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THIRD
SECTION
DECISION
Application no. 25678/09
Omar LANCHAVA and Others
against
Georgia
The
European Court of Human Rights (Third Section), sitting on 7 February
2012 as a Chamber composed of:
Josep
Casadevall,
President,
Corneliu
Bîrsan,
Egbert
Myjer,
Ján
Šikuta,
Ineta
Ziemele,
Nona
Tsotsoria,
Kristina
Pardalos,
judges,
and Marialena Tsirli,
Deputy Section Registrar,
Having
regard to the above application lodged on 24 March 2009,
Having
deliberated, decides as follows:
THE FACTS
- The
applicants
are Georgian nationals. They were represented before the Court by Mr
Simon Papuashvili, a lawyer practising in Tbilisi.
A. The circumstances of the case
- The
facts of the case, as submitted by the applicants,
may be summarised as follows.
1. Background
- In
1991-92, the applicants, as members of a State-supported housing
construction cooperative, paid various amounts of money in Soviet
roubles, the then legal tender, to the Tbilisi municipality in
exchange for the local authority’s undertaking to provide them,
under privileged conditions, with newly built apartments. The payable
amounts were calculated according to the prices prevailing on the
Georgian real property market at the material time. The validity of
that transaction was confirmed by a number of legal acts issued by
the municipality during the same period.
- Owing
to financial crises which hit the country in the course of its
transition from the old Soviet, State-controlled economy to a market
one in the early 90s, the Tbilisi municipality failed to fulfil its
contractual obligation. Thus, the construction of the relevant block
of flats for the applicants never started.
- The
applicants’ case was not an isolated instance of non-fulfilment
by the State of its contractual housing obligations. There were many
other such housing construction cooperatives all over the country,
which, despite having duly paid their contributions to the State,
never received any dwellings in exchange. As disclosed by various
legal acts contained in the case file, and notably by a Resolution of
9 October 1992 of the Government of Georgia, one of the major reasons
for that civil liability of the State was a sudden and drastic
depreciation of the Soviet rouble and a consequent rise in the prices
of the relevant services and goods, which rendered the monetary
contributions of the individual members of various housing
cooperatives, such as the applicants, insufficient even for partial
funding of house construction work.
- In
April 1993 the Georgian State withdrew the collapsed Soviet rouble
from circulation, introducing instead a provisional currency, the
so called coupons, which then also suffered from
hyper-inflation. In October 1995, the provisional currency
was finally replaced by the Georgian lari, the current national
legal tender.
2. Court proceedings
- On
4 December 2007 the applicants brought an action against the Ministry
of Finance, requesting that the State fulfil its obligations under
section 48 § 1 (g) of the Act of 5 March of
1998 on State Debt (“the Act on State Debt”) by paying
them compensation for the undelivered apartments in an amount of more
than 4 million euros. They explained that the amount claimed
corresponded to the overall total value of similar apartments
according to the current prices on the Georgian real property market.
- In
a judgment of 22 February 2008, the Tbilisi City Court dismissed the
applicants’ action as manifestly ill-founded. At the outset,
the court acknowledged that the State’s liability vis-à-vis
the individual members of housing construction cooperatives
constituted domestic public debt under section 48 § 1 (g) of the
Act. The court also noted that the State had failed to develop a
scheme for the settlement of that debt within the time-limit set by
section 48 § 4 of the Act.
- The
City Court then recalled that on 15 November 2004 the Government of
Georgia had established, on the basis of section 48 § 1 of the
Act, an ad hoc ministerial Commission for the purpose of
studying and drawing up recommendations for the problems related to
the settlement of various forms of domestic public debt, including
that owed to the individual members of housing construction
cooperatives. However, that Commission was still in the process of
working on the problems, without having submitted any specific
recommendations to the Parliament and President of Georgia as yet.
Consequently, in the absence of a clear legislative mechanism whereby
the State should settle the debt, the court was not able to rule on
the matter. Without such a mechanism it was not even possible, the
City Court emphasised, to calculate amounts which were currently
payable to the applicants as compensation for their old deposits.
- On
11 July 2008 the Tbilisi Court of Appeal fully upheld the first
instance court’s judgment of 22 February 2008. The appellate
court reiterated that, in the absence of a legislative mechanism
regulating the settlement of the relevant domestic public debt, there
was no legal basis for the courts to entertain the applicants’
action for the time being. Since the repayment of that debt was
intrinsically connected to its indexation and other complex financial
calculations, the judiciary could not overstep the competence of the
relevant ministerial Commission specifically created for that
purpose.
- On
14 January 2009 the Supreme Court of Georgia rejected the applicants’
cassation appeal as inadmissible, finally terminating the dispute.
