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FOURTH
SECTION
CASE OF SKYROPIIA YIALIAS LTD v. TURKEY
(Application
no. 47884/99)
JUDGMENT
(Just
satisfaction)
STRASBOURG
26 October
2010
This
judgment will become final in the circumstances set out in Article 44
§ 2 of the Convention. It may be subject to editorial
revision.
In the case of Skyropiia Yialias Ltd v. Turkey,
The
European Court of Human Rights (Fourth Section), sitting as a Chamber
composed of:
Nicolas
Bratza,
President,
Lech
Garlicki,
Ljiljana
Mijović,
David
Thór Björgvinsson,
Ján
Šikuta,
Päivi
Hirvelä,
Işıl
Karakaş,
judges,
and
Fatoş Aracı, Deputy
Section Registrar,
Having
deliberated in private on 5 October 2010,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 47884/99) against the Republic
of Turkey lodged with the Court under Article 34 of the Convention
for the Protection of Human Rights and Fundamental Freedoms (“the
Convention”) by a company incorporated under Cypriot law,
Skyropiia Yialias Ltd (“the applicant”), on 24 March
1999. According to a certificate issued on 20 January 1999 by the
Republic of Cyprus, the applicant company's shareholders are Mrs
Elena V. Proestou (139 shares) and Mr Georgios Christoforides (1
share).
- In
a judgment delivered on 22 September 2009 (“the principal
judgment”), the Court dismissed various preliminary objections
raised by the Turkish Government and found a continuing violation of
Article 1 of Protocol No. 1 to the Convention by virtue of the fact
that the applicant company was denied access to and control, use and
enjoyment of its properties as well as any compensation for the
interference with its property rights. Furthermore, it found that it
was not necessary to examine the applicant's complaint under Article
14 of the Convention (Skyropiia Yialias Ltd v. Turkey,
no. 47884/99, §§ 12, 21 and 24 and points 1-3 of
the operative provisions, 22 September 2009).
- Under
Article 41 of the Convention the applicant sought just satisfaction
of 18,627,531.78 Cypriot pounds (CYP –
approximately 31,827,000 euros (EUR)) for the deprivation of its
properties concerning the period between January 1987, when the
respondent Government accepted the right of individual petition, and
31 December 2007. Two affidavits from its managing director, setting
out the basis of the applicant's loss, were appended to its
observations. Furthermore, the applicant claimed approximately
EUR 6,030,100 in respect of non-pecuniary damage and
EUR 9,991.18 for the costs and expenses incurred before the
Court.
- Since
the question of the application of Article 41 of the Convention was
not ready for decision, the Court reserved it in whole and invited
the Government and the applicant to submit, within three months,
their written observations on that issue and, in particular, to
notify the Court of any agreement they might reach (ibid., §§
39 and 42, and point 4 of the operative provisions).
- On
4 March 2010 the Court invited the applicant and the Government to
submit any materials which they considered relevant to assessing the
1974 market value of the properties concerned by the principal
judgment. The applicant was moreover invited to submit written
evidence that the properties at stake was still registered in its
name or to indicate and substantiate any transfer of ownership which
might have taken place.
- The
applicant and the Government each filed observations on these
matters. On 27 May 2010 the applicant produced certificates of
ownership of Turkish-occupied immovable properties issued by the
Department of Lands and Surveys of the Republic of Cyprus. It
transpires from these documents that on 7 May 2010 the plots of land
described in paragraph 13 below were registered in the applicant's
name.
THE LAW
I. PRELIMINARY ISSUE
- In
a letter of 22 April 2010 the Government requested the Court to
decide that it was not necessary to continue the examination of the
applicant's just satisfaction claims. They invoked the principles
affirmed by the Grand Chamber in Demopoulos and Others v. Turkey
([GC] (Dec.), nos. 46113/99, 3843/02, 13751/02, 13466/03,
10200/04, 14163/04, 19993/04, 21819/04, 1 March 2010) and argued
that the applicant should address its claims to the Immovable
Property Commission (the “IPC”) instituted by the “TRNC”
Law 67/2005. They reiterated their position on the issue of
exhaustion of domestic remedies in the present case and in other
similar cases on 8 and 22 June 2010.
