the right to property - coe

Human rights handbooks, No. 4

The rightto property

A guideto the implementation

of Article 1 of Protocol No. 1to the European Convention

on Human Rights

Monica Carss-Frisk

COUNCILOF EUROPE

COUNCILOF EUROPE

CONSEILDE L’EUROPECONSEILDE L’EUROPE

HR handbook 4_rp1.pmd 02/07/2003, 16:0049

Human rights handbooks, No. 4

The rightto property

A guideto the implementation

of Article 1of Protocol No. 1 to the European

Convention on Human Rights

Monica Carss-Frisk


Directorate General of Human RightsCouncil of Europe

F-67075 Strasbourg Cedex

© Council of Europe, 2001Digital Imagery © 2001 PhotoDisc, Inc.

First impression, November 2001Reprinted August 2003

Printed in Germany

The opinions expressed in this publication are those of the author and do not engage the responsibility of the Council ofEurope. They should not be regarded as placing upon the legal instruments mentioned in it any official interpretationcapable of binding the governments of member states, the Council of Europe’s statutory organs or any organ set up byvirtue of the European Convention on Human Rights.

Handbook No. 1: The right to respect forprivate and family life. A guide to theimplementation of Article 8 of the EuropeanConvention on Human Rights (2001)

Handbook No. 2: Freedom of expression.A guide to the implementation of Article 10of the European Convention on HumanRights (2001)

Handbook No. 3: The right to a fair trial.A guide to the implementation of Article 6of the European Convention on HumanRights (2001)

Handbook No. 4: The right to property.A guide to the implementation of Article 1of Protocol No. 1 to the EuropeanConvention on Human Rights (2001)

Handbook No. 5: The right to liberty andsecurity of the person. A guide to theimplementation of Article 5 of the EuropeanConvention on Human Rights (2002)

Handbook No. 6: The prohibition of torture.A guide to the implementation of Article 3of the European Convention on HumanRights (2003)

Précis no 1: Le droit au respect de la vie

privée et familiale. Un guide sur la mise enœuvre de l’article 8 de la Conventioneuropéenne des Droits de l’Homme (2003)

Précis no 2: La liberté d’expression. Un guide

sur la mise en œuvre de l’article 10 de laConvention européenne des Droits del’Homme (2003)

Précis no 3: Le droit à un procès équitable.

Un guide sur la mise en œuvre de l’article 6de la Convention européenne des Droits del’Homme (2002)

Précis no 4: Le droit à la propriété. Un guide

sur la mise en œuvre de l’article 1 duProtocole n

o 1 à la Convention européenne

des Droits de l’Homme (2003)

Précis no 5: Le droit à la liberté et la sûreté de

la personne. Un guide sur la mise en œuvrede l’article 5 de la Convention européennedes Droits de l’Homme (2003)

Précis no 6: L’interdiction de la torture.

Un guide sur la mise en œuvre de l’article 3de la Convention européenne des Droits del’Homme (2003)

Human rights handbooks series


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Contents

I Overview . . . . . . . . . . . . . . . . . . . . . . 5

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Broad overview of the right: . . . . . . . . . . . . . . . . . 6Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6The three rules . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Justification: permissible interferenceswith property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8The questions to be asked . . . . . . . . . . . . . . . . . . . 9

II The scope of the right to property . . 10

“Autonomous” concept of what is a “possession” 17No guarantee of the right to acquire propertyin the future . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18The property of corporations . . . . . . . . . . . . . . . 19

III The three rules . . . . . . . . . . . . . . . . . 21The second rule . . . . . . . . . . . . . . . . . . . . . . . . . 21The third rule . . . . . . . . . . . . . . . . . . . . . . . . . . . 24The first rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24The significance of the three rules analysis . . . . . 25

IV Justifying an interferencewith the right to property . . . . . . . . . 26

The public or general interest . . . . . . . . . . . . . . . 26Proportionality . . . . . . . . . . . . . . . . . . . . . . . . . . 31Taxing measures . . . . . . . . . . . . . . . . . . . . . . . . . 36Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 37Legal certainty . . . . . . . . . . . . . . . . . . . . . . . . . . 40

V Other issues . . . . . . . . . . . . . . . . . . . 44Reading Article 1 of Protocol No. 1with Article 14 . . . . . . . . . . . . . . . . . . . . . . . . . . 44Continuing violations . . . . . . . . . . . . . . . . . . . . . 44Application of the right to property as betweenprivate parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 45


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I Overview

Introduction

1. Article 1 of Protocol No. 1 to the EuropeanConvention on Human Rights guarantees theright to property.

1

2. It provides:“Every natural or legal person is entitled to the peacefulenjoyment of his possessions. No one shall be deprivedof his possessions except in the public interest and sub-ject to the conditions provided for by law and by thegeneral principles of international law.The preceding provisions shall not, however, in any wayimpair the right of a state to enforce such laws at itdeems necessary to control the use of property in ac-cordance with the general interest or to secure the pay-ment of taxes or other contributions or penalties.”

3. The Convention is not alone among interna-tional human rights instruments in recognisingthe right to property.

2 The inclusion of the right

in the European Convention, however, was con-troversial. The United Kingdom and Sweden, inparticular, were concerned as to whether in-cluding the right to property in the Conventionmight place too much of a fetter on the powerof States to implement programmes of nation-

1 Marckx v. Belgium, A31 (1979).2 The Universal Declaration of Human Rights provides, for

example, that “1. Everyone has the right to own propertyalone as well as in association with others. 2. No one shallbe arbitrarily deprived of his property.” (Cf. the Interna-tional Covenant on Civil and Political Rights, where theright has not been included).

3 See Harris, O’Boyle and Warbrick, Law of the EuropeanConvention on Human Rights (1995), p. 516.


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alisation of industries for political and socialpurposes.

3 The formulation that was ultimately

adopted provides a qualified right to property.4

4. The State accordingly has a wide margin ofappreciation

5 in implementing social and eco-

nomic policies that have the effect of interfer-ing with the right to property.

6 But this does not

mean that the Court has no role to play in as-sessing the legitimacy of such an interference.As the European Court of Human Rights ob-served in James v. the United Kingdom:

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…although the Court cannot substitute its own assess-ment for that of the national authorities, it is bound toreview the contested measure under Article 1 of ProtocolNo. 1 and, in so doing, to make an inquiry into thefacts with reference to which the national authoritiesacted. (para. 46)

5. Particularly in recent years, there have beenmany cases in which the European Court ofHuman Rights has found that the State has ex-ceeded its margin of appreciation and has vio-lated the right to property guaranteed byArticle 1 of Protocol No. 1.

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Broad overview of the right

Scope6. The first thing to bear in mind when consider-

ing Article 1 of Protocol No. 1 is that the con-cept of property, or “possessions”, is verybroadly interpreted. It covers a range of eco-nomic interests. The following have been heldto fall within the protection of Article 1: mov-able or immovable property, tangible or intan-gible interests, such as shares, patents, anarbitration award, the entitlement to a pen-sion, a landlord’s entitlement to rent, the eco-nomic interests connected with the running ofa business, the right to exercise a profession, alegitimate expectation that a certain state ofaffairs will apply, a legal claim, and the clienteleof a cinema.

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7. But the protection of Article 1 of ProtocolNo. 1 does not apply unless and until it is pos-sible to lay a claim to the property concerned:it is only existing property and not the right toacquire property in the future which is pro-tected. It follows that an expectation to inheritproperty in the future, for example, will not beprotected under Article 1.

8. It is important to bear in mind that corporatebodies, as well as natural persons, may invoke

4 See, in particular, thesecond paragraph of Arti-cle 1 of Protocol No. 1.

5 As to the concept of “mar-gin of appreciation”, seeparas. 94 ff.

6 James v. the United King-dom, A98 (1986),para. 46.

7 A98 (1986).8 See, for example,

Sporrong and Lonnrothv. Sweden, A52 (1982);Hentrich v. France,A 296-A (1994); HolyMonasteries v. Greece,A 301-A (1994); PressosCompania Naviera SAv. Belgium A332 (1995);Aka v. Turkey 1998-VI(1998); Papachelasv. Greece (25 March1999); Brumarescuv. Romania (28 October1999); Immobiliare Saffiv. Italy (28 October1999); Spacek v. theCzech Republic (9 Nov-ember 1999); Beyelerv. Italy (5 January 2000);Chassagnou v. France(29 April 2000);Carbonara and Venturav. Italy (30 May 2000);Former King of Greeceand Others v. Greece(23 November 2000).

9 For a detailed considera-tion of the case-law on


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Article 1 of the Protocol.10

The three rules9. Article 1 of Protocol No. 1 has been held to

comprise three distinct rules. This analysis wasfirst put forward by the European Court ofHuman Rights in its judgment in Sporrong andLönnroth v. Sweden.

11 This is one of the most im-

portant decisions of the Court under Article 1of Protocol No. 1.

10. The case concerned some very valuable proper-ties (buildings and land) in central Stockholm inSweden. The County Administrative Board de-cided that the properties were needed for de-velopment, and so imposed two different kindsof measures: expropriation permits (whichmeant that the property might in the future beexpropriated) and prohibitions on construction(which prevented any construction of anykind). One of the properties was subject to anexpropriation permit for a total of 23 years andto a prohibition on construction for 25 years.Another property was subject to an expropria-tion permit for 8 years and to a prohibition onconstruction for 12 years. During the timewhen these measures were in place, it obvi-ously became much more difficult to sell theproperties. The measures were eventually lifteddue to a change in planning policy. The owners

of the properties complained to the EuropeanCourt of Human Rights under Article 1 of Proto-col No. 1. They had received no compensationfor the time when their properties were affectedby the relevant measures.

11. The first question for the Court was whetherthere was any interference with property at all,within the meaning of Article 1. The SwedishGovernment argued that the expropriation per-mits and prohibitions on construction weresimply an intrinsic part of town planning, anddid not impair the right to peaceful enjoymentof possessions at all. But the Court was quick toreject this argument. It noted that although le-gally the owners’ title to their property (i.e.ownership) remained intact, in practice thepossibility of exercising the right to propertywas significantly reduced. The Court observedthat, by virtue of the expropriation permits, theapplicants’ right to property became “precari-ous and defeasible”.The Court therefore found that there was an in-terference with applicants’ right to property. Itthen set out its analysis of Article 1 as compris-ing three rules:That Article [Article 1 of Protocol No. 1] comprisesthree distinct rules. The first rule, which is of a generalnature, enounces the principle of peaceful enjoyment ofproperty; it is set out in the first sentence of the firstparagraph. The second rule covers deprivation of pos-

this aspect, see below,paras. 42 ff.

10 This is clear from thewording of the first line ofArticle 1: “Every naturalor legal person is enti-tled…” (emphasis added).

11 A52 (1982).


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sessions and subjects it to certain conditions; it appearsin the second sentence of the same paragraph. The thirdrule recognises that the States are entitled, amongstother things, to control the use of property in accord-ance with the general interest, by enforcing such laws asthey deem necessary for the purpose; it is contained inthe second paragraph. (para. 61).

12. The Court then considered whether the secondrule applied and held that there was no expro-priation, or deprivation of property. The appli-cants were at all times entitled, as a matter oflaw, to use, sell, donate and otherwise deal withthe properties. Although it had become moredifficult to sell the properties because of themeasures in question, it was still possible forthe applicants to do so. Therefore, the secondsentence of the first paragraph (i.e. the secondrule) did not apply.

13. So far as the second paragraph of Article 1 wasconcerned (i.e. the third rule), it was held thatthis clearly applied to the prohibitions on con-struction, which involved the control of use ofthe property. The expropriation permits, on theother hand, had to be considered under thefirst sentence of the first paragraph (i.e. the firstrule), because they were not deprivations ofproperty, nor were they intended to control theuse of property.

Justification: permissible interfer-ences with property14. Having decided that there is an interference

with property within one of the three rules ofArticle 1 of Protocol No. 1, the next step is todecide whether that interference can be justi-fied by the State. If it can be justified (the bur-den of proof being on the State), there will beno violation of Article 1 of the Protocol.

15. In order to be justified, any interference withthe right to property must serve a legitimateobjective in the public, or general, interest.

