 1981 salt marshes, swamps, coastal meadows and heaths were included. The last extension occurred in 1991, when humid permanent grassland, uncultivated dry grassland and stone and earth dykes were included in the scheme as well. Also, in 1991 a general prohibition on cultivation closer than two metres from watercourses was introduced.
7. The adversarial system (forhandlingsprincippet) in Danish procedural law
In Denmark, civil proceedings are as a rule subject to the so-called adversarial system, whereby the court has to make its decision on the basis of the claims and particulars produced and provided by the parties. Hence, in accordance with section 338 of the Danish Administration of Justice Act (retsplejeloven), the court cannot award a party more than his or her claim, and it may only take into consideration submissions relied on by the party or submissions that cannot be excluded.
The adversarial system is based on the assumption that the parties are the best placed, in view of their advance knowledge of the facts of the case, to assess what claims the case can support, and what submissions may be relevant for inclusion in the proceedings before the court.
The court may only take into consideration submissions relied upon by the parties. The parties are thus subject to a burden of production, as the court is supposed only to refer to the specific circumstances relied upon in support of the parties’ litigation claims when it passes judgment. If a party has not produced a certain submission, the court is unable to take it into consideration on its own motion.
A submission can only be considered to have been relied upon if a specific circumstance has been emphasised as an element in the reasoning for the party’s litigation claim. A submission must contain a certain clarification of a legal fact, relating both to the pure facts and to their possible legal significance. The wording of a submission may require a certain legal description or qualification of the particulars presented to the court. A certain legal qualification of the bare facts may be necessary to allow the court and the opponent to understand the connection which is believed by the party to exist between his statement of facts and his litigation claims (see Gomard, Civilprocessen (Civil Procedure), 6th ed., 2007, p. 517).
In addition to claims and submissions, the adversarial system also includes the provision of evidence (except in certain proceedings, such as matrimonial proceedings, in which the parties do not have full control of the outcome despite their pleadings, even if the parties agree). By contrast, the adversarial system does not apply as concerns the rules of law.
COMPLAINTS
1. The applicant company complained under Article 6 of the Convention that the proceedings had not been conducted within a reasonable time.
2. Moreover, the applicant company submitted that the Supreme Court had failed to give reasons for its dismissal of the company’s alternative claim to be refunded the rent and property taxes paid between 1979 and 1997, and the interest accruing on those payments.
3. Furthermore, it complained that the Supreme Court’s judgment of 28 February 2006 was in breach of Article 1 of Protocol No. 1 to the Convention.
THE LAW
1. The applicant company maintained that the dispute between it and the Ministry of the Environment had not been determined within a reasonable time within the meaning of Article 6 of the Convention, which, in so far as relevant, reads:
“In the determination of his civil rights and obligations ..., everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law...”
The Government submitted that the applicant company had failed to exhaust domestic remedies because it had not at any time advanced the argument that the length of the proceedings had exceeded a reasonable time and/or asked for the date of the trial to be scheduled. The parties to the civil proceedings were an individual and a public authority; thus, had the applicant company lodged its complaint before the Supreme Court, the latter could have provided redress for any violations of the Convention when assessing the legal costs pursuant to section 312 of the Administration of Justice Act.
The applicant company pointed out that section 312, subsection 2, had been amended by Act no. 554 of 24 June 2005, in force from 1 July 2005, and that the preparatory works concerning that provision did not contain any reference to Article 6 of the Convention or to “length of proceedings” as a potential “particular reason” for reducing costs in accordance with the provision in question. In the light of that observation, the applicant company maintained that the Government had failed to demonstrate that section 312, subsection 2, constituted an effective and sufficient remedy.
The Court recalls that the purpose of Article 35 § 1, which sets out the rule on exhaustion of domestic remedies, is to afford the Contracting States the opportunity of preventing or putting right the violations alleged against them before those allegations are submitted to the Court (see e.g. Selmouni v. France [GC], no. 25803/94, § 74, ECHR 1999-V). The rule in Article 35 § 1 is based on the assumption, reflected in Article 13 (with which it has a close affinity), that there is an effective domestic remedy available in respect of the alleged breach of an individual’s Convention rights (ibid.).
Thus, in order to examine the Government’s objection, although Article 13 of the Convention has not been relied on, it has to be determined whether in the present case effective remedies existed.
