Last Updated on June 17, 2019 by LawEuro
FIFTH SECTION
DECISION
Application no.22398/10
TUREX LTD
against Georgia
The European Court of Human Rights (Fifth Section), sitting on 26 February 2019 as a Committee composed of:
Ganna Yudkivska, President,
Síofra O’Leary,
Lado Chanturia, judges,
and Milan Blaško, Deputy Section Registrar,
Having regard to the above application lodged on 10 April 2010,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,
Having deliberated, decides as follows:
THE FACTS
1. The applicant company, Turex Ltd., is a limited liability company registered in Georgia. It was represented before the Court by Ms B. Kaçan, a lawyer practising in Istanbul.
2. The Georgian Government (“the Government”) were represented by their Agent, Mr B. Dzamashvili of the Ministry of Justice.
A. The circumstances of the case
3. The facts of the case, as submitted by the parties, may be summarised as follows.
1. Background
4. On 4 August 1998 the Tbilisi Municipality Cabinet issued a decree (“the decree”) permitting the applicant company to conclude a lease agreement with the Tbilisi Land Management Department of the City Hall over a plot of land measuring 8,704 square meters (“the plot of land”). The lease agreement granting the applicant company a right to use the plot of land was concluded on 25 September 1998 for the duration of fifty-nine years, on the condition of the applicant company’s constructing a business and commercial centre thereon. The lease agreement expressly prohibited the use of land for any other purpose. It does not appear that the applicant company constructed the business and commercial centre specified in the agreement or that it utilised the plot of land in any other manner.
5. On 12 July 1999 a certain Mr Sh.Z. privatised the land on behalf of the applicant company based on documents which appear to have been forged, and registered the ownership title at the National Agency of Public Registry (“Public Registry”). He subsequently sold it to a third party. No information or documentation has been submitted to the Court regarding the terms of the privatisation.
6. On an unspecified date the founder and the sole shareholder of the applicant company learned about the apparently fraudulent privatisation and selling of the plot of land and instituted civil proceedings against Sh.Z. and the third party who had purchased the property in question. He claimed that the documents authorising Sh.Z. to act on behalf of the company had been forged as they had lacked appropriate signatures, and requested that those documents as well as the sales contract concluded between the respondent parties be declared null and void, and the plot of land be returned in the applicant company’s “lawful possession”.
7. On 26 June 2001 a regional court issued a default judgment finding the factual circumstances presented by the founder of the applicant company (see paragraph 6 above) to be established owing to the respondents’ failure to appear in court despite having been summoned in accordance with the law. As a result, the court ruled that the documents authorising Sh.Z. to privatise and sell the property had been null and void, and the plot of land was to be “returned to the lawful possessor … and the records of the National Agency of Public Registry amended accordingly.” The court did not opine on the validity of the property registration record made by Sh.Z. at the Public Registry (see paragraph 5 above). The judgment became final after the expiry of the statutory time-limit of one month for lodging an appeal.
8. On 15 October 2001 the Public Registry registered the applicant company as the “owner” of the plot of land. It indicated the judgment of 26 June 2001 (see paragraph 7 above) as the basis of the registration.
2. Proceedings concerning the validity of the applicant company’s property title
9. On 6 July 2006 the Tbilisi City Hall requested the Tbilisi City Court to declare the applicant company’s registration records at the Public Registry null and void (“the first set of judicial proceedings”). It submitted that the applicant company had been registered as the owner of the property erroneously as the default judgment of 26 June 2001 had only found that the plot of land was to be returned into the applicant company’s “possession” and not ownership. That “possession” could only have referred to the right to use the plot of land under the lease agreement of 25 September 1998 (see paragraph 4 above). Furthermore, the lease agreement had been conditional and had not envisaged a possibility of privatisation. In any event, the privatisation had been effectuated by means of fraudulent transactions, as confirmed by the default judgment of 26 June 2001. Therefore, the applicant company could not have benefited from it, in accordance with the principle of the prohibition of the abuse of civil rights and the nullity of illegal agreements under Articles 54 and 115 of the Civil Code (see paragraph 19 below). In the absence of a valid ownership title, the erroneous registration record could not, in and of itself, have created such a title.
