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FIFTH
SECTION
CASE OF BASARBA OOD v. BULGARIA
(Application
no. 77660/01)
JUDGMENT
(merits)
STRASBOURG
7
January 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 Basarba OOD v.
Bulgaria,
The
European Court of Human Rights (Fifth Section), sitting as a Chamber
composed of:
Peer
Lorenzen,
President,
Renate
Jaeger,
Karel
Jungwiert,
Rait
Maruste,
Isabelle
Berro-Lefèvre,
Mirjana
Lazarova Trajkovska,
judges,
Pavlina
Panova, ad
hoc judge,
and
Claudia Westerdiek,
Section Registrar,
Having
deliberated in private on 1 December 2009,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 77660/01) against the Republic
of Bulgaria lodged with the Court under Article 34 of the Convention
for the Protection of Human Rights and Fundamental Freedoms (“the
Convention”) by a Bulgarian limited liability company, Basarba
OOD (“the applicant company”), on 13 November 2001.
- The
applicant company was represented by Mrs N. Sedefova, a lawyer
practising in Sofia. The Bulgarian Government (“the
Government”) were represented by their Agent, Mrs M. Kotseva,
of the Ministry of Justice.
- The
applicant company alleged that the authorities had failed to comply
with a final court judgment in its favour and had deprived it of its
legitimate expectation of acquiring a municipally-owned property.
- On
4 January 2006 the Court decided to give notice of the application to
the Government. It was also decided to examine the merits of the
application at the same time as its admissibility (Article 29 §
3).
- Judge
Kalaydjieva, the judge elected in respect of Bulgaria, withdrew from
sitting in the case. On 30 January 2009 the Government appointed in
her stead Mrs Pavlina Panova as an ad hoc judge (Article 27 §
2 of the Convention and Rule 29 § 1 of the Rules of Court).
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
- The
applicant company was set up in 1991 and is based in Sofia.
- On
1 October 1991 it entered into a lease agreement with a
municipally-owned supermarket chain, under which it rented one of its
shops (“the shop”). The term of the agreement was until
1 October 1994.
- By
a supplementary agreement of 1 September 1992 the term of the
agreement was extended until 1 September 1997.
- On
29 June 1995 the applicant company submitted a proposal to the Sofia
Municipal Council to purchase the shop under the preferential
privatisation procedure for lessees of State and municipally-owned
properties provided for in section 35(1) of the Privatisation Act
(see paragraph 20 below).
- By
a further supplementary agreement of 2 January 1996 the term of the
lease agreement concerning the shop was amended and was set to expire
on 2 July 1996.
- In
a decision of 27 September 1996 the Municipal Council rejected the
applicant company’s request of 29 June 1995 on the grounds that
the conditions under section 35(1) of the Privatisation Act had not
been met because the lease agreement for the shop “bore a date
later than 15 October 1993”.
- On
24 October 1996 the applicant company appealed against the refusal.
- In
a judgment of 5 March 1998 the Sofia City Court found in favour of
the applicant company, quashed the decision of the Municipal Council
of 27 September 1996 and referred to it the matter for
re-examination. It found that on 15 October 1993 the applicant
company had been a lessee of the shop and that in rejecting its
privatisation proposal on the ground that it had not been a lessee
the Municipal Council had acted in contravention with the law.
- The
Municipal Council did not appeal against the judgment and it became
final on 2 April 1998.
- On
7 May 1998 the applicant company informed the Municipal Council of
the judgment in its favour and invited the latter to implement the
court’s decision by selling it the shop in accordance with the
applicable rules. No action was taken in response by the Municipal
Council.
- On
4 May 2001 the applicant company once again petitioned the Municipal
Council to implement the City Court’s judgment of 5 March 1998.
- In
response, by letter of 9 July 2001, the Sofia Municipal Privatisation
Agency informed the applicant company that on 27 April 1998 the
Municipal Council had transformed the municipally-owned supermarket
chain and had spun off two companies from it; the shop had been
included in the capital of one of these companies which had been
privatised on 24 February 1999.
