JOINT PARTLY DISSENTING OPINION OF JUDGES BRATZA, GARLICKI, LORENZEN, TSOTSORIA AND PARDALOS

I.

1. It is with regret that we cannot agree with the majority ’ s conclusion that there has been a violation of Article 1 of Protocol No. 1. In our opinion, the approach adopted in the Chamber judgment should have been confirmed.

We are ready to accept that the taking of the applicants ’ land constituted an expropriation measure.

It seems that the preference of the Grand Chamber was to avoid answering the question whether the requirement of legality had been met in the present case (see paragraph 105). It seems also that, taking into account the strategic nature of the Riga Port , the expropriation measure was found to have a sufficient link to the “public interest” (see paragraph 107).

2. What remains, therefore, is the assessment of proportionality. In the circumstances of the case, there is no alternative but to focus this assessment on the compensation issue: although it seems that the Grand Chamber might have accepted much lower compensation than the full market value of the expropriated land (see paragraph 118), the violation is said to result from the “extreme disproportion” between the official cadastral values and the amount of compensation paid to the applicants (see paragraph 119).

However, since any discussion of the question of “fair balance” involves value-oriented elements, it also seems necessary to address the question of the legal and economic nature of the property rights in question.

II.

3. The Chamber judgment was, to a considerable extent, based on the assumption that the expropriation measure had to be regarded as taken within the first period of economic transition and, therefore, the State ’ s margin of appreciation was particularly wide, in line with the Court ’ s findings in Jahn and Others v. Germany ([GC], nos. 46720/99, 72203/01 and 72552/01, ECHR 2005 ‑ VI) . The Grand Chamber decided not to follow Jahn and has gone to great lengths to distinguish it from the present case (see paragraphs 123-127).

We are ready to agree that there are differences between Jahn and the present case. We are not ready, however, to conclude that the approach in Jahn is simply not applicable here.

4. The transition process in post-communist countries was a complicated and complex one.

First of all, it was a long-lasting process which, at best, could be regarded as concluded many years after it began. While it may be accepted that the margin for error has gradually decreased, it would be a naïve interpretation of the process to assume that, in Latvia as in many other countries, the transformation was already over in 1996/1997. It should be remembered that the Convention entered into effect in respect of Latvia only in 1997 and that in other “transition cases” (such as Ždanoka v. Latvia [GC], no. 58278/00, ECHR 2006 ‑ IV, or Ä€damsons v. Latvia , no. 3669/03, 24 June 2008 ) the Court has not been as restrictive in calculating the transition period.

Secondly, it would be an oversimplification to perceive the process of transformation as a “one way street” of – at first – denationalisations and later reprivatisations and/or privatisations. In reality, this was a process of trial and error, in the course of which, quite often, measures taken one day had to be corrected or annulled the day after. This was sometimes due to a lack of experience and imagination (and, in particular, miscalculation of the economic effects of the early “restitutionary enthusiasm”) and sometimes due to the bitter realisation that economic transformation generated a considerable amount of corruption and abuse. In consequence, some “steps back” have on occasion been not only economically justified, but also politically (morally) correct. Renationalisation measures could well enter into that category.

In brief, although it is true that the reacquisition of the harbour area and the Port of Riga were matters not directly related to restitution or denationalisation, it does not mean that those decisions fell outside the general realm of the transformation process. It would appear that, as in Jahn , the harbour expropriations in the present case constituted a correction of a previous error. No economic or political logic can justify a situation in which, by a combination of restitution and donation transactions, the State (i.e. the taxpayer) gives away a 1,500-euro plot in 1994 and is required to buy it back for 5 million only two years later. That is why the Chamber was correct in accepting that the expropriation at issue was in substance part of the land and property reform carried out after the restoration of independence (see paragraph 76 of the Chamber judgment).

5. If the present case thus belongs to the category of “transformation cases”, it would be difficult not to rely upon Jahn .

The case of James and Others v. the United Kingdom ( 21 February 1986, Series A no. 98) is, of course, relevant in that it provides the general conceptual framework, but James dealt with measures adopted in a well ‑ established democracy, that is to say, in a clearly non-transition context. Therefore, at best, it applies but mutatis mutandis to the present situation.

