Ana MILASINOVIC v Croatia - 26659/08 [2010] ECHR 1327 (1 July 2010)

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The European Court of Human Rights (First Section), sitting on 1 July 2010 as a Chamber composed of:

Christos Rozakis, President,
Nina Vajić,
Khanlar Hajiyev,
Dean Spielmann,
Sverre Erik Jebens,
Giorgio Malinverni,
George Nicolaou, judges,
and Søren Nielsen, Section Registrar,

The applicant, Mrs Ana Milašinović, is a Croatian national who was born in 1950 and lives in Karlovac. She is represented before the Court by Mr M. Mihočević, an advocate practising in Zagreb.

The facts of the case, as submitted by the applicant, may be summarised as follows.

On 10 March 1992 the applicant's business premises in Karlovac were blown up by an unknown perpetrator.

(a) The course of the two sets of civil proceedings for damages in the period before 31 July 2003 and related proceedings

On 1 March 1995 the applicant brought two separate civil actions against the State in the Zagreb Municipal Court (Općinski sud u Zagrebu) seeking compensation for pecuniary damage. She relied on section 180 of the Obligations Act, which provided that the State was liable for damage resulting from “acts of violence or terrorist acts”. Eventually, she sought 65,000 and 50,000 euros (EUR) respectively together with the accrued statutory default interest.

On 3 February 1996 the Amendment to the Obligations Act (Zakon o izmjeni Zakona o obveznim odnosima, Official Gazette no. 7/1996 of 26 January 1996 – “the 1996 Amendment”) entered into force. It repealed section 180 and stayed all proceedings instituted on the basis of that provision, awaiting enactment of new legislation on the subject.

Accordingly, the applicant's proceedings were stayed ex lege, pursuant to the 1996 Amendment.

On 31 July 2003 the Act on Liability for Damage Resulting from Terrorist Acts and Public Demonstrations (Zakon o odgovornosti za štetu nastalu uslijed terorističkih akata i javnih demonstracija, Official Gazette of the Republic of Croatia no. 117/2003 of 23 July 2003 – “the 2003 Liability Act”) entered into force. It provided that the State was liable in tort for damage caused by death, bodily injury or impairment of health resulting from terrorist acts, whereas the damage to property was to be compensated through reconstruction assistance, obtainable before the competent administrative authorities, under the Reconstruction Act. The Act also provided that all proceedings stayed on the basis of the 1996 Amendment were to be resumed in accordance with its provisions.

Accordingly, the Municipal Court resumed both proceedings instituted by the applicant, pursuant to the 2003 Liability Act.

Meanwhile, on 15 October 2002 the applicant lodged a constitutional complaint under section 63 of the Constitutional Court Act, complaining about the length of the above civil proceedings and of lack of access to a court. On 25 November 2004 the Constitutional Court (Ustavni sud Republike Hrvatske) found violations of the applicant's constitutional rights to a hearing within a reasonable time and of access to a court. It awarded her 12,750 Croatian kunas (HRK) in compensation, and ordered the Zagreb Municipal Court to give decisions in the proceedings complained of in the shortest time possible but no later than a year following the publication of the decision in the Official Gazette. The Constitutional Court's decision was published on 10 December 2004.

In the meantime, on 7 November 2002 the applicant lodged her first application with the Court. On 3 May 2007 the Court adopted a judgment finding a violation of the applicant's right of access to a court and awarding her 1,000 euros (EUR) in respect of non-pecuniary damage (see Milašinović v. Croatia, no. 41751/02, §§ 28 and 38, 24 May 2007). It held that the compensation the Constitutional Court had awarded her for the violation of her right of access to a court was manifestly unreasonable and that therefore she could still claim to be a “victim” of a breach of that right (ibid., § 25).

(b) The course of the two sets of civil proceedings for damages in the period after 31 July 2003

On 19 March 2004 the Zagreb Municipal Court declared the first action by the applicant inadmissible for lack of jurisdiction.

Following an appeal by the applicant, on 22 October 2004 the Zagreb County Court (Zupanijski sud u Zagrebu) quashed the first-instance decision and remitted the case to the Municipal Court.

In the resumed proceedings, on 28 January 2005 the Municipal Court gave judgment dismissing the applicant's claim and ordered her to reimburse the State the costs of the proceedings in the amount of HRK 15,000. The relevant part of the judgment read as follows:

“It is undisputed between the parties that an unknown perpetrator planted an explosive device in the plaintiff's [business premises].

In this court's view, planting an explosive device is a terrorist act within the meaning of section 1(2) of [the 2003 Liability Act].

Section 8 of [the 2003 Liability] Act provides that damage to property [caused by terrorist acts] ... shall be compensated by reconstruction of the damaged or destroyed material goods in accordance with the Reconstruction Act. ...

According to the Reconstruction Act, pecuniary damage is compensated exclusively by restitution in kind. ... [T]herefore the plaintiff's claim for compensation of pecuniary damage by payment of damages [financial compensation] is entirely unfounded.”

On 17 February 2005 the applicant appealed to the Zagreb County Court against that judgment, including the decision on costs. In her appeal the applicant argued, inter alia, that the new legislation and/or its application to her case by the first-instance court had breached the Convention. In doing so, she emphasised the precedence of the Convention over domestic statutes, as provided in Article 140 of the Constitution, and repeated, in substance, the same arguments she is raising before the Court. In her appeal the applicant wrote as follows:

The legislation on the basis of which the plaintiff brought her action in 1995, that is section 180 of the Obligations Act, [generally] provided for compensation of non-pecuniary damage as well as of damage to property (pecuniary damage).

[The 2003 Liability] Act therefore retroactively eliminates the plaintiff's claim and thereby directly breaches the right to property guaranteed by Article 1 of Protocol No. 1 to the Convention (Pressos Compania Naviera S.A. and others v. Belgium).

Given that the Convention is according to Article 140 of the Constitution part of the legal order of the Republic of Croatia ... the [Zagreb Municipal Court] was obliged to apply international law. Moreover, ... the plaintiff proposes to lodge an application for abstract constitutional review of section 10 of the [2003] Liability Act and review its compliance with the Constitution given that the provision of the Constitution prohibiting retroactive legislation has been breached.

The plaintiff will not be able to obtain reconstruction assistance because the Reconstruction Act does not apply to pecuniary damage to business premises.

If the second-instance court considers that her appeal is unfounded as regards the merits of the case, the plaintiff also complains against the decision on the costs of proceedings.

The court unlawfully awarded the costs of proceedings to the respondent relying on section 154(1) of the Civil Procedure Act. It is true that ... the party who loses the case has to reimburse the costs of proceedings to the other party. However, the plaintiff brought her action at the time when section 180 of the Obligations Act was still in force, that is to say, at the time her action was well-founded in law. Given the fact that the [first-instance] court found in the contested judgment that the damage [to the plaintiff's property] had indeed been caused by a terrorist act, it is indisputable that the respondent would have been obliged to compensate the damage, that is to say, that the plaintiff would have won the case.

By subsequent legislative intervention the respondent improved its position in the proceedings, which resulted in the contested decision. Such legislative intervention cannot be attributed to the plaintiff but, on the contrary, to the unfair influence on the pending proceedings.

To sum up, the present action for damages was brought under section 180 of the Obligations Act, which provided for the respondent's liability for the damage in question. However, while the proceedings were pending, [the 1996 Amendment] was passed, which repealed section 180 and stayed all proceedings for damages instituted under that section. The 2003 Liability Act, which provided that the respondent is not liable for the damage, was enacted on 14 July 2003.

Given that the success of the respondent in the present case is exclusively the result of a change in legislation, which was passed and amended by the respondent itself who is at the same time a party to the proceedings, it was the respondent who caused the costs of the proceedings because the plaintiff would not have brought her action had the 1996 Amendment or the 2003 Liability Act been in force at the time when the damage occurred. Therefore, the respondent is, in accordance with section 156 of the Civil Procedure Act, obliged to reimburse the plaintiff for the costs of the proceedings.”

On 4 April 2006 the Zagreb County Court dismissed the applicant's appeal and upheld the first-instance judgment. The relevant part of the second-instance judgment read as follows:

“The subject matter of the dispute is the plaintiff's claim for compensation of damage resulting from the terrorist act – an explosion on 10 March 1992 [of an explosive device] planted by an unknown perpetrator in the plaintiff's ... business premises ....

Contrary to the arguments raised in the appeal, the first-instance court correctly applied the substantive law when, relying on section 8 of [the 2003 Liability Act], it dismissed the plaintiff's action ...

The argument raised in the appeal that the first-instance court should have decided the plaintiff's claim for damages on the basis of [...] the Convention and Protocols thereto, in particular Protocol No. 1 on the protection of property, cannot be accepted.

