Cancellation of the purchase and sale of a property due to errors by public authorities. The state is responsible and not the citizen
JUDGMENT
Batkivska Turbota Foundation v. Ukraine 9.10.2018 (no. 5876/15)
SUMMARY
The case concerned the applicant organisation being deprived of its ownership of parts of a sanatorium which it had bought from the property arm of Ukraine’s Federation of Trade Unions in 2002. The Federation itself had gained control of the premises through a process which had begun in the Soviet era and its ownership of the assets had been confirmed in a 1997 court ruling. However, in 2011 a prosecutor claimed the property for the State. The domestic courts ultimately ruled that the Federation had had no right to sell the premises as the sanatorium had remained State property and annulled the applicant organisation’s title. The Court found in particular that there was no clear law on who owned such Soviet-era properties – the Federation and its property arm or the State – and that domestic case-law was inconsistent in this respect. The State had also imposed a disproportionate burden on the applicant organisation by depriving it of its property. The Court therefore found that there had been a violation of its rights.
PROVISION
Article 1 of the First Additional Protocol
PRINCIPAL FACTS
The applicant, Batkivska Turbota Foundation, is a charity organisation which was registered in 1999.
In 2000 the applicant organisation founded a social rehabilitation centre to help young people. In August 2002, it bought parts of a sanatorium owned by UPO, an entity which had been created by the Federation of Trade Unions of Ukraine to manage its properties. The applicant organisation subsequently registered its title to the property. However, in August 2011, a prosecutor acting on behalf of the State applied to a court to annul the purchase contract. He argued that the premises that had been sold were State property and had never been transferred from the State to UPO. The first-instance court upheld the prosecutor’s claim. It found that in 1960 the Soviet Ukrainian State had transferred sanatoria and other recreational facilities, including the property in question, to trade unions for their use, but not into their ownership. When UPO had been created in 1991, the premises had therefore still belonged to the State. The court dismissed UPO’s reference to a 1997 judgment which had given it ownership of such Soviet-era assets.
The applicant organisation appealed, stating that it was a bona fide purchaser and had spent about five million hryvnias on renovating the premises. The appeal court found for the applicant organisation in April 2014, rejecting the State’s claim to ownership, but that decision was overturned by the Higher Commercial Court of Ukraine in July 2014.
The Supreme Court rejected an application by the applicant for a review of the case in October of the same year. The State’s title to the property was registered in April 2018. The applicant organisation is still using the facility and has children from “difficult” families there, as well as internally displaced people.
THE DECISION OF THE COURT
The Court noted that any interference with property rights, as had occurred in the present case, had to be lawful in order to conform to the European Convention. Lawful meant that any measure had to have a base in domestic law and that the law had to be accessible and foreseeable as to its effects.
It noted that the domestic case-law on UPO properties was inconsistent as there were significant differences between the findings made by the courts in this case and others similar to it. This was largely because there was no law dealing with the legal status of property in Ukraine that had belonged to Soviet Union civic organisations, such as trade unions.
Such facts meant that the Court had serious doubts as to whether the interference with the applicant organisation’s rights had met the Convention’s quality of law requirement.
The Court also found that the State’s actions had led to the imposition of a disproportionate burden. The applicant organisation had bought the property in 2002, several years after the 1997 court decision confirming the UPO’s ownership, but the prosecutor had not lodged a claim over it until 2011. The State knew or ought to have known long before then about the purchase of the premises.
The applicant organisation’s title had also been duly registered by the authorities. If there had been a mistake in the process, it was the State which had to bear the consequences, unless there was a clear public interest justifying the interference. However, the Government had not made convincing arguments in that regard. The Government had made only general statements about the restoration of the State’s rights over the property, without showing why it needed that property for any particular and compelling reason. Indeed, it had taken until 2018 for the State to register its title to the sanatorium.
The Court held that the interference with the applicant organisation’s property rights raised serious doubts about the lawfulness of the measure and had imposed a disprortionate burden on the applicant, thus violating Article 1 of Protocol No. 1.
Just satisfaction (Article 41)
The Court found that it was not ready in the circumstances of the case to decide on the application of this provision and it reserved the question to a later date, when any subsequent procedure would take due regard of any friendly settlement between the parties(echrcaselaw.com editing).
