LOHUIS AND OTHERS v. THE NETHERLANDS
Inadmissible
Alvina Gyulumyan;Corneliu Bîrsan;Ján Šikuta;Johannes Silvis;Josep Casadevall;Luis López Guerra;Nona Tsotsoria
1. The applicants are Netherlands nationals resident in the Netherlands. They are represented by Mr A.B. Lever, a lawyer practising in Apeldoorn. A list of the applicants is set out in the appendix. 3. From the 1980s onwards the Netherlands, in common with other European Union countries, introduced measures aimed at limiting the quantity of dung, or faecal matter, produced by certain animals including pigs. This initially involved a system of “dung production quotas”. 4. On 1 September 1998 the Pig Farming Restructuring Act (Wet herstructurering varkenshouderij) entered into force. 5. The Pig Farming Restructuring Act, according to its preamble, was enacted with a view to implementing European Union Council Directive 91/676/EEC concerning the protection of waters against pollution caused by nitrates from agricultural sources, and also in order to preserve amenity, the quality of the environment and the health and well-being of animals. 6. The Pig Farming Restructuring Act transformed “dung production quotas” into a maximum number of pigs per farm – the so-called “pig entitlement” (varkensrecht). Pig entitlements (except in so far as they concerned breeding sows, which were treated as a special category) were transferable, within certain (especially territorial) limits (sections 16-17 of the Pig Farming Restructuring Act) and subject to the lapse of a variable proportion of the entitlement upon transfer (section 18 of the Pig Farming Restructuring Act); they could not, however, be used as collateral (section 22). 7. The pig entitlement was calculated in each case by reducing the average number of pigs held on the farm in 1996 or, in certain cases, 1995 by 10% (sections 6 and 7 of the Pig Farming Restructuring Act). A further reduction by 15% was foreseen with effect from 1 January 2000 (section 31 of the Pig Farming Restructuring Act). It was the actual number of pigs kept in those years that was decisive; any “latent capacity” (latente ruimte), that is the difference between the number of pigs a farmer would have been allowed to keep at the relevant time and the number actually kept, was lost. 8. Provision for special cases of hardship was made in the Pig Farming Restructuring (Hardship) Decree (Besluit hardheidsgevallen herstructurering varkenshouderij); such cases included, among others, farms which – as determined by precise formulae – had, for specific reasons (a farmer’s ill-health not among them), been working significantly below the capacity allowed them in 1995 and 1996 by the dung production quota legislation then in force. 9. The Pig Farming Restructuring Act and the Pig Farming Restructuring (Hardship) Decree were repealed with effect from 1 January 2006. 10. The applicants are, or were at the relevant time, pig farmers resident and farming in the Netherlands. 11. The applicants Lohuis and Lohuis-Voshaar, who ran a farm as a partnership (maatschap), were farming at considerably less than full capacity in 1995 and 1996 owing to ill-health. They ended up losing over 30% of their original pig entitlements as “latent capacity”, in addition to the 25% total reduction prescribed by the Pig Farming Restructuring Act. They have since given up farming. 12. The applicant Van Gerwe farmed at two locations, on one of which he was building a new pig shed in 1995; farming began there in 1996. Thanks to a clause beneficial to him in the Pig Farming Restructuring (Hardship) Decree he lost only 5% of his entitlements for that location as “latent capacity”. For the other location he lost the full 25%. 13. The applicant Schutte lost the full 25% of his 1995-1996 entitlement plus 5% as “latent capacity”. He also stated that he had run into financial difficulties as a result of the uncertainty facing pig farming in the late 1990s, which had forced him to sell off some of his land and purchase pig entitlements from elsewhere. 14. The applicant Van den Heuvel lost the full 25% of his former entitlements, plus a claimed 30% as “latent capacity”. 15. On 26 June 1998 the applicants, together with other pig farmers and a non-governmental organisation set up to further the interests of pig farmers (hereafter “the original plaintiffs”), brought a civil action in tort against the State before the Regional Court (arrondissementsrechtbank) of The Hague, arguing among other things that the new legislation constituted a “deprivation of possessions” within the meaning of Article 1 of Protocol No. 1. 16. On 23 December 1998 the Regional Court gave judgment holding, as relevant to the case, that pig entitlements constituted “possessions”, and that depriving the applicants thereof without any compensation constituted a tort as long as adequate arrangements for compensation were not made. The Pig Farming Restructuring (Hardship) Decree was not sufficient to mend matters since it could merely limit the damage, not compensate for it. 17. The State appealed to the Court of Appeal (gerechtshof) of The Hague. The original plaintiffs lodged a cross-appeal. 