FOURTH SECTION

DECISION

Application no . 30942/04 Margarita Mihaylova MIHAYLOVA against Bulgaria

The European Court of Human Rights (Fourth Section), sitting on 13 January 2015 as a Chamber composed of:

Guido Raimondi , President, Päivi Hirvelä , George Nicolaou , Nona Tsotsoria , Zdravka Kalaydjieva , Krzysztof Wojtyczek , Faris Vehabović , judges, and Fatoş Aracı , Deputy Section Registra r ,

Having regard to the above application lodged on 3 August 2004,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant, and the additional observations submitted by the parties after the Court invited them to do so on 28 June 2013,

Having deliberated, decides as follows:

THE FACTS

1. The applicant, Ms Margarita Mihaylova Mihaylova , is a Bulgarian national, who was born in 1945 and lives in Varna. She was represented before the Court by Mr M. Ekimdzhiev and Ms G. Chernicherska , lawyers practising in Plovdiv.

2. The Bulgarian Government (“the Government”) were represented by their Agents, first Ms N. Nikolova , and then Ms M. Kotseva and Ms A. Panova , of the Ministry of Justice.

A. The circumstances of the case

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

1. Restitution proceedings

4. The applicant ’ s grandfather owned several plots of agricultural land in the area surrounding Varna measuring 48,500 square metres in total, which were expropriated between 1966 and 1970 for urban development.

5. Following the enactment of restitution legislation in Bulgaria in the early 1990s, on 20 February 1992 the applicant ’ s father applied to have the expropriation revoked. The request, initially addressed to the local agricultural land commission, was forwarded to the mayor of Varna on 21 July 1994, as it was decided that the 1992 Restitution Act (see paragraph 21 below ) applied to the case. After the time-limit for assessing whether the land should be returned elapsed without any decision being made, on 5 September 1994 the applicant ’ s father sought judicial review of the mayor ’ s tacit refusal.

6. In a judgment of 10 January 1996 the Varna Regional Court overturned the mayor ’ s refusal in part by revoking the expropriation in so far as it concerned 14,700 square metres of land and returning the land in question to the applicant ’ s father. The Regional Court ’ s judgment was subject to supervisory review ( преглед по реда на надзора ). Following a request by the mayor of Varna, on 21 October 1997 the judgment was quashed by the Supreme Administrative Court and the case remitted to the lower court.

7. On 21 April 1998, after re-examining the case, the Varna Regional Court once again revoked the expropriation of the land and returned it to the applicant ’ s father on the grounds that no construction works had yet taken place and that it was sufficient in size to form an independent plot. It did not comment on any rights to that land by third parties such as Cherno More EAD and ET Koti (see paragraphs 10-11 below).

8. No appeal was lodged against the above-mentioned judgment and on 20 May 1998 it became final. On 13 November 1998 the mayor of Varna applied to the Supreme Administrative Court to have the judicial proceedings reopened, referring to newly discovered evidence, but on 25 May 1999 the application was dismissed.

9. On an unspecified date prior to 31 May 1996 the applicant ’ s father paid back 4,504.87 Bulgarian levs (BGL) to the municipality, representing the monetary compensation received at the time of expropriation. At that time, because of inflation and the depreciation of Bulgarian currency, the sum repaid equalled approximately 90 German marks (DEM). At the same time the applicant ’ s father requested to have the plot of land marked as his in the relevant cadastral plans, which was necessary in order to obtain possession, but this was refused as it was established that third parties asserted competing rights to the same property (see below).

2. Transformation of Cherno More EAD and sale of the land to ET Koti

10. Following expropriation, the plot of land at issue formed part of Varna ’ s industrial zone and a plant, storehouses and accompanying infrastructure were constructed on it. In 1987 the land was allocated for use by a State enterprise, which in 1991 was transformed into a limited liability company and then in 1992 into a joint-stock company named Cherno More EAD (“ Cherno More”), the shares of which were owned entirely by the State.