10. Parallel to the court proceedings, on 7 March 2007 the Tbilisi City Government commenced an inquiry into the legality of the decree of 4 August 1998 issued by its legal predecessor (see paragraph 4 above).
11. On 19 November 2007, relying on Article 60 of the General Administrative Code (GAC) (see paragraph 19 below), the Tbilisi City Government declared the decree of 4 August 1998 void ab initio with an immediate effect, reasoning that it had been issued by an unauthorised public agency. In particular, relying on the regulations applicable at the material time, the Tbilisi City Government noted that it had been the City Mayor who had been the sole authorised party to take legal action in respect of the land in question. According to the decision, the applicant company had been repeatedly summoned to the hearing of 21 June 2007 held at the agency in question but did not attend.
12. On 29 November 2007 the first-instance court dismissed the City Hall’s application as part of the first set of judicial proceedings (see paragraph 9 above). It noted that the act of privatisation in respect of the plot of land had never been invalidated by a court as it had not been requested by the claimant in the proceedings concerning the validity of various documents concerning the privatisation and selling of the plot of land (see paragraphs 6-7 above). Therefore, the Public Registry had rightly registered the plot of land in the applicant company’s ownership rather than possession. Furthermore, while the plot of land had initially been privatised by an unauthorised person acting in the applicant’s name, by not challenging the validity of the privatisation the applicant company subsequently accepted, in the opinion of the court, the right created in its favour, an option provided for under Article 111 § 1 of the Civil Code (see paragraph 20 below).
13. On 10 January 2008 the applicant company instituted proceedings before a first-instance court requesting the invalidation of the Tbilisi City Government’s decision of 19 November 2007 (see paragraph 11 above) and the restitution of the property in kind (“the second set of judicial proceedings”). It argued that it had possessed a valid ownership title, and a statute of limitations as well as its bona fide interests had prohibited invalidation of its property title to the plot of land.
14. On 30 January 2008, relying on the Tbilisi City Government’s decision (see paragraph 11 above), the Public Registry annulled the applicant company’s registration record confirming its property title to the plot of land.
15. On 10 September 2008 the Tbilisi Court of Appeal annulled the decision of the lower court of 29 November 2007 (see paragraph 12 above), and discontinued the first set of judicial proceedings. It reasoned that the privatisation of the property in question had rested on the lease agreement which had been concluded based on the invalidated decree of 4 August 1998. Therefore the ab initio nullificationof the impugned decree (see paragraph 11 above) had in effect abolished the subject-matter of the dispute. It does not appear that the parties appealed against the appellate court’s decision.
16. On 27 November 2008 the Tbilisi City Court found against the applicant company in the second set of judicial proceedings. It reasoned that the decree authorising the initial lease on which the subsequent privatisation rested had been issued by an unauthorised entity. Namely, it was not within the competence of the Tbilisi Municipality but the Mayor to manage the Land Fund, and therefore to allocate the property in question to the applicant company. The court reasoned that in such instances a public agency was not only allowed but obliged to correct the error and invalidate the erroneously granted rights over a property. It therefore concluded that the invalidation of the decree had been effected in compliance with Article 60 of the GAC (see paragraph 19 below). Relying on that provision, the court further reasoned that no statute of limitations applied to pieces of delegated legislation that were void ab initio, and their nullification was permitted by law. The applicant company’s request for restitution of the property in kind was therefore dismissed.
17. On 22 April 2009 the Court of Appeal upheld the lower court’s judgment in its entirety.
18. The second set of judicial proceedings ended with the Supreme Court’s decision of 19 October 2009 declaring the applicant company’s appeal on points of law inadmissible.
B. Relevant domestic law and practice
19. The relevant provisions of the General Administrative Code (GAC) (1999), as they stood at the material time, read as follows:
Article 60: Delegated legislation void ab initio
“1. A piece of delegated legislation is considered to be void ab initio if:
(a) It is impossible to identify the issuing public authority;
(b) The act was issued by an unauthorised public agency or public official;
(c) It cannot be executed for factual reasons;
(d) Its execution will result in a criminal or administrative offence.
