Although the state may interfere with property rights, there must always be adequate justification. The European Court of Human Rights will normally examine interference on the basis of the question whether such interference was justified. It will under normal circumstances pose three questions, which assist in determining whether the interference was justified: 1. Was it lawful? 2. Was it in the public interest? 3. Was it proportional? In other words: has the government, or the court for that matter, in its solution to the case, acted lawfully and found the right balance between the interests of the affected individuals and the interests of the state? In practice, lawfulness and proportionality are the major tests. The interference must always be based on the law. The state may furthermore not interfere disproportionately in the interests of an individual. Thus, a balance needs to be struck between the interests of the community and the fundamental rights of the individual. If that balance has not been struck, the property rights of an applicant have been violated. While the European Court often studies the third criteria of public interest, the test is virtually always complied with.
Both in cases of deprivation as well as in cases of control or limitation, the margin of appreciation of the state is very large with regard to property rights. The concept of margin of appreciation assumes that a government’s discharge of its responsibilities in a democratic society is essentially a question of appreciating complex factors and balancing conflicting considerations of public and private interests. Certainly in the case of property rights the government may be assumed to possess a very wide margin of appreciation. The notion of ‘public interest’ is necessarily extensive. In particular, the decision to enact laws expropriating property will commonly involve consideration of political, economic and social issues.
In the following case,Belvedere Alberghiera v. Italy , the applicant company was Belvedere Alberghiera Srl. It was formed in 1983 and owned the Belvedere Hotel in Monte Argentario and a strip of land giving patrons of the hotel direct access to the sea. In May 1987 the Monte Argentario Municipality had passed a resolution approving a proposal to build a road over that strip of land and the Mayor had used an expedited procedure to issue an order for possession. The Municipality had taken possession and the works were largely completed by 7 August 1987. On 24 May 1988, on an appeal by the applicant company, the Tuscany Administrative Court had ruled that the Municipality’s action was illegal and quashed both the resolution and the possession order. The Municipality refused to comply with that decision. However, the applicant company’s application for restitution and reinstatement of the land was later dismissed by the Administrative Court, which on 26 June 1991 held that as the work had been completed there had been a constructive expropriation, the company had ceased to own the land and its only claim was for damages. A further appeal by the company to the full court of the Consiglio di Stato for restitution of the land was also dismissed on 7 February 1996. The European Court examined above all the lawfulness of court decisions and emphasised that court decisions must also fulfil the normal requirements of lawfulness.
European Court of Human Rights
Application No. 31524/96
Judgement of 30 May 2000
Keywords: possessions - lawfulness - general interest – proportionality
[ ? ]
B. Compliance with Article 1 of Protocol No. 1
51. The Court reiterated that Article 1 of Protocol No. 1 contained three distinct rules: “the first rule, set out in the first sentence of the first paragraph, is of a general nature and enunciates the principle of the peaceful enjoyment of property; the second rule, contained in the second sentence of the first paragraph, covers deprivation of possessions and subjects it to certain conditions; the third rule, stated in the second paragraph, recognises that the Contracting States are entitled, amongst other things, to control the use of property in accordance with the general interest? The three rules are not, however, “distinct” in the sense of being unconnected. The second and third rules are concerned with particular instances of interference with the right to peaceful enjoyment of property and should therefore be construed in the light of the general principle enunciated in the first rule” (see, among other authorities, the James and Others v. the United Kingdom judgment of 21 February 1986, Series A no. 98-B, pp. 29-30,§ 37, partly following the terms of the Court’s analysis in the Sporrong and Lönnroth v. Sweden judgment of 23 September 1982, Series A no. 52, p. 24,§ 61; see also the Holy Monasteries v. Greece judgment of 9 December 1994, Series A no. 301, p. 31,§ 56; and Iatridis v. Greece [GC] no. 31107/96,§ 55, ECHR 1999-II).
1. Whether there has been an interference?
52. The Court notes that it is common ground that there has been a deprivation of possessions.
53. In order to determine whether there has been a deprivation of possessions within the meaning of the second rule, the Court must not confine itself to examining whether there has been dispossession or formal expropriation, it must look behind the appearances and investigate the realities of the situation complained of. Since the Convention is intended to guarantee rights that are “practical and effective”, it has to be ascertained whether that situation amounted to a de facto expropriation. (see the Sporrong and Lönnroth judgment cited above, pp. 24-25,§ 63).
