BATKIVSKA TURBOTA FOUNDATION v. UKRAINE - 5876/15 (Judgment : Article 1 of Protocol No. 1 - Protection of property : Fourth Section) [2018] ECHR 815 (09 October 2018)

FOURTH SECTION

CASE OF BATKIVSKA TURBOTA FOUNDATION v. UKRAINE

(Application no. 5876/15)

JUDGMENT

( Merits )

STRASBOURG

9 October 2018

This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision.

In the case of Batkivska Turbota Foundation v. Ukraine,

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

Paulo Pinto de Albuquerque, President,
Ganna Yudkivska,
Vincent A. De Gaetano,
Iulia Antoanella Motoc,
Carlo Ranzoni,
Marko Bošnjak,
Péter Paczolay, judges,
and Marialena Tsirli, Section Registrar,

Having deliberated in private on 11 September 2018,

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

PROCEDURE

1. The case originated in an application (no. 5876/15) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms ("the Convention") by the Ukraine-wide Civic Charity Foundation Batkivska Turbota ( Всеукраїнський громадський благодійний фонд «Батьківська турбота» ), a charity foundation registered in Ukraine in 1999 ("the applicant"), on 23 January 2015.

2. The applicant was represented by Mr N. Kulchytskyy, a lawyer practising in Kyiv. The Ukrainian Government ("the Government") were represented by their Agent, most recently Mr I. Lishchyna of the Ministry of Justice.

3. The applicant complained under Article 1 of Protocol No. 1 that the courts had annulled its title to property (part of a sanatorium located in Kyiv; "the Sanatorium"). In particular, it stated that given the previous court decisions on the same matter, the application of the domestic law could not be considered as predictable. It further stated that the interference with its property rights had not been proportionate and necessary in a democratic society.

4. On 4 June 2015 the above complaint was communicated to the Government and the remainder of the application was declared inadmissible pursuant to Rule 54 § 3 of the Rules of Court.

5. A joint written submission was received from the Federation of Trade Unions of Ukraine ("the Federation") and its companies, Ukrprofozdorovnytsya ("UPO") and Ukrproftur. They were granted leave to intervene as third parties (Article 36 § 2 of the Convention and Rule 44 § 3).

THE FACTS

I. THE CIRCUMSTANCES OF THE CASE

A. Background information

6. On 17 April 1936 the government of the Union of Soviet Socialist Republics ("the USSR") entrusted the management of the network of recreational facilities for workers in the USSR to the Union-wide Central Council of Trade Unions ("the Union-wide Council"), the central authority for the USSR's official State-controlled trade unions.

7. By a resolution of 17 April 1956 the Council of Ministers of the Ukrainian Soviet Socialistic Republic ("the Ukrainian SSR") obliged the Ministry of Healthcare of the Ukrainian SSR to "take" ( прийняти ) from the trade unions and other ministries and State agencies various assets (including the Sanatorium).

8 . By a resolution of 23 April 1960 on transferring to trade unions sanatoria and recreational resorts of the Ministry of Healthcare of the Ukrainian Soviet Socialistic Republic, the Council of Ministers obliged the above-mentioned Ministry to transfer "for free use" ( безоплатно передати у відання ) to the Ukrainian Republican Council of Trade Unions (a Ukrainian entity functioning under the charter of trade unions of the Soviet Union and under the auspices of the Union-wide Council; "the Republican Council") all functioning self-supporting sanatoria, recreational resorts and health centres (including the Sanatorium).

9. On 6 October 1990 the XV Congress of Trade Unions of the Ukrainian SSR adopted a decision whereby it transformed itself into the First Founding Congress of Independent Trade Unions of Ukraine. That congress founded the Federation of Independent Trade Unions of Ukraine (which subsequently became the Federation) and declared its independence from the State and from commercial bodies of the Ukrainian SSR and the Soviet Union. It also declared its refusal to function under the charter of trade unions of the Soviet Union. The Federation was also declared the Republican Council's legal successor.

10. On 18 November 1990 the Council of the General Conference of Trade Unions of the Soviet Union approved an agreement of 18 November 1990 between the General Conference of Trade Unions of the Soviet Union and the Federation, whereby various assets (including the Sanatorium) were "reserved" ( закріплені ) for the Federation.

11. By a resolution of 29 November 1990 on the protection of sovereign property rights of the Ukrainian SSR, the Parliament of the Ukrainian SSR ordered that until a law on privatisation ( роздержавлення ) of property was enacted, a moratorium on the State authorities making any change to the title to State property and owners thereof was to be introduced.

12. On 24 August 1991 Ukraine declared its independence.

13. On 10 September 1991 the Law on Enterprises, Establishments and Organisations of the Soviet Union located on the Territory of Ukraine was enacted. The assets and financial resources of enterprises, establishments, organisations and other entities subordinated to the former Soviet Union and located on the territory of Ukraine were declared State property of Ukraine. All contracts concluded in breach of the 1990 moratorium were declared null and void.

