FOURTH SECTION
\nCASE OF S.E.F.T. TRAFIK KFT AND OTHERS v. HUNGARY
\n(Application no. 65845\/13)<\/p>\n
JUDGMENT
\nSTRASBOURG
\n30 October 2018<\/p>\n
This judgment is final but it may be subject to editorial revision.<\/p>\n
In the case of S.E.F.T. TrafikKft and Others v. Hungary,<\/strong><\/p>\n The European Court of Human Rights (Fourth Section), sitting as a\u00a0Committee composed of:<\/p>\n Paulo Pinto de Albuquerque, President, Having deliberated in private on 9 October 2018,<\/p>\n Delivers the following judgment, which was adopted on that date:<\/p>\n PROCEDURE<\/strong><\/p>\n 1.\u00a0\u00a0The case originated in an application (no. 65845\/13) against Hungary lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (\u201cthe Convention\u201d) by two Hungarian limited liability companies, S.E.F.T. TrafikKft. \u201ev.a.\u201c and S.E.F.T. Kft. \u201ev.a.\u201c, and by four Hungarian nationals, Mr Tibor Benk\u0151, Mrs\u00a0Tiborn\u00e9Benk\u0151, Ms AdriennBenk\u0151 and Mr Tibor Benk\u0151 Jr. (\u201cthe\u00a0applicants\u201d), on 11 October 2013.<\/p>\n 2.\u00a0\u00a0The applicants were represented by Mr T.Bihary, a lawyer practising in Budapest. The Hungarian Government (\u201cthe Government\u201d) were represented by Mr Z. Tall\u00f3di, Agent, Ministry of Justice.<\/p>\n 3.\u00a0\u00a0On 23 September 2016 the complaint concerning Article 1 of Protocol No 1 to the Convention was communicated to the Government and the remainder of the application was declared inadmissiblepursuant to Rule\u00a054 \u00a7\u00a03 of the Rules of Court.<\/p>\n THE FACTS<\/strong><\/p>\n THE CIRCUMSTANCES OF THE CASE<\/p>\n 4.\u00a0\u00a0The first and second applicants, S.E.F.T. TrafikKft. \u201ev.a.\u201c and S.E.F.T. Kft. \u201ev.a.\u201c, are Hungarian limited liability companies with their seats in Budapest. The first and second applicants are partly owned by the fourth applicant. The third, fourth, fifth and sixth applicants, Mr Tibor Benk\u0151, Mrs Tiborn\u00e9Benk\u0151, Ms AdriennBenk\u0151 and Mr Tibor Benk\u0151 Jr., are Hungarian nationals, close family members who were born in 1956, 1957, 1983 and 1981 respectively and live in Budapest.<\/p>\n 5.\u00a0\u00a0The applicants had been active in the tobacco retail business for several years. The first and second applicant companies operated 39 distinct tobacco shops in Hungary with the direct participation of the third, fourth, fifth and sixth applicants and several further employees.<\/p>\n 6.\u00a0\u00a0On 11 September 2012 the Parliament enacted Act no. CXXXIV of 2012 on the Repression of Smoking of the Youth and on Tobacco Retail. The Act was published on 24 September 2012. According to the Act, tobacco retail was to become a State monopoly (exercised through a\u00a0State\u2011owned company, ND NemzetiDoh\u00e1nykereskedelmiNonprofitZrt), and tobacco retailers would become authorised through a concession tender, advertised on 15 December 2012. Entities or persons previously engaged in tobacco retail had no privileges in the tender. Legal persons were not entitled to apply. One individual was eligible to apply for five concessions at most.<\/p>\n 7.\u00a0\u00a0 Since the first and second applicant companies were not entitled to apply for a concession under the new law, the third, fourth, fifth and sixth applicants applied personally for concessions, butnone of them was successful. Together with their distant family members and employees, they submitted altogether 155 tenders for concession, and only five of these were successful. Currently they participate in the tobacco retail businesses of a distant family member who was granted concession.<\/p>\n THE LAW<\/strong><\/p>\n I.\u00a0\u00a0ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION<\/p>\n 8.\u00a0\u00a0The applicants complained under Article 1 of Protocol No. 1 to the Convention that the effective removal of the tobacco retail licences of their family business, that is, the legislative exclusion of the first and second applicants from tobacco retail and the refusals concerning the third, fourth, fifth and sixth applicants, amounted to an unjustified deprivation of possessions.<\/p>\n Article 1 of Protocol No. 1 provides as follows:<\/p>\n \u201cEvery 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.<\/p>\n 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.\u201d<\/p>\n A.\u00a0\u00a0Admissibility<\/strong><\/p>\n 9.\u00a0\u00a0The Government argued that only the fourth applicant could be regarded as a victim in the case. Considering that the first and second applicants as companies could not participate in the concession tender and that the third, fifth and sixth applicants were not owners of the two companies, the complaints in respect of them should be declared incompatibleratione personaewith the provisions of the Convention within the meaning of Article 35 \u00a7 3 (a).<\/p>\n 10.\u00a0\u00a0The applicants argued that all of them had victim status. Regarding the first and second applicant companies,they argued that sincethe grievances suffered by these two business entities due to the impugned legislation had never been remedied, their victim status should be unquestionable. In respect of the third, fifth and sixth applicants, they emphasised that the applicants\u2019 victim status should be based on their direct involvement in the business and not on the ownership inany of the companies.<\/p>\n 11.