FIRST SECTION
DECISION
Application no. 65008/13
SLOT GROUP A.S.
against the Czech Republic
The European Court of Human Rights (Fifth Section), sitting on 23 February 2016 as a Committee composed of:
Ledi Bianku, President,
Aleš Pejchal,
Armen Harutyunyan, judges,
and André Wampach, Deputy Section Registrar,
Having regard to the above application lodged on 10 October 2013,
Having deliberated, decides as follows:
THE FACTS
1. The applicant is a private joint-stock company established under the laws of the Czech Republic in 1995, SLOT Group, a.s. (“the applicant company”). It has its registered office in Karlovy Vary and is represented before the Court by Mr P. Dejl, a lawyer practising in Praha.
The circumstances of the case
2. The facts of the case, as submitted by the applicant, may be summarised as follows.
1. The applicant company’s activities and licences
3. The applicant company’s activities comprise operation of lotteries and similar games of chance under the Law no. 202/1992 Coll., as amended (“the 1992 Act”). These activities are subject to licencing by the Ministry of Finance.
4. In 2012 the applicant company merged with other operators of similar activities and thus succeeded in the licences they possessed.
5. The applicant company’s licences concerned the operation of specified gaming devices at specified locations and they were mostly valid for ten years, until 2017, 2018 and 2019.
2. Legislative developments
6. On 6 September 2011 the Parliament enacted an amendment (“the 2011 Amendment”) to the 1992 Act. It was published in the Collection of Laws on 14 October 2011 under no. 300/2011 and its relevant part entered into force on 1 January 2012.
7. As amended by the 2011 Amendment, section 50(4) of the 1992 Act provided inter alia that municipalities could enact by‑laws to regulate operation on their territory of gaming activities such as those ran by the applicant company. This power included the possibility of banning such activities on the given territory altogether.
8. The 2011 Amendment contained inter-temporal provisions pursuant to which, in relation to licences granted prior to 1 January 2012, the power of municipalities under section 50(4) of the amended 1992 Law could only be exercised after 31 December 2014.
9. On 2 April 2013 the Constitutional Court, in its plenary formation, delivered a judgment invalidating the inter-temporal provisions mentioned in the preceding paragraph. The judgment was published in the Collection of Laws on 30 April 2013 under no. 112/2013.
10. The Constitutional Court relied on a line of its jurisprudence starting in 2007 to the effect that the power of municipalities to regulate gaming activities on their territories stemmed directly from the Constitution (Articles 8, 100 § 1 and 104 § 3). This power had accordingly not been conferred on them by the 2011 Amendment. The impugned inter-temporal provisions constituted in fact a temporary impediment to the exercise of that power and there were no legitimate grounds for that.
In particular, there was no justification for a claim that holders of gaming licences issued by the Ministry had a legitimate expectation that the municipalities would not exercise their constitutional power of regulation over the given sector which they had always had.
3. Withdrawal of the licences and ensuing proceedings
11. Later in 2013 the Ministry took a series of decisions whereby it withdrew a number of the applicant company’s gaming licences further to the adoption of municipal by-laws banning gaming activities on the territory of the respective municipalities.
12. The applicant company unsuccessfully challenged these decisions by way of an administrative appeal to the Minister and an administrative-law action to the administrative judiciary. Among other arguments, the applicant company contended that the decisions were unlawful and unconstitutional because they relied on the constitutional judgment of 2 April 2013 which in the applicant company’s view was in turn contrary to the principles of protection of legitimate expectations and rule of law.
13. Of the administrative law-actions filed, on 30 April 2015 the Prague Municipal Court dismissed one which was aimed at four decisions of the Minister dismissing the applicant company’s administrative appeals.
In this judgment, the Municipal Court recapitulated the case-law of the Constitutional Court referred to in its judgment of 2 April 2013 (see paragraphs 9 and 10 above) to the effect that, irrespective of the 2011 Amendment, municipalities had always had the power to regulate gaming activities on their territories, including those operated by the applicant company. The inter-temporal provisions of the 2011 Amendment had been a mistaken deviation from that premise and it had duly been rectified by the constitutional judgment of 2 April 2013.
