FIFTH SECTIONCASE OF ODESKA BUTERBRODNA KOMPANIYA, TOV v. UKRAINE(Application no. 59414/15)      JUDGMENT STRASBOURG12 December 2024 This judgment is final but it may be subject to editorial revision.In the case of Odeska Buterbrodna Kompaniya, TOV v. Ukraine,The European Court of Human Rights (Fifth Section), sitting as a Committee composed of: María Elósegui, President, Gilberto Felici, Kateřina Šimáčková, judges,and Martina Keller, Deputy Section Registrar,Having regard to:the application (no. 59414/15) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 18 November 2015 by a Ukrainian company, Odeska Buterbrodna Kompaniya, TOV (“the applicant company”), which is based in Odesa and was represented by Mr A.V. Leshchenko, a lawyer practising in Odesa;the decision to give notice of the applicant company’s complaint under Article 1 of Protocol No. 1 to the Ukrainian Government (“the Government”), represented by their Agent, Ms M. Sokorenko, and to declare the remainder of the application inadmissible;the parties’ observations;Having deliberated in private on 21 November 2024,Delivers the following judgment, which was adopted on that date:SUBJECT MATTER OF THE CASE1. The application concerns the invalidation of the applicant company’s title to a property in court proceedings instituted against it by a prosecutor, on the basis that the property was an unauthorised construction built on municipal land.2. The applicant company is a private limited liability company which was founded by Mr and Ms Ye. and one other person. Mr Ye. is also its managing director.3. As can be seen from the documents submitted by the parties, in 2001 a private entrepreneur, Ms B., decided to build a summer café in Luzanivka Park in Odesa. She obtained preliminary permits for her construction project and submitted the documents required to obtain a lease for the plot of land intended for the café. It appears that she did not obtain the lease, but built the café anyway. Building work was completed between 2004 and 2005.4. In 2007 and 2008, in a series of commercial proceedings involving Ms B., Odesa City Council and the local prosecutor, the courts established that the café had not been “authorised for use” as was required by law for all new constructions and that Ms B. had no right to the plot of land under the café. The café was therefore an unauthorised construction pursuant to Article 376 of the Civil Code, which provided that the construction of a building was deemed to be unauthorised if it was built on a plot of land which had not been allotted to the person who was carrying out the construction; or it was allocated for a different purpose; or if there was no appropriate document granting the right to carry out construction works or works in accordance with an approved project; or if it was significantly in breach of building standards and regulations. The same Article provided that a person who had undertaken the unauthorised construction of immovable property did not acquire title to it. Title to an unauthorised construction could be acknowledged by a court if the person concerned had obtained a lease for the land on which the construction stood. That was not the case for Ms B. and it appears that the local authorities did not intend to grant her a lease.5. On 22 January 2008 the Odesa Commercial Court of Appeal ordered the demolition of the café. From the case file it is apparent that the demolition was not enforced. The Government have not provided information about the reasons for the non-enforcement.6. In September 2008 (in some documents the date is indicated as September 2010) Ms B. sold the café to Mr M. In the contract she undertook to complete the requisite notarial certification, but it appears that she failed to do so. Consequently, Mr M. brought a claim against her, seeking to have the contract of sale recognised as valid and to have his property rights to the café acknowledged. By a judgment of 12 July 2011, the Suvorovsky District Court of Odesa allowed his claims in full and on the basis of that judgment Mr M. registered his title to the café.7. In December 2011 Mr and Ms Ye. bought the café from Mr M. for 614,479 Ukrainian hryvnias (UAH; approximately 57,320 euros (EUR) at the time) each. They registered their titles to the café.8. In March 2012 the applicant company obtained ownership rights to the café as a contribution to its statutory capital by Mr and Ms Ye.9. In April 2012 the local prosecutor, acting in the interests of the Odesa City Council, challenged the judgment of 12 July 2011 which had recognised Mr M.’s title to the café. By a judgment of 15 June 2012, the court found for the prosecutor. It established that there was no evidence that Ms B. had ever held a duly registered title to the café; the contract of sale was therefore null and void.10. In May 2014 the prosecutor challenged the contracts between Mr M. and Mr and Ms Ye., as well as their titles and that of the applicant company to the café. The prosecutor argued that, as had been established in the earlier sets of proceedings, the café was an unauthorised construction built on municipal land. To ensure that the land was vacated by the current owner (the applicant company), all transactions between Mr M. and Mr and Ms Ye. had to be invalidated, as well as their respective titles.11. The courts found in favour of the prosecutor at three levels of jurisdiction. The final judgment in the case was delivered by the Higher Specialised Civil and Criminal Court on 20 April 2015.12. It appears that by a judgment of 27 January 2016, delivered in another set of proceedings, the applicant company was ordered to vacate the land in question and to demolish all unauthorised constructions