14. On 22 November 1991 the Federation decided to create UPO, a joint-stock company (currently, a private joint-stock company). Pursuant to that decision, the Federation transferred to UPO various assets (including the Sanatorium). On 4 December 1991 the Federation and the Social Insurance Fund of Ukraine ("the SIFU") ratified UPO's articles of association and statute.

15. On 23 December 1991 the local authorities registered UPO.

16. By a resolution of 4 March 1992 on the implementation of the Law of Ukraine on Privatisation of Property of State Enterprises, the Parliament of Ukraine repealed the resolution of 29 November 1990 and instructed the Cabinet of Ministers of Ukraine to draw up, by 15 March 1992, a list of enterprises which had concluded contracts whereby title to State property had been transferred, in breach of the 1990 moratorium.

17 . By a resolution of 10 April 1992 on property complexes and financial resources of civic organisations of the former Soviet Union located on the territory of Ukraine, Parliament ordered that, until a list of legal successors of Union-wide civic organisations of the former Soviet Union had been drawn up, the assets and financial resources of enterprises, establishments and entities, which were located on the territory of Ukraine and which were under their central bodies' authority, were to be temporarily transferred to the State Property Fund of Ukraine ("the SPFU"), an authority managing State property.

18 . By a resolution of 4 February 1994 on the property of Union-wide civic organisations of the former Soviet Union, Parliament further ordered that, until the owners of the above-mentioned assets had been determined in legislation, those assets were to be regarded as State property. No such legislation has been adopted to date (see paragraph 40 below).

19. On an unspecified date the SPFU brought a claim against the Federation, the SIFU and UPO, arguing that the assets the Federation had transferred to UPO had not belonged to it, but had belonged to the Union-wide Council, and the SPFU had therefore been their managing authority.

20 . By a judgment of 20 January 1997 (case no. 137/7), the Higher Arbitration Court of Ukraine ("the HACU"; in 2001 renamed "the Higher Commercial Court of Ukraine", "the HCCU") rejected the claim. Referring to the resolutions of 10 April 1992 and 4 February 1994, it stated that the SPFU had not established what had constituted assets under those legal acts. The assets on the basis of which UPO had been created had been transferred to the Republican Council, succeeded by the Federation, as was evident from the latter's founding documents. Since the assets had not been transferred to the Union-wide Council, they were not covered by those resolutions. Moreover, since their transfer to trade unions, the assets had not been "recalled" ( не вилучалися ) by the State in accordance with the established procedure. The trade unions' title to those assets had not been challenged and had therefore been lawful. Under Article 92 § 7 of the 1994 Constitution of Ukraine, the legal regime applicable to property was to be determined by the laws of Ukraine only. Since a special law governing the legal regime of assets belonging to Union-wide civic organisations of the former Soviet Union had not been adopted when the case was examined, there had been no legal restrictions on the creation of UPO on the basis of sanatoria's assets. Accordingly, UPO had been founded lawfully, there was no basis for annulling its founding documents and the SPFU's allegation that it was the managing authority of UPO's assets was at odds with the law and the circumstances of the case.

21 . On 17 June 1997 the HACU review panel upheld the above judgment. It held that assets which had formed the basis for the creation of UPO had been transferred to the Republican Council pursuant to the resolution of 23 April 1960. They had not been in the Union-wide Council's use and were not, therefore, covered by the resolution of 10 April 1992.

22. On 27 June 2000, at UPO's request, the local authorities registered its title to assets transferred to it in accordance with its founding documents.

23 . By a decision of 22 November 2007, which is available to the public, the Supreme Court of Ukraine refused to allow a request submitted by the Prosecutor General for a review of the decision of 17 June 1997. The Supreme Court did not provide the details of its decision.

B. Annulment of the applicant's title to property

24. In 2000 the applicant founded the "Kovcheg" Social Rehabilitation Centre ("the Centre"). According to the latter's Statute, its activities include "social protection, social-pedagogical and psychological rehabilitation of children between the ages of six and eighteen, who are in difficult life circumstances[, and] assistance with the provision of complex social, psychological, pedagogical, medical, legal and other types of individual and family assistance."

25. On 30 August 2002 the applicant and the Centre purchased from UPO certain premises of the Sanatorium (dormitory blocks, cafeteria, library, medical block, laboratory and some other premises). Their price under the contract was 1,915,200 Ukrainian hryvnias [1] (UAH). According to the contract, the premises were owned by UPO on the basis of the title certificate of 27 June 2000.

26. The applicant subsequently registered its title to the above-mentioned premises with the local authorities, and the Centre has been using the premises for its activities and is based there. In particular, the premises have been used as accommodation for children from "difficult" families and from families of internally displaced persons ("IDPs").