11. In November 1994 Cherno More put 9,925 square metres of the land it owned up for sale. On 2 March 1995 the land was sold to ET Koti (“ Koti ”), a sole trader. It appears that this land was situated entirely within the boundaries of the larger 14,700 square metre plot which had been the subject of the applicant ’ s father ’ s restitution claim.

3. Rei vindicatio proceedings

12. On 21 March 1997 the applicant ’ s father brought a rei vindicatio action against Cherno More and Koti . He based his claim on the Varna Regional Court ’ s judgment of 10 January 1996 (see paragraph 6 above) , arguing that he owned the 9,925 square metre plot of land which Koti had bought from Cherno More in 1995.

13. On 19 June 1997, upon a request by Koti , to which the applicant ’ s father consented, the proceedings were stayed pending the outcome of related litigation between the two defendants regarding ownership of the disputed land. The proceedings were resumed in February 1999, but were again briefly stayed pending the outcome of the application by the mayor of Varna for restitution proceedings to be reopened (see paragraph 8 above).

14. After the rei vindicatio proceedings were resumed, in their respective judgments of 12 May and 17 November 2000 the Varna Regional Court and the Varna Court of Appeal disallowed the claim. While the proceedings were under way, the applicant ’ s father died and the applicant and her mother joined the proceedings as his heirs. They subsequently lodged an appeal on points of law.

15. In a judgment of 23 November 2001 the Supreme Court of Cassation quashed the Court of Appeal ’ s judgment and remitted the case on the grounds that the lower courts had failed to take into account the Varna Regional Court ’ s judgment of 21 April 1998.

16. Following a fresh examination of the case, on 27 September 2002 the Varna Court of Appeal once again dismissed the rei vindicatio claim. It found that Cherno More and Koti were not bound by the judgment of 21 April 1998 as they had not participated in the earlier proceedings and had only in the present proceedings had an opportunity to make their own claims. It further noted that a decision given in restitution proceedings could not prejudice the interests of third parties; third parties who had in the meantime acquired property from the State could always oppose their rights to the former owner claiming restitution.

17. The Varna Court of Appeal further found that the urban development projects for which the land had been expropriated had been completed, which was sufficient ground to refuse restitution. Furthermore, by the time the restitution legislation had entered into force, the land had already become the property of Cherno More, as a result of its transformation into a limited liability company, whereas the legislation had only applied to property owned by the State or municipalities when it entered into force. In addition, the land had been lawfully acquired by Koti in 1995. Accordingly, the applicant ’ s father, succeeded by the applicant and her mother, could not have acquired any rights of ownership as a result of the Varna Regional Court ’ s judgment of 21 April 1998.

18. Following an appeal by the applicant and her mother, on 25 February 2004 the above-mentioned judgment was upheld by the Supreme Court of Cassation, which reiterated that in 1995 Koti had validly acquired ownership of the disputed plot. It held further that the rei vindicatio action was in fact time-barred because the applicant ’ s father had not complied with the six-month time-limit provided for in paragraph 6a of the transitional and concluding provisions of the Privatisation Act (see paragraph 25 below) .

19. On 17 February 2003 during the course of these proceedings the applicant ’ s mother died, leaving the applicant as her sole heir.

20. The Court has not been informed of what happened to the remainder of the plot of land measuring 14,700 square metres following the Regional Court ’ s judgment of 21 April 1998 (see paragraph 7 above).

B. Relevant domestic law and practice

1. Restitution under the Restitution Act 1992

21. The Restitution of Property Expropriated under Building Planning Legislation Act ( Закон за възстановяване на собствеността върху някои отчуждени имоти по ЗТСУ, ЗПИНМ, ЗБНМ, ЗДИ и ЗС , “the Restitution Act”) entered into force in February 1992. Its most relevant provisions have been summarised in the Court ’ s judgment in the case of Decheva and Others v. Bulgaria (no. 43071/06 , § § 28-31 , 26 June 2012). It did not contain any provision prohibiting the sale to third parties after its entry into force of properties which were subject to restitution claims.