Undoubtedly, international agreements have precedence over domestic legislation. However, Article 1 of Protocol No. 1 ... does not regulate compensation for damage resulting from terrorist acts, so [that] provision of the Protocol cannot be applied in the instant case.

As the court decided on the plaintiff's claim in adversarial proceedings, to which the plaintiff is entitled under Article 6 paragraph 1 of the Convention, the arguments raised in the appeal in this respect cannot be accepted.

Lastly, the decision on costs of the proceedings is correct and in accordance with the law ... so the plaintiff's arguments against that decision are also unfounded.

In holding so and in reply to the plaintiff's argument, it has to be said that the fact that the action had been brought when section 180 of the Obligations Act, which provided for the respondent's liability for the damage as the one in question (...), had still been in force, is of no relevance because the respondent was awarded costs for the [procedural] steps undertaken in the proceedings after that provision had been repealed. ”

The applicant then lodged an appeal on points of law (revizija) with the Supreme Court (Vrhovni sud Republike Hrvatske). She repeated, in substance, the same arguments she had raised in her appeal against the second-instance judgment.

On 10 October 2006 the Supreme Court dismissed the applicant's appeal on points of law. The relevant part of the Supreme Court's judgment read as follows:

“This dispute cannot be decided on the basis of the provisions of [...] the Convention and Protocols thereto, in particular [Article 1 of] Protocol No. 1 on the protection of property because [that] provision of the Protocol does not regulate compensation for damage to property resulting from terrorist acts.

As the court decided on the plaintiff's claim in adversarial proceedings, her reliance on Article 6 paragraph 1 of the Convention, is unfounded.

The plaintiff's reliance on section 180 of the Obligations Act is unfounded because that provision was repealed by [the 1996 Amendment], which ... provided that proceedings for damages instituted under the said [Obligations] Act were to be stayed and be resumed [only] after the enactment of special legislation [regulating] liability for damage resulting from terrorist acts.

During the stay of proceedings, ..., [the 2003 Liability Act] was passed, which regulated the issue of liability for damage caused by [terrorist acts] ..., which in its section 10 provides that judicial proceedings for damages stayed pursuant to [the 1996 Amendment] shall be resumed according to the provisions of that [2003 Liability] Act. [Therefore], the provisions of that [2003 Liability] Act are relevant to ... the issue of the respondent's tort liability.

As [the 2003 Liability Act] does not provide for financial compensation of pecuniary damage for destroyed material goods but [for compensation] in the form of reconstruction in accordance with the Reconstruction Act, the lower courts correctly dismissed the plaintiff's action as unfounded.

Since the decision of the lower-instance courts on the costs of the proceedings is in accordance with sections 154(1), 155(1) and 163 of the Civil Procedure Act, the plaintiff's arguments raised in the appeal on points of law in respect of the decision on costs of civil proceedings are also unfounded. This is so in particular because the respondent was awarded costs for the [procedural] steps taken in the proceedings after section 180 of the Obligations Act had been repealed. ”

On 2 July 2007 the applicant lodged a constitutional complaint under section 62 of the Constitutional Court Act against the Supreme Court's judgment alleging violations of her constitutional rights to equality, equality before the courts, fair hearing and ownership, as well as her Convention rights to a fair hearing and property. She also argued, relying on Article 89(4) of the Constitution, that the 2003 Liability Act had retroactive effects.

On 10 June 2009 the Constitutional Court dismissed the applicant's constitutional complaint. The relevant part of the Constitutional Court's decision read as follows:

“[The complainant] argues, in substance, that the case should have been decided on the basis of section 180 of the Obligations Act because [her action had been brought] in 1995 when that statutory provision was still in force. She also emphasises the restrictiveness of the [reconstruction legislation]. She considers that [the 1996 Amendments and 2003 Liability Act] were enacted to 'prevent the ... victims of terrorist act from enforcing their claims. ... She argues that the Republic of Croatia is liable for the damage sustained because [the 2003 Liability Act] was passed so that the Republic of Croatia would not be liable for damage resulting from terrorism.'

The complainant argues in particular that section 180 of the Obligations Act, which was in force at the time when the damage occurred, should have been applied [in her case]. However, section 10 of [the 2003 Liability Act] provides that all judicial proceedings for damages stayed by the entry into force of [the 1996 Amendment] shall be resumed in accordance with the provisions of [the 2003 Liability Act]. Since the civil proceedings in the instant case were instituted on 1 March 1995 section 180 of the Obligations Act could not be applied in those proceedings because after the entry into force of [the 2003 Liability Act], that is, on 31 July 2003, the municipal and the county court could have decided on the complainant's action only by applying [the 2003 Liability Act] and not section 180 of the Obligations Act.

Turning to the complainant's argument concerning unconstitutionality of section 8 of [the 2003 Liability Act] on which the contested judgments were based, the [Constitutional] Court notes that the kinds and scope of rights which under the legislation in force belong to persons whose immovable property has been destroyed or damaged by acts of terror and other acts of violence cannot be examined in the proceedings before the Constitutional Court instituted by a constitutional complaint. Such an examination would be possible only in the proceedings of abstract constitutional review of the legislation providing for those rights.

As regards [the 2003 Liability Act], which the complainant indicates is unconstitutional, it has to be noted that compatibility of that Act with the Constitution was subject to review of the Constitutional Court in the case no. U-I-2921/2003. However, finding that the said Act was not incompatible with the Constitution, the Constitutional Court [refused] petitions to review its compliance with the Constitution.

Legal views expressed in the contested judgment of the Supreme Court and the judgments of the lower courts are based on a constitutionally acceptable interpretation and application of the relevant substantive law. The Constitutional Court finds that the competent courts in all three instances ... gave reasons for their views expressed in the contested judgments, which undoubtedly are not the result of arbitrary interpretation and application of the relevant substantive law.

For these reasons the Constitutional Court did not accept the complainant's arguments that the equality before the law, guaranteed by Article 14 paragraph 2 of the Constitution, had not been secured to her.

A violation of the constitutional right guaranteed by Article 29 paragraph 1 of the Constitution [that is, the right to a fair hearing] was also raised in the constitutional complaint.

In [the Constitutional Court's] view, the proceedings that preceded those before the Constitutional Court were conducted in a manner that provided a fair hearing to the complainant and did not result in a violation of the constitutional right provided for in Article 29 paragraph 1 of the Constitution.

Examining the arguments raised in the constitutional complaint concerning the alleged violation of the constitutional right provided in Article 48 paragraph 1 of the Constitution (the right to ownership is guaranteed), the Constitutional Court finds that the mentioned provision is not applicable to the present case. Namely, the present case concerns civil proceedings for damages, which did not involve the complainant's right of ownership of the immovable property in question.

Provisions of Article 89 paragraph 4 do not contain human rights or fundamental freedoms guaranteed by the Constitution, which could be protected in the proceedings before the Constitutional Court instituted by a constitutional complaint, on the basis of section 62 paragraph 1 of the Constitutional Court Act.”

On 19 March 2004 the Zagreb Municipal Court declared the second action by the applicant inadmissible for lack of jurisdiction.

Following an appeal by the applicant, on 23 June 2004 the Zagreb County Court quashed the first-instance decision and remitted the case to the Municipal Court.

In the resumed proceedings, on 25 May 2005 the Municipal Court gave judgment dismissing the applicant's claim and ordered her to reimburse the State the costs of the proceedings in the amount of HRK 20,000. The relevant part of the judgment read as follows:

“It is undisputed between the parties that an unknown perpetrator planted an explosive device in the plaintiff's [business premises].

In this court's view, planting of an explosive device is a terrorist act within the meaning of section 1(2) of the 2003 Liability Act.

Section 8 of the [2003 Liability] Act provides that damage to property [caused by terrorist acts] ... shall be compensated by reconstruction of damaged or destroyed material goods in accordance with the Reconstruction Act. ...

According to the Reconstruction Act, pecuniary damge is compensated exclusively by restitution in kind. ... [T]herefore the plaintiff's claim for compensation of pecuniary damage by payment of damages [financial compensation] is entirely unfounded.”

On 14 June 2005 the applicant appealed to the Zagreb County Court against that judgment, including the decision on costs. She raised the same arguments as in her appeal of 17 February 2005 lodged in the above civil proceedings no. Pn-1736/95.

On 20 June 2006 the Zagreb County Court dismissed the applicant's appeal and upheld the first-instance judgment. The relevant part of the second-instance judgment read as follows:

“The plaintiff is seeking from the respondent compensation for the [damaged] business premises ..., which were destroyed by the detonation [of an explosive device] planted by an unknown perpetrator. [She] bases her action on the former section 180 of the Obligations Act, claiming that the damage was caused by a terrorist act.

