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FIFTH
SECTION
CASE OF POPNIKOLOV v. BULGARIA
(Application
no. 30388/02)
JUDGMENT
(merits)
STRASBOURG
25
March 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 Popnikolov 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,
Mark
Villiger,
Mirjana Lazarova Trajkovska,
Zdravka
Kalaydjieva, judges,
and Claudia
Westerdiek, Section
Registrar,
Having
deliberated in private on 2 March 2010,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 30388/02) against the Republic
of Bulgaria lodged with the Court on 2 February 2002 under Article 34
of the Convention for the Protection of Human Rights and Fundamental
Freedoms (“the Convention”) by a Bulgarian national,
Mr Dimitar Nikolov Popnikolov (“the applicant”), who
was born in 1955 and lives in Varna. The applicant complained both in
his personal capacity and as Sole Trader “DINIPO-666-Dimitar
Nikolov Popnikolov” (the “sole trader”) which he
registered in 1992 in Varna.
- The
Bulgarian Government (“the Government”) were represented
by their Agent, Ms M. Dimova, of the Ministry of Justice.
- The
applicant alleged in particular that the authorities had failed to
comply with a final court judgment in his favour and had deprived him
of a legitimate expectation of acquiring a State-owned property.
- On
20 September 2007 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).
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
A. Renting of the property
- On
1 October 1992 the applicant, acting as sole trader, entered into a
contract with the State-owned company SIME ECO (“the company”)
under which he leased part of its real estate – a production
facility and fittings (“the property”) – for ten
years.
- The
rental contract stipulated, inter alia, that if the company
terminated the lease prematurely then it would compensate the lessee
for any improvements to the property.
B. Proposal under section 35(1)(2) of the Privatisation
Act.
- On
11 October 1994 the applicant submitted a proposal to the Ministry of
Industry to purchase the property under the preferential
privatisation procedure for lessees of State-owned properties or
parts thereof provided for in section 35(1)(2) of the Privatisation
Act.
- In
a letter of 26 April 1995 the Minister of Industry rejected the
applicant's proposal. On an unspecified date the latter appealed
against the decision.
- In
a final judgment of 4 December 1996 the Supreme Court found in favour
of the applicant, quashed the decision of the Minister of Industry as
unlawful, and, finding that he fulfilled the statutory conditions to
purchase the property under the preferential privatisation procedure,
explicitly instructed the Minister of Industry to adopt the required
decision in order to sell him the property under section 35(1)(2) of
the Privatisation Act. In particular, the court stated as follows:
“Thus, it should be accepted, in view of the
outlined considerations, that the refusal made by the Minister of
Industry to allow the purchase of the disputed property under the
procedure of section 35(1)(2) of the [Privatisation Act] is unlawful
and must therefore be quashed and ... the file remitted to the
[competent] body under section 3 of the [Privatisation Act] for the
matter to be decided in conformity with instructions given by the
court above, in particular for an order to be issued for the
privatisation of the property under the procedure of section 35(1)(2)
of the [Privatisation Act].”
- The
Minister of Industry did not issue an order for the applicant to
purchase the property under the procedure of section 35(1)(2) of the
Privatisation Act.
C. Mass privatisation programme
- On
19 December 1995 the National Assembly adopted a programme for mass
privatisation (the “privatisation programme”) which
provided that ninety per cent of the company's shares would be
privatised. On 24 September 1996 the Tender Commission
promulgated a list of companies whose shares would be sold in the
first tender of the said programme. It included the company.
- On
an unspecified date, the privatisation of the majority stockholding
of the company was performed, together with the property as an asset.
It is unclear whether this took place before or after the Supreme
Court's judgment of 4 December 1996.
- Thereafter,
the company had three private shareholders and the State, which
retained a ten per cent stockholding.
D. Proceedings against the State authorities
- In
1997 the applicant, in his capacity of sole trader, initiated a civil
action against the company, the Council of Ministers and the Ministry
of Industry. He sought to have the privatisation contract of the
company declared partially null and void, to the extent that it
related to the property, on the basis of the Supreme Court's judgment
of 4 December 1996 in his favour. In a final judgment of 21 August
2001 the Supreme Court of Cassation rejected the applicant's claim,
as it found that no privatisation contract had been executed between
the respondent parties in implementation of the results of the first
tender of the privatisation programme, and therefore that there was
no act whose validity could be challenged in the context of the
initiated civil proceedings. In its reasoning the court inferred that
the applicant should have challenged the authorities' decisions to
include the company in the privatisation programme and the other
administrative acts issued in that regard.
