PARTLY CONCURRING AND PARTLY DISSENTING OPINION OF JUDGE KOSKELO

1. As regards the Government ’ s preliminary objection, I have voted, like my colleagues, in favour of rejecting that objection. However, I am not satisfied with the reasoning of the majority concerning this issue. As regards the amount awarded for pecuniary damage, I am to my regret not able to agree with the majority.

Concurring opinion as regards the Government ’ s preliminary objection

2. In the present case, there has been an evident breach by the applicants of clear provisions in the Rules of Court, in that the applicants have failed to comply with Rule 62 § 2 according to which “no written or oral communication and no offer or concession made in the framework of the attempt to secure a friendly settlement may be referred to or relied on in the contentious proceedings”. The issue is which legal basis and what kind of reasons should determine the Court ’ s reaction to a breach of this particular kind. This specific provision in the Rules of Court is founded on Article 39 § 2 of the Convention, which contains a more general provision under which proceedings with a view to securing a friendly settlement must be confidential.

3. In its principal judgment (see paragraphs 2-3 of the present judgment), the Court had reserved the question of the application of Article 41 and invited the parties to submit their observations on the issue of just satisfaction and to notify the Court if any agreement were to be reached concerning the compensation to be paid by the State on account of the violation of the applicants ’ rights that had been found in the principal judgment. In their submissions to the Court concerning the application of Article 41, the applicants did disclose and refer to offers made by the Government in the course of the failed negotiations that had taken place in the wake of the Court ’ s principal judgment.

4. As regards the first question of the legal basis , in the Court ’ s case-law breaches of Rule 62 § 2 have usually been approached by having recourse to Article 35 § 3 (a) of the Convention, i.e. by considering whether such a breach constitutes an abuse of the right of individual application, with the consequence that the application is to be declared inadmissible. In my view, while there are various situations where an applicant ’ s conduct may naturally and appropriately fall to be considered from such an angle, it is problematic to have recourse to this legal basis in a context such as the present one. The question of an abuse of the right of application has been raised in a number of situations where, for instance, an applicant has submitted false information, or failed to submit relevant information, or where other forms of unacceptable behaviour vis-à-vis the Court have been at issue. It is natural that cases of this nature, relating to various types of conduct that have not been specifically addressed in the Convention nor in the Rules of Court, will have to be dealt with on the basis of the “general clause” contained in Article 35 § 3 (a).

5. By contrast, where specific provisions have been included in the Rules of Court, and there is a breach of such expressly provided norms of conduct, the situation is, in my opinion, different. Rule 62 § 2 has been adopted for good and important reasons, namely in order to safeguard the proper conduct of the contentious proceedings before the Court, in a situation where attempts have been made to reach a friendly settlement but those endeavours have failed. In the case of a breach of such specific rules of conduct that are addressed to the applicants and expressly reiterated, with clear instructions, in standard letters sent by the Court in the course of the proceedings, having recourse to Article 35 § 3 (a) does not appear to be an optimal legal basis for considering the consequences of such conduct. If breaches of clear and specific Rules that have been put in place for good reasons cannot be sanctioned without first having to consider whether or not they can be characterised as an abuse of the right of application, such an approach risks diluting and weakening those Rules in a manner that seems problematic. Breaches of these express rules both require and deserve a more stringent approach than one that follows a route vi a a standard of abuse which is intended appropriately to encompass other, more diffuse types of misconduct.

6. For these reasons, it would be more appropriate to have recourse to Article 37 § 1 (c) as the legal basis for addressing situations where there has been a breach of Rule 62 § 2 of the Rules of Court. Under that provision, the Court may strike out an application where, for any other reason than those listed in the previous sub-paragraphs, the Court finds that it is no longer justified to continue the examination of the application. As is apparent from the wording of Article 37, having recourse to this provision in the present kind of situation does not mean that the Court is left with no discretion in considering whether or not the breach in the concrete circumstances is such as to justify the application being struck out.

7. In the present case, the majority in paragraph 16 of the judgment do first refer to Article 37 § 1 (c), suggesting that this is the legal basis for considering the Government ’ s preliminary objection in the light of the applicants ’ conduct. Subsequently, however, the reasoning turns toward addressing the situation from the point of view of whether or not the applicants ’ conduct amounts to an abuse of the right of application. In the concluding paragraph (paragraph 23), the majority make the determination that this was not the case. In my view, the approach taken appears unclear and rather confusing in regard to the question, which is not unimportant, as to what legal basis should guide the Court when faced with a breach of Rule 62 § 2.