54. The Court notes that by applying the constructive-expropriation rule in its decision in the present case, the Consiglio di Stato deprived the applicant company of the possibility of obtaining restitution of its land. In the circumstances, the Court finds that the effect of the judgment of the Consiglio di Stato was to deprive the applicant company of its possessions within the meaning of the second sentence of the first paragraph of Article 1 of the Protocol (see Brumrescu v. Romania [GC] no. 28342/95,§ 77, ECHR 1999-VII).
55. In order to be compatible with the general rule set forth in the first sentence of the first paragraph of Article 1, such an interference must be “in the public interest”, “subject to the conditions provided by law and by the general principles of international law” and must strike a “fair balance” between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights (see the Sporrong and Lönnroth v. Sweden judgment cited above, p. 26§ 69). Furthermore, the issue of whether a fair balance has been struck “becomes relevant only once it has been established that the interference in question satisfied the requirement of lawfulness and was not arbitrary” (see the Iatridis judgment cited above,§ 58; and Beyeler v. Italy [GC] no. 33202/96 of 5 January 2000,§ 107).
2. Compliance with the requirement of lawfulness and the aim of the interference
56. 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. The rule of law, one of the fundamental principles of a democratic society, is inherent in all the Articles of the Convention (see the Iatridis judgment cited above,§ 58) and entails a duty on the part of the State or other public authority to comply with judicial orders or decisions against it.
57. The Court does not consider it necessary to decide in the abstract whether the role in the continental-law system of a rule, such as the constructive-expropriation rule, established by the courts is comparable to that of statutory provisions. However, it reiterates that the requirement of lawfulness means that rules of domestic law must be sufficiently accessible, precise and foreseeable (see the Hentrich v. France judgment of 22 September 1994, Series A no. 296-A, p. 19,§ 42; and the Lithgow and Others v. the United Kingdom judgment of 8 July 1986, Series A no. 102, p. 47,§ 110).
58. In that connection, the Court observes that the case-law on constructive expropriations has evolved in a way that has led to the rule being applied inconsistently (see paragraphs 22 to 36 above), a factor which could result in unforeseeable or arbitrary outcomes and deprive litigants of effective protection of their rights and is, as a consequence, inconsistent with the requirement of lawfulness.
59. The Court also notes that under the rule established by the Court of Cassation in its judgment no. 1464 of 1983 every constructive expropriation follows the unlawful taking of possession of the land. The unlawfulness may exist at the outset or arise subsequently. The Court has reservations as to the compatibility with the requirement of lawfulness of a mechanism which, generally, enables the authorities to benefit from an unlawful situation in which the landowner is presented with a fait accompli.
60. In any event, the Court is required to verify whether the way in which the domestic law is interpreted and applied produces consequences that are consistent with the principles of the Convention.
61. In the instant case, the Court notes that on 2 December 1987 the Tuscany Administrative Court quashed with retrospective effect the resolution passed by the authorities as being unlawful and not in the public interest. However, that finding of the Tuscany Administrative Court, in which it held that the occupation of the applicant company’s land was unlawful and not in the public interest (see paragraph 11 above), did not result in restitution of the land, since the Consiglio di Stato held that the transfer of property to the authorities had become irreversible.
62. The Court considers that the interference in question was not compatible with Article 1 of Protocol No. 1. That conclusion makes it unnecessary for it to examine whether a fair balance was struck between the requirements of the general interest of the community and the need to protect individual rights.
63. Consequently, there has been a violation of Article 1 of Protocol No. 1.
The relevance of the case lies above all in the emphasis on the importance of compliance with the law. Any decision on interference with property rights must be based on the law. Such lawfulness has to fulfil minimum requirements, including execution of sentences once they have become final. (See also ECHR: Spacek s.r.o. v. The Czech Republic (Application No. 26449/95, Judgement of 9 November 1999) where the European Court emphasised that a law must be accessible and foreseeable)
All the three regional conventions (ECHR, IACHR and ACHPR) explicitly stipulate that any interference - the ACHPR speaks of encroachment - must fulfil the requirement of lawfulness. The Human Rights Committee considered in Fabryova v. The Czech Republic(reproduced below) that unlawfulness is contrary to equality and as such violates Article 26 ICCPR .
In the following case the applicant complained that, at a time when the annual rate of inflation in Turkey had been 70 percent, she had been paid insufficient interest on additional compensation received following the expropriation of her land and the authorities had delayed in paying her the relevant amounts. She complained that the authorities had calculated her compensation on the basis of the value her land had had when it was expropriated or when the Court proceedings were commenced. The Court held that compensation must also fulfil the requirement of proportionality. The case is moreover interesting since the Court has decided more than 150 similar cases. It raises questions as to what to do when a state does not itself solve similar cases at the national level.