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16. But it is not sufficient that the interferenceserves a legitimate objective. It must also beproportionate. In Sporrong and Lönnroth v. Sweden(above), the Court made the following impor-tant statement of principle concerning the jus-tification of an interference:…the Court must determine whether a fair balancewas struck between the demands of the general interestsof the community and the requirements of the protec-tion of the individual’s fundamental rights… Thesearch for this balance is inherent in the whole of theConvention and is also reflected in the structure of Ar-ticle 1 [of Protocol No. 1]. (para. 69) (emphasis added)Applying this test, the Court found that the fairbalance had been upset in that case. In an-other significant statement of principle, quotedagain and again in its later judgments, the

12 James v. the United King-dom, A98 (1986),para. 46.


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Court stated:Being combined in this way, the two series of measurescreated a situation which upset the fair balance whichshould be struck between the protection of the right toproperty and the requirement of the general interest:the Sporrong Estate and Mrs Lönnroth bore an indi-vidual and excessive burden which could have beenrendered legitimate only if they had had the possibilityof seeking a reduction of the time-limits or of claimingcompensation. Yet at the relevant time Swedish law ex-cluded the possibilities and it still excludes the second ofthem. (para. 73) (emphasis added)

17. So it is necessary to consider whether any in-terference with property strikes a fair balancebetween the protection of the right to propertyand the requirement of the general interest.Such a fair balance will not have been struckwhere the individual property owner is made tobear “an individual and excessive burden”.

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The application of these criteria is consideredin more detail below.

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18. An interference with property is also subject tothe requirement of legal certainty, or legality.This requirement is expressly stated in the sec-ond sentence of the first paragraph of Article 1of Protocol No. 1, where it is provided that adeprivation of property must be “subject to theconditions provided for by law”. But the princi-ple of legal certainty is inherent in the Conven-tion as a whole, and must be complied with

whichever of the three rules of Article 1 applies.19. Legal certainty requires the existence of and

compliance with adequately accessible and suf-ficiently precise domestic legal provisions,which satisfy the essential requirements of theconcept of “law”. In other words, the phrase“subject to the conditions provided for by law”is not restricted to domestic law alone. TheConvention seeks to ensure that the domesticlaw itself complies with the essential require-ments of “law”. This involves a fair and properprocedure, namely, that the measure in ques-tion should issue from and be executed by anappropriate authority and should not be arbi-trary.

15 There must also be procedural safe-

guards against the misuse of powers of theState. The principle of legal certainty is consid-ered further below.

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The questions to be asked20. It follows from the above that the relevant ques-

tions to be asked when considering whether therehas been a violation of the right to property guar-anteed by Article 1 of Protocol No. 1 are:

(i) Is there a property right, or possession, withinthe scope of Article 1?

(ii) Has there been an interference with that pos-session?

(iii) Under which of the three rules of Article 1 does

13 Sporrong and Lönnrothv. Sweden, A52 (1982),para. 73.

14 See below, paras. 20 ff.15 Winterwerp v. the Neth-

erlands, A33 (1979).16 See below, paras. 149 ff.


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the interference fall to be considered?(iv) Does the interference serve a legitimate objec-

tive in the public or general interest?(v) Is the interference proportionate? That is, does

it strike a fair balance between the demands ofthe general interest of the community and therequirements of the protection of the individu-al’s fundamental rights?

(vi) Does the interference comply with the principleof legal certainty, or legality?

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21. If there has been an interference with a posses-sion, the interference will be incompatible withArticle 1 of Protocol No. 1 if the answer to anyone of questions (4) to (6) is “no”.

II The scopeof the right to property

22. As indicated above, the concept of what con-stitutes property, or “possessions”, in Article 1of Protocol No. 1 is wide. A range of eco-nomic interests falls within the scope of theright to property, including movable or immov-able property, tangible or intangible interests.

23. That Article 1 applied to the ownership ofshares in a company, for example, was recog-nised by the European Commission of HumanRights in 1982 in Applications Nos. 8588/79and 8589/79, Bramelid and Malmström v. Sweden(1982).

18 The case concerned two private indi-

viduals who owned shares in a large well-knowndepartment store in Stockholm, Sweden. In1977 a new Company Act was passed, whichhad the effect that any company which ownedmore than 90% of the shares and voting rightsin another company was entitled to compel theremaining minority of shareholders to sell theirshares to it, at the same price as would havebeen paid if it had purchased the sharesthrough a public offer, or otherwise at a pricefixed by arbitrators. The minority shareholderscomplained to the Commission about the ap-plication of the new law to them. They argued

17 In Iatridis v. Greece(25 March 1999), theEuropean Court ofHuman Rights empha-sised the importance ofthis requirement andstated that this was thefirst question to be asked,because if the interfer-ence was not lawful, itcould not be compatiblewith Article 1 of ProtocolNo. 1 (para. 58). Thisrequirement has, how-ever, been listed as thelast question above, be-cause it is anticipated thatin most cases the primaryquestions will be whetherthe interference served alegitimate objective andwhether it was propor-tionate.

18 See Appl. No. 12633/87,Smith Kline and FrenchLaboratories v. the Neth-erlands (1990), for recog-nition of the fact thatArticle 1 of ProtocolNo. 1 may apply to theownership of patents.


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that they had had to surrender their shares tothe majority shareholders at less than marketvalue. (The price had been fixed by arbitrators).

24. The Commission first considered whether theshares amounted to “possessions” within themeaning of Article 1 of Protocol No. 1. Theyconsidered what a complex thing a share was: acertificate that promises the holder a share inthe company, together with correspondingrights (especially voting rights). It also involvedan indirect claim on company assets. Therewas no doubt in this case that the shares hadeconomic value. The Commission thereforeconsidered that the shares were “possessions”.

25. On the question of which of the three rules ofArticle 1 applied, the Commission consideredthat the application of the Company Act to theshares of the minority shareholders did not fallwithin the second, “deprivation”, rule as theapplicants had argued. The Commission ob-served that although there was no express ref-erence to “expropriation” in Article 1, itswording showed clearly that the second rulewas intended to refer to expropriation, i.e. theaction whereby the State lays hands – or au-thorises a third party to lay hands – on a par-ticular piece of property for a purpose which isto serve the public interest. This interpretationwas confirmed by the travaux préparatoires toArticle 1. The Commission considered that the

legislation complained of was something com-pletely different. It concerned relations be-tween private individuals. So the secondsentence did not apply.

26. The Commission then noted that in all theStates Parties to the Convention, the legislationgoverning private law relations between indi-viduals includes rules which determine the ef-fects of these legal relations with respect toproperty and, in some cases, compel a personto surrender a possession to another. Examplesinclude the division of inherited property, espe-cially agricultural, the division of matrimonialestates and in particular the seizure and sale ofproperty in the course of execution. The Com-mission considered that this type of rule, whichis essential in liberal society, cannot in principlebe contrary to Article 1 of Protocol No. 1. Butthe Commission nevertheless had to make surethat, in determining the effects on property oflegal relations between individuals, the law didnot create such inequality that one personcould be arbitrarily and unjustly deprived ofproperty in favour of another. In the case be-fore it, it found no such inequality.

27. Bramelid and Malmström v. Sweden (above) is sig-nificant not only because it recognises thatshare ownership falls within the protection ofArticle 1 of Protocol No. 1, but also because itmakes clear that this Article is capable of apply-


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ing to legislation which affects legal relationsbetween private individuals.

28. In the more recent case of Stran Greek Refineriesand Stratis Andreadis v. Greece,

19 the European

Court of Human Rights held that an arbitra-tion award was a “possession” for the pur-poses of Article 1 of Protocol No. 1. By acontract made in 1972, Mr Andreadis con-tracted with the State (then under the controlof a military dictatorship) for the constructionof a crude oil refinery near Athens in Greece bya company owned by him (“Stran”). The costwas to be about US$ 76 million. The State rati-fied the contract by legislative decree, but sub-sequently failed to fulfil its part of the bargain.Once democracy had been restored in Greece,the State considered that the contract was con-trary to the national economy and terminatedit. Stran had incurred large costs before thecontract was terminated. A dispute arose, andStran brought legal proceedings against theState in Athens. The State argued that the Ath-ens court lacked jurisdiction and that the caseshould go to arbitration. It proceeded to ap-point an arbitration tribunal and requested it tofind all the legal claims of Stran unfounded. Butinstead the arbitration court found in favour ofStran, ordering the payment by the State toStran of over US$16 million. The State then ap-plied to the court to set aside the award, on the

basis that the arbitration court lacked jurisdic-tion. The State lost in the court of appeal.While the case was subsequently pending inthe court of cassation, the State in 1987 en-acted a new law, which had the effect of render-ing the arbitration award in Stran’s favour voidand unenforceable. Stran and Mr Andreadiscomplained to the Strasbourg organs, inter alia,under Article 1 of Protocol No. 1 to the Con-vention.

29. Much of the case before the European Court ofHuman Rights was concerned with Article 6 ofthe Convention. In relation to Article 1 of Pro-tocol No. 1, the State argued that no “posses-sion” had been interfered with. Theycontended that an arbitration award could notbe equated with the right which might be rec-ognised by such an award. The Court observedthat it had to decide whether the award hadgiven rise to a debt in Stran’s favour which wassufficiently established to be enforceable. Itconcluded that it had. The award was on itsface final and binding. It did not require any fur-ther enforcement measure, and there was noordinary or special appeal against it. Strantherefore had a property right which fell withinthe scope of Article 1 of Protocol No. 1 at thetime when the annulling law was passed in1987.

30. Pressos Compania Naviera SA v. Belgium20

is a19 A301-B (1994).20 A332 (1995).


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somewhat similar case, which also demon-strates the breadth of the concept of property,or “possessions” for these purposes. It is an-other case concerning a legal claim. Here theapplicants were ship owners whose ships wereinvolved in collisions in the territorial waters ofBelgium. They considered that the collisionswere due to the negligence of Belgian pilots(for whom the State was responsible accordingto Belgian law), and brought proceedingsagainst the State. By an Act of 30 August 1988,the Belgian legislature effectively excluded li-ability for damage in the cases in question.

31. The ship owners complained under Article 1 ofProtocol No. 1, arguing that their right to prop-erty had been violated. The State disputed thatthe applicants had any “possessions”, and ar-gued that they had had no recognised claimswhich had been determined by a judicial deci-sion having final effect.

32. The European Court of Human Rights statedthat although the concept of “possession” isautonomous,

21 it was relevant to consider the

position as a matter of domestic (Belgian) law.It noted that under Belgian law claims for com-pensation for torts came into existence assoon as damage occurred. Such a claim con-stituted “an asset” and therefore amountedto a “possession”, within the meaning of Arti-cle 1 of Protocol No. 1. In addition, based on

judicial determinations prior to the passing ofthe 1988 Act, the applicants could argue thatthey had a legitimate expectation that theirclaims could be determined in accordance withthe general law of tort.

33. The 1988 Act was held to amount to an interfer-ence with the right to property, as it preventedthe applicants from enjoying the rights they hadhad before the Act.

34. Another case which illustrates the width of thescope of Article 1 of Protocol No. 1 is Pine ValleyDevelopments Ltd v. Ireland,

22 where the European

Court of Human Rights held that Article 1 wascapable of protecting a legitimate expecta-tion that a certain state of affairs will apply. Inthat case, the applicant bought a plot of land in1978, relying on an existing grant of outlineplanning permission for industrial develop-ment. Subsequently, in 1982, the Irish SupremeCourt held that the original grant of outlineplanning permission was ultra vires and a nullityab initio, since it was contrary to the relevantlegislation. The applicant claimed that the deci-sion of the Supreme Court was contrary to hisright to property guaranteed by Article 1 of Pro-tocol No. 1.

35. The Court asked itself first whether the applicantever enjoyed any right to develop the landwhich could be the subject of an interferenceunder Article 1, given the ruling of the Supreme

21 I.e. domestic law is notconclusive as to whethersomething amounts to aproperty right or “posses-sion”.

22 A 222 (1991).


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Court, which meant that as a matter of Irish lawhe enjoyed no such right. The Court held thathe did, because when he bought the land he didso in reliance on a permission duly recorded ina public register, which he was entitled to as-sume was valid. The Court said that in these cir-cumstances it would be “unduly formalistic” tohold that the decision of the Supreme Courtdid not constitute an interference with the ap-plicant’s property.

23 Until that decision was

given, the applicant had at least a legitimate ex-pectation that he could carry out the proposeddevelopment, and this had to be regarded forthe purposes of Article 1 of Protocol No. 1 as acomponent of the property (i.e. the land) inquestion.

