a violation of Article 1 of Protocol No. 1 (protection of property) of the European Convention on Human Rights.

Transcription

1 issued by the Registrar of the Court ECHR 396 (2012) Extremely disproportionate compensation for expropriated land: Latvian Government failed to strike a fair balance between the protection of property and the public interest In today s Grand Chamber judgment in the case of Vistiņš and Perepjolkins v. Latvia (application no /01), which is final 1, the European Court of Human Rights held, by a majority, that there had been: a violation of Article 1 of Protocol No. 1 (protection of property) of the European Convention on Human Rights. The case concerned the expropriation of land in the 1990s in connection with the enlargement of the Free Port of Riga. The expropriation was based on a special law derogating from the normal rules of expropriation. The Court found that the difference between the current value of the expropriated plots for land-tax purposes and the compensation awarded was very disproportionate and therefore that Latvia had not struck a fair balance between the public interest and the applicants fundamental rights. Principal facts The applicants, Janis Vistiņš and Genadijs Perepjolkins, are Latvian nationals who live in Riga (Latvia). They acquired five plots of land on the island of Kundziņsala under contracts of donation signed in The island is occupied by port facilities and is part of the city of Riga, to which it is physically connected. The donations were made in return for certain personal services that the applicants had rendered to the donors. The contracting parties indicated each plot of land as having a fixed value of about 705 euros (EUR), except for one which was valued at about EUR 1,410. These small amounts did not correspond to their cadastral value (for the calculation of land tax), but represented merely an indicative sum for the purposes of calculating the registration tax. The applicants paid EUR 0.35 in notary s tax and were not liable for any income tax, donations between individuals being exempted. In accordance with the law then in force, they were also exempted from the payment of land tax for 6 months following the acquisition. Mr Vistiņš and Mr Perepjolkins disagreed with the Government as to the actual value of the plots of land at the time of their expropriation. The initial decisions on development in the port areas of the island had been taken during the 1990/91 period of constitutional transition, by the Supreme Council of the Republic of Latvia, and in 1992 the authorities had taken action to fix the port s boundaries and determine the facilities to be transferred from the former Soviet Union to the independent Latvian State. On 15 August 1995 the Latvian Cabinet adopted a regulation fixing the perimeter of the Port of Riga. In accordance with that Regulation, all the plots of land owned by the applicants were included within the port s boundaries. All the privately owned land 1 Grand Chamber judgments are final (Article 44 of the Convention). All final judgments are transmitted to the Committee of Ministers of the Council of Europe for supervision of their execution. Further information about the execution process can be found here:

2 situated within those boundaries became subject to a servitude for the benefit of the public corporation responsible for the port s management. In return, the corporation was to pay the owners annual compensation of not more than 5% of the cadastral value of the plots of land in question. In January 1996 the applicants requested the Real Estate Valuation Centre of the State Land Authority to determine the cadastral value of their respective plots of land for the year The Centre certified that the cadastral value amounted to about EUR 900,000 for the land belonging to Mr Vistiņš and for the various plots of Mr Perepjolkins it totalled about EUR 5,010,000. On 11 June 1997 the administration of the Free Commercial Port of Riga applied, in its turn, to the Valuation Centre, requesting it to calculate the amount of compensation that would have to be paid to the applicants in accordance with Article 2 of the Supreme Council s decision on the conditions of entry into force of the Law on the expropriation of real estate in the public interest (the General Expropriation Act, enacted in 1923). That Article limited the amount of such compensation to the cadastral value of the land as fixed in July 1940, multiplied by a conversion ratio. On 12 June 1997 the Centre issued two certificates stating that Mr Vistiņš would receive about EUR 850 for his plot of land, and Mr Perepjolkins about EUR 13,500 for all his plots. The Cabinet ordered the expropriation of all the land in question for the benefit of the State. On 30 October 1997 the measure was confirmed by Parliament, which enacted a special law for that purpose. Under that law Mr Vistiņš and Mr Perepjolkins were to be paid compensation for the expropriation, which would be deemed completed once the sums had been paid into their current accounts. In 1998 Mr Perepjolkins brought two sets of proceedings to obtain rent arrears for the use of his land. He requested the payment of sums due for the period from 21 April 1994 to 31 March In a judgment of 15 October 1998, upheld in cassation proceedings, the Riga Regional Court ordered the Free Port to pay him about EUR 448,150 for the use of his land during the period in question. Mr Perepjolkins then brought fresh proceedings to obtain from the Free Port the payment of rent arrears for the period subsequent to 1 April 1996 and compensation for the servitude imposed on his property. On 18 March 1999 the Civil Division of the Supreme Court partly upheld his claim, awarding him about EUR 145,000. It further indicated that the applicant s title to the property had ceased on 9 September 1997, when the expropriation had become effective. Mr Vistiņš, brought similar proceedings. In a judgment of 9 June 1999 the Civil Division ordered the Free Port to pay him about EUR 85,000 in rent arrears for the period from 1994 to In January 1999 the applicants sued the Transport Ministry before the Riga Regional Court. They requested the annulment of the cadastral registration of the State s title, and the restoration, in the land registers, of the previous entries attesting to their ownership of the land in question. They emphasised that they were not satisfied with the sums paid by way of compensation and that they were deprived of their right to challenge those sums before a court. In a judgment of 29 March 2000 the Regional Court dismissed the applicants claims. According to the judgment, the expropriation was not based on the 1923 General Expropriation Act, as the applicants had claimed, since the measure in question had been decreed in the context of the Latvian land reform, and thus the special Law of 30 October 1997 was to be applied. The applicants appealed. They emphasised at the outset that they did not object to the expropriation as such, provided the statutory formalities were observed and the amount of the compensation was reasonable. In their view, this had not been the case, no expert s report having been ordered for the purpose of determining the actual value of 2