While these proceedings were pending, the 1996 Amendment to the Obligations Act entered into force, which repealed section 180 of the Obligations Act and provided that proceedings for damages instituted on the basis of that provision were to be stayed and be would resumed [only] after the enactment of special legislation [regulating] liability for the damage resulting from terrorist acts.

That special legislation, that is [the 2003 Liability Act], was enacted in the meantime ...

Under section 10 of [the 2003 Liability Act] judicial proceedings for damages stayed pursuant to [the 1996 Amendment] shall be resumed according to the provisions of [the 2003 Liability] Act.

Therefore, the provisions of [the 2003 Liability Act] are relevant for the issue of the respondent's tort liability, as correctly concluded by the first-instance court which dismissed the plaintiff's action by applying them.

In particular, according to section 7(1) of [the 2003 Liability Act], the victim has the right to compensation only of damage resulting from death, bodily injury or impairment of health, whereas according to section 8 of the same Act damage to property ... is to be compensated by reconstruction of damaged or destroyed material goods in accordance with the Reconstruction Act, which regulates reparation of this kind of damage that is to be obtained in administrative procedings.

In reply to the ... arguments contesting the constitutionality of section 10 of the 2003 Liability Act, it is to be noted that the appellant has the opportunity to institute proceedings to review compatibility of that statutory provision with the Constitution.

Furthermore, the plaintiff's reliance on the Convention for the Protection of Human Rights and Fundamental Freedoms and the additional Protocols thereto, ..., and a decision of the European Court of Human Rights rendered in another case ..., is unfounded because it is of no relevance in the present case and does not affect the validity of the contested judgment. Namely, only a final judgment of the European Court for Human Rights in Strasbourg adopted in the proceedings instituted by the plaintiff herself finding a violation of the plaintiff's right or freedom guaranteed by the Convention would constitute a ground for reopening of proceedings (section 428a of the Civil Procedure Act).

In the light of all the above, the plaintiff's arguments to the contrary cannot be accepted.

The decision on the costs of the proceedings is also correct (...). Namely, the decision awarding the costs of the proceedings to the respondent is based on clear and unequivocal provision of section 154(1), which provides that the party which lost the case has to reimburse the opposing party's costs. The interpretation by the plaintiff to the contrary cannot therefore be accepted.”

The applicant then lodged an appeal on points of law with the Supreme Court repeating the same arguments she had raised in her appeal against the second-instance judgment.

On 28 December 2006 the Supreme Court dismissed the applicant's appeal on points of law. The relevant part of the Supreme Court's judgment read as follows:

“The appellant considers that the decision of the lower court is the result of the incorrect application of the substantive law because it was delivered in application of section 10 of the 2003 Liability Act, which is in her view unconstitutional and contrary to the Convention for the Protection of Human Rights and Fundamental Freedoms, Protocol No. 1, Article 1 – the right to peaceful enjoyment of possessions, and the case-law of the European Court for Human Rights.

The lower courts correctly applied the substantive law when they decided on the plaintiff's claim by applying [the 2003 Liability Act]. Namely, the plaintiff's immovable property was destroyed by a terrorist act of an unknown perpetrator.

The damage occurred at the time when section 180 of the Obligations Act was still in force ...

That provision was repealed by [the 1996 Amendment] and all proceedings for damages instituted under section 180 were stayed and were to be resumed [only] after the enactment of the legislation [governing] liability for damage resulting from terrorist acts.

In 2003 [the 2003 Liability Act], which regulated liability of the Republic of Croatia for damage resulting from acts of terror and other acts of violence, was passed... Section 8 provides that damage to property ... is to be repaired by reconstruction of damaged or destroyed material goods in accordance with the Reconstruction Act. In transitory and final provisions; in section 10 it is provided that judicial proceedings for damages stayed by the entry into force of [the 1996 Amendment] shall be resumed according to the provisions of that [the 2003 Liability] Act.

It follows that the courts ... could have decided on the plaintiff's claim by applying provisions of [the 2003 Liability Act] ...

As the [2003] Liability Act does not provide for compensation in the form of damages [financial compensation] of pecuniary damage to a material good destroyed by a terrorist act but for reconstruction (restitution in kind) in accordance with the Reconstruction Act, the lower courts applied the substantive law correctly when dismissing the plaintiff's claim for damages...”

The appellant unfoundedly contests the decision on costs of the proceedings which was rendered in correct application of section 154 of the Civil Procedure Act, taken in conjunction with section 155 [of the same Act], because the plaintiff lost the case and is obliged to reimburse the costs of the proceedings to the respondent.”

On 16 May 2007 the applicant lodged a constitutional complaint against the Supreme Court's judgment, alleging violations of her constitutional rights to equality, equality before the courts, fair hearing and ownership, as well as her Convention rights to a fair hearing and property. She also argued, relying on Article 89(4) of the Constitution, that the 2003 Liability Act had retroactive effect.

On 10 June 2009 the Constitutional Court dismissed the applicant's constitutional complaint, adducing the same reasons as in its decision of the same date delivered in the first set of civil proceedings instituted by the applicant (see above).

The relevant part of the Constitution of the Republic of Croatia (Ustav Republike Hrvatske, Official Gazette of the Republic of Croatia nos. 56/1990, 135/1997, 8/1998 (consolidated text), 113/2000, 124/2000 (consolidated text), 28/2001 and 41/2001 (consolidated text), 55/2001 (corrigendum)) provides as follows:

“(1) Rights and freedoms may be restricted only by law in order to protect the rights and freedoms of others, legal order, public morals or health.

(2) Every restriction of the rights and freedoms should be proportional to the nature of the necessity for the restriction in each individual case.”

“In the determination of his rights and obligations or of any criminal charge against him, everyone is entitled to a fair hearing within a reasonable time by an independent and impartial court established by law.”

(2) Property implies duties. Holders of the title to property and property users shall have a duty to contribute to the general welfare.”

“(4) Statutes and other legislative acts of state or public authorities shall not have a retroactive effect.

(5) Only certain provisions of a statute may have retroactive effect, for especially justified reasons.”

“International agreements concluded and ratified in accordance with the Constitution and made public shall be part of the Republic's internal legal order and shall have precedence over the [domestic] statutes....”

The relevant part of the 1999 Constitutional Act on the Constitutional Court of the Republic of Croatia (Ustavni zakon o Ustavnom sudu Republike Hrvatske, Official Gazette of the Republic of Croatia no. 99/1999 of 29 September 1999 – “the Constitutional Court Act”), as amended by the 2002 Amendments (Ustavni zakon o izmjenama i dopunama Ustavnog zakona o Ustavnom sudu Republike Hrvatske, Official Gazette of the Republic of Croatia no. 29/2002 of 22 March 2002), which entered into force on 15 March 2002, provides as follows:

“1. Any person may lodge a constitutional complaint with the Constitutional Court if he or she deems that the decision of a state authority, local or regional self-government, or a legal person invested with public authority, on his or her rights or obligations, or concerning a suspicion or an accusation that he or she has committed a criminal offence, has violated his or her human rights or fundamental freedoms, or right to local or regional self-government, guaranteed by the Constitution (“constitutional rights”)...

2. If another legal remedy is allowed against the violation of the constitutional rights [complained of], the constitutional complaint may be lodged only after this remedy has been exhausted.

3. In matters in which an administrative action, or, in civil and non-contentious proceedings, an appeal on points of law [revizija,] are allowed, remedies shall be considered exhausted only after the decision on these legal remedies has been given.”

“(1) The Constitutional Court shall examine a constitutional complaint whether or not all legal remedies have been exhausted, if the competent court fails to decide a claim concerning the individual's rights and obligations or a criminal charge against him or her within a reasonable time ...

(2) If a constitutional complaint ... under paragraph 1 of this section is upheld, the Constitutional Court shall set a time-limit within which the competent court must decide the case on the merits ...

(3) In a decision issued under paragraph 2 of this section, the Constitutional Court shall assess appropriate compensation for the applicant for the violation of his or her constitutional rights ... The compensation shall be paid out of the State budget within three months of the date a request for payment is lodged.”

The relevant part of the Obligations Act (Zakon o obveznim odnosima, Official Gazette of the Socialist Federal Republic of Yugoslavia nos. 29/1978, 39/1985 and 57/1989, and Official Gazette of the Republic of Croatia nos. 53/1991, 73/1991, 3/1994 – “the Obligations Act”), as in force before the 1985 Amendment, provided as follows:

“Liability for loss caused by death or bodily injury resulting from acts of violence or terrorist acts ..., lies with the ... authority whose officers were under a duty, according to the laws in force, to prevent such loss.”