II. RELEVANT DOMESTIC LAW AND PRACTICE
- The Transformation and Privatisation of State and
Municipally Owned Enterprises Act (Закон
за преобразуване
и приватизация
на държавни
и общински
предприятия:
“the Privatisation Act”), adopted in 1992,
provided for the transformation of public property and the
privatisation of State and municipally-owned enterprises. In March
2002 it was superseded by other legislation.
- Section
3 of the Act indicated the bodies competent to take decisions for
privatisation. For municipally-owned property these were the
respective municipal councils.
- Section
35(1) of the Privatisation Act provided that lessees of State and
municipally-owned property could propose to buy the properties rented
by them, without a public auction or competition and for a price
equal to the property’s valuation prepared by certified experts
in accordance with rules adopted by the Government. Those
preferential conditions were applicable to lessees of State and
municipally-owned property who had concluded lease contracts before
15 October 1993 and where the said contracts were still in force on
the date of the respective privatisation proposal.
- Section
35(2) of the Privatisation Act, as worded after October 1997,
provided that where a refusal by the competent administrative body to
initiate a privatisation procedure following a proposal by the
interested party had been quashed by means of a final court judgment,
the relevant administrative body was obliged, within two months of
the judgment becoming final, to initiate the privatisation procedure,
prepare the privatisation of the property at issue and offer to sell
the property to the entitled party.
- In
a similar case, in a decision of 10 February 1998, the Supreme
Administrative Court declared inadmissible an appeal against the
Sofia Municipal Council’s failure to act in implementing a
final judgment against it with which an earlier refusal to initiate a
privatisation procedure under section 35(1) of the Privatisation Act
had been quashed. The Supreme Administrative Court found that the
appeal concerned the lack of enforcement of an earlier judgment which
was not subject to separate judicial review because it did not
represent a new “refusal” to privatise (see decision no.
310 of 10 February 1998, case no. 929/1997).
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE
CONVENTION
- The
applicant company complained that the Municipal Council had failed to
comply with the City Court’s judgment of 5 March 1998 in its
favour, in breach of Article 6 § 1 of the Convention, which, in
so far as relevant, reads:
“In the determination of his civil rights and
obligations ... everyone is entitled to a fair ... hearing ... by [a]
... tribunal ...”
A. Admissibility
- The
Government urged the Court to dismiss the complaint as inadmissible
for non-exhaustion of domestic remedies as the applicant company had
not appealed against the failure of the Municipal Council to comply
with the City Court’s judgment of 5 March 1998. The applicant
company contested this argument.
- The
Court recalls that it has often found it to be inappropriate to
require an individual who has obtained judgment against the State at
the end of legal proceedings then to bring enforcement
proceedings to obtain satisfaction (see, for example, Metaxas v.
Greece, no. 8415/02, § 19, 27 May 2004, and Scordino
v. Italy (no. 1) [GC], no. 36813/97, § 198, ECHR 2006-V).
- However,
even if the present case is to be considered differently as the City
Court’s judgment of 5 March 1998 was an order to undertake
particular actions, rather than a money judgment, the Government have
not presented any domestic case-law or judgments in support of their
assertion that this was a remedy that could have been successful. On
the contrary, the domestic case-law that has been identified (see
paragraph 22 above) indicates that such an appeal would not have even
been examined by the courts. Accordingly, the Court does not see a
reason to reach a conclusion different from the one in the cases
above and dismisses the Government’s objection on the basis of
non-exhaustion of domestic remedies.
- Furthermore,
the Court notes that this complaint is not manifestly ill founded
within the meaning of Article 35 § 3 of the Convention and not
inadmissible on any other grounds. It must therefore be declared
admissible.
B. Merits
1. The parties’ submissions
- The
applicant company argued that the Municipal Council had been obliged,
by virtue of section 35(2) of the Privatisation Act (see paragraph 20
above), to enforce the City Court’s judgment of 5 March 1998 by
initiating a privatisation procedure and selling it the shop.
However, the Council had not only failed to do so but had in effect
obstructed and rendered impossible the enforcement of the said
judgment by selling the shop to another party.