27 . In August 2011 a prosecutor acting on behalf of the State lodged a claim with the Kyiv City Commercial Court against UPO, the applicant and the Centre, seeking the annulment of the 2002 contract. He argued, in particular, that the premises that had been sold were State property and had never been transferred from the State to UPO's ownership. The 2002 contract had thus breached State interests. The prosecutor also stated that he had only learned about the 2002 contract in July 2011.

28 . On 19 September 2011 the court allowed the claim. It held that in 1960, the State had transferred sanatoria and recreational facilities, including the disputed property to trade unions for their free use but not their ownership. Therefore, when UPO had been created, the disputed premises had belonged to the State. The 2002 contract had thus been invalid. The court dismissed UPO's reference to the judgment of 20 January 1997, stating that the parties in that case and in the present one were not the same, and that judgment contained value judgments rather than facts as regards the owner of the disputed property. Furthermore, that judgment had not been in accordance with the Supreme Court's findings in its decisions of 25 September 2007 and 16 September 2008, in which it had held that property transferred for free use under the resolution of 23 April 1960 had been State property (the parties did not provide copies of those decisions). Lastly, the court rejected the prosecutor's argument that the resolutions of 10 April 1992 and 4 February 1994 had been breached, holding that they were inapplicable in the present case, as they concerned property owned by civic organisations of the former Soviet Union (including trade unions), whereas the disputed property had not been transferred from the State (that is to say, trade unions had never gained title to the property).

29. The applicant appealed, stating that UPO had a title certificate to the disputed property. Even assuming that UPO had had no right to sell that property, the applicant was a bona fide purchaser. Moreover, it had spent around UAH 5 million on renovation of the purchased premises.

30. On 1 April 2014 the Kyiv Commercial Court of Appeal quashed the judgment of 19 September 2011 and found for the applicant, stating that there were no legal grounds to conclude that the disputed premises belonged to the State. In particular, the resolutions of 10 April 1992 and 4 February 1994 had not concerned the Federation's trade unions, because the latter had left the Union-wide Council as early as 1990. Moreover, those legal acts had been in breach of Article 92 of the Constitution of Ukraine, pursuant to which the property regime could be regulated by laws of Ukraine only. UPO had therefore become the owner of property transferred to it. The court also referred to the judgment of 20 January 1997 and decisions adopted in case no. 48/202-20/191 (see a summary of the latter decisions in paragraph 42 below), holding that facts established by a decision of a commercial court were not to be proved again when deciding other disputes with the same parties. The applicant had been a bona fide purchaser as it could not have known about the existence of any obstacles for concluding the 2002 contract, and such obstacles had not been present when it had been concluded.

31 . On 24 July 2014, following an appeal on points of law lodged by the prosecutor, the HCCU quashed the judgment of 1 April 2014 and upheld the judgment of 19 September 2011. It held that following a systematic analysis of various legal acts, including the law of 10 September 1991 and the resolutions of 10 April 1992 and 4 February 1994, there were no grounds to conclude that under the resolution of 23 April 1960 the State had transferred title to the disputed property to the trade unions. The latter resolution contained no indication that the disputed property would be transferred to the ownership of the Republican Council, nor any intention on the part of its owner (the Ukrainian SSR) to alienate it to the Republican Council. The resolution of 29 November 1990 had set a moratorium on any change of title to, and owners of, State property until the enactment of a law on privatisation of property. Accordingly, the disputed property which had been transferred to the Republican Council and used by it had been State property. The HCCU also held that its position was confirmed by its own decisions and those of the Supreme Court given in 2007-2014 (the parties did not provide copies thereof).

32 . In October 2014 the applicant applied to the Supreme Court for a review of the decision of 24 July 2014. On 4 February 2015 the Supreme Court rejected its request. It referred, inter alia , to the resolution of 23 April 1960, the resolution of 29 November 1990 and the law of 10 September 1991, and stated that it did not follow from them that the transfer of property to the Republican Council had entailed a change in the State's title to it. Trade unions had been operating under the charter of trade unions of the Soviet Union and had been Union-wide civic organisations. Therefore, the Sanatorium had been the property of a civic organisation of the former Soviet Union located on the territory of Ukraine and, when UPO had been created, the Sanatorium had belonged to the State and could be alienated only with the State's consent. The Supreme Court also referred to the resolutions of 10 April 1992 and 4 February 1994 in support of its findings. In particular, it held that the question of holders of title to property of Union-wide civic organisations had not yet been regulated by domestic law and the property of such organisations was at present regarded as State property. Accordingly, there had been no legal grounds for the Federation to dispose of the property of Union-wide civic organisations.

33 . On 2 April 2018 relevant changes were entered in the register of ownership rights to real estate. The State, as represented by the SPFU, was indicated as the new owner of the disputed property.