36. In Van Marle v. the Netherlands,24

the EuropeanCourt of Human Rights had to consider whethera professional clientele could be protectedunder Article 1 of Protocol No. 1. The appli-cants had practised as accountants for someyears, when in 1972 a new statute was adoptedwhich required them to seek registration by aBoard of Admission if they wanted to continueto practise. They applied for registration andthis was refused in 1977. An appeal to theBoard of Appeal was unsuccessful, after the ap-plicants had been interviewed. The Board tookthe view that they had provided some unsatis-factory answers and had not shown sufficient

professional competence. The applicantsclaimed that the decision of the Board wascontrary to Article 1 of Protocol No. 1 becauseas a result of it their income and the value ofthe goodwill of their accountancy practiceshad diminished. They argued that the decisionamounted to an interference with the peacefulenjoyment of their possessions, and that theyhad been partially deprived of their posses-sions without compensation.

37. The State argued that the applicants had no“possessions” for the purposes of Article 1, butthe Court disagreed. It held that the right theyrelied on “may be likened to the right of prop-erty” embodied in Article 1. By dint of theirown work, the Applicants had built up a clien-tele; this in many respects had the natureof a private right and constituted an assetand, hence, a “possession”.

38. Further, the refusal to register the applicantsradically affected the conditions of their pro-fessional activities and the scope of those ac-tivities was reduced. Their income fell, as didthe value of their clientele and, more generally,their business. Consequently, there was an in-terference with their right to the peaceful en-joyment of their possessions.

39. Tre Traktörer Aktiebolag v. Sweden25

is another ex-ample of the application of Article 1 of Proto-col No. 1 to the economic interests connected

23 Para. 51.24 A101 (1986).25 A159 (1989).


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with the running of a business. The applicantwas a Swedish limited company. It took overthe management of a restaurant called “Le Car-dinal” (in 1980). The restaurant had previouslybeen granted a licence to serve alcohol. Con-cerns arose as to the lady who was behind theapplicant company, as to her tax affairs andgenerally as to her ability to manage the restau-rant. In July 1983, the County AdministrativeBoard decided to revoke the licence with im-mediate effect. The company argued that as aresult, the restaurant had to be closed the verynext day (although this was disputed on behalfof the State). An appeal to a further administra-tive authority was rejected, as was a claim ad-dressed to the Government for compensationas a result of the withdrawal of the licence.

40. The applicants complained to the EuropeanCourt of Human Rights under Article 6 as wellas under Article 1 of Protocol No. 1 to the Con-vention. As to the latter, the State argued that alicence to serve alcohol could not constitute a“possession” for the purposes of Article 1. Butthe Court, like the Commission, consideredthat the “economic interests connectedwith” the running of the restaurant were“possessions” for these purposes. The main-tenance of the licence was one of the principalconditions for the carrying on of the applicantcompany’s business, and its withdrawal had

adverse effects on the goodwill and value of therestaurant. Such withdrawal constituted an in-terference with the peaceful enjoyment of pos-sessions.

41. The Court then recited the three rules of Arti-cle 1. It said that, severe though it might be, theinterference did not fall within the ambit of thesecond sentence of the first paragraph. The ap-plicant company, although it could no longeroperate “Le Cardinal” as a restaurant, keptsome economic interests represented by theleasing of the premises and the property assetscontained therein, which it finally sold in 1984.There was therefore no deprivation of propertywithin the second rule. The withdrawal of the li-cence was therefore a measure for the controlof use of property, under the second paragraphof Article 1.

42. The same approach of looking at business in-terests as “possessions” was adopted in the re-cent case of Iatridis v. Greece (25 March 1999).Here, a Mr K.N. had inherited an estate inGreece, on which he decided to build an openair cinema (having obtained the necessary per-mit from the authorities). There was subse-quently a dispute as to ownership of the landon which the cinema was built, and the Stateclaimed it. Notwithstanding this, the State alsoclaimed inheritance tax from K.N.’s heirs in re-spect of it (in 1976). The dispute as to owner-


16

ship continued, and in 1978, K.N.’s heirs leasedthe cinema to the applicant, who restored it. In1989, the authorities ordered the applicant tobe evicted. The eviction order was then forciblyexecuted, and the cinema given to the localtown council.

43. On the question of whether the applicant hadany “possession” within the meaning of Arti-cle 1 of Protocol No. 1, the Court reiteratedthat the concept of “possession” in Article 1has an autonomous meaning which was cer-tainly not limited to the ownership of physicalgoods; certain other rights and interests consti-tuting assets could also be regarded as “prop-erty rights”, and thus as “possessions” for thepurposes of Article 1.

26

44. The Court made it clear that it could notdetermine the dispute under domestic law as towho owned the land, but noted that before theapplicant was evicted he had been responsiblefor the operation of the cinema under a leasewhich was formally valid, without anyinterference from the authorities, as a result ofwhich he had built up a clientele whichconstituted an asset.

45. The Court then recited the three rules of Arti-cle 1. Since the applicant held a lease of thepremises, there was neither an expropriationnor an instance of control of use, but an inter-ference within the first rule of Article 1.

46. In Mellacher v. Austria,27

the Court had to con-sider an interference with a landlord’s contrac-tual entitlement to rent.

28 The applicants jointly

owned a large building in Graz in Austria com-prising a number of flats leased to tenants. Asystem of rent control had existed in Austriasince World War I. But this did not apply tohouses constructed after 1917 or to certainother flats. In 1981 a new Rent Act was intro-duced after heated debate, to bring aboutoverall reform. It had the effect for the appli-cants of vastly reducing the rents they were en-titled to under existing tenancy agreements.They complained that the legislation interferedwith their freedom of contract and entitlementto future rent. The existing rents had been con-tractually agreed under the old law.

47. It was not disputed that the reduction in rentmade pursuant to the 1981 Act constituted aninterference with the applicants’ enjoyment oftheir rights as owners of the building. The appli-cants claimed that this was a de facto expropria-tion of their property (the building), and thatthey had in any event been deprived of theircontractual right to receive rent. The Courtheld that there had been no de facto expropria-tion of property, as there had been no transferof the applicants’ property, nor had they beendeprived of their right to use, let or sell it. Ad-mittedly the effect of the Act was to deprive

26 Para. 54.27 A169 (1989).28 See also Appl. No. 10741/

84, S v. the United King-dom (1984), where theCommission consideredthat Article 1 of ProtocolNo. 1 applied to the ben-efit of a restrictive cov-enant and the entitlementto annual rent.


17

them of part of their income from the property.This amounted in the circumstances to a con-trol of use of property.

48. The entitlement to a pension is also capableof falling within the protection of Article 1 ofProtocol No. 1. This issue was considered in anearly decision by the European Commission ofHuman Rights, Application No. 5849/72, Müllerv. Austria (1975). Mr Müller had worked as alocksmith in Austria and Luxembourg for manyyears, making compulsory and voluntary contri-butions to a State-run old-age insurancescheme. As a result of a treaty entered into be-tween Austria and Luxembourg, part of his con-tributions could no longer count towards hismain pension, but only towards a supplemen-tary pension. This meant that when Mr Müllercame to retire in 1970, he did not get as muchby way of pension benefit as he had expected.He argued that the application of the treaty tohim involved a violation of his right to propertyunder Article 1 of Protocol No. 1.

49. When considering his argument, the EuropeanCommission of Human Rights made it clearthat the right to an old-age pension is not in-cluded as such among the Convention rights.But it decided that the making of compulsorycontributions to a pension fund might create aproperty right in a portion of such a fund andthat such a right might be affected by the way

the fund was distributed.The Commission was also prepared to assume,without deciding, that voluntary pension con-tributions could equally give rise to a right safe-guarded by Article 1 of Protocol No. 1.

50. Ultimately, the Commission rejected Mr Müller’sclaim, on the basis that although Article 1 mightguarantee a person the right to derive benefit, itcannot be interpreted as entitling that person toa particular amount. But the decision is impor-tant in that it shows that pension rights based oncontributions to a fund may fall within the pro-tection of Article 1. This does not of coursemean that Article 1 of Protocol No. 1 guaranteesentitlement to pension or social security ben-efits where there is no basis for such benefits asa matter of domestic law.

“Autonomous” concept of what is a“possession”51. It is important to bear in mind that in order for

Article 1 of Protocol No. 1 to come into play, itis not necessary for domestic law to recognisethe relevant interest as a property right: theconcept of “possessions” is autonomousfor Convention purposes.

52. A good example of this is Tre Traktörer Aktiebolagv. Sweden,

29 where (as indicated above) the Court

recognised that the established economic in-29 A159 (1989), para. 53.


18

terests in connection with the running of abusiness attracted the protection of Article 1 ofProtocol No. 1.

53. But in order to invoke the protection of Arti-cle 1, a person must enjoy some right as a mat-ter of domestic law, which may be regarded as aproperty right from the Convention perspec-tive. This point is illustrated by ApplicationNo. 11716/85, S. v. the United Kingdom (1986),where the European Commission of HumanRights held that the occupation of propertywithout a legal right was not protected underArticle 1 of Protocol No. 1.

54. In this case a woman had lived “as man andwife” for many years with another woman. Theother woman was a tenant of the local author-ity, but the applicant had no legal right in theproperty or the tenancy. When her partner – thetenant – died, the applicant applied to the Eng-lish court for the tenancy to vest in her, as sur-viving partner of the tenant. But the Englishcourt held that the law did not allow this: onlythe surviving spouse of a heterosexual couplethat had married could claim a tenancy. Beforethe European Commission of Human Rights,the applicant relied primarily on Article 8, butalso on Article 1 of Protocol No. 1. The Com-mission rejected this claim out of hand. Itnoted that the applicant had no contractualright, and the mere fact that she had been living

in the house did not mean that she had any“possession” for the purposes of Article 1 ofProtocol No. 1.

No guarantee of the right to acquireproperty in the future55. The protection of Article 1 of Protocol No. 1

only applies when it is possible to lay claim tothe relevant property. Article 1 does not pro-tect the right to acquire property.

56. This principle is illustrated by the case ofMarckx v. Belgium.

30 In this case the applicant

and her infant daughter complained of the factthat certain aspects of the illegitimacy laws inBelgium, including the fact that maternal affilia-tion could only be established by a formal actof recognition, and the existence of limitationson the mother’s right to bequeath, as well aslimitations on an illegitimate child’s right to in-herit, constituted interferences with their rightto property under Article 1 of Protocol No. 1(also read together with Article 14).

31 (Other

claims were also made, in particular under Arti-cle 8).

32

57. The European Court of Human Rights held thatArticle 1 of Protocol No. 1 did not apply at allto the daughter, noting that this article does nomore than enshrine the right of everyone tothe peaceful enjoyment of “his” possessions,

30 A 31 (1979). Cf. Inzev. Austria, A126 (1987).Here the applicant was anillegitimate child whocomplained that he wasnot permitted to take overhis mother’s farm (as theeldest son) as he wouldhave been if he had beenlegitimate. He claimed aviolation of Article 1 ofProtocol No. 1 read to-gether with Article 14 ofthe Convention. The Staterelied on the Marckx caseto argue that Article 1 ofProtocol No. 1 did notcome into play at all. Butthe Court rejected thisargument. It distinguishedMarckx, on the basis thatwhereas that case con-cerned a potential right toinherit, here the applicanthad in fact already inher-ited a share of the farm,and his complaint wasthat he was not permittedto inherit as much as hewould have been able toinherit if he had been alegitimate child.

31 Article 14 of the Conven-tion prohibits discrimina-tion in relation to theenjoyment of the rightsand freedoms guaranteedby the Convention. Seebelow, paras. 163 ff.


19

that consequently it applies only to a person’sexisting possessions and does not guaranteethe right to acquire possessions whether on in-testacy or through voluntary dispositions.

58. The same principle was applied in ApplicationNo. 8410/78, X v. the Federal Republic of Germany(1979). In this case, the applicant was a notaryworking in Germany. He complained about Ger-man legislation which obliged him to reduce hisfees when drawing up deeds for certain clients,such as universities, churches and other non-profit making organisations. The amount of re-duction was 80% as compared to what he hadpreviously been entitled to charge under theregulations. He complained, inter alia, under Arti-cle 1 of Protocol No. 1. The European Commis-sion of Human Rights made short shrift of theapplication. It stated that a notary’s claim for feescould only be considered a possession whensuch a claim has come into existence in a particu-lar matter, on the ground of services actually ren-dered and on the basis of the existing regulationsfor notaries’ fees. The mere expectation that thelegal regulations on fees would not change couldnot be considered a property right.

