Legal summary

July 2023

G.I.E.M. S.r.l. and Others v. Italy (just satisfaction) [GC] - 1828/06, 34163/07 and 19029/11

Judgment 12.7.2023 [GC]

Article 41

Just satisfaction

Calculation of awards for pecuniary damage caused by automatic and complete confiscation of unlawfully developed land, regardless of any criminal liability

Facts – The applicants are four companies and one individual, who is a director of one of those companies (Mr Gironda). They had complained about the automatic and complete confiscation of unlawfully developed land, regardless of any criminal liability.

In its judgment on the merits delivered on 28 June 2018 (see legal summary ), the Grand Chamber found: a violation of Article 1 of Protocol No. 1 to the Convention in respect of each of the applicants; a violation of Article 7 of the Convention in respect of the applicant companies, but no violation of Article 7 in respect of Mr Gironda; and a violation of Article 6 § 2 in respect of Mr Gironda. It reserved the question of the application of Article 41. The property has been returned to all the applicants.

Law – Article 41:

(1) Pecuniary damage –

(a) Approach followed by Court – It was in principle for the applicants to adduce evidence of the existence and quantum of any pecuniary damage and to show a causal link with the violation found.

As to pecuniary damage arising, as in the present case, from the confiscation of real property in violation of Article 1 of Protocol No. 1, the relevant factors to be taken into consideration in order to establish the extent of the damage included, in particular: the value of the land and/or buildings prior to their confiscation, whether the land could be built upon at that time, the use reserved for the land in question by the relevant legislation and the land-use plans, the period in which it had not been possible to use the property and the loss of value caused by the confiscation, while deducting, if appropriate, the cost of demolishing illegal buildings.

In assessing the duration of the inability to use the property, the Court took as the starting point the actual confiscation and not any previous measures of seizure, since in the judgment on the merits only the confiscation measures had given rise to the findings of violations.

The Court did not need to rule on the question whether a violation of Article 6 § 2 of the Convention could give rise to pecuniary damage requiring compensation, as in any event none of Mr Gironda’s claims of pecuniary damage had a causal link with the violation of the right to be presumed innocent. As to the violations of Article 7, even assuming that they could give rise to compensation for pecuniary damage, it would not entail any increase in the amount awarded in respect of the violations of Article 1 of Protocol No. 1. Accordingly, the Court proceeded to focus on the latter.

Lastly, there were some similarities between the present case and that of Sud Fondi S.r.l. and Others v. Italy . That being said, the nature of the violations in question was significantly different: whereas in Sud Fondi S.r.l. , the violations of Article 7 of the Convention and Article 1 of Protocol No. 1 had been found on account of a lack of legal basis of the confiscations in question, thus rendering them arbitrary, in the present case the violations were mainly procedural, arising solely from the fact that the applicant companies had not been parties to the relevant proceedings. Accordingly, the present case had to be distinguished from that of Sud Fondi S.r.l. and Others in a number of respects.

(b) Heads of pecuniary damage requiring compensation – In view of the fact that the land and buildings in question had already been returned to the applicants, the Court decided to take into consideration the claims for compensation solely in respect of the following points:

(i) Inability to use the land since confiscation – In the case of Sud Fondi S.r.l. and Others (just satisfaction) the compensation due for the inability to use the land had been based on the likely value of the land at the beginning of the situation complained of and it had been considered that the damage resulting from that inability could be compensated for by the payment of a sum corresponding to the statutory interest accruing throughout that period, applied to the value of the land.

As to the starting point of the period in question, it was appropriate in the present case to calculate the damage from the time of the confiscation of the property.

In addition it was necessary to examine, on a case-by-case basis, whether or not the land in question could be built upon, a status which had a significant impact on the value of land.

- G.I.E.M. S.r.l. – As the possibility of building on the land in question had not been proven, the Court awarded the applicant company EUR 35,000.

- Falgest S.r.l. and Mr Gironda – Building was permitted on the land in question to a very limited extent on the basis of the regulatory provisions in force at the time of the relevant construction. However, the applicants had not shown that they would have been able to sell their land in spite of the constructions thereon, whose nature did not correspond to that specified on the relevant building permits. This fact had to be taken into account in an assessment of any damage. The Court thus awarded the applicants jointly EUR 700,000.

- R.I.T.A. Sarda S.r.l. – The domestic courts had established that the applicant company’s land did not permit building. Buildings had been erected on the basis of permits granted by the municipal and regional authorities, which, as found by the criminal courts, had acted in breach of statutory prohibitions. The Court awarded the applicant company EUR 35,000.

(ii) Deterioration of buildings (Falgest S.r.l. and Mr Gironda) – The applicants had erected the buildings in question in breach of the administrative authorisations. Consequently, no compensation was due under this head.

(iii) Loss of value of the property stemming from the change in the land-use plan prior to restitution and from the criminal courts’ decisions finding administrative acts unlawful (G.I.E.M. S.r.l.) – The change in designated land use and the loss of status as building land had not been raised in the context of the judgment on the merits. Therefore those were matters which bore no relation to the violations found. In the absence of any causal link with the confiscation measure, the loss of value of the land resulting from the change in its designated use and the loss of its status as building land could not be taken into account in the calculation of the compensation due.

The same was true for the loss of value of the property caused by the criminal courts’ decisions finding the administrative acts unlawful. In any event, proceedings were still pending in the domestic courts.

(2) Non-pecuniary damage – The Court did not rule out the possibility that compensation might be awarded for non-pecuniary damage alleged by a legal entity. Whether an award should be made would depend on the circumstances of each case. In the present case, the situation at issue must have caused, in respect of the relevant applicant companies, their directors and shareholders, considerable inconvenience, if only in the conduct of those companies’ everyday affairs. The Court awarded to the companies G.I.E.M. S.r.l. and Falgest S.r.l. and to Mr Gironda the sum of EUR 10,000 each (the company R.I.T.A. Sarda S.r.l. not having claimed anything for non-pecuniary damage).

The Court made awards in respect of costs and expenses to the companies G.I.E.M., R.I.T.A. Sarda and Falgest S.r.l. and to Mr. Gironda.

The Court struck out of its list one of the applications in so far as it had been lodged by the company Hotel Promotion Bureau S.r.l., which had ceased to exist.

(See also Sud Fondi S.r.l. and Others v. Italy , 75909/01, 20 January 2009, Legal summary ; Sud Fondi S.r.l. and Others v. Italy (just satisfaction), 75909/01 , 24 May 2012)

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

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