European Court of Human Rights

 

 

 

FOURTH SECTION

 

 

 

 

 

 

CASE OF PARTNERS 2000 KFT AND OTHERS v. HUNGARY

 

(Application no. 966/14)

 

 

 

 

 

 

 

 

 

 

JUDGMENT

 

 

 

 

STRASBOURG

 

22 March 2016

 

 

 

 

This judgment is final but it may be subject to editorial revision.




In the case of Partners 2000 Kft and Others v. Hungary,

The European Court of Human Rights (Fourth Section), sitting as a Committee composed of:

          Vincent A. De Gaetano, President,
          Egidijus Kūris,
          Gabriele Kucsko-Stadlmayer, judges,

and Fatoş Aracı, Deputy Section Registrar,

Having deliberated in private on 1 March 2016,

Delivers the following judgment, which was adopted on that date:

PROCEDURE

1.  The case originated in an application (no. 966/14) against Hungary lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Hungarian limited liability company, Partners 2000 Kft, and three Hungarian nationals, Mr Imre Györkös, Mrs Anikó Györkösné Pusker and Mr Imre Györkös Jr. (“the applicants”) on 19 December 2013.

2.  Initially, all four applicants were represented by Mr T. Bihary, a lawyer practising in Budapest. Subsequently, the first applicant, Partners 2000 Kft had gone into liquidation as of 12 November 2014. The liquidator, entitled to represent the first applicant from this date, withdrew the mandate of Mr T. Bihary and appointed Mr A. I. Fodor, a lawyer practising in Budapest as of 6 March 2015. The second, third and fourth applicants remained represented by Mr T. Bihary.

3.  The Hungarian Government (“the Government”) were represented by Mr Z. Tallódi, Agent, Ministry of Justice.

4.  On 16 December 2014 the application was communicated to the Government.

5.  Having been informed of the Court’s intention to examine the case sitting as a Committee of three judges, the Government objected arguing that the Court should not automatically follow the findings of the judgment in Vékony v. Hungary (no. 65681/13, § 13 January 2015), which they find erroneous. The Court rejects this objection considering that the subject matter of the present case is very similar to that in the Vékony judgment, which should be regarded as well-established case-law for applications of this kind.

THE FACTS

THE CIRCUMSTANCES OF THE CASE

6.  The first applicant, Partners 2000 Kft, is a Hungarian limited liability company with its seat in Nyárliget. It is owned and run by the second applicant. The second applicant is a Hungarian national, who was born in 1972 and lives in Sopron. The third applicant is the second applicant’s wife, who was born in 1973 and lives in Sopron. The fourth applicant is the second and third applicants’ minor child, born in 2000.

7.  On 11 September 2012 Parliament enacted Act no. CXXXIV of 2012 on the Repression of Smoking of the Youth and on Tobacco Retail. The Act was published on 24 September 2012.

8.  According to the Act, tobacco retail was to become a State monopoly (exercised through a State-owned company, ND Nemzeti Dohánykereskedelmi Nonprofit Zrt), and tobacco retailers would become authorised through a concession tender, advertised on 15 December 2012. The time-limit for applying was 22 February 2013.

9.  Entities or persons previously engaged in tobacco retail had no privileges in the tender. Legal persons were not entitled to apply.

10.  The Act was subsequently amended on several occasions, and the final version was enacted on 6 June 2013, with entry into force on 1 July 2013. Government Decree no. 181/2013. (VI.7.), which contained the detailed rules for the operations of the future concession-holders, was published on 8 June 2013, that is, after the completion of the tendering process, the results of which had become public on 22 April 2013. The decision about the tenders was taken by ND Zrt itself.

11.  The first applicant, Partners 2000 Kft had been active in tobacco retail for several years. Since, however, it was not entitled to apply for a concession under the new law, the second applicant applied personally for one, on several occasions. However, ND Zrt turned down his applications, informing him that he had not obtained a tobacco retail concession. The decisions said that his applications did not fully meet the requirements, without developing the shortcomings.

12.  No compensation is available for ex-tobacco-retailers who, by not being awarded a concession, lost part of their livelihood. The refusals, such as those of Mr Györkös, were not subject to any legal remedy.

13.  The applicants submitted that others in comparable situations - and in the case of those who had never been doing tobacco retail beforehand, in non-comparable situations - were granted concessions, which difference in treatment cannot be explained by any circumstance other than political adherence.

THE LAW

I.  ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1

14.   The applicants complained under Article 1 of Protocol No. 1 to the Convention that the effective removal of the tobacco retail licence of their family business, that is, the legislative exclusion of the first applicant from tobacco retail and the refusals concerning the second applicant, amounted to an unjustified deprivation of possessions.

Article 1 of Protocol No. 1 provides as follows:

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

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

15.  The Government argued that after the announcement of its liquidation, the first applicant had not been properly represented in the proceedings because the second applicant - who actually signed the authority in the name of the first applicant - could no longer represent the first applicant. However, as it appears from the case file, the officially appointed liquidator mandated Mr A. I. Fodor as of 6 March 2015 who submitted his authorisation. The Court concludes that this applicant was properly represented in the proceedings.

16.  Further, the Government argued that only the first applicant, the sole holder of a retail licence in the past, could be regarded as a victim. The applicants contested this argument.