\u00a0\u00a0The Court observes that the first and second applicants were not eligible to apply for a new tobacco retail concession and therefore they had not been directly affected by any aspects of the concession tender process. The Court further notes that the third, fourth, fifth and sixth applicants did apply personally for concession tenders that could have effectively remedied the grievances suffered by the first and second applicants. However, none of these tenders was successful. The concession tender process which, in the Court\u2019s view, appeared to be on the verge of arbitrariness, was the primary subject of the scrutiny in the V\u00e9kony case (see\u00a0V\u00e9kony v. Hungary, no. 65681\/13, \u00a7 36, 13 January 2015) and, in essence, led to the violation that was found by the Court in that case.Therefore, the Court is satisfied that the third, fourth, fifth and sixth applicants, who participated in the tender process but to no avail, can claim to be the victim of the violation alleged, whilst the first and second applicants cannot. In regard to the first and second applicants, the application is therefore incompatible ratione personae with the provisions of the Convention within the meaning of Article 35 \u00a7 3 (a) and must be rejected in accordance with Article 35 \u00a7 4.<\/p>\n 12.\u00a0\u00a0The Court notes that in respect of the third, fourth, fifth and sixth applicants the complaint is not manifestly ill-founded within the meaning of Article 35 \u00a7 3 (a) of the Convention. It also notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.<\/p>\n B.\u00a0\u00a0Merits<\/strong><\/p>\n 13.\u00a0\u00a0The Government submitted that the fourth applicant continued to enjoy the profits of tobacco retail business through the concession granted to her distant family member and, in any event, the first and second applicant companies were operating without generating any profit before the introduction of the impugned law, therefore the applicants cannot claim to have suffered a loss of property as a result of the change of the system of tobacco retail in July 2013.<\/p>\n 14.\u00a0\u00a0The applicants disagreed. They argued that although the fourth applicant had acquired ownership in a small tobacco retail shop that operates on the basis of the concession granted to a distant family member, the size of this business cannot be compared to the previous course of business run by the first and second applicants with the average yearly revenue of approximately 14 billion Hungarian forints (approximately 42\u00a0million euros). Further, they argued that the first and second applicant companies had been generating losses in the first half of 2013 only because of the impugned legislation, whose effects could be felt on the market long before the effective deadline for termination of the activity in 2013.<\/p>\n 15.\u00a0\u00a0The Court considers that the findings outlined in paragraphs\u00a029 to\u00a037 of the V\u00e9kony judgment equally hold true in the present case. It notes that the arguments raised by the Government could affect only the amount of just satisfaction due to the applicants, but not the fact that the impugned legislationdeprived them,indeed, of their previous business and did not offer realistic prospects to continue it within the new regime, at least in a somewhatcomperable volume.<\/p>\n Therefore the Court finds that there has been a violation of Article 1 of Protocol No. 1.<\/p>\n II.\u00a0\u00a0APPLICATION OF ARTICLE 41 OF THE CONVENTION<\/p>\n 16.\u00a0\u00a0Relying on Article 41, the fourth applicant claimed EUR\u00a01,162,075 in respect of pecuniary damage. The third and fourth applicants each claimed HUF\u00a0100,000,000 (approximately EUR\u00a0312,600) and the fifth and sixth applicants each claimed HUF\u00a035,000,000 (approximately EUR\u00a0110,000) in respect of non-pecuniary damage.<\/p>\n 17.\u00a0\u00a0The Government contested these claims.<\/p>\n 18.\u00a0\u00a0Without speculating on the profits which the fourth applicant would have achieved if the violation of the Convention had not occurred, the Court observes that a real loss of business had been suffered. It therefore considers it appropriate to award the fourth applicant an aggregate sum of EUR\u00a050,000in respect of pecuniary damage.<\/p>\n 19.\u00a0\u00a0In addition, the Court considers that the violation it has found of Article 1 of Protocol No. 1 in the instant case must have caused the third, fourth, fifth and sixth applicants prolonged uncertainty in the conduct of business and feelings of helplessness and frustration. Thus, the Court considers it reasonable to award them each EUR 5,000 in respect of non\u2011pecuniary damages.<\/p>\n 20.\u00a0\u00a0The applicants made no costs claim. It is therefore not necessary to rule on the matter.<\/p>\n 21.\u00a0\u00a0The 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.<\/p>\n FOR THESE REASONS, THE COURT, UNANIMOUSLY,<\/strong><\/p>\n 1.\u00a0\u00a0Declaresthe applicationadmissible in respect of the third, fourth, fifth and sixth applicants and inadmissible for the remainder;<\/p>\n 2.\u00a0\u00a0Holdsthat there has been a violation of Article 1 of Protocol No. 1 in regard to the third, fourth, fifth and sixth applicants;<\/p>\n 3.\u00a0\u00a0Holds<\/p>\n (a)\u00a0\u00a0that the respondent State is to pay, within three months, the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement:<\/p>\n (i)\u00a0\u00a0 EUR 50,000 (fifty thousand euros)to the fourth applicant, plus any tax that may be chargeable, in respect of pecuniary damage;<\/p>\n (ii)\u00a0\u00a0EUR 5,000 (five thousand euros) to each of the third, fourth, fifth and sixth applicants, plus any tax that may be chargeable, in respect of non-pecuniary damage;<\/p>\n (b)\u00a0\u00a0that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;<\/p>\n 4.\u00a0\u00a0Dismissesthe remainder of the applicants\u2019 claim for just satisfaction.<\/p>\n Done in English, and notified in writing on 30 October 2018, pursuant to Rule\u00a077\u00a0\u00a7\u00a7\u00a02 and 3 of the Rules of Court.<\/p>\n Andrea Tamietti\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Paulo Pinto de Albuquerque
\nEgidijusK\u016bris,
\nIulia Antoanella Motoc, judges,
\nand Andrea Tamietti, Deputy Section Registrar,<\/p>\n
\nDeputyRegistrar\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 President<\/p>\n