CASE OF YANAKIEV v. BULGARIA
Violation of Article 6 - Right to a fair trial (Article 6 - Administrative proceedings;Article 6-1 - Access to court;Civil rights and obligations;Determination (civil));Pecuniary and non-pecuniary damage - award (Article 41 - Non-pecuniary damage;Pecuniary damage;Just satisfaction)
Peer Lorenzen
9. By an order of 13 October 1983 the applicant was settled as a tenant, together with his family, in a flat which the State had assigned in 1980 for “use and management” to the State enterprise by which he was employed. He moved in the flat in 1986. 10. In a decision of 20 September 1991 the Council of Ministers transformed the enterprise employing the applicant into a Stateowned singlemember limited liability company. On 28 January 1992 the Varna Regional Court ordered the entry of the newly formed company into the register of companies. In a decision of 5 August 1992 the Minister of Industry, acting as a representative of the sole shareholder – the State – transformed the company into a Stateowned singleshareholder jointstock company. The transformation was entered into the register of companies kept at the Varna Regional Court on 15 September 1992. 11. In late 1992, after the entry into force, on 3 August 1992, of certain amendments to the Act to Settle the Housing Problems of LongStanding Home Purchase Savings Depositors of 1991 („Закон за уреждане на жилищните въпроси на граждани с многогодишни жилищноспестовни влогове“ – “the Housing Act of 1991” – see paragraphs 2427 below), the applicant applied to purchase the flat. He considered that paragraph 4 of the additional provisions of the Act entitled him to buy the flat at a preferential price. It appears that many of his colleagues had purchased the flats they were renting from their employer under this provision. On 28 December 1992 the board of directors of the applicant’s employer assented to the sale. 12. On 4 January 1993 the applicant requested the mayor of Varna to approve the sale, enclosing declarations and documents purporting to establish that he met all the conditions laid down in section 2 of the Act (see paragraph 27 below). In addition, he submitted a letter from his employer’s board of directors, in which it informed the mayor that it had assented to the sale and asked him to validate it. The letter expressly mentioned that the sale was to be effected under paragraph 4 of the additional provisions of the Housing Act of 1991, and indicated the company’s bank account to which the municipality was to transfer the sale proceeds once the applicant had made the payment. 13. The mayor failed to reply and on an unspecified date in 1993 the applicant filed with the Varna Regional Court an application for judicial review of his tacit refusal. 14. In a judgment dated 30 November 1994 and entered in the court’s register on 5 December 1994, the Varna Regional Court quashed the refusal and instructed the mayor to issue, within one month, an order validating the sale. It held as follows: “According to section 111 of the [State Property Regulations of 1975 („Наредба за държавните имоти“ – see paragraphs 3336 below)], the sale of State-entityowned [„ведомствени“] housing units is effected by the municipal councils under the conditions laid down in section 111(4) of the [Regulations], that is, pursuant to a proposal by the respective State entity, indicating the buyer. In such case, under section 120 of the [Regulations], the municipal council effects the sale on the basis of an order issued by it. The text of section 120 of the [Regulations] is categorical on the point that, provided all conditions for execution of the transaction have been met, the municipal council has no discretion whether or not to do so, but must issue the respective order. Such an order undoubtedly constitutes an individual administrative decision and is, like the tacit refusal to issue it, subject to review under the [Administrative Procedure Act of 1979 („Закон за административното производство“ – “the APA” – see paragraph 41 below)]. The facts of the case indicate beyond doubt that the applicant was a tenant in the flat [in issue] on the basis of a[n] ... order ... of 13 October 1983. As such, he has the right to buy it according to the procedure laid down in the [Regulations]. It is also beyond doubt that this flat is the property of [the applicant’s employer]. In a decision of [28 December 1992] the board of directors of the [applicant’s employer] allowed the applicant to purchase the State-entity-owned housing unit he was living in. In execution of this decision [the applicant’s employer] addressed a request to the chairperson of the Executive Committee of the Varna Municipal Council [i.e. the mayor – see paragraph 35 below], in which it had also indicated the buyer. Thus, all requirements of section 111 of the [Regulations] were complied with. In view of this state of affairs the Municipal Council should have discharged its duty under section 120 of the [Regulations], finalising in due form the consent already achieved between the parties and issuing the respective order. The Municipal Council is in effect not a party to the sale agreement. The parties are the State entityowner [of the flat] and the tenant. The Municipal Council acts as an administrative authority which only approves the already concluded contract. The tacit refusal to do so was unlawful.” 