The property of corporations

59. It is not only natural persons who may enjoythe protection of Article 1 of Protocol No. 1:

corporate bodies fall within the scope of theright. This is clear from the wording of Article 1,which refers to “Every natural or legal person”(emphasis added).

60. It follows that companies may claim in respectof interferences with their property. But share-holders generally have no claim based on dam-age to a company. The “piercing of thecorporate veil” will only exceptionally be per-mitted, as when a company is unable to make aclaim through its organs or liquidators.

61. This principle is illustrated by Agroteximv. Greece.

33 In this case, the applicants were com-

panies who held shares in a brewery in Athens.In order to overcome certain financial prob-lems, the brewery wanted to develop two of itssites. But the Athens Council decided to adoptmeasures with a view to expropriating the land.The brewery then went into liquidation, and liq-uidators were appointed. The applicant share-holders complained to the EuropeanCommission of Human Rights that the expro-priation measures were in breach of Article 1 ofProtocol No. 1.

62. The State took the preliminary point that theapplicants as shareholders were not victims ofany violation of the company’s right to prop-erty. The Commission held that they could bevictims, taking into account in particular thatthe interference with the rights of the brewery

32 Article 8 of the Conven-tion protects the right torespect for private andfamily life.

33 A330-A (1995).


20

had caused a fall in the value of its shares, andthus had diminished the value of the appli-cants’ shareholding. But the Court disagreed. Itopposed the idea that a shareholder shouldgenerally be able to claim for violations of theproperty rights of a company. It pointed to thefact that disagreements between shareholdersand a company’s board of directors, oramongst shareholders, are common. Such disa-greements could cause difficulties in relation toan infringement of the company’s rights. If theCommission’s view were followed, there wouldbe a risk – in view of the competing interests –of creating difficulties in determining whowould be entitled to claim. Such a view wouldalso cause real problems about exhausting do-

mestic remedies,34

as shareholders do not gen-erally in Member States have the right to sue inrespect of violations of the company’s rights.

63. The Court therefore held that the “piercing ofthe corporate veil” – or disregarding of thecompany’s legal personality – will be justifiedonly in exceptional circumstances, in particu-lar, when it is clearly established that it is im-possible for the company to claim through theorgans set up under its articles of incorpora-tion, or – in the event of liquidation – throughits liquidators. In this case, there was no legalreason why the liquidators should not claim,and no suggestion that they were not doingtheir job properly. The applicants’ claim there-fore failed on that preliminary point.

35

34 Article 35 of the Conven-tion requires all domesticremedies to have beenexhausted before an ap-plication is made to theEuropean Court of Hu-man Rights.

35 The Agrotexim v. Greececase is in contrast to cer-tain earlier decisions bythe Commission to theeffect that a substantialmajority shareholder maybe held to be a victim ofdamage to the company,for the purposes of Arti-cle 1 of Protocol No. 1.See Appl. No. 9266/81,Yarrow v. the UnitedKingdom (1983) andAppl. No. 1706/62, Xv. Austria 21 CD 34(1966).


21

III The three rules

64. We have seen that the European Court of HumanRights has analysed Article 1 of Protocol No. 1 ascomprising three distinct rules. This analysis wasfirst put forward in the Sporrong and Lönnrothv. Sweden case,

36 and has been repeated time and

time again in the Court’s subsequent judgments.The three rules are:

(I) the principle of peaceful enjoyment of posses-sions (the first sentence of the first paragraph);

(II) deprivation of possessions (the second sen-tence of the first paragraph); and

(III) control of use (the second paragraph).

65. The second and third rules will be consideredfirst, and then the first rule.

The second rule

66. In order to decide whether there has been a dep-rivation of property within the meaning of thesecond rule, it is necessary to investigate not onlywhether there has been a formal expropriation ortransfer of ownership,

37 but also to investigate the

realities of the situation to see whether there hasbeen a de facto taking of property.

36 A52 (1982). See above, paras. 9 ff.37 For an example of a formal transfer of ownership in breach

of the second rule of Article 1 of Protocol No. 1, see thejudgment of the European Court of Human Rights in thecase of The Former King of Greece and Others v. Greece,23 November 2000.


22

67. This was made clear in Sporrong and Lönnrothv. Sweden,

38 the case concerning the imposition

of expropriation permits and prohibition no-tices on properties in Stockholm, Sweden,

39

where the Court observed that:In the absence of formal expropriation, that is to say atransfer of ownership, the Court considers that it mustlook behind the appearances and investigate the reali-ties of the situation complained of … Since the Con-vention is intended to guarantee rights that are“practical and effective”…, it has to be ascertainedwhether that situation amounted to a de facto expro-priation, as was argued by the applicants. (para. 63)

40

68. This approach to the question of what amountsto a taking of property coincides with the ap-proach adopted by general international law,that: “...measures taken by a State can interferewith property rights to such an extent thatthese rights are rendered so useless that theymust be deemed to have been expropriated,even though the State does not purport to haveexpropriated them and the legal title to theproperty formally remains with the originalowner.”

41

69. A good example of measures which amountedto a de facto expropriation is provided by thecase of Papamichalopoulos v. Greece.

42 The appli-

cants were owners of a large area of valuableland in Greece. The land included a beach, andin 1963 the applicants had obtained permission

from the Greek Office of Tourism to construct ahotel complex on the site. But thereafter a mili-tary dictatorship assumed control in Greece,and in August 1967 the applicants’ land (in-cluding the beach) was transferred to the Navy.The applicants sought, not surprisingly, to re-cover the land, but failed. The Navy proceed toconstruct a naval base on the land and a holi-day resort for officers.

70. Despite various court actions in Greece, andsome suggestions on behalf of the State thatthe applicants should get some other land byway of exchange, no redress at all had beenmade available by the early 1990s, when theapplicants applied to the Commission in Stras-bourg.

71. When the case came before the EuropeanCourt of Human Rights, the Court began bynoting that the interference had to be regardedas a continuing violation since 1967. The Courtnoted that the interference here was not forthe purpose of controlling use of property, andso the third rule of Article 1 did not apply. Asregards the second rule, the land was never for-mally expropriated, in the sense that title wasnot transferred. But since the Convention wasintended to safeguard rights that were “practi-cal and effective”, it had to be ascertainedwhether the situation complained of neverthe-less amounted to a de facto expropriation.

38 A52 (1982).39 For a summary of the facts

of this case, see above,paras. 9 ff. In this case,the Court rejected theargument that the secondrule of Article 1 of Proto-col No. 1 applied, asthere had been no legaldeprivation of ownership,and no de facto expro-priation, because theapplicants were able inpractice to sell their prop-erties, albeit that this hadbeen made more difficultby the measures com-plained of.

40 See also James v. theUnited Kingdom, A98(1986), para. 38; Hentrichv. France, A296-A (1994),paras. 34-35.

41 Case concerning StarrettHousing Corporation andthe Government of theIslamic Republic of Iran;Interlocutory award ofDecember 1983 by Iran-United States ClaimsTribunal.

42 A260-B (1993).


23

72. The Court noted that the Navy Fund actuallyphysically took the applicants’ property fromthem and built on the land. From that date,the applicants were unable to make use oftheir property or to sell, bequeath, mortgageor make a gift of it. The Court held that theloss of all ability to dispose of the land, takentogether with the failure to remedy the situa-tion, entailed sufficiently serious conse-quences for the applicants’ land de facto tohave been expropriated.

43

73. This principle was applied more recently in thecase of Brumarescu v. Romania,

44 where the Euro-

pean Court of Human Rights reiterated that, indetermining whether there has been a depriva-tion of possessions within the second rule, it isnecessary to look behind the appearances andinvestigate the realities of the situation com-plained of.

74. In this case, the applicant’s parents had built ahouse in Bucharest in 1939. In 1950, the housewas nationalised pursuant to a legislation de-cree. In 1974, the house was sold by the Stateto two brothers, who had previously lived in aflat in the house as tenants. In 1993, the appli-cant brought an action in the Romanian courtto establish that the nationalisation was nulland void, because his parents fell within an ex-emption provided for in the decree, as theywere unemployed. The court at first instance

agreed, and ordered the administrative authori-ties to transfer the house to the applicant. Theapplicant went to live in the house, and paidland tax in respect of it.

75. But the Procurator-General, acting on behalfof the brothers to whom the property had pre-viously been transferred, then brought an ap-plication on their behalf in the Supreme Court.The Supreme Court quashed the judgment ofthe first instance court, and held that the ap-plicant did not have title to the house, andthat the brothers should have it returned tothem.

76. When the case came before the EuropeanCourt of Human Rights, it held, first, that theapplicant had a possession in the form of thejudgment of the first instance court that theproperty had never been lawfully nationalised.It then found that the decision of the SupremeCourt had been an interference with the rightrecognised by that judgment.

77. The Court then applied the principle that youhad to see whether in reality the applicant hadbeen deprived of his possession, and held thathe had, i.e. the second rule applied. The Courtnoted that the applicant was no longer able touse the house at all.

45

78. So whether or not, in the absence of formaltransfer of ownership, there is a de facto expro-priation, is a question of fact and degree.

43 Interestingly, havingfound a de facto expro-priation, the Court did notgo on to ask whether theexpropriation served alegitimate objective andwas proportionate. Itsimply stated that the defacto expropriation was“incompatible with theapplicants’ right to thepeaceful enjoyment oftheir possessions“, pre-sumably because therewas no compensation orother remedy.

44 28 October 1999, para. 76.45 As to whether the interfer-

ence with the right toproperty could be justi-fied, the Court observedthat no justification as topublic interest had beenoffered by the State. Italso noted that the appli-cant had been deprived ofthe house for four yearswithout any compensa-tion reflecting the truevalue of the property. It isinteresting that the Courtin this case found thejudgment of the first in-stance court in Romaniato have been the appli-cant’s possession, ratherthan stating that title tothe house vestedin the applicant and treat-


24

The third rule79. The third rule (in the second paragraph of Arti-

cle 1 of Protocol No. 1) applies when an inter-ference with property is intended, or is part of alegislative scheme whose purpose is to controlthe use of property.

80. Examples of the application of the third rulehave been referred to above. They includeSporrong and Lönnroth v. Sweden

46 (concerning the

prohibition of construction on land); Pine ValleyDevelopments Ltd v. Ireland

47 (concerning planning

controls), and Mellacher v. Austria48

(concerningthe control of rented property).

49 Further de-

tailed examples of the application of this rulewill be given below in the section dealing withthe issue of justification of an interference withthe right to property.

81. Measures which secure the payment of taxesor other contributions or penalties also fallto be considered under the second paragraphof Article 1 of Protocol No. 1. A good exampleof the application of this aspect of the third ruleis Gasus Dosier- und Fordertechnik v. the Nether-lands,

50 where a German company had supplied

goods to a Dutch company on terms statingthat it retained title to the goods until they hadbeen paid for. Before payment had been re-ceived by the seller, the goods were seized bythe Dutch tax authorities in respect of unpaid

tax debts owed by the Dutch purchaser. TheGerman seller alleged that the seizure of thegoods by the Dutch authorities involved a vio-lation of its right to property under Article 1 ofProtocol No. 1. The European Court of HumanRights held that the case fell to be consideredunder the third rule of Article 1, on the basisthat the seizure of the goods was part of theState’s machinery for the collection of taxes.(This case is considered in further detail inparagraph 129 below.)

The first rule82. The first rule of Article 1 of Protocol No. 1 may

be described as a “catch-all” which may applywhere none of the other rules does. It applieswhere a measure has the effect of interferingwith the use or enjoyment of property, but fallsshort of being a taking, and is not intended tocontrol the use of property.

83. The first rule was held to apply in relation tothe expropriation permits that had been im-posed in respect of the applicants’ proper-ties in Sporrong and Lönnroth v. Sweden.

51

Another example of the application of thefirst rule is Stran Greek Refineries and StratisAndreadis v. Greece,

52 where legislation which

had the effect of rendering an arbitrationaward in the applicants’ favour void and un-

ing the house itself as apossession. This mayhave been because it wasunwilling to be seen to begoing behind the judg-ment of the RomanianSupreme Court.

