CASE OF URBARSKA OBEC TRENCIANSKE BISKUPICE  v. SLOVAKIA
Preliminary objections dismissed (non-exhaustion of domestic remedies, six-month period);Violation of P1-1 (transfer of ownership of the land and compulsory letting of the land);Just satisfaction reserved
Nicolas Bratza
6. The applicant is a registered association of landowners (pozemkové spoločenstvo). It is a legal person with its registered office in Trenčín. It was entered in the official register with effect from 30 December 1996. Mr K. Rehák, its president, lodged the application on the applicant's behalf. 7. Under the communist regime in Czechoslovakia owners of land were in most cases obliged to put their land at the disposal of State-owned or cooperative farms. They formally remained owners of the land but in practice had no possibility of availing themselves of the property. 8. Some of the land in question was, for various reasons, not cultivated by the farms. It was the State policy to promote the use of such land for gardening. For that purpose allotment gardens (záhradkové osady) were established, mainly in the vicinity of urban agglomerations. Individual plots of land were put at the disposal of persons belonging to the Slovakian Union of Allotment and Leisure Gardeners (Slovenský zväz záhradkárov), who were allowed to cultivate the land as a pastime activity for their individual needs. 9. In the context of Czechoslovakia's transition to a market-oriented economy following the fall of the communist regime, Parliament adopted the Land Ownership Act 1991 (for further details concerning the relevant law and practice see point II below), the purpose of which was to mitigate certain wrongs and to improve the care of agricultural and forest land. 10. Under the Land Ownership Act 1991 the plots of land on which allotment gardens had been established were not to be restored in natura to the original owner where ownership of the land had passed from the original owners to the State or a legal person. In such cases the original owners were entitled to compensation in kind or in pecuniary form. In this category of cases the legislator gave precedence to legal certainty for the existing users of the property, as the use of land for gardening was considered to be of greater public interest than restoring the land in natura to its original owners. 11. In the second category of cases, where the original owners maintained their ownership rights, albeit in name only (nuda proprietas), the Land Ownership Act 1991 established conditions enabling the owners to enjoy their property rights to a greater extent. In particular, it provided for the land to be let to the existing users, with a notice period expiring on the date when the temporary right to use the land came to an end. The tenants were, however, entitled to have the lease extended by ten years unless an agreement to the contrary was reached between the parties. The landowners were also entitled to request, within three years of the coming into effect of the 1991 Act, the exchange of their property for a different plot of land owned by the State. 12. The above approach, permitting the owners to recover full possession of their land after the expiry of the ten years for which the tenants had the right to have the lease extended, was modified with the adoption of Act 64/1997. As a result, owners have only a limited possibility of terminating the lease, mainly on the grounds of the tenants' failure to comply with their obligations. The position of the tenants has been strengthened in that they are entitled to acquire ownership of the land they use for gardening. As to the owners, Act 64/1997 gives them the right to obtain either a different plot of land or pecuniary compensation. 13. In introducing Act 64/1997 the legislator abandoned the philosophy of giving general priority to the rights of the owners of plots of land on allotment sites and took the position that it was in the general interest that the rights of persons who had been using the land for gardening should prevail. 14. The land owned by the predecessors of the members of the applicant association was put at the disposal of the agricultural cooperative in Trenčín-Soblahov. The owners' formal title to the land remained unaffected, but they had no possibility of using it in practice. 15. On 24 November 1980 the cooperative farm let the land, free of charge, to the Trenčín branch of the Slovakian Fruit and Gardening Association (Slovenský ovocinársky a záhradkársky zväz), as the Union of Gardeners was known at the time. The contract was to expire on 31 December 2000 unless the parties reached an agreement on its extension. The tenant was to return the land to the lessor in its original state on termination of the lease. 16. On 31 March 1982 the authorities approved the establishment of the “Váh” allotment gardens on the land in question, located in an industrial area on the outskirts of the town of Trenčín. The project envisaged the apportionment of 74 individual plots with a surface area of approximately 300 square metres on which garden huts with a surface area of 12 square metres would be built. Re-cultivation of the land and communal facilities such as a road and a parking area, water supply and a fence at the allotment site's boundaries were also planned. 