18. On 20 January 2000 the Court of Appeal gave judgment holding that the measures complained of constituted not a “deprivation” of possessions but a “control” of their use. It accepted the necessity of measures to be taken, and also the proportionality of the first reduction of the pig entitlements by 10%. The second reduction by an additional 15%, however, it found disproportionate. It therefore held that section 31 of the Pig Farming Restructuring Act should not be put into effect as regards the original plaintiffs, dismissing their claims for the remainder. 19. A number of the original plaintiffs, including the applicants, lodged an appeal on points of law to the Supreme Court (Hoge Raad). The State lodged a cross-appeal. 20. On 16 November 2001 the Supreme Court delivered a judgment (LJN (Landelijk Jurisprudentie Nummer, National Jurisprudence Number) AD5493) quashing the judgment of the Court of Appeal. As relevant to the case before the Court, it found that Article 1 of Protocol No. 1 was applicable and that there had been an interference with the applicants’ right to the peaceful enjoyment of their possessions. However, there was no “de facto expropriation” as the applicants argued. On this point, the Supreme Court held as follows: “6.1.3. According to the case-law of [the European Court of Human Rights], in cases where there is no formal expropriation there is a deprivation within the meaning of the second sentence of Article 1 of Protocol No. 1 if it concerns a ‘de facto expropriation’ (see Sporrong and Lönnroth v. Sweden, 23 September 1982, § 63, Series A no. 52, Nederlandse Jurisprudentie (Netherlands Law Reports, NJ) 1988, no. 290, and Fredin v. Sweden (no. 1), 18 February 1991, § 42, Series A no. 192). According to the case-law of [the European Court of Human Rights] cited in the advisory opinion of the Acting Procurator General ... it is, in the case of a (partial) withdrawal of a licence, or of a restriction of a different kind of the rights flowing from the licence, not the licence itself that constitutes the nexus (aanknopingspunt) for the protection of property, but the enterprise exploited with that licence. In line with this, whenever – as in the cases in issue in the present proceedings – the contested Government measure purports to restrict certain enterprise activities (bedrijfsactiviteiten) in pursuance of goals such as those pursued by the quota arrangement of the Pig Farming Restructuring Act (...), then in answering the question whether that measure constitutes a ‘de facto expropriation’ the effects of that measure on the affected enterprise as a whole must be examined (...). The circumstance that the legislative arrangements (regelingen) involved provide for (limited) transferability of dung production quotas and pig entitlements does not deprive these legislative arrangements of the character of a restriction imposed on the exploitation of the enterprise (aan de bedrijfsvoering opgelegde beperking).” The Supreme Court went on to hold that the new legislation constituted a “control of use” of the applicants’ possessions. The legislature had not, in principle, overstepped its “margin of appreciation”. It had to be recognised, however, that the interests of the individual pig farmers among the plaintiffs deserved protection: in particular, a “fair balance” had to be found in each case, implying a “reasonable relationship of proportionality between the means employed and the aim sought to be realised”. The case was remitted to a different Court of Appeal, that of Arnhem, which would have to review the individual cases of the pig farmers party to the proceedings. The instruction to the Arnhem Court of Appeal was phrased as follows: “7.3 It follows [from the above] that the second paragraph of Article 1 of Protocol No. 1 does not, in principle, constitute a basis for not applying the Pig Farming Restructuring Act in respect of those pig farmers who have been affected by the impugned measures only as concerns dung production quotas or pig entitlements allotted them by law and which they have not acquired for a consideration in any other way. However, after remittal it will have to be examined whether the impugned measures under the Pig Farming Restructuring Act constitute an ‘individual and excessive burden’ for one or more of the [individual] appellants [i.e. not including the non-governmental organisation aforementioned] owing to specific facts and circumstances not applicable to all pig farmers, and whether the relevant provisions of the Pig Farming Restructuring Act should not be left unimplemented in their respect, at least as long as no provision is made for adequate financial compensation. This may be the case, in particular – but not exclusively –, if a pig farmer’s dung production quota or pig entitlement, obtained for a consideration, is affected, it being of particular importance to what extent the State has created expectations finding their expression in, for example, the price for which the rights in issue were obtained. As mentioned, such problems have been provided for in part by the Pig Farming Restructuring (Hardship) Decree. The [individual] appellants have however stated that this Decree does not apply to them. 7.4. In so doing it will be possible also to take into consideration facts and developments in the field of legislation that have occurred subsequent to the judgment of the Court of Appeal. After remittal the parties will be able to expand and adapt their positions accordingly.” 21. The applicants lodged an application with the Court on 13 May 2002, complaining that the new legislation did not constitute a “control of the use of property” within the meaning of Article 1 of Protocol No. 1 but a “deprivation of possessions” without any form of compensation. 