European Court of Human Rights

 

 

 

FIFTH SECTION

 

 

 

 

 

 

CASE OF YORDANOVA AND OTHERS v. BULGARIA

 

( Applications nos. 61432/11and 64318/11 )

 

 

 

 

 

 

 

 

 

 

 

 

JUDGMENT

( Just satisfaction )

 

 

 

 

STRASBOURG

 

11 July 2019

 

 

 

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

In the case of Yordanova and Others v. Bulgaria ,

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

Ganna Yudkivska , President,
Síofra O ' Leary,
Lado Chanturia , judges,
and Milan Blaško , Deputy Section Registrar ,

Having deliberated in private on 18 June 2019 ,

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

PROCEDURE

1 .     The case originated in two applications (nos. 61432/11and 64318/11) against the Republic of Bulgaria lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms ("the Convention") by three Bulgarian nationals, Ms Violeta Aleksandrova Yordanova ("the first applicant"), Ms Timka Aleksandrova Rusamanova ("the second applicant") and Ms Rumyana Strashimirova Telyatinova ("the third applicant"), on 15 September 2011. The second applicant passed away in 2013 and her daughter, Ms Svetla Velichkova Gogova , expressed a wish to continue the application in her stead.

2 .     The first and third applicants and Ms Gogova were represented by Ms   S. Margaritova-Vuchkova , a lawyer practising in Sofia. The Bulgarian Government ("the Government") were represented by their Agents, Ms   M.   Dimova and Ms I. Sotirova , of the Ministry of Justice.

3 .     In a judgment delivered on 19 July 2018 ("the principal judgment ", see Yordanova and Others v. Bulgaria [Committee], nos.   61432/11and   64318/11, 19 July 2018 ), the Court found a breach of Article 1 of Protocol No. 1, on the ground s that the national authorities had failed , for many years, to complete a procedure initiated by the applicants under legislation adopted in 1997, aiming at providing compensation for properties expropriated in the 1940s . A dministrative decisions awarding the applicants compensation through shares in a State-owned company named Obrazovanie i nauka EAD (" ON EAD ") - a printing house engaged in , among other things , the printing of school textbooks - had been given in 1998 and 1999, and further decisions setting the amount of shares had been adopted in 2003. However, none of the decisions at issue were executed , in particular because a legislative provision adopted in 2002 prohibited the award of compensation through shares in a number of companies, including ON EAD . No valid alternative method of compensation was proposed to the applicants .

4 .     Under Article 41 of the Convention the applicants sought just satisfaction.

5 .     Since the question of the application of Article   41 of the Convention was not ready for decision as regards damage, the Court reserved it and invited the Government and the applicants to submit, within four months, their written observations on that issue and, in particular, to notify the Court of any agreement they might reach (ibid., §§ 50-52 , and point 7 of the operative provisions).

6 .     The applicants and the Government each filed observations. They informed the Court that they have failed to reach an agreement.

THE LAW

7 .     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.     Damage

1.     The parties ' submissions

( a)     The first and third applicants and Ms Gogova

8 .     Acknowledging the "social function" of ON EAD , t he first and third applicants and the second applicant ' s heir, Ms Gogova , stated that they did not seek the execution of the decisions awa rding them shares in ON EAD . They claimed instead of that "the full current value" or the "reasonable market value" of the compensation due to them. They pointed out that in 2003 the first and second applicants had been awarded 579 shares in the company at issue, with th e third applicant set to receive 263 shares; these numbers had been set after the value of the nationalised property had been calculated under a formula provided for in the compensation legislation. Each share had a face value of 100 Bulgarian levs (BGN) - the equivalent of about 51 euros (EUR) . The number of shares in ON EAD , unchanged throughout the years, was 32,286.

9 .     The first and third applicants and Ms Go gova argued, on the basis of an expert assessment taking into account publicly available information on ON EAD and property prices , that the current market value of the company ' s assets equalled BGN 13,733,000 (EUR 7,024,000). They contended furthermore that , since one of the elements of the formula provided in the compensation legislation was the average monthly salary, which had increased since 2003, the value of the compensation due to them and their respective shares in the company would have increased as well , were they to be re calculated now. On t he basis of these considerations the experts retained by the m calculated the current "market value" of each of the share s for the purposes of compensation at BGN 860 (EUR 440) . This meant that the first applicant and Ms Gogova were entitled to BGN 498,000 (EUR 254,700) in compensation for their shares, and the third applicant was entitled to BGN 226,000 (EUR 115,600) . The fi rst and third applicants and Ms Gogova claimed accordingly these amounts.

10 .     They claimed in addition any dividends they would have received had the applicants been recognised as shareholders of ON EAD in 2003. They submitted further expert report s , b ased on the publicly available annual reports of ON EAD , calculating the dividends corresponding to their shares. To this they added default interest, calculated in accordance with the national rules. On that basis the first applicant and Ms Gogova claimed BGN 8,135 (EUR 4,160) in dividends and BGN 5,811 (EUR 2,972) in interest for each of them, and the third applicant claimed BGN 7,390 (EUR   3,780) in dividends and BGN 5,282 (EUR 2,701) in interest.

