MASOKOMBINAT PRIBRAM, a. s. v the Czech Republic - 41493/04 [2011] ECHR 114 (6 January 2011)

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Application no. 41493/04
by MASOKOMBINÁT PŘÍBRAM, a. s.
against the Czech Republic

The European Court of Human Rights (Fifth Section), sitting on 6 January 2011 as a Chamber composed of:

Peer Lorenzen, President,
Karel Jungwiert,
Mark Villiger,
Isabelle Berro-Lefèvre,
Mirjana Lazarova Trajkovska,
Zdravka Kalaydjieva,
Ganna Yudkivska, judges,
and Claudia Westerdiek, Section Registrar,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,

The applicant, Masokombinát Příbram, a.s., is a joint stock company incorporated under Czech law. It is represented before the Court by Mr D. Šachta, a lawyer practising in Prague. The respondent Government are represented by their Agent, Mr V.A. Schorm, from the Ministry of Justice.

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

In a purchase contract concluded in writing on 10 July 1975, Mr and Ms K. sold four plots of land defined in a geometrical plan to the Central-Bohemian Meat Industry (Středočeský průmysl masný). The contract became valid and effective on that day. A purchase price amounting to 52,986.40 Czechoslovak korunas (CSK) was paid to the sellers.

On 7 June 1976 Mr K. died. In inheritance proceedings concerning his estate, the Příbram Public Notary declared, on 25 October 1976, that Ms K. inherited her late husband’s estate, including the relevant part of the plots of land concerned.

On 22 June 1990 the Ministry of Agriculture and Alimentation divided the Central-Bohemian Meat Industry. Masokombinát Příbram, s.p., a state-owned enterprise and the applicant company’s predecessor, emerged as one of its legal successors.

On 7 February 1992 the purchase contract of 10 July 1975 was entered into the land register, on the basis of the geometrical plans of 4 February 1974 and 24 January 1991. On 30 March 1992 it was registered with the Příbram Centre of Geodesy (středisko geodézie). At the date of 13 April 1992 the land register showed Masokombinát Příbram, s. p. as the owner of the plots of land in issue. On 29 April 1992 certain parts of the state enterprise including the plots of land concerned were transferred to the National Property Fund (Fond národního majetku) under a privatisation project (privatizační projekt) of 31 December 1991 and, subsequently, to the applicant company which had been created by the Fund for these purposes in March 1992. The privatisation project expressly noted that the ownership certificate (list vlastnictví) of the plots of land was kept on the name of the former owner, Ms K., and that the new owner upon the purchase contract was not yet entered into the certificate. The purchase contract of 10 July 1975 was part of the privatisation project. The applicant company came into being on 1 May 1992 upon its entry into the companies register.

On 3 August 1993 Ms K. died. In inheritance proceedings concerning her estate, the Příbram District Court (okresní soud) decided, on 7 December 1993, that her estate, including the plots of land at issue, was inherited by her daughters, Ms P. and Ms Ko.

In a judgment of 18 January 1994, the Příbram District Court, upon an action of Ms K. filed on 16 September 1992, declared the purchase contract of 10 July 1975 null and void ab initio for lack of factualness and accuracy, as it was not clear what plots of land had been sold. Although their size was specified, a geometrical plan showing the boundaries of the land was not joined to the contract. The court admitted that the ten-year time-limit of possession of property in good faith necessary for acquiring ownership of the plots of land by the applicant company by means of positive prescription had lapsed. However, in its view, the company had not acquired ownership, as the amendment to the Civil Code (Act. no. 509/1991) required that possession in good faith existed at the entry into force of the Act, on 1 January 1992. Given that in summer 1991 the predecessor of the applicant company was negotiating with Ms K. over the sale of the land, it could not be regarded as being in good faith as the owner of the land since then.

The applicant company as the defendant in the proceedings did not appeal, and the judgment became final on 16 April 1994.

On 14 August 1998 the National Property Fund issued a declaration that the plots of land at issue were included in the privatisation project and as such transferred to the applicant company in 1992.

