FOURTH SECTION
DECISION
Application no. 10857/21
STEAG GMBH
against Germany
The European Court of Human Rights (Fourth Section), sitting on 11 April 2023 as a Committee composed of:
Armen Harutyunyan, President,
Anja Seibert-Fohr,
Ana Maria Guerra Martins, judges,
and Veronika Kotek, Acting Deputy Section Registrar,
Having regard to:
the application (no. 10857/21) against the Federal Republic of Germany lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 15 February 2021 by a German company, STEAG GmbH, which has its seat in Essen (“the applicant company”) and was represented by Ms J. Michaelis, a lawyer practising in Essen;
Having deliberated, decides as follows:
SUBJECT MATTER OF THE CASE
1. The present case concerns the applicant company’s complaints (see paragraphs 8-10 below) about a 2020 law providing for the gradual phasing out of the use of coal to produce electricity (see paragraph 3 below).
2. The applicant company, a German limited company (GmbH), operates eight hard-coal-fired power plants (Steinkohlekraftwerke, hereinafter “SKW”) in Germany. All shares are held by KSBG mbH & Co. KG, a consortium of several public utility companies. Via these companies, 85.9% of the applicant company’s shares are held by different German municipalities. The applicant company’s power plants have a remaining projected run time until between 2027 and 2039, depending on their age.
3. On 8 August 2020 the Coal-Fired Power Generation Termination Act (Kohleverstromungsbeendigungsgesetz, hereinafter “the KVBG”) came into force. It provides for a phasing out of the use of coal to produce electricity by 2038. Under this law, existing power plants have to be gradually shut down, starting in 2027. Compensation for the loss in run time for SKWs may only be obtained by auction. Since 2020, owners have been able to participate in several rounds of bidding to decommission individual power plants before 2027 in exchange for a sum based on the carbon dioxide emissions saved. All other SKWs have to shut down in the coming years without further compensation.
4. This auction system does not apply to lignite-fired power plants (Braunkohlekraftwerke, hereinafter “BKW”). Instead, the German government has negotiated fixed compensation of 4.35 billion euros (EUR) with the companies concerned. In exchange, these companies waived the right to challenge the KVBG in court.
5. The applicant company submitted that, due to the conditions and regulations of the auctions under the KVBG (see paragraph 3 above), the potential compensation would amount to a maximum of EUR 99.3 million, whereas, without interference, its power plants could generate up to EUR 720.1 million during their remaining run time.
6. On 29 July 2020 the applicant company requested an injunction before the Federal Constitutional Court, asking to have the sums auctioned off for the premature shutdown of SKWs increased.
7. On 18 August 2020 the Federal Constitutional Court dismissed the request on the grounds that the applicant company was a predominantly state‑owned enterprise (see paragraph 2 above) and therefore not protected by the articles of the German Constitution relied upon. It also stated that, for the same reasons, any future constitutional complaint would be inadmissible (1 BvQ 82/20). Subsequently, the applicant company did not lodge a constitutional complaint.
8. Before the Court, the applicant company complained under Article 1 of Protocol No. 1 to the Convention that “the provisions of the KVBG concerning the phasing out of SKWs and auctions for SKWs” constituted an expropriation without sufficient compensation.
9. It further complained under Article 14 of the Convention, read in conjunction with Article 1 of Protocol No. 1 to the Convention, that the measures concerning SKWs were much more restrictive than those concerning BKWs, even though the latter were far more damaging to the climate, and that this constituted discrimination.
10. It finally complained under Article 13 of the Convention of the lack of domestic remedies available against the KVBG (see paragraph 3 above).
THE COURT’S ASSESSMENT
11. As regards the preliminary question of locus standi, the relevant principles can be found in Vallianatos and Others v. Greece ([GC], nos. 29381/09 and 32684/09, § 47, ECHR 2013 (extracts)) and Slovenia v. Croatia ((dec.) [GC], no. 54155/16, §§ 61-63, 18 November 2020). The Court notes that 85.9% of the applicant company’s shares are held by different German municipalities (see paragraph 2 above). It reiterates that the fact that the state (indirectly) holds a majority of the shares in a company is not decisive for its locus standi. A company can nevertheless have standing before the Court if it is governed essentially by company law, does not enjoy any powers beyond those conferred by ordinary law in the exercise of its activities and is subject to the jurisdiction of the ordinary rather than the administrative courts (see Islamic Republic of Iran Shipping Lines v. Turkey, no. 40998/98, § 81, 13 December 2007). The applicant company meets these requirements. Furthermore, the applicant company does not hold any sort of monopoly position (compare JKP Vodovod Kraljevo v. Serbia (dec.), no. 57691/09, § 26, 16 October 2018) and does not participate in the exercise of governmental powers (compare State Holding Company LUGANSKVUGILLYA v. Ukraine (dec.), no. 23938/05, 27 January 2009). It is therefore a “non-governmental organisation” within the meaning of Article 34 of the Convention and, as such, entitled to lodge an application before the Court.
