CASE OF FREDIN v. SWEDEN (No. 1)
Violation of Art. 6-1;No violation of P1-1;No violation of Art. 14+P1-1;Pecuniary damage - claim dismissed;Non-pecuniary damage - financial award;Costs and expenses award - Convention proceedings;Costs and expenses award - domestic proceedings
C. Russo;Gaukur Jörundsson;R. Pekkanen
8. Mr Anders Fredin, an agricultural engineer, and his wife Mrs Maria Fredin own several parcels of land in the municipality of Botkyrka. On the land there is a farm and a gravel pit. The parcel where the gravel pit is located consists of 27 hectares and is called Ström 1:3. It was specifically created in 1969 from parts of the other properties with a view to the exploitation of the pit. 9. When Mr Fredin’s mother bought the land in 1960 the commercial exploitation of the gravel pit had been at a standstill since the middle of the 1950s. In the meantime, gravel had been taken only for use on the farm. The Fredins were eager for exploitation to resume and, on 20 March 1960, they signed a licence agreement with two companies ("the Jehanders"), granting them, for an annual fee, the exclusive right to extract gravel from the pit for fifty years. The Jehanders subsequently acquired several other gravel pits in the vicinity and thus obtained, so the applicants allege, a quasi-monopoly on gravel production in the region. 10. In 1963 a prohibition on the extraction of gravel without a permit was introduced through an amendment to the Nature Protection Act 1952 (naturskyddslagen 1952:688). On 11 December 1963 the County Administrative Board (länsstyrelsen) of Stockholm County granted Mr Fredin’s parents the necessary permit. This provided, inter alia, that exploitation had to be in conformity with a plan drawn up in May 1962; in particular, it had to be carried out in three stages, each of which should not exceed ten years. In addition, restoration works had to be carried out continuously during each stage and financial security lodged to cover the costs thereof. 11. On 4 September 1969 Mr Fredin acquired a fifth of the property by way of a gift from his mother. 12. On 1 July 1973 an amendment to the Nature Conservation Act 1964 (naturvårdslagen 1964:822 - "the 1964 Act") - which had left unaffected the need for a permit - empowered the County Administrative Board to revoke permits that were more than ten years old (see paragraph 35 below). 13. On 31 July 1977 the applicants bought the remainder of the property, which thenceforth belonged as to two-thirds to Mr Fredin and as to one-third to his wife. The County Administrative Board was informed of the change in ownership. 14. Despite a number of requests over the years, the Jehanders had, at the time of the applicants’ purchase, still not put the gravel pit to commercial use. The Fredins accordingly instituted court proceedings for breach of contract, but the dispute was resolved by a friendly settlement according to which the licence agreement was deemed to have terminated with effect from 1 October 1979. 15. On 3 October 1979 the applicants requested that the permit to take gravel should be formally transferred to them. With the consent of Mr Fredin’s parents they began to exploit the pit in 1980, partly through a new licensee. At about this time the County Administrative Board offered to redeem the exploitation permit from the applicants for a sum, according to them, of around 50,000 Swedish kronor. However, the applicants did not accept the offer. As from 1983 they conducted part of the business themselves through Kagghamra Grus AB, a limited liability company they owned. 16. On 30 May 1980 the County Administrative Board granted the applicants an exemption from the general prohibition in the 1964 Act against building near the seashore and allowed them to build a quay with shiploading equipment. The exemption was valid until further notice, but not for longer than the permit to exploit gravel. The Board stated that the "decision [did] not imply that any position [had] been taken as to the possibility of a future reconsideration of the gravel exploitation activities on the property". The applicants built the quay at a cost of 1,000,000 kronor and also invested some 1,250,000 kronor in the gravel exploitation business over the period from 1980 to 1983. 17. On 24 April 1981 the County Administrative Board asked the applicants to lodge a financial security of 40,000 kronor to cover restoration costs, this amount being subsequently increased to 75,000 kronor. 18. After the applicants had provided the security required, the County Administrative Board, by "partial decision" of 14 April 1983, amended its decision of 11 December 1963 (see paragraph 10 above) by transferring the permit to them. The Board added that it planned to issue new directives concerning restoration work and that, in view of the 1973 amendment of the 1964 Act (see paragraph 12 above), it intended to re-examine the permit question in 1983 with a view to a possible termination of the activities. 19. On 25 August 1983 the County Administrative Board notified the applicants that, in the interest of nature conservation, it was contemplating amending the permit so as to provide that exploitation of the gravel pit should cease by 1 June 1984. 