8. As for the detailed reasoning , I also have some misgivings about the line taken by the majority. In my view, it is important to note that Rule 62 § 2 contains two distinct elements . Firstly, in line with Article 39 § 2 of the Convention, there is the general requirement that negotiations aiming at a friendly settlement be kept confidential. Secondly, there is the requirement that these negotiations remain without prejudice to any arguments in the subsequent contentious proceedings. Specifically in regard to the latter aspect, the parties are prohibited from referring to or relying on any written or oral communication or on any offer or concession that has been made in the context of attempts to secure a friendly settlement in the contentious proceedings that may follow.

9. Rule 62 § 2 thus contemplates two distinct aspects of the general principle of confidentiality that is set out in Article 39 § 2 of the Convention, one being “external” to the proceedings before the Court, the other being “internal” to those proceedings. The “external” aspect entails that the parties are not allowed to disclose information concerning the friendly settlement negotiations to any third parties, including the media. The rationale behind this restriction is to preclude the parties from seeking direct or indirect external support or pressure for their position in order to gain, through publicity or otherwise, extr a leverage in the negotiations. The “internal” aspect is concerned with maintaining and protecting the objectivity of the Court when it is called upon to adjudicate the issues that have been the subject matter of the prior negotiations with a view to a friendly settlement.

10. These two aspects may in practice become intertwined but they are distinct and serve in part different purposes, which is why the factual elements to be taken into consideration in an assessment of the consequences of a breach are not necessarily identical. While, for instance, the question of the extent of impermissible communication of information, such as whether the information has been disclosed to a limited number of third persons or published in the media, may be relevant in the context of the external aspect and the consequences of external disclosure, such considerations should not carry similar weight in regard to the internal aspect. Attempts to exert undue influence on the Court by references to, or reliance on, communications, offers or concessions made at the negotiation stages are, by express provision, not permitted, and the illegitimate nature of such conduct does not, as a matter of principle, depend on the number of persons who may come to have cognizance of the information involved in such breaches of the Rules. In particular, it cannot be decisive in the context of this internal aspect whether or not the information has also been disclosed to third parties or made public in the media. What is at stake here is the integrity of the Court in the contentious proceedings, and an assessment of a breach of the specific Rules of conduct vis-à-vis the Court cannot depend on whether or not the public, or third parties, have been made aware of the matter or whether or not the information has also been communicated to persons outside the Court.

11. In regard to the above-mentioned aspects, which should be distinguished, I find the reasoning adopted by the majority too muddled. I also find it difficult to excuse the applicants ’ conduct by reference to the invitation addressed to the parties to “notify the Court of any agreement that they may reach”, or by reference to their alleged intention of informing the Court about the development of the negotiations. It is clear that the Court ’ s invitation only concerned information about any agreement actually reached between the parties. In this case, no such agreement was reached, and the express intent and purpose of Rule 62 § 2 is to state that the Court shall not be informed about developments in the course of negotiations where these have failed and where therefore the Court is required to engage in further adjudication in contentious proceedings in order to settle the issues of just satisfaction under Article 41.

12. In their submissions to the Court regarding their claims for just satisfaction, the applicants communicated to the Court information concerning their negotiations with the respondent Government, including information about offers made and concessions suggested in the course of those negotiations. There has thus been a clear breach of Rule 62 § 2 of the Rules of Court. It remains to be determined whether or not, taking into account all the circumstances, the breach is so serious that it should result in the striking out of the application s in its remaining part, i.e. the applicants ’ claim for just satisfaction. In this respect, while under Article 37 § 1 (c) the issue is not whether the applicants ’ conduct amounts to an abuse of the right of application, there is nevertheless certain room for discretion, the test being whether or not it remains justified to continue the examination of the claims and, in particular, whether respect for human rights so requires.

