FOURTH SECTION

DECISION

Application no . 68750/11 Jolanta and Bogusław MACH against Poland

The European Court of Human Rights (Fourth Section), sitting on 15 December 2015 as a Chamber composed of:

András Sajó , President, Vincent A. De Gaetano, Paulo Pinto de Albuquerque, Krzysztof Wojtyczek, Egidijus Kūris , Iulia Antoanella Motoc , Gabriele Kucsko-Stadlmayer , judges, and Fatoş Aracı , Deputy Section Registrar ,

Having regard to the above application lodged on 28 October 2011,

Having deliberated, decides as follows:

THE FACTS

1. The applicants, spouses Ms Jolanta Mach and Mr Bogusław Mach, are Polish nationals who were both born in 1933 and live in Łódź . They are represented before the Court by Ms M. Szereda , a lawyer practising in Łódź .

A. The circumstances of the case

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

3. The application concerns national bonds issued by the State Treasury in 1936. The bonds were to have been redeemed by 1995. However, the Treasury failed to undertake any steps to redeem them or to pay interest to the holders of those bonds.

4. The applicants ’ claim was not subject to limitation because on 28 July 2003 they had asked the State Treasury to arrange a friendly settlement before the Warsaw District Court.

5. On 20 June 2008 the applicants instituted civil proceedings for payment against the State Treasury represented by the Ministry of Finance. They claimed 55,000 Polish zlotys (PLN), with interest.

6. On 12 February 2009 the Warsaw District Court granted the applicants PLN 35.48 (approximately 9 euros (EUR)). The amount granted was calculated in the following way.

The court first referred to § 2 of the 1949 Decree (see paragraph 15 below) and found that by introducing this provision the lawm aker had deprived the applicant s ’ claim of its economic value. According to the court, by 1949 the applicants ’ claim had already been worth only about 2% of the average monthly salary at that time. On the day that the 1949 Decree entered into force – that is to say on 6 August 1949 – the nominal value of the applicants ’ bonds had been PLN 1,000 each.

It further referred to the 1950 Act (see paragraphs 16 and 17 below) and concluded that after the entry into force of the relevant provisions the value of the applicants ’ bonds had been PLN 10 each.

Relying on the 1994 Act (see paragraph 18 below) it further found that the nominal value of the applicants ’ bonds in 1994 was 1 grosz.

Finally, the court, relying on the judgment of the Constitutional Court of 24 April 2007 (see paragraphs 22 and 23 below), ruled that it could recalculate the applicants ’ claim on the basis of Article 357 1 § 3 of the Civil Code. It based the indexation of the applicants ’ claim on the official average salary and considered that the State Treasury should bear 90% of the inflation costs and the applicants 10%.

7. On 22 March 2009 the applicants appealed against that judgment.

8. On 10 August 2009 the Warsaw Regional Court quashed the first ‑ instance judgment and remitted the case. The Regional Court did not accept the basis of indexation of the applicants ’ claim applied by the District Court and held that the indexation should have been based on the real value of the claim in 1936, when the bonds in question had been issued, and on the price of gold at the time the applicants instituted civil proceedings. The court further considered that while recalculating the value of the applicants ’ claim, the District Court should have weighed the interests of both parties and taken into account the effects of the Second World War in order to assess the extent of participation of the defendant in the process of bringing about “ a significant change in the purchasing power of money” ( istotna zmiana si Å‚ y nabywczej pieni Ä… dza ).

9. On 22 March 2010 the Warsaw District Court, having re-examined the case and having recalculated the applicants ’ claim on the basis of the instructions contained in the Regional Court ’ s judgment, found that the claim ’ s value amounted to PLN 17,016. The court, having weighed the interests of both parties, considered that they should bear the effects of inflation in equal parts. Accordingly, the above amount was divided by two and the applicants were granted PLN 8,508. The Court dismissed the remainder of the claim.