- The
Government argued that the judgment of 5 March 1998 did not
imperatively oblige the Municipal Council to sell the shop to the
applicant company but left the decision to the Council’s
discretion. The Government considered that the Council had not failed
to comply with the said judgment.
2. The Court’s assessment
- The
Court reiterates that Article 6 § 1 of the Convention secures to
everyone the right to have any claim relating to his civil rights and
obligations brought before a court or tribunal; in this way it
embodies the “right to a court”, of which the right of
access, that is the right to institute proceedings before courts in
civil matters, constitutes one aspect. However, that right would be
illusory if a Contracting State’s domestic legal system allowed
a final, binding judicial decision to remain inoperative to the
detriment of one party. Execution of a judgment given by a court must
therefore be regarded as an integral part of the “trial”
for the purposes of Article 6 of the Convention (see Hornsby v.
Greece, judgment of 19 March 1997, Reports of Judgments and
Decisions 1997 II, p. 510, § 40, and Burdov v.
Russia (no. 2), no. 33509/04, § 67, ECHR 2009 ...).
- Turning
to the case at hand, the Court, observing that the City Court’s
judgment of 5 March 1998 concerned the applicant company’s
alleged entitlement to acquire certain property under preferential
conditions, is of the view that the said judgment was determinative
for the applicant company’s civil rights and obligations,
within the meaning of Article 6 § 1 of the Convention.
Therefore, Article 6 § 1 is applicable in the case.
- Furthermore,
the Court notes that on 5 March 1998 the City Court quashed the
Municipal Council’s refusal to initiate a privatisation
procedure pursuant to the applicant company’s proposal under
section 35(1) of the Privatisation Act and referred the case to the
Municipal Council for re examination (see paragraphs 13-14
above). Thereafter, the Municipal Council not only had an obligation
to comply with the said judgment but it also had a statutory
obligation under section 35(2) of the Privatisation Act to initiate
the preferential privatisation procedure within two months of the
judgment becoming final, prepare the privatisation of the property at
issue and offer to sell the property to the entitled party at the
preferential price equal to the property’s valuation (see
paragraphs 20 and 21 above). However, it failed to do so. What is
more, by finalising a separate privatisation procedure and selling
the property at issue to another buyer, it rendered any such
enforcement impossible.
- This
is sufficient to enable the Court to conclude that in the case at
hand there has been a violation of the applicant’s company
right to have a final judgment in its favour enforced, as an aspect
of its right of access to a court, as guaranteed by Article 6 §
1 of the Convention.
II. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1 TO
THE CONVENTION
- The
applicant company further complained that the Municipal Council had
infringed its statutory right to purchase the shop under the
preferential conditions of section 35(1) of the Privatisation Act.
The
Court finds that the complaint falls to be examined under Article 1
of Protocol No. 1, which reads:
“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.”
A. Admissibility
- The
Court notes that the complaint is not manifestly ill-founded within
the meaning of Article 35 § 3 of the Convention and not
inadmissible on any other grounds. It must therefore be declared
admissible.
B. Merits
1. The parties’ submissions
- The
applicant company considered that in its judgment of 5 March 1998 the
City Court had recognised that it met the preconditions under section
35(1) of the Privatisation Act, that the Municipal Council had been
obliged to sell to it the property and that it therefore had a
legitimate expectation of buying the shop under the preferential
conditions.
- The
Government contested this argument. They considered that the
Municipal Council had enjoyed discretion as to what action to take
pursuant to the City Court’s judgment of 5 March 1998 and that
the applicant company had not had any legitimate expectation of being
offered the shop for purchase.
2. The Court’s assessment
(a) The existence of “possessions”
- The
Court reiterates that an applicant can allege a violation of Article
1 of Protocol No. 1 only in so far as the impugned decisions related
to his “possessions” within the meaning of this
provision. “Possessions” can be either “existing
possessions” or assets, including claims, in respect of which
the applicant can argue that he or she has at least a “legitimate
expectation” of obtaining effective enjoyment of a property
right (see Maltzan and Others v. Germany (dec.) [GC], nos.
71916/01, 71917/01 and 10260/02, § 74(c), ECHR 2005-V, and
Kopecký v. Slovakia [GC], no. 44912/98, §
35(c), ECHR 2004-IX).