22. The provisions of domestic law concerning the res judicata effect of court judgments have been summarised in the Court ’ s judgment in the case of Kehaya and Others v. Bulgaria (nos. 47797/99 and 68698/01, §§ 34-55, 12 January 2006).

23. Although not expressly stipulated in the Restitution Act, according to settled judicial practice restitution was only possible where the property taken had remained State or municipally-owned. The same view was expressed by the Constitutional Court in a decision of 11 March 1998 ( Решение № 4 от 11.03.1998 г. на КС на РБ по конст . д. № 16/97 г. ). According to settled judicial practice under the Restitution Act, third parties claiming property rights could not intervene in the ex parte proceedings under that Act or challenge any decision restoring the former owners ’ rights, but could have their claims examined in separate judicial proceedings, in which the courts exercised “indirect judicial review” ( косвен контрол ) of the restitution decision. The scope of that review was discussed in an Interpretative Decision of 10 May 2006 of the Supreme Court of Cassation, which noted that a third party claiming rights to a restituted property was not bound by a decision given under the Restitution Act and could dispute all preconditions for restitution as provided for under that Act, as this was its sole means by which to defend its rights ( Тълкувателно решение № 6 от 10.05.2006 г. на ВКС по т. гр . д. № 6/2005 г. ).

2. The Privatisation Act

24. The Transformation and Privatisation of State and Municipally-Owned Enterprises Act (“the Privatisation Act”), enacted in 1992 and superseded by other legislation in 2002, provided for the privatisation of State and municipally-owned enterprises and companies and publicly owned property. A summary of the legislation ’ s provisions relating to the transformation of companies from public enterprises into companies is set out in the Court ’ s judgment in the case of Sivova and Koleva v. Bulgaria (no. 30383/03 , §§ 45-49, 1 5 November 2011). Transformation is also regulated by other legislation, summarised in the Court ’ s decision in the case of Credit Bank and Others v. Bulgaria (( dec. ) , no. 40064/98 , 30 April 2002). Most notably, the transformation procedure involved transferring ownership of all the assets to the newly created company.

25. Pursuant to paragraph 6a of the transitional and concluding provisions of the Privatisation Act (“paragraph 6a”), which was added in May 1996, creditors of State and municipally-owned enterprises and companies were obliged to notify their claims to the body competent to make a decision for privatisation. Notifications had to be made within six months of the publication in the Official Gazette of a notice that the privatisation procedure had started. Creditors failing to give such notice forfeited their right to bring subsequent proceedings regarding the same claim.

COMPLAINTS

26. The applicant complained under Article 6 § 1 of the Convention that the rei vindicatio proceedings had been unfair because: (a) the national courts had failed to take into account the Varna Regional Court ’ s final judgment of 21 April 1998 satisfying her father ’ s restitution claims, and (b) the Supreme Court of Cassation had found the action brought by her father time-barred on the basis of a legal provision, namely paragraph 6a, which should not have applied to the case.

27. The applicant also complained under Article 6 § 1 of the Convention that the rei vindicatio proceedings had been too lengthy.

28. She further complained, under Article 1 of Protocol No. 1 to the Convention, that the plot of land measuring 9,925 square metres had not been returned to her.

THE LAW

A. Alleged violations of Article 6 § 1 of the Convention

29. Article 6 § 1 of the Convention, in so far as applicable, reads:

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

1. Complaint concerning the fairness of the 1997-2004 rei vindicatio proceedings

(a) Arguments of the parties

30. The Government contended that the proceedings had been fair. As regards the first argument raised by the applicant (described under (a) in paragraph 26 above), they argued that the domestic courts had been correct in finding that her father, and the applicant as his heir, had not acquired ownership of the disputed land as a result of the judgment of 21 April 1998. The effect of a decision given under the Restitution Act could only be the revocation of the earlier expropriation and not the automatic restoration of a previous owner ’ s property rights. Such a decision could not prejudice the rights of third parties who had in the meantime acquired the property but who had not participated in the earlier restitution proceedings.