10. Both parties appealed against that judgment.

11. On 18 March 2011 the Warsaw Regional Court found the applicants ’ appeal ill-founded and the defendant ’ s appeal partly well-founded, amended the challenged earlier judgment, and granted the applicants PLN 169 (approximately EUR 42). The Court considered that the District Court, in its judgment of 22 March 2010, had failed – when recalculating the value of the claim – to apply the 1949 Decree and the 1950 Act, which had never been repealed or declared unconstitutional; they thus remained in force and had to be applied to the present case. Having set the value of the applicants ’ claim at PLN 169, the Court considered that it would be “contrary to the principles of community life” ( sprzeczne z zasadami wspó łż ycia spo ł ecznego ) to reduce this amount further by placing on the applicants part of the burden of the effects of inflation; accordingly, it granted them the whole of the recalculated amount.

12. The Court then referred to the applicants ’ argument that the value of the claim had been decreased by the 1994 Act. It found that this Act had not significantly influenced the value of their claim because after the entry into force of the 1950 Act the claim had been of only symbolic value, namely PLN 10. The Court further considered that for the more than 40 years that had followed the entry into force of the 1950 Act the applicants ’ claim had lost its value as a result of economic developments in Poland and that it was in fact immaterial whether an assessment of the claim ’ s value was made with or without reference to the 1994 Act.

B. Relevant domestic law and practice

1. The decree of 27 July 1949 on incurring new obligations and on the determination of the amount of non-redeemed pecuniary obligations (o zaci ą ganiu nowych i okre ś leniu wysoko ś ci nie umorzonych zobowi ą za ń pieni ęż nych )

13. Article 4 provides:

“The payment of dues resulting from pecuniary obligations arising from any title of a private or public nature before the entry into force of the present decree and not redeemed until that day may only be effected in the Polish currency.”

14. At the relevant time, Article 5 (subsequently repealed) provided:

“( 1) The change in the purchasing power of money during the time between the creation of an obligation and its payment date or performance does not constitute a basis for a change in the amount of the obligation or in the means of the execution of the contract or dissolution of the contract.

(2) Payment of an obligation, specified in Polish currency on the basis of this decree, shall be made in banknotes of the Polish National Bank according to their nominal value, which is equal to the nominal value of banknotes or other means of payment, which were expressed in zlotys and which were in circulation on the territory of Poland or a part thereof before the introduction of the National Polish Bank ’ s banknotes into circulation.

(3) For the establishment of the value of pecuniary obligations referred to in the present Decree and expressed in the Polish currency, it is irrelevant what means of payment was in circulation at the time of the creation of the obligation.”

15. Article 6 § 2 provides :

“The amount of obligations expressed in zlotys in gold is calculated at 1 zloty for 1 zloty in gold.” (Wysoko ść nalezno ś ci z zobowiaza ń pieni ęż nych wyra ż onych w z ł otych w z ł ocie liczy si ę jeden z ł oty za jednego z ł otego w z ł ocie) .

2. Other relevant provisions and practice

16. The Change of Monetary System Act of 28 October 1950 (o zmianie systemu pieni ęż nego ) provided that all public and private obligations expressed in zlotys (irrespective of the time at which they came into existence) were to be recalculated with effect from 30 October 1950 according to the following ratio: 100 “old” zlotys = 1 zloty.

17. Under section 9 of the 1950 Act, all amounts expressed in “old” zlotys and mentioned in legal provisions binding on the day of the entry into force of this Act were to be recalculated, by virtue of law, according to the following ratio: 100 “old” zlotys = 3 zlotys.

18. The Polish Zloty Denomination Act of 7 July 1994 ( ustawa o denominacji z ł otego ) introduced a new payment unit: with effect from 1 January 1995 the new unit of PLN 1 was to be worth 10,000 “old” zlotys.

19. Article 32 of the Constitution reads:

1. All persons shall be equal before the law. All persons shall have the right to equal treatment by public authorities.

2. No one shall be discriminated against in political, social or economic life for any reason.

20. Article 64 of the Constitution reads, in so far as relevant, as follows:

1. Everyone shall have the right to ownership, other property rights and the right of succession.

2. Everyone, on an equal basis, shall receive legal protection regarding ownership, other property rights and the right of succession...

