FIFTH SECTIONCASE OF BUDIVELNO INVESTYTSIYNA GRUPA 1 v. UKRAINE(Application no. 56903/10)     JUDGMENT(Merits) STRASBOURG17 December 2020 This judgment is final but it may be subject to editorial revision.In the case of Budivelno Investytsiyna Grupa 1 v. Ukraine,The European Court of Human Rights (Fifth Section), sitting as a Committee composed of: Arnfinn Bårdsen, President, Ganna Yudkivska, Mattias Guyomar, judges,and Martina Keller, Deputy Section Registrar,Having regard to:the application (no. 56903/10) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Ukrainian company, Budivelno Investytsiyna Grupa 1 (“the applicant”), on 30 September 2010;the decision to give notice to the Ukrainian Government (“the Government”) of the application;the parties’ observations;Having deliberated in private on 26 November 2020,Delivers the following judgment, which was adopted on that date:INTRODUCTION1. The case concerns the applicant company’s allegations under Article 1 of Protocol No. 1 that it had been prevented by the local authorities from carrying out the erection of a multi-storied residential building and the lack of any compensation in that regard.THE FACTS2. The applicant company, Budivelno Investytsiyna Grupa 1, is a legal entity registered in Ukraine in 2003 with its office in Kyiv. The applicant company was represented by Ms I. Moroz, a lawyer practising in Kyiv.3. The Government were represented by their Agent, Mr I. Lishchyna.4. The facts of the case, as submitted by the parties, may be summarised as follows.land Lease and further developments5. On 24 June 2004 Kyiv City Council decided to lease, for a five-year term, a plot of land to the applicant company for the construction of a residential building with underground parking in Kyiv.6. On 28 October 2004 Kyiv City Council concluded with the applicant company a lease contract, specifying that the plot of land was leased for the purpose of constructing a residential building with underground parking.7. On 12 June 2007 the city residents living in the neighbourhood to the plot of land requested that the local land inspectorate verify whether the municipal authorities and the other involved parties had complied with the law under which the plot of land had been allocated to the applicant company. The local land inspectorate suggested in reply that public meetings be held regarding the use of the land.8. On 17 July 2007 the State Administration of Dniprovskyy District of Kyiv held public meetings with the participation of local officials, representatives of non-governmental organisations, journalists and 256 people living in the neighbourhood. The applicant company’s representatives had not attended the meeting. During the meeting the citizens stressed the importance of preserving the plot of land as green area, which had already included 335 trees with children’s playgrounds. They further referred to the official building and sanitary standards on developing residential areas, which set out the ratio of playgrounds and recreation zones to the density of population, and concluded that those standards would be clearly disregarded in the event of erecting the multi-storeyed building. They insisted that their opinion on the matter had not been taken into account, despite the requirements of law.9. In that latter regard the head of the local NGO announced that she had met the director of the applicant company and received, among other documents, a copy of the minutes of the earlier public meetings, where citizens had allegedly supported the construction plan. In reply the citizens concerned denied that they had supported any construction plan.10. In conclusion the participants of the public meetings decided that the local authorities should take steps to categorise the plot of land as a “public garden zone” and that the requests should be made to the authorities in order to terminate the lease contract and annul Kyiv City Council’s decision of 24 June 2004.11. On 24 July 2007 deputies of Kyiv City Council appealed to the Mayor of Kyiv in the interests of the citizens living in the environs of the plot of land. The deputies reported that the initiative group had collected 1187 signatures of the citizens opposing the construction development of the plot of land. They further reported that on 17 July 2007 public meetings were held which confirmed the strong disagreement of the community with the construction plan. The deputies proposed that the decision on the allocation of the disputed land for construction be annulled and the plot of land be classified as public garden zone.12. On 26 July 2007 the deputy minister for Regional Development and Construction informed the chair of the Kyiv City State Administration that the opinion of the citizens had not been taken into account when Kyiv City Council had adopted its decision of 24 June 2004. Given that the citizens had strongly opposed the construction of the multi-storied building, the Deputy Minister suggested considering the withdrawal of the plot of land from the applicant company.13. On 27 August 2007 the local NGO sent a letter to the applicant company, arguing that the plot of land was used by citizens as a recreation zone and also as a carpark. They stressed that the plot of land was adjacent to the neighbouring building and that the decision to allocate the plot of land to the applicant company for construction purpose had been adopted