B. Relevant domestic law
- On
5 March 1998 the Act on State Debt was enacted. Pursuant to its
section 1 (b), domestic debt, which resulted from various types of
Government liabilities, was represented by sums in fiat currency.
- Pursuant
to section 48 § 1 (g) of the Act on State Debt, the contractual
obligations undertaken but not fulfilled by the State vis à vis
individual members of housing construction cooperatives were
recognised, amongst other Government liabilities, as a form of
domestic public debt. According to paragraph 4 of the same section,
the Ministry of Finance was supposed to devise a mechanism for the
repayment of that particular debt by 1 September 1998.
- On
15 November 2004 the Prime Minister of Georgia issued Resolution no.
108, establishing an ad hoc Commission to address the problem
of the settlement of the various forms of domestic public debt under
section 48 § 1 of the Act. The Commission was composed of
different Ministers and was initially supposed to submit specific
recommendations for the resolution of the problem by 1 January 2009.
Subsequently, that deadline was postponed several times. Pursuant to
the Resolution as it currently stands, after having been amended for
the last time on 1 December 2011, the Commission is expected to
submit such recommendations by 1 January 2013.
COMPLAINT
- Relying
on Article 1 of Protocol No. 1, the applicants complained that the
State failed to settle the debt which it owed to them on the basis of
section 48 § 1 (g) of the Act on State Debt.
THE LAW
- The
present application concerns, under Article 1 of Protocol No. 1,
the respondent State’s alleged failure to fulfil the obligation
which it undertook vis à vis the applicants
under section 48 § 1 (g) of the Act on State
Debt. Article 1 of Protocol No. 1 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...”
- The
Court notes that section 48 § 1 (g) of the Act on State Debt
transformed the State civil liability vis-à-vis the
individual members of State-supported housing construction
cooperatives into a form of domestic public debt. Pursuant to section
1 of the Act, public debt was represented and payable by sums in fiat
currency (see paragraph 12 above). Consequently, as the applicants’
complaint can only be understood in the light of these domestic
provisions, their aim was to retrieve the moneys they deposited with
the State in 1991-92. The same follows from the formulation of the
applicants’ statement of claim lodged with the domestic courts,
in which they explicitly sought to have their housing deposits
returned in the new currency (see paragraph 7 above).
- The
Court further observes that the applicants’ housing deposits
were made with the State in 1991-92 in Soviet roubles, the amounts of
their contributions being dependent, amongst other things, on the
prices of the goods and services necessary for the construction of
the relevant apartments at the material time. However, following the
demise of the Soviet Union, it proved to be impossible to maintain
the Soviet rouble as the legal tender between and within the newly
independent States. Georgia had no influence over the operation of
the Soviet rouble, which consequently led to its withdrawal from the
circulation and introduction of a provisional currency, coupons, in
1993, which in its turn also suffered from hyper-inflation.
Consequently, with the prices of construction work skyrocketing due
to inflation, the applicants’ deposits in Soviet roubles
necessarily lost their initial purchasing power. Then, more than
fifteen years later, during which period various significant
financial and economic changes occurred in the country, the
applicants attempted to retrieve their depreciated housing deposits
already in a new currency, the euro, making their calculations
according to the currently prevailing real property prices. In other
words, the applicants’ wish is to have the purchasing power of
their initial, depreciated deposits restored (contrast with Ališić
and Others v. Bosnia and Herzegovina and Other Member States
(dec.), no. 60642/08, §§ 53 55, 17 October
2011).
- However,
the Court reiterates that the right to have the purchasing power of
monetary deposits secured from inflation and other types of financial
crises is not guaranteed by Article 1 of Protocol No. 1. This
provision cannot oblige the State to compensate for financial losses
caused by a rise in the level of prices of goods and services or by
any other type of recession in an economy over a period of time (see,
among many other authorities, Appolonov v. Russia (dec.), no.
67578/01, 29 August 2002; and Kireev v. Moldova and
Russia (dec.), no. 11375/05, 1 July 2008). Indeed, the repayment
of sums deposited with the Georgian State in Soviet roubles, a
currency which first depreciated and was then abolished altogether,
is intrinsically contingent on the existence of precise legal rules
on indexation adjustment, currency conversion and other complex
financial calculations. However, since no such rules have been
adopted in Georgia to date, with the relevant ministerial Commission
currently working on the issue, the applicants cannot legitimately
argue, solely on the basis of the generally worded provisions of
section 48 § 1 (g) of the Act on State Debt, that any specific
amounts of money denominated in the current national or foreign
currencies may qualify as their “existing possessions”
(see, among many other authorities, Boyajyan v. Armenia,
no. 38003/04, § 55, 22 March 2011; Rudzińska v. Poland
(dec.), no. 45223/99, ECHR 1999 VI; and Gayduk and Others v.
