MLADOST TURIST A.D. v. CROATIA
Inadmissible
Aleš Pejchal;Krzysztof Wojtyczek;Linos-Alexandre Sicilianos;Pauliine Koskelo;Ksenija Turković
1. The applicant, Mladost Turist a.d. (hereafter “the applicant company”), is a commercial (joint stock) company incorporated under Serbian law, with its seat in Belgrade. It was represented before the Court by Ms R. Andrić, an advocate practising in Belgrade. 2. The Croatian Government (“the Government”) were represented by their Agent, Ms Š. Stažnik. The Government of Serbia, having been informed of their right to intervene (Article 36 § 1 of the Convention and Rule 44 § 1 (a) of the Rules of Court), did not avail themselves of this right. 3. The facts of the case, as submitted by the parties, may be summarised as follows. 4. The legal system of the former Socialist Federal Republic of Yugoslavia (SFRY) distinguished between two types of ownership: private ownership (privatno vlasništvo) and social ownership (društveno vlasništvo). While owners of property in private ownership were private individuals (natural persons) and some private legal entities called “civil legal entities” (građanske pravne osobe) such as foundations, associations and religious communities, the owner of property in social ownership was not defined. Nevertheless, the federal State, the constituent Republics, municipalities being local government units and other various legal entities called “social legal entities” (društvene pravne osobe), among which the most important ones were companies, known at the time as “organisations of associated labour” (organizacije udruženog rada) and later on as “socially owned companies” (društvena poduzeća), were during the socialist period given certain quasi-ownership rights over property in social ownership, such as the right to use it (pravo korištenja), the right to administer it (pravo upravljanja) or the right to dispose of it (pravo raspolaganja). 5. The applicant company was established in 1978 in Belgrade as an “organisation of associated labour”. On 30 April 1991 it transformed itself under Serbian law into a commercial (joint stock) company whose shareholders were all private individuals. 6. The applicant company claimed that during the socialist period it had held a quasi-ownership right over eleven plots of land in social ownership (društveno vlasništvo) located in Tisno (Croatia), namely the right of use (pravo korištenja) of that land. At the time, the plots in question had formed the “Beograd” Children and Youth Resort operated by the applicant company. 7. On 8 October 1991 Croatia declared independence and severed all ties with the Socialist Federal Republic of Yugoslavia (hereafter “the SFRY”). 8. By a number of decrees adopted in the period between 17 July and 1 October 1991 the Government of Croatia prohibited companies or other legal entities with their seat in other republics of the former SFRY from undertaking any transactions involving assets (including immovable property) located in Croatia. 9. By Government of Croatia decree of 26 June 1992, which entered into force on the same day, all such assets of legal entities with their seats in Serbia or Montenegro were transferred to the State (see paragraph 23 below). 10. Relying on subsequent legislation that entered into force on 19 April 1994 (see paragraph 24 below), the Šibenik Municipal Court (Općinski sud u Šibeniku) on 8 June 1994 recorded in the land register the State as the owner of the plots of land at issue. 11. With the entry into force on 1 January 1997 of the Property Act, holders of existing quasi-ownership rights over socially-owned property (the rights to administer, use and dispose of it) ex lege became its owners (see paragraph 25 below). This did not apply to such rights which had been extinguished before that date, primarily by virtue of earlier legislative acts whereby social ownership of certain types of property (such as flats, agricultural land and sports facilities) was transformed into private ownership. 12. By a gift contract of 18 April 2001 the State transferred ownership of the land in question to the V.K. elementary school (hereafter “the elementary school”). On the basis of that contract, on 31 May 2002 the Šibenik Municipal Court registered the school as the owner of the land. 13. On 2 June 2004 the Agreement on Succession Issues between the successor States to the SFRY (hereafter “the Succession Agreement”) entered into force (see paragraph 26 below, and, for further details, Ališić and Others v. Bosnia and Herzegovina, Croatia, Serbia, Slovenia and the former Yugoslav Republic of Macedonia [GC], no. 60642/08, §§ 61-67, ECHR 2014). Annex G to the Agreement deals with private property and acquired rights. Article 2 § 1 of Annex G provides that successor States will recognise, protect and restore the rights to immovable property located on their territory to which citizens or other legal entities of the SFRY were entitled on 31 December 1990, and that anyone who is unable to enjoy such rights will be entitled to compensation. It also provides that any purported transfer of rights to immovable property made after 31 December 1990 will be deemed null and void (see paragraph 27 below). 14. Following an application by the relevant land-survey (geodetic) authorities of 21 November 2005, the Šibenik Municipal Court, by a decision of 22 February 2007, joined the eleven plots of land in question to form a single cadastral plot and recorded the change in the land register. 