GU?A TUDOR TEODORESCU v. ROMANIA - 33751/05 (Judgment (Merits and Just Satisfaction) : Court (Fourth Section)) [2016] ECHR 328 (05 April 2016)

In the case of Guță Tudor Teodorescu v. Romania,

The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of:

          András Sajó, President,
          Vincent A. De Gaetano,
          Boštjan M. Zupančič,
          Nona Tsotsoria,
          Paulo Pinto de Albuquerque,
          Krzysztof Wojtyczek,
          Iulia Antoanella Motoc, judges,
and Fatoş Aracı, Deputy Section Registrar,

Having deliberated in private on 1 March 2016,

Delivers the following judgment, which was adopted on that date:

PROCEDURE

1. The case originated in an application (no. 33751/05) against Romania lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Romanian national, Mr Guță Tudor Teodorescu (“the applicant”), on 15 August 2005.

2. The applicant was represented by Mr V. Zorcă, a lawyer practising in Bucharest. The Romanian Government (“the Government”) were represented by their Agent, Ms C. Brumar, of the Ministry of Foreign Affairs.

3. The applicant alleged that the failure of the public authorities to issue and validate in a timely manner the decisions granting him compensation for lost properties from provinces which were formerly part of Romania, followed by the domestic court’s refusal to grant him the adjustment of the due compensation, caused him a significant financial loss, in breach of Article 1 of Protocol No. 1 to the Convention.

4. On 7 July 2009 the application was communicated to the Government.

THE FACTS

I. THE CIRCUMSTANCES OF THE CASE

A. Administrative procedure

5. On 8 April 1998 the applicant requested the Bucharest Commission for Implementing Law no. 9/1998 (the County Commission) to award compensation for a property owned by his ancestors and taken over by the Bulgarian State. On 15 December 2000 the Commission issued a decision proposing payment of compensation in the amount of ROL 2,013,957,441 (approximately EUR 88,000 at the time).

6. That decision, according to the law, had to be validated by a central commission within sixty days. As the Central Commission did not issue any decision, the applicant brought a court action aimed at obliging the Central Commission to act in accordance with the law. The applicant also asked for the amounts granted by the County Commission to be adjusted for inflation when payment was made.

The applicant’s action was dismissed on 17 February 2002 by the Bucharest County Court, which held that the sixty-day deadline was not compulsory, but rather advisory. The court also held that the adjustment of the amounts granted was indeed prescribed by Article 8 § 3 of the law, but any adjustment was to be made at the time payment was actually made, once the Central Commission had ratified or otherwise the County Commission decision.

7. On 23 June 2003 the Bucharest Court of Appeal allowed the applicant’s claim, and ordered that the Central Commission issue a decision ratifying or otherwise the proposal made by the County Commission on 15 December 2000. The court held that the claim concerning the adjustment of the amounts granted as compensation was to be dealt with during the enforcement stage.

8. On 29 August 2003 the Central Commission ratified the County Commission decision of 15 December 2000.

9. The compensation, representing at that time approximately EUR 54,000, was paid to the applicant on 22 November 2003.

B. Judicial proceedings

10. Dissatisfied with the decision of the Central Commission, on 13 December 2003 the applicant lodged a court action aimed at obtaining an adjustment of the initial amount to take into account inflation from the date on which it was established by the County Commission to the date of actual payment.

11. By a decision of 16 April 2004, the Bucharest County Court ruled in the applicant’s favour. The County Court established that in accordance with Article 8 § 2 of Law no. 9/1998, the amounts set by the County Commission had to be adjusted for inflation if they were not paid in the year they were awarded.

12. On 21 February 2005 the Bucharest Court of Appeal reversed the decision, and ruled that the applicant was not entitled to an adjustment for inflation.

13. The appellate court concluded that the County Court had interpreted the applicable law incorrectly, as the entitlement to adjustment for inflation had to be determined on the basis of the date when the Central Commission had ratified the decision of the County Commission. As the payment had been made uno ictu, and not in instalments, during the same year as the Central Commission took its decision, the applicant was not entitled to an adjustment for inflation.

14. It also concluded that the failure of the Central Commission to ratify the decision of the County Commission within sixty days could not represent a legal basis for the adjustment of the amount in question.