34 . Despite the judgment of 19 September 2011, the applicant is still able to use the disputed property and children from "difficult" families and IDP families still live on those premises. The applicant also informed the Court that on 1 February 2018, at its request, the Kyiv City Commercial Court decided to postpone the execution of the judgment until 31 May 2018. As it appears from the decision of 1 February 2018, the representatives of the State did not object to that postponement.

II. RELEVANT DOMESTIC LAW AND PRACTICE

A. The 2003 Civil Code of Ukraine

35 . Article 216 of the Code provides that should a contract be declared null and void, each party must return to the other party the proceeds received under the contract. If that is impossible, each party must pay the other party the current value of what it received under the contract. If a party has suffered pecuniary or non-pecuniary damage as a result of a contract being declared null and void, the liable party must pay compensation.

36 . Article 321 of the Code provides, inter alia , that a person may be deprived of his or her property rights or limited in exercising them only in accordance with the procedure established by law.

37 . Article 1166 of the Code provides, inter alia , that any damage caused by unlawful decisions, actions or inactivity in respect of property of a natural or legal person must be fully compensated for by the person who caused it.

B. Draft legislation

38 . The applicant submitted that on 30 March 2016 a draft law on the legal regime governing property of Union-wide civic organisations of the former Soviet Union had been registered in Parliament. It provided for an acknowledgement of the State's title to property which had been transferred for use by Union-wide civic unions (organisations) under decisions of the State authorities of the former Soviet Union and the Ukrainian SSR and which was located on the territory of Ukraine as of 24 August 1991. It also provided that the Cabinet of Ministers would ensure that an inventory of property of Union-wide civic organisations (unions) of the former Soviet Union was drawn up within six months of the law's entry into force.

39. The explanatory note to the draft law stated that, given the conditions of legal uncertainty, starting from 1992 property of Union-wide civic organisations had been sold off by civic organisations of Ukraine, which had arbitrarily proclaimed themselves the successors of Soviet Union assets, and had been unlawfully alienated in other ways. This had been done despite the fact that the Ministry of Justice of Ukraine had repeatedly informed notaries that it was prohibited to certify contracts of sales of such property. The HCCU and the Supreme Court of Ukraine repeatedly stated, in decisions they adopted on prosecutors' claims, that such contracts had no legal consequences, as the only legitimate managing authority of assets of Union-wide civic organisations of the former Soviet Union was the SPFU.

40 . The draft law does not appear to have been enacted.

C. Case-law of the Higher Commercial Court of Ukraine

41. The applicant submitted copies of court decisions adopted in cases nos. 48/202-20/191 and 51/227.

42 . By a judgment of 9 September 2008, upheld on 20 November 2008 by the Kyiv Commercial Court of Appeal (case no. 48/202-20/191), the Kyiv City Commercial Court rejected a prosecutor's claim for the annulment of UPO's founding documents, in which the prosecutor alleged that assets transferred by the Federation to UPO had belonged to the State and not to trade unions. The courts held that the claimant had failed to prove that the assets transferred to UPO had been "recalled" by the State. Allegations about the unlawfulness of transferring the assets to UPO's ownership had been ungrounded, because it had not been proved that UPO's acquisition of property rights had been unlawful. The courts also dismissed the claimant's reference to the resolution of 10 April 1992, because assets transferred to UPO had belonged to the Republican Council, and not to the Union-wide Council. The courts stated that this had been further confirmed by the resolution of 23 April 1960. Furthermore, until the examination of the case, neither the Federation nor UPO had been included in the list of enterprises mentioned by the resolution of 29 November 1990. In any event, that resolution concerned the initiation by the State authorities of changes to the State's title to property, but the transfer of assets to UPO had not been initiated by them. In sum, the claimant had not proved that assets transferred from the Federation to UPO had been State property; nor was there any proof that they had remained under State management.

On 19 March 2009 the HCCU upheld the above decisions and stated that the courts had arrived at correct conclusions in rejecting the prosecutor's claim. At the same time, it referred in its reasoning to the resolution of 29 November 1990 and the law of 10 September 1991 and held that the assets transferred to UPO had been State property. It further held that their transfer to UPO had not entailed a change of State title to them, and State interests had not therefore been breached; disposal of those assets by UPO had been possible only with the SPFU's consent.

43 . On 22 July 2013 (case no. 51/227) the HCCU rejected a claim lodged by the Prosecutor General in the interests of the State against UPO and three other private companies, for the annulment of a contract concluded in 2004 whereby UPO had sold another part of the Sanatorium to one of those companies (that company then sold it on to two other companies). The HCCU referred, inter alia , to the judgment of 20 January 1997, stating that facts established by a decision of a commercial court during the examination of one case were not to be proved again in the examination of another case with the same parties. It also stated that the resolutions of 10 April 1992 and 4 February 1994 were inapplicable to the Federation's trade-union organisations, because they had left the Union-wide Council as early as October 1990 and, pursuant to Article 5 of the Civil Code of Ukraine, civil law acts could not regulate legal relations which had emerged before their adoption.