31. The Government further contended that the Supreme Court of Cassation had been correct in applying paragraph 6a to the case.

32. The applicant disputed these arguments. She submitted that the Varna Regional Court ’ s judgment of 21 April 1998 had been binding on Cherno More and Koti because it had also been binding on the State, which the two businesses had succeeded in title. Thus, r elying on the Court ’ s judgment in the case of Kehaya and Others (cited above), the applicant argued that the domestic courts ’ approach in disregarding the judgment of 21 April 1998 had breached the principle of legal certainty.

33. In addition, the applicant argued that the Supreme Court of Cassation had acted arbitrarily in applying paragraph 6a to the case and finding the rei vindicatio action time-barred. She submitted that paragraph 6a applied to entirely different situations and argued that it was unclear when, according to the Supreme Court, the six-month time-limit in her case had started to run.

(b) The Court ’ s assessment

34. As the Court has stated in previous cases, the right to a fair hearing under Article 6 § 1 of the Convention, interpreted in the light of the principles of rule of law and legal certainty, requires that where the courts have determined an issue with final effect, their ruling should not be called into question (see Brumărescu v. Romania [GC], no. 28342/95, § 61, ECHR 1999 ‑ VII). The principle of legal certainty presupposes that no party is entitled to seek a review of a final and binding judgment merely for the purpose of obtaining a rehearing and fresh determination of the case (see Ryabykh v. Russia , no. 52854/99, § 52, ECHR 2003 ‑ IX).

36. The Court observes that in the case at hand the initial judgment on the applicants ’ entitlement to restitution, the one of 21 April 1998, was given in proceedings between the applicants and the Plovdiv mayor, a body of the municipality. It has not been contested, and it is also the subject matter of settled practice of the domestic courts (see paragraph 23 above), that third parties affected by such decisions could legitimately dispute the applicants ’ entitlement to restitution in situations where it invaded their rights to the same property. In these circumstances the Court is not convinced that the decision of 21 April 1998 had obtained the stability similar, for example, to the one in the case of Brumărescu , cited above .

37. The subsequent rei vindicatio proceedings opposed the applicants to the company Cherno More and the sole trader Koti . The applicant claimed that the two businesses had not been “third parties” to the restitution proceedings (see paragraph 32 above). As regards Cherno More, the Court observes that under Bulgarian law State-owned companies, even where they are the successors of former State enterprises, are separate legal entities, capable of independently acquiring and exercising various property rights, as well as defending these rights in civil proceedings. Such companies are subjected to the rules of private law and exercise no public power (see Sivova and Koleva , cited above, §§ 48 ‑ 49). The same is valid in respect of Koti , a private entity which has always been legally and financially independent from the public authorities. It has not been disputed that the two businesses did not participate in the proceedings which resulted in the judgment of 21 April 1998 allowing the applicant ’ s father ’ s restitution claim. Accordingly, the Court sees no reason to conclude that they should have been considered bound by that judgment.

38. Consequently, the Court concludes that the “indirect judicial review” exercised by the national courts did not contradict the ad personam aspect of the principle of respect for the res judicata effect of judgments, in that the courts did not re-examine a question allegedly already decided upon in proceedings involving the same parties.

39. It is thus unnecessary to examine whether the courts ’ approach also contradicted the ad rem aspect of the same principle.