17. The local branch of the gardening association subsequently concluded separate contracts with its members. Individual plots of land were thereby put at the latter's disposal until 31 December 1999. The gardeners obtained a permit to build huts. Unless the lease contract was extended before 30 June 1999, the huts were to be entirely removed by the gardeners. 18. In 1995 the present members of the applicant association inherited the title to the land where the Váh allotment gardens had been established. 19. On 12 May 1997 the applicant association submitted a draft rent contract to a representative of the gardening association. On 21 May 1997 the president of the Váh allotments rejected the proposal as being unacceptable. Reference was made to negotiations about a one-year contract under Act 64/1997 pending a decision on the ownership of the land. 20. Between 1998 and 2002 the Trenčín municipality charged the applicant 11,260.92 Slovakian korunas (SKK) a year in real property tax in respect of the land used by the gardeners. The tax was based on municipal regulations fixing the tax on gardens at SKK 0.44 per square metre. 21. The applicant submitted copies of bank statements indicating that the Slovakian Union of Allotment and Leisure Gardeners had paid to it, following the entry into force of Act 64/1997, SKK 8,762.40 as a yearly rent for the use of 29,208 square metres of land. That amount corresponds to SKK 0.3 per square metre. 22. The applicant association unsuccessfully attempted to recover possession of the land. For that purpose it offered to compensate the gardeners for their existing property attached to the land. 23. On 22 July 1998 the allotment gardeners initiated proceedings under Act 64/1997 with a view to having the ownership of the land transferred to them. 24. On 24 September 1999 the Trenčín District Office granted the request to start proceedings under Act 64/1997. The Trenčín Regional Office upheld this decision on 24 November 1999. 25. On 6 September 2000 the Trenčín Regional Court dismissed an action which the vice-president of the applicant association and several other persons had lodged against the above decision of the Regional Office. The Regional Court found that the statutory requirements for bringing proceedings under sections 7 et seq. of Act 64/1997 had been met. 26. On 30 November 2001 the District Office in Trenčín made public the consolidation project pursuant to section 13 of Act 64/1997. The president of the applicant association as well as all the other landowners whose address was known were notified of the project and informed that the data contained therein could be challenged within fifteen days. 27. The letter stated, in particular, that one part of the applicant's land (1.5665 hectares) had been valued at SKK 6.1 per square metre and the other part (1.0046 hectares) at SKK 6.9 per square metre. The major part of the land to be provided to the applicant in compensation was valued at SKK 9 per square metre. The valuation had been carried out in accordance with the relevant administrative regulation. It was based on the classification of the land and its quality at the time when the tenants had acquired the right to use the land. 28. Some of the allotment gardeners submitted their comments on the project. The authorities approved the project on 11 February 2002. 29. On 4 June 2002 a decision was issued to carry out the consolidation project. On 6 August 2002 the Regional Office in Trenčín dismissed the appeal lodged by the landowners. 30. The gardeners subsequently paid the purchase price for the 2.5711 hectares of the applicant's land to the Slovakian Land Fund. On 1 October 2002 the applicant association received 1.4097 hectares of different land in compensation. On 2 December 2002 the District Office in Trenčín approved the manner in which the consolidation project had been implemented. Its decision became final on 14 February 2003. On that day the ownership of the relevant plots of land passed formally to the persons involved. 31. The zoning plan in respect of the area in which the Váh allotments are situated was approved in 1999. It indicates that the whole area forms part of a “production and services zone”. The zoning plan does not foresee that the land on the allotment site will be used for its current purpose in the future. At present an industrial park is in the process of being established in the vicinity of the allotments. The land within the allotment site has not been included in the project at this stage. 32. According to information in the land register, at least eight gardeners from the Váh allotments sold their plots to other persons between 2004 and 2006. 