Peaceful enjoyment of possessions<\/strong><\/p>\nSupreme Court\u2019s failure to follow its own clear line of case-law resulting in applicants\u2019 inability to obtain statutory additional compensation for expropriated property: violation<\/p>\n
Facts \u2013 In 2011 the Head of the Baku City Executive Authority (\u201cthe BCEA\u201d) issued orders requiring the applicants to vacate their properties. On the basis of those orders, the applicants concluded sale and purchase contracts with the Deputy Head of the BCEA. The applicants wrote to the BCEA several years later that their flats had been expropriated for State needs and asking for additional compensation under Article 2.3 of Presidential Decree no. 689 of 26 December 2007 and under Article 66 of the Law on the Expropriation of Land for State Needs. The BCEA refused to pay any additional compensation. The applicants subsequently initiated separate proceedings before the domestic courts against the BCEA and the Ministry of Finance as a third party. At first instance, some of the applicants\u2019 claims were successful, either fully or partially, while others were dismissed in full. The cases were appealed up to the Supreme Court, which ruled against the applicants.<\/p>\n
Law \u2013 Article 1 of Protocol No. 1<\/p>\n
(a) Applicability<\/p>\n
(i) Additional 20% compensation under the 2007 Presidential Decree \u2013 Article 2.3 of the 2007 Presidential Decree entitled a person whose property had been expropriated for State needs to additional compensation. The compensation appeared to be essentially a fixed premium calculated at the rate of 20% of the market price of the expropriated property.<\/p>\n
While the applicants\u2019 claims for additional compensation had been refused by final decisions of the Supreme Court on the basis of the conclusion that their properties had not been expropriated for State needs, in a number of other cases, the Supreme Court had upheld the lower courts\u2019 judgments allowing additional compensation claims lodged by other individuals living in the same neighbourhood as the applicants who had similarly been affected by the BCEA\u2019s order and had claimed the same compensation relying on the same grounds. In those latter cases, the Supreme Court had concluded that, despite the authorities\u2019 failure to follow the relevant expropriation procedure and, in particular, the absence of an expropriation order by the Cabinet of Ministers, the property in question had indeed been expropriated for State needs. Moreover, in one of its decisions the Supreme Court had also referred to the existence of previous similar cases in which compensation claims had been allowed. The Government had not argued that such an approach, which appeared to recognise the existence of a legitimate expectation for the applicants to obtain the 20% compensation they claimed, had been the result of an isolated judicial error or that it had for some reason been irrelevant to the applicants\u2019 cases. The applicants\u2019 claim to additional 20% compensation had been supported by a clearly identifiable line of Supreme Court case-law.<\/p>\n
Further, in the cases of Akhverdiyev and Khalikova, the applicants\u2019 house and flat respectively had been demolished following similar orders issued by the BCEA. Particularly in the Akhverdiyev case, the Government had expressly argued before the Court that the applicants\u2019 properties had been lawfully \u201cexpropriated \u2026 for public needs\u201d by the BCEA. Having regard to the fact that the circumstances in which the alienation of privately owned properties had occurred in those cases and in the present cases had to a large extent been similar (that is, the alienation and deprivation of title had been initiated pursuant to orders by the BCEA and in Khalikova a sale and purchase contract had eventually been signed), the Government\u2019s position on the question whether the alienation could be characterised under domestic law as expropriation for State or public needs had been inconsistent.<\/p>\n
The refusal to award compensation to the applicants had not been due to any long-standing divergence of domestic case-law resulting from various interpretations by the domestic courts of the relevant legal provision, as it had not been demonstrated that there had been any conflicting interpretations of that provision. The refusal had stemmed from the domestic courts\u2019, and notably the Supreme Court\u2019s conclusions in those particular cases, departing from its findings in previous similar cases, that the Decree had been inapplicable in the applicants\u2019 situation because that situation had not amounted to expropriation for State needs.<\/p>\n