The Court reiterates that the burden of proving the existence of an effective and sufficient remedy lies upon the State invoking the rule (see, among other authorities, Vernillo v. France, judgment of 20 February 1991, Series A no. 198, § 27; Dalia v. France, judgment of 19 February 1998, Reports of Judgments and Decisions 1998-I, § 38; and Susini and others v. France (dec.), no. 43716/98, 8 October 2002).
It also reiterates that at the relevant time Danish law did not contain remedies which have been specifically designed or developed to provide a remedy in respect of complaints about the length of civil court proceedings, whether preventive or compensatory in nature.
However, in civil proceedings initiated by an individual against or involving a public authority, the Danish courts may grant redress for a length-of-proceedings violation, by, for example, exempting the individual from paying legal costs or by deciding that expenses and fees are to be covered by the Treasury (see, among other authorities, Kirsten Norman v. Denmark (dec.), no. 44704/98, 14 June 2001; Hansen and Others v. Denmark (dec.), no. 26194/03, 29 May 2006; and Ugilt Hansen v. Denmark (dec.), no. 11968/04, 26 June 2006).
The Court need not rule in general whether section 312, subsection 2, of the Administration of Justice Act is a remedy which, depending on the circumstances of the case, should be used, for example where a court refuses to terminate pre-trial proceedings although the case is ready for trial in the applicant’s view, or to schedule court hearings at shorter intervals in order to speed up the trial.
In the present case, however, the Court is satisfied that the applicant company could have been granted an exemption from paying legal costs pursuant to section 312, subsection 2, of the Administration of Justice Act, had a complaint about the length of the proceedings been lodged and the outcome been successful.
It notes in particular that the applicant company lost the case before the Supreme Court and accordingly was ordered to pay costs to the Ministry of the Environment in the amount of DKK 1,400,000. Moreover, the applicant company was not granted free legal aid in the proceedings; hence, it could in reality have been exempted from paying legal costs (see Hansen and Others, both cited above).
In these circumstances, the Court finds that the applicant company failed to avail itself of a remedy which may be considered effective for the purpose of Article 35 § 1 of the Convention. It follows that the Government’s objection is well-founded and that this part of the application must be rejected pursuant to Article 35 § 4 of the Convention.
2. Relying on Article 6 of the Convention, the applicant company also complained that it had not had a fair hearing before the Supreme Court, because the latter had failed to duly state reasons for dismissing the company’s further alternative claim in the amount of DKK 883,782.90 concerning the refund of the rent and property taxes paid between 1979 and 1997, and the interest accruing on those payments.
The Government submitted that this part of the application should be declared inadmissible either because of the applicant company’s lack of status as victim or because it had failed to exhaust domestic remedies.
They pointed out that before the Supreme Court the applicant company’s further alternative claim had relied on the same two legal bases as the main and the alternative claim, namely a claim for compensation for conservation under the Nature Preservation Act and a claim for compensation for expropriation under section 73 of the Constitution.
They argued that the Supreme Court had given detailed reasons as to why it had found against the applicant company in respect of the two legal bases relied on and it could not have been expected to repeat exactly the same reasoning in respect of the alternative and the further alternative claim.
Moreover, in so far as the applicant company’s further alternative claim had relied on another legal basis, for example general contract law, they argued that it should have advanced submissions in relation to that basis.
The Government noted that civil cases were subject to the adversarial system, which meant that the courts could only consider submissions produced by the litigants. Accordingly, the fact that the Supreme Court had not considered the further alternative claim in the light of general contract law or another legal basis had been entirely due to the applicant company’s failure to ask it to do so.
Consequently, the Government submitted that the applicant company, which had been represented by legal counsel throughout the proceedings, could not reasonably claim to be a victim for the purpose of Article 34 of the Convention or be considered to have exhausted domestic remedies within the meaning of Article 35 of the Convention.
The applicant company reiterated that its further alternative claim had been based on the right of property, more specifically section 73 of the Constitution, just as its principal and alternative claims had been. Thus, there had been no reason to speculate on contract law or other legal bases.