II. RELEVANT DOMESTIC LAW AND PRACTICE

15. For an overall description of the legal framework and of the domestic mechanisms created for the assessment of various types of restitution and compensation claims, see Maria Atanasiu and Others v. Romania, nos. 30767/05 and 33800/06, §§ 45-51, 12 October 2010. As mentioned in this pilot judgment, the Romanian State undertook via various international treaties signed at the relevant time the obligation to compensate former owners or their successors in title who lost buildings, land or crops abandoned on certain territories following border changes before and during the Second World War. The administrative procedure for obtaining compensation in respect of such property, provided for by Laws nos. 9/1998, 290/2003 and 393/2006 and coordinated by the National Authority, differed from that for immovable property nationalised by the communist regime, and the necessary funds came out of the State budget (see Maria Atanasiu and Others, cited above, § 51), as also presented succinctly below.

A. Law no. 9/1998

16. Law no. 9/1998 came into force on 14 March 1998 and was amended in 2004 and 2007; it established a compensatory mechanism for Romanian citizens whose immovable properties were confiscated without due compensation under the Treaty of Craiova, signed by Romania and Bulgaria on 7 September 1940 (see paragraph 32 below).

17. The mechanism referred essentially to pecuniary compensation or to the right to shares in State-run companies. The deadline for filing such claims was set in Article 4 § 1 at eighteen months from the entry into force of the law. This deadline was subsequently extended by Law no. 97/2005, for a period of twelve more months starting with the entry into force of the law on 21 April 2005 and then by Law no. 348/2006, for a period of eighteen more months, starting from the entry into force of the law on 28 July 2006.

18. The bodies in charge of implementing the said Law were the County Commissions established within each county (including Bucharest) under the authority of the Prefect, and the Central Commission for Implementing Law no. 9/1998.

19. Under Article 7 § 1, the County Commissions had responsibility for assessing and dealing with requests for compensation within a maximum of six months following the date of registration. The decisions of the County Commissions were communicated to the claimants and the Central Commission, and they could be challenged by the claimants before the Central Commission within fifteen days. The latter then had to ratify or reject such decisions within sixty days.

20. In their turn, the decisions adopted by the Central Commission could be challenged before the domestic courts.

21. The methodological rules issued for the implementation of Law no. 9/1998, in force since 30 November 1998, provided for, inter alia, a calculation method for the setting of the compensation. This amount was to be updated when payment was made, according to Articles 8, 21 and 27 of the rules, on the basis of the median salary index of the last trimester prior to the moment of the actual payment.

22. In its original version, Article 8 stipulated in its paragraph 3 that

“(3) Within sixty days of the deadline set out in Article 4 § 1, depending on the total amount of compensation to be granted, a Government Decision will set up payment by instalments, the amounts being adjusted for inflation. The instalments are not to be set for more than two consecutive years.”

This paragraph became paragraph 2 from 9 November 1999, and stated as follows:

“(2) ...when the compensation is paid in the year it was awarded it is granted in the amount validated by the Central Commission, and when it is paid the next year ... it is to be adjusted on the basis of the consumer price index. The payment is to be staggered over a maximum of two years.”

23. Government Decision no. 286/2004, in force since 22 March 2004, provided in its Article 5 that compensation validated by the Central Commission was to be paid in two annual instalments, namely 40% in the year of the payment and 60% the following year, this second instalment being adjusted for inflation as set out in Law no. 9/1998.

24. From 18 October 2004, when Government Decision no. 1643/2004 came into force, the responsibilities of the Central Commission were taken over by the Department for the Application of Law no. 9/1998, functioning within the Prime Minister’s Chancellery. The Department forwarded the ratification decisions adopted by the County Commissions for the approval of the Prime Minister’s Head of Chancellery.

The Department was further entitled to make a proposal for adjustment of the compensation at the time of the ratification decision, in accordance with Law no. 9/1998.

25. These responsibilities were taken over by the National Authority with effect from the entry into force of Government Decision no. 361/2005, namely on 29 April 2005; this act was modified by Government Decision no. 240/2006 on 27 February 2006.

26. The methodological rules issued for the implementation of Law no. 9/1998, as amended on 26 October 2007 by Government Decision no. 1277/2007, set out in Article 38 § 1 that payment of compensation was to be made by the National Authority as the institution in charge of dealing with all claims lodged under the restitution laws adopted in Romania.

B. Law no. 164/2014

27. Law no. 164/2014 concerning measures for the acceleration and finalisation of the process of resolving compensation claims lodged under Law no. 9/1998 and Law no. 290/2003 entered into force on 18 December 2014.