Thus, in the Municipal Court’s view, the applicant company could not have been bona fides in expecting that the municipalities concerned would not regulate gaming operations on their territories and that the applicant company’s licences would not be affected by any such possible regulation. To the contrary, the applicant company must have been aware that its activities produce negative effects on vulnerable categories of population and are therefore subject to strict regulation. A change of circumstances such as regulation by way of municipal by-laws was therefore a natural risk inherent in the given type of business.
The Municipal Court further pointed out that gaming was regulated in order to control the negative consequences of gambling for the society and the individuals concerned.
Moreover, the Municipal Court held that application of the relevant rules in the circumstances of each individual case was reviewable by administrative courts which had jurisdiction to examine all relevant questions including possible arbitrariness or discrimination in the underlying municipal by-laws.
14. The applicant company challenged the judgment of 30 April 2015 by way of a cassation appeal, in which it recapitulated and further developed its previous arguments and added, inter alia, that that the contested judgment was contrary to the law of the European Union and to the judgment of the Court of Justice of the European Union of 11 June 2015 in a case no. C‑98/14.
The appeal is still pending before the Supreme Administrative Court.
COMPLAINTS
15. The applicant company complains under Article 1 of Protocol No. 1 that the Constitutional Court’s judgment of 2 April 2013 was unpredictable, arbitrary, in violation of the principle of legal certainty, and in breach of its legitimate expectation based on the licences awarded by the Ministry.
THE LAW
16. The applicant company alleged that the constitutional judgment of 2 April 2013 constituted a violation of its rights under Article 1 of Protocol No. 1, which provides:
“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.”
17. The Court observes at the outset that the applicant company appears to have submitted only some of the licences and decisions concerned. In other words, it appears not to have submitted all of the relevant documentation. It may therefore be open to doubt whether the application has been properly substantiated. However, the Court is of the view that it is not necessary to examine this question in detail because the application is in any event inadmissible on other grounds laid out below.
18. The Court observes that the application is primarily concerned with the Constitutional Court’s judgment of 2 April 2013. However, it is of the view that that judgment is rather a part of the legislative framework with general implications only and that any concrete repercussions on the applicant company’s property rights directly stemmed from the implementation of the legislative framework by the withdrawal of its licences following the adoption of municipal by-laws prohibiting gaming activities on the territory of the municipalities concerned.
19. As specifically concluded by the Municipal Court in its judgment of 30 April 2015, the implementation of the legislative framework in the circumstances of any individual case is reviewable by administrative courts which have full jurisdiction to examine all aspects of each case.
20. The Court notes that the applicant company itself has taken this course of action and has moreover challenged the Municipal Court’s judgment by way of a cassation appeal to the Supreme Court.
21. As that appeal is pending, the application is above all premature. Depending on is outcome, the applicant company may further assert its rights by way of a constitutional complaint. Having found no circumstances exempting the applicant company from the requirement of exhaustion of these remedies under Article 35 § 1 of the Convention, the Court considers that the applicant company has failed to comply with it.
22. This conclusion is consonant with that reached by the Court in its recent decision in Laurus Invest Hungary KFT and Continental Holding Corporation and 5 other applications v. Hungary (nos. 23265/13, 23853/13, 24262/13, 25087/13, 25095/13 and 25102/13, 8 September 2015). Those cases concerned in particular the possibility of suing the State for compensation for damage due to an alleged violation of EU law by domestic legislation and, in assessing that possibility, the Court took into account the very judgment of the CJEU relied on by the applicant company at the domestic level in the present case (see paragraph 14 above and §§ 36 et seq. of the Court’s decision of 8 September 2015).
23. It follows that the application must be rejected under Article 35 §§ 1 and 4 of the Convention.
For these reasons, the Court unanimously
Declares the application inadmissible.
Done in English and notified in writing on 17 March 2016.
André WampachLedi Bianku
Deputy RegistrarPresident
Full & Egal Universal Law Academy