17.  The Court notes that the third and the fourth applicants never had a tobacco retail licence, nor they did ever apply for a concession under the new law. Having regard to the foregoing, the Court concludes that the application, in so far as it was lodged by the third and the fourth applicants, is incompatible ratione personae with the provisions of the Convention within the meaning of Article 35 § 3 (a) and must be rejected in accordance with Article 35 § 4.

18.  With respect to the first and the second applicants, the Court reiterates that the term “victim” used in Article 34 of the Convention denotes the person directly affected by the act or omission which is in issue (see, among other authorities, Vatan v. Russia, no. 47978/99, § 48, 7 October 2004). The Court is persuaded that the legislative removal of the first applicant’s tobacco retail licence amounts to an interference with its right to peaceful enjoyment of possessions. However, this grievance could have effectively been remedied, in the circumstances, by granting a tobacco retail concession personally to the second applicant under the new rules. This is essentially so because the second applicant applied personally for a concession, in the family company’s stead, only since legal persons were not eligible as such. The Court considers that the measure of control of use of property (see Vékony, cited above, § 30) resulting, jointly, from the statutory removal of the first applicant’s licence and the non-granting of a licence to the second applicant is most appropriately regarded as an occurrence affecting the second applicant. Therefore, the Court is satisfied that the second applicant can claim to be the victim of the violation alleged, whilst the first applicant cannot. In regard to the latter, the application is therefore is incompatible ratione personae with the provisions of the Convention within the meaning of Article 35 § 3 (a) and must be rejected in accordance with Article 35 § 4.

19.  The Government submitted that a constitutional complaint - which was a remedy capable of enabling an ensuing official liability action - should have been lodged so as to exhaust domestic remedies. The applicants disagreed. The Court observes that a similar objection was already dismissed by the Court in Vékony (cited above, §§ 22 to 24). For essentially the same reasons, it holds that the application cannot be rejected for non-exhaustion of domestic remedies.

20.  The Government further argued that the complaint, in so far as the non-acquisition of a new license was concerned, was incompatible ratione materiae with the provisions of the Convention. Again, the applicants disagreed. In Vékony, a similar objection was already dismissed (cited above, § 29). The Court sees no reason to hold otherwise in the present case.

21.  The Court further notes that the complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It also notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.

22.  On the merits, the Government in essence reiterated their arguments set out in paragraph 28 of the Vékony judgment. The second applicant primarily argued that the measure complained of constituted an excessive individual burden.

23.  The Court considers that the considerations outlined in paragraphs 29 to 37 of the Vékony judgment equally hold true in the present case and finds that there has been a violation of Article 1 of Protocol No. 1.

24.  In view of this finding, the Court considers that it is not necessary to examine separately either the admissibility or the merits of the second applicant’s related complaints submitted under Articles 6, 8, 10, 13 and 14 of the Convention and Article 1 of Protocol No. 12.

II.  APPLICATION OF ARTICLE 41 OF THE CONVENTION

25.  Relying on Article 41, the second applicant claimed 635 euros (EUR) in respect of pecuniary damage and EUR 41,700 in non-pecuniary damage.

26.  The Government contested these claims.

27.  Without speculating on the profits which the second applicant would have achieved if the violation of the Convention had not occurred, the Court observes that a real loss of business had been suffered. It therefore considers it appropriate to award a lump sum in compensation for the loss of future earnings. In addition, the Court considers that the violation it has found of Article 1 of Protocol No. 1 in the instant case must have caused the second applicant prolonged uncertainty in the conduct of business and feelings of helplessness and frustration, entailing some non-pecuniary damage.

28.  Thus, the Court considers it reasonable, making its assessment on the basis of equity, to award the second applicant an aggregate sum of EUR 20,000, covering all heads of damage (see, mutatis mutandis, Centro Europa 7 S.r.l. and Di Stefano v. Italy [GC], no. 38433/09, §§ 219 to 222, ECHR 2012; Vékony, cited above, § 41).

29.  The second applicant also claimed EUR 2,000 plus VAT for the costs and expenses incurred before the Court.

30.  The Government contested the claim.

31.  Regard being had to the documents in its possession and to its case-law, the Court considers that the sum claimed should be awarded in full.

32.  The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

1.  Declares the application inadmissible in regard to the first, third and fourth applicants;

 

2.  Declares the complaint under Article 1 of Protocol No. 1 in respect of the second applicant admissible;

 

3.  Holds that there has been a violation of Article 1 of Protocol No. 1 in regard to the second applicant;

 

4.  Holds that it is not necessary to examine separately the second applicant’s remaining complaints;

 

5.  Holds

(a)  that the respondent State is to pay the second applicant, within three months, the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement:

(i)  EUR 20,000 (twenty thousand euros), plus any tax that may be chargeable in respect of pecuniary and non-pecuniary damage combined;

(ii)  EUR 2,000 (two thousand euros), plus any tax that may be chargeable to the second applicant, in respect of costs and expenses;

(b)  that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;

 

6.  Dismisses the remainder of the second applicant’s claim for just satisfaction.

Done in English, and notified in writing on 22 March 2016, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

     Fatoş Aracı                                                                Vincent A. De Gaetano
Deputy Registrar                                                                       President