CASE OF OSIPKOVS AND OTHERS v. LATVIA
No violation of Article 1 of Protocol No. 1 - Protection of property (Article 1 para. 1 of Protocol No. 1 - Peaceful enjoyment of possessions)
Angelika Nußberger;Carlo Ranzoni;Erik Møse;Mārtiņš Mits;Yonko Grozev
5. After the regaining of independence, in 1991 property reform legislation came into force in Latvia and provided that former owners or their heirs could reclaim property nationalised in 1940. 6. The second applicant and two other individuals were the heirs of A.S. In 1999 they asked the Riga Regional Court to recognise their title to 30 ha of forest in Jurmala (hereinafter “the contested property”) which had allegedly belonged to A.S. and was nationalised in 1940. They also asked the court to recognise their right to receive a plot of land of the same value in Jurmala, as it had not been possible to establish the precise boundaries of the inherited land. 7. On 7 May 1999 the Riga Regional Court ruled in favour of the claimants. It recognised that there was no question over whether the claimants were the heirs of the late A.S., as that had been established by a court order in 1995. Referring to documents received from the State Archive and the State Land Authority (Valsts Zemes dienests), it also established that A.S. had purchased 30 ha of forest in Jurmala. Referring to section 12 of the Law on Land Reform in the Cities of the Republic of Latvia (Par zemes reformu Latvijas Republikas pilsētās), which provided that any requests after 1 June 1994 for the restoration of property rights should be decided by a court, the Riga Regional Court recognised that the second applicant owned a two-third share of the forest in Jurmala and that the other two claimants owned a sixth each. As there was no evidence of what the precise boundaries of the forest were, the court recognised the claimants’ right to receive a plot of land of the same value elsewhere. 8. Jurmala City Council was a defendant in the above proceedings and a representative of Jurmala City Land Commission contested the claim, arguing that in 1940 the contested property had belonged to several individuals as undivided property, and the archive documents did not show what part of that property each claimant could be entitled to. 9. The judgment was not appealed against and became final on 8 June 1999. In April 2000, at the claimants’ request, the Riga Regional Court adopted an additional decision specifying that the contested property had historically been part of the Bulduri estate forest. 10. After adoption of the above judgment, the Jurmala City Land Commission informed the claimants, the Jurmala City Council and the State Land Authority several times of problems in enforcement of the judgment. The Jurmala City Land Commission maintained that the archive material, which had been obtained after the above judgment had been adopted, did not give information as to the location of the contested property. On those grounds, in October 2000 the State Land Authority asked the Prosecutor General’s Office to lodge an application for supervisory review (protests) asking for the judgment of 7 May 1999 to be quashed. 11. In November 2000 the Prosecutor General’s Office dismissed the request, arguing that reassessment of evidence could not serve as grounds for triggering supervisory review proceedings. 12. On several occasions the second applicant complained to the Jurmala City Council and the Jurmala City Land Commission about delays in the enforcement of the judgment. 13. In order to comply with the judgment, on 6 December 2002 the Jurmala City Land Commission adopted decisions allocating four plots of land to the claimants. 14. On 27 December 2002 the title to the four plots of land was entered in the land register, and on 8 and 9 January 2003 the second applicant and the other two claimants sold their respective plots to the fifth applicant, the limited liability company Bulduru Muiža, the owner and director of which at the material time was the second applicant. Between January 2002 and October 2003 the first applicant was the president of the fifth applicant, and between October 2003 and August 2007 the first applicant was its chairman of the board. 15. On 24 October 2003 the President of the Civil Division of the Senate of the Supreme Court lodged an application for supervisory review with regard to the judgment adopted on 7 May 1999 by the Riga Regional Court, arguing that there was a lack of evidence to corroborate that A.S. had owned the property before 1940. As information received from the State Archive had suggested, the contested property had consisted of undivided shares and therefore it could not be concluded that A.S. had been the sole purchaser of 30 ha of a forest. 16. A copy of that application was sent to the second applicant and the other two parties to the initial proceedings, inviting them to submit comments within thirty days of receipt. 17. At a hearing on 17 December 2003 attended by the representative of the claimants in the initial proceedings, the Senate of the Supreme Court quashed the judgment and remitted the case to the Riga Regional Court for fresh consideration. The Senate recognised that there was nothing in the case file to suggest that A.S. had owned the contested property. 18. In January and March 2004 the Bureau for the Prevention and Combating of Corruption (“the KNAB”) asked the Prosecutor General’s Office to initiate proceedings to reclaim the contested property from the applicants. 19. The fifth applicant entered into various transactions with the contested property. 20. On 15 and 16 December 2003 part of the property was for a total amount of 7,000 Latvian lati (LVL) (about 10,000 euros (EUR)) sold to A.V. who on 26 and 29 March 2004 sold it for the same amount to the third applicant, the limited liability company Balt Invest Group, the coowner and representative of which at the material time and until February 2007 was A.V. himself. On 23 April and 7 May 2004 the third applicant was registered as the owner of the property in the land register. 