THE LAW

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

44. The applicant complained of a breach of its property rights under Article 1 of Protocol No. 1, which reads as follows:

"1. 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.

2. 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."

A. Admissibility

45. The Government submitted that the applicant had failed to exhaust domestic remedies, as it had not claimed before the domestic courts compensation for the value of the premises bought under the 2002 contract or for money spent on their renovation. In commenting on the third parties' submissions (see paragraph 52 below), they further submitted that buyers could apply to the courts for compensation from entities which had sold them a property later found to belong to the State. Thus, it was UPO which should have compensated the applicant for the lost property. Referring to Article 1166 of the Civil Code (see paragraph 37 above), the Government concluded that the applicant should either have sued UPO for damages in the proceedings instituted by the prosecutor or lodged a separate claim for damages against it after it had received the unfavourable judgments. Referring again to the third parties' submissions, the Government also submitted that the lodging of such claims had led to compensation being awarded to buyers of property whose title had been annulled.

46. The applicant submitted that the Government had not indicated any provision of domestic law which would entitle it to claim compensation for the value of the disputed property. In particular, it considered that since the domestic courts had not established whose actions had led to the conclusion that the contract had been invalid, it had been impossible to determine who had had to compensate it under Article 216 of the Civil Code (see paragraph 35 above). It further submitted that since the courts had found that the disputed premises had belonged to the State, UPO had not been obliged to return to the applicant any sums it had received under the 2002 contract. Lastly, it stated that the current value of the premises was incomparable to their value under the 2002 contract.

47 . The Court recalls that a remedy that cannot lead to a reinstatement of title is not required to be exhausted for the purposes of Article 35 § 1 of the Convention. The Court has found, in particular, that any damages that an applicant may be able to recover though use of such a remedy may only be taken into account for the purposes of assessing the proportionality of the interference and the calculation of pecuniary damage if a violation of Article 1 of Protocol No. 1 to the Convention is found (see Gladysheva v. Russia , no. 7097/10, §§ 60-62, 6 December 2011, and Andonoski v. the former Yugoslav Republic of Macedonia , no. 16225/08, §§ 22-23, 17 September 2015). Consequently, the Government's objection should be dismissed.

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

B. Merits

1. The parties' submissions

49. The applicant submitted that it had been deprived of its possessions unlawfully. The domestic courts had relied on the resolutions of 10 April 1992 and 4 February 1994 (see paragraphs 17 and 18), even though under Article 321 of the Civil Code (see paragraph 36 above) a person could be deprived of property only under conditions prescribed by law, namely by the laws of Ukraine. It also stated that in the Supreme Court decision of 4 February 2015 it had been established that the issue regarding holders of title to property of Union-wide civic organisations of the former Soviet Union had not been regulated by domestic law. In the applicant's opinion, the Supreme Court had thereby recognised the absence of legitimate grounds for depriving it of its property. The applicant also stated that the fact that it had been deprived of its property more than twenty years after the adoption of the above-mentioned legal acts constituted a breach of the principle of legal certainty. In any event, those acts concerned property of Union-wide civic organisations of the former Soviet Union before their successors had been determined, and not that of the Federation, which in October 1990 had stopped functioning under the charter of trade unions of the Soviet Union and had declared itself the successor of trade unions of the Ukrainian SSR. Moreover, the above-mentioned legal acts gave the State temporary rights regarding the property of Union-wide civic organisations of the former Soviet Union until their successors had been determined, and did not provide for transferring title to relevant property to the State. Even assuming that the interference with its rights was based on formal grounds in the domestic law, that law did not correspond to the "quality of law" requirements, as in cases nos. 137/7, 48/202-20/191 and 51/227 the domestic courts had concluded that the transfer of property from the Federation to UPO had been lawful. However, that had not precluded the HCCU from reaching the opposite conclusion in the applicant's case. Furthermore, the applicant considered that there had been no public interest in depriving it of its property: since the Federation was a legal successor of the trade unions of the Ukrainian SSR, the transfer of management of the disputed property to the State, let alone its ownership, under the resolutions of 10 April 1992 and 4 February 1994, had not pursued any legitimate aim. The applicant stated that even assuming that the above-mentioned legal acts had been applicable, their application twenty years later had constituted a disproportionate burden on it. Lastly, it had not received any compensation.

50 . The Government agreed that there had been an interference with the applicant's property rights. However, they considered that it had been lawful, as under the resolution of 23 May 1960 the property of sanatoria (including the disputed property) had been transferred to the Republican Council for free use. Therefore, the property transferred to UPO had belonged to the State and could be alienated only with its consent. Furthermore, the interference had been in the public interest - restoration of the State's breached property rights. As to proportionality of the interference, the Government reiterated their non-exhaustion arguments.