“The obligation to compensate damage is due from the moment the damage occurs.”

“The provisions of this Act shall not apply to obligations that arose before the entry into force of this Act.”

Section 180, as amended by the 1985 Amendments to the Obligations Act (Zakon o izmjenama i dopunama Zakona o obveznim odnosima, Official Gazette of the Socialist Federal Republic of Yugoslavia no. 39/1985) that entered into force on 3 August 1985 and which extended State liability for damage caused by terrorist acts to damage or destruction of property, read as follows:

“Liability for loss caused by death or bodily injury or by damage or destruction of another's property, resulting from acts of violence or terrorist acts ..., lies with the ... authority whose officers were under a duty, according to the laws in force, to prevent such loss.”

In the period before the entry into force of the 1996 Amendments to the Obligations Act the Supreme Court delivered only one decision (judgment no. Rev-3776/1994-2 of 17 January 1996) interpreting section 180 of the Obligations Act. That judgment read as follows:

“Not every act of violence by an unknown perpetrator is a terrorist act within the meaning of section 180 of the Obligations Act. Every terrorist act is violence but not every act of violence is a terrorist act referred to in section 180 of the Obligations Act. ... the case file does not provide sufficient evidence for the conclusion that this case involves a terrorist act referred to in section 180 of the Obligations Act. The characteristics of such an act would be brutality or cruelty with an aim of stirring up fear, terror or feelings of personal insecurity in citizens. The background of such an act would have to be some political orientation, that is to say, it would have to have been committed for some political reason. The victim should have also been chosen with [some] political background in mind, that is for political reasons, even if selected randomly. The act should have been committed at the order of a certain terrorist organisation or the perpetration of the act should follow from the activities or the programme of such an organisation. The above-mentioned characteristics do not all have to be met, but the act has to be predominantly characterised [by them]. However, in the present case neither of the mentioned characteristics was established with certainty. ... it cannot even be speculated what was the aim or the motives of the act. The established circumstances do not indicate [that the act had] political or similar background ... [Likewise] the method of selection of the victim and the reasons behind it are completely unknown. At that time there was another explosion nearby where damage was inflicted in a similar way. That circumstance as well as the fact there were many explosions causing damage in the larger surrounding area during a year, does not support the conclusion that the act in question was a terrorist act referred to in section 180 of the Obligations Act. It all happened in an area which was at the time, in a way, also affected by war. It is a notorious fact that many people, that is to say, anyone who wished so, could acquire possession of arms and explosive devices. All this [weaponry] could have been used by these persons to commit acts not having the characteristics of terrorist acts referred to in section 180 of the Obligations Act, the motive or background of which could have been different, making them common acts of violence that happen more or less every day, but at the critical time the war and easy access to arms and explosives caused their occurrence in this form.”

The above interpretation of section 180 provided in the Supreme Court's judgment largely reflects the legal views expressed by Croatian legal scholars at the time (see, in particular, Petar Klarić: “Ratna šteta i štete nastale zbog akata nasilja ili terora te prilikom javnih demonstracija” [War Damage and Damage Arising from Acts of Violence or Terror or from Public Demonstrations], Privreda i pravo, Vol. 32(1993), Nos. 11-12, p.p. 795-815). Those legal views are best summarised in Vilim Gorenc (ed.), Rječnik trgovačkog prava [The Dictionary of Commercial Law], Masmedia, Zagreb, 1997, according to which a terrorist act is:

“an act of terror having the following basic characteristics: 1. massive or individual use of violence or other methods generally involving cruelty, with an aim of stirring up fear, terror or feelings of personal insecurity in citizens; 2. political motives, that is, political background, particularly in case of an individual act of violence; 3. very often the victim is selected randomly; 4. [the act is] very often committed in the name or at the request of a certain terrorist organisation.

Not all these characteristics have to be met cumulatively. The first two are considered constitutive and the remaining two optional (supplementary). ... The liability for the damage [resulting from terrorist acts] is governed by the rules of strict liability.”

The relevant part of the 1996 Amendment to the Obligations Act (Zakon o izmjeni Zakona o obveznim odnosima, Official Gazette no. 7/1996 of 26 January 1996 – “the 1996 Amendment”), which entered into force on 3 February 1996, provided as follows:

“Section 180 of the Obligations Act (the Official Gazette nos. 53/91, 73/91 and 3/94) shall be repealed.”

“(1) Proceedings for damages instituted under section 180 of the Obligations Act shall be stayed.

(2) The proceedings referred to in paragraph 1 of this section shall be resumed after the enactment of special legislation which shall regulate liability for damage resulting from terrorist acts.”

In its judgment no. Rev-765/05-2 of 24 January 2006 the Supreme Court held as follows:

“... the evident purpose of the [1996 Amendment] was to regulate, by a special legislation, in more detail, liability for all damage resulting from terrorist acts because, after repealing section 180 of the Obligations Act, there was no longer a legal basis in that Act for the liability of the State for such damage. This referred to the damage in respect of which the proceedings had already been instituted while section 180 had still been in force, as well as to the damage in respect of which proceedings on that basis had not yet been instituted or [to the damage] which had not yet occurred. For that reason it was necessary ... to postpone adoption of judicial decisions concerning claims for damages against the Republic of Croatia until the enactment of new legislation regulating liability for such damage, and to deliver decisions in accordance with that legislation irrespective of the time when judicial proceedings had been instituted.”

In the period between 1996 and 2002 the Constitutional Court received seven petitions for abstract constitutional review (prijedlog za ocjenu ustavnosti) whereby the petitioners asked that court to institute proceedings to review the constitutionality of the 1996 Amendment. On 17 December 2003 the Constitutional Court discontinued the proceedings because the Amendment had been abrogated by the entry into force of the 2003 Liability Act.

The relevant part of the 1999 Amendments to the Obligations Act (Zakon o dopunama Zakona o obveznim odnosima, Official Gazette no. 112/1999 of 29 October 1999 – “the 1999 Amendments”), which entered into force on 6 November 1999, provided as follows:

“The Government of the Republic of Croatia is hereby obliged to submit [to the Croatian Parliament] for adoption the [draft] special legislation envisaged in ... section 2 paragraph 2 of the 1996 Amendment to the Obligations Act the latest within six months of this Act's entry into force.”

The relevant part of the Act on Liability for Damage Resulting from Terrorist Acts and Public Demonstrations (Zakon o odgovornosti za štetu nastalu uslijed terorističkih akata i javnih demonstracija, Official Gazette of the Republic of Croatia no. 117/2003 of 23 July 2003 – “the 2003 Liability Act”), which entered into force on 31 July 2003, provides as follows:

“(1) This Act regulates the liability for damage caused by acts of terrorism or other acts of violence committed with an aim of seriously disturbing public order by provoking fear or stirring up feelings of insecurity in citizens ...

(2) A terrorist act within the meaning of this Act is especially an act of violence committed for political reasons [motives] with a view to stirring up fear, terror or feelings of personal insecurity in citizens.”

“The Republic of Croatia shall be liable for the damage referred to in section 1 of this Act ....”

“The victim shall have the right to compensation [in the form of damages] of damage resulting from death, bodily injury or impairment of health.”

“Damage to property ... shall be repaired by reconstruction of damaged or destroyed material goods in accordance with the Reconstruction Act.”

“Judicial proceedings for damages stayed pursuant to the 1996 Amendment shall be resumed according to the provisions of this Act.”

In its judgment no. Rev 910/05-2 of 26 October 2005 the Supreme Court held that the 2003 Liability Act was to be applied to all pending civil proceedings in which plaintiffs sought compensation for damage caused by terrorist acts, including those instituted before its entry into force.

In its decision no. U-I-2921/2003 of 19 November 2008 (Official Gazette of the Republic of Croatia no. 137/2008 of 26 November 2008) the Constitutional Court rejected nine petitions for abstract constitutional review and thereby refused the initiative to institute proceedings to review the constitutionality of the 2003 Liability Act. The Constitutional Court's decision in its relevant part reads as follows:

“The petitioners consider that the contested [2003 Liability Act] as a whole, as well as its sections 7, 8, 10, 11 and 12, are not in compliance with Articles ... 48(1) and 89 paragraphs 3 to 5 of the Constitution. In addition, they point to [the 2003 Liability Act's] incompatibility with Articles 6, 8 and 17 of the European Convention on Human Rights and Fundamental Freedoms and Article 1 of Protocol No. 1 thereto.