46 A52 (1982). See above,paras. 9 ff.

47 A222 (1991). See above,para. 34.


49 Other examples includethe cases of AGOSI v. theUnited Kingdom, A108(1986) (concerning legis-lation to control the ille-gal importation of goldcoins); Air Canada v. theUnited Kingdom, A316-A(1995) (concerning theillegal importation ofdrugs); Inze v. Austria,A126 (1987); Fredinv. Sweden, A192 (1991);Vendittelli v. Italy, A293-A (1994); Spadea andScalabrino v. Italy, A315-B (1995); Scollo v. Italy,A315-C (1995) (concern-ing legislation to controlhousing).

50 A306-B (1995), para. 59.Other examples includeAppl. No. 11036/84;Svenska ManagementGruppen v. Sweden(1985); Appl. No. 13013/87; Wasa Liv Omsesidigt


25

enforceable fell to be considered under thefirst rule of Article 1.

53

The significance of the three rulesanalysis84. When considering whether there has been a

violation of Article 1 of Protocol No. 1, the firststep is to consider whether the complainanthas any property right, or possession, fallingwithin the scope of Article 1. The second stepis to consider whether there has been an inter-ference with that possession, and then, thirdly,the nature of the interference (i.e. which of thethree rules applies).

85. But it should be remembered that the Euro-pean Court of Human Rights has on manyoccasions emphasised that the three rulesare connected: the second and third rulesare concerned with particular instances of in-terference with the right to peaceful enjoy-ment of possessions and should beconstrued in the light of that general princi-ple. See, for example, Mellacher v. Austria,

54 a

case about rent control legislation,55

atpara. 42.

86. See also Beyeler v. Italy,56

where the EuropeanCourt of Human Rights emphasised that thesecond sentence of Article 1 was only a par-ticular instance of interference with the right

to peaceful enjoyment of property as guaran-teed by the general rule set forth in the firstsentence.

87. This case concerned a painting by Van Gogh,and the facts were extremely complex. Therewas a dispute as to whether the applicant wasthe owner of the painting. The painting was ac-quired by the State pursuant to a right of pre-emption, on the basis of its historical andartistic interest. The Court found that the ap-plicant’s dealings with the painting over a peri-od of time were such that he must be regardedas having a possession within the meaning ofArticle 1 of Protocol No. 1. But the Court didnot actually rule that he was the owner of thepainting.

88. The Court then considered the nature of theinterference with the applicant’s possessionand stated that “The complexity of the factualand legal situation prevents its being classifiedin a precise category” (para. 106). The appli-cant had argued that the second rule applied,but the Court, noting that the situation envis-aged in the second sentence was only a par-ticular instance of interference with thepeaceful enjoyment of property as guaranteedby the general rule in the first sentence of Arti-cle 1, decided that it should examine the situ-ation complained of in the light of that generalrule.

57

v. Sweden (1988) atpp. 185-187; NationalProvincial Building Soci-ety and Others v. theUnited Kingdom, 1997-VII (1997), para. 79.


52 A301-B (1994), para. 68.See also Erkner andHofauer v. Austria, A117(1987), para 74; andAppl. No. 7456/76,Wiggins v. the UnitedKingdom (1978), at pp.46-47; Appl. No. 7889/77, Arrondelle v. theUnited Kingdom, 19 DR186 (1980).

53 See above, paras. 28 ff.,for a more detailed con-sideration of this case.

54 A169 (1989).55 See above, paras. 46 ff.,

for a more detailed con-sideration of this case.

56 5 January 2000, para. 98.57 On the facts of this case,

the Court considered thatthe applicant had had tobear “an individual andexcessive burden”, andfound a violation of Arti-cle 1 of Protocol No. 1(para. 122).


26

IV Justifyingan interference withthe right to property

The public or generalinterest

89. As has been mentioned above, any interferencewith property can only be justified if it is in thepublic, or general, interest. The requirementthat a taking (or deprivation) of property shouldbe in the “public” interest is expressly set out inthe second sentence of Article 1 of ProtocolNo. 1. The third rule refers expressly to the“general” interest. But any interference withproperty, whichever rule it falls under, must sat-isfy the requirement of serving a legitimate pub-lic (or general) interest objective.

90. One of the earliest cases in which this require-ment was considered is James v. the United King-dom.

58 The applicants in this case were trustees

of the estate of the Duke of Westminster, whoowned 2000 houses in a highly desirable part ofLondon. The applicants complained that theestate had lost a very large amount of money as

a result of the implementation of a statute, theLeasehold Reform Act 1967, which gave longleaseholders (tenants) the right to buy the free-hold (ownership) at less than market value. The1967 Act applied only to long leaseholds, i.e.to leases of 21 years or more. They also had tobe leaseholds granted at a low rent. As a resultof being forced to sell the freehold under theAct to some 80 tenants in London who exer-cised their right to buy, or to “enfranchise”, theDuke’s estate lost around £2 million, as com-pared to the market value.

91. When considering the complaint under Arti-cle 1 of Protocol No. 1, the European Court ofHuman Rights first referred to the “three rules”analysis in Sporrong and Lönnroth v. Sweden.

59 The

Court considered that the applicants had beendeprived of their properties within the secondrule (although the transfer of ownership wasnot to the State but to other private individu-als).

92. On the question of whether the taking of theproperties could be justified by the State, theapplicants argued that the relevant legislationcould not be in the public interest, because theproperties were not taken for the benefit of thecommunity generally. The applicants con-tended that the transfer of property from oneperson to another could not, as a matter ofprinciple, be “in the public interest”. But the

58 A98 (1986), para. 46.59 A52 (1982). See above,

paras. 9 ff.


27

Court disagreed and held that the compulsorytransfer of property from one individual to an-other may constitute a legitimate aim in thepublic interest.

93. The Court added that the taking of propertypursuant to a policy calculated to enhancesocial justice within the community couldproperly be described as being in the public in-terest. In so deciding the Court recognised thatit was not following the approach of the do-mestic law of a number of contracting States inrelation to expropriation.

94. It then made an important and oft-quoted state-ment of principle about the State’s “margin ofappreciation”.

60 This statement forms the basis,

together with the dicta in Sporrong and Lönnroth v.Sweden,

61 for any consideration of what is a justi-

fied interference with property to this day:Because of their direct knowledge of their society and itsneeds, the national authorities are in principle betterplaced than the international judge to appreciate whatis “in the public interest”. Under the system of protec-tion established by the Convention, it is thus for thenational authorities to make the initial assessmentboth of the existence of a problem of public concern war-ranting measures of deprivation of property and of theremedial action to be taken… Here as in other fields towhich the safeguards of the Convention extend, the na-tional authorities accordingly enjoy a certain margin ofappreciation.

Furthermore, the notion of “public interest” isnecessarily extensive. In particular, as the Com-mission noted, the decision to enact laws ex-propriating property will commonly involveconsideration of political, economic and socialissues on which opinions within a democraticsociety may differ widely. The Court, finding itnatural that the margin of appreciation avail-able to the legislature in implementing socialand economic policies should be a wide one,will respect the legislature’s judgment as towhat is “in the public interest” unless that judg-ment is manifestly without reasonablefoundation. In other words, although theCourt cannot substitute its own assessment forthat of the national authorities it is bound toreview the contested measures under Arti-cle 1 of Protocol No. 1 and, in so doing, tomake an inquiry into the facts with referenceto which the national authorities acted.(para. 46) (emphasis added)

95. The Court went on to find that the aim of theLeasehold Reform Act 1967 – greater social jus-tice in the sphere of housing – was a legitimateaim in the public interest.

96. The Court then referred to the requirement ofproportionality, citing Sporrong and Lönnroth v.Sweden

62 and the test of whether a fair balance

had been struck between the demands of thegeneral interest of the community and the re-

60 The doctrine of the State’s“margin of appreciation”applies generally to theConvention provisions.See, for example,Handyside v. the UnitedKingdom, A24 (1976),para. 48, where the Courtobserved that: “…themachinery of protectionestablished by the Con-vention is subsidiary tothe national systems safe-guarding human rights.The Convention leaves toeach contracting state, inthe first place, the task ofsecuring the rights andfreedoms it enshrines.The institutions createdby it make their owncontribution to this taskbut they become involvedonly through contentiousproceedings and once alldomestic proceedingshave been exhausted.”

61 A52 (1982), paras. 69 and73. See above, paras. 9 ff.

62 Ibid.


28

quirements of the protection of the individual’sfundamental rights. The applicants relied on thefact that other States

63 apparently did not have

similarly draconian measures. They argued thatin order to be proportionate the measure hadto be necessary, in the sense that there was noother alternative. But the Court rejected thissubmission: it was not for the Court to judgewhether the Leasehold Reform Act 1967 consti-tuted the best solution to the problem.

97. The Court also considered the question of com-pensation and agreed with the Commission thatArticle 1, although it is silent on the point, gener-ally requires compensation for a taking of prop-erty.

64 The Court noted that in the legal systems

of contracting States, the taking of propertywithout any compensation would be justifiableonly in exceptional circumstances: otherwise theright to property would be largely ”illusory andineffective”. As to the standard of compensa-tion, the Court said that a taking of propertywithout an amount of compensation reasonablyrelated to its value would normally be dispropor-tionate. But Article 1 does not guarantee a rightto full compensation in all circumstances:Legitimate objectives of ’public interest’, such as arepursued in measures of economic reform or measuresdesigned to achieve greater social justice, may call forless than reimbursement of the full market value.

65

98. The Court went on to find that the requisite fair

balance had been struck in this case, althoughthe estate of the Duke of Westminster did notreceive the full market value on the transfer ofownership to the tenants. The Court noted thatthe tenant paid approximately the site value,but nothing for the buildings on the site. Thisclearly favoured the tenants, but because ofthe money he (or his predecessors) had paidfor the lease (a capital sum) and money spentover the years on repairs, maintenance and im-provements, the tenant or his predecessor intitle had in effect already paid for the property.Accordingly, there had been no violation ofArticle 1 of Protocol No. 1.

99. The James v. the United Kingdom case66

illustratesthe wide margin of appreciation that the Stras-bourg organs have been prepared to afford tothe national authorities in assessing bothwhether an interference with the right to prop-erty serves a legitimate aim in the public inter-est, and whether it is proportionate to that aim.This decision also makes it clear, however, thatthe Court has a role to play in inquiring into thefacts and assessing whether that margin hasbeen exceeded by the State. As indicatedabove, particularly in recent years the EuropeanCourt of Human Rights has in many cases foundthe margin to have been exceeded.

67

100. A more recent example of the Court consider-ing the question of whether an interference

63 I.e. parties to the Conven-tion.

64 As to the requirement ofproportionality and, inparticular, of compensa-tion, see furtherparas. 124 ff. below.

65 Para. 54.66 A98 (1986).67 See above, para. 4 ff.


29

with property served a legitimate objective inthe public interest is Scollo v. Italy.

68 In this case,

the applicant bought a residential flat in Romein June 1982 that was occupied by a tenant.The applicant sought eviction of the tenant inMarch 1983, on the grounds, inter alia, that he(the applicant) was 71 per cent disabled, unem-ployed, diabetic and needed the flat, and thatthe tenant had ceased to pay his rent. The ap-plicant was first granted an eviction order bythe magistrate in April 1983. However, in ac-cordance with the Italian Government policy ofpostponing, suspending or staggering the en-forcement of eviction orders against residentialtenants, the eviction order was suspended onfour separate occasions pursuant to a Legisla-tive Decree. Eventually, the tenant left the flatof his own accord in January 1995, eleven yearsand ten months after the applicant first beganproceedings for his eviction.

101. The applicant complained of a violation of hisright to property. When the issue came beforethe European Court of Human Rights, it firstconsidered the application of the three rules ofArticle 1. It noted that there was neither atransfer of property nor, contrary to the appli-cant’s submissions, a de facto expropriation. Atall times the applicant retained the possibilityof alienating the property, and he received rent– in full until October 1987, and in part be-

tween November 1987 and February 1990. Asthe implementation of the measures in ques-tion meant that the tenant continued to oc-cupy the flat, they undoubtedly amounted tocontrol of the use of possessions. Accordingly,the second paragraph of Article 1 of ProtocolNo. 1 applied.

102. The Court referred to the fact that the secondparagraph of Article 1 reserves to the States theright to enact such laws as they deem neces-sary to control the use of property in accord-ance with the general interest. Such laws, itnoted, are especially common in the field ofhousing, which in our modern societies is acentral concern of social and economic poli-cies. In order to implement such policies, thelegislature must have a wide margin of appre-ciation both with regard to the existence of aproblem of public concern warranting measuresof control and as to the choice of the detailedrules for the implementation of such measures.The Court reiterated

69 that it will respect the

legislature’s judgment as to what is in the gen-eral interest unless that judgment is manifestlywithout reasonable foundation.