2. The third parties' submissions

51 . The third parties supported the applicant's position and considered that the issue relating to the lawfulness of the interference with its rights had been similar to that raised in the cases of Shchokin v. Ukraine (nos. 23759/03and 37943/06, 14 October 2010) and Serkov v. Ukraine (no. 39766/05, 7 July 2011). Indeed, in the present case the situation had been even worse, because in case no. 137/7 the domestic court had adopted, as early as 1997, a final judgment acknowledging the Federation's title to the disputed property and the lawfulness of its transfer to UPO's statutory fund. In its judgment of 24 July 2014 the HCCU had not stated any reason as to why the judgment of 1 April 2014 had been unlawful and the judgment of 20 January 1997 inapplicable. Furthermore, the interference had not been in the public interest and had not been necessary in a democratic society.

52 . The third parties also submitted that the domestic courts had annulled a number of sales contracts concluded by the Federation or its companies with buyers, thereby recognising the State's property rights in respect of the sold property. As a result, it had been for the Federation and its companies to return to those buyers the sums they had paid under the annulled contracts. In particular, they referred to four decisions (without providing copies thereof) by which the domestic courts had allowed claims for damages against the Federation's companies lodged by buyers after the annulment by the courts of the relevant contracts. The courts had awarded the buyers the purchase price under the sales contracts.

53 . Lastly, the third parties submitted that the problem raised in the present case was a systemic one. Despite the judgment of 20 January 1997, between 2011 and 2015 prosecutors acting in the interests of the SPFU had lodged 237 claims with the domestic courts for recognition of the State's rights to property owned by the Federation and its companies. In that period, seventy-two decisions had been given in the State's favour. In addition, in 2015 prosecutors had taken part in the examination of 4,539 cases concerning the protection of State and municipal property and 7,592 cases concerning the protection of State interests in land matters. The third parties also referred to several cases which the Federation's companies had lodged before the Court. In sum, they considered that the transfer of property back to the State without sufficient legislative grounds and after a considerable period of time constituted a systemic problem. They thus asked the Court to indicate to the Government that there was a need to take urgent measures in this respect.

3. The Court's assessment

54. The Court reiterates that Article 1 of Protocol No. 1 contains three distinct rules: the first rule, set out in the first sentence of the first paragraph, is of a general nature and enunciates the principle of the peaceful enjoyment of property; the second rule, contained in the second sentence of the first paragraph, covers deprivation of possessions and subjects it to certain conditions; the third rule, stated in the second paragraph, recognises that the States are entitled, amongst other things, to control the use of property in accordance with the general interest. These rules are not, however, unconnected: the second and third rules are concerned with particular instances of interference with the right to the peaceful enjoyment of possessions and are therefore to be construed in the light of the principle laid down in the first rule (see, for instance, Scordino v. Italy (no. 1) [GC], no. 36813/97, § 78, ECHR 2006-V).

55 . In the present case, the Court first notes that it is clear from the case file and it is not disputed between the parties that the impugned premises of the Sanatorium constituted the applicant's "possessions" within the meaning of Article 1 of Protocol No. 1. Indeed, it was not disputed by the Government that the applicant was a bona fide purchaser, having bought the premises more than five and a half years after the HACU final judgment of 20 January 1997 (confirming the lawfulness of UPO's title to property, which also included those premises). It had been treated as their owner by the State authorities, which had registered its title to those premises, for a number of years. Furthermore, it was not disputed by the parties, and the Court sees no reason to hold otherwise, that the retrospective annulment of the applicant's title to the premises constituted a "deprivation of property" within the meaning of that provision (see, for instance, Kryvenkyy v. Ukraine , no. 43768/07, § 41, 16 February 2017). It must therefore be ascertained whether this deprivation was lawful, effected in the public interest and whether it pursued a legitimate aim by means reasonably proportionate to the aim sought to be realised ( ibid ., § 42).

56. In this connection, the Court first reiterates that an essential condition for an interference to be deemed compatible with Article 1 of Protocol No. 1 is that it should be lawful. When speaking of "law", Article 1 of Protocol No. 1 requires firstly that the measures should have a basis in domestic law. It also refers to the quality of the law in question, requiring that it be accessible to the persons concerned, precise and foreseeable in its application (see, for instance, Shchokin , cited above, § 51). Although it is primarily for the national authorities to interpret and apply domestic law, the Court is required to verify whether the way in which the domestic law is interpreted and applied produces consequences consistent with the principles of the Convention, as interpreted in the light of the Court's case-law ( ibid ., § 52).