21. On 12 and 19 February 2004 the fifth applicant sold two other parts of the contested property to the sixth and fourth applicants respectively for about EUR 45,000 per each transaction. The purchase contract of 19 February 2004 provided, inter alia, that the seller, namely the fifth applicant, guaranteed that the property was not subject to any dispute, and that seller would be liable for any third party claims made in respect of the transaction. 22. On 27 February 2004 the fifth applicant sold another part of the property to K.K, who on 18 June 2004 sold it to the first applicant for about LVL 29,000 (about EUR 41,500). The purchase contract of 18 June 2004 provided, inter alia, that the seller guaranteed that the property was not anyhow encumbered. 23. On 27 April 2004 and on 16 September 2004 (with regard to the first and the third applicants) the Prosecutor General’s Office, acting on behalf of the Ministry of Finance, lodged a claim against the Jurmala City Council, the applicants, A.V. and the two other claimants in the initial proceedings. The Prosecutor General’s Office relied on the Senate’s judgment (see paragraph 17 above) and the request received from the KNAB (see paragraph 18 above). The claim stated that the second applicant and the two other claimants in the initial proceedings had no legal right of ownership over the contested property. The Riga Regional Court was asked to quash the decisions of Jurmala City Land Commission allocating the four plots of land (see paragraph 13 above). The Prosecutor General’s Office also asked for the relevant Land Registry records to be deleted and the rights of the State to the contested property to be recognised. 24. The claim was based on the section of the Civil Law regulating property claims, such as sections 1041, 1044 and 1063 (see paragraph 37 below). 25. On 30 May 2004 the Riga Regional Court decided to join the claim lodged by the Prosecutor General’s Office and the claim about the restoration of property rights (see paragraph 17 above). 26. On 9 September 2005 the Riga Regional Court dismissed the claim lodged by the Prosecutor General’s Office and upheld the decision recognising the second applicant and the two other claimants as owners of the contested property. 27. Both the Prosecutor General’s Office and the Jurmala City Council appealed against that decision. 28. On 22 June 2006 the Civil Division of the Supreme Court partly upheld the appeal lodged by the Prosecutor General’s Office. The court revoked the decisions of the Jurmala City Land Commission allocating the second applicant and the two other claimants the four plots of land, and ordered that the corresponding entries be deleted from the relevant Land Registry records. It established that the lower court had failed to address the fact that until 1937 the contested plots of land had been jointly owned by the former owner A.S. and seventy-six other individuals. Moreover, the joint ownership of the land had ceased after the passing of a decree in 1937, and after that date A.S. had not registered his title to the property with the Land Registry. The appellate court also dismissed part of the claim of the Prosecutor General’s Office in which it claimed that the State (represented by the Ministry of Finance) had ownership rights over the property in question. The plots of land were returned to Jurmala Municipality in order for it to finalise the land reform. 29. In relation to the applicants’ argument that they had all acted in good faith when acquiring their part of the contested property, the court at the outset noted that such criteria as the date of conclusion of a contested transaction and the nature of the infringed property rights have to be considered when assessing the protection of bona fide acquirers. The court also observed that after the second applicant had sold the contested property to the fifth applicant, the owner of which was the second applicant himself, all the transactions involving the contested property (see paragraphs 19-22 above) had been concluded after the Senate of the Supreme Court had revoked the final judgment in the initial proceedings. It also noted that K.K. had sold his respective parts of the property to the first applicant despite the fact that the civil proceedings initiated by the Prosecutor General’s Office had been pending. On those grounds and on the basis of section 1055 of the Civil Law (see paragraph 38 below), the applicants were not recognised as having acted in good faith. 30. The first, second, fourth and fifth applicants lodged an appeal on points of law. Following an application dated 14 August 2006, the third applicant joined the cassation appeal lodged by the first applicant. The sixth applicant did not lodge an appeal on points of law. 31. The five appellants complained, inter alia, that the State did not have sufficient interest in the property to justify the fact that the Prosecutor General’s Office had lodged a property claim on behalf of the State. 32. By a final decision of 17 January 2007, the Senate of the Supreme Court upheld in essence the appellate court’s judgment. With respect to the property claim brought by the Prosecutor General’s Office, the Senate noted that even if the State’s property rights had not been infringed, that did not prevent the court from finding that the second applicant and the two other claimants in the first set of proceedings had had no rights to the contested property. The Senate also upheld the appellate court’s conclusions about the applicants acting in bad faith. 33. After the above judgment took effect and at Jurmala Municipality’s request the applicants’ entries were deleted from the relevant Land Registry records. 34. On 16 October 2012 the third applicant was declared insolvent and the Riga District Court appointed E.K. as its insolvency administrator who replaced the former board members of the third applicant. On 19 February 2013 the insolvency proceedings were terminated and on 14 May 2013 the third applicant was deleted from the company register. 35. On 12 April 2013 A.V., who until June 2012 had been a board member of the third applicant, on its behalf designated a legal representative in the proceedings before the Court (see paragraph 2 above).