13. In the applicants ’ submissions in response to the Government ’ s preliminary objection, I find no convincing justification for the breach of Rule 62 § 2 that has occurred. Nevertheless, I have joined the majority in concluding that the preliminary objection must be rejected. The main reason is that in this particular case, I find that it would be excessively harsh on the applicants if their compensation claims were to be struck out on account of a breach that is likely to have resulted from a failure on the part of their lawyer to abide by the relevant Rules rather than from any instruction stemming from the applicants themselves to disregard those Rules. Although it is an important and established principle that any mistakes or omissions made by the lawyer engaged by the applicants are imputable to the applicants themselves, who must bear the negative consequences of what their lawyer does or fails to do in handling the case, in the present situation it would be a disproportionate consequence if the applicants were precluded from having their compensation claims examined, taking into account that the Court has already found a violation of their Convention rights and that efforts to reach a friendly settlement have failed. In the belief that the applicants have acted in good faith and cannot be faulted for the breach that has occurred, I am prepared to accept that it is, in the circumstances of the present case, justified to continue examining their remaining claims.

Dissenting opinion as regards the award of compensation for pecuniary loss

14. To my regret, I am unable to agree with the majority as regards the determination of the amount of compensation for pecuniary damage to be awarded to the applicants. The majority have taken the view that the proper measure of compensation for pecuniary loss in the present case is the difference between the level of rent under free-market conditions and the actual regulated rents in the relevant period. In my opinion, the position according to which the level of market rent is to be taken as the point of reference for the calculation of pecuniary loss is, in the circumstances of the present case, incorrect and results in over-compensation.

15. According to well-settled case-law, a judgment in which the Court has found a violation of the Convention imposes on the respondent State a legal obligation to put an end to the violation and make reparation for its consequences in such a way as to restore as far as possible the situation that would have existed had the violation not occurred. Article 41 empowers the Court to afford the injured party such satisfaction as appears to it to be appropriate. In this context, the purpose of an award of damages for pecuniary loss is compensatory, not punitive. As regards the applicants ’ claims for pecuniary loss, the Court ’ s case-law establishes that there must be a clear causal connection between the damage claimed by the applicants and the violation of the Convention (see, among many authorities , Kurić and Others v. Sloveni a (just satisfaction) [GC], no. 26828/06 § 81, 12 March 2014).

16. The background to the present case is that on 21 June 2000 the Constitutional Court of the Czech Republic had found the domestic rent control legislation unconstitutional and set a deadline (31 December 2001) by which legislative measures had to be taken in order to correct the situation. The State ’ s legislative organs, however, failed to replace the unconstitutional legislation in a timely manner, while the flawed regulation remained in place. In a judgment of 28 February 2006, the Constitutional Court held that the continuing failure by Parliament to enact a law on unilateral rent increases was unconstitutional. New legislation did not enter into force until 1 January 2007.

17. The principal judgment of this Court established a violation of Article 1 of Protocol No. 1 because of the fact that in the period between the beginning of the year 2002 and the end of 2006 there was no legal basis at domestic level for the interference with the applicants ’ property rights (arising from the rent control) that would have been in compliance with the requirement of lawfulness under Article 1 of Protocol No. 1. The substantive features of the rent control were not the subject of the Court ’ s assessment in the principal judgment, and not the basis for the finding of a violation. In this context it may be recalled that Article 1 of Protocol No. 1 has not been considered to preclude Contracting States from taking measures in their housing regulation in order to reduce rents to a level below market value in the interest of social policy and social justice. Although the proportionality of such measures may come under the Court ’ s review, the principal judgment in the present case does not contain and is not based on such a review ( paragraph 127 of the principal judgment). In this regard, the present case clearly differs, for instance, from the case of Statileo v. Croatia , no. 12027/10, 10 July 2014 (referred to in paragraph 45 of the present judgment), where the Court did examine the proportionality of the Croatian rent-control system in its impact on the applicant and came to the conclusion that, notwithstanding their wide margin of appreciation, the Croatian authorities had failed to strike the requisite fair balance between the general interests of the community and the protection of the applicant ’ s property rights.

18. With this background in mind, I find it important to stress the following elements.

19. Firstly, the Court ’ s principal judgment does not entail a finding that the rent control as such violated the applicants ’ rights under Article 1 of Protocol No. 1. The flaw as established by the Court was not the presence of rent control, or its substantive features, but the absence of a proper legal basis for the interference with the owners ’ property rights from the point of view of the requirement of lawfulness.