The case of the Former King of Greece and Others v. Greece ( [GC] (merits), no. 25701/94, ECHR 2000 ‑ XII) , while more closely related to a democratic transition, did not involve the process of economic transformation and should be read rather as falling within the category of “post-revolutionary justice”.

The cases of Broniowski v. Poland ( [GC], no. 31443/96, ECHR 2004 ‑ V) and, to some extent, Suljagić v. Bosnia and Herzegovina (no. 27912/02, 3 November 2009) dealt with specific legislative entitlements which had not been correctly implemented by the authorities. In neither of these cases did the State claim that its action had been aimed at the correction of earlier mistakes.

For corrective actions, Jahn remains the most relevant precedent [2] and the only one adopted at Grand Chamber level. It is true that the holding in Jahn was limited to the particular context of the reunification of Germany . This approach distinguishes Jahn from other situations in which German authorities have interfered with property rights. But the logic of Jahn cannot be confined exclusively to the German context. The transformation process in other post-communist countries was more complex, required more sacrifices and witnessed more cases of error, deception or abuse than German reunification, which was implemented within the existing economic and legal framework of the Federal Republic of Germany.

6. Therefore, even making the bold assumption that no deception or abuse had taken place in the present case, the logic of Jahn can and should also apply to the situation in Latvia , as well as that in other transition countries.

This logic is composed of three elements: (a) in the transition process, a State may inevitably make mistakes and has a right to take corrective action; (b) in such a context the State ’ s margin of appreciation becomes wider and the corrective action may interfere with acquired rights and expectations; and (c) the width of the margin of appreciation narrows with the passage of time. The same approach, albeit in a different context, was later confirmed in Suljagić (cited above – where no violation was found) as well as in Althoff and Others v. Germany (no. 5631/05 , 8 December 2011 – where a violation was found).

It cannot be denied that there are many differences between the factual situation in Jahn and that in the present case. However, Jahn remains applicable as a general framework which may and should be used when expropriations are closely connected to the process of transition. In any event, Jahn cannot be read in an a contrario manner, at least in a situation where some compensation has been offered to the “victims” of such expropriation. The Grand Chamber seems to have overlooked the fact that, while the Chamber judgment followed the logic of the Jahn approach, it did not duplicate the solution in that case.

7. The present case arises from corrective action taken by the State and that is why there is no alternative but to follow the Jahn approach. In other words, it should be recognised not only that the State has a very wide margin of appreciation in taking back what was erroneously given away, but also that it has the right to take into account the financial dimension of the evolving situation.

III.

8. This is the context in which the compensation issue has to be addressed. While a total lack of compensation can be considered justifiable only in exceptional circumstances, legitimate “public interest” objectives, may often call for less than reimbursement of the full market value (see James , cited above, § 54). This principle applies all the more forcefully when laws are enacted in the context of a change of political and economic regime, especially during the initial transition period, which is necessarily marked by upheavals and uncertainties; in such cases the State has a particularly wide margin of appreciation (see paragraphs 81-82 of the Chamber judgment).

In consequence the Court, in assessing the proportionality of financial arrangements, is not absolutely bound by the market value of the expropriated property. If there are valid arguments to depart from an evaluation based on the market value, a lesser award of compensation (or – exceptionally – even a total lack of compensation) may be accepted. The ultimate criterion is always the same: whether the amount of compensation imposes an excessive individual burden on the applicant(s), in violation of the “fair balance” requirement.

9. We believe that, in the present case, the amount of compensation did not impose an excessive burden on the applicants. Three groups of arguments support that position.

10. In the mathematical perspective, it should firstly be taken into account that the applicants had received the disputed plots as gifts in consideration of some personal services rendered to the previous owners. The pecuniary value of those services has never been established, but their description indicates that it could not have been very high. Therefore, the applicants ’ original investment had a limited pecuniary aspect.

Secondly, the applicants themselves declared, in the process of calculation of the registration tax, that the indicative value of the acquired plots was about EUR 705 and EUR 1,410 respectively. This valuation has never been contested by the authorities.

Thirdly, as a result of legal actions concerning the payment of rent arrears for 1994-1996, the applicants were awarded about EUR 85,000 and EUR 593,150 respectively.

