FOURTH SECTION

DECISION

Application no . 11186/12 Donka Kirilova PETROVA and Dimo Petrov PETROV against Bulgaria

The European Court of Human Rights ( Fourth Section ), sitting on 25 August 2015 as a Committee composed of:

Ledi Bianku, President, Paul Mahoney, Krzysztof Wojtyczek, judges, and Fatoş Aracı , Deputy Section Registrar ,

Having regard to the above application lodged on 19 July 2007 ,

Having deliberated, decides as follows:

THE FACTS

1. The applicants, Ms Donka Kirilova Petrova and Mr Dimo Petrov Petrov , are Bulgarian nationals who were born in 1958 and live in Burgas . They were represented before the Court by Ms S. Margaritova-Vuchkova , a lawyer practising in Sofia .

2. The Bulgarian Government (“the Government”) were represented by their Agent, Ms R. Nikolova , 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 . Background of the case

4. In 1968 Mr and Mrs K. bought from the municipality in Burgas a three-room flat of 80 square metres, which had become State property pursuant to the nationalisations carried out by the communist regime in Bulgaria after 1947. After the death of Mr and Mrs K. their heirs sold the property to Mr and Mrs T.

5. On 26 February 1992 the latter transferred the property to the applicants. In exchange, the applicants transferred to Mr and Mrs T. a flat of 60 square metres, also in Burgas, and also paid 7,600 old Bulgarian levs (BGL) for the difference between the two properties ’ values .

6. Subsequently Mr and Mrs T. transferred the flat of 60 square metres to the heirs of Mr and Mrs K., who, on their turn, sold it to a third party in 2000.

2. Proceedings under section 7 of the Restitution Law

7. In February 1992 the Restitution Law entered into force.

8. On 19 February 1993 the heirs of the pre-nationalisation owners of the flat of 80 square metres brought an action against the applicants , Mr and Mrs T. and the heirs of Mr and Mrs K. under section 7 of that Law.

9. The proceedings ended with a final judgment of the Supreme Court of Cassation of 30 January 2007. The courts restored the former owners ’ title to the flat , finding that Mr and Mrs K. ’ s title , acquired in 1968, had been null and void ab initio , and that a ccordingly all subsequent transactions with the flat were null and void as well . In order to reach this conclusion the courts noted that no evidence had been presented to them showing that Mr and Mrs K. had been the property ’ s tenants, which would entitle them to buy it. Furthermore, two documents related to the sale in 1968 had not been signed by the officials with whom the relevant power had been ves ted, but by their replacements.

10. Shortly after the Supreme Cour t of Cassation ’ s judgment of 30 January 2007 the former owners of the flat brought rei vindicatio proceedings against the applicants who were living in the flat . In January 2008 the applicants vacated the property.

11. In June 2007 the applicants applied to receive compensation bonds. Their request was dismissed as time-barred.

3. Proceedings brought by the applicants

12. In July 2007 the applicants brought an action against Mr and Mrs T. seeking the rescission of the 1992 contract whereby they had exchanged flats with Mr and Mrs T. They argued that that contract had been defective, because Mr and Mrs T. had not been the owners of the flat of 80 square metres; they had acquired it from the heirs of Mr and Mrs K. whose title had been found to be null and void ab initio .

13. The action was allowed in a judgment of the Burgas Regional Court of 28 October 2008.

14. In September 2007 the applicants br ought another action against Mr and Mrs T., claiming 62,600 new Bulgarian levs (BGN) for the market value of the flat of 60 square metres which they had transferred to the defendants by virtue of the 1992 contract. The applicants argued that they were entitled to receive that value, as they could not claim the flat itself, given that it had in the meantime been transferred to a third party.

15. In November 2007 the Burgas R egional C ourt granted an interim injunction aimed at securing the applicants ’ claim , prohibiting Mr and Mrs T. from disposing of other property they owned.

16. The proceedings ended with a final judgment of the Supreme Court of Cassation of 28 April 2015. It found that the applicants were entitled to receive the market value of the flat of 60 square metres, as they had been evicted from the flat they had received in exchange, namely the one of 80 square metres, which they had acquired in good faith. It thus awarded the applicants 55,320 new Bulgarian levs (BGN), the equivalent of the market value of the flat of 60 square metres in January 2007 (the date of the final judgment in the proceedings under section 7 of the Restitution Law), as calculated by a court-appointed expert, plus interest for the period since the filing of the claim in September 2007.

B. Relevant domestic law and practice

17. The relevant background facts and domestic law and practice concerning the effect of restitution on third parties have been summarised in the Court ’ s judgment in the case of Velikovi and Others v. Bulgaria ( nos. 43278/98, 45437/99, 48014/99, 48380/99, 51362/99, 53367/99, 60036/00, 73465/01, and 194/02, 15 March 2007 ) .

18. In May 2007 the Government published regulations implementing section 7(3) of the Restitution Law (State Gazette no. 37 of May 2007). The regulations enabled persons in possession of housing compensation bonds to obtain payment at face value from the Ministry of Finance.