15. In 2007 the applicant company brought a civil action against the State and the elementary school (see paragraph 12 above) in the Šibenik Municipal Court, seeking restitution of the land in question. In particular, since all existing rights of use had been abolished and transformed into rights of ownership (see paragraph 11 above and paragraph 25 below), the applicant company sought to be declared the owner of the land. In the alternative, the company sought 4,000,000 euros (EUR) in compensation. It relied on Article 2 § 1 of Annex G to the Succession Agreement (see paragraph 12 above and paragraphs 26-27 below). 16. By a judgment of 30 September 2009 the Municipal Court dismissed the applicant company’s action. It found that during the socialist period the applicant company had held the right of use only in respect of one of the eleven plots of land which at the time had formed the “Beograd” Children and Youth Resort (see paragraph 6 above). During the socialist period the right of use in respect of the remaining plots had belonged to the Municipality of Belgrade (nine plots) and to the Belgrade Scouts Association (one plot). When the company had instituted civil proceedings in 2007, that plot had no longer existed as it had been joined to the remaining ten plots to form a single cadastral plot (see paragraph 14 above). This meant that the applicant company’s action had to be dismissed because it had been brought in respect of an inexistent item of property. 17. The applicant company appealed, arguing that during the socialist period the Municipality of Belgrade and the Belgrade Scouts Association had transferred to it the right of use in respect of the ten plots of land. It provided some documentary evidence to that effect. In any event, it was evident that the applicant company had operated and used the resort in the period before 1990 for more than ten years and thereby, under the legislation in force at the time, had acquired the right of use in respect of those ten plots by the operation of law. As regards the remaining plot in respect of which the Municipal Court had acknowledged that it had had the right of use, the applicant company argued that its civil action should not have been dismissed just because that plot had been joined with the remaining ten to form a single plot of land. 18. On 28 February 2011 the Šibenik County Court (Županijski sud u Šibeniku) dismissed the applicant company’s appeal and upheld the firstinstance judgment. It held that the applicant company had not provided sufficient evidence to overturn the Municipal Court’s finding that the company had not held the right of use in respect of the ten plots of land. The County Court, however, agreed with the applicant company’s argument that its civil action regarding the remaining plot of land should not have been dismissed on the grounds stated by the Municipal Court. Nonetheless, the applicant company’s action had to be dismissed because the State had lawfully become the owner of that plot on the basis of the decree of 26 June 1992 and the legislation of 19 April 1994 (see paragraphs 9-10 above and 2122 below). The applicant company’s right of use had thereby been extinguished and thus could not have been transformed into a right of ownership on the basis of the transitional provisions of the 1996 Property Act, which had entered into force on 1 January 1997 (see paragraphs 11 above and 25 below). Lastly, the applicant company could not have relied on Annex G of the Succession Agreement either, because that agreement was not directly applicable. 19. By a judgment of 16 January 2013 the Supreme Court (Vrhovni sud Republike Hrvatske) dismissed a subsequent appeal on points of law (revizija) lodged by the applicant company. The relevant part of that judgment reads as follows: “Pursuant to section 362(1) of the Property Act the owner of a socially-owned immovable property is the [legal entity] recorded in the land register as the holder of the right to administer, use or dispose of that immovable property. However, this statutory presumption does not operate in favour of the plaintiff. The plaintiff’s right of use ... could not have been transformed into a right of ownership with the entry into force of the Property Act (1 January 1997) because the plaintiff had already lost the right of use before that, on the basis of section 3(1) of the [Government] Decree [of 26 June 1992]. ... In the light of the foregoing, the right of use ... was extinguished and was transformed into a right of ownership of the first defendant [i.e. the State] before the entry into force of the Property Act. Lastly, as regards the application of Annex G to the Succession Agreement, on which the plaintiff relies, its provisions do not entitle the plaintiff to seek from the [first] defendant recognition of its [i.e the plaintiff’s] right of ownership, ... deletion of the [second] defendant’s right of ownership or [to make] further claims under the law of obligations [i.e. to seek compensation]. ... The plaintiff did not acquire the right of ownership on the basis of the Succession Agreement itself because that right still needs to be recognised. This clearly follows from the last sentence of Article 2 § 1 subparagraph (a) of Annex G which reads: ‘Persons unable to realise such rights shall be entitled to compensation in accordance with civil and international legal norms.’ Therefore, the plaintiff’s right of ownership still has to be recognised, whereupon the competent authority should decide either to return the property or to recognise the right to compensation. In this connection it should be mentioned that under section 3(1) of the Succession Agreement Ratification Act, its implementation is within the jurisdiction of the State authorities citied therein and not of the courts.” 