28. Article 10 of the law sets out the deadlines by which all payments should be made; paragraphs 4 and 5 of this Article refer essentially to the manner in which the compensation should be adjusted for inflation, on the basis of the consumer price index, from the moment the decision was issued until the entry into force of the law.

C. The decision of 19 March 2007 of the High Court of Cassation and Justice

29. Given the conflicting domestic case-law on Article 8 § 2 of Law no. 9/1998 and of Article 5 of Government Decision no. 286/2004 regarding the manner of adjusting amounts granted as compensation to claimants, the General Prosecutor attached to the High Court of Cassation and Justice lodged an extraordinary appeal (recurs în interesul legii), mechanism generally designed to unify and settle the conflicting views taken by the domestic courts in the interpretation of a specific legal text.

30. By a decision of 19 March 2007 the High Court of Cassation and Justice established that, taking into account the principle of restitutio in integrum, the correct interpretation of Article 8 § 2 of Law no. 9/1998 was that the date when the amount of compensation was established was the date when the County Commissions were to issue their decision. If such a decision was not ratified within the legal limit of sixty days, which was the case in many situations, the entire amount initially determined had to be adjusted for inflation on the basis of the consumer price index.

31. The High Court further held that the adopted conclusion was obvious, in view of the applicable legislation, which was clear and unquestionable on this matter (“reglementare neîndoielnică”), as well as based on the principle of fully compensating claimants for damage incurred. This interpretation of the High Court was mandatory for all domestic courts ex nunc.

D. Relevant International Law

32. The Treaty of Craiova was signed on 7 September 1940 by Romania and Bulgaria. Under the terms of this treaty, the signatory parties agreed on the border line that was to be established between the two countries, with particular reference to the territory between the Black Sea and the Danube River (the Cadrilater). Section III of the Treaty provided for a mandatory resettlement of Romanian citizens of Bulgarian ethnicity living in Tulcea and Constanţa Districts to Bulgaria, and the resettlement of ethnic Romanians living in Durostor and Caliacra Districts to Romania. Section V of Annex C of the Treaty stipulated that the Romanian State was in charge of compensating those Romanian citizens who, following the mandatory resettlement had to abandon their possessions in the rural areas which were transferred to Bulgaria.

THE LAW

I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION

33. The applicant complained that as a result of the State’s failure to ratify the decision of the County Commission within the legal time-limit of sixty days, which rendered it impossible to obtain in court an adjustment for inflation of the amount he was entitled to, he suffered a pecuniary loss for which the State is responsible.

Article 1 of Protocol No. 1 reads as follows:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

A. Admissibility

34. The Government argued that the applicant’s complaint was incompatible ratione materiae with the provisions of the Convention, in so far as the domestic courts have not acknowledged the applicant’s right to an adjustment of the amount granted as compensation (the Government cited Kopecký v. Slovakia [GC], no. 44912/98, ECHR 2004-IX).

They further contended that the applicant could not claim to have any legitimate expectation in that respect either, given that the manner in which the relevant domestic law was interpreted was subject to controversy.

35. The applicant disagreed, estimating that the law itself guaranteed his right to full compensation, meaning also the right to have the amount adjusted for inflation at the time of the actual payment, in view of the time that had elapsed between the award of the compensation and its ratification by the Central Commission.

36. The Court observes that the applicant’s primary contention was that he had suffered a pecuniary loss which was due to the authorities’ failure to ratify the decision awarding him compensation in due time; such failure, enhanced by the refusal of the Court of Appeal to acknowledge his entitlement to an adjustment of the amount granted as compensation, allegedly infringed his right to the peaceful enjoyment of his possessions.

The Court considers that in such circumstances the issue of whether the applicant was or was not entitled to obtain compensation adjusted for inflation in view of the failure of the Central Commission to ratify the compensation decision in due time is closely linked to the merits of the complaint that the compensation mechanism set out by Law no. 9/1998 was inefficient. Accordingly, the Court considers that the Government’s objection should be joined to the merits of the applicant’s complaint under Article 1 of Protocol No. 1 to the Convention.

37. The Court further notes that this complaint is not manifestly
ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.

B. Merits

38. The Government contended that the judgment given by the High Court of Cassation and Justice on 19 March 2007 (see paragraph 30 above) referred to a different factual situation, namely to the circumstances in which the compensation was paid in two instalments of respectively 40% and 60% of the total amount, which was not the case in the applicant’s situation, as he had received the whole amount in one payment.

They concluded that since the applicant had received all the compensation to which he was entitled his complaint should be dismissed as ill-founded.