Finally, the amount of compensation for expropriation of the land was assessed at about EUR 850 and EUR 13,500 respectively. This shows that the payment actually awarded to the applicants was related neither to their original investment nor to their initial declarations as to the value of their plots. Within two years, the applicants were able to generate a considerable profit from their opportunistic action. While it is undisputed that, in 1997, the cadastral value of the plots was counted in millions, the question is whether the payment of the whole cadastral (market) value would not have imposed an excessive burden on the State. In our opinion, the Chamber was correct in adopting a balanced mathematical approach in which all payments were taken together and assessed as sufficiently addressing the interests of both parties.

11. In a perspective of “historical justice”, it should be taken into account that the applicants were not the “historical owners”. It can be accepted that, in the process of democratic transition, historical owners not only may have a (moral) claim to the restitution of the once-confiscated property but also a claim to compensation for moral suffering and other difficulties in surviving under the communist regime. In other words, the State may owe to them more than just a mathematically corrected amount of compensation. Additional and unexpected profit (even of a windfall nature) may be justified in those historical categories. However, the applicants have never had any historical claim to the land in question. They managed to acquire this land without any substantial investment and now claim an exclusive entitlement to all profits resulting from the transaction. Since no “historical-justice” argument can support their position, the present case is closer to the situation in Jahn than to the situations in Althoff , Suljagić or Broniowski (all cited above).

12. Finally, in a perspective of “social justice”, the question arises as to what extent the applicants ’ claim to receive the actual market value of their land could be regarded as legitimate.

Firstly, the whole story belongs to the transformation period, that is to say, a period in which the State had not only more opportunities to make mistakes but also more powers to take corrective action.

Secondly, it seems, at best, mysterious how the market value of the same land could have risen from about EUR 1, 000 in 1994 to millions in 1996 ‑ 1997. We agree that no direct proof of any illicit or criminal action has been forthcoming. Therefore, the only plausible explanation is that of error on the part of the authorities. Either the value of the land had been much higher already in 1994, and the authorities erred in accepting a much lower value, as declared by the applicants to the tax office; or, the value of land soared within the two-year period, and the authorities erred in not predicting this development before the original restitution had taken place. The former explanation seems to correspond better to the facts of the case; it should be taken into account that the disputed plots have always formed part of the Riga Port and already contained a developed technical infrastructure. In any event, once a mistake has been made, the authorities should not be deprived of any possibility of correcting it.

Thirdly, while the Court may not be in a position to pass judgment on the moral quality of the transactions, this cannot mean that the Court is not allowed to take into account the context of the claim. A situation in which a gift for unexplained services later gives rise to a multi-million claim may be regarded as a typical illustration of the dark side of the transformation processes in the post-communist countries. And the general knowledge of the complicated picture of that process should dictate some caution in distributing good and bad faith between the parties. The assessment of proportionality cannot be morally sterile, particularly when the category of “social justice” is brought into play.

Fourthly, it is exactly the “social justice” consideration that militates against accepting the applicants ’ claim to astronomical profits. The prohibition on imposing an excessive burden applies to both sides and requires the Court to mitigate the protection afforded in cases of abuse. There seems to be something inherently wrong in a situation in which an individual is allowed to squeeze millions from the State in consequence of a not-fully-transparent sequence of transactions and valuations relating to the same plot of land. While the State should pay for its mistakes, there must be some reasonable limit to the making of profit at the taxpayer ’ s expense.

13. In conclusion, whilst it is undisputed that that the compensation paid to the applicants represented only a fraction of the market value of their land, this does not mean that – in the particular circumstances of this case – no fair balance was struck between the owners ’ rights and the interests of the community.

Accordingly, there has not been a violation of Article 1 of Protocol No. 1. As to the applicants ’ claim under Article 14 of the Convention, we consider that it is subsumed by the complaint made under the substantive Article and therefore that no separate issue arises.

[1] O r in reality, the re-entry into force of the law.

[2] The recent judgment in Althoff and Others v. Germany also seems to confirm the general applicability of Jahn to the post-reunification property regulations in Germany . The finding of a violation was based rather on the “very particular circumstances” of the case (see Althoff and Others v. Germany , no. 5631/05 , § 74, 8 December 2011 ), in particular on the retrospectivity of the State action, the legislative intervention in a pending procedure and, last but not least, the very long delay ( eight years after German reunification and six years after the expiry of the statutory time-limit for restitution claims based on the Property Act ) in the State’s action.