103. The applicant argued that the relevant legislativemeasures had no legitimate aim; in substance,the fact that the State had no effective housingpolicy had deprived him of his right to dispose ofhis flat, since the tenant’s interests alone had

68 A315-C (1995), para. 32.69 See James v. the United

Kingdom, A98 (1986),para. 46; para. 99 above.


30

been protected. The Government was not enti-tled, he argued, to justify the emergency legisla-tion by invoking the general interest.

104. The Court observed, however, that the legisla-tive provisions suspending evictions during theperiod 1984 to 1988 were prompted by theneed to deal with the large number of leasesthat expired in 1982 and 1983 and by the con-cern to enable the tenants affected to find ac-ceptable new homes or obtain subsidisedhousing. To have enforced all the evictions si-multaneously would undoubtedly, said theCourt, have led to considerable social tensionand would have jeopardised public order.Therefore, the legislative provisions had a legiti-mate aim in the general interest, as required byArticle 1 of Protocol No. 1.

105. Going on to deal with the requirement of pro-portionality, the Court observed that any inter-ference with property must strike a fair balance,and that there had to be a reasonable relation-ship of proportionality between the means em-ployed and the aim pursued.

70

106. The applicant argued that the interference inquestion was disproportionate. He emphasisedthat he was a small property owner who wantedto occupy his own flat in order to live there withhis family. He referred to the fact that he hadbeen obliged to incur debts to buy another flat.The State for its part invoked the exceptional

housing shortage in Italy at that time.107. The Court noted that housing shortages are

an almost universal problem of modern soci-ety. In order to see whether the measureswere proportionate to the aims sought to beachieved – protecting tenants on low incomesand avoiding the risk of any prejudice to pub-lic order – the Court had to ascertain whetherthe applicant’s tenant was treated in such away that the requisite fair balance was main-tained. The Court noted that the applicanthad made it clear to the authorities that heneeded the flat, that he had no job and thathe was disabled. The authorities had taken noaction at all in response. The applicant hadnot been able to recover his property until thetenant left of his own accord, although he hadsatisfied the conditions for enforcement ofeviction during the period when this proce-dure was suspended. The Court also notedthat the applicant had had to buy another flatand to bring an action to recover rent. All inall, the restrictions on the applicant’s use ofhis flat amounted to a breach of the require-ment of proportionality and to a violation ofArticle 1 of Protocol No. 1.

108. So Scollo v. Italy is an example of it being argued,unsuccessfully, that the measures in questiondid not serve a legitimate objective in the pub-lic interest. But the applicant did succeed on 70 Para. 32.


31

his argument that even if there was a legitimateobjective, the means chosen to serve that ob-jective were disproportionate to that aim.

71

Proportionality

109. As indicated above,72

in order for an interfer-ence with property to be permissible, it mustnot only serve a legitimate aim in the public in-terest, but there must also be a reasonable re-lationship of proportionality between themeans employed and the aim sought to be re-alised.

73 A fair balance must be struck between

the demands of the general interest of thecommunity and the requirements of the pro-tection of the individual’s fundamental rights,the search for such a balance being inherent inthe whole of the Convention.

74 This is likely to

be the crucial question in most cases.

110. A good example of the application of the pro-portionality test in practice is AGOSI v. theUnited Kingdom.

75 The applicant was a German

company, AGOSI, in the business of metalsmelting, and also dealing in gold and silvercoins. One Saturday afternoon, a Mr X and Mr Yvisited the company’s factory in Germany andasked to make an immediate purchase of 1 500krugerrands, which were gold coins minted in

South Africa. The value of the coins was£120 000. The sale was agreed and the coinswere loaded into a car with British numberplates. Payment was accepted in the form of acheque drawn on an English bank. AGOSIsought to cash the cheque, but it was dishon-oured. The contract of sale for the gold coinscontained a term that ownership of the coinsremained with AGOSI until payment in full hadbeen received.

111. Meanwhile, the buyers tried to bring the coinsinto the United Kingdom hidden in a spare tyrein the car. But the coins were discovered andwere seized by the United Kingdom customsauthorities. A few months earlier, the importa-tion of gold coins had been prohibited by theSecretary of State for Trade and Industry. Thebuyers of the coins, Messrs X and Y, werecharged with fraudulent evasion of the prohibi-tion on importation of gold coins (smuggling).

112. AGOSI shortly thereafter requested the returnof the coins to them, on the basis that they re-mained their rightful owner, as they had notbeen paid. The customs authorities declined torestore the coins. Mr X and Mr Y were convictedin the criminal court. Even at that stage the cus-toms authorities refused to return the coins toAGOSI. The company unsuccessfully sued inthe English court for their return.

113. Before the European Court of Human Rights,

71 For another example ofan unsuccessful argumentthat a legislative measurewhich had the effect ofdepriving the applicantsof their property did notserve a legitimate objec-tive in the public interest,see The Former King ofGreece and Othersv. Greece (23 November2000). The applicants did,however, succeed ontheir argument that thetaking of all their propertyin Greece without anypayment of compensationwas disproportionate, andthe Court accordinglyfound a violation of Arti-cle 1 of Protocol No. 1.

72 See para. 105.73 James v. the United King-

dom, A98 (1986),para. 50; and Lithgowv. the United Kingdom,A102 (1986), para. 120.

74 Sporrong and Lönnrothv. Sweden, A52 (1982),paras. 69, 73; TreTraktörer Aktiebolagv. Sweden, A159 (1989),para. 59; Hentrichv. France, A296-A (1994),paras. 45-49; Holy Mon-asteries v. Greece, A301-A (1994), para. 70; AirCanada v. the UnitedKingdom, A316-A (1995),para. 29.

75 A108 (1986), para. 52.


32

AGOSI complained, inter alia, of the refusal bythe customs authorities to restore the coins.The company argued that it was the lawfulowner of the coins and innocent of any wrong-doing, and that it had not been given a properopportunity of putting its case before the Eng-lish courts. The Strasbourg Court noted thatthe retention (forfeiture) of the coins clearlyamounted to an interference with peaceful en-joyment of possessions within the first sen-tence of Article 1: this had not been disputed.But the Court then had to determine whetherthe material provision was the second sentenceof the first paragraph or the second paragraph.It observed that the prohibition on the impor-tation of gold coins clearly constituted a con-trol of the use of property. The seizure andforfeiture of the coins were measures taken forthe enforcement of that prohibition. It alsonoted that the forfeiture of the coins did ofcourse involve a deprivation of property, but inthe circumstances the deprivation formed aconstituent element of the procedure for thecontrol of the use in the United Kingdom ofgold krugerrands. Accordingly, the third, controlof use, rule applied.

114. As to whether the measures could be justified,the Court noted that the prohibition on the im-portation of krugerrands was undoubtedlycompatible with Article 1 of Protocol No. 1. It

served a legitimate objective in the public inter-est. But it was also necessary to considerwhether there was a reasonable relationship ofproportionality between the means used to en-force the prohibition and the aim sought to berealised. The court had to determine whetherthe requisite fair balance had been struck. TheCourt observed that:The State enjoys a wide margin of appreciation with re-gard both to choosing the means of enforcement and toascertaining whether the consequences of enforcementare justified in the general interest for the purpose ofachieving the object of the law in question. (para. 52)

115. The Court noted that under the general princi-ples of law recognised in all contracting States,smuggled goods may as a rule be the object ofconfiscation. But AGOSI argued (and the Com-mission had agreed) that this did not applywhen the owner was “innocent”. The Courtnoted that the striking of a fair balance de-pends on many factors, and that the behaviourof the owner of property (in relation to smug-gling), including the degree of fault or carewhich he displayed, is one element in the en-tirety of circumstances which should be takeninto account. (The Court also noted that therewas no common practice in contracting Statesas to whether fault was required for forfeiture.)

116. Accordingly, although this is not expresslymentioned in Article 1, the Court had to con-


33

sider whether the applicable procedures weresuch as to enable reasonable account to betaken of the applicant’s degree of fault or care,and also to see whether the applicable pro-cedures afforded the company a reason-able opportunity of putting its case to theresponsible authorities. The Court examinedthe English procedure of judicial review andfound that it was sufficient to satisfy Article 1of Protocol No. 1. Accordingly, there had beenno violation of AGOSI’s right to property.

117. Another example of the application of the prin-ciple of proportionality, and of the wide marginof appreciation that has been afforded to theState in some of the Court’s decisions, isMellacher v. Austria.

76 As mentioned above,

77 this

case concerned landlords of a block of flatswho claimed that Austrian rent control legisla-tion was contrary to Article 1 of Protocol No. 1because it interfered with their contractualrights to receive rent. The Court found thatArticle 1 applied, and that there was an inter-ference with the applicants’ right to propertywithin the second, control of use, rule.

118. As for the issue of justification, the applicantscontended that the 1981 Rent Act did notserve a legitimate aim. They said it was not cal-culated to redress a social injustice, but tobring about a redistribution of property. Theyaccepted that this was something which could

in principle be done, but argued that there wasno problem in existence which required Stateintervention. They referred to an economicboom which Austria had been experiencing.They put forward statistics showing that ac-commodation was in fact available, and theyclaimed that the Act did not have the supportof two of the three political parties representingthe majority of the population. They arguedthat it was a measure of a socialist governmentintended to satisfy a section of the electorate.So it was not a measure, they said, which was inthe general interest.

119. The European Court of Human Rights looked atthe explanatory memorandum submitted to theAustrian Parliament by the government whenthe legislation was introduced. This referred tothe need to reduce disparities between therents payable for equivalent flats. The Act wasaimed at making accommodation more easilyavailable at reasonable prices. The Court foundthat these explanations could not be character-ised as manifestly unreasonable. The Act there-fore had a legitimate aim in the general interest.

120. As for the requirement of proportionality, theCourt reiterated the fair balance test. The appli-cants argued that the Act constituted a statu-tory inducement not to comply with the termsof validly concluded contracts and thereforeviolated the principle of freedom of contract.

76 A169 (1989), para. 48.77 See above, para. 46 ff.


34

The Court observed, however, that in remedialsocial legislation, and in particular in the field ofrent control, it must be open to the legislatureto take measures affecting the further execu-tion of previously concluded contracts in orderto attain the aim of the policy adopted. TheCourt further stated that the possible existenceof alternative solutions did not of itself renderthe contested legislation unjustified. Providedthat the legislature remained within the boundsof its margin of appreciation, it was not for theCourt to say whether the legislation repre-sented the best solution for dealing with theproblem or whether the legislative discretionshould have been exercised some other way.

121. The applicants referred to the fact that the ef-fect of the 1981 Act was to reduce their rentsby as much as 80% in two cases, and 22% inanother. The Commission had found that de-gree of interference unjustifiable. The State ar-gued that even at a reduced level, the rentscompared reasonably with rent that could becharged for other buildings. The Court foundthat the requisite fair balance had been struck.It took into account, inter alia, that owners werestill able to pass on various expenses to ten-ants, such as insurance cost, and could requirethe tenants to pay a contribution towardsmaintenance works. The Act also made transi-tional provision which meant that landlords

were allowed to recover under existing con-tracts a rent 50% higher than what they wouldbe allowed to obtain under a new lease. Therewas, therefore, no violation of Article 1 of Pro-tocol No. 1.

122. The case of Stran Greek Refineries and StratisAndreadis v. Greece

78 has also been referred to

above.79

In this case, concerning an arbitrationaward that had been rendered void and unen-forceable by legislation, the Court decided thatthe interference was neither an expropriationnor a control of use, and had to be dealt withunder the first sentence of Article 1.

123. The Court then went on to determine whetherthe requisite fair balance had been struck. TheState argued that the measure in question waspart of a body of measures designed to cleansepublic life of the disrepute attaching to themilitary regime and to proclaim the power andwill of the Greek people to defend the demo-cratic institutions. The applicants’ rights weresaid to derive from a preferential contractprejudicial to the national economy, which hadhelped to sustain the dictatorship. The appli-cants argued that it would be unjust for everylegal relationship entered into with a dictatorialregime to be invalidated when the regime cameto an end.