15. The mayor refused to comply and on 3 February 1995 submitted a petition for review (see paragraphs 4345 below) to the Supreme Court, arguing that such an order – or the refusal to issue it – was not an individual administrative decision and was hence not subject to judicial review under the APA. 16. The applicant filed a counterpleading, arguing, inter alia, that the dispute did not concern an ordinary sale of a Stateowned housing unit but a sale of a housing unit subject to the special provisions of paragraph 4 of the additional provisions of the Housing Act of 1991. The mayor’s role was thus not that of a contracting party, as it would have been in the general case, but that of a supervising administrative authority. Once the prerequisites for effecting the sale had been met, the mayor had no discretion but to approve it. He or she could refuse to do so only if the applicant did not meet the conditions laid down by the Act. 17. The Supreme Court held a hearing on 7 October 1996. The applicant’s counsel argued that the mayor’s petition for review had been submitted out of time. The participating prosecutor also maintained that the petition was untimely and stated that the mayor should be allowed to present evidence to prove when the Varna Regional Court’s judgment had been entered in the register. The merits of the case were not pleaded during the hearing. 18. On 9 October 1996 the Supreme Court sent a letter to the Varna Regional Court, enquiring about the date on which the latter’s judgment had been entered in the court’s register. The Varna Regional Court replied that its judgment had been entered on 5 December 1994. 19. In December 1996 the Supreme Court was divided into a Supreme Court of Cassation and a Supreme Administrative Court. The newly formed Supreme Administrative Court took over cases, such as the applicant’s, in which petitions for review in administrative proceedings had been pending before the former Supreme Court. 20. A threemember panel of the Supreme Administrative Court gave judgment on 14 January 1997. It held that the petition for review had been submitted within the two-month statutory time-limit and was thus admissible and continued: “... The petition for review is well-founded. In the judgment under review the Varna Regional Court quashed the tacit refusal of the mayor ... of Varna to enter into a contract for the sale of a Stateentityowned housing unit ... to its tenant... The mayor’s decisions to enter into contracts for the sale of Stateowned housing units under the State Property Regulations [of 1975] or the refusals to do so, including where the housing units have been given, for management, to ministries, other State entities, State commercial enterprises and institutions, are not administrative decisions within the meaning of section 2 of the [APA]. These decisions precede the execution of the bilateral transaction for transferring title to the respective property from the State to the individual purchaser and denote the assent of the mayor ... to the future execution of such a deal. [The mayor] does not, however, act as an administrative authority; he is placed on equal footing with the private individual contracting with him. For this reason his acts in such cases fall out of the ambit of the [APA] and are not subject to review under it. ... Moreover, in view of the terms of section 117 of the State Property Regulations [of 1975], it could not be accepted that the municipalities are bound to sell Stateentityowned housing units to the tenants settled therein. This provision sets out only the manner in which these housing units are sold and the persons who are entitled to purchase them in the event of a decision to that effect by the competent body. There is no legal obligation for the mayor to approve the sale of a Stateentityowned flat. This lack of a legal duty excludes administrative or judicial review under the [APA]. ... In examining the application [for judicial review] the [Varna] Regional Court overstepped its jurisdiction. Its judgment therefore is to be quashed, the application is to be left without examination, and the proceedings are to be discontinued. ...” 21. On 24 February 1997 the applicant filed a petition for review, expounding all his arguments, including those relating to the merits of the case. Later he filed additional observations. A hearing was held on 19 June 1997, at which the applicant’s counsel argued the case and made reference to his earlier written pleadings. 22. On 10 July 1997 a fivemember panel of the Supreme Administrative Court found the applicant’s petition timely, but dismissed it in the following terms: “The threemember panel’s judgment is wellfounded. The proceedings before the Varna Regional Court related to the refusal of the mayor of Varna to enter into a contract for the sale of a Stateentityowned housing unit. The holding that the decisions to enter into a contract for the sale of State-owned housing units in the manner prescribed in the State Property Regulations [of 1975] or the refusals to do so, including where [such housing units] have been assigned to State entities, as in the case at hand, are not individual administrative decisions within the meaning of section 2 of the APA is correct. [These decisions] precede the execution of a bilateral transaction transferring title to the property from the State to the [individual], and denote the assent of the mayor ... to the future execution of this transaction. [The mayor] does not act as an administrative authority; he is placed on an equal footing vis-à-vis the private person. Therefore, his acts in such cases are not encompassed by the [APA]. Acts which relate to civillaw relations, where the administrative authority and the [person concerned] are on an equal footing, are not individual administrative decisions within the meaning of the APA. The threemember panel correctly found that in view of section 117 et seq. of the State Property Regulations [of 1975] it could not be accepted that the municipalities are bound to sell Stateentityowned housing units to their occupants. This provision sets forth only the manner of selling such units, which could be purchased in the event of a decision to this effect by the competent body. There is however no legal duty for the mayor ... to assent to the sale of a Stateentityowned housing unit, and in the absence of such a legal obligation administrative or judicial review under the APA is inadmissible.” 