21. Article 358 1 § 3 of the Civil Code provides :

“In the case of an essential change of the purchasing power of money after an obligation falls due the court may, after considering the interests of the parties and in accordance with the principles of community life, change the amount or the mode of payment, even if these were fixed in a decision or a contract.”

22. On 24 April 2007 the Constitutional Court gave a judgment (SK49/05) in which it held that section 12(1) of the Act of 28 July 1990 amending the Civil Code – in so far as it limited the possibility of judicial indexation referred to in Article 358 1 § 3 of the Civil Code as regards pecuniary obligations which had come into existence before 30 October 1950 as a result of bonds emitted by the State Treasury – was inconsistent with Article 64 §§ 1 and 3 in conjunction with Article 32 § 1 of the Constitution.

23. In the part named “ effects of the judgment ” the Constitutional Court noted:

“Taking into consideration the effects of this judgment and the impossibility of claiming the full value of claims arising from national bonds issued before 1939, the matter of possibility and scope and, in particular, the amount of just satisfaction for persons holding such bonds, should be resolved by the lawmaker. As stressed on many occasions in its case-law, the Constitutional Court should not replace the lawmaker.

The finding by the Constitutional Court that section 12(1) of the Act of 28 July 1990 amending the Civil Code was inconsistent with the Constitution ... will enable the holders of national bonds to access the indexation of their claims guaranteed by Article 358 1 § 3 of the Civil Code. However, in practice, the expiry of limitation periods may effectively deprive claimants of a chance to achieve a positive outcome in the relevant proceedings.

If [the Parliament] does not enact new provisions before section 12 (1) of the Act of 28 July 1990 expires, holders of national bonds, who have been patiently waiting for the settlement of their claims, will be able to lodge [with civil courts] their claims for payment in an amount which will be calculated with the application of the indexation clause.

However, the present judgment of the Constitutional Court does not indicate to the courts the scope, direction or scale of the indexation.”

24. The provisions which had been found unconstitutional were subsequently repealed, which opened the way for applicants to seek their claims before the courts and to demand that the value of their claims be judicially increased.

COMPLAINTS

25. The applicants complained under Article 1 of Protocol No. 1 to the Convention and Article 6 of the Convention.

26. They claimed, in particular, that the authorities had done nothing to pay their obligations in respect of the national bonds. They further submitted that their right of access to court was of an illusory nature. Firstly, the proceedings before the domestic courts had been completely arbitrary; secondly, as a result of those proceedings their pecuniary claims had been deprived of their economic value.

THE LAW

A. Alleged violation of Article 1 of Protocol No. 1 to the Convention

27. The applicants complained that the State authorities had done nothing to meet the State ’ s obligations that arose from their national bonds. In particular, they referred to a lack of relevant legislation in this respect and alleged a violation of Article 1 of Protocol No. 1, which provides:

“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.”

1. Compatibility ratione temporis

28. The Court first has to examine whether the applicants ’ complaint as regards a reduction in the value of their claims and the inactivity of the State authorities is compatible ratione temporis with the provisions of the Convention and Protocol No. 1 to the Convention.

(a) General principles deriving from the Court ’ s case-law

29. The Court ’ s jurisdiction ratione temporis covers only the period after the date of ratification of the Convention or its Protocols by the respondent State. From the ratification date onwards, all the State ’ s alleged acts and omissions must conform to the Convention or its Protocols; subsequent facts fall within the Court ’ s jurisdiction, even where they are merely extensions of an already existing situation (see, for example, Broniowski v. Poland [GC] ( dec. ), no. 31443/96, §§ 74 et seq., ECHR 2002 ‑ X, with further references).

30. Accordingly, the Court is competent to examine the facts of the present case for their compatibility with the Convention only in so far as they occurred after 10 October 1994, the date of the ratification of Protocol No. 1 by Poland. It may, however, have regard to the facts prior to ratification inasmuch as they could be considered to have created a situation extending beyond that date or may be relevant for the understanding of facts occurring after that date (ibid.).