On 14 October 1999 answering to a letter of the applicant company the Ministry of Finance noted that in 1992 the plots of land had been transferred to the applicant company and that the State had considered itself an owner of the land at the time of the transfer based on the then valid purchase contract of 10 July 1975. Moreover, the Ministry noted that the subsequent decision of the Příbram District Court 18 January 1994 was a new fact and that the applicant company should address the National Property Fund for possible compensation.

D. Action by the applicant company seeking to determine the ownership rights over the plots of land

In a judgment of 17 July 2000 the Příbram District Court dismissed the applicant company’s action against Ms P. and Ms Ko. seeking to determine its ownership over the plots of land concerned.

On 30 March 2001 the Prague Regional Court (krajský soud) quashed this judgment for procedural shortcomings and remitted the case to the District Court which, on 20 December 2001, again dismissed the applicant company’s action.

That judgment was upheld by the Regional Court on 3 September 2002, which held that the purchase contract was uncertain and void. As regard the assertion of positive prescription, the court found that no time-limit had ever been triggered by the applicant company which, if acting with reasonable due diligence, must have been aware that land may have been transferred with other dimensions than those recorded in the land register only if the purchase contract embodied a geometrical plan. This was, however, not done here. Any examination of the alleged negotiations between the predecessor of the applicant company and Ms K. was thus superfluous.

On 18 November 2003 the Supreme Court (Nejvyšší soud) rejected an applicant company’s appeal on points of law (dovolání).

On 3 June 2004 the Constitutional Court (Ústavní soud) dismissed a constitutional appeal by the applicant company.

As the applicant company needed the plots of land at issue for continuing to run its business activities, it concluded with the successors to the former owners, on 4 November 2004, a purchase contract on the basis of which it bought the estates against payment of CZK 14,000,000 (EUR 543,185).

On 24 May 1996 the applicant company brought an action against the National Property Fund for payment of CZK 14,000,000 (EUR 543,185) as compensation corresponding to the purchase price plus two separate amounts of CZK 943,092 (EUR 36,591) and 1,191,708 (EUR 46,237). Later, the applicant company withdrew its claim of CZK 943,092.

In a judgment of 28 June 2005 the Prague Municipal Court granted the applicant company’s action in respect of the original price of the land when it was transferred to the applicant company in 1992 (CZK 1,191,708) and dismissed it in respect of the rest.

On 22 October 2008 the Supreme Court dismissed the applicant company’s appeal on points of law.

On 27 April 2009 the Constitutional Court rejected its constitutional appeal as manifestly ill-founded.

Article 37 § 1 provides that a legal act must be undertaken freely, seriously, with certainty and comprehensibility.

Article 39 stipulates that a legal act whose subject-matter or object contravenes or circumvents law, or is contra bonos mores, is null and void.

Article 130 § 1 provides that a holder who is according to all circumstances in good faith is a rightful holder.

Under Article 134 § 1 a rightful holder becomes an owner of real estate if he or she retains it in his or her continuous possession for ten years.

According to Article 134 § 3 the period of time during which a given thing was possessed by a legal predecessor is to be figured into the time-limit stipulated in paragraph 1 thereof.

The applicant company complained under Article 1 of Protocol No. 1 that it had been deprived of its possession of the plots of land which it had acquired by prescription on 1 January 1992 at the latest.

The applicant company complained that the decisions of the domestic courts that had not uphold its claim of ownership of the plots of land were wrong and an interference with its property rights. It relied on Article 1 of Protocol No. 1 which provides 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 Government maintained that the application had been submitted outside the six-month time-limit within the meaning of Article 35 § 1 of the Convention because only the Příbram District Court’s judgment of 18 January 1994, which had become final on 16 April 1994, could have constituted an interference with the applicant company’s property rights. Consequently, the applicant company had not had legitimate expectations that it would have become the owner of the disputed land in the subsequent proceedings on the determination of property rights, which it instituted in 2000. Thus, this part of the application was incompatible ratione materiae.