In the light of the above, for the purposes of the present complaint, the applicants\u2019 position that their flats had, in fact, been expropriated for State needs by the BCEA, acting on behalf of the State, and that therefore they had been entitled to the additional 20% compensation, had amounted to a \u201clegitimate expectation\u201d which had been sufficiently established in domestic law and a sufficient body of domestic case-law to give rise to the notion of \u201cpossessions\u201d within the meaning of Article 1 of Protocol No. 1.<\/p>\n
(ii) Compensation for hardship under the Law on Expropriation \u2013 Under the relevant provisions of the Law on Expropriation, the \u201cexpropriating authority\u201d was an authority appointed by the Cabinet of Ministers in its expropriation order. No such order had been issued in the present cases and the applicants had eventually submitted their claims to the BCEA, which had no competence to expropriate private property of its own motion. The applicants had also brought their claims for compensation long after any period for doing so would have expired. Further, while there had existed a sufficient body of domestic case-law which, together with the applicable domestic legal provisions, had constituted a sufficient basis for the applicants\u2019 claims under the Presidential Decree, the same could not be said in respect of their claims for compensation under the Law on Expropriation. In fact, in only three cases brought by other individuals affected by the BCEA\u2019s orders had similar claims been eventually allowed.<\/p>\n
In sum, the applicants had failed to demonstrate convincingly that at the time of lodging their claims they could have a \u201clegitimate expectation\u201d of obtaining compensation for hardship under the law on Expropriation.<\/p>\n
(b) Merits \u2013 The Court had to decide whether the refusal to pay the additional 20% compensation had itself constituted an interference with the applicants\u2019 right to peaceful enjoyment of their possessions. The applicants\u2019 complaints were mainly focused on the inconsistent approach of the domestic courts and alleged arbitrariness of their decisions. Therefore, the existence of interference depended on whether the domestic courts had indeed decided arbitrarily.<\/p>\n
The parties had disagreed as to whether the situation at hand could be regarded as expropriation for State needs. As seen, the Court had concluded that the applicants\u2019 claim that the flats had been expropriated for State needs had at least been supported by a line of Supreme Court case-law. In those circumstances, it had been essential that the domestic courts to which the applicants turned for protection would provide a clear and comprehensive answer regarding the question whether the applicants were entitled to the additional 20% compensation payment they claimed.<\/p>\n
However, the domestic courts, and more specifically the Supreme Court, which was the highest judicial body to which the applicants had ordinary recourse, had delivered judgments containing conflicting assessments of the same situation in the applicants\u2019 cases and in cases brought by other individuals.<\/p>\n
Moreover, despite the applicants\u2019 direct references to previous final decisions in which similar claims had been allowed, the Supreme Court had remained silent in its decisions concerning their cases and had not made any clarifications as to why it had reached a different conclusion in the present cases.<\/p>\n
The Court had already stressed that the role of a supreme court is precisely to resolve such conflicts and if conflicting practice develops within one of the highest judicial authorities in a country, that court itself becomes a source of legal uncertainty, thereby undermining the principle of legal certainty and weakening public confidence in the judicial system. It had also held that where such manifestly conflicting decisions interfered with the right to peaceful enjoyment of possessions and no reasonable explanation was given for the divergence, such interferences could not be considered lawful for the purpose of Article 1 of Protocol No. 1 because they lead to inconsistent case-law which lacks the required precision to enable individuals to foresee the consequences of their actions.<\/p>\n
In the light of the above, the domestic courts\u2019 decisions, and in particular the relevant decisions of the Supreme Court, refusing the applicants\u2019 claims, had constituted an interference with their right to peaceful enjoyment of their possessions under Article 1 of Protocol No. 1. Such interference was incompatible with the principle of lawfulness and hence contravened Article 1 of Protocol No. 1.<\/p>\n
Conclusion: violation (unanimously).<\/p>\n
Article 41: Sums ranging between EUR 3,640 and EUR 7,930 to each applicant in respect of pecuniary damage; EUR 3,000 to each applicant in respect of non-pecuniary damage.<\/p>\n
(See Khalikova v. Azerbaijan, 42883\/11, 22 October 2015, and Akhverdiyev v. Azerbaijan, 76254\/11, 21 March 2019)<\/p>\n