57 . The Court notes in this connection the marked inconsistency of the domestic case-law on the status of UPO's property, in particular, the significant differences between the conclusions reached by the courts in the present case (see paragraphs 28, 31 and 32 above) and those made in other judicial decisions (see paragraphs 20, 21, 23, 42 and 43 above). It is not the Court's role to decide which of the conflicting decisions were correct or the exact status of the property transferred to UPO. However, it observes that it does not follow from those decisions that there existed one unique approach at the domestic level as regards the status of property belonging to the former State-controlled trade unions located on the territory of the Ukrainian SSR. Furthermore, the Government did not show that, despite the inconsistencies in the case-law observed in the present case, such case-law has subsequently become uniform. It appears that such a situation has been caused by the absence in Ukraine of a law dealing with the legal status of property of Union-wide civic organisations of the former Soviet Union located on the territory of Ukraine and providing for an inventory of the property of such organisations. The absence of such legislation has in turn caused the difference in the domestic courts' understanding of what property belonged to such organisations and whether such property also included the property of the trade-union organisations. Overall, given the lack of requisite clarity in the domestic law on this issue, producing opposing judicial interpretations, the Court has serious doubts as to whether the interference complained of met the lawfulness requirement under the Convention (see, mutatis mutandis , Shchokin , cited above, § 56; Serkov , cited above, § 42; and Chumak v. Ukraine , no. 44529/09, § 48, 6 March 2018).

58. Nevertheless, in the present case the Court does not find it necessary to decide whether the above considerations alone can serve as a basis for finding a violation. Given also that a conspicuous problem arises with respect to the proportionality of the interference with the applicant's property rights, the Court will continue the examination of the case and turn to that question (see, mutatis mutandis , Chumak , cited above, § 48). As to the issue of the "public interest" in the interference, the Court considers that it is closely linked to the proportionality of the interference; it will therefore examine it in the context of the proportionality (see, similarly, Volchkova and Mironov v. Russia , nos. 45668/05and 2292/06, § 114, 28 March 2017).

59. In this connection, the Court observes that the applicant bought the property from UPO in August 2002 - more than five and a half years after the adoption of the HACU final judgment of 20 January 1997, whereby it had been confirmed that the property, on the basis of which UPO had been created, had been transferred to UPO lawfully. In other words, and as already indicated (see paragraph 55 above), there appeared to be no objective reasons to believe that the applicant had bought the property in bad faith. Indeed, the attempt to return UPO's property to the State in 1997, including the disputed property, turned out to be unsuccessful. No court decisions against UPO and its property seem to have been given in the following ten years, that is until 2007 (see paragraph 28 above), when the State decided to make other attempts to claim that property. Even assuming that the property transferred to UPO was indeed State property and that the State attempted again to restore its title to it after the applicant had bought part of it, the Court fails to understand why it had to wait for so long before doing so, that is, from the time the applicant bought the property in 2002 until the prosecutor lodged a claim in 2011. In this connection, the Court finds it immaterial that the prosecutor allegedly did not learn about the 2002 contract until 2011 (see paragraph 27 above). Indeed, after the applicant had concluded the contract in 2002, the State authorities registered its title to the purchased property and that information was available in the relevant register. In other words, the State knew or ought to have known about the 2002 contract and the registration of the applicant's title to the disputed property long before 2011. However, it did not react for the following nine years.

60. The Court is also mindful of the fact that in 2007 the SCU refused to allow the Prosecutor General's request for a review of the decision of 17 June 1997 upholding the judgment of 20 January 1997 (see paragraph 23 above).

61. The Court further notes that it was not disputed by the parties that the validity of the applicant's title had been duly verified and approved by the State registration authorities. In this connection, it reiterates that mistakes or errors committed by State authorities should serve to the benefit of the persons affected, especially where no other conflicting private interest is at stake. In other words, the risk of any mistake made by the State authority must be borne by the State and the errors must not be remedied at the expense of the individual concerned (see Tomina and Others v. Russia , nos. 20578/08and 19 others, § 39, 1 December 2016).

62. In this connection the Court observes that in explaining the "public interest" of the interference with the applicant's property rights, the Government made only a general submission about the restoration of the State's rights in respect of the disputed property (see paragraph 50 above), without arguing that the State needed that property for any particular and compelling reason. They did not explain how the State interests in the property served the "public interest" (see similarly, in the latter respect, Maksymenko and Gerasymenko , cited above, § 57). Nor did the prosecutor advance any specific argument in that respect in his claim for the annulment of the 2002 contract (see paragraph 27 above). Indeed, after the State had received in 2011 a favourable judgment, which was upheld in 2014, it did not immediately proceed with registration of its title to the disputed premises, but did so only in April 2018 (see paragraph 33 above). In view of the above factors, the Court is not convinced that the annulment of the applicant's title to the disputed property was the only possible option for the State to restore its rights in respect of that property.

63. In such circumstances, the Court considers that requiring the applicant to seek damages from UPO - either in proceedings against the applicant or by way of lodging a separate claim for damages against UPO - would pose an excessive burden on it. It reiterates, however, that any compensation the applicant might receive from UPO would be relevant for the evaluation of its losses, potentially for the purposes of Article 41 of the Convention (see paragraph 47 above).