- The
Court first observes that the Government's submissions were
unsolicited; they were received by the Registry long after the
expiration of the time-limit for filing comments on just satisfaction
and almost two months after the delivery of the Grand Chamber's
decision in Demopoulos. It could therefore be held that the
Government are estopped from raising the matter at this stage of the
proceedings.
- In
any event, the Court cannot but reiterate its case-law according to
which objections based on non-exhaustion of domestic remedies raised
after an application has been declared admissible cannot be taken
into account at the merits stage (see Demades v. Turkey (merits),
no. 16219/90, § 20, 31 July 2003, and Alexandrou
v. Turkey (merits), no. 16162/90, § 21, 20 January
2009) or at a later stage. This approach has not been modified by the
Grand Chamber, as the cases of Demopoulos and Others had not
been declared admissible when Law 67/2005 entered into force and when
Turkey objected that domestic remedies had not been exhausted.
- Furthermore,
the Court considers that its previous finding in the present case
that the applicant was not required to exhaust the remedy introduced
by Law 67/2005 constitutes res judicata. It recalls that after
the compensation mechanism before the IPC was introduced, the
Government raised an objection based on non-exhaustion of domestic
remedies. This objection was rejected in the principal judgment (see
paragraph 12 of the principal judgment and point 1 of its operative
provisions). The Government also unsuccessfully requested the
referral of the case to the Grand Chamber.
- It
follows that the Government's request to stay the examination of the
applicant's claims for just satisfaction should be rejected. The
Court will therefore continue to examine the case under Article 41 of
the Convention.
II. APPLICATION OF ARTICLE 41 OF THE CONVENTION
- Article 41 of the Convention provides:
“If the Court finds that there has been a
violation of the Convention or the Protocols thereto, and if the
internal law of the High Contracting Party concerned allows only
partial reparation to be made, the Court shall, if necessary, afford
just satisfaction to the injured party.”
A. Pecuniary and non-pecuniary damage
1. The parties' submissions
(a) The applicant
- In
its just satisfaction claims of 23 November 2000, the applicant
requested CYP 6,941,271 (approximately EUR 11,859,855) for pecuniary
damage. It recalled that it was the owner of four plots of land (plot
no. 166, sheet plan XXXI/4, registration no. A196, area: 1,217
m²; plot no. 168, sheet plan XXXI/4, registration no. A197,
area: 2,732 m²; plot no. 170, sheet plan XXXI/4, registration
no. A200, area: 8,078 m²; plot no. 230, sheet plan
XXXI/20.W.1, registration no. B229, area: 25,244 m² – see
paragraph 8 of the principal judgment), on which a quarry was
situated. Before 1974, the applicant company had obtained a permit to
operate the quarry and was the owner of several machines and
equipment (see paragraph 9 of the principal judgment).
- The
applicant relied on an affidavit from its managing director,
Mr Vassos Proestos, stating that Skyropiia Yialias Ltd was
operating profitably and that prospects were very good in view of the
Cypriot Government's development plans to build roads, airports,
marinas and tourist developments. The company had obtained a number
of permits to carry out its business. In the last four years of its
activity, the company's annual profits amounted, on average, to CYP
17,300 (approximately EUR 29,558). Assuming an increase in
profits of 15 % per year, the total loss of profits from 1987
until November 2000 would have been CYP 6,941,271, a sum which
included compound interest for delayed payment at a rate of 9 %
per annum.