European Court of Human Rights
Application No. 19263/92
Judgement of 9 July 1997
Keywords: peaceful enjoyment of his/her possessions - pecuniary damage - non-pecuniary damage – proportionality
AS TO THE LAW
II. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 (P1-1)
27. As the situation of which the applicant complains concerns her “entitle[ment] to the peaceful enjoyment of [her] possessions”, the Court must examine whether a fair balance has been maintained between the demands of the general interest and the requirements of the protection of the individual’s fundamental rights; in that regard, the terms and conditions on which compensation is payable under domestic legislation and the manner in which they were applied in the applicant’s case must be considered (see the Lithgow and Others v. the United Kingdom judgment of 8 July 1986, Series A no. 102, p. 50, para. 120).
28. The Court notes at the outset that the applicant, whose land was expropriated to enable a hydro-electric dam to be built, was awarded compensation that was paid to her when the expropriation took place. The Duragan Court of First Instance subsequently awarded her additional compensation plus interest at the rate of 30% per annum from the date of expropriation.
It is not the Court’s task here to rule on the valuation of the land carried out by the committee of experts of the National Water Board or on the amount of the additional compensation. The scope of the dispute is determined by the Commission’s decision on admissibility and solely concerns the alleged damage sustained by Mrs Akkus because of the authorities’ delay in paying her the compensation due.
29. In that respect, the Court has previously held that the adequacy of compensation would be diminished if it were to be paid without reference to various circumstances liable to reduce its value, such as unreasonable delay [?]. Abnormally lengthy delays in the payment of compensation for expropriation lead to increased financial loss for the person whose land has been expropriated, putting him in a position of uncertainty especially when the monetary depreciation which occurs in certain States is taken into account. The Court notes on this subject that in Turkey the rate of interest payable on debts owed to the State - 84% per annum - is such as to encourage debtors to pay promptly; on the other hand, individual creditors of the State risk substantial loss if the State fails to pay or delays payment.
30. In the instant case, the additional compensation together with interest at the rate of 30% per annum was paid to the applicant in February 1992, that is to say seventeen months after the Court of Cassation’s judgment, at a time when inflation rates in Turkey had reached 70% per annum.
This difference - due solely to delay on the part of the authorities - between the value of the applicant’s compensation as finally determined by the Court of Cassation and its value when actually paid caused Mrs Akkus to sustain separate loss in addition to the loss deriving from the expropriation of her land.
31. By deferring payment of the compensation for seventeen months, the national authorities rendered that compensation inadequate and, consequently, upset the balance between the protection of the right to property and the requirements of the general interest.
There has therefore been a violation of Article 1 of Protocol No. 1 [?].
The question of proportionality is of major importance in the case-law on property rights. States often have to interfere with individual property rights in order to fulfil its lawful duties of government. As the European Court has repeatedly pointed out, the state has a wide margin of appreciation. But there is a limit: if the state creates a situation which upsets the fair balance that should be struck between the protection of the right of property and the requirements of the general interest or if the affected persons bear an individual and excessive burden, then there is a violation, unless there is the possibility of seeking a reduction of the impact or of claiming compensation.
Selected additional cases: Stran Greek Refineries and Stratis Andreadis v. Greece(Application No. 13427/87; Judgement of 9 December 1994); Hentrich v. France(Application No. 13616/88; Judgement of 22 September 1994).
The European Court also dealt with the proportionality issue in James et al. v. The United Kingdom . This case concerned a long leasehold system of tenure in England and Wales, where occupying tenants of houses were empowered by the state to acquire the property on certain conditions. The owners of the property brought the case to the European Court as they claimed, inter alia, that the compulsory transfer of their properties gave rise, ipso facto and/or at the price paid, to a breach of Article 1 Protocol No. 1 to the Convention. After applying the proportionality and margin of appreciation concepts, the European Court found in favour of the state that there was no breach of property rights.
Neither the ECHR not the ACHPR mention explicitly the need for compensation in any form. It may be assumed in the case of the ECHR case-law, that compensation in case of deprivation is normally a precondition as otherwise the proportionality requirement cannot be met. Compensation for interference with property rights can be seen as being an inherent feature of the right of property set forth in Article 1 of Protocol No. 1, ECHR, in so far as it might form a necessary ingredient in a fair balance between public interests and private rights.