SMALHOUT v. THE NETHERLANDS

THIRD SECTION

DECISION

Application no. 4597/23
James SMALHOUT
against the Netherlands

The European Court of Human Rights (Third Section), sitting on 11 June 2024 as a Committee composed of:

 Peeter Roosma, President,
 Jolien Schukking,
 Diana Kovatcheva, judges,
and Olga Chernishova, Deputy Section Registrar,

Having regard to:

the application (no. 4597/23) against the Kingdom of the Netherlands lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 10 January 2023 by an American national, Mr James Smalhout (“the applicant”), who was born in 1950 and lives in Bethesda (United States of America);

Having deliberated, decides as follows:

SUBJECT MATTER OF THE CASE

1.  The case concerns the partial rejection of the applicant’s application for compensation based on a municipal scheme for moral compensation (Regeling individueel Joods moreel rechtsherstel) which, according to the applicant, violated his rights under the Convention and its Protocols.

2.  In 2017 the Municipal Council of The Hague, after consultation with several Jewish organisations, adopted a policy to compensate for property taxes (erfpacht and straatbelasting) levied by the City of The Hague through additional tax assessments in the years following the Second World War for the tax years 1942-1945 on real estate owned by the Jewish citizens who in those years did not have access to their possessions because they had been deported or were in hiding. The amount of 2,600,000 euros (EUR) was released for the implementation of the compensation scheme. It was made clear that the compensation scheme related exclusively to privately owned property and that the individual claims of injured parties were of a moral, rather than legal nature, since the tax assessments had been lawful at the time they had been made and all possible claims challenging their lawfulness were time-barred. An Advisory Committee consisting of experts with support within the Jewish community was set up by the municipality to advise it on the applications for compensation.

3.  The applicant, who is the sole descendant of his late father, sought compensation for (1) additional tax assessments paid for the residential home of his grandparents, and (2) tax assessments that would have been paid for the properties owned by three limited liability companies owned by his great‑uncle.

4.  In its advice to the municipal authorities the Advisory Committee noted that only private homes fell within the scope of the compensation scheme and that company-owned premises had been deliberately and explicitly excluded. The explanation for this policy choice related to the acts of the Nazi occupier vis-à-vis Jewish businesses in the early years of the occupation, whereby most Jewish entrepreneurs had already been forced to liquidate their businesses in 1941 prior to the beginning of the deportations to concentration camps (summer 1942). Most Jewish entrepreneurs had thus not been liable to pay property related taxes during the period covered by the scheme. Businesses that had not been liquidated had been put under the control of the Nazi occupier, and Jewish entrepreneurs had been forced to part with their share in their businesses and, as such, had also not been liable to pay property taxes. Some of those businesses survived the occupation, after which control of them was returned to the original owner or his or her descendants, who were then liable for the (outstanding) property taxes which were owed on account of the continuation of the businesses. It was therefore chosen to have the compensation scheme apply only to privately owned, not company-owned premises.

5.  Following an objection (bezwaar), the applicant received compensation (in the amount of EUR 22,500.86) for the taxes levied on the private property owned by his late grandfather. Taking into account the advice of the Advisory Committee, no compensation was awarded for taxes levied on the property owned by the legal entities owned by his great-uncle. The applicant appealed against that decision to the Regional Court of The Hague, arguing, inter alia, that the distinction made between private property and property registered to a business, was arbitrary. His appeal was heard by videoconference, owing to the restrictions imposed as a result of the COVID-19 pandemic. An interpreter was not present from the beginning of the hearing, and so the applicant, who does not speak Dutch, was not able to fully understand the authorities’ oral arguments.

6.  The Regional Court of The Hague dismissed the applicant’s appeal on 12 January 2021, making it clear that the compensation scheme had no basis in any statutory provision and was born out of moral rather than legal obligations, and that therefore judicial restraint was called for. It noted that it was not for the judiciary to question the choices the executive had made, since the compensation scheme qualified as an extra-statutory favourable policy (buitenwettelijk begunstigend beleid). That meant that any legal assessment was limited to an assessment of whether the policy was being applied in a consistent manner. The Regional Court considered that there was no indication of inconsistent application of the policy in the applicant’s case. The Regional Court dismissed the applicant’s arguments regarding violations of Article 1 of Protocol No. 1 as out of scope, since the compensation scheme did not create, as the applicant erroneously assumed, a legal obligation for the municipal authorities to repair all wrongs committed by the Nazi occupier which had infringed the property rights of the applicant’s family.

