CASE OF AKA v. TURKEY
Preliminary objection rejected (non-exhaustion);Violation of P1-1;Pecuniary damage - financial award;Non-pecuniary damage - financial award;Costs and expenses - claim dismissed
John Freeland;N. Valticos
8. The applicant was a Turkish citizen and was born in 1930. At the material time he lived in the village of Gökdoğan (district of Durağan – Sinop province). 9. At the beginning of September 1987 the National Water Board (“the DSİ” – Devlet Su İşleri), a State body responsible, inter alia, for dam construction, expropriated two plots of land belonging to the applicant in the village of Gökdoğan (Sinop). Following the construction of the Altınkaya hydroelectric dam in the Kızılırmak valley, the land, which had been used for growing crops, was flooded, as was that of more than 3,000 families also affected by the scheme. 10. After title to the land had been transferred to the authorities on 4 September 1987, the DSİ paid the applicant a total of 4,370,962 Turkish liras (TRL) for the two plots of land (being TRL 1,380,000 and TRL 2,990,962 respectively). 11. On 2 October 1987 the applicant brought, in respect of the expropriation of each plot of land, an action in the Durağan Court of First Instance for increased compensation. The actions were registered under nos. 87/2837 and 87/2828. 12. During the proceedings the court ordered two on-site valuations by experts in order to assess whether the amounts fixed by the expropriating authorities were correct. The two panels of experts relied on the same criteria in preparing their valuations, namely the criteria set out in Law no. 2942 on expropriation rules. As, however, they did not use the same methods of calculation, their valuations differed, but both were higher than the amount that had been paid by the DSİ on expropriation. An application by the parties for a third valuation was dismissed because the court considered that the two valuations had been based on criteria complying with the statutory requirements and contained sufficient relevant material to enable it to decide the case. 13. Subsequently, the applicant stated in writing that he accepted the lower of the expert valuations. The Court of First Instance noted his agreement and made an order in those amounts. 14. In action no. 87/2837, on 22 June 1989 the court ordered the DSİ to pay TRL 3,089,130 in additional compensation for expropriation. In action no. 87/2828 it awarded the applicant an additional TRL 3,895,692 on 10 May 1990. Those amounts bore simple interest for delay at the statutory rate of 30% a year running from 4 September 1987 (see paragraph 10 above). 15. The Court of Cassation upheld those decisions on 17 September 1990 and 6 September 1991 respectively. 16. The additional compensation awarded in action no. 87/2837 was paid to the applicant on 30 January 1992. It came to TRL 7,097,276, of which TRL 4,008,146 was interest for delay due up to December 1991. In action no. 87/2828 the applicant received the sum of TRL 10,116,692 on 7 January 1993, TRL 6,221,000 of which was interest for delay calculated up to December 1992. 17. The relevant part of Article 46 of the Constitution, relating to expropriations, provides: “... Compensation for expropriation shall be paid immediately and in cash... If deferred payment is permitted by statute ... interest for delay at the maximum rate laid down for State debts shall be payable on the part that is not paid immediately...” At the material time the rate of interest for delay payable on debts owed to the State was 7% per month (84% per annum) (section 51 of Law no. 6183 on the collection of debts due to the State and Cabinet Ordinance no. 89/14915). 18. By Law no. 3095 the rate of interest on overdue State debts is 30% per annum. 19. Article 105 of the Code of Obligations (“CO”) provides: “Where the loss sustained by the creditor exceeds the interest due for delay and the debtor is unable to show that the creditor has been at fault, it is for the debtor to make good the loss. If the additional loss can be assessed immediately the court may determine the amount when giving its decision on the merits.” In practice, the loss for which compensation may be claimed under this provision is the loss caused by the lapse of time between the date the debt is due and the date it is paid. 20. On 3 June 1991 the Court of Cassation (Fifth Civil Division), which has jurisdiction in cases concerning compensation for expropriation, ruled as follows: “The way in which creditors are compensated for the late payment of debt is through statutory interest. Since creditors are able, when resorting to enforcement measures, to claim the amount due to them plus interest, they are not entitled to claim any other form of compensation; accordingly, the decision to grant the creditor’s claim, on the basis that the rate of inflation was high, was ill-founded...” The Government