3 the disputed land. The applicants did not challenge the finding that the Law of 30 October 1997 was a special law but argued that this law could not be construed as derogating from the normal expropriation procedure. The Civil Division dismissed the applicants appeal. Addressing the applicants objection to the compensation awarded, it pointed out that the amounts had been determined in accordance with Article 2 of the Supreme Council decision, which was a special law governing the implementation of the General Expropriation Act. Mr Vistiņš and Mr Perepjolkins appealed on points of law but their appeals were dismissed. Complaints, procedure and composition of the Court The applicants alleged that there had been a violation of Article 1 of Protocol No. 1 (protection of property). Relying on Article 14 (prohibition of discrimination), they further argued that the expropriation in question represented discrimination on grounds of property. The application was lodged with the European Court of Human Rights on 5 June 2001 and declared admissible on 30 November On 16 May 2011 the applicant requested that the case be referred to the Grand Chamber under Article 43 of the Convention (referral to the Grand Chamber) and on 15 September 2011 the panel of the Grand Chamber accepted that request. Judgment was given by the Grand Chamber of 17 judges, composed as follows: Nicolas Bratza (the United Kingdom), President, Françoise Tulkens (Belgium), Nina Vajić (Croatia), Dean Spielmann (Luxembourg), Lech Garlicki (Poland), Peer Lorenzen (Denmark), Karel Jungwiert (the Czech Republic), Elisabeth Steiner (Austria), Ján Šikuta (Slovakia), András Sajó (Hungary), Nona Tsotsoria (Georgia), Işıl Karakaş (Turkey), Kristina Pardalos (San Marino), Angelika Nußberger (Germany), Julia Laffranque (Estonia), Linos-Alexandre Sicilianos (Greece), André Potocki (France), and also Michael O Boyle, Deputy Registrar. Decision of the Court Article 1 of Protocol No. 1 The Court acknowledged that the disputed expropriation had been carried out on the basis of the Law of 30 October 1997 on expropriation, for the needs of the State, of land within the Free Commercial Port of Riga. The Court noted that in Latvian law the formal decision on expropriation was taken not by the executive but by Parliament in the form of a special law. The Court observed that this was a feature of the Latvian legal system, dating back to 1923, and enshrined in the Constitution in It found that the general 3