124. The Court did not doubt the State’s power toterminate a contract which it considered preju-

78 A301-B (1994), para. 74.79 See above, paras. 28 ff.


35

dicial to the economic interests of the State.Indeed this was well-established in public inter-national law: a State has sovereign power toterminate a contract concluded with private in-dividuals, provided it pays compensation. Thisdid not, however, extend to certain essentialclauses of the contract, such as an arbitrationclause. Otherwise it would be possible for aparty to evade jurisdiction in a dispute in re-spect of which arbitration had been agreed.The Court also noted that the State had itselfopted for the arbitration procedure whoseconsequences it then sought to evade. There-fore, by annulling the arbitration award, thelegislature had upset the requisite fair balance.Accordingly, there was a violation of Article 1 ofProtocol No. 1.

125. Pressos Compania Naviera SA v. Belgium80

is an-other example of the State having exceeded itsmargin of appreciation. As set out above,

81 this

was a case where a number of ship owners,whose ships had been involved in collisions inthe territorial waters of Belgium, sued for dam-ages in respect of the negligence of pilots whowere the responsibility of the Belgian State.After the damage had been suffered, the Statehad passed legislation to remove the right tocompensation in the applicable circumstances.The Court found that the applicants’ claimswere possessions, and that there had been an

interference with their rights under Article 1 ofProtocol No. 1.

126. The State pointed to the need to protect its fi-nancial interests, the need to re-establish legalcertainty in the field of tort, and the need tobring the position in Belgium into line with thatin neighbouring countries, notably the Nether-lands. The Court noted that under the Conven-tion system it is for the national authorities tomake the initial assessment both of the exist-ence of a problem of public concern warrantingmeasures of deprivation of property and of theremedial action to be taken. The notion of pub-lic interest was necessarily extensive. The Statetherefore had a wide margin of appreciation.

127. As for proportionality, the Court referred to thefair balance test, and noted that compensationterms under the relevant legislation were rel-evant to that question. It also made the pointthat the taking of property without the paymentof an amount reasonably related to its value willnormally be justifiable only in exceptional cir-cumstances. In this case the 1988 Act extin-guished with retrospective effect and withoutcompensation very high claims for damagesthat the victims of the accidents could other-wise have pursued against the Belgian State. Insome cases proceedings were already pending.The State referred to the huge potential claimsthat would have resulted if the Act had not

80 A332 (1995), para. 38.81 See above, paras. 30 ff.


36

been passed (3 500 million BEF). The Courtconcluded that this concern, and the concernto bring the law into line with neighbouringcountries, would warrant prospective legisla-tion to alter the law of tort, but these consid-erations could not justify legislating withretrospective effect with the aim and conse-quence of depriving the applicants of theirclaims for compensation. Such a fundamentalinterference was inconsistent with the fair bal-ance, and Article 1 of Protocol No. 1 had ac-cordingly been violated.

Taxing measures

128. The power of the State to secure the paymentof taxes or other contributions or penalties(within the third rule of Article 1 of ProtocolNo. 1) has been held to be particularly wide.But a taxing measure is nevertheless subject tothe requirement of proportionality.

129. In Gasus Dosier- und Fordertechnik v. the Nether-lands,

82 which has been referred to above,

83 the

applicant, Gasus, was a German company thatmade an agreement with a Dutch company, At-las, for the sale to Atlas of a concrete-mixer.Gasus’ standard terms and conditions of saleincluded a “retention of title clause” which

meant that they retained ownership in the con-crete-mixer until it had been paid for in full.

130. Atlas got into financial difficulties, and the con-crete-mixer was seized by the Dutch tax bailiffin respect of Atlas’ unpaid tax debts. Gasuscomplained about this, and went throughlengthy legal proceedings in the Dutch court toget the mixer back, but to no avail. They thencomplained to Strasbourg.

131. Interestingly, as a first point the State arguedthat the company did not actually retain own-ership in the mixer, but simply had an interestin the nature of security. They said that on thisbasis Gasus did not have any possession. Butthe Court was quick to reject that argument. Itrecalled that “possession” has an “autono-mous” meaning for the purposes of Article 1,and was certainly not limited to ownership ofphysical goods. It was therefore quite immate-rial whether Gasus retained ownership ormerely had a security interest in the mixer.Either way, they had a protected possessionunder Article 1 of Protocol No. 1.

132. As to which of the three rules applied, Gasusargued that they had been deprived of theirproperty under the second rule. But the Courtheld that the seizure of the mixer was part ofthe State’s machinery for the collection oftaxes and so fell to be considered under thesecond paragraph of Article 1, which enables

82 A306-B (1995), para. 62;National Provincial Build-ing Society and Othersv. the United Kingdom,1997-VII (1997), para. 80.

83 See above, para. 81.


37

States to “secure the payment of taxes or othercontributions or penalties”.

133. In this context the Court reminded itself thatthe drafters of the Convention had attachedgreat importance to this aspect of the secondparagraph of Article 1: in fact at a stage whenthis phrase was not yet included, it was alreadyunderstood by all concerned, said the Court,that States could pass whatever fiscal laws theyconsidered desirable, provided always thatthey did not amount to “arbitrary confisca-tion”. Here, said the Court, there was no arbi-trary confiscation, albeit that the law permittedthe tax authorities to seize goods on the taxpayer’s premises that did not actually belongto it, but to a third party. The Court found sup-port for its view in the fact that this kind ofthing was permitted in several legal systems.

134. The Court then went on to record that theState has a wide margin of appreciation regard-ing taxing measures, and that its judgmentwould be respected unless “devoid of reason-able foundation”. It cited Sporrong and Lönnrothv. Sweden

84 and referred to the requirement of

fair balance and proportionality. It also askeditself whether Gasus had been made to bear“an individual and excessive burden”.

135. Applying these tests, the Court found that theseizure of the mixer was compatible with Arti-cle 1 of Protocol No. 1. It took into account, in

particular: (1) that Gasus was engaged in a com-mercial venture which by its nature involvedrisk; (2) that the retention of title clause wouldprovide security against creditors other thanthe tax authorities; (3) that Gasus could haveeliminated the risk altogether by declining toextend credit to Atlas; (4) that it could have ob-tained additional security, e.g. by insurance;and (5) that Gasus permitted the mixer to be onAtlas’ premises.

136. This case illustrates that, although the Courtapplies the same test of fair balance to a taxingmeasure as to other interferences with prop-erty, the State is afforded a particularly widemargin of appreciation in cases of this kind.

Compensation

137. As has been noted above,85

Article 1 of Proto-col No. 1 does not expressly require the pay-ment of compensation for a taking of, or otherinterference with, property. But in the case of ataking (or deprivation) of property, compensa-tion is generally implicitly required. See, for ex-ample, James v. the United Kingdom,

86 where the

Court observed that:…under the legal systems of the Contracting States,the taking of property in the public interest without

84 A52 (1982).85 See above, paras. 97 ff.86 A98 (1986), para. 54;

Lithgow v. the UnitedKingdom, A102 (1986),para. 120; Holy Monaster-ies v. Greece, A301-A(1994), paras. 70-75;Hentrich v. France, A296-A (1994), para. 48; PressosCompania Naviera SA v.Belgium, A332 (1995),para. 38; Guillemin v.France, 1997-I (1997),paras. 52-57.


38

payment of compensation is treated as justifiable onlyin exceptional circumstances not relevant for presentpurposes. As far as Article 1 [of Protocol No. 1] is con-cerned, the protection of the right to property it affordswould be largely illusory and ineffective in the absenceof any equivalent principle. Clearly, compensationterms are material to the assessment whether the con-tested legislation respects a fair balance between thevarious interests at stake and, notably, whether it doesnot impose a disproportionate burden on the appli-cant… (para. 54)

138. Whether or not compensation is available isalso relevant when assessing the proportional-ity of other (lesser) interferences with property.

139. An example of the Court taking into accountthe absence of compensation in relation to aninterference with property falling short of adeprivation is Chassagnou v. France.

87 In this case

the applicants were landowners who, underFrench law, had the exclusive right to hunt ontheir land. This right was an aspect of the own-ership of the land. But the French authoritiesconsidered that it could be beneficial to makesmaller landowners get together and form anassociation granting mutual hunting rights to allconcerned. They made it compulsory for land-owners like the applicants to become membersof the association and to give up their exclusivehunting rights to other members of the associa-tion to hunt on their land.

140. The applicants (who were animal welfare activ-ists and anti-hunting) claimed that the compul-sory transfer of hunting rights was contrary toArticle 1 of Protocol No. 1.

141. It was agreed before the Court that the third,control of use, rule applied. As to public inter-est, the applicants argued that the law was onlyfor benefit of hunters, and so not in the publicinterest. The Court rejected that argument. Itheld that the French authorities were entitledto conclude that it was in the general interestto avoid unregulated hunting.

142. As to proportionality, the Court held that it up-set the fair balance for the applicants to becompelled to transfer their hunting rights toenable others to hunt on their land when theyhad ethical and moral objections to hunting. Inparticular, the Court noted the absence of anycompensation. (The Government had intendedthat the ability for landowners such as the ap-plicants to hunt on land belonging to otherswould be sufficient compensation, but this didnot assist the applicants, who did not want tohunt.) In the circumstances, the applicants’right to property as guaranteed by Article 1 ofProtocol No. 1 had been violated.

143. Where the payment of compensation is re-quired in order to satisfy the requirement ofproportionality, it does not necessarily have tobe full compensation in all circumstances. Le-

87 1999-III, para 82. See alsoSporrong v. Lönnrothv. Sweden, A52 (1982),para. 73; ImmobiliareSaffi v. Italy, 1999-V,paras. 56 and 57.


39

gitimate objectives of “public interest”, such asare pursued in measures of economic reformor measures designed to achieve greater socialjustice, may call for less than reimbursement ofthe full market value. But the amount of com-pensation should at least be reasonably relatedto the value of the property.

88

144. In Lithgow v. the United Kingdom,89

the applicantswere shipbuilding and aircraft building compa-nies, whose interests were nationalised. Theydid not contest that the State had a legitimateobjective for the taking, but argued that thecompensation paid was grossly inadequate.The British Government had decided on a sys-tem of compensation whereby the applicants’shares (which were nationalised) were valuedby reference to their value some three yearsbefore the date of transfer of the shares. TheGovernment’s case was that this was done inorder to avoid a value which was artificially af-fected by the knowledge that there would be anationalisation. The applicants argued that therelevant date should be closer to the date oftransfer, because the value of the shares hadactually gone up. The applicants pointed to thefact that in general international law, in similarcases, it is the date of taking, or transfer, whichis taken as the date of assessment.

145. The Court agreed with the Commission that:the taking of property without an amount reasonably

related to its value would normally constitute a dispro-portionate interference which could not be consideredjustifiable under Article 1. Article 1 does not, however,guarantee a right to full compensation in all circum-stances, since legitimate objectives of “public interest”,such as pursued in measures of economic reform ormeasures designed to achieve greater social justice, maycall for less than reimbursement of the full marketvalue. (para. 121).

146. Significantly, the Court also stated that thestandard of compensation may vary dependingon the nature of the property and the circum-stances of the taking. The standard of compen-sation required in a nationalisation case may bedifferent from that required in regard to othertakings of property, e.g. the compulsory acqui-sition of land for public purposes (para. 121).

147. The Court held (rejecting the applicants’ argu-ment) that the “margin of appreciation” appliednot only to the question of whether the nation-alisation was in the public interest, but also tothe choice of compensation terms. The Courtobserved that:…the Court’s power of review in the present case is lim-ited to ascertaining whether the decision regarding com-pensation fell outside the United Kingdom’s widemargin of appreciation; it will respect the legislature’sjudgment in this connection unless that judgment wasmanifestly without reasonable foundation. (para. 122)

148. The applicants had also relied on the require-

88 James v. the United King-dom, A98 (1986),para. 54; Holy Monaster-ies v. Greece, A301-A(1994), para. 71.

89 A98 (1986).


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ment in the second sentence of Article 1 that adeprivation of property be subject to the con-ditions provided for “by the general principlesof international law.” They had argued that thisrequirement meant that the compensation pay-able to them had to be “adequate, prompt andeffective” as required by the general principlesof international law. But the Court rejected thisargument. It noted that under the general prin-ciples of international law themselves, this re-quirement only applies to non-nationals.Looking at the travaux préparatoires to Article 1, itwas clear that the States intended this phraseto apply only to non-nationals.

