Published on 9 October 2023

SECOND SECTION

Application no. 2677/22 Rima SKOPIENÄ– and Mindaugas AMBRASAS against Lithuania lodged on 13 December 2021 communicated on 18 September 2023

SUBJECT MATTER OF THE CASE

The application concerns property rights.

The applicants are siblings. On 7 November 2011 they inherited a plot of land with several buildings. On 11 November 2011 they sold the land and the buildings to company VB. In January 2012 the company sold that property to its director G.S. and his spouse V.S. In order to buy it, G.S. had taken a loan of 238,000 Lithuanian litai (approximately 68,930 euros) from a private credit union and mortgaged the land and the buildings as a collateral. Part of the land was subsequently divided into a separate plot and resold.

On an unspecified date the applicants lodged a claim with the courts, asking them to annul the aforementioned transactions and return the property to them. They submitted that they had sold the property to company VB because they had been deceived: the applicants had intended to divide the land into two separate plots and sell one of them, but the second applicant’s son, who had previously been the director of company VB, had convinced them to sell the entire property to the company, claiming that that would make it easier to divide it. The applicants stated that they had not received any money from the company, they had remained living on part of the land after the sale and had not been aware that the company had sold it to other persons. By a final decision taken in September 2018, the courts acknowledged that the applicants had sold their property as a result of deception, which constituted grounds for annulling the sale. They ordered G.S. and V.S. to compensate the applicants for the part of the land which had been resold and to return the remainder of the property to them in kind.

In 2019 the applicants lodged a new claim with the courts. They submitted that their property remained mortgaged to the credit union as a collateral for the loan taken by G.S. and asked that the mortgage be lifted. The first-instance and the appellate courts allowed their claim in part. They found that the sale-purchase agreement between company VB and G.S. and V.S. had been declared null and void ab initio , which meant that G.S. had not had the right to mortgage that property; therefore, the agreement between him and the credit union had to be annulled. At the same time, the courts held that there were no grounds to question the good faith of the credit union and therefore its rights had to be protected. Accordingly, it retained the right to reclaim the property which had been mortgaged.

In their appeal on points of law lodged in June 2021, the applicants submitted that while the Civil Code provided for the possibility, in situations such as the one at hand, to defend the rights of the creditor who had acted in good faith, it did not provide for the possibility to defend the rights of the owners of the mortgaged property who had also acted in good faith. Accordingly, the applicants asked the Supreme Court to rely directly on the Constitution and to defend their rights against unjustified restrictions to their property, striking a fair balance between their rights and those of the credit union. However, the Supreme Court refused to accept the appeal on points of law for examination on the grounds that it did not raise any important legal issues.

The applicants complain that the courts failed to ensure practical and effective protection of their property rights. They submit that they sold their property because they had been deceived, which was acknowledged by the courts. Despite that, the property was returned to them with additional restrictions, namely, the mortgage aimed at securing the loan taken by G.S. The applicants submit that personal bankruptcy proceedings have been opened against G.S., which means that they may be required to service his debts with their property, without any fault on their part. They rely on Article 6 § 1 of the Convention.

QUESTIONS TO THE PARTIES

Has the State complied with its positive obligations under Article 1 of Protocol No. 1 to the Convention (see Kotov v. Russia [GC], no. 54522/00, §§ 109-15, 3 April 2012, and Nikolay Kostadinov v. Bulgaria , no. 21743/15, § 54, 8 November 2022)? In particular, did the domestic courts give due consideration to the applicants’ arguments concerning the need to strike a fair balance between their rights and those of the credit union and did they carry out a balancing exercise between the competing interests (see, mutatis mutandis , Megadat.com SRL v. Moldova , no. 21151/04, § 74, ECHR 2008)?