- On
24 January 2008, following a request from the Court for an update on
the developments of the case, the applicant submitted updated claims
for just satisfaction, which were meant to cover the loss of the use
of the properties from 1 January 1987 to 31 December 2007. It
produced a fresh affidavit from its managing director, which, on the
basis of the criteria adopted in the previous affidavit, concluded
that the whole sum due for the loss of profits was CYP 12,885,722.6
plus CYP 5,741,809.18 for interest (the interest rate from 2000
onwards was lowered to 6 % per annum). The total sum claimed
under this head was thus CYP 18,627,531.78 (approximately
EUR 31,827,000).
- On
27 May 2010 the applicant's director produced a revised valuation
according to which the sum due for the period 1987-2010 was
EUR 43,748,445.03. According to this valuation, the applicant's
profits, calculated at CYP 20,000 in 1974, would have constantly
increased, reaching CYP 123,055.75 in 1987, CYP 497,829.15 in 1997,
CYP 1,475,443.70 in 2007 and CYP 1,708,010.51 in 2010.
- The
applicant further submitted an “independent valuation report”,
which was meant to cover the loss of profit for the period between
1 January 1987 and 31 December 2010. The expert appointed
by the applicant company considered that the whole sum due to his
client for pecuniary damage was EUR 26,392,276.
- The
expert observed that three of the applicant's fields were used as a
base for conducting the quarrying business and/or used for the
installation of machinery and storage of aggregate materials, while
one field was kept as a reserve for future quarrying. The licence
granted by the Republic of Cyprus to carry out quarrying of aggregate
materials along Yialias River and the existing and potential fields
could have ensured a length of business exceeding forty years. Due to
rapid economic growth, at the time of the Turkish invasion there was
in Cyprus an increasing demand for building aggregates; the applicant
company was one of the few existing active quarries and was the only
one with brand new equipment. Photographs of the quarry, of its
personnel and its equipments were attached to the expert's report.
- The
expert took into account the trade disturbance due to the fact that
the applicant had not been allowed to continue its established course
of business and the compound interest due until 31 may 2010. He
applied the following interest rates: 9 % until 31 December
2000; 6 % until 30 November 2007; 5 % from 1 December
2007 onwards. Taking into account the financial figures of business
prior to 1974 and the projections for the following years, the expert
concluded that the applicant's company net profits (difference
between total revenues and total costs) for the period 1987-2010
would have varied for a minimum of EUR 239,058 in 1999 to a maximum
of EUR 697,774 in 2009. The total net profit for the period under
consideration would have been EUR 12,269,568, while the interest due
to the applicant company amounted to EUR 14,122,708.
- In
its just satisfaction claims of 23 November 2000, the applicant
company further claimed CYP 3,500,000 (approximately EUR 5,980,100)
in respect of non-pecuniary damage. In its updated claims for just
satisfaction of 24 January 2008 it requested the additional sum of
EUR 50,000.
(b) The Government
- The
Government filed comments on the applicant's updated claims for just
satisfaction on 30 June 2008, 15 October 2008 and 22 June 2010. They
pointed out that the present application was part of a cluster of
similar cases raising a number of problematic issues and submitted
that as an annual increase of the value of the properties had been
applied, it would be unfair to add compound interest for delayed
payment. Moreover, Turkey had recognised the jurisdiction of the
Court on 21 January 1990, and not in January 1987. In any event, the
alleged 1974 market value of the properties was exorbitant, highly
excessive and speculative; it was not based on any real data with
which to make a comparison and made insufficient allowance for the
volatility of the property market and its susceptibility to
influences both domestic and international. The report submitted by
the applicant had instead proceeded on the assumption that the
property market would have continued to flourish with sustained
growth during the whole period under consideration.
- The
Government produced a valuation report prepared by the
Turkish-Cypriot authorities, which they considered to be based on a
“realistic assessment of the 1974 market values, having regard
to the relevant land records and comparative sales in the areas where
the properties [were] situated”. This report contained two
proposals, assessing, respectively, the sum due for the loss of use
of the properties and their present value. The second proposal was
made in order to give the applicant the option to sell the properties
to the State, thereby relinquishing title to and claims in respect of
them.