31. A continuing violation of the Convention – that is to say, a situation which originates before the date on which the Convention entered into force but which continues after that date – has effects on the temporal limitations of the Court ’ s jurisdiction. In particular, such situations as a continuing and total denial of access to – and the control, use and enjoyment of – property, as well as any compensation for the expropriation of property, may fall within this notion, even if they stemmed from events or laws that occurred before the ratification of the Convention or the Protocol (see, inter alia , Loizidou v. Turkey (merits and just satisfaction), 18 December 1996, §§ 41 et seq., Reports 1996 ‑ VI, and Cyprus v. Turkey [GC], no. 25781/94, §§ 187 ‑ 189, ECHR 2001-IV).

32. However, as the Court has consistently held (in particular within the context of expropriation measures effected by the post-Second World War regulation of ownership relations), the deprivation of ownership or another right in rem is in principle an instantaneous act and does not constitute a continuous “deprivation of a right” (see, among many other authorities, Malhous v. the Czech Republic [GC] ( dec. ) , no. 33071/96, ECHR 2000-XII; Smoleanu v. Romania , no. 30324/96, § 46, 3 December 2002; Bergauer and Others v. the Czech Republic ( dec. ), no. 17120/04, 13 December 2005; and Von Maltzan and Others v. Germany [GC] ( dec. ), nos. 71916/01, 71917/01 and 10260/02, § 74, ECHR 2005-V).

(b) Application of the above principles in the present case

33. In the instant case, the applicants were not deprived of their property in the classic manner; rather, they held and still hold a legal title acquired by their predecessors, which should have been expected to entitle them to claim payment from the State. The Court notes, however, that the applicants ’ claim had already been partially deprived of their economic value before the entry into force of the 1950 Act. It further lost a substantial part of its economic value with the entry into force of this Act. This was confirmed by the Warsaw Regional Court in its judgment of 18 March 2011, in which it expressly stated that the 1994 Act had had little impact on the value of the applicants ’ claims because by the 1950s they had been worth only 10 “old” zlotys and they had lost further value as a result of economic developments in Poland between the 1950s and 1990s (see paragraph 12 above).

34. The Court considers that the reduction in the value of the applicants ’ claims should be regarded as the equivalent of the deprivation of the applicants ’ property. This, in turn, occurred as a result of legislative changes to the Polish legal system made in 1949 and 1950 – that is to say, well before Protocol No. 1 to the Convention came into force in respect of Poland.

35. Under such circumstances, it cannot be said that there was a continuing violation of the Convention which could be ascribed to the Polish State and which could have consequences for the Court ’ s temporal jurisdiction, as defined above (see paragraphs 29-30 above).

36. It thus follows that the part of the application which refers to events before 10 October 1994 is incompatible ratione temporis with the provisions of the Convention and the Protocols thereto within the meaning of Article 35 § 3, and must be rejected, pursuant to Article 35 § 4 of the Convention.

2. Compatibility ratione materiae as regards the applicants ’ situation after 10 October 1994

37. The Court notes that according to its well-established case-law, Article 1 of Protocol No. 1 to the Convention cannot be interpreted as imposing any general obligation on the Contracting States to restore property which was transferred to them before they ratified the Convention. Nor does Article 1 of Protocol No. 1 impose any restrictions on the Contracting States ’ freedom to determine the scope of property restitution or to choose the conditions under which they agree to restore the property rights of former owners (see Jantner v. Slovakia , no. 39050/97, § 34, 4 March 2003).

38. Having found that the applicants ’ bonds had already been deprived of any realistic value well before Article 1 of Protocol No. 1 entered into force in respect of Poland, and noting that after the entry into force of Protocol No. 1 the Polish State had not enacted any laws which would create for the applicants any hope or expectation in respect of claims arising out of the 1936 national bonds (see and compare Lobanov v. Russia , no. 16159/03, § 51, 16 October 2008) , the Court considers that the Polish State has no duty under Article 1 of Protocol No. 1 to enact laws providing for rehabilitation, restitution or compensation in respect of property lost by individual applicants.

