DECISION

AS TO THE ADMISSIBILITY OF

Application no. 33091/96

by Českomoravská myslivecká jednota

against the Czech Republic

The European Court of Human Rights ( Third Section) sitting on 23 March 1999 as a Chamber composed of

Sir Nicolas Bratza , President ,

Mr J.-P. Costa,

Mr L. Loucaides ,

Mrs F. Tulkens ,

Mr W. Fuhrmann ,

Mr K. Jungwiert,

Mr K. Traja , Judges ,

with Mrs S. Dollé, Section Registrar ;

Having regard to Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms;

Having regard to the application introduced on 30 August 1996 by Českomoravská myslivecká jednota   against the Czech Republic and registered on 20 September 1996 under file no. 33091/96;

Having regard to the report provided for in Rule 49 of the Rules of Court;

Having regard to the observations submitted by the respondent Government on 12 November 1997 and 6 March 1998 and the observations in reply submitted by the applicant association on 20 January and 1 June 1998;

Having deliberated;

Decides as follows:

THE FACTS

The applicant is an association of hunters and gamekeepers, registered in Prague.  It is represented before the Court by Mr P. Pilecký , a lawyer practising in Prague.

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

A. Particular circumstances of the case

In December 1948 a privately owned house and plot situated in Prague 1 was nationalised by the State pursuant to the Nationalisation of Wholesale Enterprises Act. No compensation was awarded to its owner.

In April 1949 the property was sold to the applicant association for 3,250,000 crowns.  The monetary reform of 1 June 1993 devalued the crown at the rate of 5:1.

On 20 June 1991 the successors to the former owner of the property entitled to restitution under Section 3(2)(e) of the Extra-Judicial Rehabilitation Act ( Zákon o mimosoudních rehabilitacích ) (“the Restitution Act”), made a request to the applicant association for an agreement on restitution under Section 5 of this Act. As the applicant association refused to conclude the agreement, they brought an action against the applicant association in the Prague 1 District Court ( obvodní soud ) .

On 3 December 1992 the District Court ordered the applicant association to conclude an agreement on the restitution of the property stating, inter alia , that the nationalisation of the property had been unlawful. As to the current value of the property, the court held that the parties could solve this issue in a separate agreement.

The applicant association appealed against this judgment claiming that the unlawfulness of the nationalisation had not been established.  It also argued that it could not be a “mandated person” under Section 4 of the Restitution Act because it had acquired the property by a lawful purchase in April 1949.

On 30 September 1993 the Municipal Court ( městský soud ) rejected the applicant association’s appeal finding, in particular, that the Restitution Act applied in the present case as the former owner had not received any compensation and that the applicant association was not excluded from the scope of this Act. The court further stated that the applicant association claimed compensation for the revaluation of the property but did not specify the amount of the compensation and the claimants denied the revaluation of the property within the meaning of Section 7(4) of the Restitution Act. Moreover, the applicant association did not lodge a reciprocal action under Section 97 of the Code of Civil Procedure. The documents from 1988, 1987 and 1986 submitted by it, concerned the property in question, but were given to the court without any selection. The court found that it was for the applicant association to specify its claims of revaluation of the property and submit them in a separate action.

On 20 December 1993 the applicant association lodged an appeal on points of law ( dovolání ) claiming, inter alia , that it could not be required to return the property because it was not a legal entity which had acquired the property from the State free of charge.

On 30 December 1994 the High Court ( Vrchní soud ) dismissed the applicant’s appeal stating in particular:

“… if the property which was nationalised without compensation is not in the possession or ownership of such legal entities as mentioned in Section 1 of the Transfer of the State’s property to Other Persons Act as amended (i.e. state enterprise, state bank, state insurance company and other state organisation …), the redress for the violation of the property rights will be governed by the [Restitution] Act in accordance with Section 47(a) of the Transfer of the State’s Property to Other Persons Act (as amended). …”

As to the valuation of the property, the High Court found:

“According to Section 5(3) of the [Restitution] Act, the mandated person shall conclude an agreement with the entitled person about the surrender of the property without any obligatory settlement of mutual claims … Nor does Section 7(4) of the [Restitution] Act, according to which the entitled person shall compensate the mandated person for the difference between the original price and the actual price, specify the manner of that compensation. … This situation is governed by general provisions of the Civil Code concerning the obligations. However, Section 560 of the Civil Code concerning reciprocal obligations cannot be applied in the agreement on the surrender the property under the [Restitution] Act.” [EHU1]

On 10 April 1995 the applicant association lodged a constitutional appeal claiming, in particular, that the national courts had violated its right to safeguard its property rights under Article 11 § 1 of the Charter and Article 1 of Protocol No. 1 to the Convention. It challenged the findings of the courts concerning its position as a person obliged to surrender the property, the question of compensation for revaluation of the property, the relation between the Restitution Act and the Transfer of the State’s property to Other Persons Act (as amended) ( Zákon o převodu majetku státu na jiné osoby ) (“the Privatisation Act”) and the relation of these two Acts to the general civil law concerning obligations.

On 1 March 1996 the Constitutional Court ( Ústavní soud ) rejected the applicant association’s appeal as manifestly ill-founded referring to the findings of the High Court.

On 19 March 1996 an expert report determined the real value of the applicant association’s property at 32,894,140 crowns.

On 14 October 1996 the purchase price of 650,000 crowns fixed in pursuance of Section 16(3) of the Competence of Authorities of the Czech Republic on Extra-Judicial Rehabilitations Act, was paid to the applicant association by the Ministry of Finance as provided for in Section 11 of the Restitution Act.

B. Relevant domestic law

Extra-Judicial Rehabilitations Act No. 87/1991 [“the Restitution Act”]

In the preamble to the Restitution Act of 23 March 1991, the Federal Assembly of the Czech and Slovak Federal Republic affirmed its will to prevent violations of the kind committed in the past.

Section 1(1) sets out the aim of the Act, providing that it is designed to redress the consequences of certain violations of property and other rights caused by acts falling within the sphere of civil or labour law or by administrative acts incompatible with the principles of a democratic society respecting the rights of citizens as enshrined in the Charter of the United Nations and the Universal Declaration of Human Rights.

According to Section 2(1)(c) and (3), such redress consists in the surrender of property if the violation in question was caused by an act infringing generally recognised human rights and freedoms, that is, an act in contradiction with the principles referred to in Section 1(1) of the Act. When an entitled person was deprived of his or her property rights without appropriate compensation under nationalisation laws adopted between 1945 and 1949, the entitled person has a claim under this Act, which he or she can raise under the Privatisation Act (as amended).

Section 3(1) provides that, in order to be entitled to restitution of his or her property, a claimant must be a physical person and a citizen of the Czech and Slovak Federal Republic whose property was ceded to the State in the circumstances listed in Section 6 of the Act. According to Section 3(2)(e), if the person whose property has been transferred to the State in cases specified in Section 6 dies before the expiry of the time period specified in Section 5(2), the entitled persons, provided they are citizens of the Czech and Slovak Federal Republic, shall be his or her siblings or in the case of decease of any of them, his or her children.

According to Section 4(1), those obliged to make restitution (“mandated persons”) are the State or the legal entities in possession of the property on the day on which this Act has entered into force with certain exceptions.

According to Section 7(4), if the value of the property has so increased that its price assessed on the day of the submission of the written request by the entitled person exceeds substantially the price of the initial property, it is left at the discretion of the entitled person, whether he or she will request financial compensation under Section 13 or whether he or she will request the surrender of real property. If he or she insists on the surrender of the property, the entitled person shall compensate the mandated person for the difference between the two prices specified in the preceding clause. Both prices shall be assessed in conformity with the price regulations in force on the day of entry into force of the Restitution Act.

Section 11 entitles physical persons who are under an obligation to restore property to recover the price they had paid when acquiring such property from the State.