12. Regarding the applicant company’s complaint under Article 1 of Protocol No. 1 to the Convention (see paragraph 8 above), the relevant principles can be found in Anheuser-Busch Inc. v. Portugal ([GC], no. 73049/01, §§ 62-65, ECHR 2007‑I). The Court reiterates notably that Article 1 of Protocol No. 1 to the Convention is only applicable to existing possessions. Future income cannot be considered “possessions” unless it has already been earned or is definitely payable (ibid., § 64). In the present case, the applicant company complained in detail of the loss of expected profits, claiming that its SKWs were expecting losses of EUR 720.1 million, of which EUR 99.3 million at most could be compensated under the KVBG. These potential future losses however are not existing possessions, as they concern expected profits, that is potential future income, and are not already earned nor definitely payable. Furthermore, nothing indicates that there is a legitimate expectation that the applicant company would actually earn these profits.
13. Accordingly, this complaint falls outside the scope of Article 1 of Protocol No. 1 to the Convention and must be dismissed as incompatible ratione materiae with the Convention pursuant to Article 35 §§ 3 (a) and 4 of the Convention.
14. In so far as the complaint under Article 1 of Protocol No. 1 to the Convention was meant to be directed against the phasing out of SKWs, more precisely against the eventual revocation of the permits to exploit SKWs, it falls within the scope of Article 1 of Protocol No. 1 to the Convention. The Court has previously found that the revocation of a permit to exploit a gravel pit, for example, interfered with the owners’ right to the peaceful enjoyment of their possessions, including the economic interests connected with the exploitation of the gravel pit (see Fredin v. Sweden (no. 1), 18 February 1991, § 40, Series A no. 192).
15. However, in the absence of any details about the applicant company’s assets and their value and the question whether the revocation of the permits to exploit SKWs will have any impact on these assets, the present application does not allow the Court to analyse the question of the category to which the interference belongs, more precisely whether it amounts to a deprivation of property or merely a control of use of property (ibid., §§ 45-47, where the Court considered that the revocation of the permit constituted a control of use of property, notably because it did not take away all meaningful use of the property in question and did not deprive this property of all of its value).
16. Furthermore, the Court observes that the applicant company did not provide any substantial information which would allow the Court to determine whether the compensation granted to SKWs could be considered insufficient. It reiterates that while the taking of property without payment of an amount reasonably related to its value would normally constitute a disproportionate interference, Article 1 of Protocol No. 1 to the Convention does not guarantee a right to full compensation in all circumstances. Legitimate objectives of “public interest”, such as pursued in measures of economic reform or measures designed to achieve greater social justice, may call for less than reimbursement of the full market value. Furthermore, the Court’s power of review is limited to ascertaining whether the choice of compensation terms falls outside the State’s wide margin of appreciation in this domain (see James and Others v. the United Kingdom, 21 February 1986, § 54, Series A no. 98). The Court has also already held that environmental conservation has become an increasingly important consideration in today’s society, thus the State’s margin of appreciation is particularly wide in cases concerning environmental protection such as the present case (see Tumeliai v. Lithuania, no. 25545/14, § 72, 9 January 2018, and Hamer v. Belgium, no. 21861/03, § 78, ECHR 2007-V (extracts)).
17. Accordingly, the applicant company has failed to substantiate its complaint in this respect which must therefore be rejected as manifestly ill‑founded in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
18. Regarding the applicant company’s complaint under Article 14 of the Convention, read in conjunction with Article 1 of Protocol No. 1 to the Convention (see paragraph 9 above), the Court first reiterates that Article 14 merely complements the other substantive provisions of the Convention and the Protocols thereto. It has no independent existence since it has effect solely in relation to “the enjoyment of the rights and freedoms” safeguarded thereby (see Molla Sali v. Greece [GC], no. 20452/14, § 123, 19 December 2018). Assuming that the facts of the case fall within the wider ambit of Article 1 of Protocol No. 1 to the Convention (see paragraph 14 above), the Court further reiterates the relevant principles on the right not to be discriminated against which can be found in Biao v. Denmark [GC] (no. 38590/10, §§ 89-93, 24 May 2016).
19. Applying these principles to the present case, the Court observes that there are considerable differences between SKWs and BKWs. In contrast to hard coal, lignite is primarily mined in Germany by companies operating BKWs. The sum agreed upon between the German government and the companies operating BKWs is also meant to compensate for the necessary restructuring in these areas. The differences between the two energy sources and the way they are exploited justify a different approach regarding the compensation regime. In conclusion, the different compensation policies adopted for SKWs and for BKWs are rooted in an “objective and reasonable” justification (see Biao, cited above, § 91).
20. Therefore, the applicant company’s complaint under Article 14 of the Convention, read in conjunction with Article 1 of Protocol No. 1 to the Convention, is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
21. Regarding the applicant company’s complaint under Article 13 of the Convention (see paragraph 10 above), the Court observes that this provision does not go so far as to guarantee a remedy allowing a Contracting State’s laws as such to be challenged before a national authority on the ground of being contrary to the Convention or to equivalent domestic legal norms (see James and Others, cited above, § 85). This is however exactly what the applicant company sought.
22. It follows that this complaint, which amounts to a challenge of a domestic law as such, is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Done in English and notified in writing on 11 May 2023.
Veronika Kotek Armen Harutyunyan
Acting Deputy Section Registrar President