33. On 17 May 2005 the District Land Office in Trenčín, at the Government's request, explained that the Váh allotment gardens in Zlatovce were situated on land which, at the time of their establishment, had been derelict and had served as a municipal dump. The surface area of the applicant's land which fell under Act 64/1997 was 2.5711 hectares. The surface area of the land which the applicant had received in compensation was smaller as it was arable land of higher quality and value. The document further indicated that the value of the applicant's land taken into account in the consolidation proceedings had been the value on the date when the allotments were established. The same regulation relating to the value of real property for administrative purposes had been applied in valuing the substitute land. 34. In 2005 one of the representatives of the applicant association sold to a company a plot of land in the vicinity of the Váh allotments for SKK 380 per square metre. Prior to the sale, an expert had valued the land at SKK 288. On 10 January 2007, the same company offered to buy different plots belonging to the applicant association in the area for SKK 380 per square metre. 35. In August 2005, at the Government's request, an expert established the value on 1 October 2002 of both the land on the allotment site and the land which the applicant association had received in compensation. The expert calculated the value for general purposes of the land on the allotment site at SKK 1,166.40 per square metre. The location of the land in an industrial zone increased its value considerably according to the opinion. 36. The same expert assessed the general value of the other plot of land at SKK 110.16 per square metre. The opinion stated that the substitute plot of land was situated between a motorway and a slip road and that a highvoltage line was erected above it. As a result, multiple restrictions applied to the use of the plot. No construction activity was envisaged in the area. 37. On 15 December 2006 a different expert, at the Government's request, established the value in 1982 of the applicant's land at SKK 257,100, or approximately SKK 10 per square metre. The expert calculated the value of the land on 14 February 2003 at SKK 7.71 million, that is, approximately SKK 300 per square metre. The gardeners' investments (huts, fence, wells, permanent vegetation, etc.) were tentatively valued at SKK 241 per square metre of land in 2003. The general value of the land including the gardeners' investments was thus SKK 541 per square metre. Finally, the expert assessed the general value in 2003 of the arable land which the applicant association had obtained in compensation at SKK 95 per square metre. 38. On 21 December 2006, at the applicant's request, a private company assessed the value on 23 May 2002 of the applicant's land on the allotment site at SKK 7.6 million. That sum corresponds to approximately SKK 295 per square metre. In a document dated 16 January 2007, at the applicant's request, the company in question submitted comments on the above opinion of 15 December 2006. The view was expressed that the expert's conclusion was probably not in line with local market prices. Plots of land similar to those used by the gardeners, including gardeners' investments, were most frequently sold for between SKK 250 and 300 per square metre, whereas free plots of land outside allotments were being sold at SKK 350-380 per square metre in that area. The use of the land by gardeners had rather a negative impact on its general value. Land in the area in question could be let out for at least SKK 20 per square metre yearly, its value for general purposes being between SKK 280 and 300 per square metre. 39. In a letter addressed to the Government's Agent on 14 March 2007, the Institute of Forensic Engineering in Žilina, having examined the comments submitted by the above private company, expressed the view that the expert who had submitted the opinion on 15 December 2006 had proceeded in accordance with the relevant law. 40. The Land Ownership Act 1991 (Zákon o úprave vlastníckych vzťahov k pôde a inému poľnohospodárskemu majetku) entered into force on 24 June 1991. 41. Section 19(1) provides that the purpose of land consolidation within specific areas is to establish integral economic units, in accordance with the needs of individual landowners and with their consent, in line with public needs as regards creation of the landscape, the environment and investment activities. 42. Paragraph 2 of section 22 provides that, as of the entry into force of the Act and unless a different agreement is reached with the owner, the user of the land shall acquire tenancy rights in respect of it. 43. Under section 22(3), as in force until 25 March 1997, in cases where the land was used by individual gardeners on an allotment site the tenancy could not be terminated before expiry of the period for which the land had been originally put at the disposal of the users. Unless the parties otherwise agreed, the tenants had the right to have the tenancy extended by another ten years. The rent and the purchase price in respect of such land were to be determined on the basis of the classification and quality of the land at the time when the gardeners' right to use it had been established. The tenants had the right of pre-emption should the owner decide to sell the land. 44. Section 22(4) entitled the owners of land used by allotment gardeners to request, within three years of the entry into force of the Act, exchange of the land for a different plot of land owned by the State. The land to be proposed in exchange had to correspond, as regards both size and quality, to the original land and it was to be situated, where possible, in the same area. 45. The Land Consolidation Act 1991 (Zákon o pozemkových úpravách, usporiadaní pozemkového vlastníctva, pozemkových úradoch, pozemkovom fonde a o pozemkových spoločenstvách) entered into force on 19 August 1991. 