The applicant company pointed out that before the court it had submitted three claims; the principal claim was for payment of DKK 15,200,000; the alternative claim was for payment of a lesser amount; and the further alternative claim was for payment of DKK 883,782.90. The first two claims had been related, whereas the further alternative claim was distinct. Had it not been distinct, it would have been covered by the alternative claim. It had been stated explicitly that the amount was equivalent to what had been paid under the contract between 1979 and 1997 in rent and property taxes, together with accruing interest, in relation to the area of 66 hectares in which the applicant company had planned to extract peat. Thus, although obviously the further alternative claim was also a claim for compensation, it had been based on different factual grounds, namely the collection of payments between 1979 and 1997 as opposed to the profit expected in 1978 had the peat extraction gone ahead.
Accordingly, the further alternative claim had been based on a different submission from the principal and the alternative claim, which had been “in favour of compensation for being denied the right to extract sphagnum”. Rather, it had been a submission in favour of compensation “for expenses defrayed in the form of rent and property tax after the instigation of the preservation procedure.”
The Supreme Court had not even mentioned the specific submission in support of the further alternative claim and the applicant company had been left with the impression that the claim had simply been neglected. In those circumstances, the applicant company maintained that the proceedings had fallen short of the obligations arising out of Article 6 of the Convention.
The Court reiterates that, according to its established case-law reflecting a principle linked to the proper administration of justice, judgments of courts and tribunals should adequately state the reasons on which they are based. The extent to which this duty to give reasons applies may vary according to the nature of the decision and must be determined in the light of the circumstances of the case. Although Article 6 § 1 obliges courts to give reasons for their decisions, it cannot be understood as requiring a detailed answer to every argument. The function of a reasoned judgment is inter alia to show the parties that their submissions have been heard (see, among other authorities, Klemeco Nord AB v. Sweden, no. 73841/01, § 42, 19 December 2006).
Turning to the circumstances of the specific case, the Court notes that it is not in dispute that the applicant company relied on the same two legal bases for its claims for compensation, whether concerning the principal claim, the alternative claim or the further alternative claim. The legal bases were the Nature Preservation Act and the provisions on expropriation under section 73 of the Constitution.
The Supreme Court firstly endorsed the High Court’s finding that it was not the preservation initiated in December 1978, but the general prohibition in section 43, subsection 2, of the Nature Preservation Act that was the reason why the applicant company was prevented from exercising its right to extract peat/sphagnum from Draved Bog, and that therefore the applicant company was not entitled to compensation under the rules of the Nature Preservation Act.
Thereafter the Supreme Court turned to the question whether in relation to the applicant company the general prohibition in section 43, subsection 2, of the Nature Preservation Act and the County Council’s refusal of 13 June 1983 to grant permission to continue peat extraction (confirmed by the Preservation Agency on 1 June 1984) had amounted to expropriation which could justify a claim for compensation under section 73 of the Constitution. That question was to be determined on the basis of an overall assessment of the interference with the applicant company’s right of extraction.
The Supreme Court noted that the County Council and the Preservation Agency had found, respectively, that “the southern part of the area in question consists of unspoiled raised bog, which must be described as nationally unique, geologically as well as biologically” and that “Draved Bog is nationally of the greatest value in terms of nature preservation”.
Thereafter it stated: “the interference was motivated by significant nature and environmental interests. It was part of a general programme to preserve bogs and included a general restriction on the right to extract peat in Denmark. This affected all manufacturers of sphagnum, and it has not been shown that [the applicant company], which at the relevant time had not invested in production facilities for the purpose of exercising its extraction rights at Draved Bog, and which, moreover, had access to the extraction of considerable amounts of peat elsewhere in this country, was affected in a particularly severe manner. Against this background, we find no basis for awarding the applicant company compensation under section 73 of the Constitution.”
Accordingly, the Supreme Court found “in favour of the Ministry of the Environment’s claims”, without additionally addressing the applicant company’s alternative claim or its further alternative claim.
In the Court’s view the Supreme Court’s judgment provided reasons that must be deemed sufficiently detailed for its conclusion that the legal bases relied on by the applicant company could not justify a claim for compensation either under the Nature Preservation Act or under section 73 of the Constitution. Moreover, since all the claims relied on the same legal bases, it could hardly be expected that the Supreme Court, before reaching its overall conclusion in favour of the Ministry, separately should repeat its reasoning as to the main claim in order to dismiss the alternative and further alternative claims.
Accordingly, the Court finds that the Supreme Court’s judgment 28 February 2006 did contain sufficient reasons for the purposes of Article 6 § 1 of the Convention. Consequently, this part of the application is manifestly ill-founded and must be dismissed pursuant to Article 35 §§ 3 and 4 of the Convention.