The petitioners emphasise that the contested [2003 Liability Act] regulates [legal] relationships that arose before its entry into force and extinguishes rights which were before the entry into force of [the 1996 Amendment] granted to persons who sustained damage resulting from terrorist acts ... Therefore, they consider that the contested [2003 Liability Act] has retroactive effect, which is contrary to Article 89 paragraphs 4 and 5 of the Constitution. They submit that the contested [2003 Liability Act] brought legal uncertainty among citizens because its enactment significantly altered their rights and obligations they had under the legislation in force at the time the damage occurred. They emphasise that, given the legislation in force at the time of bringing of the actions for damages against the Republic of Croatia on the basis of section 180 of the Obligations Act, the plaintiffs could have realistically expected to succeed in [the proceedings instituted thereby], and that the consequences stemming from the contested [2003 Liability Act] (which diminished earlier rights) do not correspond to legitimate expectations of the parties, which is contrary to the principle of the rule of law prescribed in Article 3 of the Constitution as well as to the principle of proportionality guaranteed by Article 16 paragraph 2 of the Constitution.

... In addition, they stress that the contested [2003 Liability Act] retroactively exonerates the Republic of Croatia from the liability for [the] damage [resulting from terrorist acts], which in the petitioners' view, is not in accordance with the constitutionally guaranteed right of property.

The petitioner K.S. points out that the application of the contested [2003 Liability Act] will be detrimental to persons who brought their actions for damages before the entry into force of [the 1996 Amendment] on 3 February 1996. Given the fact that the contested [2003 Liability Act] excluded liability of the Republic of Croatia for the damage [resulting from terrorist acts] (, which [liability] existed under [section 180 of] the Obligations Act, which was in force at the time the damage occurred), the courts will dismiss claims for damages which were, according to the legislation in force at the time the damage occurred and the actions brought, undoubtedly well founded, but the plaintiffs will despite that be obliged to pay the costs of judicial proceedings.

The legal effects of [the 2003 Liability Act] would be questionable from the constitutional point of view only if they would interfere with final court decisions adopted on the basis of section 180 of the Obligations Act while that provision was in force in the Republic of Croatia. However, [the 2003 Liability Act] in no way interferes with final court decisions, [thereby] respecting effects of their finality. [The 2003 Liability Act] does not apply to them.

On the other hand, [the plaintiffs] which had brought their actions on the basis of section 180 of the Obligations Act while [that provision] had been in force in the Republic of Croatia but whose actions were not decided by the competent courts before [that section] was repealed ... on 3 February 1996, did not obtain a court judgment on which they could rely. On that date the outcomes of judicial proceedings, which [those plaintiffs] had instituted were still uncertain because the competent courts had not yet decided whether their actions brought under section 180 of the Obligations Act were well founded [or not].

... The mere fact of bringing an action under one legal ground (in the instant case section 180 of the Obligations Act) ... does not exclude the legal possibility of subsequent change of that legal ground and subsuming the action – on which the competent court has not yet finally decided – under new legal ground.

The Constitutional Court finds in this connection that in the state based on the rule of law repealing of a previous legal ground and subsuming under new legal regulation all unresolved actions brought under previous legal ground (in the instant case, repealing of section 180 of the Obligations Act and the enactment of new special legislation regulating differently the issue previously regulated by the repealed section, where the new legislation applies also to unresolved actions brought before 3 February 1996 on the basis of the repealed section) has to be justified, that is to say, must have a legitimate aim in the general or the public interest of the community.

From this a further question that has to be answered in these proceedings arises: was the repealing of section 180 of the Obligations Act constitutionally justified, that is to say, whether it had a legitimate aim in the general or public interest of the community? ...

The Government of the Republic of Croatia, which proposed the enactment of [the 2003 Liability Act], ... pointed out that section 180 of the Obligations Act did not contain a definition of a terrorist act, so that the statutory expression 'resulting from acts of violence or terrorist acts' might have lead to a conclusion that a terrorist act is every tortious act involving violence. Since every tortious act involving violence is obviously not a terrorist act, it was necessary to repeal that section and replace it with one containing the statutory definition of a terrorist act.

... [T]he Constitutional Court finds that the intervention of the domestic legislator whereby in 1996 ... it repealed section 180 of the Obligations Act was justified. It had a legitimate aim in the general or the public interest (the change of the statutory requirements for the State liability for the damage resulting from terrorist acts on account of the state of emergency in the country caused by the armed aggression on the Republic of Croatia, because of which the content of the provision of section 180 of the Obligations Act, that was not in compliance with the Constitution, had to be brought in line with the Constitution in order to remove uncertainties existing in the previous statutory regulation and, at the same time, adjust statutory requirements for that liability to newly created circumstances in the State with a view to preventing excessive financial burden imposed on the Republic of Croatia at the time of waging a defensive war and in the post-war period of reconstruction and recovery of the country).

In conclusion, in the situation where a significant number of actions was brought against the Republic of Croatia seeking payment of large sums of money for the damage resulting from 'acts of violence or terrorist acts' at the time of armed aggression on its sovereignty and territorial integrity, the legislator was entitled to repeal ... section 180 of the Obligations Act ... and regulate this issue in line with the newly created circumstances in the State (waging a defensive war and all related consequences), which required clarification of the statutory regulation of different kinds of damage occurred during the Homeland War, as well as [in line] with financial capabilities of the State in such circumstances.

From the content of all petitions lodged with the Constitutional Court, it follows that the petitioners find unacceptable precisely the repealing of section 180 of the Obligations Act ... considering that the [plaintiffs] who had brought their actions before 3 February 1996 had 'a legitimate expectation' that their actions (pecuniary claims) would be decided on the basis of section 180 of the Obligations Act.

In other words, the petitioners consider that extending new statutory regulation of the State liability for the damage at issue provided in [the 2003 Liability Act] to actions brought before 3 February 1996 on the basis of section 180 of the Obligations Act is not in compliance with the Constitution. In their opinion, its is undisputed that the outcome of the proceedings the plaintiffs had instituted by bringing actions under section 180 of the Obligations Act would generally be less favourable by applying [the 2003 Liability Act] than the outcome of the proceedings they could have expected had their actions been decided by applying section 180 of the Obligations Act. For that reason they consider that they have 'a legitimate expectation' within the meaning of Article 1 of Protocol No. 1 to the Convention that their actions would be decided by applying section 180 of the Obligations Act.”

The Constitutional Court then cited and analysed the case-law of the European Court of Human Rights developed in respect of Article 1 of Protocol No. 1 to the Convention on the notion of “legitimate expectations”. It referred primarily to the case of Kopecký v. Slovakia ([GC], no. 44912/98, ECHR 2004 IX) but also to the cases of Pine Valley Developments Ltd and Others v. Ireland (29 November 1991, Series A no. 222); Stretch v. the United Kingdom (no. 44277/98, 24 June 2003), Pressos Compania Naviera S.A. and Others v. Belgium (20 November 1995, Series A no. 332); and Gratzinger and Gratzingerova v. the Czech Republic ((dec.), no. 39794/98, ECHR 2002 VII). In examining whether the persons who had brought their actions under section 180 of the Obligations Act had had “legitimate expectations” within the meaning of Article 1 of Protocol No. 1 to the Convention, the Constitutional Court held as follows:

“Having regard to the specific circumstances of the case under examination in these ... proceedings, the Constitutional Court finds that it cannot be subsumed under the notion of 'legitimate expectation' which would – under the case-law of the European Court [of Human Rights] – fall within the scope of Article 1 of Protocol No. 1 to the Convention.

The Constitutional Court first reiterates that in these ... proceedings it is examining ... petitions for constitutional review of [the 2003 Liability Act], and not the legislative measure of repealing section 180 of the Obligations Act, which took place in 1996. In that context it has to be taken into account that the legislator on 3 February 1996 stayed all judicial proceedings instituted by actions brought on the basis of section 180 of the Obligations Act because from that date the legal ground for deciding actions for compensation of the damage resulting from acts of terror no longer existed as it had been repealed. In the preceding [passages] it had already been established that this legislative intervention was justified as it had a legitimate aim and pursued the general or the public interest of the community.

It also has to be taken into account that the review of constitutionality of [the 2003 Liability Act] cannot be based on the assumption that all the actions of the [plaintiffs] brought on the basis of section 180 of the Obligations Act, which were not decided by the competent courts before 3 February 1996, were undoubtedly well founded and that the outcome of those proceedings – had they ended before 3 February 1996 – would in all cases undoubtedly be favourable to the [plaintiffs]. Or vice versa. Therefore, the belief of [those plaintiffs] that [the competent courts] would have found their actions well founded if section 180 would have been applied to them – as a result of which the outcome of judicial proceedings would have been favourable for them and they would have obtained full compensation for pecuniary and/or non-pecuniary damage sought – remains mere belief, which, in the opinion of the Constitutional Court, cannot be qualified as 'legitimate [expectation]' and therefore legally protected expectation.