46. Section 1 provides that land consolidation consists of the rational arrangement of land ownership in a specific area in accordance with the requirements of the protection of the environment and the creation of ecologically stable territorial systems, the functions of agricultural land and economic and production criteria applicable to modern agriculture and forestry. 47. Under section 2(a), land consolidation pursues the aim, inter alia, of resolving issues and eliminating obstacles related to ownership and possession/occupancy of land which arose as a result of historical developments prior to the entry into force of the Act. 48. Section 29(1) provides for the possibility of transferring the ownership of land on allotment sites to the tenants, subject to compensation of the landowners. 49. Act 64/1997 on the use of plots of land in allotment gardens and arrangements as regards their ownership (Zákon o užívaní pozemkov v zriadených záhradkových osadách a vyporiadaní vlastníctva k nim) governs the use of land within allotment gardens and the transfer of ownership rights in respect of such land. It entered into force on 11 March 1997 and took effect on 26 March 1997. It repealed section 22(3) of the Land Ownership Act 1991. 50. The government explanatory report of 10 December 1996 which was submitted to Parliament together with the draft Act indicates that some 5,700 hectares of land (approximately 0.22 per cent of all agricultural land in Slovakia) were used by 100,000 individual gardeners on 987 allotment sites at that time. Gardening served as relaxation and provided a partial supply of fruit and vegetables to at least 700,000 town dwellers in Slovakia. 51. According to the report, there was a public interest in land consolidation in Slovakia. In that context, it was in the general interest to transfer the ownership of land in allotment gardens to the existing tenants as it would provide greater legal certainty for both the gardeners and the owners. 52. The tenants would obtain ownership of the land which they used and would not risk losing the surplus value which they had added to the land through their work and investments. As to the owners, they were likely to continue to have their rights to avail themselves of the property restricted for a considerable period of time; the allocation of appropriate alternative plots of land to them would resolve that problem. According to the explanatory report, compensation based on the surface area and quality of the land at the time when the owner had lost the possibility of using the land was appropriate. Pecuniary compensation was to be paid in exceptional cases only where the owner either asked for it or refused compensation in natura. 53. Under section 1(1), the aims of the Act are (i) regulation of the use of allotment land and (ii) definition of the procedure to be followed with a view to land consolidation on allotment sites under a special law (reference is made to section 29(1) of the Land Consolidation Act 1991). 54. Section 3(1) of Act 64/1997 provides that, unless the owner of the land and the gardeners concluded a tenancy agreement earlier under a special regulation, a tenancy comes into being between them as of the moment when the Act takes effect. 55. Paragraph 2 of section 3 enumerates the conditions under which the owner of the land is entitled to terminate the tenancy. Such entitlement is limited to cases where the tenant (i) is not using the land with due care, (ii) has constructed a building on the plot without a permit, (iii) has sub-let the land to a third person without the owner's consent or (iv) has failed to pay the rent, despite a prior warning, by 30 August following the year for which the rent is due. An owner who puts an end to a lease is obliged to compensate the tenant for buildings and permanent vegetation as well as for the tenant's share in the equipment jointly used by the gardeners within the allotments (section 3(3)). 56. Pursuant to section 4(1), the yearly rent for the use of plots of land in allotment gardens is ten per cent of their value as established under section 15(5-7) of Regulation 465/91 of the Ministry of Finance, the minimum sum being SKK 0.3 per square metre. This provision does not affect the amount of rent which owners and tenants may have agreed under a special law at an earlier date. 57. The main purpose of Act 64/1997 is to permit the transfer of ownership of the land to tenants of allotments where the majority of tenants so request and where the owners have refused to sell the land at a price not below the level of compensation provided for under section 11. In such cases proceedings are brought, in the course of which a preliminary inventory of the land is prepared. The inventory can be challenged within thirty days of its publication. Once the proceedings have started, the competent district office invites the Slovakian Land Fund to select Stateowned plots of lands to be offered as compensation to the owners of the land situated on the allotment sites (sections 7 and 8). 