39. It follows that this part of the application is incompatible ratione materiae with the provisions of the Convention and Protocols thereto within the meaning of Article 35 § 3, and must be rejected, pursuant to Article 35 § 4 of the Convention.

B. Alleged violation of Article 1 of Protocol No. 1 to the Convention taken together with Article 6 § 1 of the Convention.

40. The applicants further complained that their right of access to a court was of an illusory nature. They claimed that the proceedings before the domestic courts had been completely arbitrary; they further claimed that as a result of those proceedings their pecuniary claims had been deprived of their economic value. They relied on Article 1 of Protocol No. 1 and on Article 6 of the Conv ention, the relevant part of which reads:

“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”

41. The Court notes that the applicants ’ claims have lacked any economic value for a considerable time. This was already so at the time when Poland ratified the Convention and Protocol No. 1 thereto. The applicants ’ situation was not changed to a substantial extent by the entry into force of the 1994 Act (see paragraph 12 above).

42. The Court further notes that on 24 April 2007 the Constitutional Court gave a judgment which removed obstacles to seeking a judicial recalculation of claims arising from the 1936 national bonds (see paragraph 26 above). That judgment did not empower the courts to disregard the effects of the 1949 Decree and the 1950 Act. After that judgment took effect the applicants lodged a claim with the domestic courts seeking the redemption of their bonds and payment from the State Treasury as recalculated by the courts on the basis of Article 358 1 § 3 of the Civil Code. The domestic courts in principle granted their claims, although they did not unanimously agree on their value.

43. It follows that the Court must first examine whether the circumstances of the case, taken as a whole, allow it to conclude that the applicants had and still have title to a substantial interest protected by Article 1 of Protocol No. 1 ( Broniowski v. Poland ( dec. ) [GC], no. 31443/96 , § 98, ECHR 2002 ‑ X)

44. In this respect the Court reiterates that according to its well ‑ established case-law, the concept of “possessions” referred to in the first part of Article 1 of Protocol No. 1 has an autonomous meaning which is not limited to ownership of physical goods and is distinct from the formal classification of “possessions” in domestic law – that is to say, certain other rights and interests constituting assets can also be regarded as “property rights”, and thus as “possessions” for the purposes of this provision (see Anheuser-Busch Inc. v. Portugal [GC], no. 73049/01, § 63, ECHR 2007 ‑ I).

45. The Court has found on numerous occasions that a “claim” can constitute a “possession” within the meaning of Article 1 of Protocol No. 1 if it is sufficiently established to be enforceable (see, for example, Stran Greek Refineries and Stratis Andreadis v. Greece , 9 December 1994, § 59, Series A no. 301 ‑ B, and Pravednaya v. Russia , no. 69529/01, § 38, 18 November 2004 ).

46. Moreover , the European Commission of Human Rights in its case ‑ law found that securities having an economic value could be regarded as “possessions”. In particular, it was of the opinion that bonds vesting a title to repayment on a fixed future date could indeed be regarded as assets giving rise to a right of ownership (see Jasinskij and Others v. Lithuania ( dec. ), no. 38985/97).

47. As noted above, the applicants hold national bonds, claims arising from which have been recognised by a final and enforceable domestic judgment. It follows that the Court must conclude that the applicants ’ claims amount to “possessions” within the meaning of Article 1 of Protocol No. 1 to the Convention.

48. Having found that the applicants indeed hold “possessions” within the meaning of Article 1 of Protocol No. 1, the Court must now examine whether there has been interference with the applicants ’ peaceful enjoyment of their possessions.

49. The Court notes that the applicants ’ complaint essentially concerned the manner in which the national courts interpreted and applied domestic law. In particular, they complained that their access to a court was illusory and that as a result of the courts ’ rulings their pecuniary claim has been deprived of its economic value. They also submitted that in their case the proceedings before the civil courts were arbitrary; each time the courts gave different judgments that prescribed different methods of indexing their claims.