- The
report prepared by the Turkish-Cypriot authorities specified that it
would be possible to envisage, either immediately or after the
resolution of the Cyprus problem, restitution of the properties
described in paragraph 13 above. In case the conditions for
restitution were not fulfilled, the applicant could claim financial
compensation, to be calculated on the basis of the loss of income (by
applying a 5 % rent on the 1974 market values) and increase in
value of the properties between 1974 and the date of payment. Had the
applicant applied to the IPC, the latter would have offered CYP
6,664.87 (approximately EUR 11,387) to compensate the loss of use and
CYP 7,098.99 (approximately EUR 12,129) for the value of the
properties. According to an expert appointed by the authorities of
the “TRNC”, the 1974 open-market value of the applicant's
properties was the following:
– plot no. 166: CYP 50 (approximately EUR 85);
– plot no. 168: CYP 100 (approximately EUR 170);
– plot no. 170: CYP 250 (approximately EUR
427);
– plot no. 230: CYP 760 (approximately EUR
1,298).
- Upon
fulfilment of certain conditions, the IPC could also have offered the
applicant exchange of its properties with Turkish-Cypriot properties
located in the south of the island.
- In
their comments of 22 June 2010, the Government recalled that in the
case of Demopoulos and Others (cited above) the Grand Chamber
had found that the IPC was an adequate domestic remedy for those
claiming a violation of Article 1 of Protocol No. 1. Notwithstanding
the adoption of a judgment on the merits, it would still be open to
the applicant to apply to the IPC, which would calculate the current
value and the 1974 value of the properties “in a credential way
based on actual data”. On 27 May 2010 the IPC had sent a letter
to the applicant's representative, inviting his client to introduce
an application before it.
- The
Government recalled that under Law No. 67/2005, the following means
of redress were available: a) restitution; b) compensation;
c) exchange. The relevant provisions of the law at issue are
described in Demopoulos and Others (cited above, §§
35-37).
- The
Government further noted that in making its assessment as regarded
compensation for the loss of use, the IPC had collected data from the
Department of Lands and Surveys on the 1973-1974 purchase prices for
comparable properties. It had also examined the development of
interest rates of the Cyprus Central Bank. The loss of income was
then calculated by assuming that the obtainable rent would have been
5 % of the value of the properties; this last value had been
modified every year on the basis of the land market value index.
Cyprus Central Bank interest rates had been applied on the sums due
since 1974.
- Being
in possession of the land registers, the Turkish-Cypriot authorities
were in a better position than the applicants and the Greek-Cypriot
authorities to assess the market values of the properties in a
realistic and reliable manner. The applicants had put forward
exaggerated claims and had tended to inflate the 1974 values of their
possessions. The Government therefore requested the Court to
rule on compensation on the basis of the calculations made by the
Turkish-Cypriot authorities, which were “credential and
objective in every aspect”.
- The
report prepared by the Turkish-Cypriot authorities confirmed that it
would be possible to envisage restitution of the properties described
in paragraph 13 above. Had the applicant company applied to the
IPC, the latter would have offered CYP 7,622.86 (approximately
EUR 13,024) to compensate the loss of use and CYP 7,771.84
(approximately EUR 13,278) for the value of the properties. The
expert appointed by the authorities of the “TRNC” also
confirmed the 1974 open-market values of the applicant's plots of
land as indicated in paragraph 23 above.
- Finally,
the Government considered that the amount claimed in respect of
non-pecuniary damage was excessive and unrealistic; given the
existence of an effective domestic remedy, the Court should keep the
award for such damage to a minimum.