58. Section 10(1) provides that, prior to approval of such a land consolidation project, the district office involved has to ask the owners to inform it, within 60 days, whether they wish to be allocated a different plot of land of corresponding surface and quality in the same area or to receive financial compensation for their land. Where the allotments are situated in a built-up area of a municipality, the owner can claim a different plot of land in a comparable area. Where the owners do not indicate their preference within 60 days, they are to receive financial compensation (section 10(3)). 59. Section 11 governs financial compensation for plots of land situated in allotments. It is to be determined on the basis of the quality and nature of the land at the time when the gardeners' right to use it was established. Section 11 further provides for an increase or decrease in compensation according to the location of the land and possible restrictions on its use. 60. A consolidation project comprises, inter alia, a recapitulation of the proceedings, a list of tenants with indication of the land they use and its value, a list of owners who have requested financial compensation and its amount and a proposal as regards the situation of the substitute land to be provided to the owners (section 12). 61. Under section 13, the district office must publish the consolidation project under the Act and notify the persons concerned thereof. If no objections are filed, the district office must approve the project. If the district office dismisses objections to the data included in the project, a regional administrative authority must re-examine them. Decisions on approval of land consolidation projects can be reviewed by an administrative court. 62. Sections 15-17 govern the implementation of land consolidation projects which have been approved. Under section 17(2), the entry in the land register must indicate that the new owner of the land on the allotment site is obliged to use it for the same purpose as previously until a different use has been approved. 63. Section 17(3) provided that, where the tenants did not pay the compensation due, the ownership of the land was transferred to the Slovakian Land Fund. The latter could not use the land but could let it to the person who used it. This provision ceased to have effect after the Constitutional Court declared it contrary to the Constitution. 64. Regulation 465/1991 of the Ministry of Finance of 25 October 1991, as amended, governed determination of the price of buildings and plots of land and compensation for the use of land. It concerned the value of property for administrative purposes. It was repealed on 1 January 2004 and replaced by regulations on the determination of the general value of real property. 65. Section 15(5-7) provides that the price of plots of land registered as arable land, orchards, vineyards, meadows or pastures is to be fixed in accordance with Annex 8 to the Regulation. In the case of meadows and pastures the price is 0.75 per cent of the price indicated in Annex 8. The annex provides for prices per square metre ranging from SKK 12.1 to SKK 0.5 according to the quality and classification of the land. 66. Pursuant to section 2(1), real property tax is payable by the owner as entered in the land register. Where the owner has let another person use the land, the tenant is obliged to pay the tax where the lease has lasted or is to last five years at least, and subject to the registration of the tenant in the land register. 67. Thirty-five members of Parliament and the Prosecutor General brought proceedings before the Constitutional Court claiming that several provisions of Act 64/1997 were contrary to the Constitution and Article 1 of Protocol No. 1. In particular, the members of Parliament relied on the Court's case-law (James and Others v. the United Kingdom, judgment of 21 February 1986, Series A no. 98, § 54, and Sporrong and Lönnroth v. Sweden, judgment of 23 September 1982, Series A no. 52, §§ 69 and 73), arguing that there existed no genuine public interest in the interference with the landowners' rights and that the compensation which the landowners were to receive under the relevant provisions of Act 64/1997 was not appropriate. 68. Both petitions were examined jointly at a plenary meeting of the Constitutional Court. 69. On 30 May 2001 the Constitutional Court concluded that section 17(3) of Act 64/1997 was contrary to, inter alia, the constitutional protection of ownership rights. It dismissed the remainder of the submissions. 70. The Constitutional Court noted that the regulation of relations in respect of land used for gardening in allotments mainly concerned, as in the case of restitution laws, the undoing or mitigation of the wrongs which had occurred in the past when the principle of the rule of law had not been respected. The legislator had a certain margin of appreciation when deciding on the relevant issues, provided the constitutional guarantees were upheld. 