40. The applicant argued in addition that the Supreme Court of Cassation ’ s finding that the rei vindicatio action had been time-barred pursuant to paragraph 6a of the Privatisation Act was arbitrary (see paragraph 26 above). However, the Court observes that it is not called upon to deal with errors of fact or law allegedly committed by a national court, as it is not a court of fourth instance (see, for example, García Ruiz v. Spain [GC], no. 30544/96, § 28, ECHR 1999 ‑ I; and Khodorkovskiy and Lebedev v. Russia , nos. 11082/06 and 13772/05, §§ 803-4, 25 July 2013 ). In addition, it observes that before deciding whether or not there has been a violation of Article 6 § 1 of the Convention it is to take into account the “proceedings as a whole” (see Edwards v. the United Kingdom , judgment of 16 December 1992, Series A no. 247-B, § 34; Mirilashvili v. Russia , no. 6293/04, § 164, 11 December 2008; and Kinský v. the Czech Republic , no. 42856/06 , § 83, 9 February 2012 ). It thus notes that the disputed argument about the application of paragraph 6a was not the only decisive argument in the case; in fact, the rei vindicatio action brought by the applicant ’ s father was dismissed on the additional grounds discussed above. Accordingly, the proceedings taken “as a whole” were not unfair for the purposes of Article 6 § 1 of the Convention.

41. It follows that the complaint under that provision concerning the fairness of the proceedings is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

2. Complaint concerning the length of the rei vindicatio proceedings

42. The applicant complained in addition under Article 6 of the Convention that the rei vindicatio proceedings (see paragraphs 12-18 above) had been excessively lengthy.

43. The Government argued that the proceedings ’ length had been reasonable because they had been very complex. The applicant disagreed.

44. The Court observes that the reasonableness of the duration of proceedings must be assessed in the light of the particular circumstances of each case and with reference to the following criteria: the complexity of the case, the conduct of the applicant and the relevant authorities, and what was at stake for the applicant in the litigation (see, among many other authorities, Finger v. Bulgaria , no. 37346/05 , § 94, 10 May 2011 ).

45. The proceedings in the present case started on 21 March 1997 (see paragraph 12 above), and ended on 25 February 2004 (see paragraph 18 above). They lasted nearly seven years and were examined by three levels of court. However, the Court observes that soon after they started, the proceedings were stayed for a year and eight months, from June 1997 to February 1999, to which the applicant ’ s father consented (see paragraph 13 above). The proceedings were again stayed for an unidentified brief period in 1999 (ibid.). It appears that on both occasions the stays were ordered on reasonable grounds, namely to await the outcome of other related litigation.

46. It appears that the rei vindicatio proceedings were resumed in the second half of 1999 and that they then progressed reasonably quickly, there being no particular delays (see paragraphs 14-18 above). In fact, after the proceedings were resumed they were brought to a close within approximately four and a half years. The Court thus concludes that the proceedings in the case were not unreasonably lengthy.

47. It follows that this complaint is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

B. Alleged violation of Article 1 of Protocol No. 1

48. 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 or to secure the payment of taxes or other contributions or penalties.”

1. Arguments of the parties

49. The Government contended that the applicant ’ s father had not become the owner of the disputed plot of land, which had been lawfully acquired by Cherno More and later by Koti . They thus agreed with the domestic courts ’ findings in the rei vindicatio proceedings that the land could not be returned to the applicant.

50. The applicant disagreed. She submitted that her father, and she as his heir, had become owners of the plot by virtue of the Regional Court ’ s final judgment of 21 April 1998 and that the case concerned deprivation of property. The applicant argued further that this deprivation had been unlawful, because the rei vindicatio proceedings had been unfair. On the same ground she contended that the deprivation of property had not been in the public interest and that she had had to bear an excessive burden. The applicant relied once again on the case of Kehaya and Others , cited above.