Ukraine (dec.), nos. 45526/99 et al., ECHR 2002 VI
(extracts)). Nor can the nebulous wording of the above-mentioned
provision of the Act on State Debt be interpreted, in the absence of
underlying rules on the necessary financial calculations, as giving
the applicants at least a “legitimate expectation” to
claim any such specific sums (compare with, mutatis mutandis,
Klaus and Yuri Kiladze v. Georgia, no. 7975/06, §§ 57 60,
2 February 2010).
- It
follows that the present application is incompatible ratione
materiae with Article 1 of Protocol No. 1 within the meaning of
Article 35 § 3 (a) of the Convention and must be
rejected in accordance with Article 35 § 4.
For these reasons, the Court unanimously
Declares the application
inadmissible.
Marialena Tsirli Josep
Casadevall Deputy Registrar President
Appendix to the decision
List
of the applicants
|
No.
|
Name
|
Date of birth
|
|
1.
|
Mr Omar Lanchava
|
14 October 1946
|
|
2.
|
Mr Ilia Chkuaseli
|
19 January 1950
|
|
3.
|
Mr Levan Gavasheli
|
25 December 1950
|
|
4.
|
Mrs Liza Ediberidze
|
25 March 1954
|
|
5.
|
Mr Zurab Lebanidze
|
1 November 1952
|
|
6.
|
Mrs Nana Khutsishvili
|
7 June 1962
|
|
7.
|
Mrs Kato Mumladze
|
5 October 1956
|
|
8.
|
Mr Yasha Katamadze
|
3 December 1949
|
|
9.
|
Mr Alexander
Kartvelishvili
|
26 October 1939
|
|
10.
|
Mr Nugzar Bulia
|
15 July 1951
|
|
11.
|
Mrs Eteri Okhanashvili
|
3 April 1944
|
|
12.
|
Mr Yuri Davlianidze
|
6 April 1961
|
|
13.
|
Mr Murad Bitsadze
|
10 December 1955
|
|
14.
|
Mrs Nino Simonishvili
|
24 December 1955
|
|
15.
|
Mrs Manana
Korghanashvili
|
6 November 1958
|
|
16.
|
Mr Giorgi Nozadze
|
11 September 1962
|
|
17.
|
Mr Zurab Imerlishvili
|
29 December 1942
|
|
18.
|
Mrs Leila Marjanidze
|
5 January 1959
|
|
19.
|
Mr Omar Samkharadze
|
1 September 1941
|
|
22.
|
Mr Teimuraz Kalandadze
|
17 January 1947
|
|
23.
|
Mr Mamuka Maisuradze
|
28 October 1962
|
|
24.
|
Mrs Tamar Gotsiridze
|
3 May 1977
|
|
25.
|
Mrs Nani Goginashvili
|
6 August 1958
|
|
26.
|
Mr Grigol Gabrichidze
|
1 January 1930
|
|
27.
|
Mr Tariel
Elizbarashvili
|
2 January 1940
|
|
28.
|
Mrs Nana Giorgobiani
|
1 March 1960
|
|
29.
|
Mr Guram Chavchanidze
|
30 January 1930
|
|
30.
|
Mrs Ekaterine
Bidzinashvili
|
29 September 1949
|
|
31.
|
Mr Revaz
Chkhubianishvili
|
6 August 1947
|
|
32.
|
Mrs Tamara
Maghalashvili
|
26 June 1952
|
|
33.
|
Mrs Neli Guliashvili
|
11 July 1956
|
|
34.
|
Mrs Manana
Machavariani
|
24 February 1949
|
|
35.
|
Mrs Guranda Popkhadze
|
2 January 1940
|
|
No.
|
Name
|
Date of birth
|
|
36.
|
Mr Nugzar Ter-Oganov
|
29 November 1947
|
|
37.
|
Mrs Dali Ioseliani
|
19 January 1950
|
|
38.
|
Mr Guram Gvelesiani
|
23 February 1928
|
|
39.
|
Mrs Manana
Gusharashvili
|
19 February 1958
|
|
40.
|
Mrs Maia Chikovani
|
10 February 1964
|
|
41.
|
Mrs Nanuli
Khotenashvili
|
14 April 1941
|
|
42.
|
Mrs Roza Burjanadze
|
23 June 1956
|
|
43.
|
Mrs Otar Tchkadua
|
8 March 1953
|
|
44.
|
Mrs Lili Omaidze
|
3 August 1953
|
|
45.
|
Mrs Darejan Kvashilava
|
16 April 1958
|
|
46.
|
Mr Mikheil
Nikoleishvili
|
3 August 1957
|
|
47.
|
Mr Vladimer Togonidze
|
5 May 1954
|
|
48.
|
Mr Teimuraz
Gamtsemlidze
|
23 December 1955
|