22. On 8 April 2004 the Court, sitting as a Committee of three judges (former Article 27 § 1 of the Convention), declared that application (no. 18689/02) inadmissible. It found that domestic remedies had not been exhausted as required by Article 35 § 1 of the Convention, since, after the case had been remitted by the Supreme Court to the Court of Appeal of Arnhem, the proceedings had not yet been pursued to a final decision. 23. After the Court’s decision of inadmissibility, proceedings were resumed in the Court of Appeal of Arnhem on the basis of the Supreme Court’s remittal judgment of 16 November 2001. 24. The Arnhem Court of Appeal gave an interlocutory judgment on 29 August 2006. It found, as relevant to the case before the Court, that both the Court of Appeal of The Hague and the Supreme Court had dismissed the suggestion that the applicants’ pig entitlements were “possessions” within the meaning of Article 1 of Protocol No. 1 of which they had been deprived. Referring to the judgment of a Chamber of this Court (J.A. Pye (Oxford) Ltd v. the United Kingdom, no. 44302/02, § 46, 15 November 2005), it held that it had nonetheless to consider whether a “reasonable relationship of proportionality” existed regardless of whether the interference with the applicants’ rights was to be seen as a “deprivation” of possessions or as “control” of their use. 25. Faced with the need to consider the applicants’ cases individually, it came to the provisional conclusion that the applicant Lohuis had been disproportionately affected. He had lost no less than 34% of his pre-existing rights, his “latent capacity”, in addition to the 25% total reduction under the Pig Farming Restructuring Act; this had rendered an investment in a new pig shed made in 1993, worth 60,000 Netherlands guilders (NLG), useless. In the case of the applicant Van den Heuvel there was a dispute as to the actual extent and value of the “latent capacity” actually lost. The claims of the applicants Schutte and Van Gerwe, whose loss of “latent capacity” was minimal, would have to be dismissed in their entirety. The proceedings were adjourned so that the loss suffered by the applicants Lohuis and Van den Heuvel could be established. 26. In a second interlocutory judgment, delivered on 3 July 2007, the Arnhem Court of Appeal found it established that the applicant Lohuis had suffered a disproportionate loss in that he had lost his 34% “latent capacity”, for which he had received no compensation. It also found it established that the applicant Van den Heuvel had lost “latent capacity” in an amount of 25% of his former entitlement. However, he had obtained this “latent capacity” by taking over dung production quotas attached to land which he had purchased; hereafter, the discussion centred on whether he had paid a consideration for these quotas or not. It adjourned the proceedings to hear any witnesses brought forward by the parties and obtain a report by an expert. 27. The Arnhem Court of Appeal delivered its final judgment on 17 November 2009, after having heard witnesses and taken cognisance of a report by an expert. It found that the applicant Van den Heuvel had lost “latent capacity” in an amount of 25%, but had been able largely to set off his loss against capacity tied to the land which he had purchased. With respect to the 25% reduction provided for by the Pig Farming Restructuring Act, he was affected no worse than any other pig farmer; he could therefore not be said to have been made to bear an “individual and excessive burden”. 28. The Arnhem Court of Appeal quashed the judgment of the Regional Court. It held that the State had committed a tort in respect of the applicants Lohuis and Lohuis-Voshaar and was therefore liable for any damage thereby caused, the amount of which would need to be assessed and settled in due course. It dismissed the other applicants’ appeals. 29. The State lodged an appeal on points of law against the Court of Appeal’s judgment. 30. The applicants Lohuis and Lohuis-Voshaar lodged a cross-appeal. The other applicants did not, having been advised by counsel that an appeal lodged by them had no prospects of success. 31. The applicants Lohuis and Lohuis-Voshaar argued that the Court of Appeal ought, on reflection, to have given favourable consideration to their argument that they had suffered a “deprivation of possessions” within the meaning of Article 1 of Protocol No. 1. 32. The Supreme Court gave judgment on 2 September 2011. It dismissed the State’s appeal and the cross-appeal by the applicants Lohuis and Lohuis-Voshaar in their entirety. In dismissing the latter, it referred to its own judgment of 16 November 2001, which was binding on the Court of Appeal. 33. The Netherlands Civil Code (Burgerlijk Wetboek) defines “property” (goederen) as “all things and all other proprietary rights (vermogensrechten)” (Article 3:1). “Proprietary rights” within the meaning of that Article are “rights which, either separately or together with another right, are transferable, or which purport to give the person entitled (rechthebbende) material benefit, or which are obtained in exchange for present or future material benefit” (Article 3:6). Article 3:228 provides that all transferable property can be encumbered (i.e. as collateral) with a pledge (pandrecht) or a mortgage (hypotheek).