- In
the meantime, in 1998 the applicant, in his capacity as sole trader,
had also initiated an administrative action against the Ministry of
Industry in which he sought to have declared partially null and void,
to the extent that it related to the property, (1) the decision of
the Minister of Industry to include the company in the privatisation
programme and (2) the privatisation contract for the sale of the
company. In a final decision of 5 October 2000 the extended panel of
the Supreme Administrative Court rejected the applicant's claim and
found that neither of the acts constituted administrative acts which
could be challenged in the context of administrative proceedings.
- On 12 November 2001 the applicant sought the
assistance of the Prime Minister and the Chief Public Prosecutor's
Office to obtain enforcement of the Supreme Court's judgment of 4
December 1996. In a letter of 5 December 2001 the Ministry of Economy
informed the applicant that it could not assist him, because by that
time the State owned only 0.2 % of the share capital of the company
and could not force the sale of the property to the applicant. Thus,
the only way that he could obtain enforcement would be to seek to
purchase the property directly from the company.
E. Proceedings against the company
- On
an unspecified date the applicant, in his capacity of sole trader,
initiated proceedings against the company seeking to be compensated
for the improvements he had made to the property.
- In
a judgment of 5 April 2004 the Varna Regional Court found partly in
favour of the applicant. It recognised that in 1992 he had made
improvements to the property in the amount of 200,352 old Bulgarian
levs (BGL, approximately 12,637 German marks at the time), and, in
view of the redenomination of the local currency of 4 July 1999,
awarded him the current day equivalent of 200.35 new Bulgarian levs
(BGN, approximately 102 euros (EUR)).
- On
appeal, the Supreme Court of Cassation upheld the judgment of the
lower court in a final judgment of 28 March 2005.
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. In the present case that body was the Minister of
Industry.
- 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 a
privatisation procedure, prepare the privatisation of the property at
issue and offer to sell the property to the entitled party.
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION
- The
applicant complained that the authorities had failed to comply with
the Supreme Court's judgment of 4 December 1996 recognising his right
to purchase the property under the preferential privatisation
procedure of section 35(1)(2) of the Privatisation Act, as provided
in Article 6 of the Convention, which reads as follows:
“In the determination of his civil rights and
obligations ... everyone is entitled to a fair ... hearing ... by [a]
... tribunal ...”
- The
Government did not submit observations.
A. Admissibility
- The
Court notes that this complaint is not manifestly ill-founded within
the meaning of Article 35 § 3 of the Convention. It further
notes that it is not inadmissible on any other grounds. It must
therefore be declared admissible.
B. Merits
- 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 Supreme Court
judgment of 4 December 1996 concerned the applicant's alleged
entitlement to acquire certain property under preferential
conditions, is of the view that the said judgment was determinative
for the applicant'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 in its judgment of 4 December 1996 the Supreme
Court established that the applicant met all the statutory conditions
to purchase the property under the preferential privatisation
procedure, quashed as unlawful the decision of the Minister of
Industry of 26 April 1995 and explicitly instructed the latter
to issue an order to sell him the property under section 35(1)(2) of
the Privatisation Act (see paragraph 9 above). Thereafter, the
Minister of Industry had an obligation to comply with the said
judgment by initiating the said preferential privatisation procedure
and selling the property to the applicant. However, he failed to do
so and the Government failed to provide any submissions and
explanations for this lack of compliance by this State body (see
paragraphs 10 and 25 above). What is more, by including the property
as an asset of the company and selling the latter through the
privatisation programme, the State rendered impossible the
enforcement of the Supreme Court's judgment of 4 December 1996
(see paragraphs 12-13 and 16 above).
- This
is sufficient to enable the Court to conclude that in the specific
circumstances of the present case there has been a violation of the
applicant's 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 also complained of a violation of Article 1 of Protocol No.
1 in that the authorities had infringed his statutory right,
recognised by the Supreme Court in its judgment of 4 December 1996,
to purchase the property under the preferential privatisation
procedure of section 35(1)(2) of the Privatisation Act.