2. The statute of limitations prescribed by the Code does not apply to [such] by‑laws. It is obligatory for the issuing public authority to declare the legal act void ab initio either based on its own initiative or the request of a concerned party.”
20. Articles 155-169 of the Civil Code (1997), as it stood at the material time, referred to the “possession” of immovable property without the ownership title while Articles 170-173 of the Code referred to “ownership” of property. Furthermore, the Civil Code, in so far as relevant, read as follows:
Article 54: Illegal and immoral agreements
“An agreement that violates rules and prohibitions provided in the law, contradicts the public order or moral norms is null and void.”
Article 111 § 1 (Conclusion of an agreement without a power to represent a party)
“If an individual concludes an agreement on behalf of another individual without the power to represent the latter, the validity of such an agreement depends on the endorsement by the latter.”
Article 115: Impermissibility of the abuse of rights
“A civil right shall be implemented in compliance with the law. It is impermissible to abuse a right to inflict damage upon another person.”
Article 167: Acquisition of immovable property by prescription
“If a person is registered at the Public Registry as the owner of a plot of land or any other immovable property without in fact having acquired an ownership title, such a person will acquire the ownership title if the registration existed for [at least] fifteen years and during that period the person in question possessed the property as their own.”
Article 183: Grounds for Acquiring Ownership over Immovable Property
“1.Acquisition of immovable property shall require a notarised document and the acquirer’s registration at the Public Registry…
2. The document shall specify the grounds for acquiring the immovable property. If one of the parties participates through a representative, it shall be so specified in the document.”
21. According to Article 3 § 1 (disposition principle) of the Code of Civil Procedure (1997), applicable to administrative proceedings in view of Article 3 of the Code of Administrative Procedure (1999), and the practice of the Supreme Court, the domestic courts are constrained by the disposition principle according to which the scope of the proceedings is delimited by the parties’ claims. As specified by the Supreme Court, “a court does not have a right to attribute to a party, of its own motion, what has not been claimed by that party or to attribute to it more than what has been claimed” (see case no. ბს-651-626-(კ-13), Chamber of Administrative Cases, 29 April 2014).
22. The National Agency of Public Registry is a legal entity governed by public law established under the Ministry of Justice. One of its main functions is to register an ownership title and other related rights over real property for the purpose of their recognition and verification (see Dadiani and Machabeli v. Georgia, no. 8252/08, § 15, 12 June 2012).
COMPLAINT
23. The applicant company submitted that it had acquired a valid ownership title over a plot of land and its uncompensated nullification had amounted to a violation of its rights under Article 1 of Protocol No. 1.
THE LAW
24. The applicant company submitted that it had obtained a valid ownership title to the plot of land and that the ab initio and uncompensated nullification of its title based on an alleged error on the part of the State authorities constituted an infringement of Article 1 of Protocol No. 1 to the Convention which 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”.
25. The Government submitted that the application was to be declared inadmissible as being incompatible ratione materiae with the provision in question on the grounds that the applicant company had not had a valid ownership title to the plot of land. In the alternative, the applicant company had failed to exhaust domestic remedies as it never initiated judicial proceedings to claim compensation for the damage inflicted to its pecuniary interests. The Government further submitted that, in any event, the invalidation of the decree of 4 August 1998 has been lawful, had pursued a legitimate aim of preventing inappropriate allocation of scarce public resources, and had been proportionate to that aim.
26. The applicant company argued that it had possessed a valid ownership title to the plot of land on account of the judicial decision of 26 June 2001 and the Public Registry registration record based on it. Accordingly, the interference in its property right, by means of retroactive invalidation of the decree allocating the plot to it and the resulting invalidation of all the subsequent legal acts, including privatisation of that property, had been unlawful. As regards the domestic remedies regarding the issue of compensation, they had been irrelevant as they could not have been used in respect of actions and omissions of State agencies.