The applicant company argued that after the District Court’s judgment, it had been repeatedly reassured by the National Property Fund and other State authorities that it was the owner of the plots of land.

The Court recalls that the deprivation of ownership or of another right in rem is in principle an instantaneous act and does not produce a continuing situation of “deprivation of a right” (see Malhous v. the Czech Republic (dec.), no. 33071/96, ECHR 2000 XII). Moreover, the concept of “possessions” is not limited to “existing possessions” but may also cover assets, including claims, in respect of which the applicant can argue that he has at least a reasonable and “legitimate expectation” of obtaining effective enjoyment of a property right. Under certain circumstances the authorities’ conduct can give rise to such legitimate expectations (Öneryıldız v. Turkey [GC], no. 48939/99, §§ 124, 127-129, ECHR 2004 XII). There is, however, a difference between a mere hope of acquiring a property and a “legitimate expectation” which must be of a nature more concrete and based on a legal provision or a legal act such as a judicial decision (see Gratzinger and Gratzingerova v. the Czech Republic (dec.), no. 39794/98, § 73, ECHR 2002 VII). Similarly, no “legitimate expectation” can be said to arise where there is a dispute as to the correct interpretation and application of domestic law and the applicant’s submissions are subsequently rejected by the national courts (Kopecký v. Slovakia [GC], no. 44912/98, § 50, ECHR 2004 IX). The Court has only limited power to deal with alleged errors of fact or law committed by the national courts (see Jantner v. Slovakia, no. 39050/97, § 32, 4 March 2003).

The Court observes that on 18 January 1994 the District Court declared the purchase contract of 10 July 1975 null and void ab initio and, thus, the claimants to be the owners of the plots of land at issue. The applicant company as the defendant did not appeal, and the judgment became final on 16 April 1994. Even assuming that this judgment constituted an interference with the applicant company’s ownership of the plots of land which it had acquired from the State, the Court considers that it was an instantaneous act, which did not create a continuous situation of the violation of the applicant company’s property rights.

The application, however, arises from the subsequent proceedings for determination of the property rights instituted by the applicant company in 2000. The Court must firstly establish whether at this time the applicant company had a claim of ownership to the plots of land, in respect of which it could argue that it had at least a “legitimate expectation” of obtaining effective enjoyment of its property right.

The applicant company referred to unspecified acts of the National Property Fund and other State authorities between 1994 and 2000, which acknowledged that it was the owner of the plots of land. From its other submissions it seems that it was referring to the 14 October 1999 letter of the Ministry of Finance and the National Property Fund’s declaration of 14 August 1998.

The Court however cannot see how these documents could have given rise to legitimate expectations of the applicant company that it was the owner of the land at that time. These documents contain only undisputed facts that the State considered itself the owner of the plots of land based on the then valid purchase contract in 1992. Nevertheless, the purchase contract was declared null and void in 1994 and this fact was not disputed by any of the above documents. On the contrary, the Ministry of Finance explicitly relied on the court’s decision and informed the applicant company that it could seek compensation from the National Property Fund. The applicant company subsequently sought such compensation and was successful to the extent that the price of the plots of land in 1992 was eventually paid to it.

The Court further notes that the judgment of the District Court of 18 January 1994 made clear that the applicant was not the owner of the land. The Court thus considers that the claim of the applicant company lodged in 2000, that it was the owner of the plots of land, was entirely speculative. The applicant company had at best a mere hope that the courts will rule in its favour. Consequently, when the District Court rejected on 20 December 2001 the applicant company’s action, a decision that was upheld on appeals, there was no interference with any property rights of the applicant company.

It follows that the application is incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3 (a) and must be rejected in accordance with Article 35 § 4.

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You are here: BAILII >> Databases >> European Court of Human Rights >> MASOKOMBINAT PRIBRAM, a. s. v the Czech Republic - 41493/04 [2011] ECHR 114 (6 January 2011) URL: http://www.bailii.org/eu/cases/ECHR/2011/114.html Cite as: [2011] ECHR 114