COMPLAINTS

19. Relying on Articles 6 § 1, 13 and 14 of the Convention and Article 1 of Protocol No. 1, the applicants complain that they were deprived of their property (the flat of 80 square metres) arbitrarily, through no fault of their own and without adequate compensation.

THE LAW

20. The Court is of the view that the applicants ’ complaints fall to be examined under Article 1 of Protocol No. 1 alone, which 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.”

21. The Government disputed the complaints. In their submissions, filed in October 2012, they pointed out that the proceedings described in paragraphs 14-16 above were still pending, and that they offered the applicants a reasonable chance to obtain redress. They pointed out in addition that the applicants had failed to duly seek compensation bonds. Finally, the Government argued that the deprivation of the applicants of their property had been in compliance with the requirements of Article 1 of Protocol No. 1.

22. The applicants disagreed. They contended that their case was similar to the case of Eneva and Dobrev , examined in Velikovi and Others (cited above, §§ 243-49), where the Court found that the authorities had acted in breach of the principle of legal certainty, failing to set clear limits on the restitution of property which had, after the initial sale by the State to private persons, been acquired by bona fide third parties. In addition, the applicants argued that the compensation they could receive through the compensation bonds scheme would be inadequate, and that even if they were to be successful in the proceedings against Mr and Mrs T. (their submissions were filed in January 2013 when these proceedings were still pending), they had no reasonable chance of effectively obtaining the payment of any award made.

23. The Court notes that the application concerns the same legislation and issues as Velikovi and Others (cited above) and the follow-up cases (see , for example , Peshevi v. Bulgaria , no. 29722/04, 2 July 2009; Georgieva and Mukareva v. Bulgaria , no. 3413/05, 2 September 2010; Madzharov v. Bulgaria , no. 40149/05, 2 September 2010 ; Tonov and Others v. Bulgaria [Committee], no. 48704/07 , 30 October 2012) .

24. As in these cases, the Court is of the view that t he interference with the applicants ’ property rights was based on the Restitution Law, which pursued in principle an important aim in the public interest, namely to restore justice and respect for the rule of law in the transitional period after the fall of the totalitarian regime in Bulgaria. The case did not involve a departure from the transitional character of the restitution legislation, since the action under section 7 of the Restitution Law was brought within the initial one-year time-limit after that Law ’ s entry into force in 1992.

25. It is significant in the present case that the applicants lost their flat not because their title to it was defective, but because of defects in the title of Mr and Mrs K. from whom the applicants ’ predecessors, Mr and Mrs T., had acquired property. Thus, even though property to the flat at issue was on two occasions validly transferred after it had been initially purchased from the State, these subsequent transactions were found to be null and void by the national courts, on the basis of a principle of Bulgarian property law according to which a contract, albeit valid as a source of contractual obligations, does not effectively transfer ownership if the seller was not the owner of the property. Moreover, in applying this principle to restitution claims under section 7 of the Restitution Law, the national courts considered that a formerly nationalized piece of property could be recovered by the pre-nationalisation owners regardless of the passage of time since the rules of acquisitive prescription did not apply, and regardless of the good faith of the subsequent buyers (see Velikovi and Others , cited above, §§ 123 and 125) .

26. As pointed out by the applicants, the situation was similar in the case of Eneva and Dobrev , examined in Velikovi and Others (see §§ 243-49 of the judgment). The Court, finding that the authorities ’ failure to set limits on the application of section 7 of the Restitution Law to bona fide third parties such as Ms Eneva and Mr Dobrev impinged upon the principle of legal certainty, found that nothing short of compensation reasonably related to the market value of the applicants ’ flat could ensure the fair balance required under Article 1 of Protocol No. 1 (ibid., § 247-48).

27. The Court sees no reason not to apply these conclusions to the case at hand. Accordingly, it is to verify whether the applicants obtained, or could have obtained, compensation reasonably related to the market value of the property they lost, namely the flat of 80 square metres.

28. In that regard the Court observes that the applicants could, in the first place, have resort to the compensation bonds scheme. After May 2007 it became possible for persons holding such bonds to receive from the State their face value (see paragraph 18 above), which has led the Court, in a number of Velikovi -type cases, to conclude that the applicants could have obtained compensation adequate in the circumstances (see , for example , Dzhagarova and Others v. Bulgaria (dec.), no. 5191/05 , 3 March 2009 , and Bashikarova and Others v. Bulgaria [Committee], no. 53988/07, § 26, 5 February 2013 ) .

29. However, in cases such as the present one, the Court has required that the interested parties should receive compensation which is not merely adequate, but, as mentioned above, reasonably related to the market value of the flat lost. This is a higher threshold (see Todorova and Others v. Bulgaria (just satisfaction), nos. 48380/99, 51362/99, 60036/00 and 73465/01, § 9, 24 April 2008 ). In cases similar to the present one the Court has found that even as it operated after May 2007 the bonds scheme could not ensure compensation satisfying this threshold, namely reasonably related to the market value of the property lost (see Tonov and Others , cited above, § 27).

32. It follows that the present application is 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 17 September 2015 .

Fatoş Aracı Ledi Bianku Deputy Registrar President