4 principles and objectives of the expropriation system set up by Latvian law did not, as such, raise any issue of lawfulness within the meaning of Article 1 of Protocol No. 1. However, the Court noted that on 5 August 1997 the Cabinet had adopted a regulation ordering the expropriation of all the properties at issue in the present case, and that, together with the Law of 30 October 1997 by which it was confirmed, the regulation had been interpreted by the domestic courts as providing for a derogation from the General Expropriation Act of It had thus been possible to disregard the usual expropriation procedure in the applicants case and to limit the amount of the compensation by reference to Article 2 of the Supreme Council s decision of Prior to the adoption of the regulation and the enactment of the special Law, the applicants could have expected that any expropriation of their property would be carried out in accordance with the 1923 General Expropriation Act. The Court had doubts as to whether the expropriation at issue had been carried out subject to the conditions provided for by law, having regard in particular to the derogation applied to the applicants and to the procedural safeguards that were or were not attached to it. The Court reiterated that an interference with the right to the peaceful enjoyment of possessions always had to strike a fair balance between the demands of the general interest and the protection of the individual s fundamental rights. The Court observed that the value of the properties at issue had been assessed on three separate occasions. It took the view that the Latvian authorities had been justified in deciding not to compensate the applicants for the full market value of the expropriated property and that much lower amounts could suffice to fulfil the requirements of Article 1 of Protocol No. 1. Nevertheless, the Court noted an extreme disproportion between the official cadastral value of the land and the compensation received by the applicants: the sum received by Mr Vistiņš was less than one thousandth of the cadastral value of his land, and Mr Perepjolkins had received a sum some 350 times lower than the total cadastral value of all his properties. In the Court s view, such disproportionate awards were virtually tantamount to a complete lack of compensation. The Court further noted that shortly after being deprived of their properties, the applicants had received significant amounts from the Free Commercial Port of Riga for the rent arrears due to them. Those amounts calculated this time on the basis of the current value, and not that of 1940 were respectively 95 times higher than the compensation granted to Mr Vistiņš and 40 times higher than that granted to Mr Perepjolkins. In any event, the disproportion between the rent arrears and the compensation awarded confirmed that the compensation had been unreasonably low. The Government had failed to show that the legitimate aim relied on, namely that of optimising the management of the port infrastructure in the general context of the State s economic policy, could not be fulfilled by less drastic measures than expropriation compensated for by purely symbolic sums. In that connection the Court dismissed the Government s argument that the expropriation had been carried out in a particular historical context. It took the view that, as the events at issue had taken place well after the end of the period of historic upheaval, the legislature could nevertheless have been expected to uphold the principle of legal certainty and to refrain from imposing excessive burdens on individuals. The authorities could have calculated the compensation on the basis of the cadastral value of the land at the date on which the applicants had actually lost their title, instead of using the cadastral value from Even though Article 1 of Protocol No. 1 did not, in the present case, require the reimbursement of the full cadastral or market value of the expropriated properties, the Court considered that the disproportion between their current cadastral value and the compensation awarded was too significant for it to find that a fair balance had been struck between the interests of the community and the applicants fundamental rights. 4

5 The Court concluded that the State had overstepped the margin of appreciation afforded to it and that the expropriation complained of by the applicants had imposed on them a disproportionate and excessive burden, upsetting the fair balance to be struck between the protection of property and the requirements of the general interest. Accordingly, there had been a violation of Article 1 of Protocol No. 1. Article 14 taken together with Article 1 of Protocol No. 1 The Court was of the view that the inequality of treatment of which Mr Vistiņš and Mr Perepjolkins claimed to be victims had been sufficiently taken into account in its assessment leading to the finding of a violation of Article 1 of Protocol No. 1. It thus found that there was no need for a separate examination of the same facts under Article 14 of the Convention. Just satisfaction (Article 41) The court held that the question of the application of Article 41 of the Convention was not ready for decision and reserved it in its entirety for future consideration. Separate opinion Judges Bratza, Garlicki, Lorenzen, Tsotsoria and Pardalos expressed a joint partly dissenting opinion, which is annexed to the judgment. The judgment is available in English and French. This press release is a document produced by the Registry. It does not bind the Court. Decisions, judgments and further information about the Court can be found on To receive the Court s press releases, please subscribe here: Press contacts echrpress@echr.coe.int tel: Denis Lambert (tel: ) Tracey Turner-Tretz (tel: ) Céline Menu-Lange (tel: ) Nina Salomon (tel: ) The European Court of Human Rights was set up in Strasbourg by the Council of Europe Member States in 1959 to deal with alleged violations of the 1950 European Convention on Human Rights. 5