Mate CULAR v Croatia - 55213/07 [2010] ECHR 654 (22 April 2010)

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The European Court of Human Rights (First Section), sitting on 22 April 2010 as a Chamber composed of:

Christos Rozakis, President,
Nina Vajić,
Anatoly Kovler,
Elisabeth Steiner,
Khanlar Hajiyev,
Dean Spielmann,
Giorgio Malinverni, judges
and Søren Nielsen, Section Registrar,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,

The applicant, Mr Mate Čular, is a Croatian national who was born in 1952 and lives in Zagreb. He was represented before the Court by Mr T. Vukičević, an advocate practising in Split. The Croatian Government (“the Government”) were represented by their Agent, Mrs Š. StaZnik.

The facts of the case, as submitted by the parties, may be summarised as follows.

On 6 April 1984 the police authorities seized, from a Mr Z.K., 160,000 former Yugoslav dinars (YUD) that belonged to the applicant, under suspicion that the two of them had received it as a bribe. The applicant submits that he wanted to use the money to buy 4,870 kg of pickled (metal) sheet (dekapirani lim), which he intended to use in his recently opened locksmith's business.

On 12 November 1989 the competent State Attorney indicted the applicant and Z.K. before the Zagreb Municipal Court (Općinski sud u Zagrebu), charging them with the criminal offence of accepting a bribe. On 20 February 1995 the Zagreb Municipal Court discontinued the criminal proceedings, the State Attorney having dropped the charges against the accused. However, the sum seized was not returned to the applicant.

For that reason, on 28 November 1995, the applicant brought a civil action against the State in the Zagreb Municipal Court. In the period between 1984 and 1995 there were several changes to and denominations of domestic currency (see below under Relevant domestic law). So, the applicant initially sought the amount of 0.016 Croatian kunas (HRK) together with the statutory default interest accruable since 6 April 1984.

During the proceedings, on 7 November 1997, a court-appointed financial expert prepared a report according to which, taking into account the inflation rate, the value of YUD 160,000 in 1984 was equal to the value of HRK 22,170.50 at the time that he had prepared his report.

On the basis of that report, the applicant amended his claim and sought HRK 22,170.50 together with the statutory default interest accruable since 6 April 1984.

On 15 December 1997 the Municipal Court ruled in part for the applicant. It held that, by seizing and not returning to the applicant YUD 160,000, the State had enriched itself without cause, and awarded him HRK 22,170.50 together with the statutory default interest accruable since 7 November 1997. The remainder of the applicant's claim, concerning the statutory default interest accrued between 6 April 1984 and 7 November 1997, was dismissed.

Following appeals by both parties, on 15 February 2000, the Zagreb County Court (Zupanijski sud u Zagrebu) quashed the first-instance judgment and remitted the case. It held that the first-instance court had erred when it had adjusted the applicant's claim and awarded him the contemporary value of YUD 160,000, because, under the relevant legislation, he was entitled only to the nominal amount.

In the resumed proceedings, on 31 May 2001, the Zagreb Municipal Court awarded the applicant HRK 0.01 (as the amount awarded – HRK 0.016 – could be expressed to only two decimal places), together with the statutory default interest accruable since 28 November 1995. The remainder of the applicant's claim was dismissed and he was ordered to pay the respondent HRK 2,900 for the costs of the proceedings. In the applicant's submission, the sum he was awarded, including the accrued statutory default interest, was HRK 0.03.

On 16 December 2003 the Zagreb County Court dismissed the applicant's appeal and upheld the first-instance judgment.

On 19 February 2004 the applicant lodged a constitutional complaint against the second-instance judgment alleging a violation of his constitutional right to equality before the courts.

The Constitutional Court (Ustavni sud Republike Hrvatske) dismissed the applicant's constitutional complaint on 5 June 2007 and served its decision on his representative on 9 July 2007.

The Act on the Change of the Value of the Dinar (Zakon o promjeni vrijednosti dinara, Official Gazette of the Socialist Federal Republic of Yugoslavia no. 83/89) of 21 December 1989 established the new value of the Yugoslav dinar (YUD) so that one new dinar corresponded to 10,000 old dinars.

By the Decision on the Introduction of the Croatian Dinar as the Currency on the Territory of the Republic of Croatia (Odluka o uvođenju hrvatskog dinara kao sredstva plaćanja na teritoriju Republike Hrvatske, Official Gazette of the Republic of Croatia no. 71/1991), which entered into force on 23 December 1991, the Republic of Croatia introduced its own currency, Croatian dinar (HRD). The Yugoslav dinar (YUD) was replaced by the Croatian dinar at an exchange rate of YUD 1 to HRD 1.

On 13 May 1994 the Decision on the Termination of the Validity of the Decision on the Introduction of the Croatian Dinar as the Currency on the Territory of the Republic of Croatia and on the Manner and Time of Calculation of Sums Expressed in Croatian Dinars into Kunas and Lipas (Odluka o prestanku vaZenja Odluke o uvođenju hrvatskog dinara kao sredstva plaćanja na teritoriju Republike Hrvatske, te o načinu i vremenu preračunavanja iznosa izraZenih u hrvatskim dinarima u kune i lipe, Official Gazette of the Republic of Croatia no. 37/1994) entered into force, introducing the Croatian kuna (HRK) as the currency of the Republic of Croatia. It provided that the Croatian dinar should be replaced by the Croatian kuna at an exchange rate of 1,000 dinars to one kuna.