20. In a memorandum dated 14 May 1984, the County Administrative Board indicated two possible ways of discontinuing the exploitation. One was to stop extraction as soon as possible because the environment was being damaged and there was already a satisfactory supply of gravel in the region. The other was to allow the exploitation to continue for a couple of years, thereby making it possible to give the area a natural shape. The memorandum was submitted to the National Environment Protection Board (naturvårdsverket) and to the municipality of Botkyrka. On 18 September 1984 the Board replied that it favoured the first alternative and that it considered that a reasonable exploitation-time had been afforded as the permit had been valid for twenty years. On 1 October the municipality expressed the opinion that a certain closing-down period was preferable as it would facilitate the restoration of the landscape. 21. In a new "partial decision" of 19 December 1984, the County Administrative Board ordered, inter alia, that: (a) the exploitation of gravel should cease within three years, i.e. by the end of 1987, by which time the area should also be restored; (b) as from the day of the decision further extraction from certain parts of the pit be prohibited; (c) before 1 March 1985 the applicants should increase the security to 200,000 kronor, to cover possible restoration costs resulting from the growing activity in the pit; they should also draw up a new work plan, so that the Board could fix the final conditions for the extraction and restoration works. 22. The applicants appealed to the Government, claiming that: (a) the County Administrative Board’s decision was in part based on insufficient scientific material; (b) it should not have followed the opinion expressed by the municipality of Botkyrka (see paragraph 20 above), in view of that opinion’s limited scope; (c) its decision, and also the opinion of the National Environment Protection Board, should have been based on the views of a geological expert; (d) it had not given the applicants’ interests sufficient consideration and had not granted a reasonable closing-down period; (e) the order to submit a new extraction plan and to lodge security of 200,000 kronor constituted a financial penalty; (f) the prohibition on extraction from parts of the pit was unlawful as it amounted to a closing-down of the activities; (g) pursuant to the 1964 Act, as interpreted in the light of the Environment Protection Act 1969 (miljöskyddslagen 1969:387) and the Water Act 1918 (vattenlagen 1918:533), they had a protected right to exploit gravel for at least ten years from the transfer of the permit on 14 April 1983. 23. On 26 March 1985 the County Administrative Board submitted an opinion on the appeal, stating amongst other things that it had known, from its contacts with the Jehanders (see paragraph 9 above), that no exploitation of gravel was imminent. 24. In a decision of 12 December 1985 the Government (Ministry of Agriculture) dismissed the appeal, stating that they concurred with the County Administrative Board’s assessment. They ordered, however, that the validity of the permit should be extended to 1 June 1988 and that the security should be lodged on 1 March 1986 at the latest. 25. On 9 March 1987 the County Administrative Board adopted a restoration plan for the pit. 26. Before the expiry of the permit the applicants twice requested new permits, but to no avail. The last request was rejected by the Board on 18 May 1987. The applicants’ appeal to the Government was dismissed on 9 June 1988, although the validity of the permit was extended until 1 December 1988. 27. On 1 December 1988 extraction of gravel from the pit ceased. The applicants had by then almost terminated the first of the three exploitation stages provided for in the plan attached to the permit of 11 December 1963 (see paragraph 10 above). 28. On 9 February 1989 the County Administrative Board requested the public prosecutor to institute criminal proceedings against Mr Fredin for non-compliance with the 1964 Act, in that he had not restored the gravel pit as provided for in the permit. These proceedings are still pending and the restoration work has not yet been carried out. 29. On 14 March 1989 the County Administrative Board rejected a request by the applicants for a special extraction permit in order to enable them to comply with the 1987 restoration plan (see paragraph 25 above). Their appeal to the Government was dismissed on 21 June 1989, and their application for judicial review under the new Act on Judicial Review of Certain Administrative Decisions (lag om rättsprövning av vissa förvaltningsbeslut 1988:205), which entered into force on 1 June 1988, was rejected by the Supreme Administrative Court on 13 December 1990. These proceedings are not the object of the present complaint. 