11 .     Lastly, the first and third applicants and Ms Gogova claimed EUR   5,000 each in respect of non-pecuniary damage.

( b)     The Government

12 .     The Government argued that the claims above were "legally and economically unjustified". The y considered it impermissible for the first and third applicants and Ms Gogova to recalculat e the amount of shares due to them, seeing that that amount had been set with finality in 2003.

13 .     The Government pointed out that, since ON EAD was not a publicly listed company and all its shares were held by the State, those shares could not have a "market value". Furthermore, t hey submitted a document issued by the company , according to which the book value of its a s sets (their value as entered in its balance sheet) was BGN 3,646,000 (EUR 1,186,500). This meant that the book value of each of its shares was about BGN 113 (EUR   58). Considering that, in view of the passage of time, it would be unjust if the Court awarded the face value of the shares due to the applicants, the Government proposed t hat the Cour t award the book value indicated above (EUR 58) , taking into account the number of shares awarded to the applicants in 2003 - namely 579 shares to the first and second applicants and 263 shares to the third applicant . The Government pointed out that in a n earlier similar case against Bulgaria , also concerning the State ' s continued failure to provide shares awarded to the applicant s under compensation legislation , the Court had awarded those shares ' face value ( the value indicated on the face of the security certificate ; see Nedelcheva and Others v. Bulgaria (just satisfaction), no. 5516/05 , § 13, 3   February 2015).

14 .     Lastly, the Government contested the claims concerning dividends and the claims in re spect of non-pecuniary damage.

2.     The Court ' s assessment

(a)     Pecuniary damage

15 .     The Court observes that the first and third applicants and the second applicant ' s heir, Ms Gogova , did not seek the actual enforcement of the decisions awarding them shares in ON EAD , and were willing to receive the monetary equivalent of the compensation d ue to them (see paragraph s 8 -9 above). The Government also proposed the award of monetary compensation (see paragraph 13 above). Accordingly, the Court sees no reason to insist on the enforcement of the decisions at issue (see furthermore the considerations presented in paragraph 19 below) and will award monetary compensation (see , for a similar approach, Velcheva v. Bulgaria (just satisfaction), no. 35355/08, § 13, 9 February 2017).

16 .     The Court reiterates that a judgment in which it finds a breach of the Convention imposes on the respondent State a legal obligation to put an end to the breach and make reparation for its consequences in such a way as to restore as far as possible the situation existing before the breach (see, among many other authorities, Brumărescu v. Romania (just satisfaction) [GC], no.   28342/95, § 19, ECHR 2001 - I, and Vistiņš and Perepjolkins v. Latvia (just satisfaction) [GC], no. 71243/01, § 33, ECHR 2014).

17 .     In the case at hand, the Court found a breach of Article 1 of Protocol   No. 1 on the ground s of the continuing failure of the national authorities to complete the compensation procedure initiated by the applicants. In 1998 and 1999 the applicants were awarded shares in ON   EAD in compensation for their predecessors ' expropriated property. I n 2003 the exact amount of the shares due to them was approved by the Minister of Educatio n (see paragraph 3 above and §§   7-10 and 14 -16 of the principal judgment).

18 .     The Court is thus of the view that, had the breach of the applicants ' right s found in the principal judgment not occurred, it is reasonable to assume that the applicants would have received the compensation due to them soon after 2003.

19 .     T he Court observes furthermore that the refusal of the Minister of Education to provide to the applicants the shares awarded to them was based on a legislative provision adopted in 2002 prohibiting the awarding of shares in ON EAD and other companies in compensation for formerly expropriated propert ies (see § 24 of the principal judgment ) . W hile at the domestic level the applicants made some attempts to secure the shares awarded ( ibid., §§ 20-21), in the procedure before the Court they acknowledged that this had not been possible . I n their submissions on the merits of the case the first and third applicants and Ms Gogova reproach ed instead the Minister of Education ' s unwillingness to find an alternative solution (ibid., § 35). In the principal judgment t he Court also made this point ( ibid., § 42; see also Nedelcheva and Others v. Bulgaria , no. 5516/05 , § 69, 28 May 2013, where the Court observed that the shares due to the applicants could have been replaced by other assets ).

20 .     In view of the considerations above , the Court finds it reasonable to assume that, had the compensation due to the applicants been provided to them at the domestic level, this would not have meant the actual transfer of shares to them but , as an alternative solution, their replacement with other assets. As already noted, had the breach of the applicants ' rights not occurred, such replacement would have happened soon after 2003 . There is no justification for the Court to conclude that at that time the value of any such assets would have significantly differed from the value of the compensation due to the applicants as calculated by an expert in 2003 - namely BGN 57,932 (EUR 29,630) jointly for the first and second applicant s and BGN 26,309 (EUR 13,460) for the third applicant (see §§ 9 and 15 of the principal judgment).