39. The applicant reiterated his arguments that the domestic authorities were bound to pursue the proceedings within specific deadlines, and that their failure to do so had infringed his rights protected by Article 1 of Protocol No. 1, given that the compensation received was much lower than that he was entitled to receive by law.

He further contended that the legal provisions entitling him to an adjustment of the compensation were clear and in compliance with the general purpose of the law, namely restitutio in integrum. This interpretation of the applicable legal provisions was confirmed by the High Court of Cassation and Justice in its decision on the appeal on points of law given on 19 March 2007.

40. The Court reiterates that an applicant may allege a violation of Article 1 of Protocol No. 1 only in so far as the impugned decisions relate to his or her “possessions” within the meaning of that provision. “Possessions” can be “existing possessions” or claims that are sufficiently established to be regarded as “assets”. Where, as in the present case, a proprietary interest is in the nature of a claim, it may be regarded as an “asset” only if there is a sufficient basis for that interest in national law (for example, where there is settled case-law of the domestic courts confirming it), that is, when the claim is sufficiently established to be enforceable (see Kopecký [GC], cited above, §§ 48-49 and 52).

41. The Court further reiterates that the first and most important requirement of Article 1 of Protocol No. 1 is that any interference by a public authority with the peaceful enjoyment of someone’s possessions should be lawful and not arbitrary (see Iatridis v. Greece [GC], no. 31107/96, § 58, ECHR 1999-II).

42. The Court considers that when speaking of “law”, Article 1 of Protocol No. 1 alludes to the same concept to be found elsewhere in the Convention, a concept which comprises statutory law as well as case-law. It refers to the quality of law in question, requiring that it be accessible to the persons concerned, precise and foreseeable (see Carbonara and Ventura v. Italy, no. 24638/94, § 64, ECHR 2000-VI).

43. The Court accepts that it is in the first place for the national authorities to interpret and apply the domestic law.

Nevertheless, in the instant case the Court is required to establish whether the way in which the domestic law was interpreted and applied produced consequences that are consistent with the principles of the Convention (see Mullai and Others v. Albania, no. 9074/07, § 114, 23 March 2010).

44. In this connection, the Court notes that the applicant’s general entitlement to have the amount of compensation adjusted was confirmed several times by the courts, firstly by the Bucharest County Court on 17 February 2002, which decision was upheld by the Bucharest Court of Appeal in its final judgment of 23 June 2003; lastly, the Bucharest County Court allowed such claims on 16 April 2004 (see paragraphs 6 and 7 above). Admittedly, the latter judgment was overturned by the Bucharest Court of Appeal on 21 February 2005 (see paragraphs 12-13 above).

However, the Court cannot ignore that the legal provisions stipulating the manner in which compensation was to be calculated mention constantly the existence of an adjustment mechanism, determined by the date of the actual payment (see paragraphs 21-24 above).

The same principle was reiterated in the current Law no. 164/2014, Article 10 § 4 (see paragraph 28 above).

In this context, the Court makes reference to the High Court of Cassation and Justice’s arguments for allowing the extraordinary appeal on 19 March 2007, according to which the legal texts setting out an adjustment of the compensation mechanism were “clear and unquestionable”, in view of the main purpose of the law, which was restitutio in integrum, namely to fully compensate the claimants (see paragraphs 30-31 above). The High Court, in this extraordinary appeal designed to unify and settle the conflicting domestic jurisprudence on the matter, which had been ongoing until then, confirmed the validity of the interpretation given to the applicable law by the domestic courts which, in the current case, allowed recognizing the applicant’s right to an automatic adjustment of the initial award of compensation (see paragraphs 7 and 11 above).

45. The Court considers that in view of all of the above, the applicant’s claim to obtain an adjustment of the awarded compensation - adjustment determined by the Central Commission’s tardy validation of the County Commission’s decision - had a sufficient basis in national law to qualify as an “asset” and therefore a “possession” protected by Article 1 of Protocol No. 1 to the Convention.

46. In the light of its above finding, that the applicant’s claim for the adjustment of the amount of compensation was sufficiently established to qualify as an “asset” attracting the protection of Article 1 of Protocol No. 1, the Court considers that the refusal of the Bucharest Court of Appeal to grant that claim undoubtedly constituted an interference with his right to the peaceful enjoyment of possessions.