7.  The applicant lodged a further appeal with the Administrative Jurisdiction Division of the Council of State (“the Division”). The Division held an oral hearing at which the applicant was able to present his arguments and hear those made by the municipality. On 2 November 2022 the Division upheld the Regional Court’s judgment of 12 January 2021 as regards the parts relevant for the case at hand. With reference to the Court’s case-law (Sigma Radio Television Ltd v. Cyprus, nos. 32181/04 and 35122/05, §§ 151-57, 21 July 2011), the Division ruled that in cases concerning an extra-statutory favourable policy, restrained judicial review, limited to an assessment of whether the policy was being applied in a consistent manner and in compliance with fundamental norms, was permissible, and did not violate Article 6 of the Convention. With regard to the applicant’ argument that his right under Article 1 of Protocol No. 1 to the Convention had been violated because he was not entitled to compensation for levies paid for the properties owned by his great-uncle’s companies, the Division held that this argument failed since in the situation at issue there was no existing possession, nor any legitimate expectation of having such a possession, within the meaning of that Article. Further, addressing the applicant’s argument that the municipal authorities had wrongly distinguished between the rights of the “Jewish private owners” and those of Jewish owners who had organised their property in other ways, the Division noted that the scheme had not aimed to compensate levies paid for properties owned by companies and found that the distinction made was not contrary to the principle of equality. In this regard the Division observed that the municipality had clearly explained its policy choice (see paragraph 4 above) which explanation, it considered, provided a sufficient justification.

8.  Relying on Article 1 of Protocol No. 1, the applicant alleged, inter alia, that the municipal scheme had raised a legitimate expectation that he would be refunded for all immorally levied property taxes, not just those levied on homes privately owned by Jewish citizens. Under Article 14 of the Convention read in conjunction with Article 1 of Protocol No. 1, and under Article 1 of Protocol No. 12 to the Convention, the applicant complained about the distinction made between private and business property. With regard to his procedural rights under Articles 6 and 13 of the Convention, he complained of the judicial restraint exercised by domestic authorities, as well as alleged deficiencies during the oral hearing before the Regional Court.

 THE COURT’S ASSESSMENT

9.  To determine whether the applicant’s complaint falls within the scope of Article 1 of Protocol No. 1, which provides for protection of property, the Court must establish whether the applicant could have had a legitimate expectation of being compensated for the property taxes allegedly paid for the properties owned by the companies of his great-uncle.

10.  The Court has previously held that “possessions” can be existing possessions or assets, including claims, in respect of which an applicant can argue that he has at least a legitimate expectation that they will be realised, that is, that he or she will obtain effective enjoyment of a property right (see Gratzinger and Gratzingerova v. the Czech Republic (dec.) [GC], no. 39794/98, § 69, ECHR 2002‑VII). In this regard the Court has pointed out that there is a difference between a mere hope of restitution, however understandable that hope may be, and a legitimate expectation, which must be of a nature more concrete than a mere hope and be based on a legal provision or a legal act such as a judicial decision (ibid., § 73).

11.  The applicant could not have had a legitimate expectation of being compensated for the property taxes paid in respect to the property owned by his great-uncle’s companies. The compensation scheme clearly identified only private homeowners as potential beneficiaries. The applicant’s claim for compensation thus cannot be considered a “possession” within the meaning of Article 1 of Protocol No. 1. It follows that the complaint under Article 1 of Protocol No. 1 is incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3 (a) and must be rejected in accordance with Article 35 § 4.

12.  The applicant further complained of discrimination under both Article 14 in conjunction with Article 1 of Protocol No. 1, and Article 1 of Protocol No. 12.