2. The Court's assessment
- The
Court recalls that it has concluded that there had been a continuing
violation of the applicant's rights guaranteed by Article 1 of
Protocol No. 1 by reason of the complete denial of the rights of the
applicant company with respect to its peaceful enjoyment of its
properties in northern Cyprus (see paragraph 21 of the principal
judgment). Furthermore, its finding of a violation of Article 1 of
Protocol No. 1 was based on the fact that, as a consequence of being
continuously denied access to its plots of lands since 1974, the
applicant company had effectively lost all access and control as well
as all possibilities to use and enjoy its properties (see paragraph
19 of the principal judgment). It is therefore entitled to a measure
of compensation in respect of losses directly related to this
violation of its rights as from the date of deposit of Turkey's
declaration recognising the right of individual petition under former
Article 25 of the Convention, namely 22 January 1987, until the
present time (see Cankoçak v. Turkey, nos. 25182/94 and
26956/95, § 26, 20 February 2001, and Demades v. Turkey
(just satisfaction), no. 16219/90, § 21, 22 April
2008).
- In
connection with this, the Court observes that the affirmations of
ownership of Turkish-occupied immovable properties produced by the
applicant company (see paragraph 6 above) show that on 7 May 2010 it
was still the owner of the plots of land described in paragraph 13
above.
- In
the opinion of the Court, the valuations furnished by the applicant
company involve a significant degree of speculation due to the
absence of real data with which to make a comparison and make
insufficient allowance for the volatility of the property market and
its susceptibility to influences both domestic and international (see
Loizidou (just satisfaction), cited above). An even higher
degree of speculation is involved in the calculations concerning the
applicant company's alleged loss of the profits which might have been
earned from running its quarrying business. Accordingly, in assessing
the pecuniary damage sustained by the applicant company, the Court
has, as far as appropriate, considered the estimates provided by it
(see Xenides-Arestis v. Turkey (just satisfaction),
no. 46347/99, § 41, 7 December 2006). In general
it considers as reasonable the approach to assessing the loss
suffered by the applicant company with reference to the annual ground
rent, calculated as a percentage of the market value of the
properties that could have been earned during the relevant period
(see Loizidou v. Turkey (just satisfaction), 28
July 1998, § 33, Reports of Judgments and Decisions 1998-IV,
and Demades (just satisfaction), cited above, § 23).
Furthermore, the Court has taken into account the uncertainties,
inherent in any attempt to quantify the real losses incurred by the
applicant company (see Loizidou v. Turkey (preliminary
objections), 23 March 1995, § 102, Series A no. 310,
and (merits) 18 December 1996, § 32, Reports
1996-VI).
- The
Court notes that notwithstanding its request to submit material
relevant to assessing the 1974 market value of the applicant's
properties, the parties have produced few elements in this respect.
The Government have relied on the accuracy of the IPC's calculations
(see paragraphs 22 and 27-28 above), while the applicant company has
confined itself in providing estimates of the profits which could
have earned by conducting its business (see paragraphs 16-19 above).
The starting point of these estimates was that each and every year
the quarrying business would have generated a profit.
- The
Court further observes that the applicant submitted an additional
claim in the form of annual compound interest in respect of the
losses on account of the delay in the payment of the sums due. While
the Court considers that a certain amount of compensation in the form
of statutory interest should be awarded to the applicant company, it
finds that the rates applied by it are on the high side (see, mutatis
mutandis, Demades (just satisfaction), cited
above, § 24).
- Finally,
the Court recalls that it is empowered to award
pecuniary compensation for non-pecuniary damage to commercial
companies. Non-pecuniary damage suffered by such companies may
include heads of claim that are to a greater or lesser extent
“objective” or “subjective”. Among these,
account should be taken of the company's reputation, uncertainty in
decision-planning, disruption in the management of the company (for
which there is no precise method of calculating the consequences) and
lastly, albeit to a lesser degree, the anxiety and inconvenience
caused to the members of the management team (see Comingersoll
S.A. v. Portugal, no. 35382/97, § 35, ECHR 2000-IV).
- In
the instant case, the violation of the applicant company's rights
under Article 1 of Protocol No. 1 must have caused it, its directors
and shareholders considerable inconvenience and prolonged uncertainty
in the conduct of the company's business. It is therefore legitimate
to consider that the applicant company was left in a state of
uncertainty that justifies making an award of moral compensation (see
also, mutatis mutandis, Demades (just satisfaction),
cited above, § 29, and Xenides-Arestis (just
satisfaction), cited above, § 47).