Transfer of the State’s Property to Other Persons Act No.  92/1991 [“Privatisation Act”]

According to Section 1(1), this Act lays down the conditions for the transfer of State property, the right to manage which is vested in State enterprises, State financial institutions and other State organisations or State property used by organisations founded by municipalities or administered by the Land Fund ( pozemkový fond) of the Czech Republic.

Section 47(1) provides that in the case of a dispossession of  the whole or part of any privatised property that occurred in a manner specified in Section 2(3) of the Restitution Act, the persons entitled under the Restitution Act in relation to that property may make a claim in respect of which the remedy provided for is a privatisation decision concerning that property.

According to Section 47(a), if property seized in a manner specified in Section 2(3) of the Restitution Act is not used or owned by any of the legal entities referred to in Section 1 of the present Act, any redress for the violation of rights over that property shall be settled under the Restitution Act.

Competence of Authorities of the Czech Republic under the Extra-Judicial Rehabilitations Act No. 231/1991

Section 16(3) provides that any purchase price fixed before 1 June 1953 shall be deemed to have been recalculated at the rate of 5:1.

Code of Civil Procedure

According to Section 97(1), the defendant can submit his or her claims against the claimant by way of a reciprocal action.

Charter of Fundamental Rights and Freedoms

Article 11 § 1 provides inter alia that everybody has the right to own property. The property rights of every owner are equal in the eyes of the law and benefit from the same legal protection.

COMPLAINTS

The applicant association complains that the restitution of its property to entitled persons amounted to a de facto expropriation of its possessions.  The compensation to which it was entitled corresponded to one-fiftieth of the real value of the property.  It further alleges that Section 47(a) of the Transfer of the State’s Property to Other Persons Act (as amended), read in conjunction with the Extra-Judicial Rehabilitation Act, discriminates against associations and non-governmental organisations. It invokes Article 1 of Protocol No. 1 to the Convention and, in substance, Article 14 of the Convention.

PROCEDURE

The application was introduced before the European Commission of Human Rights on 30 August 1996 and registered on 20 September 1996.

On 11 September 1997 the Commission decided to communicate the application to the respondent Government.             

The Government’s written observations were submitted on 12 November 1997 and 6 March 1998. The applicant association replied on 20 January and 1 June 1998.

On 1 November 1998, by operation of Article 5 § 2 of Protocol No. 11 to the Convention, the case fell to be examined by the Court in accordance with the provisions of that Protocol.

THE LAW

The applicant association complains that the restitution of its property to entitled persons amounted to a de facto expropriation of its possessions and that the compensation to which it was entitled corresponded to one-fiftieth of the real value of the property. It further alleges that Section 47(a) of the Transfer of the State’s Property to Other Persons Act (as amended), read in conjunction with the Restitution Act, discriminates against associations and non-governmental organisations. It invokes Article 1 of Protocol No. 1 to the Convention and, in substance, Article 14 of the Convention, which provide as follows:

Article 1 Protocol No. 1

“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.”

Article 14 of the Convention

“The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”

The respondent Government submit that the applicant association did not satisfy the requirements of Article 35 § 1 of the Convention concerning the exhaustion of domestic remedies. They submit that, apart from the right to reimbursement of the purchase price provided for in Section 11 of the Restitution Act, the applicant association could, under Section 7(4) of the Restitution Act, claim compensation for their loss arising out of the revaluation of the property from the persons entitled to restitution, who would have been required to compensate it for the difference between the price at the time of the submission of the request for the property to be surrendered and the original purchase price. However, the applicant association did not properly exercise this right. The Government refer in this regard to the findings of the Prague Municipal Court in its judgment of 30 September 1993. In addition, the expert report of 19 March 1996, drawn up at the applicant association’s expense, determining the real value of the property at 32,894,140 crowns, has never been submitted to the national courts.

The Government also submit that the applicant association did not complain before the Constitutional Court of a violation of the principle of  “adequate compensation for the loss of property”, but merely alleged a breach of its right to the peaceful enjoyment of its possession. Nor did it complain of the allegedly discriminatory nature of Section 47(a) of the Privatisation Act before the national courts, including the Constitutional Court.