3. Lastly, the applicant company complained that the outcome of the Supreme Court’s judgment of 28 February 2006 was in breach of Article 1 of Protocol No. 1 to the Convention, which reads:
“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.”
The Government submitted, in line with the Supreme Court, that only the County Council’s decision of 13 June 1983 to refuse permission to extract peat, later upheld by the Preservation Agency, constituted an interference with the applicant company’s right under the provision relied on.
They maintained that the interference had constituted control of the use of property, falling within the scope of the second paragraph of Article 1 of Protocol No. 1 (the third rule) since the rights were only limited. They observed that the applicant company had been granted permission to extract peat in the northern part of Draved Bog, which contained 56% of the peat in the bog. Moreover, they pointed out that from 25 May 1973 until 1 March 1983 the applicant company had sublet to another company the cultivated area, which amounted to 110 hectares. According to the sublease contract, the applicant company had received DKK 50,000 in rent per year. Thus, since allegedly under the 1954 contract the applicant company had paid an average rent of DKK 13,600 per year, it was evident that it had continued to derive financial benefit from the lease.
They submitted that the interference had been in accordance with the law and had pursued a legitimate aim, namely to protect the natural environment, and more specifically to preserve the remaining raised bogs in Denmark and thereby ensure the preservation of unique areas like Draved Bog.
With regard to the assessment of whether 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 had been struck, in the Government’s view a particular wide margin of appreciation should be allowed.
The Government did not contest as such that at the relevant time the applicant company had been the only peat-producing company affected by the general prohibition in section 43, subsection 2, of the Nature Preservation Act introduced by Act no. 219 of 24 May 1978. They pointed out, however, that the fact that the applicant company was dominant in extracting peat from raised bogs could not alter the character of Act no. 219 as a general regulatory act entailing general preservation of bogs and thus a general limitation on the right to extract peat in Denmark. They pointed out that the legislative amendment had not been specifically aimed at the applicant company or at Draved Bog, and that the applicant company had certainly not been the only holder of rights over bogs to have been affected by the amendment.
The Government argued that the interference with the applicant company’s property rights had been of limited intensity.
In support of that argument they submitted, firstly, that at the relevant time the applicant company had made virtually no investment with a view to extracting peat. They acknowledged that the applicant company had cleared some growth in the bog in the autumn of 1978 with a view to subsequent extraction and that in 1980, for the purpose of the legal proceedings it had drawn up a detailed plan for the establishment of production facilities and a compensation statement. Both measures, however, had entailed very limited costs and the applicant company had failed to substantiate that in 1978, the same year in which Act no. 219 was adopted, it had indeed planned to commence extracting peat.
Secondly, the Government pointed out that from the 1960s until approximately 1971 the applicant company had extracted peat in Draved Bog and had presumably made a profit from its activities in that connection. Moreover, since the permission to extract peat had been refused only for the southern part of the bog the applicant company could continue extracting in the northern part.
Thirdly, as found by the Supreme Court, only a small part of the applicant company’s overall business had been affected by Act no. 219 and the subsequent refusal of permission to extract peat in the southern part of Draved Bog.
The Government contested that the applicant company should enjoy special protection under Article 1 of Protocol No. 1 to the Convention because its rights derived from an “irrevocable State contract” as it had argued. Its expectations of the contract must have decreased at least in May 1978, when Act no. 219 had been passed by Parliament. The Government thus argued that it had been reasonable to expect that from that time the applicant company had had a duty to mitigate its possible losses by adapting its other activities of extracting and importing peat to the prospect that permission to extract peat from all parts of Draved Bog might not be obtained. Furthermore, the Government found that the applicant company’s alleged expectations had been seriously compromised by the fact that it had been aware even before the enactment of Act no. 219 that extraction of peat was subject to a system of official registration and authorisation in accordance with the Raw Materials Act as applicable at the time.
Lastly, the Government found it relevant to take into account the fact that the State had on several occasions engaged in serious settlement negotiations with the applicant company, on issues including the repayment of rent paid by it since 1979. Nevertheless, the applicant company had allegedly refused and had chosen to continue its contractual obligation with the State. However, had the applicant company found that the limitation on its extraction facilities constituted a failure of the basic condition of the lease it could have invoked general contract law and terminated the lease for breach of contract.