without taking into account the opinion of the residents living in the neighbourhood. The NGO invited the applicant company to terminate the lease contract and vacate the plot of land.14. On 10 September 2007 the applicant company obtained a building permit with validity until 2 November 2009, authorising the company to carry out construction work on the plot of land.15. On 11 March 2008 the applicant company contracted a foreign company to invest in the construction project.16. On 26 June 2008 the mayor of Kyiv, having considered that the applicant company had not complied with the procedure for the construction of the building, requested that the local authorities take measures to revoke the building permit issued to the applicant company.17. On 17 July 2008 Kyiv City Council, having regard to the minutes of the public meetings and the numerous complaints on the matter, annulled its decision of 24 June 2004 concerning the granting lease to the applicant company and invited the latter to dissolve the lease contract. In the same decision, Kyiv City Council decided that the plot of land should be developed as a public garden zone according to the Kyiv green area development programme.18. In 2018 the Kyiv City Council Kyiv City Council approved further development of the public garden at the plot of land and decided that it should be permanently given to a municipal association for that purpose.Proceedings for damages19. On 2 February 2009 the applicant company instituted commercial proceedings against Kyiv City Council, seeking damages for the annulment of the lease decision of 24 June 2004 and for having designated the plot of land as a recreational zone. The applicant company argued that the impugned decision had prevented it from pursing its construction work; moreover, the decision had been taken in violation of the defendant’s obligations under the lease. The applicant company relied on section 24 of the Land Lease Act, which provided that the lessor was obliged to refrain from actions that prevented the lessee from using the plot of land (see paragraph 27 below). It further referred to Articles 610 and 611 of the Civil Code (see paragraph 24 below) and sought damages as a remedy for the breach of the obligation. The applicant company then submitted that it had been bound by the investment contract of 11 March 2008 and that the foreign investment company had agreed to buy the entirety of the building that would be constructed and had undertook to financially support the construction process.20. On 7 July 2009 the Kyiv City Commercial Court dismissed the applicant company’s claim as unsubstantiated. The court found that, despite the decisions of Kyiv City Council and the city’s mayor, the lease contract had not been terminated, the building permit had been valid, and there was no evidence that Kyiv City Council had neglected its duties under the lease contract.21. The applicant company appealed to the higher courts, arguing, among other things, that it had not been possible to use the plot of land for construction purposes after Kyiv City Council had designated it as a public garden zone. Relying on section 63 of the Natural Environment Protection Act (see paragraph 28 below) and Article 52 of the Land Code (see paragraph 26 below), the applicant company specified that it had been forbidden to use a plot of land categorised as a recreational zone for any other purpose, including construction of a residential building. The courts dismissed the applicant company’s appeals finding that the decision of the first-instance court had been lawful and substantiated. The final decision was taken by the Supreme Court on 18 March 2010. The applicant company was informed of that decision in September 2010, following their inquiry about the outcome of the proceedings before the Supreme Court.Proceedings for invalidation of the LAND-lease contract22. On 5 November 2009 the applicant company lodged with the Commercial Court of Kyiv a claim against Kyiv City Council and the main office of the State Treasury of Ukraine in Kyiv, seeking the invalidation of the land-lease contract and recovery of the rent paid for the use of the plot of land.23. On 28 January 2010 the Commercial Court of Kyiv declared the lease contract invalid on the grounds that after Kyiv City Council’s decision of 17 July 2008 the plot of land had been classified as a public garden zone and its use for any other purpose had been prohibited by law. The lease contract was therefore contrary to domestic law and had to be invalidated. The court further rejected the claim for reimbursement of rent paid by the applicant company given that the payment had been made regarding the period when the lease had remained valid. On 9 April 2010 the Higher Commercial Court of Ukraine returned an appeal on points of law lodged by the applicant company against the judgment of 28 January 2010 due to its failure to pay the court fee.RELEVANT LEGAL FRAMEWORKCivil Code of Ukraine, 200324. Article 610 of the Code provides that the civil obligation is violated in the event of its non-performance or performance in breach of the conditions specified by the content of the obligation. Under Article 611 of the Code, in case of breach of the obligation the legal consequences include, among other things, compensation for pecuniary and non-pecuniary damage.25.

Article of the Convention at issue: Article 1
Outcome: violation