23. Neither the threemember panel, nor the fivemember one mentioned the Housing Act of 1991 in their reasons. 24. This Act concerns mainly persons who have deposited money in special housing bank accounts prior to 1991 (the applicant does not fall into this category). 25. Separately, paragraph 4 of the additional provisions of the Act, dealing with the housing needs of employees of State entities („ведомства“), provided, as enacted in October 1991: “State entities which own residential buildings may sell existing housing units to their employees ... provided the persons willing to purchase them meet the requirements of section 2(1).” 26. Effective 3 August 1992, that text was amended to read: “1. State entities ... shall, by decisions adopted by their managements after 4 March 1991 and not later than six moths after the entry into force of this amendment of the Act, sell the existing housing units to their employees under the following terms: (1) employees who have applied to purchase State-entityowned housing units not later than 4 March 1991 or were tenants therein before that date and who meet the requirements of section 2(1)(1), (3) and (4) of the Act may purchase the units at prices set in accordance with [previous, more favourable pricing rules]. (2) employees who were settled as tenants after 4 March 1991, but before the entry of this amendment of the Act into force, and, as of the date of issuing of the settlement order, met the requirements of section 2(1)(1), (3) and (4) of the Act, may purchase the housing units at prices set in accordance with [the then current pricing rules]. 2. The difference between the price at which the housing units are acquired under subparagraph 1 and their real value shall be borne by the [respective State entity].” 27. Points 1, 3, and 4 of section 2(1) of the Act, as in force at the relevant time, laid down certain conditions for the persons concerned to come within its purview: (i) that they did not own homes or country houses fit for permanent use whose value, when added to the value of the remainder of their assets, was above 150,000 old Bulgarian levs (BGL), (ii) that they had not conveyed title to homes to third parties after 1 January 1981, except in cases of partition of property, and that (iii) the total amount of their movable and immovable assets, other than their homes and country houses, valued in accordance with the Regulations for the implementation of the Act, was below BGL 150,000. 28. Section 2 of the Regulations („Правилник за прилагане на Закона за уреждане на жилищните въпроси на граждани с многогодишни жилищноспестовни влогове“), which were enacted in October 1992, reads: “The persons eligible within the meaning of the Act are: ... (3) tenants in housing units owned by [State entities] whose tenancies commenced before 3 August 1992; ...” 29. Paragraph 2(1) of the of the additional provisions of the Regulations defines “existing housing units” (the expression used in paragraph 4 of the additional provisions of the Act – see paragraphs 25 and 26 above) as units which have been completed not later than 4 March 1991 (in the cases falling under subparagraph 1(1) of paragraph 4) or 3 August 1992 (in the cases falling under subparagraph 1(2) of paragraph 4). 30. Paragraph 2(2) of the additional provisions of the Regulations provides that paragraph 4 of the additional provisions of the Act does not apply to housing units which have been assigned by the municipalities to State entities for use and management. 31. By paragraph 2(3) of the additional provisions of the Regulations, the decisions to sell Stateentityowned housing units are valid if they are adopted by their collective management bodies, or by the respective government minister or an official authorised by him or her. 32. Paragraph 18(1) of the transitional and concluding provisions of the Regulations (added in March 1995) provides that if the housing units under paragraph 4 of the additional provisions of the Act have been listed as longterm assets of State-owned commercial companies, the difference between the price at which they were sold and their book value has to be noted down as a reduction of these companies’ capital. 33. The State Property Regulations of 1975 (repealed in September 1996) were adopted by the Council of Ministers under section 21 of the Property Act of 1951 („Закон за собствеността“) – which empowered it to make regulations for the “management, use, and disposition” of State property – and governed, inter alia, the procedure for selling housing units owned by the State (section 109(1)). 34. Their section 111(2) provided that where housing units, given for “use and management” to, inter alia, State entities or State commercial enterprises and institutions, were put up for sale, they had to be turned over to the municipality on the territory of which they were situated for effectuating the transaction. 35. Section 120(1) provided that the sale was effected on the basis of an order of the chairperson of the executive committee of the municipal council (after the adoption of the Constitution of 1991 that was the mayor). 36. Section 117 dealt with the conditions for and the manner of selling of Stateowned housing units to tenants. 37. Before 1989, under the communist regime, State enterprises did not enjoy an independent right of property over their assets; these assets were the property of the State and were only made available to them for “use and management”. 