The applicant company claimed as its main submission that it was contrary to Article 1 of Protocol No. 1 that its rights under the State contract for peat extraction in Draved Bog had been interfered with without provision of compensation.
As a subsidiary argument, it claimed that it was contrary to that provision that the State had collected full payment under the contract although the applicant company’s rights had been denied.
The applicant company pointed out that it had entered into a State contract, which was valid for fifty years, and thus until April 2005. In 1973, pursuant to the Raw Materials Act, it had had to provide notification of its rights. Those rights had been officially acknowledged in 1975. Nevertheless, owing to the preservation procedure, which had been initiated on 21 December 1978, to the introduction on 1 January 1979 of section 43, subsection 2, of the Nature Preservation Act, and to the subsequent refusals to grant permission, the applicant company had suddenly been deprived of its rights to extract peat in the southern area of Draved Bog, amounting to 66 hectares. Those interferences had taken away the very raison d’être underpinning the State contract.
The applicant company maintained that the interference either amounted to deprivation of property or came under the general rule concerning peaceful enjoyment of property.
The permission granted as to the northern part of the bog was immaterial, since it was not possible commercially to exploit the darker peat found there unless mixed with the lighter peat from the southern part. Likewise, although the applicant company had retained its rights to sublet the cultivated areas of Draved Bog, and had in fact done so in respect of an area of 110 hectares, the income from the sublease, amounting to DKK 50,000 per year, was only marginal when compared to the profit expected to be made from peat extraction. The applicant company pointed out that the income from the sublease could not be compared to the average rent of DKK 13,600 per year which it had paid under the 1954 contract, since the latter sum had only covered the rent relating to the 66 hectares in the southern part of the bog.
The applicant company disagreed with the Government that the latter should enjoy a particular wide margin of appreciation in the present case. They maintained that State contracts in general should give rise to special protection under Article 1 of Protocol No. 1 in order to prevent the State from upsetting contractual equality through sovereign actions.
As to the State contract in question, it was no coincidence that it had been intended to last for fifty years. Peat had also been a limited resource at the time the contract was signed and the contractual partner, Lindet State Forest District, had acknowledged that it was for the applicant company to carry out the overall planning. The latter had had faith in the contract and there had been no urgency to embark on peat extraction in Draved Bog. Otherwise, the applicant company would naturally have commenced extraction early on.
The applicant company pointed out that it was seeking compensation for lost profit, as opposed to investment made. Thus, the fact that only minor investments had been made in 1978, nearly thirty years before the expiry of the contract, was in perfect conformity with the intentions underpinning the contract. In response to the Government’s submission as to the possibility for the applicant company to import peat, it stressed that importing would necessarily entail transport costs and that if it had wished to look for an alternative solution, exploiting its facilities at other bogs in Denmark (Lille Vildmose and Store Vildmose) would have been more obvious. However, Draved Bog was attractive from a financial point of view, because the lighter peat was a limited resource.
The applicant company contested the Government’s allegation that it had refused the offer of 21 June 1993 from the Forest and Nature Agency to negotiate the recovery of some of the rent payments. Had the State been serious in this matter, the rent could simply have been repaid. Moreover, the applicant company contested that it could have terminated the State contract, since that option, and the option to refuse to pay the rent, would have entailed significant risks. Thus, in the event that a permit had been granted under section 43, subsection 2, of the Nature Preservation Act, termination of the contract or non-payment of the rent would have produced a new, separate basis on which the right to extract peat might have been disputed. Accordingly, by collecting full payment under the contract between 1979 and 1997, Lindet State Forest District had taken advantage of the applicant company’s precarious situation. The applicant company pointed out, however, that the State could not on the one hand take away the raison d’être of the State contract, and on the other hand claim full payment in accordance with the original terms of the very same contract. Such behaviour and, subsequently, the refusal to reimburse the amounts collected after 1978 constituted a violation of Article 1 of Protocol No. 1 to the Convention, as set out in the applicant company’s subsidiary claim.