- As
the present case does not concern any existing possessions of the
applicant company, it remains to be examined whether it could have
had any “legitimate expectation” of realising a property
right.
- The
Court reiterates in this respect that Article 1 of Protocol No. 1
does not guarantee the right to acquire property (see Slivenko and
Others v. Latvia (dec.) [GC], no. 48321/99, § 121, ECHR
2002-II, and Kopecký, cited above, § 35(b)).
However, the Court notes that in restitution cases it has held that
once a Contracting State, having ratified the Convention including
Protocol No. 1, enacts legislation providing for the full or partial
restoration of property confiscated under a previous regime, such
legislation may be regarded as generating a new property right
protected by Article 1 of Protocol No. 1 for persons satisfying the
requirements for entitlement. The same may apply in respect of
arrangements for restitution or compensation established under
pre-ratification legislation, if such legislation remained in force
after the Contracting State’s ratification of Protocol No. 1
(see Maltzan and Others v. Germany, cited above, § 74(d)
and Kopecký, cited above, § 35(d)).
- The
Court finds it appropriate to apply this standard in the present
case, which does not concern restitution of formerly nationalised
property but the right to privatise leased municipal properties under
preferential conditions once the person satisfies certain criteria
and requirements for the said entitlement.
- In
this respect, the Court observes that domestic law as in force at the
time outlined the conditions allowing a lessee of municipally-owned
property to benefit from the preferential procedure under section
35(1) of the Privatisation Act, namely the rent contract concerning
the property at issue should have been concluded before 15 October
1993 and be still in force on the date of the respective
privatisation proposal (see paragraph 20 above). The Court further
notes that in its judgment of 5 March 1998 the City Court concluded
that the applicant company met those conditions (see paragraph 13
above). The Court does not see a reason to doubt this conclusion, as
it observes that the rent contract in the case was indeed concluded
on 1 October 1991 and expired on 2 July 1996 (see paragraphs 7 8
and 10 above) whereas the privatisation proposal was made on 29 June
1995 (see paragraph 9 above), that is while the contract was still in
force.
- Furthermore,
the Court notes that section 35(2) of the Privatisation Act, as in
force at the time, provided that where the courts had quashed a
refusal to initiate privatisation following a proposal by the
interested party under section 35(1), as in the present case, the
competent body was obliged to initiate privatisation procedure and to
offer to sell the property to the entitled party (see paragraph 21
above). In view of the unequivocal wording of the provision of
section 35(2), the Court cannot accept the Government’s
argument that domestic law left the Municipal Council any room for
discretion. In fact, under domestic law the Municipal Council had no
latitude as to whether to commence a privatisation procedure under
section 35(1) of the Privatisation Act, or as to the conditions
of the future transaction, including the price to be paid by the
prospective buyer (see paragraph 20 above).
- In
view of the above, the Court concludes that the applicant company had
a legitimate expectation consisting of the right to be offered to
purchase the shop at issue under the preferential conditions of
section 35(1) of the Privatisation Act (see paragraph 20 above).
Accordingly, the applicant company had a “possession”
within the meaning of Article 1 of Protocol No. 1.
(b) The existence of interference
- The
Court considers that the Municipal Council’s failure to
initiate a preferential privatisation procedure following the City
Court’s judgment of 5 March 1998 and to offer to sell the shop
to the applicant company represented an interference with the
latter’s right to peaceful enjoyment of its possessions.
(c) The lawfulness of the interference
- The Court reiterates that the first and most important
requirement of Article 1 of Protocol No. 1 is that any interference
by a public authority with the peaceful enjoyment of possessions
should be lawful (see Former King of Greece and Others v.
Greece [GC], no. 25701/94, § 79, ECHR 2000 XII).
- In
the case at hand, following the judgment of 5 March 1998 the
Municipal Council had a statutory obligation under section 35(2) of
the Privatisation Act to initiate the preferential privatisation
procedure within two months of the judgment becoming final, prepare
the privatisation of the property at issue and offer to sell the
property to the entitled party at the preferential price equal to the
property’s valuation (see paragraphs 20 and 21 above). However,
it failed to comply with its statutory obligation and instead
finalised a separate privatisation procedure by selling the property
at issue to another buyer.