on it. According to the information provided by the Government, the enforcement proceedings relating to that judgment are still ongoing.THE COURT’S ASSESSMENTALLEGED VIOLATION OF ARTICLE 1 of protocol nO. 1 to THE CONVENTIONPreliminary remarks13. The applicant company complained under Article 1 of Protocol No. 1 that the deprivation of property to which it had been subjected had been unlawful and disproportionate. It also complained under Article 6 that insufficient reasons had been given in the courts’ decisions in the proceedings relating to the invalidation of its title.14. The Court, being the master of the characterisation to be given in law to the facts of the case (see Radomilja and Others v. Croatia [GC], nos. 37685/10 and 22768/12, §§ 114 and 126, 20 March 2018), considers that the applicant company’s complaints fall to be examined under Article 1 of Protocol No. 1 only.Admissibility15. The Government noted that a finding of a violation of Article 1 of Protocol No. 1 was directly related to the legality of the acquisition of property and the behaviour of the purchaser. In that connection, they stated that creating a chain of contracts for a property was a known way of committing fraud, with the aim of making it difficult for the original owner to quickly recover his or her property. In the present case, Ms B. had sold the café to Mr M., but the relevant contract had never been certified by a notary – a procedure intended to ensure the legality of such a contract, including in terms of verification of title to property. In the event that a party to a contract of sale failed to have it certified by a notary, the law provided for the possibility of bringing a claim against that party, and the court’s judgment would have the same legal effect as notarisation. That procedure was, however, sometimes abused by parties acting in bad faith and the Government submitted that that was exactly what had happened in the present case.16. On that basis the Government argued that the title to the café in question had been obtained unlawfully and that the applicant company had no legitimate right regarding the disputed plot of land, as it had obtained the right of ownership on the basis of title deeds which had later been found by the courts to be invalid. The applicant company could therefore not claim to have “possession” within the meaning of Article 1 of Protocol No. 1.17. The Government further argued that the applicant company’s shareholders could have lodged a claim under Article 216 of the Civil Code of Ukraine, which provided that if a deed was found to be invalid, each party was obliged to return in kind to the other party everything that it had received for the execution of that deed or, if the return in kind was impossible, to provide compensation equivalent to the value of what had been received. They provided an example of domestic case-law in that regard and further alleged that the applicant company had failed to show that the remedy proposed would not have allowed for proper consideration of its claims. The Government therefore submitted that the applicant company had failed to exhaust domestic remedies.18. The applicant company disagreed, stating that its property rights to the café had been duly registered and that it had not been involved in a fraudulent scheme regarding that property, if any. It also noted that any claims for damages that its shareholders could have made had nothing to do with it as a separate legal entity, and that no compensatory remedies had been available for it to pursue.19. The Court considers that the Government’s preliminary objections relate closely to the merits of the case and decides, therefore, to join both objections to its examination of the merits.Merits20. The Government conceded that the “alienation of [the] land” had constituted an interference with the applicant company’s property rights. They argued, however, that it had been lawful (although they did not refer to precise legal provisions) and had been aimed at protecting the interests of the local community as the owner of the land. It had also been proportionate as the applicant company had had the opportunity to claim compensation for the losses caused by allegedly unlawful decisions, actions or inaction of the State authorities in the exercise of their powers, as well as having had the right to apply for compensation for non-pecuniary damage. They also noted that the judgments against the applicant company had not yet been enforced and therefore it could not be argued that it had suffered any actual losses. Lastly, they argued that the applicant company could not assert that an excessive burden had been imposed on it in view of the fact that the alienation of property had not been due to the actions of State authorities, but rather had been the result of its shareholders’ actions as the café had constituted their contribution to the applicant company’s statutory capital.21. The applicant company agreed that there might have been a general interest in the interference in question but argued that that interference had not been lawful and proportionate. In particular, it argued that it had been a bona fide owner of the café and that the café could not have been reclaimed from it by anybody, let alone by the State. In any event, the applicant company could not be held responsible for the mistakes of the State authorities. In addition, it emphasised that its complaints related only to the invalidation of its title to the café and that it had not submitted any claims or complaints regarding the land. The applicant company further stated that it had been deprived of its property without any compensation.22.

Outcome for Article P1-1: violation