20. The applicant company then lodged a constitutional complaint against the Supreme Court’s judgment. It relied on Articles 48 and 50 of the Croatian Constitution (see paragraph 22 below) and on Article 1 of Protocol No. 1 to the Convention. 21. By a decision of 14 May 2014 the Constitutional Court (Ustavni sud Republike Hrvatske) declared inadmissible the applicant company’s constitutional complaint. It held that the case did not raise any constitutional issues. 22. The relevant Articles of the Constitution of the Republic of Croatia (Ustav Republike Hrvatske, Official Gazette no. 56/90, with subsequent amendments) read: “The right of ownership shall be guaranteed. Ownership entails obligations. Owners and users of property shall contribute to the general welfare.” “1. Ownership may be restricted or taken in accordance with the law and in the interests of the Republic of Croatia, subject to the payment of compensation equal to the market value. 2. Entrepreneurial freedom and ownership rights may, on an exceptional basis, be restricted by law for the protection of the interests and security of the Republic of Croatia, nature, the environment or public health.” “International agreements in force which have been concluded and ratified in accordance with the Constitution and made public shall be part of the internal legal order of the Republic of Croatia and shall have precedence over the [domestic] statutes. ...” 23. The relevant provision of the Government Decree of 26 June 1992 prohibiting transactions with, and taking over assets of, certain legal entities on the territory of Croatia (Uredba o zabrani raspolaganja i preuzimanja sredstava određenih pravnih osoba na teritoriju Republike Hrvatske, Official Gazette no. 40/92 with subsequent amendments), reads as follows: “The assets of business units and other organisational forms of legal entities with their seat in the territory of Serbia or Montenegro and the autonomous provinces of Kosovo and Vojvodina ... are [hereby] transferred to the Republic of Croatia.” 24. On 24 March 1994 Croatian Parliament passed legislation with the same name (Zakon o zabrani raspolaganja i preuzimanju sredstava određenih pravnih osoba na teritoriju Republike Hrvatske, Official Gazette no. 29/94). The relevant provision of that Act reads as follows: “The courts shall of their own motion record [in the land register] the immovable property of which the Republic of Croatia became the owner on the basis of section 3(1) of the [Government] Decree [of 26 June 1992].” 25. The relevant transitional provisions of the Ownership and Other Rights in Rem Act (Zakon o vlasništvu i drugim stvarnim pravima, Official Gazette no. 91/96 with subsequent amendments – “the 1996 Property Act”), in force since 1 January 1997, are set out in the case of Trgo v. Croatia, no. 35298/04, § 28, 11 June 2009. 26. The relevant articles of the Agreement on Succession Issues between the successor States to the SFRY read as follows: “(1) A Standing Joint Committee of senior representatives of each successor State, who may be assisted by experts, is hereby established. (2) This Committee shall have as its principal tasks the monitoring of the effective implementation of this Agreement and serving as a forum in which issues arising in the course of its implementation may be discussed. The Committee may as necessary make appropriate recommendations to the Governments of the successor States. ...” “(1) Differences which may arise over the interpretation and application of this Agreement shall, in the first place, be resolved in discussion among the States concerned. (2) If the differences cannot be resolved in such discussions within one month of the first communication in the discussion the States concerned shall either (a) refer the matter to an independent person of their choice, with a view to obtaining a speedy and authoritative determination of the matter which shall be respected and which may, as appropriate, indicate specific time-limits for actions to be taken; or (b) refer the matter to the Standing Joint Committee established by Article 4 of this Agreement for resolution. (3) Differences which may arise in practice over the interpretation of the terms used in this Agreement or in any subsequent agreement called for in implementation of the Annexes to this Agreement may, additionally, be referred at the initiative of any State concerned to binding expert solution, conducted by a single expert (who shall not be a national of any party to this Agreement) to be appointed by agreement between the parties in dispute or, in the absence of agreement, by the President of the Court of Conciliation and Arbitration within the OSCE. The expert shall determine all questions of procedure, after consulting the parties seeking such expert solution if the expert considers it appropriate to do so, with the firm intention of securing a speedy and effective resolution of the difference. (4) The procedure provided for in paragraph (3) of this Article shall be strictly limited to the interpretation of terms used in the agreements in question and shall in no circumstances permit the expert to determine the practical application of any of those agreements. In particular the procedure referred to shall not apply to (a) The Appendix to this Agreement; (b) Articles 1, 3 and 4 of Annex B; (c) Articles 4 and 5(1) of Annex C; (d) Article 6 of Annex D. (5) Nothing in the preceding paragraphs of this Article shall affect the rights or obligations of the Parties to the present Agreement under any provision in force binding them with regard to the settlement of disputes.” “The Annexes to this Agreement and the Appendices to the Agreement and Annexes are an integral part of the Agreement.” “This Agreement, together with any subsequent