30. As regards the impact of the revocation of the permit on the value of their property and of their wholly-owned licensee, Kagghamra Grus AB, the applicants have referred to three certificates. According to the first, issued by Mr Lars Carlsson, a consultant, on 17 March 1987, it appears from the accounts of the applicants’ company that it would become insolvent without the income from the pit. The second certificate, drawn up on 1 September 1988 by Mr Nils Olof Rydstern, an economist, states that the applicants’ company would have had an estimated market value of 14-18,000,000 kronor in 1988, had the applicants been able to extract gravel from 1980 onwards without any interference by the authorities. Mr Rydstern points out that this is not the company’s liquidation value. In the third certificate, dated 14 September 1988, Mr Hans Lagerqvist, a land-surveyor at the Senior Land-Surveying Authority (överlantmäterimyndigheten), notes that, as a result of the revocation of the permit, the gravel pit was considered in 1988 to be worth less than 1,000 kronor for general property-taxation purposes. Mr Lagerqvist’s own assessment, made on the assumption, inter alia, that the extraction of gravel would have continued according to the 1963 permit, concludes that the estate’s market value decreased by 15,500,000 kronor as a consequence of the revocation. Taking into account Mr Rydstern’s valuation, the total loss suffered by the applicants is estimated at approximately 28-31,000,000 kronor. 31. The applicants have also submitted a report by Mr Dick Karlsson, a consultant, according to which, in a large number of revocation cases concerning businesses that had been carried on for several years, the County Administrative Board had not ordered the restoration of the gravel pits at issue. The Board was also said to have given the holders of the permits in question the opportunity of obtaining new ones, should the supply of gravel on the market decrease. Mr Karlsson noted that in these cases the permits had been held by two companies, including one of the Jehanders (see paragraph 9 above). He concluded that the Board’s decision concerning the applicants’ permit was exceptional, in that it terminated an ongoing profitable business. 32. The basic regulations on the protection of nature are laid down in the 1964 Act. 33. According to section 1 of the Act, everyone must show respect and circumspection in his or her dealings with nature. In addition, all necessary measures have to be taken to limit or counteract any damage to nature which is bound to result from any works undertaken or otherwise. 34. Section 3 provides that, in decisions on questions relating to nature conservation, other public and private interests must be duly considered. 35. Section 18 of the Act prohibits, inter alia, extraction of gravel for purposes other than the domestic needs of the landowner without a permit from the County Administrative Board. The section also specifies that: "The County Administrative Board may require a party applying for an exploitation permit to submit, on pain of the application being rejected, material showing the need for the extraction and a sufficiently detailed plan for the activities. The permit shall be made subject to such conditions as are necessary to limit or counteract the harmful effects of the enterprise on the natural environment. In the absence of special reasons to the contrary, a permit shall be valid only if sufficient financial security is lodged to ensure that the conditions prescribed are actually fulfilled. If the security given proves to be inadequate, the County Administrative Board may order that the permit shall not become effective until additional security has been lodged. If a prescribed measure is to be taken by someone other than the landowner, the latter must allow it to be carried out. If ten years have elapsed since an exploitation permit acquired legal force, the County Administrative Board may revoke the permit completely or in part or may make its renewal subject to revised conditions. If it becomes apparent that the conditions laid down do not sufficiently limit or counteract the damaging effects that the activities may have on the natural environment, the County Administrative Board may, before the expiry of the stated period, make the permit subject to such additional conditions as may be necessary." The last sub-paragraph was added on 1 July 1973. Previously an exploitation permit could not be revoked without compensation being paid to the landowner if the prescribed conditions had been complied with. According to the transitional provisions, the ten-year period was, as regards permits valid on 1 July 1973, to be calculated as from that date. The amendment also repealed certain provisions whereby a landowner could be granted compensation if he was refused a permit. 36. Section 40 (2) of the Act provides that an appeal lies to the Government against a decision taken by the County Administrative Board. At the time of the final decision regarding the revocation question (12 December 1985, see paragraph 24 above), the Government’s decisions were not subject to any judicial review. However, since the entry into force, on 1 June 1988, of the Act on Judicial Review of Certain Administrative Decisions, the lawfulness of some decisions by the Government may be challenged before the Supreme Administrative Court.