- Therefore,
the interference with the applicant company’s right to peaceful
enjoyment of its possessions was not in accordance with domestic law
and did not meet the requirement of lawfulness under Article 1 of
Protocol No. 1.
- It
follows that there has been a breach of that provision.
III. 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. Damage
- The
applicant company claimed, in respect of pecuniary damage, the 2006
market value of the shop, reduced by the preferential price it would
have paid had it been offered the property in 1996, plus interest.
The applicant company submitted an expert report commissioned by it,
assessing the market value of the shop in 2006 at 78,200 Bulgarian
levs (BGN, 39,983 euros (EUR)), and the preferential price it would
have paid in 1996 at BGN 9,962 (EUR 5,093). The difference claimed by
the applicant company amounted therefore to BGN 68,238 (EUR 34,890).
- The
applicant company also claimed compensation for lost profit from the
use of the shop in the amount of the market rent it would have
received had it rented out the property between 1996 and 2006. On the
basis of the above-mentioned expert report, it assessed its profit
lost at BGN 49,463 (EUR 25,290).
- The
Government did not comment.
- In
the circumstances, the Court considers that the question of the
application of Article 41 is not ready for decision in so far as it
concerns the claims for damages, and reserves it, due regard being
had to the possibility that an agreement between the applicant
company and the respondent Government be reached (Rule 75 § 1 of
the Rules of the Court).
B. Costs and expenses
- For
costs and expenses, the applicant company claimed EUR 1,100 for 22
hours of work by its legal representative, Mrs Sedefova, at an hourly
rate of EUR 50. Furthermore, the applicant company claimed BGN 200
(EUR 100) for the cost of the expert report it submitted (see
paragraph 51 above) and BGN 238 (EUR 120) for the translation of its
observations in the present proceedings. In support of these claims
it presented a contract for legal representation, a time sheet and
the relevant receipts. It requested that any sum awarded under this
head be transferred directly into the bank account of Mrs Sedefova.
- The
Government did not comment.
- According
to the Court’s case-law, an applicant is entitled to the
reimbursement of costs and expenses only in so far as it has been
shown that these have been actually and necessarily incurred and are
reasonable as to quantum.
- In
the present case, regard being had to the documents in its possession
and the above criteria, the Court considers that the costs and
expenses claimed were actually and necessarily incurred and
reasonable as to quantum. It thus awards in full the amounts claimed,
that is EUR 1,320 in total, to be transferred directly into the bank
account of the applicant company’s legal representative.
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
- Declares the application admissible and
accordingly dismisses the Government’s objection for
non-exhaustion of domestic remedies;
- Holds that there has been a violation of Article
6 § 1 of the Convention;
- Holds that there has been a violation of Article
1 of Protocol No. 1 to the Convention;
- Holds that the question of the application of
Article 41 is not ready for decision in so far as it concerns the
claims for damages;
accordingly,
(a) reserves
the said question;
(b) invites
the Government and the applicant company to submit, within two months
from the date on which the judgment becomes final in accordance with
Article 44 § 2 of the Convention, their written observations on
the matter and, in particular, to notify the Court of any agreement
that they may reach;
(c) reserves
the further procedure and delegates to the President of the
Chamber the power to fix the same if need be;
- Holds
(a) that
the respondent State is to pay the applicant company, within three
months from the date on which the judgment becomes final in
accordance with Article 44 § 2 of the Convention, EUR 1,320 (one
thousand three hundred and twenty euros), plus any tax that may be
chargeable on the applicant company, in respect of costs and
expenses, to be transferred directly into the bank account of its
legal representative, Mrs Sedefova;
(b) that
from the expiry of the above-mentioned three months until settlement
simple interest shall be payable on the above amount at a rate equal
to the marginal lending rate of the European Central Bank during the
default period plus three percentage points.
Done in English, and notified in writing on 7 January 2010, pursuant
to Rule 77 §§ 2 and 3 of the Rules of Court.
Claudia Westerdiek Peer Lorenzen
Registrar President