According to the Government, the national legislation ensures that the financial consequences for mandated persons of the process of redressing violations suffered by the mandated persons are reduced to a minimum. The right to have the purchase price reimbursed by the State, together with the obligation of the person entitled to restitution to compensate the mandated person for the difference in value due to the revaluation of the property, ensures that the latter is repaid all the capital invested in the property.

They further note that although the aims of the Restitution Act, on the basis of which the applicant association’s property has been restored to its former owners, and the Privatisation Act are different, the Acts are interrelated.  If the property was nationalised under the 1945-1948 nationalisation laws without compensation being paid, persons entitled to restitution are authorised, under Section 2(3) of the Restitution Act, to submit their claims under the Privatisation Act. According to Section 47 of the latter Act, their claims will then be resolved by a privatisation decision. At the same time Section 47 refers back to the Restitution Act, providing that the scope of application and manner of settlement of the claims and the procedure to be followed are governed by this Act. The Government submit that Section 47(a) was added to the Privatisation Act to cover the situations where property nationalised under the nationalisation laws without compensation had been transferred to persons other than the State or its emanations and maintain that, although the State entities specified in Section 1(1) of the Privatisation Act are exempted from the scope of Section 47(a), they are obliged to redress violations of property rights under other provisions of this Act. They conclude that no discrimination can arise from the mere fact that the way in which the redress is to be effected is different.

The applicant association disputes the Government’s arguments, underlining the difference between a dispossession of property rights as a consequence of a nationalisation - which was itself unlawful - of private property, and the restitution of this property to former owners or their successors in title. It submits that the nationalisation in the present case was not done in violation of the law (which is still in force), but in conformity with it. The State failed to grant compensation to the original owner of the property. No attempt was made to compensate citizens of the Czech Republic or legal entities established on its territory for the loss of nationalised property. The State has allowed the violations committed during the period of nationalisation to become detrimental only to subjects other than those mentioned in Section 1 of the Privatisation Act.

The Court is not required to examine the question whether the applicant association satisfied the requirements under Article 35 § 1 of the Convention concerning the exhaustion of domestic remedies because the application is in any event manifestly ill-founded for the following reasons.

The Court recalls that “possessions” within the meaning of Article 1 of Protocol No. 1 to the Convention may be either “existing possessions” or valuable assets, including claims, under certain conditions (see the Van der Mussele v. Belgium judgment of 23 November 1983, Series A no. 70, p. 23, § 48).

The Court considers that the applicant association had a “possession” within the meaning of Article 1 of Protocol No. 1 to the Convention even if its property was restored to the successors of the former owner. Thus, for about 45 years it possessed the property in question and was considered its owner for all legal purposes.  Moreover, it would be unreasonable to accept that a State may enact legislation which allows the restitution of property acquired bona fide and, in fact, nullify ab initio a purchase contract of the property and thus escape the responsibility for an interference with property rights under the Convention.

The applicant association’s title to the property was lost by the court decisions ordering restitution of the property to the successors of its former owner.

The Court recalls that Article 1 of Protocol No. 1 to the Convention guarantees in substance the right of property and comprises three distinct rules.  The first, which is expressed in the first instance of the first paragraph and is of a general nature, lays down the principle of peaceful enjoyment of property.  The second, in the second sentence of the same paragraph, covers deprivation of possessions and makes it subject to certain conditions.  The third, contained in the second paragraph, concerns the control of the use of property.  The deprivation rule is intended to refer to acts whereby the State lays hands on, or authorises a third party to lay hands on, a particular piece of property which is to serve the public interest (see the Air Canada v. the United Kingdom judgment of 5 May 1995, Series A no. 316, p. 15, §§ 29-30).

The essence of the applicant association’s complaints is its criticism of Section 47(a) of the Privatisation Act and the provisions of the Restitution Act, the manner in which they were applied, and the alleged injustice resulting therefrom.  The Court considers that these complaints should be examined in the light of the first sentence of the first paragraph of Article 1 of Protocol No. 1 to the Convention (see the Matos e Silva Lda and Others v. Portugal judgment of 16 September 1996, Reports of Judgments and Decisions 1996-IV).