The relevant part of the Obligations Act (Zakon o obveznim odnosima, Official Gazette of the Socialist Federal Republic of Yugoslavia nos. 29/1978, 39/1985 and 57/1989, and Official Gazette of the Republic of Croatia no. 53/1991 with subsequent amendments), which was in force at the material time, provided as follows:

“(1) When a part of the property of one person passes, by any means, into the property of another person, and that transfer has no basis in a legal transaction or a statute [that is, it is without cause], the beneficiary shall be bound to return that property. If restitution is not possible, he or she shall be bound to provide compensation for the value of the benefit received.

(3) The obligation to return the property or provide compensation for its value shall arise even when something is received on account of a cause which did not come into existence or which subsequently ceased to exist.”

“When returning what has been received without cause, the beneficiary shall also be bound to return any profit or benefit accrued, and to pay the default interest, and to do so, if he or she was in bad faith, from the day of the enrichment, or otherwise from the day the request [for the return of the property] was made.”

“(1) The creditor shall have a right to default interest irrespective of whether or not he sustained any damage on account of the debtor's default.

(2) If the damage sustained by the creditor on account of the debtor's default is greater than the amount received as default interest, he or she shall have a right to claim damages up to the full amount of the compensation due.”

“When an obligation has for its object a sum of money, the debtor is bound to pay the number of monetary units in which the obligation is expressed [that is, its nominal value], unless the law provides otherwise.”

The applicant complained, under Article 1 of Protocol No. 1 to the Convention, that the domestic courts had refused to grant his claim for payment of the real value of the money seized from him in 1984.

The applicant complained that he had not received compensation corresponding to the real value of YUD 160,000 seized from him by the police authorities in 1984. He relied on Article 1 of Protocol No. 1, which reads as follows:

“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 disputed the admissibility of the application on two grounds. They argued that the applicant had failed to exhaust domestic remedies and that, in any event, the application was manifestly ill-founded.

The Court does not find it necessary to examine the Government's objections, because the application is in any event inadmissible for the following reasons.

The Court reiterates that it has to satisfy itself that it has jurisdiction in any case brought before it, and is therefore obliged to examine the question of its jurisdiction at every stage of the proceedings (see Blečić v. Croatia [GC], no. 59532/00, § 67, ECHR 2006 III). Thus, even though the Government in their observations did not explicitly plead inadmissibility on account of lack of jurisdiction ratione temporis, the Court nevertheless has to examine it of its own motion.

The Court first notes that the applicant, in substance, complained about the refusal of the Croatian courts to take into consideration inflation and the depreciation of the domestic currency when deciding on his action.

In this connection the Court first notes that the sum of YUD 160,000 had been seized from the applicant by the police authorities on 6 April 1984 under suspicion that he had received it as a bribe. It further notes that the subsequent criminal proceedings instituted against the applicant were eventually discontinued on 20 February 1995, after the State Attorney had dropped the charges against him. The Court also notes that between these two dates the domestic currency had depreciated several times and that the last depreciation occurred on 13 May 1994, with the introduction of the Croatian kuna (see under Relevant domestic law above), after which date the currency remained stable.

The Court reiterates in this connection that while it is true that Article 1 of Protocol No. 1 to the Convention cannot be interpreted so as to impose a positive obligation on States to maintain the value of claims or any other assets in the face of inflation (see Todorovi v. Bulgaria (dec.), no. 19108/04, 12 May 2009, and Todorov v. Bulgaria (dec.), no. 65850/01, 13 May 2008), this is not so if the authorities contributed to the loss of value of an applicant's claim. For instance, the Court has previously held in expropriation cases that, when monetary depreciation occurs, lengthy delays on the part of the authorities in the payment of compensation may lead to a violation of Article 1 of Protocol No. 1 to the Convention (see, for example, Akkuş v. Turkey, 9 July 1997, §§ 29-31, Reports of Judgments and Decisions 1997 IV).

In the present case it took more than five years and seven months after the above-mentioned sum had been seized from the applicant for the domestic authorities to institute criminal proceedings against him. Once those proceedings were instituted they lasted more than five years and three months. Such lengthy delays in the period when the domestic currency heavily depreciated must have contributed to the loss of value of the applicant claim arising out of unjust enrichment.

However, the Court reiterates that in the present case the last devaluation of the domestic currency affecting the value of the applicant's claim had occurred with the introduction of the Croatian kuna on 13 May 1994. It follows that only those delays that occurred before that date in the above criminal proceedings could have an effect on the value of the applicant's claim. However, that was before the Convention entered into force in respect of Croatia on 5 November 1997.

In this respect, the Court reiterates that, while it is true that from the ratification date onwards all of the State's acts and omissions must conform to the Convention (see Yağcı and Sargın v. Turkey, 8 June 1995, § 40, Series A no. 319 A), the Convention imposes no specific obligation on the Contracting States to provide redress for wrongs or damage caused prior to that date (see Kopecký v. Slovakia [GC], no. 44912/98, § 38, ECHR 2004 IX).

It follows that the application is incompatible ratione temporis with the provisions of the Convention within the meaning of Article 35 § 3 thereof and must be rejected pursuant to Article 35 § 4.

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You are here: BAILII >> Databases >> European Court of Human Rights >> Mate CULAR v Croatia - 55213/07 [2010] ECHR 654 (22 April 2010) URL: http://www.bailii.org/eu/cases/ECHR/2010/654.html Cite as: [2010] ECHR 654