agreements called for in implementation of the Annexes to this Agreement, finally settles the mutual rights and obligations of the successor States in respect of succession issues covered by this Agreement. The fact that it does not deal with certain other non-succession matters is without prejudice to the rights and obligations of the States parties to this Agreement in relation to those other matters.” “Each successor State, on the basis of reciprocity, shall take the necessary measures in accordance with its internal law to ensure that the provisions of this Agreement are recognised and effective in its courts, administrative tribunals and agencies, and that the other successor States and their nationals have access to those courts, tribunals and agencies to secure the implementation of this Agreement.” “This Agreement shall be implemented by the successor States in good faith in conformity with the Charter of the United Nations and in accordance with international law.” 27. The relevant Articles of Annex G to the Succession Agreement read as follows: “Private property and acquired rights of citizens and other legal persons of the SFRY shall be protected by successor States in accordance with the provisions of this Annex.” (1) (a) The rights to movable and immovable property located in a successor State and to which citizens or other legal persons of the SFRY were entitled on 31 December 1990 shall be recognised, and protected and restored by that State in accordance with established standards and norms of international law and irrespective of the nationality, citizenship, residence or domicile of those persons. This shall include persons who, after 31 December 1990, acquired the citizenship of or established domicile or residence in, a State other than a successor State. Persons unable to realize such rights shall be entitled to compensation in accordance with civil and international legal norms. (b) Any purported transfer of rights to movable or immovable property made after 31 December 1990 and concluded under duress or contrary to sub-paragraph (a) of this Article shall be null and void. ...” “The successor States shall take such action as may be required by general principles of law and otherwise appropriate to ensure the effective application of the principles set out in this Annex, such as concluding bilateral agreements and notifying their courts and other competent authorities.” 28. Section 3(1) of the Succession Agreement Ratification Act (Zakon o potvrđivanju Ugovora o pitanjima sukcesije, Official Gazette – International Agreements no. 2/04) entrusts its implementation to the Ministry of Finance, the Croatian National Bank, the Ministry of Foreign Affairs, the Ministry of Defence, the Ministry of Health and Social Welfare, the Ministry of Justice, the Ministry of Culture, the State Archive and other State authorities responsible for the issues covered by the Agreement. 29. At the meetings of the Standing Joint Committee, established under Article 4 of the Succession Agreement (see paragraph 23 above) held on 1718 September 2009 and 11-12 November 2015, the committee adopted recommendations concerning, inter alia, Annex G to the Agreement. The committee noted that the application of the provisions of Annex G was not efficient enough, and recommended that the interested successor States conclude bilateral agreements for the purpose of the efficient implementation of those provisions. It also advised them to refrain from passing any legislation or undertaking any steps contrary to the provisions of Annex G, and to adopt, should they deem it necessary, measures intended to enable the effective application of Annex G standards. 30. In decision no. U-I-1777/2003 of 17 March 2009 the Constitutional Court held as follows: “... The Constitutional Court notes that the entry into force of the [Succession] Agreement did not remove the legal effects associated with taking over the assets of certain legal entities on the territory of Croatia produced by the entry into force of the [Government of Croatia] Decree [of 26 June 1992] ... nor did the Contracting Parties by that Agreement explicitly undertake to return those assets. They only established the principle of equal protection of the property of natural [persons] and legal [entities] with the nationality of, or their seat in, the territory of the other Contracting party [thereby granting them the same level of protection] as the one enjoyed by their nationals and legal entities. The said Agreement merely constitutes a basis for the conclusion of further agreements between the Contracting Parties with a view to regulating the procedure for exercising the right to compensation for damaged, destroyed or lost property, but is not an instrument suitable for direct application in each particular case. ... The Constitutional Court ... reiterates that Annex G stipulates only the fundamental principles underlying the succession issues related to private property and acquired rights of citizens and other legal entities. This undoubtedly stems from Article 4 of Annex G, which stipulates that the successor States should take such measures as may be required by general principles of law and otherwise appropriate to ensure the effective application of the principles set out in that Annex, such as concluding bilateral agreements and notifying their courts and other competent authorities. ... [these] measures entail the adoption of appropriate legislation and subordinate legislation, concluding international agreements and the like. In so doing, all the successor States are obliged to implement the Agreement in good faith, in accordance with the UN Charter and international law.”