20. Secondly, given the declaratory nature of the Court ’ s judgments, the finding of a violation on the grounds of a lack of lawfulness in the domestic regulation has not had any impact on the domestic regulations that were in place. The Court ’ s judgment has not rendered those regulations invalid, or otherwise ineffective.

21. Therefore, although the Court found that there was no Convention-compliant legal basis for the rent control regime that was applied at the time, it does not follow, as a matter of law or fact, that the appropriate alternative hypothesis for the purposes of an assessment of pecuniary losses suffered should have been a complete absence of rent control in the relevant period. Thus, neither in view of its substance nor in terms of its legal effects was the Court ’ s principal judgment as such capable of justifying a conclusion according to which the applicants either should or would have been in a position to charge market-level rents for the flats in question during the relevant period.

22. Furthermore, as a matter of domestic law, the Government have shown that an abrupt abolition of rent control was not required by the national constitution, and might not even have been in conformity with the constitution. In any event, the Constitutional Court has accepted the 2006 legislation, under which rent control was not abolished at once but which provided for a gradual, progressive adjustment of the rent levels. It is also clear from the Government ’ s submissions that social consequences were behind the policy decision whereby rent control was not abolished at once but adjusted gradually in order to raise permissible rents towards market levels over a longer period.

23. For the above-mentioned reasons, neither the Convention nor domestic law, including domestic constitutional law, justify the conclusion, in the circumstances of the present case, that the correct point of reference from the point of view of an award of damages in keeping with the principle of restitutio in integrum would be the level of market rents. Taking into account the above-mentioned elements, I am unable to discern any reasonable basis for considering that the hypothetical scenario that would have prevailed without the violation found in the principal judgment was a situation without any rent control measures whatsoever. In my view, notwithstanding the violation found in the principal judgment, the applicants could not have entertained any legitimate expectation of being totally free from any kind of rent control in the relevant time period. Accordingly, awarding pecuniary damages on that basis would, in my view, result in over-compensation.

24. The Government have argued for a method which – instead of applying market level rents as the benchmark – is based on the ide a that the maximum rent allowed under the 2006 legislation for the year 2007, i.e. the first year of the new legislation, should be the cap by reference to which the compensation should be calculated. This approach does not appear justified, either, for the following reasons.

25. The underlying problem in the present case is that, even admitting that as a matter of principle the respondent State would not have been required to abolish rent regulation once and for all, the necessary legislative response came five years too late. A progressive adjustment of the rent levels over a period encompassing several years was not begun until 2007, whereas in the light of the Constitutional Court ’ s findings it ought to have begun in 2002. Under such circumstances, it is difficult to see a justification for using the first, initial year of the actual adjustment scheme as a cap for calculating the pecuniary loss for a period which, for the applicant Čapský, encompassed the years 2002-2004, and for the applicant Jeschkeová a period from mid-2002 to mid-2005. The method proposed by the Government would in turn result in under-compensation.

26. The difference between the amount awarded by the majority, based on free-market rents, and the amount suggested by the Government, is wide, the majority award being roughly 10 times the latter amount for the applicant Čapský. For the applicant Jeschkeová, whose claim is based not on full market rents but on minimum-economic-value rents, the difference is somewhat narrower.

27. It goes without saying that in a situation such as the present one, it is easier to conclude which hypotheticals are incorrect than to substitute a better solution in their place. This difficulty, however, is not a justification for either of the above-mentioned options, one being overly generous and the other inadequate. As the Court has acknowledged on other occasions, a precise calculation of the sums necessary to make complete reparation ( restitutio in integrum ) in respect of the pecuniary losses suffered by the applicants may be prevented by the inherently uncertain character of the damage flowing from the violation (see, for instance, Kurić and Others , cited above, § 82). Under such circumstances, an award must be determined by the Court at its discretion, having regard to what is equitable.

28. From the judicial perspective of this Court, and with the limited information available, it is impossible to speculate with any accuracy what might have been the situation for the applicants if a constitutionally acceptable and Convention-compliant legislative regime for rent regulation had been in place for their flats in the relevant period of time. In the absence of elements that would enable an approximation of the actual losses but with the aim of avoiding both over-compensation and under-compensation, I would award the applicant Čapský the amount of EUR 30,000 and the applicant Jeschkeová the amount of EUR 17,000 in compensation for their pecuniary loss.