64. In light of the above, the Court concludes that the interference with the applicant's property rights, in addition to raising serious doubts as to its lawfulness, as noted in paragraph 57 above, imposed a disproportionate burden on the applicant, given that its title to the property had been annulled in the aforementioned circumstances. There has accordingly been a violation of Article 1 of Protocol No. 1 to the Convention.

II. APPLICATION OF ARTICLE 41 OF THE CONVENTION

65. Article 41 of the Convention provides:

"If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party."

A. The applicant

66. The applicant claimed 181,653,029 [2] Ukrainian hryvnias (UAH) in respect of pecuniary damage. It provided a report from company I., according to which the above amount represented the market value of the property it had been deprived of by virtue of the court decisions. The applicant stated that the above amount only represented the value of the disputed property, whereas the de facto loss incurred was much higher, since in the future it would have to incur additional expenses connected with the search for new premises, the payment of taxes related to the purchase of such premises, and removal expenses.

67. The applicant also claimed 100,000 euros (EUR) in respect of non-pecuniary damage, stating that the premises in question were not a commercial property but accommodation for children from "difficult" families and IDP families. Their removal would cause them utmost inconvenience and complicate the rehabilitation process.

68. The applicant further submitted the following claim for expenses incurred in the domestic proceedings: UAH 101,548 [3] for court fees; and UAH 22,640.64 [4] for the cost of the forensic examination ordered by the appellate court. It also claimed reimbursement of the cost of I.'s report (UAH 30,000 [5] ). In addition, it claimed EUR 7,850 for the legal costs incurred in its representation before the Court, stating that its representative and his assistant had spent fifty-six hours and forty-five minutes on the case, their hourly rates being EUR 150 and EUR 40, respectively.

69. Finally, commenting on the third parties' submissions (see paragraph 53 above), the applicant agreed with them that there was a systemic problem in Ukraine and referred in that connection to the 2016 draft law (see paragraph 38 above). It thus also asked the Court to indicate, under Article 46 of the Convention, "urgent measures" to be adopted by Ukraine.

B. The Government

70. In their initial comments on the applicant's just satisfaction claims the Government stated, in respect of the pecuniary damage claimed, that in order to assess I.'s report they had requested the SPFU to review it. The latter concluded that the report was of poor quality and unprofessional, had not complied with the relevant regulations and could not be used. Without providing any alternative assessment, the Government thus considered that the applicant's claim for pecuniary damage was unsubstantiated and invited the Court to reject it. As to the non-pecuniary damage claimed, they stated that the applicant had linked it to damage caused to children living in the disputed premises, who were not parties to the present case. Moreover, the applicant had not said that the claimed amount, if awarded, would be transferred to those children. The Government thus asked the Court to reject that claim as well. In respect of the court fees incurred by the applicant in the domestic proceedings, the Government submitted that the applicant had not provided any information about the amount of time spent by its lawyer during the proceedings and his or her hourly rate. As regards the claimed cost of I.'s report, the Government considered that that report did not constitute appropriate confirmation of the pecuniary damage incurred and asked the Court to reject that claim. As regards the claims for UAH 22,640.64 and EUR 7,850, the Government left them for the Court's discretion. Lastly, the Government did not agree that the issue raised in the present case represented a systemic problem. The figures referred to by the third parties (see paragraph 53 above) concerned all types of cases in which prosecutors had participated and did not indicate the existence of a systemic problem. They stated that for a declaration by the Court of a systemic problem there should be a lack of domestic remedies, whereas in circumstances similar to those in the present case, the relevant party could lodge a separate claim for damages.

71. In their further submissions the Government requested the Court, should it find a violation of Article 1 of Protocol No. 1, and in view of the amount and complexity of the applicant's just satisfaction claims and the difficulties in establishing the actual quantum of damages the applicant may have incurred, to reserve the question of the application of Article 41 of the Convention for separate consideration.

C. The Court

72. The Court considers that, in the circumstances of the present case, the question of the application of Article 41 of the Convention is not ready for decision. That question must accordingly be reserved and the subsequent procedure fixed, having due regard to any agreement which might be reached between the Government and the applicant (Rule 75 §§ 1 and 4 of the Rules of Court).

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

1. Declares the application admissible;

2. Holds that there has been a violation of Article 1 of Protocol No. 1;

3. Holds that the question of the application of Article 41 of the Convention is not ready for decision; accordingly,

(a) reserves the said question in whole;

(b) invites the Government and the applicant to submit, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, their written observations on the matter and, in particular, to notify the Court of any agreement that they may reach;

Done in English, and notified in writing on 9 October 2018, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Marialena Tsirli Paulo Pinto de Albuquerque
Registrar President

[1] . Approximately 365,939 euros ("EUR") at the material time

[2] . Around EUR 6,826,084

[3] . Around EUR 3,764

[4] . Around EUR 839

[5] . Around EUR 1,112