13.  Having regard to the substance of the applicant’s complaint and the relevant context, the Court, which is the master of the characterisation to be given in law to the facts of any case before it (see Radomilja and Others v. Croatia [GC], nos. 37685/10 and 22768/12, §§ 114 and 126, 20 March 2018), is of the opinion that this complaint should be examined from the standpoint of Article 1 of Protocol No. 12 only (see Paun Jovanović v. Serbia, no. 41394/15, § 54, 7 February 2023).

14.  In relation to the applicant’s complaint under Article 1 of Protocol No. 12, the Court recalls that according to the Explanatory Report on Article 1 of Protocol No. 12, this provision applies to, inter alia, discrimination by a public authority in the exercise of discretionary power. The applicant complains of the distinction between privately owned and company-owned property made in the compensation scheme, and the Court is prepared to assume that such a distinction could fall within the scope of Article 1 of Protocol No. 12. Like Article 14, this provision affords protection against different treatment without an objective and reasonable justification, of persons in relevantly similar situations (see, for a latest recapitulation of principles, Paun Jovanović, cited above, §§ 59-60 and 74-76, 7 February 2023). In the present case, given the detailed explanation for the distinction made in the compensation scheme between privately owned and company-owned property (see paragraphs 4, 6 and 7 above), the Court does not find that the domestic authorities have exceeded their margin of appreciation in the determination of the reasonableness of justification of different treatment in the compensation scheme (ibid., § 77). It follows that the complaint under Article 1 of Protocol No. 12 is manifestly ill-founded and must be declared inadmissible in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

15.  To determine whether the applicant’s complaint falls within the scope of Article 6 § 1, which protects the right to a fair hearing, the Court must establish whether the decision regarding the applicant’s claim for compensation constituted the determination of a civil right, within the meaning of that Article.

16.  The Court reiterates that for Article 6 § 1 in its civil limb to be applicable, there must be a “dispute” over a right which can be said, at least on arguable grounds, to be recognised under domestic law, irrespective of whether that right is protected under the Convention (see Grzęda v. Poland [GC], no. 43572/18, § 257, 15 March 2022).

17.  The Court notes that the absence of a legitimate expectation of a property right under Article 1 of Protocol No. 1 does not presuppose the absence of a right within the meaning of Article 6 § 1 (see Associazione Nazionale Reduci and 275 Others v. Germany (dec.), no. 45563/04, 4 September 2007). However, given the clear exclusion of business properties from the compensation scheme, the applicant cannot claim to have had a right to compensation which was, even on arguable grounds, recognised under domestic law. It follows that Article 6 § 1 of the Convention does not apply to the facts of the present case. This part of the application is therefore incompatible ratione materiae with the provisions of the Convention and the Protocols thereto within the meaning of Article 35 § 3 (a) and must be rejected in accordance with Article 35 § 4.

18.  Moreover, even assuming that Article 6 of the Convention is applicable, the Court considers that, in the light of all the material in its possession, the applicant’s complaints do not disclose any appearance of a violation of the rights and freedoms enshrined in the Convention or the Protocols thereto (see, for the relevant principles on sufficiency of judicial review, Sigma Radio Television Ltd v. Cyprus, nos. 32181/04 and 35122/05, §§ 154-57, 21 July 2011, and for the requirements of an oral hearing, Ramos Nunes de Carvalho e Sá v. Portugal [GC], nos. 55391/13 and 2 others, §§ 187 and 192, 6 November 2018).

19.  The Court further notes that Article 13, which provides for the right to an effective remedy, can only be applied in combination with, or in the light of, one or more Articles of the Convention or the Protocols thereto of which a violation has been alleged. To rely on Article 13 the applicant must also have an arguable claim under another Convention provision (see Zavoloka v. Latvia, no. 58447/00, § 35, 7 July 2009). It follows from the foregoing that the applicant does not have an arguable claim under any other Convention provision. This part of the application is hence incompatible ratione materiae with the provisions of the Convention and the Protocols thereto 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.

Done in English and notified in writing on 4 July 2024.

 Olga Chernishova Peeter Roosma
 Deputy Registrar President