The Constitutional Court reiterates that ... the enforcement of the right to compensation on the basis of section 180 of the Obligations Act was entirely dependent on the competent court's prior finding on whether the conditions set forth in section 180 of the Obligations Act were met in the particular case, that is to say, whether [the act in question] was 'an act of terror or violence' within the meaning of section 180 of the Obligations Act.

The need to satisfy the conditions set forth in section 180 of the Obligations Act in each particular case has to be viewed particularly in the light of detrimental consequences of the war in the Republic of Croatia in early 1990s. ...In such circumstances it was of a particular importance to establish the nature of the tortious act (that is to say, whether the damage in the particular case resulted from war, civil wrong [tort] or a terrorist act), because the application of the relevant rules of the State liability to the damage in question directly depended on that finding.

In these circumstances, the belief of [the plaintiffs] that their particular cases concerned precisely terrorist acts, and that therefore – in their view – the requirements set forth in section 180 of the Obligations Act were met, for which reason they had a legitimate expectation to consider that their actions for damages under section 180 of the Obligations Act constitute 'claims' within the meaning of Article 1 of Protocol No. 1 to the Convention – irrespective of the fact that the competent courts had not decided on those actions before [section 180 of the Obligations Act] had been repealed – the Constitutional Court does not consider sufficient to constitute legally protected 'legitimate expectation'. This is even more so because by repealing section 180 of the Obligations Act ... the actions of the [plaintiffs] were not extinguished. They were merely subsumed under the new legal regulation.

The preceding issue is [closely] connected with the question of retroactive application of certain provisions of the contested [2003 Liability Act].

The petitioners primarily contest the constitutionality of section 10 of [the 2003 Liability Act] considering that it has impermissible retroactive effect because it prescribes that [the 2003 Liability Act] applies to situations originated before its entry into force.

It is beyond doubt that section 10 of [the 2003 Liability Act], which prescribes that judicial proceedings stayed by the operation of law on 3 February 1996 shall be resumed 'according to the provisions of this Act', subsumes decision-making on the well- or ill-foundedness of actions – which the [plaintiffs] brought in the early and mid-1990s on the basis of section 180 of the Obligations Act – under the legal regime of [the 2003 Liability Act]. In that part the contested [2003 Liability Act] is retroactive.

In other words, section 10 of [the 2003 Liability Act], as a transitory statutory provision, legally enables resumption of judicial proceedings stayed after the entry into force of [the 1996 Amendment] and application of the substantive provisions of [the 2003 Liability Act] ... in the resumed judicial proceedings.

The Constitutional Court also notes that section 10 of [the 2003 Liability Act] only confirms the legal fact previously established in [the 1996 Amendment]. Namely, in section 2 paragraph 2 of that Amendment it was clearly provided that the proceedings for damages – instituted under section 180 of the Obligations Act – shall be stayed and resumed 'after the enactment of special legislation which shall regulate liability for damage resulting from terrorist acts'. ...

Consequently, from the day section 180 of the Obligations Act was repealed (3 February 1996), ... it was evident that the stayed proceedings will be resumed only after the enactment of special legislation 'which shall regulate liability for damage resulting from terrorist acts'. From the normative expression formulated in that way it clearly and undoubtedly followed that this new legislation/statute shall be applicable (also) to actions brought on the basis of section 180 of the Obligations Act which were not decided by 3 February 1996. In this regard there was no uncertainty, imprecision or ambiguity which could ... give rise to hopes that the rules identical to those provided in the previously repealed section 180 of the Obligations Act would be applied to [those] actions ....

Having regard to the above findings and the specific circumstances in which the concept of State liability for the damage resulting from terrorist act was evolving in the legal order of the Republic of Croatia, the retroactive effect of several provisions of [the 2003 Liability Act], in particular [its] sections 7 and 8, is not constitutionally questionable in any of its aspects.

As [the 2003 Liability Act] is a special statute which prescribes requirements for State liability for the damage resulting from terrorist acts ... that is, the requirements under which the victim of those acts has a right to indemnification, one of the most important questions the Constitutional Court has had to answer in these proceedings is: whether [the 2003 Liability Act] establishes the requisite balance between the protection of the rights of individuals (that is, the parties/victims in the proceedings for compensation of the damage resulting from acts of terror referred to in section 1 of [the 2003 Liability Act]) and the public or the general interest of the community?

The answer to that question presupposes examination of constitutional permissibility of statutory limitation of the level and scope of the right to compensation of the damage resulting from terrorist acts (...) and the statutory choice of methods of indemnification of the victims.

According to the contested [2003 Liability Act] a victim has a right to financial compensation of the damage resulting from death, bodily injury or impairment of health ...

On the other hand, if the regulation of the right of a victim to compensation for pecuniary damage is examined, it is evident that [the 2003 Liability Act] provides for State liability for such damage but excludes the possibility of its financial compensation. The method whereby the State repairs such damage is reduced to reconstruction of destroyed or damaged immovable property, under the conditions provided in the Reconstruction Act.

The Constitutional Court does not consider it constitutionally problematic to repair pecuniary damage by reconstructing damaged or destroyed material goods instead of paying financial compensation for such damage. In that respect the legislator has a relatively wide margin of appreciation.

From the aspect of the supervision exercised by the Constitutional Court it is important that the legislator, when choosing the method of reparation of the damage inflicted on material goods of natural persons, does not impair the very essence of that right of the potential victim because that would disturb the fair balance between the protection of the rights of individuals and the general or public interests of the community.”

The Constitutional Court then addressed the issue of the costs of proceedings instituted under former section 180 of the Obligations Act. It held as follows:

“While examining [the 2003 Liability Act] from the aspect of reaching a fair balance between the protection of the rights of individuals and the public and the general interests of the community, it remains to answer the following question: Having regard to the situation in which the victims referred to in section 10 of [the 2003 Liability Act] found themselves owing to the justified legislative intervention whereby the judicial proceedings were stayed because section 180 of the Obligations Act was repealed ..., is the petitioners' complaint that [the plaintiffs in those proceedings] today bear a disproportionate and excessive burden by paying the costs of proceedings, including [the costs incurred in] the period before those proceedings were resumed ... on the basis of section 10 of [the 2003 Liability Act], well-founded?

The Constitutional Court finds it necessary to examine that question in these proceedings because it concerns general effects of [the 2003 Liability Act] (substantive legislation) which is applicable in judicial proceedings conducted under the rules of the Civil Procedure Act – the procedural legislation – and affects large number of persons in the identical legal situation, that is, all addressees of section 10 of [the 2003 Liability Act] (... on the entire territory of the Republic of Croatia the total [number] of 381 proceedings were stayed by operation of [the 1996 Amendment]).

In the light of all the above ... the Constitutional Court finds that paying the judicial costs – in which the costs from the date of bringing the actions on the basis of section 180 of the Obligations Act in the early or mid-1990s are included – would lead to shifting on to the plaintiffs a disproportionate and excessive burden which would disturb the balance between the protection of the rights of individuals and the public or the general interests of the community (because of which all judicial proceedings instituted on the basis of section 180 of the Obligations Act, which had been repealed ..., were stayed after 3 February 1996).

It is beyond doubt that the property of the parties affected was destroyed or damaged in the early or mid-1990s. The decision whether the destruction of or damage to that property was caused by an act of terror referred to in section 1 of [the 2003 Liability Act] is in the competence of the ordinary courts which shall in those proceedings apply rules of [the 2003 Liability Act] that entered into force only on 31 July 2003. If an ordinary court, applying [the 2003 Liability Act] to a particular case, finds such an action unfounded, there is no single rational or legitimate reason for such a [plaintiff] to have to pay judicial costs from the day the action was brought on the basis of section 180 of the Obligations Act. It was precisely because of the legislator's intervention that these proceedings were stayed and section 180 of the Obligations Act repealed ... Even though such a legislative intervention was justified it has to be taken into account that it directly influenced the legal situation of plaintiffs whose actions had not yet been decided by the courts by that date, and where those actions could not even have been examined before the courts for more than seven years (in particular, from 3 February 1996 until the resumption of the proceedings, which could have been resumed in August 2003 at the earliest, but under new statutory rules).

The mere fact that [the 2003 Liability Act] enabled the courts to resume the proceedings at issue does not affect the finding that the legislator nevertheless interfered with the previously recognised right of the plaintiffs to seek damages from the State, imposing new conditions under which the State is liable for the damage inflicted on the property of the parties affected.

The principle of proportionality requires that the competent state authorities take these facts into account. Any conduct contrary to that principle would be constitutionally unacceptable because calculating the costs of judicial proceedings from the day the actions were brought would shift a disproportionate and excessive burden on the parties, and the question of violation of the constitutional guarantee of a fair judicial hearing provided for in Article 29 of the Constitution would also arise.