21 .     The Court accordingly finds irrelevant to its assessment the submissions of the first and third applicants and Ms Gogova on the current value of the assets of ON EAD and any current "market value" of the shares awarded to them (see paragraph 9 above).

22 .     Reiterating once again that reparation for pecuniary damage under Article 41 of the Convention must result in the closest possible situation to that which would have existed if the breach in question had not occurred (see paragraph 16 above) , the Court awards to the first and third applicants and Ms Gogova the value of the compensation awarded to them in 2003 , namely the sums mentioned in paragraph 20 above.

23 .     Furthermore, n oting its conclusion above that it was in all likelihood impossible for the applicants to receive actual shares in ON EAD , the Court sees no justification to award any compensation for lost dividends, as claimed by the first and third applicants and Ms Gogova (see paragraph 10 above) .

24 .     I t considers it however justified to add to the sums above interest in compensation for the excessive delays in the procedure. It has held that interest rate s applied, intended to compensate for loss of value of an award over time, should reflect national economic conditions, such as levels of inflation and rates of interest during the relevant period (see Runkee and   White v. the United Kingdom , nos . 42949/98and 53134/99, § 52, 10 May 2007, and Vaskrsić v. Slovenia , no. 31371/12, § 98, 25 April 2017). In a recent case against Bulgaria the Court found it reasonable to apply an interest rate equal to the base interest rate of the Bulgarian National Bank during the relevant period plus one percentage point (see Boyadzhieva and   Gloria International Limited EOOD v. Bulgaria , nos. 41299/09and   11132/10, § 55, 5 July 2018) . I t will follow the same approach in the case in hand. It thus awards the first applicant and the second applicant ' s heir, Ms   Gogova , EUR 10,400 jointly under this head , and the third applicant - EUR 4,700 .

25 .     The overall award in respect of pecuniary damage for the first applicant and Ms Gogova is thus EUR 40,030 , or EUR 20,015 for each of them . The overall award for the third applicant is EU R 18,160 .

(b)     Non-pecuniary damage

26 .     Lastly, the Court is of the view that the finding of a violation of Article 1 of Protocol No. 1 in the principal judgment constitutes in itself sufficient just satisfaction for any non - pecuniary damage suffered by the applicants.

B.     Costs and expenses

27 .     As concerns costs and expenses, the first applicant claimed BGN   1,259 (EUR 644) , paid by her for the expert report s submitted in support of the claims for just satisfaction (see paragraphs 9-10 above) and for translation, and the third applicant claimed BGN 1,355.5 0 (EUR 693) for expert reports, translation and the scanning of documents. In support of these claims the two applicants presented the respective receipts.

28 .     The first and third applicant s and Ms Gogova claimed a n addition al EUR 1,400 for the work performed by their legal representative, Ms   Margaritova-Vuchkova , in the proceedings concerning just satisfaction . They presented a contract for legal representation, indicating that the third applicant had already paid Ms Margaritova-Vuchkova BGN 300 ( EUR   153). They requested that any additional amount awarded by the Court under this head be paid directly to their representative.

29 .     The Government contested the claims.

30 .     The Court, finding that the costs and expenses described in paragraph 2 7 above have been actually and necessarily incurred and are reasonable as to quantum, satisfies those claims in full. It thus awards the first applicant EUR 644, and the third applicant EUR 693. Concerning legal representation in the current proceedings , noting that the third applicant has already paid Ms Margaritova-Vuchkova EUR 153, the Court finds it justified to award an additional EUR 500. As requested by the first and third applicants and Ms Gogova , th at sum is to be paid directly to their legal representative.

C.     Default interest

31 .     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 .     Holds that the finding of a violation constitutes in itself sufficient compensation for any non-pecuniary damage;

 

2.     Holds

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

( i )     EUR 20,015 (twenty thousand and fifteen euros) each to the first applicant and the seco nd applicant ' s heir, Ms Svetla Velichkova Gogova , and EUR 18,160 (eighteen thousand one hundred and sixty euros) to the third applicant , plus any tax that may be chargeable, in respect of pecuniary damage;

(ii)     EUR 1,837 ( one thousand eight hundred and thirty-seven euros), plus any tax that may be chargeable to the applicants, in respect of costs and expenses , EUR 644 (six hundred and forty-four euros) of which is to be paid to the first applicant, EUR 693 (six hundred and ninety-three euros) to the third applicant, and the remain ing EUR 500 (five hundred euros) to be paid directly to Ms   Margaritova-Vuchkova ;

(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;

 

3 .     Dismisses the remainder of the claim s for just satisfaction.

Done in English, and notified in writing on 11 July 2019 , pursuant to Rule   77   §§   2 and 3 of the Rules of Court.

Milan Blaško Ganna Yudkivska
Deputy Registrar President