IP-OMEKOM INVALIDSKO PODJETJE D.O.O. v. SLOVENIA
Inadmissible
André Potocki;Angelika Nußberger;Ann Power-Forde;Helena Jäderblom;Mark Villiger;Vincent A. De Gaetano
1. The applicant, Ip-Omekom invalidsko podjetje d.o.o., is a limited company, whose registered office is in Jurovski Dol (“the applicant company”). It was represented before the Court by Mr J. Sladič, a lawyer practising in Ljubljana. 2. 3. On 6 November 1991, shortly after its declaration of independence in June 1991, the State concluded a contract with M.C., by which the latter allowed the authorities to build State border infrastructure on her property located in Jelšane, on the national border between Slovenia and Croatia. The State paid M.C. compensation and acquired actual possession of the land, but did not institute any legal proceedings in respect of the transfer of ownership. In the same year the State built a parking area for heavy goods vehicles and installed drainage on the relevant plots. 4. On 28 June 1994 the Convention came into force in respect of Slovenia. 5. On 12 December 2001 at the applicant company’s request, the Ilirska Bistrica municipality issued a certificate declaring that there was no right of pre-emption over the plots of land subject to the 1991 contract between M.C. and the State. In the certificate the municipality however indicated that it was anticipated that the plots would be included in the location plan for the Jelšane international border crossing. 6. On 26 March 2002 the applicant company bought the two plots of land subject to the contract between M.C. and the State for 1,300,000 Slovenian tolars (SIT) (approximately 7,600 euros (EUR)). The applicant company intended to use the plots for commercial purposes, namely to install advertising hoardings. 7. On 8 May 2003 the Government adopted a decision on the location plan for the Jelšane international border crossing (published in the Official Gazette, no. 43/2003). The decision also referred to the two plots bought by the applicant company. 8. On 26 May and 15 July 2003 the applicant company was invited on behalf of the State to conclude a sale contract in respect of the two plots. The applicant company rejected both offers. 9. On 20 August 2003 the Joint Services of the Government lodged a request to have expropriation proceedings initiated in respect of the two plots with the Ilirska Bistrica Administrative Unit in accordance with section 97 of the Spatial Management Act 2002. 10. On 25 August 2003 the Ilirska Bistrica Administrative Unit instituted expropriation proceedings. The applicant company demanded substitute land instead of monetary compensation. 11. On 13 October 2003 the Ilirska Bistrica Administrative Unit issued a decision using the expedited procedure under section 104 of the Spatial Management Act 2002 and expropriating the applicant company’s two plots. As no agreement had been reached between the parties in respect of compensation, the matter was referred to the civil courts to be dealt with as non-contentious proceedings. 12. On 28 June 2004 the Ilirska Bistrica Local Court held the first main hearing. Throughout the entire proceedings the applicant company maintained that it wished to be compensated with substitute land. 13. On 21 April 2008 the court decided to award the applicant company financial compensation, as it had not been possible to find adequate substitute land. The court explained that further negotiations on substitute land would be futile and that in view of the length of the proceedings – during which several hearings were postponed at the request of the applicant company – it would not be reasonable to seek further solutions. It ordered the State to pay the applicant company EUR 107,414 as compensation for the expropriation, comprising EUR 56,202 for the market value of the plots on 24 March 2003 and EUR 51,212 for the value of the infrastructure built by the State authorities before the applicant company had become owner. The court held that the applicant company was not entitled to any compensation for loss of opportunity, as it had never used the property for commercial purposes. The court noted that the applicant company had probably been aware of the contract concluded between the previous owner and the State authorities and might not have purchased the land in good faith. It however dismissed the arguments of the State that these circumstances should be relevant for determining the amount of compensation, as the State authorities had failed to institute any legal proceedings for the transfer of ownership after they had concluded the contract with M.C. in 1991. Both parties appealed. 14. On 9 December 2008 the Koper Higher Court quashed the decision of 21 April 2008 in so far as it granted to the applicant company compensation for the value of infrastructure built by the State, and remitted the case back to the first-instance court. 15. On 9 February 2009 the Ilirska Bistrica Local Court decided in the new proceedings that the applicant company was not entitled to compensation for the value of the infrastructure built by the State. The court highlighted the fact that the applicant company had already known at the time of the purchase that the infrastructure was built by the State, and that the State was in possession, not the previous owner. Under these circumstances, compensating the applicant company for the infrastructure would have been contrary to the rules governing good faith. It further described the applicant company’s case as a case of “reverse expropriation”, where the State had first obtained possession of the land and built infrastructure on it and only later had it been shown to be in the public interest and a decision on expropriation issued. According to the local court, “reverse expropriation” could not be considered arbitrary or unlawful. The applicant company appealed. 16. On 25 August 2009 the Koper Higher Court dismissed the appeal. The applicant company lodged an appeal on points of law, claiming that it should be awarded compensation to correspond not only to the market value of the land, but to the full value of the property, including the value of the infrastructure built by the State. 17. On 16 September 2010 the Supreme Court dismissed the appeal on points of law and thereby confirmed as compensation the award of EUR 56,202 which represented the market value of the plots. Contrary to the position of the lower courts, the Supreme Court acknowledged that “reverse expropriation” as in the applicant company’s case was not covered by domestic law and was therefore unlawful. In respect of the question of how to determine the appropriate compensation to be awarded in such cases, it noted that domestic legislation and practice did not provide any guidance; it would be insufficient however, to grant the owner only the amount foreseen for lawful expropriations. The Supreme Court therefore considered additional options. The first was awarding additional compensation for the owner’s inability to use the property in the relevant period; the second was giving additional compensation either in the form of an account of profits or default interest; the third was compensating the total value of the property, including the infrastructure built by the State. However, while the above options might be appropriate means of compensation for owners who were dispossessed arbitrarily, they would not be appropriate in respect of the applicant company, which was well aware of the contract concluded between the previous owner and the State in 1991 and that it was in the public interest. In any event, even if the applicant company was not aware of the contract, this would only have consequences for the relationship between the applicant company and M.C. Relying on the Court’s judgment in the case of Guiso-Gallisay v. Italy ((just satisfaction) [GC], no. 58858/00, 22 December 2009) the Supreme Court confirmed that the lower courts’ conclusions that the compensation due to the applicant company was equal to the revised market value of the land at the moment the applicant company could have known that it had lost possession of the property, and no additional compensation for the value of the infrastructure built by the State could be granted. The applicant company lodged a constitutional complaint. 18. On 12 April 2011 the Constitutional Court dismissed the constitutional complaint. 19. At the material time the expropriation proceedings were governed by the provisions of the Spatial Management Act 2002 (Official Gazette no. 110/2002). 20. For an overview of the remedies provided by the Protection of the Right to a Trial without Undue Delay Act 2006 (Official Gazette no. 49/2006 – “the 2006 Act”), see Grzinčič v. Slovenia (no. 26867/02, §§ 38-48, 3 May 2007).