In the light of the foregoing, ..., the Constitutional Court finds that the contested [2003 Liability Act] is not incompatible with the Constitution ...”

The relevant part of the Reconstruction Act (Zakon o obnovi, Official Gazette nos. 24/1996, 54/1996, 87/1996, 57/2000 and 38/2009) provides, inter alia, that the State shall grant reconstruction assistance to the owners of residential property (flats and houses only) which was damaged during the war. The assistance is subject to conditions such as the degree of damage to the property, residence in the property at the date of the beginning of the hostilities, and a statement that the owner will return to the house or flat after its reconstruction. The application is to be submitted to the competent administrative authorities.

Damage to other material goods such as agricultural estates, companies, cooperatives and crafts is to be compensated through loans obtainable from the Croatian Bank for Reconstruction and Development.

Section 154 of the Civil Procedure Act (Zakon o parničnom postupku, Official Gazette of the Socialist Federal Republic of Yugoslavia nos. 4/1977, 36/1977 (corrigendum), 36/1980, 69/1982, 58/1984, 74/1987, 57/1989, 20/1990, 27/1990 and 35/1991 and Official Gazette of the Republic of Croatia nos. 53/1991 with subsequent amendments) provides that the losing party shall pay the winning party's costs.

In its decisions nos. U-III-4020/2003 of 30 June 2004 (Official Gazette of the Republic of Croatia no. 93/2004 of 9 July 2004) and U-III-3097/2005 of 18 October 2007 the Constitutional Court took a view that decisions on costs of proceedings are not decisions concerning meritorious determination of rights or obligations within the meaning of section 62 of the Constitutional Court Act against which a constitutional complaint would be allowed. Therefore, in the first case the Constitutional Court declared inadmissible the constitutional complaint lodged solely against the lower court's decision on costs of proceedings whereas in the second case that court declared inadmissible the constitutional complaint against the lower court's judgment only in so far as it was directed against the decision on costs.

The applicant complained under Articles 6 § 1 and 13 of the Convention about the length of the above two sets of civil proceedings and that there had been no effective remedy in this respect.

The applicant also complained under Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 thereto that Parliament's enactment of the 2003 Liability Act had violated her right of access to a court, to a fair hearing and to peaceful enjoyment of her possessions.

A. Alleged violation of Article 6 § 1 of the Convention on account of the excessive length of the proceedings

The applicant complained that the length of the above two sets of civil proceedings had been incompatible with the “reasonable time” requirement of laid down in Article 6 § 1 of the Convention, which in its relevant part reads as follows:

“In the determination of his civil rights and obligations ..., everyone is entitled to a ... hearing within a reasonable time by [a] ... tribunal...”

The Court reiterates that it has held in similar cases that applicants' complaints that the proceedings concerning their actions for damages were stayed in the period between 3 February 1996 and 31 July 2003 raised an issue of their right of access to a court under Article 6 § 1 of the Convention. It also held that the applicants' length complaints in respect of that period were regarded as absorbed by complaints about lack of access to a court (see Kutić v. Croatia, no. 48778/99, § 34, ECHR 2002 II, and Multiplex v. Croatia, no. 58112/00, § 58, 10 July 2003). The Court sees no reason to depart in the present case from its view expressed in the above-mentioned judgments.

In this connection, the Court notes that it has already found a violation of the applicant's right of access to a court in respect of the above-mentioned period and awarded her just satisfaction on that account (see Milašinović v. Croatia, no. 41751/02, §§ 28 and 38, 24 May 2007).

It follows that the applicant in the present case can only complain about the length of the proceedings in the period after 31 July 2003.

In this connection, the Court first notes that in that period each set of civil proceedings lasted some five years and ten months at four levels of jurisdiction. The Court considers, in the light of the criteria established in its case-law on the question of “reasonable time” (the complexity of the case, the applicant's conduct and that of the competent authorities), and having regard to all the information in its possession, that the length of the two sets of proceedings in that period cannot be considered excessive.

It follows that these complaints are inadmissible under Article 35 § 3 of the Convention as manifestly ill-founded and must be rejected pursuant to Article 35 § 4 thereof.

The applicant also complained under Article 13 of the Convention, taken in conjunction with Article 6 § 1 thereof, that she had not had an effective remedy for her length complaints. Article 13 reads as follows:

“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”

The Court reiterates that Article 13 requires a remedy in domestic law only where an individual has an “arguable claim” that one of his or her rights or freedoms set forth in the Convention has been violated (see, for example, Boyle and Rice v. the United Kingdom, 27 April 1988, § 52, Series A no. 131).

In this connection the Court refers to its above findings according to which the applicant's length complaints are manifestly ill-founded. It follows that her complaint under Article 13 cannot be considered “arguable” for the purposes of Article 13 of the Convention. It is thus also inadmissible under Article 35 § 3 as manifestly ill-founded and must be rejected pursuant to Article 35 § 4 of the Convention.

The applicant further complained that the entry into force of the 2003 Liability Act had violated her right to peaceful enjoyment of possessions as it had retroactively extinguished her civil claims for damages. She relied on Article 1 of Protocol No. 1 to the Convention and the Court's case-law (Pressos Compania Naviera S.A. and Others v. Belgium, 20 November 1995, Series A no. 332). Article 1 of Protocol No. 1 reads as follows:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

The Court first notes that the two civil proceedings the applicant instituted in March 1995 in order to enforce those claims were affected by two legislative measures: the 1996 Amendment to the Obligations Act and the 2003 Liability Act.

By repealing section 180 of the Obligations Act, the 1996 Amendment removed the legal ground for the obligation of the State to compensate the damage caused by terrorist acts and thereby prevented new claims for damages to arise under that provision. However, the 1996 Amendment also provided that civil proceedings for damages instituted under section 180 of the Obligations Act were to be stayed until the enactment of new legislation regulating liability for damage resulting from terrorist acts. It follows the 1996 Amendment did not only prevent new claims from arising but also extinguished already existing claims, including those of the applicant, that had arisen while section 180 of the Obligations Act had still been in force.

This is evident in particular from the Supreme Court's judgment no. Rev-765/05-2 of 24 January 2006 and the Constitutional Court's decision of 19 November 2008.

The Court also notes that it has already held in its decisions in the Ivanović and Dobrotinić cases that the applicants' claims under former section 180 of the Obligations Act for compensation for damage to their property caused by terrorist acts had been extinguished by the entry into force of the 1996 Amendment. It found that this legislative interference took place before the entry into force of the Convention in respect of Croatia, and, accordingly, declared their complaints under Article 1 of Protocol No. 1 inadmissible as incompatible ratione temporis with the provisions of the Convention (see Ivanović v. Croatia (dec.), no. 9573/02, 21 December 2002, and Dobrotinić v. Croatia (dec.), no. 13848/02, 13 February 2003).

Consequently, when the Convention entered into force in respect of Croatia, the applicant had no right under domestic law to seek damages for terrorist acts from the State. When the 2003 Liability Act entered into force on 31 July 2003 it filled the legal gap existing at the time by setting (new) rules governing State liability for damage resulting from terrorist acts.

In these circumstances, the Court cannot accept the applicant's argument that it was the 2003 Liability Act that extinguished her claim for damages against the State. Rather, her claims had been extinguished earlier, by the entry into force of the 1996 Amendment on 3 February 1996. That was before Croatia's ratification of the Convention on 5 November 1997.

That being so, the entry into force of the 2003 Liability Act could not amount to interference with the applicant's property rights, because at the time it occurred she did not have sufficient proprietary interest to constitute a “possession” within the meaning of Article 1 of Protocol No. 1 to the Convention (see, mutatis mutandis, see Slivenko v. Latvia (dec.) [GC], no. 48321/99, § 122, ECHR 2002 II (extracts), and Gaćeša v. Croatia (dec.), no. 43389/02, 1 April 2008).

2. As to whether the applicant's claims for damages ever constituted an “asset” within the meaning of Article 1 of Protocol No. 1 to the Convention

The Court reiterates that an applicant may allege a violation of Article 1 of Protocol No. 1 only in so far as the impugned decisions relate to his or her “possessions” within the meaning of that provision. “Possessions” can be “existing possessions” or claims that are sufficiently established to be regarded as “assets”. Where a proprietary interest is in the nature of a claim, it may be regarded as an “asset” only if there is a sufficient basis for that interest in national law (for example, where there is settled case-law of the domestic courts confirming it), that is, when the claim is sufficiently established to be enforceable (see Kopecký v. Slovakia [GC], no. 44912/98, §§ 49 and 52, ECHR 2004 IX, and Stran Greek Refineries and Stratis Andreadis v. Greece, 9 December 1994, § 59, Series A no. 301 B).