referred to another judgment delivered by the same division (judgment no. 96/13828 of 22 October 1996), in which the Court of Cassation had allowed an application for compensation under Article 105 CO. The decision concerned alleged additional loss resulting from the authorities’ delay in repaying a sum to which they had not been entitled. However, the claims in that case were based on the fact that in order to pay the amount supposedly due the plaintiff had had to close a deposit account before term, thereby losing interest. Nonetheless, the practice of the Court of Cassation and in particular of its Thirteenth Division (see judgments nos. 95/267 and 96/9985) in cases not concerning expropriation appears to be to allow compensation for losses of that type under Article 105 CO in disputes between private individuals. On this point, it should be observed that the presidential committees of the Court of Cassation, responsible for ensuring that the case-law is consistent, tend to dismiss grounds of appeal based on differences in the practice of the various divisions, as they consider that decisions are made on a case by case basis in the light of the particular facts concerned and consequently do not need to be harmonised. 21. In a leading judgment of 23 February 1994 the Court of Cassation, sitting as a full court, ruled for the first time on the adverse effects of inflation, holding: “Law no. 3095 was approved and came into force when inflation in the country was high with rates well over 30%. Notwithstanding that fact, the legislature fixed the rate of interest for delay at 30%. In the present case it would therefore be unlawful to award compound interest at a rate exceeding 30% on the erroneous basis that the rate of interest payable on bank deposits was applicable.” 22. On 19 June 1996 the Court of Cassation, sitting as a full court, delivered another leading judgment in which it decided the issue of the applicability of Article 105 CO (see paragraph 19 above) to claims for loss sustained as a result of inflation. It held as follows: “... the rate of interest provided for by Law no. 3095 ... constitutes lump-sum compensation for damage without the need for proof of loss... Since the rate of default interest (interest for delay in payment) is fixed by statute in the light of the economic problems (inflation, monetary erosion ...) the country is experiencing, it is impossible to adduce the same factors (inflation, monetary erosion ...) as clear evidence of the additional loss referred to in Article 105 of the Code of Obligations, or to affirm that the resulting disadvantages constitute the actual damage suffered. Otherwise, the legislature’s decision that the compensation for those disadvantages would be 30% would no longer make any sense. If the legislature, having had regard to all the economic problems, has, by virtue of the legislative power conferred on it by the Constitution, fixed the rate of compensation for loss resulting from those problems, it cannot be accepted that the damage for which compensation is due amounts to 60% or 70% rather than 30%, on the implied ground that the [legislature’s] assessment was unfounded... It is obvious that inflation, which has a considerable impact in the current economic climate of the country, exceeds [the rate of] 30% laid down by ... Law no. 3095 and that [in consequence] the creditor’s loss through late payment is not covered. However, in so far as it exceeds the 30% rate fixed by the legislature, that loss does not come within Article 105 of the Code of Obligations... As the legislature, pursuant to its legislative power, considered that the loss amounted to 30%, a judicial decision applying a higher rate of loss on the ground that inflation exceeds 30% would constitute an encroachment on the legislature’s jurisdiction...” 23. In practice, leading judgments must be followed by the courts below when those courts decide issues similar to those previously considered by the Court of Cassation, sitting as a full court. 24. In January 1992 and 1993 the average exchange rate of the US dollar was, according to the exchange rate applied by the Central Bank of Turkey, TRL 5,332.59 and TRL 8,711.80 respectively. 25. The effects of inflation in Turkey are indicated in the lists of the retail price index published by the State Institute of Statistics. According to the relevant list, if the base index for the months of September and October 1987 (when title to the expropriated property was transferred to the authorities and the proceedings were issued in the Durağan Court of First Instance – see paragraphs 10–11 above) is taken as 100, the inflation index had by January 1992 (when the additional compensation in case no. 87/2837 was paid – see paragraph 16 above) reached 1006.06 and 1783.48 by January 1993 (when the additional compensation in case no. 87/2828 was paid – see paragraph 16 above).