The Court reiterates that Article 1 of Protocol No. 1 to the Convention comprises three distinct rules. The first rule, set out in the first sentence of the first paragraph, is of a general nature and enunciates the principle of the peaceful enjoyment of property. The second rule, contained in the second sentence of the same paragraph, covers deprivation of possessions and makes it subject to certain conditions. The third rule, stated in the second paragraph, recognises that Contracting States are entitled, amongst other things, to control the use of property in accordance with the general interest. Moreover, “possessions” within the meaning of the provision can be “existing possessions” or assets, including claims, in respect of which an applicant can argue that he has at least a “legitimate expectation” of obtaining effective enjoyment of a property right (see, inter alia, Stretch v. the United Kingdom, no. 44277/98, §§ 32-40, 24 June 2003; Iatridis v. Greece, no. 31107/96, § 54, ECHR 1999-II; and Bruncrona v. Finland, no. 41673/98, §§ 78-79, 16 November 2004). The three rules are not “distinct” in the sense of being unconnected: the second and third rules are concerned with particular instances of interference with the right to the peaceful enjoyment of property and should therefore be construed in the light of the general principle enunciated in the first rule and must comply with the principle of lawfulness and pursue a legitimate aim by means reasonably proportionate to the aim sought to be realised (see, for example, Beyeler v. Italy [GC], no. 33202/96, §§ 108-14, ECHR 2000-I).
In the present case the applicant company maintained that the interference had been caused both by the preservation procedure, which was initiated on 21 December 1978, and by the introduction on 1 January 1979 of section 43, subsection 2, of the Nature Preservation Act and the subsequent refusals by the authorities to grant it permission to extract peat from the 66 hectares of the southern part of Draved Bog.
The Court observes that in 1954 the applicant company entered into the contract with Lindet State Forest District for the exclusive and irrevocable rights to extract peat in Draved Bog for fifty years over an area of 212 hectares.
Both the High Court and the Supreme Court found that it was the general prohibition in section 43, subsection 2, of the Nature Preservation Act, in force from 1 January 1979, that was the reason why the applicant company had been prevented from exercising its right to extract peat from Draved Bog. The Court finds that it is not in a better position to conclude otherwise. Pursuant to the provision in question, alterations of the state of bogs could only take place with the permission of the County Council. Such legislation cannot be qualified as a deprivation of possessions. Nevertheless, it meant that the applicant company had to request a permit, which was refused by the County Council on 9 June 1983, in a decision upheld by the Preservation Agency on 1 June 1984, in respect of the southern part of Draved Bog amounting to 66 hectares. That confirmed that the applicant company had a proprietary interest in the leased area of Draved Bog. Thus, although the legislation was intended as a means of controlling bog owners’ use of their possessions, with regard to the applicant company the law comes close to an interference which should be analysed in the light of the general rule in the first sentence of Article 1 of Protocol No. 1 (see Broniowski v. Poland [GC], no. 31443/96, § 136, ECHR 2004-V).
The Court must examine whether an interference with the peaceful enjoyment of possessions strikes the requisite fair balance between the demands of the general interest of the public and the requirements of the protection of the individual’s fundamental rights, or whether it imposes a disproportionate and excessive burden on the applicant (see, among many other authorities, Jahn and Others v. Germany [GC], nos. 46720/99, 72203/01 and 72552/01, § 93, ECHR 2005-VI). More specifically in the present case, it must examine whether the Supreme Court in its judgment of 28 February 2006 struck a “fair balance” between the demands of the general interests of the community and the requirements of the applicant company’s proprietary interest.
It is undisputed that the southern part of Draved Bog consisted of unspoiled raised bog, described as nationally unique, geologically as well as biologically, and that nationally it was of the greatest value in terms of nature preservation. Thus, undoubtedly there was an important general interest on the part of the community in preserving it. The Supreme Court stated in that connection that section 43, subsection 2, of the Nature Preservation Act was motivated by significant nature and environmental interests. Furthermore, within the areas of environmental, social and financial policy, national authorities enjoy a certain margin of appreciation in the implementation of laws regulating property and contractual relationships (see Alatulkkila and Others v. Finland, no. 33538/96, § 67, 28 July 2005, Perinelli and others v. Italy (dec.), no. 7718/03 and Longobardi and others v. Italy, no. 7670/03, both of 26 June 2007).
Turning to the applicant company’s fundamental rights, the Supreme Court found that the company was not affected in a particularly severe manner. It noted in this connection that the introduction of section 43, subsection 2, of the Nature Preservation Act had affected all manufacturers of sphagnum, that at the relevant time the applicant company had not invested in production facilities for the purpose of exercising its extraction rights at Draved Bog, and that it had access to the extraction of considerable amounts of peat elsewhere in Denmark.