- Having
regard to the above considerations, the Court is of the opinion that
the sums claimed by the applicant in respect of pecuniary and
non-pecuniary damage (respectively EUR 26,392,276 according to
the expert appointed by it – or EUR 43,748,445.03 according to
its managing director – and EUR 6,030,100 – see
paragraphs 16-19 and 20 above) are manifestly excessive. In this
respect, the Court notes that even though the loss of the possibility
of operating the quarry on the plots of land described in paragraph
13 above has undoubtedly created a serious trouble in the business
conducted by the applicant, the latter could have envisaged the
eventuality of installing the quarry in land located in the
unoccupied parts of Cyprus. At the same time, the amount which the
“TRNC” authorities could have offered the applicant in
respect of loss of use (EUR 13,024 – see paragraph 29 above)
does not seem to take into due account the fact that the applicant
company had obtained a permit to operate a quarry on its plots of
land, which had a total area of 37,271 square metres, and that
quarrying equipment has been installed in situ. Making its
assessment on an equitable basis, the Court decides to award the
applicant EUR 200,000 in respect of pecuniary and non-pecuniary
damage.
B. Costs and expenses
- In
its just satisfaction claims of 23 November 2000, relying on bills
from its representative, the applicant sought CYP 3,613
(approximately EUR 6,173) for the costs and expenses incurred before
the Court. In its updated claims for just satisfaction of 24 January
2008, the applicant submitted an additional bill of costs amounting
to EUR 3,818. It indicated that the overall sum claimed for cost and
expenses was EUR 9,991.18 (including V.A.T.). Finally, on 27 May
2010 the applicant submitted that its further legal fees and expert
report's costs amounted to EUR 2,955.50 and EUR 26,000 plus VAT
respectively.
- The
Government did not comment on this point.
41. According
to the Court's case-law, an applicant is entitled to reimbursement of
his costs and expenses only in so far as it has been shown that these
have been actually and necessarily incurred and were reasonable as to
quantum (see, for
example, Iatridis v. Greece (just
satisfaction) [GC], no. 31107/96, § 54, ECHR 2000-XI).
- The
Court notes that the case involved perusing a certain amount
of factual and documentary evidence and required a fair degree of
research and preparation. In particular,
the costs associated with producing a valuation report in view of the
continuing nature of the violation at stake were essential to enable
the Court to reach its decision regarding the issue of just
satisfaction (see Demades (just satisfaction), cited
above, § 34).
- Although
the Court does not doubt that the fees claimed were actually
incurred, it considers the amount claimed for the costs and expenses
relating to the proceedings before it excessive and decides to award
a total sum of EUR 8,000.
C. Default interest
- The
Court considers it appropriate that the default interest should be
based on the marginal lending rate of the European Central Bank, to
which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
- Dismisses the Government's request to
stay the examination of the applicant's claims for just satisfaction;
- Holds
(a) that
the respondent State is to pay the applicant, within three months
from the date on which the judgment becomes final in accordance with
Article 44 § 2 of the Convention, the following
amounts:
(i) EUR
200,000 (two hundred thousand euros), plus any tax that may be
chargeable, in respect of pecuniary and non-pecuniary damage;
(ii) EUR
8,000 (eight thousand euros), plus any tax that may be chargeable to
the applicant, in respect of costs and expenses;
(b) that
from the expiry of the above-mentioned three months until settlement
simple interest shall be payable on the above amounts at a rate equal
to the marginal lending rate of the European Central Bank during the
default period plus three percentage points;
- Dismisses the remainder of the applicant's claim
for just satisfaction.
Done in English, and notified in writing on 26 October 2010, pursuant
to Rule 77 §§ 2 and 3 of the Rules of Court.
Fatoş Aracı Nicolas Bratza
Deputy Registrar President
