Information Note on the Court’s case-law 41

April 2002

S.A. Dangeville v. France - 36677/97

Judgment 16.4.2002 [Section II]

Article 1 of Protocol No. 1

Article 1 para. 1 of Protocol No. 1

Peaceful enjoyment of possessions

Impossibility of obtaining reimbursement by the State of VAT payments which were not due: violation

Facts : The applicant, S.A. Dangeville, is a company of insurance brokers whose business activi ty was subject to value added tax (VAT). It paid 292 816 French francs in VAT on the business it had conducted in 1978. The provisions of the Sixth Directive of the Council of the European Communities, which were applicable from 1 January 1978, exempted fr om VAT "insurance and reinsurance transactions, including related services performed by insurance brokers and insurance agents". On 30 June 1978 the French State was notified of the Ninth Directive of the Council of the European Communities, which gave Fra nce extra time in which to implement the provisions of Article 13 B (a) of the Sixth Directive of 1977. Nonetheless, as it was not of retrospective effect, the Sixth Directive was applicable from 1 January to 30 June 1978. The applicant company, relying on the Sixth Directive, sought a refund of the VAT paid for the year 1978. The Administrative Court dismissed its claim. In a decision of March 1986, the Conseil d’Etat dismissed the claim on the ground, among other things, that a Directive could not be dire ctly invoked against a provision of national law. An administrative direction of 2 January 1986 annulled the supplementary tax assessments levied against insurance brokers who had not paid VAT for that period. The applicant lodged a second application, whi ch was ultimately dismissed by a further judgment of the Conseil d’Etat in October 1996, which, in accordance with the traditional legal principle of "distinction of means of appeal", held that the applicant could not seek to obtain by way of an action for damages satisfaction which had been refused it in the tax proceedings in a decision (of the Conseil D'Etat in 1986 ) which had become res judicata . However, in a judgment of the same date concerning an application brought by another company, whose business activity and claims were initially identical to those of the applicant, the Conseil d’Etat departed from its earlier decision and upheld that company’s claim for a refund by the State of sums wrongly paid.

Law : Article 1 of Protocol No. 1 – This article was applicable because the sum owed by the State to the applicant on account of the VAT wrongly paid amounted to a pecuniary right and was therefore in the nature of a possession. The applicant had had at least the legitimate hope of being able to secure r eimbursement of the VAT. In considering the justification for interfering with the applicant's right to respect for his possessions, it had to be established whether a fair balance had been struck between the requirements of the general interest and the ne ed to safeguard the applicant's fundamental rights. Regarding the first point, the 1986 administrative direction had been intended to bring domestic legislation into line with the Sixth Community Directive, which was a legitimate aim, compatible with the " general interest". However, the Conseil d’Etat's particularly strict interpretation of the traditional legal principle of "distinction of means of appeal" had deprived the applicant of the sole domestic procedure capable of offering a sufficient remedy to ensure compliance with Article 1 of Protocol No. 1. Nothing relating to the general interest could justify the Conseil d’Etat's refusal to draw the consequences of a provision of Community law that was directly applicable. The interference in question was the consequence of Parliament's failure to bring domestic law into compliance with a Community directive. Although this compliance was achieved through the January 1986 administrative direction, the Conseil d'Etat's decision handed down two and a half mont hs later, in March 1986, did not draw the consequences of this. While it appeared that there were difficulties in applying Community law at the domestic level, the applicant should not have had to bear the consequences of these difficulties and differences between the various domestic authorities. The interference in the applicant's possessions did not therefore reflect the requirements of the general interest. Both the applicant company's inability to enforce its debt against the State and the lack of dome stic proceedings providing a sufficient remedy to protect its right to respect for enjoyment of its possessions upset the fair balance between the demands of the general interest of the community and the requirements of the protection of the individual’s f undamental right. The interference with the applicant company’s enjoyment of its property had therefore been disproportionate.

Conclusion : violation (unanimously).

Article 14 combined with Article 1 of Protocol No. 1 – In view of its finding, the Court decided unanimously that it was not necessary to examine this complaint separately.

Article 41 – The Court awarded EUR 21 734.49 for pecuniary damage and EUR 21 190.41 for costs and expenses.

© Council of Europe/European Court of Human Rights This summary by the Registry does not bind the Court.

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