27. The Court reiterates that Article 1 of Protocol No. 1 protects “possessions”, which can be either “existing possessions” or assets, including claims, in respect of which the applicant can argue that he or she has at least a “legitimate expectation” of obtaining effective enjoyment of a property right. It does not, however, guarantee the right to acquire property (see J.A. Pye (Oxford) Ltd and J.A. Pye (Oxford) Land Ltd v. the United Kingdom [GC], no. 44302/02, § 61, ECHR 2007‑III, and Kopecký v. Slovakia [GC], no. 44912/98, § 35, ECHR 2004‑IX). Where a proprietary interest is in the nature of a claim, the person in whom it is vested may be regarded as having a “legitimate expectation” if there is a sufficient basis for the interest in national law (see Anheuser-Busch Inc. v. Portugal [GC], no. 73049/01, § 65, ECHR 2007‑I). No legitimate expectation can be said to arise where there is a dispute as to the correct interpretation and application of domestic law and the applicant’s submissions are subsequently rejected by the national courts (see Kopecký, cited above, § 50). Where there is a dispute as to whether an applicant has a property interest which is eligible for protection under Article 1 of Protocol No. 1, the Court is required to determine the legal position of the applicant (see Beyeler v. Italy [GC], no. 3202/96, § 99, ECHR 2000‑I).
28. The Court observes at the outset that while Protocol No. 1 to the Convention entered into force with respect to Georgia on 7 June 2002, no issue regarding its temporal scope arises in the present case. In particular, the nullification of the decree of 4 August 1998 and the resulting invalidation of the ownership title registered at the Public Registry took place following that date.
29. The applicant company claimed to have acquired the ownership title to the plot of land in view of the default judgment of 26 June 2001 and the resulting registration record at the Public Registry (see paragraphs 7-8 above). However, the Court observes that the domestic judgment in question did not refer to the applicant company’s “ownership” but to “possession” of the plot of land (see paragraph 7 above), a distinct legal category under domestic law relating to the use of property without the ownership title (see paragraph 20 above). Therefore, the default judgment of 26 June 2001 did not grant the applicant company an ownership title to the plot of land which, furthermore, does not appear to have been claimed by the latter (see paragraph 6 above).
30. While the first-instance court issued a judgment in the applicant company’s favour in another set of proceedings (see paragraph 12 above), it never acquired binding force as those proceedings were subsequently discontinued by a decision against which the applicant company does not appear to have appealed (see paragraph 15 above). Accordingly, the applicant company’s title to the property other than possession was never confirmed by a final judicial decision.
31. As regards the registration of the ownership title at the Public Registry, the applicant company was indeed registered as the owner of the plot of land between 15 October 2001 and 30 January 2008 (see paragraphs 8 and 14 above). The validity of that registration record was not challenged until 6 July 2006 (see paragraph 9 above). The Court observes that in the absence of a judicial recognition of the applicant company’s ownership title (see paragraph 29 above), such registration alone could not have created a valid ownership title. While the domestic legislation, as it stood at the material time, allowed for a possibility of acquiring, through prescription, an ownership title over immovable property registered at the Public Registry without an underlying valid title, it was conditional upon the actual possession of the property and the lapse of at least fifteen years from the date of such registration (see paragraph 20above). At least one of these conditions had not been met.
32. By contrast, the unchallenged registration of its ownership title at the Public Registry between 15 October 2001 and 6 July 2006 (see paragraph 31 above) enabled the applicant company, at least in theory, to manage the property as its own during the period concerned. However, even assuming, on that account, that the applicant company had, for the purposes of Article 1 of Protocol No. 1, a sufficiently established proprietary interest, the complaint is in any event inadmissible as manifestly ill-founded.
33. In particular, the nullification of the decree of 4 August 1998 and the resulting invalidation of all related legal documents, including the registration of the ownership title to the plot of land (see paragraphs 11 and 15 above), was based on Article 60 of the GAC aimed at correcting the errors of public authorities by declaring decisions taken by unauthorised bodies as null and void ab initio (see paragraph 19 above). According to the domestic courts, the provision in question not only allowed, but obliged an administrative body to correct an error and invalidate an erroneously granted right over a property (see paragraphs 13 and 16-18 above). While no statute of limitations applied to such invalidation, it was not universal but concerned only four specific types of cases (see paragraph 19 above). The relevant procedure provided for the attendance and participation of a party concerned, but as it appears from the case materials, the applicant failed to attend the hearing held at the relevant agency (see paragraph 11 above and contrast, Rysovskyy v. Ukraine, no. 29979/04, § 73, 20 October 2011). The Court does not find that the law based on which the applicant’s title was nullified was in violation of the requirement of lawfulness under of Article 1 of Protocol No. 1 to the Convention.
