FIRST SECTION

DECISION

Application no. 39479/18 KREMELSON INVEST KFT and O thers against Hungary

The European Court of Human Rights ( First Section ), sitting on 16 December 2020 as a Committee composed of:

Krzysztof Wojtyczek , President, Erik Wennerström , Lorraine Schembri Orland , judges, and Renata Degener , Deputy Section Registrar ,

Having regard to the above application lodged on 14 August 2018 ,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicants,

Having deliberated, decides as follows:

THE FACTS

1 . A list of the applicants is set out in the appendix . They are limited liability companies incorporated under Hungarian law and seated in Budapest . They were represented before the Court by Mr L.A. Kelemen , a lawyer practising in Budapest.

2 . The Hungarian Government (“the Government”) were represented by their Agent, Mr Z. Tallódi, Ministry of Justice.

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

4 . The application concerns the revocation of the applicant companies ’ licences to run amusement arcades operating slot machines in Hungary. The background of the case is set out in Laurus Invest Hungary KFT and Others v. Hungary (( dec. ), nos. 23265/13 and 5 others, ECHR 2015 (extracts)). The first applicant, Kremelson Invest KFT, is the legal successor of an applicant in Laurus . The remaining three companies were applicants in Laurus .

5 . Following the Court ’ s decision in Laurus (cited above), on 3 May 2016 the Budapest High Court gave a partial judgment and an interim judgment in the case having been lodged against the State by the applicants for damages caused by the impugned measures.

6 . The High Court partially granted the applicants ’ claims in its interim judgment and found the State liable for damages for the violation of the principle of protection of legitimate expectations. However, it rejected the applicants ’ other claims concerning the tax burden increase , the loss of profits and other expected gains related to the impugned prohibition on amusement arcades operating slot machines. The c ourt pointed out that there was an absence of direct causal link between the alleged damage s, if any, and the impugned measures.

7 . Upon appeal, by its judgment dated 15 November 2016, the Budapest Court of Appeal reversed the first instance judgment and dismissed the applicants ’ claim in its entirety. It reasoned that due to the divergent specification of the factual basis for the damage and because of the partially conflicting claims, the applicants were unable to prove the actual occurrence of any damage.

8 . On 4 October 2017, following the applicants ’ petition for review, the Kúria upheld the first instance court ’ s partial and interim judgment. The Kúria found that, in addition to the prohibition of reverse discrimination, in view of the special nature of the regulation of the activity of organising games of chance, the legislature ’ s liability for damages could also be established under EU law. The Kúria also held that the various damages alleged by the applicants were to be proved and causal connections were to be examined in the resumed proceedings pending before the first instance court.

9 . Based on the interim judgment of the Kúria , proceedings for determination of the compensation amount are still pending before the Budapest High Court.

10 . The applicants did not file constitutional complaints against the domestic court decisions referred to above.

11 . The Fundamental Law of Hungary provides as follows:

Article XIII

“(1) Everyone shall have the right to property and inheritance. Property shall entail social responsibility.

(2) Property may only be expropriated exceptionally, in the public interest and in those cases and ways provided for by an Act, subject to full, unconditional and immediate compensation.”

Article XV

“(1) Everyone shall be equal before the law. Every human being shall have legal capacity.

(2) Hungary shall guarantee fundamental rights to everyone without discrimination and in particular without discrimination on the grounds of race, colour, sex, disability, language, religion, political or other opinion, national or social origin, property, birth or any other status.”

COMPLAINTS

12 . The applicant companies alleged that the revocation of their licences to operate amusement arcades with slot machines in Hungary amounted to an unjustified interference with their rights under Article 1 of Protocol No. 1, read alone and in conjunction with Article 14 of the Convention.

THE LAW

13 . The applicant companies submitted that the impugned legislative changes removing their licences had infringed their rights under Article 1 of Protocol No. 1 to the Convention , taken alone and in conjunction with Article 14 of the Convention .

14 . 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.”

15 . Article 14 of the Convention reads as follows:

“The enjoyment of the rights and freedoms set forth in [the] 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.”

16 . The Government submitted that the applicant companies should have pursued a constitutional complaint under sections 26 or 27 of the Constitutional Court Act. The applicant companies disagreed, arguing in essence that the constitutional complaint was not an ef fective remedy.

17 . The Court has already held that a constitutional complaint under section 26(1) and/or section 27 of the Constitutional Court Act is an effective remedy normally to be exhausted for the purposes of Article 35 § 1 of the Convention in situations where the application concerns Convention rights equally protected by the Fundamental Law of Hungary (see Szalontay v. Hungary ( dec. ) , no. 71327/13, 12 March 2019).

18 . The present case concerns complaints about alleged breaches of protection of property and of prohibition of discrimination which are enshrined in Article 1 of Protocol No. 1 and Article 14 of the Convention, likewise in Article s XIII and XV of the Fundamental Law, respectively (see paragraph 11 above). It follows that the constitutional complaint would have been an effective remedy to exhaust in the circum stances.

19 . Since the applicant companies did not avail themselves of this legal avenue, the application must be rejected for non-exhaustion of domestic remedies, according to Article 3 5 §§ 1 and 4 of the Convention.

For these reasons, the Court, unanimously,

Declares the application inadmissible.

Done in English and notified in writing on 21 January 2021 .

Renata Degener Krzysztof Wojtyczek Deputy Registrar President

Appendix

No.

Applicant ’ s Name

Year of incorporation

1KREMELSON INVEST KFT

2003

2LIXUS INVEST SZERENCSEJÁTÉK SZERVEZŐ KFT

2012

3LIXUS PROJEKT SZERENCSEJÁTÉK SZERVEZŐ KFT (“ f.a. ”)

2012

4LIXUS SZERENCSEJÁTÉK SZERVEZŐ KFT (“ f.a. ”)

2003