47. The Court notes that the decision given by the Bucharest Court of Appeal on 21 February 2005 conflicted with the findings of the previous courts applied to by the applicant, confirming the pertinence for the applicant’s case of the provisions of Article 8 § 3 (later Article 8 § 2) which allowed for an adjustment of compensation in specific situations prescribed therein; furthermore, no pertinent reason was given for such departure (see paragraph 13 above).

48. The Court has also held that where such manifestly conflicting decisions interfere with the right to peaceful enjoyment of possessions and no reasonable explanation is given for the divergence, such interference cannot be considered lawful for the purposes of Article 1 of Protocol No. 1 to the Convention, because those conflicting decisions lead to inconsistent case-law which lacks the required precision to enable individuals to foresee the consequences of their actions (see Brezovec v. Croatia, no. 13488/07, §§ 67-68, 29 March 2011).

49. Having regard to the foregoing considerations, it follows that the impugned interference, in the form of the Bucharest Court of Appeal’s judgment of 21 February 2005, was not foreseeable for the applicant who, relying on the existing case-law of the courts and on the applicable legal texts and principles, could reasonably have expected that his claim for adjustment of compensation would be granted.

50. The interference was therefore incompatible with the principle of lawfulness and hence contravened Article 1 of Protocol No. 1 to the Convention.

This finding makes it unnecessary to examine whether a fair balance has been struck between the demands of the general interest of the community and the requirements of the protection of the applicant’s fundamental rights.

51. It follows that the Government’s objections as to incompatibility ratione materiae must be dismissed. Furthermore, the Court finds that there has been a violation of Article 1 of Protocol No. 1.

II. OTHER ALLEGED VIOLATIONS OF THE CONVENTION

52. The applicant complained also of further aspects linked to the fairness of the impugned proceedings, such as their unsatisfactory outcome and the fact that the courts were not impartial.

53. Having regard to all the material in its possession, and in so far as these complaints fall within its competence, the Court finds that there is no appearance of a violation of the rights and freedoms set out in the Convention or its Protocols. It follows that this part of the application must be rejected as manifestly ill-founded, pursuant to Article 35 §§ 3 and 4 of the Convention.

III. APPLICATION OF ARTICLE 41 OF THE CONVENTION

54. Article 41 of the Convention provides:

“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”

A. Damage

55. The applicant claimed that the amounts granted to him as compensation should be adjusted for inflation, the reference period being from 15 December 2000 to the present. According to his calculation, based on the inflation rate, this amount was RON 260,818,314.90.

The applicant further claimed an amount of EUR 100,000 (euros) for non-pecuniary damage.

56. The Government argued that the applicant was not entitled to any pecuniary claims, given that the compensation he was entitled to was paid in full in 2003.

Concerning the non-pecuniary claim, the Government contended that the finding of a violation would be sufficient in that respect.

57. The Court notes that the applicant has sustained pecuniary damage, in so far as he has not received the amounts to which he was entitled, according to the domestic law.

As it has reiterated many times, a judgment in which it finds a breach imposes on the respondent State a legal obligation to put an end to the breach and make reparation for its consequences in such a way as to restore as far as possible the situation existing before the breach (see Iatridis v. Greece (just satisfaction) [GC], no. 31107/96, § 32, ECHR 2000-XI).

The Court notes that Article 509 § 10 of the Romanian Civil Procedure Code allows for the reopening of the domestic proceedings in order to remedy the breaches found by it. Given the nature of the applicant’s complaint and the reasons for which it has found a violation of Article 1 of Protocol No. 1 to the Convention, the Court considers that in the present case the most appropriate form of redress would be to reopen the proceedings complained of in due course (see Brezovec, cited above, § 79, and, mutatis mutandis, S.C. Uzinexport S.A. v. Romania, no. 43807/06, § 41, 31 March 2015).

The Court further considers that the applicant is entitled to non-pecuniary damages, and on an equitable basis, it awards him EUR 900 under that head.

B. Costs and expenses

58. The applicant has made no valid claim in this respect.

C. Default interest

59. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

1. Declares the complaint raised under Article 1 of Protocol No. 1 admissible and the remainder of the application inadmissible;

2. Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention;

3. Holds

(a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, EUR 900 (nine hundred euros) by way of non-pecuniary damages, to be converted into the currency of the respondent State at the rate applicable at the date of settlement;

(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;

4. Dismisses the remainder of the applicant’s claim for just satisfaction.

Done in English, and notified in writing on 5 April 2016, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Fatoş Aracı András Sajó
Deputy Registrar President

In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the separate opinion of Judge Wojtyczek is annexed to this judgment.

A.S.
F.A.

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