For the purposes of this examination the Court must determine whether a fair balance was struck between the general interest of the community and the requirements of the protection of the individual’s fundamental rights (see the Pressos Compania Naviera S.A. and Others v. Belgium judgment of 20 November 1995, Series A no. 332, p. 23, § 38).

In matters under Article 1 of Protocol No. 1 to the Convention States enjoy a certain margin of appreciation.   Where the legislature has made a choice by enacting laws, which it considered to be in the general interest, the possible existence of alternative solutions does not in itself render the contested legislation unjustified.  Provided that the authorities remain within the bounds of their margin of appreciation, it is not for the Court to say whether the legislation represented the best solution (see, mutatis mutandis , the Mellacher and Others v. Austria judgment of 19 December 1989, Series A no. 169, p. 28, § 53).

In the present case the applicant association’s title to its property derived from a transaction concluded in 1949 with the State, which had acquired this property by nationalisation without compensation. In 1991 the Parliament adopted the Restitution Act and the Privatisation Act, which created a new opportunity for challenging acts of nationalisation of property without compensation, by giving locus standi to third persons, the pre-nationalisation owners. The successors to the pre-nationalisation owner of the applicant association’s property seized this opportunity and claimed restitution of the property under Section 2(3) of the Restitution Act and Section 47(a) of the Privatisation Act. The national courts dealing with their action reviewed the act of nationalisation and, finding that the pre-nationalisation owner had never received any compensation, ordered the applicant association to restore the property to that owner’s successors.

In examining whether the interference with the applicant association’s rights under Article 1 of Protocol No. 1 to the Convention resulting from the above legislation and its implementation in this case was justified, the Court attaches special importance to the very particular circumstances which formed the background to the Restitution Act. The aim of this Act is to mitigate certain wrongs caused by acts which are incompatible with the principles of a democratic society respecting the rights of citizens.  When adopting this Act, the legislators affirmed that it was their intention to prevent wrongs which had been committed in the past from re-occurring.  Thus the Restitution Act pursues a legitimate aim to safeguard the legality of legal transactions.  It promotes the principles of a democratic society and provides redress in cases where wrongs were committed in disrespect of such principles.  In these circumstances, and having regard to the State's margin of appreciation, the Court accepts that the deprivation complained of took place not only in the interests of the original pre-nationalisation owners of the property in question, but also in the general interest of society as a whole.

The Court further notes that the applicant association was paid the original purchase price of 650,000 crowns, as provided for in Section 11 of the Restitution Act. Moreover, according to Section 7(4) of the Restitution Act, the applicant association could claim compensation for revaluation of the property from the persons entitled to restitution, who would have been required to compensate a possible difference between the price at the time of the submission of the request for the surrender of the property and the original purchase price.

Finally, as to the difference in treatment between associations and non-governmental organisations on the one hand and State entities on the other hand in the matter of restitution, of which complaint is made by the applicant association, the Court recalls that Article 14 of the Convention affords protection against discrimination, that is treating differently, without an objective and reasonable justification, persons in “relevantly” similar situations (see, for example, the Fredin v. Sweden judgment (No. 1) of 18 February 1991, Series A no. 192, p. 19, § 60). However, the Court finds that situation of a non-governmental organisation and a State entity  is not comparable and that, accordingly,  the  present case does not disclose any discrimination contrary to Article 14 of the Convention.

In sum, the Court does not consider that the Czech authorities acted beyond the margin of appreciation left to States under Article 1 of Protocol No. 1 to the Convention or that the application of the national legislation relevant to the present case gave rise to any discrimination against the applicant association.

It follows that the application is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention and must be rejected pursuant to Article 35 § 4.

For these reasons, the Court, by a majority,

DECLARES THE APPLICATION INADMISSIBLE .

S. Dollé N. Bratza

Registrar President

[EHU1] 1