71. With regard to the compulsory letting of the land to the gardeners under section 3 of Act 64/1997, it was merely a temporary measure pending the transfer of its ownership to the gardeners in accordance with the provision of that Act. It pursued the aim of providing the users with legal certainty and of ensuring optimal use of the land in question with due regard to the requirements of the landscape and the environment. It was as such in the public interest. The measure was limited in duration and it was not disproportionate as it filled the gap which arose following the quashing of section 22(3) of the Land Ownership Act 1991. Parliament, by obliging the owners to let the land to the gardeners, had not overstepped its margin of appreciation and had struck a fair balance between the general interest and the protection of individuals' rights. Section 3 was therefore not contrary to Article 1 of Protocol No. 1 to the Convention or its constitutional equivalent. 72. As to the argument that the rent payable under section 4 of Act 64/1997 was disproportionately low, the Constitutional Court held that Article 1 of Protocol No. 1 imposed on the Contracting Parties to the Convention no specific obligations as regards compensation for the use of property in the general interest. There was no appearance that the relevant provision was unconstitutional. 73. The plaintiffs also argued that the transfer of ownership of the land to the gardeners under sections 7 et seq. of Act 64/1997 was not in the general interest as it restricted the rights of the owners to the benefit of a different group of individuals without any relevant justification. 74. In the Constitutional Court's view, that transfer of ownership was to be seen in the broader context of land consolidation, the purpose of which was set out in section 19 of the Land Ownership Act 1991 and in section 2(a) of the Land Consolidation Act 1991. Consolidation pursued the aim of setting up integrated land entities in accordance with the needs of individual owners, with their consent, and with due regard to general requirements as regards the creation of the landscape, the environment and investment development. Land consolidation was also justified with a view to adjusting the existing relations between owners and users and eliminating any obstacles which had arisen as a result of past developments. Sections 7 et seq. of Act 64/1997 in no way affected the above general interest in land consolidation. 75. The plaintiffs further alleged that the compensation for land under section 11 of Act 64/1997 was inappropriate as it was substantially lower than the market value of the land. 76. The Constitutional Court noted that the owners had the choice between alternative plots of land and financial compensation. The gardeners could not be held liable and they should not be penalised for the fact that the owners had been deprived of the possibility of enjoying their property under a regime which had disregarded democratic principles. Furthermore, the users, by cultivating the land, had substantially increased its value. The Constitutional Court therefore accepted as just the relevant provisions under which compensation to the owners should be based on the value of the property at the time when the gardeners had started using it. The compensation under Act 64/1997 was therefore appropriate and compatible with the requirements of Article 1 of Protocol No. 1. 77. Finally, the Constitutional Court found that section 17(3) of Act 64/1997 was unconstitutional as there was no justifiable public interest in transferring ownership of land to the State in cases where the user had failed to pay the amount due. 78. In a separate opinion three judges stated that the compulsory letting under section 3 of Act 64/1997 was unconstitutional and that the compensation payable under section 11 was not appropriate as it was based on the value of the property at the time when the gardeners had acquired the right to use the land. 79. The dissenting judges expressed the view that the parties to proceedings under Act 64/1997 were in an unequal position. In particular, the applicable law did not permit the administrative authorities or courts called upon to review their decisions to balance the interests of the persons involved, assess whether the transfer of ownership was justified or examine the question whether the compensation provided to the owner was appropriate. 80. In accordance with its established practice, the Constitutional Court lacks jurisdiction to examine a complaint lodged by natural or legal persons when the determination of the point in issue involves the preliminary question of conflict of legal rules (see, for example, I. ÚS 96/93, decision of 16 November 1993; II. ÚS 806/00, decision of 16 November 2000; II. ÚS 19/2001, decision of 22 March 2001; or IV. ÚS 11/04, decision of 22 January 2004). Such proceedings can be brought only by the persons enumerated in Article 130 § 1 of the Constitution including, inter alia, onefifth of the members of Parliament and the Prosecutor General.