Legal certainty

149. An interference with the right to property mustalso satisfy the requirement of legal certainty,or legality.

90 This is expressly stated in the sec-

ond sentence of the first paragraph of Article 1,in relation to a deprivation of property: a takingmust be “subject to the conditions provided forby law”. But the principle of legal certainty is in-herent in the Convention as a whole, and thisrequirement must be satisfied whichever of thethree rules applies.

150. As to what the principle of legal certainty

means, see Winterwerp v. the Netherlands.91

Thiscase concerned the right to liberty guaranteedby Article 5 of the Convention, and the right toa fair hearing guaranteed by Article 6. The ap-plicant had been confined to a mental hospital.He had been detained by court orders whichwere reviewed periodically, but had not beennotified that proceedings were in progress orallowed to appear or be represented. On sev-eral occasions, his requests for release werenot forwarded to the court by the public pros-ecutor. As a result of his detention, the appli-cant automatically lost the right to administerhis property.

151. The European Court of Human Rights found aviolation of Article 5, in that the applicant wasunable to get his detention reviewed by a courtand there had been a failure to hear him. Fur-ther, the denial of his right to administer hisproperty without affording him a hearing wascontrary to Article 6 of the Convention.

152. One of the issues for the Court in relation toArticle 5 was whether the applicant’s detentionwas “in accordance with a procedure pre-scribed by law”.

92 The Court stated that these

words essentially refer back to domestic law;they state the need for compliance with the rel-evant procedure under that law. But the do-mestic law must itself be in conformity with theConvention, including the general principles

90 See above, para. 18.91 A33 (1979), para. 45.92 See Article 5 of the Con-

vention.


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expressed or implied therein. The notion un-derlying the term in question was one of fairand proper procedure, namely, that any meas-ure depriving a person of his liberty shouldissue from and be executed by an appropriateauthority and should not be arbitrary.

153. The Court also observed that “In a democraticsociety subscribing to the rule of law, no deter-mination that is arbitrary can ever be regardedas lawful.” (para. 39). The same principle ap-plies in relation to Article 1 of Protocol No. 1.

154. For a recent case where the importance of theprinciple of legality, or legal certainty, wasstressed, see Iatridis v. Greece.

93 As mentioned

above,94

that was a case where the applicantoperated an open-air cinema, from which hehad been evicted and which had been compul-sorily transferred to the municipal authorities.The Court held that the clientele of the cinemaconstituted a protected asset under Article 1. Itproceeded to analyse the interference withinthe first rule of Article 1.

155. The Court then noted that the eviction order toevict the applicant from the cinema had actu-ally been quashed by the Greek court (despitethe fact that the lawfulness of the applicant’sinterest in the land had never been accepted).That had happened two years earlier, and yetthe applicant had not had the land returned. Inthese circumstances, the Court took the op-

portunity to make an emphatic statement abutthe crucial need for States to comply with theprinciple of legality, or legal certainty. As theCourt noted, if that requirement was not satis-fied, there was no need to go further and con-sider the legitimacy of the State’s objective orthe question of proportionality. The Court ob-served that:The Court reiterates that the first and most importantrequirement of Article 1 of Protocol No. 1 is that anyinterference by a public authority with the peaceful en-joyment of possessions should be lawful: the second sen-tence of the first paragraph authorises a deprivation ofpossessions only “subject to the conditions provided forby law” and the second paragraph recognises that theStates have the right to control the use of property byenforcing “laws”. Moreover, the rule of law, one of thefundamental principles of a democratic society, is inher-ent in all the Articles of the Convention … and entailsa duty on the part of the State or other public authorityto comply with judicial orders or decisions againstit…It follows that the issue of whether a fair balancehas been struck between the demands of the general in-terest of the community and the requirements of theprotection of the individual’s fundamental rights … be-comes relevant only once it has been established thatthe interference in question satisfied the requirement oflawfulness and was not arbitrary. (para. 58)

156. In the Iatridis case, the failure to return the landto applicant was “manifestly” in breach of

93 25 March 1999, para. 58.94 See above, paras. 42 ff.


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Greek law, and so in clear violation of Article 1of Protocol No. 1, without looking at any otherissue.

95

157. In order to satisfy the principle of legal cer-tainty, the State (or public authority) must com-ply with adequately accessible and sufficientlyprecise domestic legal provisions, which satisfythe essential requirements of the concept of“law”. This means not only that the interferencein question must be based on some provisionof domestic law, but that there must be a fairand proper procedure, and that the relevantmeasure must issue from and be executed byan appropriate authority, and should not be ar-bitrary.

96

158. These requirements are illustrated by Hentrichv. France.

97 Mrs Hentrich bought some land in

Strasbourg for 150 000 FRF. She was then toldthat the Revenue would exercise a right of pre-emption, that is, a right to buy the property, be-cause they considered the price that she hadpaid was too low. There was no system ofadversarial proceedings in which Mrs Hentrichcould argue that the price she had paid was notin fact too low.

159. Mrs Hentrich claimed that her property had defacto been expropriated, and that was not con-tested. She argued that the system of pre-emp-tion was not in the public interest if applied, as inher case, where there was no question of bad

faith or intention to evade tax. The EuropeanCourt of Human Rights rejected this argument,citing the “wide margin of appreciation” af-forded to States in assessing the public interest.

160. The Court then made an important ruling onthe question of lawfulness. It held that:…the pre-emption operated arbitrarily and selectivelyand was scarcely foreseeable, and it was not attendedby the basic procedural safeguards. In particular, Arti-cle 668 of the General Tax Code, as interpreted up tothat time by the Court of Cassation and as applied tothe applicant, did not sufficiently satisfy the require-ments of precision and foreseeability implied by theconcept of law within the meaning of the Convention.A pre-emption decision cannot be legitimate in the ab-sence of adversarial proceedings that comply with theprinciple of equality of arms, enabling argument to bepresented on the issue of the underestimation of the priceand, consequently, on the Revenue’s position – all ele-ments which were lacking in the present case. (para. 42)

161. The Court then went on to look at proportion-ality, and stated that in order to assess this, itwould look at the degree of protection from ar-bitrariness. The Court found that there had notbeen sufficient protection of this kind: it notedthat Mrs Hentrich had been selected for thisprocedure, which was rarely used. There wasno suggestion that she had acted in bad faith,and there would have been other means opento the State to discourage tax evasion (e.g. to

95 Para. 62.96 Lithgow v. the United

Kingdom, A102 (1986),para. 110; Winterwerpv. the Netherlands, A33(1979), paras. 45 and 39;Spacek v. the Czech Re-public (9 November1999), where the Courtobserved that whenspeaking of “law”, Arti-cle 1 of Protocol No. 1alludes to the same con-cept to be found else-where in the Convention,a concept which com-prises statutory law aswell as case-law. It im-plies qualitative require-ments, notably those ofaccessibility andforeseeability (para. 54).

97 A296-A (1994), para. 42.


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take proceedings to recover unpaid tax). Inthese circumstances, the Court found that MrsHentrich had been made to “bear an individualand excessive burden”.

98

162. This case is important, particularly because ofits emphasis on the need for a fair procedure,and on the requirement that State must not actarbitrarily – both under the principle of legality,and under the heading of proportionality.

98 Para. 49.


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V Other issues

Reading Article 1 of Protocol No. 1with Article 14163. In some cases, there may not be a violation of

Article 1 of Protocol No. 1 taken on its own, butthere may be a breach of that Article read to-gether with Article 14 of the Convention (whichprohibits discrimination in the enjoyment ofthe rights and freedoms set out in the Conven-tion).

99

164. Marckx v. Belgium100

provides an illustration of thispossibility. As mentioned above, this was a casewhich concerned legislation which discriminatedagainst illegitimate children, in that, inter alia, itplaced limitations on the mother’s right to be-queath. The European Court of Human Rightsheld that this involved an interference with herright to property under Article 1 of Protocol No.1, read together with Article 14 of the Conven-tion (although there was no violation of Article 1of Protocol No. 1 read on its own).

101

165. The Belgian Linguistics Case (No. 2)102

sets outthe general principles applicable to Article 14 ofthe Convention. Here a number of French-speaking parents in Belgium complained thatvarious aspects of Belgian laws on the use oflanguages in education infringed, inter alia, the

right to private life (Article 8) and the right toeducation (Article 2 of Protocol No. 1), read to-gether with Article 14, in that they denied pub-lic support and recognition to French-speakingschools in certain areas designated as Flemish.In considering this claim, the Court made itclear that a measure which in itself conformedto the requirements of an article might infringethat article when read together with Article 14,because it was of a discriminatory nature.

166. But Article 14 would not prohibit every differ-ence in treatment in the exercise of the Con-vention rights and freedoms. The principle ofequality of treatment would be violated only ifthe particular distinction had no objectiveand reasonable justification. A difference intreatment had to pursue a legitimate aim,and there had to be a reasonable relationshipof proportionality between the means em-ployed and the aim sought to be realised.

Continuing violations

167. The European Court of Human Rights has rec-ognised the concept of a continuing violationof the right to property. This approach may berelevant to takings of property which, on theface of it, occurred before the Russian Federa-tion accepted the jurisdiction of the EuropeanCourt of Human Rights.

99 Article 14 provides: “Theenjoyment of the rightsand freedoms set forth inthis Convention shall besecured without discrimi-nation on any groundsuch as sex, race, colour,language, religion, politi-cal or other opinion, na-tional or social origin,association with a na-tional minority, property,birth or other status.”

100 A31 (1979). See also Inzev. Austria, A126 (1987),referred to in more detailin note 21 above.

101 Para. 65.102 A6 (1968).


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103 1996-VI (1996).104 A260-B (1993). See

above, paras. 69 ff.

168. A good illustration is provided by Loizidou v. Tur-key.

103 In this case the applicant was a Greek

Cypriot who claimed a violation of Article 1 ofProtocol No. 1 in relation to a house sheowned and had been forced to leave behind innorthern Cyprus after the Turkish occupationof that part of the island in 1974. She allegedthat she had been continuously preventedfrom having access to her property by the Turk-ish forces.

169. The Turkish Government argued, inter alia, thatshe was unable to claim, because the interfer-ence with her property occurred before 1990,when Turkey accepted the jurisdiction of theEuropean Court of Human Rights in relationto events thereafter. The Court recalled that ithad already indorsed the notion of a continu-ing violation in Papamichalopoulos and Othersv. Greece,

104 and the effects of this notion on

the temporal limitations of the competence ofthe Convention organs. The present case con-cerned a continuing violation, provided thatthe applicant could still be regarded for thepurposes of Article 1 as being the legal ownerof the land. The Court found that she could beso regarded, and that a constitutional “law”passed by the “Turkish Republic of NorthernCyprus”, which purported to deprive her of ti-tle to her property, could not be regarded asvalid law.

170. The Court went on to find that having been re-fused access to the land since 1974, the appli-cant had effectively lost all control as well as allpossibilities to use and enjoy her property. Thiswas not a deprivation of property or a controlof use, in the exceptional circumstances of thecase. The matter had to be considered underthe first sentence of Article 1: it was an interfer-ence with the peaceful enjoyment of her pos-sessions. The Court observed that a hindrancecan amount to a violation just as much as a le-gal impediment. The Turkish government hadnot really sought to justify the interference, andthere was therefore a violation of Article 1 ofProtocol No. 1.

Application of the right to propertyas between private parties

171. It is clear that the application of the right toproperty in Article 1 of Protocol No. 1 is notrestricted to interferences with property whichinvolve the transfer of some benefit to theState. This article is capable of applying tomeasures introduced by the State (or otherpublic authority) which affect an individual’sproperty rights by transferring them to, or oth-erwise benefiting, another individual or indi-viduals, or which otherwise regulate theproperty of an individual.


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172. See, for example, James v. the United Kingdom,105

involving legislation which enabled tenants toacquire ownership of the properties in whichthey lived from their landlords. See also Appli-

105 A98 (1986). See above,paras. 90 ff., where thiscase is analysed in somedetail.

106 (1982). See above,paras. 23 ff.

cations Nos. 8588/1979, 8589/79, Bramelid andMalmström v. Sweden,

106 concerning legislation

governing the relationship between sharehold-ers in a company.


Directorate General of Human RightsCouncil of EuropeF-67075 Strasbourg Cedex

http://www.coe.int/human_rights

These human rights handbooks are intended as a very practicalguide to how particular articles of the European Convention onHuman Rights have been applied and interpreted by the Euro-pean Court of Human Rights in Strasbourg. They were writtenwith legal practitioners, and particularly judges, in mind, but areaccessible also to other interested readers.


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