34. Furthermore, the nullification of the decree of 4 August 1998 resulting in the annulment of the applicant company’s ownership title was designed to correct a mistake of the authorities, an aim expressly provided by the law (see paragraph 19 above). The Court accepts the Government’s argument that the impugned decision was therefore based on the “public interest” of preventing inappropriate allocation of scarce public resources (see, among other authorities, Vukušić v. Croatia, no. 69735/11, § 64, 31 May 2016).
35. As regards the proportionality of the interference complained of, the Court reiterates that a fair balance must be struck between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights, the search for such a fair balance being inherent in the whole of the Convention. The requisite balance will not be struck where the person concerned bears an individual and excessive burden (see, among other authorities, Béláné Nagy v. Hungary [GC], no. 53080/13, § 115, 13 December 2016). The Court recognises that the State enjoys a wide margin of appreciation with regard to the means to be employed and to the question of whether the consequences are justified in the general interest for the purpose of achieving the objective pursued (see Bosphorus Hava Yolları Turizm ve Ticaret Anonim Şirketi v. Ireland [GC], no. 45036/98, § 149, ECHR 2005‑VI, and G.I.E.M. S.R.L. and Others v. Italy, 1828/06, § 293, 28 June 2018).
36. In assessing proportionality in the present case, the Court underlines that the subject-matter of the complaint before it is the annulment of the applicant company’s ownership title registered at the Public Registry (see paragraphs 23-24 above). Against this background, the Court reiterates the absence of a final judicial decision clearly awarding the ownership title to the applicant company (see paragraphs 29-30 above). Furthermore, while that property had been privatised earlier, the privatisation had not been carried out by the applicant company but a third party, and it had been a result of a series of fraudulent transactions which were subsequently declared null and void by a domestic court (see paragraphs 5-7 above). Therefore, the registration of the ownership title alone could not have created for the applicant company a proprietary interest requiring the domestic courts to have returned to it the plot of land in natura, as claimed by the applicant company at domestic level.
37. As to the potential financial harm that the applicant company might have suffered given that the plot of land was registered in its ownership during several years, it does not appear to have ever occupied or otherwise used the property during the relevant period, or even before the registration of the ownership title at the Public Registry (see paragraphs 4-8 above). Furthermore, and in any event, at no point during the domestic proceedings did the applicant company allege having had suffered any financial harm, nor did it claim compensation for pecuniary damage, if any (contrast, Kryvenkyy, cited above, §§ 19 and 35). It only sought the restoration of the ownership title, and the return of plot of land in natura. In that connection, the Court observes that the domestic courts adjudicating the matter were constrained by the applicant’s arguments before them and could not have granted any compensation in the absence of the applicant company’s claim to that end (see paragraph 21 above). Furthermore, by failing to raise the matter before the domestic courts, the applicant company failed to demonstrate the pecuniary dimension of its interests, rendering it impossible to assess the extent of any burden it had to bear.
38. In the light of the foregoing considerations, the Court holds that, even assuming that the applicant company had a sufficient basis in national law for the proprietary interest on which it relied, which is far from clear, the domestic courts’ decision not to return the property claimed by the applicant company was not, in the particular circumstances of the present case, disproportionate to the legitimate aim pursued by the domestic authorities. As regards whether or not the applicant company actually had a proprietary interest, the Court has regard to the nullification of the decree of 4 August 1998 and the resulting invalidation of all related legal documents, including the registration of the ownership title at the Public Registry. The Court finds in any event that the complaint under Article 1 of Protocol No. 1 is manifestly ill-founded and must be rejected, in accordance with Article 35 §§ 3 (a) and 4 of the Convention. There is accordingly no need to address the second objection of the Government.
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Done in English and notified in writing on 21 March 2019.
Milan Blaško Ganna Yudkivska
Deputy Registrar President
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