50. The obligations of a State under Article 1 of Protocol No. 1 entail the taking of measures necessary to protect the right of property. In particular, the State is under an obligation to afford the parties to a dispute judicial procedures which offer the necessary procedural guarantees and therefore enable the domestic courts and tribunals to adjudicate effectively and fairly in the light of the applicable law. However, the Court reiterates that its jurisdiction to verify whether domestic law has been correctly interpreted and applied is limited and that it is not its function to take the place of the national courts; rather, its role is to ensure that the decisions of those courts are not flawed by arbitrariness or otherwise manifestly unreasonable. This is particularly true when, as in this instance, the case turns upon difficult questions concerning the interpretation of domestic law. According to Article 19 of the Convention, the Court ’ s duty is to ensure the observance of the engagements undertaken by the Contracting Parties to the Convention. In particular, it is not its function to deal with errors of fact or law allegedly committed by a national court unless and in so far as such errors may have infringed rights and freedoms protected by the Convention (see García Ruiz v. Spain [GC], no. 30544/96, § 28, ECHR 1999-I, and Anheuser-Busch Inc., cited above, § 83 ).

51. Turning to the circumstances of the present case, the Court observes that following the judgment of the Con stitutional Court the applicants instituted civil proceedings before the domestic courts, which examined their claims twice, at two different instances. On 10 August 2009 the Warsaw Regional Court quashed the first-instance judgment and ordered the first-instance court, among other things, to apply a different method of recalculating the applicants ’ claims (see paragraph 8 above). The first ‑ instance court gave another judgment that was partly in accordance with the appellate court ’ s instructions, but failed to take into account the relevant provisions of the 1949 Decree and the 1950 Act. Accordingly, on appeal, its judgment was amended by the Regional Court, which took into account the interests of the applicants and granted them the whole value of their claim, considering that it would have been contrary to the principles of community life to have reduced this amount further by placing on the applicants part of the burden of the effects of inflation and granted them the entire recalculated amount (see paragraph 11 above). The Court also exhaustively addressed the applicants ’ arguments in respect of the influence on the value of their claim of the 1994 Act.

52. Taking into account the foregoing, the Court considers that the domestic courts properly addressed and examined the applicants ’ arguments and applied existing domestic law in a reasonable way. It is true, as was confirmed by the Constitutional Court (see paragraphs 22 and 23 above), that the matter of the redemption of national bonds issued before the Second World War has not been regulated by Polish law. However, as already found by the Court, the Polish State cannot be considered to have a particular obligation under the Convention or Protocols thereto to regulate that matter by means of legislative provisions (see paragraph 38 above). In the absence of any arbitrariness or manifest unreasonableness the Court cannot call into question the findings of the Regional Court.

53. In their application form, the applicants recognised that in respect of most lawsuits lodged with the domestic courts by holders of national bonds, either ( i ) the claims in question had been rejected as time-barred or (ii) the value of those claims had been estimated as minimal. In the instant case, the courts did apply different methods of indexation; however, this did not lead them to reach completely different conclusions. It follows that even in the absence of clear guidance as regards the estimation of claims arising from national bonds, the domestic courts ’ case-law has remained relatively stable.

54. In the light of the foregoing, the Court concludes that the Regional Court ’ s judgment of 18 March 2011 did not constitute interference with the applicants ’ right to the peaceful enjoyment of their possessions. It follows that the applicants cannot be considered victims of the alleged violation of their rights under Article 1 of Protocol No. 1 to the Convention taken together with Article 6 § 1 of the Convention. This part of the application is incompatible ratione personae with the provisions of the Convention and the Protocols thereto within the meaning of Article 35 § 3 and must therefore be rejected pursuant to Article 35 § 4 of the Convention.

For these reasons, the Court , unanimously ,

Declares the application inadmissible.

Done in English and notified in writing on 14 January 2016 .

F atoş Arac ı András Sajó Deputy Registrar President