38. Under the Trade Act of 1991 („Търговски закон“) and other reform legislation adopted in 1991 and 1992, State enterprises had to be transformed, by decision of the relevant ministry and upon registration at the competent court, into singlemember limited liability companies or singleshareholder jointstock companies whose sole member or shareholder was the State. 39. The question whether the transformed enterprises became full owners of their assets or continued to be only beneficiaries of a right to “use and manage” them on behalf of the State was unclear and was still discussed in the legal theory after 1991. It was finally settled with the adoption, in May 1996, of the State Property and the Municipal Property Acts of 1996 („Закон за държавната собственост“ и „Закон за общинската собственост“). Sections 2(4) of both Acts provided that the assets of State or municipalityowned commercial companies were not the property of the State or, respectively, of the municipalities, even if they were the sole shareholder or member of such companies. In December 1999 the Supreme Administrative Court confirmed that this provision applied to flats previously made available for “use and management” to State enterprises which had later been transformed into commercial companies (реш. № 7376 от 30 декември 1999 г. по адм.д. № 4277/1999 г., ВАС, III о.). 40. Article 120 of the Constitution of 1991 provides: “1. The courts shall review the lawfulness of the administrative authorities’ acts and decisions. 2. Natural and juristic persons shall have the right to seek judicial review of any administrative act or decision which affects them, save as expressly specified by statute.” 41. The APA governs the procedure for issuing administrative decisions and for judicial review of such decisions. Section 2(1) of the APA defines “individual administrative decisions” as “decisions issued [by public authorities], which create rights or obligations for, or affect the rights or the legitimate interests of, individuals or juristic persons, as well as the refusals to issue such decisions”. By sections 33 and 34 of the APA, all “administrative decisions”, save those relating to the national security or specifically enumerated by statute, are subject to judicial review. 42. In this interpretative judgment no. 21 of 26 October 1995 in constitutional case no. 18/1995 (реш. № 21 от 26 октомври 1995 г. по к.д. № 18 от 1995 г., обн. ДВ, бр. 99 от 10 ноември 1995 г.) the Constitutional Court gave a binding interpretation of Article 120 § 2 of the Constitution. It held, inter alia, that this provision encompassed all administrative decisions regardless of their character or theoretical qualification. The exclusion of a given administrative decision from judicial review could only be done by statute. “All administrative decisions” meant “without exception”. Only internal decisions which did not affect in any way physical or juristic persons outside the respective administration were not covered by the constitutional provision. 43. Until December 1997 section 44 of the APA provided that the regional courts’ judgments on applications for judicial review of administrative decisions were final and could be set aside only in accordance with Article 225 et seq. of the Code of Civil Procedure of 1952 (“the CCP”). 44. Articles 22530 of the CCP, repealed with effect from 1 April 1998, governed review proceedings before the former Supreme Court. Prior to 1990 these texts stipulated that review proceedings were initiated on the proposal of the Chief Prosecutor or the chairperson of the Supreme Court, which was not, as a rule, limited by time, and was examined in private by a section of the Supreme Court or its Plenary. 45. However, these texts were fully reshuffled with effect from 21 April 1990 and henceforth provided that review proceedings were initiated upon the petition of a party to the case (Article 225 § 1), lodged within two months after the entry into force of the lower court’s judgment (Article 226 § 1), or the proposal of the Chief Prosecutor (Article 225 § 2), lodged within one year after the judgment’s entry into force (Article 226 § 1). A petition for review did not have suspensive effect, but the Supreme Court could, on the application of the petitioning party, order a stay of the enforcement of the lower court’s judgment in case such enforcement would cause irreparable harm to the petitioning party (Article 225 § 4). The petition was examined by the Supreme Court at a public hearing in the presence of the parties to the case (Article 227 § 2). The Supreme Court had the power to set the judgment aside wholly or in part, whenever (i) it was “contrary to the law”, (ii) “substantial breaches of procedural law [had] occurred during the proceedings or in connection with the delivery of the judgment”, or (iii) it was “illfounded” (Article 225 § 3 in conjunction with Article 207). If the Supreme Court set the lower court’s judgment aside, it could either decide the case itself, or exceptionally remit it to the lower court for reexamination (Article 229 § 2). 46. Article 231 § 1 (h) of the CCP, adopted in 1997 and in force since 1 April 1998, provides that an interested party may request the reopening of civil proceedings in case a “judgment of the European Court of Human Rights has found a violation of the [Convention]”. By section 45 of the APA and section 41(1) of the Supreme Administrative Court Act of 1997 („Закон за върховния административен съд“), this provision is applicable to proceedings in administrative cases as well. The Supreme Administrative Court has already had occasion to use it to reopen proceedings resulting in a ruling that the courts had no jurisdiction to examine an application for judicial review of an administrative decision (see Al-Nashif v. Bulgaria, no. 50963/99, 20 June 2002; and реш. № 4332 от 8 май 2003 г. по адм.д. № 11004/2002 г., ВАС, петчленен състав).