2. The Court ’ s assessment

51. The Court has previously summarised the principles applicable to cases of restitution of expropriated property in Kopecký v. Slovakia ([GC], no. 44912/98, § 35, 2004 ‑ IX) . Most notably, it has held that Article 1 of Protocol No. 1 cannot be interpreted as imposing any general obligation on the Contracting States to restore property taken by them before they ratified the Convention. Nor does this provision 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 property rights of former owners. However, once a Contracting State, having ratified the Convention including Protocol No. 1, enacts legislation providing for the full or partial restoration of property confiscated under a previous regime, such legislation may be regarded as generating a new property right protected by Article 1 of Protocol No. 1 for persons satisfying the requirements for entitlement. In addition, the Court has accepted that in situations such as that in the present case, involving a wide-reaching legislative scheme with a significant economic impact, the national authorities must have a wide margin of appreciation in selecting the measures to secure respect for property rights or to regulate ownership relations (see also Broniowski v. Poland [GC], no. 31443/96, § 182, ECHR 2004 ‑ V; Maria Atanasiu and Others v. Romania , nos. 30767/05 and 33800/06 , §§ 171-72, 12 October 2010; and Sivova and Koleva , cited above, §§ 97-98) .

52. Turning to the circumstances of the present case, the Court notes that in a judgment of 21 April 1998 the Varna Regional Court found that the preconditions of the Restitution Act had been satisfied. It considered that no construction works had yet taken place and that the land was sufficient to form an independent plot (see paragraph 7 above). The applicant ’ s father paid back the sum received in compensation at the time of the expropriation, to enable the quashing of the expropriation order to take effect (see paragraph 9 above).

53. The Court must examine whether the judgment of 21 April 1998 gave rise to any property rights protected under Article 1 of Protocol No. 1. It already noted (see paragraph 36 above) that affected third parties had the opportunity to challenge such decisions, given in ex parte proceedings, in subsequent proceedings so as to protect their own rights to the same properties. It thus concludes that the judgment of 21 April 1998 could not be considered to have determined with a final and binding effect the applicant ’ s entitlement to restitution, or that it gave rise to any legitimate expectation to restitution. In this regard the Court notes that a comparable scheme existed under other restitution legislation in Bulgaria, and in cases concerning that legislation ’ s application the Court has also held that decisions on restitution cannot be considered to have given rise, in a final and binding manner, to property rights in respect of a given asset until affected third parties have had a chance to defend their interests (see Karaivanova and Mileva , cited above, §§ 74-76; Nedelcheva and Others v. Bulgaria , no. 5516/05, §§ 56-57, 28 May 2013; and Kupenova and Others v. Bulgaria ( dec. ), no. 12664/05, §§ 30-31, 7 May 2013).

54. The Court notes, in addition, that throughout all the time the disputed plot of land in the case was held by the two businesses, first by Cherno More, and then by Koti , who used it for economic activity (see paragraph 11 above). Thus, the applicant should have been aware that Cherno More and Koti would have competing claims in respect of the same property, subject to determination in separate civil proceedings.

55. In view of the above, the Court considers that the applicant could not have legitimately expected the judgment of 21 April 1998 to definitively determine whether her father, and she as his heir, was entitled to restitution and thus give rise to a right to property or to a legitimate expectation to obtain any property rights falling under the protection of Article 1 of Protocol No. 1 (see, mutatis mutandis , Karaivanova and Mileva , § 76, Nedelcheva and Others , § 60, and Kupenova and Others , § 34, all cited above).

56. Lastly, with regard to the applicant ’ s argument that she was made to bear an excessive burden (see paragraph 50 above), the Court notes that indeed her father paid back the compensation received at the time of expropriation (see paragraph 9 above) and the applicant could not eventually obtain the restitution of the plot. However, the Court notes that the payment was intended to meet a precondition of the law and was due so that the restitution of the expropriated property could take effect. The applicant has not argued that she could not claim the sum back following the finding that the restitution was not possible.

57. In those circumstances, the Court cannot accept that the applicant has been deprived of her possessions in an unjustified or arbitrary manner.

58. It follows from the considerations above that this part of the application is also manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

For these reasons, the Court unanimously

Declares the application inadmissible.

Done in English and notified in writing on 5 February 2015 .

FatoÅŸ Aracı Guido Raimondi              Deputy Registrar President