Article
1 of Protocol No. 1 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.”
- The
Government did not submit observations.
A. Admissibility
- The
Court notes that this complaint is not manifestly ill-founded within
the meaning of Article 35 § 3 of the Convention. It further
notes that it is not inadmissible on any other grounds. It must
therefore be declared admissible.
B. Merits
1. 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 relate
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, 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 State
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 State-owned
property to benefit from the preferential procedure under section
35(1)(2) 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 22 above). The Court further
notes that in its judgment of 4 December 1996 the Supreme Court
concluded that the applicant met all those conditions (see paragraph
9 above). The Court does not see a reason to doubt this conclusion
and the Government failed to submit any arguments to the contrary.
- Furthermore,
the Supreme Court in its judgment of 4 December 1996 instructed the
Minister of Industry to issue an order to sell the applicant the
property under section 35(1)(2) of the Privatisation Act (see
paragraph 9 above). Thus, the unequivocal wording of the said
judgment left no right of discretion on the part of the Minister of
Industry as to the type of compliance expected by the domestic
courts. Moreover, under domestic law the Minister of Industry 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 22 above).
- In
view of the above, the Court concludes that the applicant had a
legitimate expectation consisting of the right to purchase the
property under the preferential conditions of section 35(1)(2) of the
Privatisation Act. Accordingly, the applicant had a “possession”
within the meaning of Article 1 of Protocol No. 1.
2. The existence of interference
- The
Court finds that the failure of the Minister of Industry to initiate
a preferential privatisation procedure following the Supreme Court's
judgment of 4 December 1996 in order to sell the property to the
applicant represented an interference with the latter's right to
peaceful enjoyment of his possessions.
3. 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, after the Supreme Court in its judgment of
4 December 1996 established that the applicant had met all the
statutory conditions to purchase the property and explicitly
instructed the Minister of Industry to sell him the property under
section 35(1)(2) of the Privatisation Act (see paragraph 9 above),
the latter had an obligation to comply and to initiate the said
procedure by selling the property to the applicant at the
preferential price equal to the property's valuation. However, he
failed to do so and instead the State sold the property as an asset
of the company to third parties (see paragraphs 12-13 and 16 above).
The Government did not provide any submissions and explanations for
the actions of the State authorities involved (see paragraphs 10 and
32 above).
- This
is sufficient to enable the Court to conclude that in the specific
circumstances of the present case the interference with the
applicant's right to peaceful enjoyment of his 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. OTHER ALLEGED VIOLATIONS OF THE CONVENTION
- Lastly,
on 28 September 2005 the applicant complained that the proceedings
against the company were unfair, and considered that the domestic
courts had not awarded him the real value of the improvements he had
made to the property. He argued, in particular, that the improvements
had cost BGL 200,352, which in 1992 was equal to 22,000 United States
dollars while the domestic courts had awarded him the present-day
value of BGN 200.35 (approximately EUR 102).
- However,
in the light of all the material in its possession, and in so far as
the matters complained of are within its competence, the Court finds
that they do not disclose any appearance of a violation of the rights
and freedoms set out in the Convention or its Protocols.
It follows that this part of the application is manifestly
ill-founded and must be rejected in accordance with Article 35 §§
3 and 4 of the Convention.
IV. 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.”
- The
applicant claimed compensation for the moral and pecuniary damage he
had allegedly suffered and left it to the Court to determine the
amount.
- However,
the Court considers that the question of the application of Article
41 is not ready for decision and reserves it, due regard being had to
the possibility that an agreement between the applicant and the
respondent Government be reached (Rule 75 § 1 of the Rules of
the Court).
FOR THESE REASONS, THE COURT UNANIMOUSLY
- Declares the complaints that the authorities
failed to comply with a final court judgment and deprived the
applicant of the legitimate expectation of acquiring a State-owned
property admissible and the remainder of the application
inadmissible;
- 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;
accordingly,
(a) reserves
the said question;
(b) invites the Government and the applicant 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.
Done in English, and notified in writing on 25 March 2010, pursuant
to Rule 77 §§ 2 and 3 of the Rules of Court.
Claudia Westerdiek Peer Lorenzen
Registrar President