The Court endorses the Government’s observations that section 43, subsection 2, of the Nature Preservation Act, introduced by Act no. 219 of 24 May 1978, was a general regulatory act entailing general preservation of bogs and consequently a general limitation of the right to extract peat, and that the applicant company’s dominant position on the peat-extraction market at the relevant time could not alter this fact.
According to the contract of 1954, the leased area of Draved Bog amounted to 212 hectares. By May 1973, 110 hectares of that area had been cultivated and were sublet to the company Pindstrup Foderindustri A/S until March 1983 for an annual amount of DKK 50,000 (equivalent to approximately EUR 6,750). The applicant company pointed out that its further alternative claim during the domestic proceedings, namely the claim for reimbursement of approximately DKK 884,000 (equivalent to approximately EUR 117,000) for rent and property taxes paid in the period between 1979 and 30 October 1997, including the calculated annual rent of approximately DKK 13,600 (equivalent to approximately EUR 1,840), plus added interest accruing on those payments, related solely to the disputed 66 hectares in the southern part of Draved Bog. Thus, in the applicant company’s opinion, a comparison of the amounts of DKK 50,000 and DKK 13,600 could not be used to conclude that the company had benefited overall from the 1954 contract during those years. The Court notes, nevertheless, that the applicant company cultivated more than half of the area covered by the 1954 contract and subsequently, in the years between 1973 and 1983, made an additional profit by subletting it.
In addition, subsequent to the introduction of section 43, subsection 2, of the Nature Preservation Act, the applicant company was granted permission to extract peat from the northern part of Draved bog. The applicant company submitted that this permission was of insignificant value to it since only so‑called darker peat could be extracted from that area and that in order to exploit the peat commercially, the darker peat had to be mixed with so‑called lighter peat, which was in short supply in general. The Court notes, nevertheless, that the northern part contained approximately 56% of the peat which remained to be extracted from Draved Bog and that the 66 hectares at issue represented less than 32% of the total area, amounting to 212 hectares, which the applicant company had leased under the 1954 contract.
The Court is aware that the applicant company in 1980 produced a report in which it estimated its loss of expected profit relating to the area of 66 hectares at DKK 15,200,000 (equivalent to approximately EUR 2,050,000).
The High Court, although finding for the applicant company, reduced the compensation to DKK 5,000,000. In assessing that amount it stated that its calculation had taken as its starting point the 1980 report. However, according to the information provided, since 1979 the applicant company had extracted, processed and sold peat from other bogs in Denmark as well as abroad, thereby being able to meet its market demands. The profit thus acquired was to be subtracted when determining the loss for which the applicant company could claim compensation.
The Supreme Court found that the applicant company was not entitled to any compensation since it had not been affected in a particularly severe manner. It observed that at the relevant time the applicant company had not invested in any production facilities for the purpose of exercising its extraction rights at Draved Bog and that it had access to the extraction of considerable amounts of peat elsewhere in Denmark.
In the Court’s view the said observations by the Supreme Court were relevant and appropriate for the determination of whether the applicant company had been affected in a particularly severe manner (see, mutatis mudandis, Longobardi and others v. Italy (dec.) and Perinelli and others v. Italy (dec.), both cited above).
Moreover, having regard to the various findings and the material before it, the Court must limit itself to an overall assessment of whether a “fair balance” between the demands of the general interests of the community and the requirements of the applicant company’s proprietary interest was struck by the domestic courts.
The Court is satisfied that the applicant company’s claims were carefully examined by two judicial bodies, which took all the relevant elements into account, and there is nothing to show that the conclusions reached by the courts were arbitrary or unreasonable.
As regards the applicant company’s subsidiary claim before the Court, which was identical to its further alternative claim before the domestic courts, it is not in dispute that this claim was based on exactly the same legal reasoning as the principal claim and the alternative claim, namely section 73 of the Constitution. Accordingly, and since it is not for the Court to speculate as to the outcome of the domestic proceedings had the applicant company relied on another legal basis for its further alternative claim, the Court’s reasoning above applies likewise to the applicant company’s subsidiary claim before it.
In these circumstances the Court finds that the Danish authorities cannot be said to have failed in their duty to strike a fair balance between the applicant company’s property rights and the general interests of the community. It follows that this part of the application is manifestly ill‑founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.
For these reasons, the Court unanimously
Declares the application inadmissible.
Claudia WesterdiekRait Maruste
RegistrarPresident
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