The Court has also referred to claims in respect of which an applicant can argue that he has at least a “legitimate expectation” that they will be realised, that is, that he or she will obtain effective enjoyment of a property right (see, inter alia, Gratzinger and Gratzingerova v. the Czech Republic (dec.) [GC], no. 39794/98, ECHR 2002 VII, § 69, and Kopecký, cited above, § 35). However, a legitimate expectation has no independent existence; it must be attached to a proprietary interest for which there is a sufficient legal basis in national law (see Kopecký, cited above, §§ 45-53). In reality, the question for the Court is therefore whether the applicant has a sufficiently established claim to attract the protection of Article 1 of Protocol No. 1.

On the other hand, a hope of recognition of a property right which it has been impossible to exercise effectively cannot be considered a “possession” within the meaning of Article 1 of Protocol No. 1 (see, inter alia, Gratzinger and Gratzingerova, loc.cit., and Kopecký, loc.cit.).

Turning to the present case, the Court notes at the outset that the applicant, relying on the case of Pressos Compania Naviera S.A. and Others (cited above), suggested that the right to receive damages for the loss she had sustained when unknown perpetrators had blown up her business premises vested in her without the intervention of the courts (see, by converse implication, Kopecký, cited above, § 41). In this connection the Court first notes that under section 186 of the Croatian Obligations Act a claim for damages in principle came into existence as soon as the damage occurred, and that in this respect the instant case is similar to the case of Pressos Compania Naviera S.A. and Others (cited above, § 31), relied on by the applicant. However, the Court also notes that the question whether or not setting off explosive devices in the applicant's business premises constituted “acts violence or terrorist acts” within the meaning of former section 180 of the Obligations Act and, consequently, whether the applicant was entitled to receive damages for the destruction of her property, was to be determined before the competent courts. In this connection, the Court reiterates that, in principle, it cannot be said that an applicant has a sufficiently established claim amounting to an “asset” for the purposes of Article 1 of Protocol No. 1, where there is a dispute as to the correct interpretation and application of domestic law and where the question whether or not he or she complied with the statutory requirements is to be determined in judicial proceedings (see, mutatis mutandis, Kopecký, cited above, §§ 50 and 58). As the Constitutional Court has pointed out in its decision no. U-I-2921/2003 of 19 November 2008, section 180 of the Obligations Act did not provide for a definition of an “act of violence or terrorist act”. Furthermore, in the period before that provision was repealed by the entry into force of the 1996 Amendment, the Supreme Court applied section 180 in one case only (judgment no. Rev-3776/1994-2 of 17 January 1996), in which it gave a rather narrow interpretation of the notion of an “act of violence or terrorist act” that largely reflected the interpretation provided by Croatian legal scholars at the relevant time (see above under Relevant domestic law and practice). Therefore, unlike in the case of Pressos Compania Naviera S.A. and Others, the applicant could not rely on the settled-case law of the domestic courts in support of her claims. This view of the Court is also corroborated by the finding of the Constitutional Court in its decision no. U-I-2921/2003 of 19 November 2008 according to which:

“[It cannot be assumed] that all the actions of the [plaintiffs] brought on the basis of section 180 of the Obligations Act, which were not decided by the competent courts before 3 February 1996, were undoubtedly well founded and that the outcome of those proceedings – had they ended before 3 February 1996 – would in all cases undoubtedly be favourable to the [plaintiffs]. Or vice versa. Therefore, the belief of [those plaintiffs] that [the competent courts] would have found their actions well founded if section 180 would have been applied to them – as a result of which the outcome of judicial proceedings would have been favourable for them and they would have obtained full compensation for pecuniary and/or non-pecuniary damage sought – remains mere belief, which, in the opinion of the Constitutional Court, cannot be qualified as 'legitimate [expectation]' and therefore legally protected expectation.”

For all these reasons, the Court is unable to establish that the applicant's claims for damages would have been granted had section 180 of the Obligations Act remained in force. For the same reasons, the Court is not convinced that the applicant's claims for damages were ever sufficiently established to qualify as “assets” protected by Article 1 of Protocol No. 1 to the Convention.

It follows that this complaint is incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3 and must be rejected pursuant to Article 35 § 4.

D. Alleged violation of Article 6 § 1 of the Convention on account of a legislative measure

The applicant also complained, under Article 6 § 1 of the Convention, that the entry into force of the 2003 Liability Act had rendered the proceedings unfair and had thereby violated her right to a fair hearing. In her view, the Act aimed to influence the judicial determination of a dispute with a view to exonerating the State from liability. The State's intervention in a lawsuit affecting it by means of retroactive legislation violated the principle of equality of arms.

The Court first reiterates that, in principle, the legislature is not precluded in civil matters from adopting new retrospective provisions to regulate rights arising under existing laws. It further reiterates that for a legislative intervention to be in violation of Article 6 § 1 of the Convention, it has to have a prejudicial effect on the outcome of the pending civil proceedings since that Article precludes any interference by the legislature – other than on compelling grounds of the general interest – with the administration of justice designed to influence the judicial determination of a dispute (see, for example, Zielinski and Pradal & Gonzalez Others v. France [GC], nos. 24846/94 and 34165/96 to 34173/96, § 57, ECHR 1999–VII; Stran Greek Refineries and Stratis Andreadis v. Greece, 9 December 1994, § 49, Series A no. 301 B; and Gorraiz Lizarraga and Others v. Spain, no. 62543/00, § 64, ECHR 2004 III).

In this connection, the Court first refers to its findings in respect of the applicant's complaint under Article 1 of Protocol No. 1 and notes that when the 1996 Amendment entered into force on 3 February 1996 it did not only stay all proceedings instituted on the basis of former section 180 of the Obligations Act, including those of the applicant, but also repealed that provision thereby extinguishing all claims arising from it.

It follows that at the moment the Convention entered into force in respect of Croatia on 5 November 1997, the applicant had no right under the domestic law to seek compensation from the State for any damage resulting from terrorist acts. Therefore, the entry into force of the 2003 Liability Act, which regulated, inter alia, State liability for damage to property resulting from such acts, could have neither worsened the applicant's, nor endorsed the State's position in the proceedings. Thus, it did not have any prejudicial effect on the outcome of the applicant's proceedings.

In the light of the foregoing and its above findings in respect of the applicant's complaint under Article 1 of Protocol No. 1 to the Convention, the Court finds that the entry into force of the 2003 Liability Act did not infringe the applicant's rights under Article 6 § 1 of the Convention.

It follows that this complaint is inadmissible under Article 35 § 3 of the Convention as manifestly ill-founded and must be rejected pursuant to Article 35 § 4 thereof.

E. Alleged violation of Article 6 § 1 of the Convention on account of the order to reimburse the State for the costs of proceedings

The applicant also complained that, because the 2003 Liability Act had made her actions devoid of any prospects of success, they had been dismissed and she had had to reimburse the costs of proceedings to the State even though at the time when the actions had been brought they would have been successful.

The Court considers that it cannot, on the basis of the case file, determine the admissibility of this complaint and that it is therefore necessary, in accordance with Rule 54 § 2 (b) of the Rules of Court, to give notice of this part of the application to the respondent Government.

F. Alleged violation of Article 6 § 1 of the Convention on account of lack of access to a court

Lastly, the applicant complained that the 2003 Liability Act had violated her right to effective access to a court provided in Article 6 § 1 of the Convention as after its entry into force her actions had become futile because according to its provisions they lacked any prospects of success.

The Court observes that the Zagreb Municipal Court had initially declared the applicant's actions inadmissible for lack of jurisdiction but that these decisions had subsequently been quashed by the Zagreb County Court and both actions were eventually decided on their merits.

The mere fact that the applicant's actions after the entry into force of the 2003 Liability Act had very limited prospects of success is not equivalent to depriving her of the right of access to a court (see, mutatis mutandis, X. v. the United Kingdom, no. 7443/76, Commission decision of 10 December 1976, Decisions and Reports (DR) 8, pp. 216, 217).

It follows that this complaint is inadmissible under Article 35 § 3 of the Convention as manifestly ill-founded and must be rejected pursuant to Article 35 § 4 thereof.

Decides to adjourn the examination of the applicant's complaint concerning the order to reimburse the costs of proceedings;

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You are here: BAILII >> Databases >> European Court of Human Rights >> Ana MILASINOVIC v Croatia - 26659/08 [2010] ECHR 1327 (1 July 2010) URL: http://www.bailii.org/eu/cases/ECHR/2010/1327.html Cite as: [2010] ECHR 1327