CASE OF BERGER-KRALL AND OTHERS v. SLOVENIA

1. The case originated in an application (no. 14717/04) against the Republic of Slovenia lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by ten Slovenian nationals, Ms Cornelia Berger-Krall, Ms Ljudmila Berglez, Ms Ivanka Bertoncelj, Ms Slavica Jerančič, Ms Ema Kugler, Mr Primož Kuret, Mr Drago Logar, Ms Dunja Marguč, Mr Dušan Milič and Ms Dolores Zalar (“the applicants”), on 15 March 2004.
2. The applicants were represented by the Čeferin Law Firm, practising in Grosuplje. The Slovenian Government (“the Government”) were represented by their Agent, Mrs V. Klemenc., State Attorney.
3. The applicants alleged that the Housing Reform had deprived them of their possessions and homes, that they had been discriminated against vis-à-vis other categories of tenants, that they did not have access to a court to challenge the alleged infringement of their rights and that they did not have at their disposal any effective legal remedy.
4. By a decision of 28 May 2013, the Court declared the application admissible.
5. The applicants and the Government each filed further written observations (Rule 59 § 1 of the Rules of Court) on the merits. In addition, third-party comments were received from the International Union of Tenants, which had been given leave by the President to intervene in the written procedure (Article 36 § 2 of the Convention and Rule 44 § 3).
I. THE CIRCUMSTANCES OF THE CASE
6. The applicants’ names and dates of birth are listed in annex 2. They are members of the Association of Tenants of Slovenia ( Združenje najemnikov Slovenije ).
1. Socially-owned flats and “specially protected tenancy” in the former Socialist Republic of Slovenia
7. In the former Socialist Republic of Slovenia, socially-owned dwellings represented a significant part of the housing stock (230,000 housing units). Approximately one-third of the Slovenian population lived in such housing units at the time. According to the doctrine of “social ownership” ( družbena lastnina ) introduced into the Yugoslav system in the 1950s, such dwellings were owned by the community, the role of public bodies being confined to management.
8. After the Second World War, private dwellings and other premises passed into State ownership through legislation on nationalisation. At the same time, dwellings were built or purchased by socially-owned enterprises or other public bodies. In both cases the latter allocated them to their employees and other entitled persons, who became holders of a “specially protected tenancy” or “occupancy right” ( stanovanjska pravica – hereinafter translated either as “specially protected tenancy”, as suggested by the applicants, or as “occupancy right”, as indicated by the Government) under Article 206 of the then Constitution of the Socialist Republic of Slovenia and the existing legislation. The right to a socially-owned dwelling guaranteed the citizen “the permanent use of the dwelling for his personal housing needs as well as for the needs of his family”. The Housing Act 1982 (hereinafter referred to also as the “ZSR”) provided that once allocated by an administrative decision followed by a contract, a specially protected tenancy entitled the holder to permanent, lifelong and uninterrupted use of the flat against the payment of a fee covering maintenance costs and depreciation. The fee (or rent) was determined on the basis of the construction price of dwellings and the requirements of simple replacement of dwellings, and in accordance with the standards and norms for the maintenance and management of socially-owned dwellings.
9. The Government pointed out that the occupancy right conferred the right to use the socially-owned dwelling only for the purpose of satisfying one’s personal and family housing needs. Its rationale was the economical and efficient use of housing space, meaning that each family should have at its disposal as much space as it needed, and no more. The occupancy relationship could be terminated and another, more appropriate dwelling allocated in the event of a reduction of the number of users of the dwelling (Section 59 of the ZSR). In the Government’s view, this proved that the occupancy right was associated with personal and family needs, and not with a particular dwelling. The concept of family needs was variable and depended on the number of family members. No more than one dwelling could be used at the same time and no one could move into the dwelling without the prior approval of the holder of the occupancy right. The latter was given management entitlements, such as the right and duty to participate in the management of the socially-owned housing. Holders of occupancy rights could exchange dwellings and make alterations to the dwelling, its furnishings and appliances only with the prior written approval of the housing administration (Section 29 of the ZSR).
10. The applicants challenged the Government’s allegation that the specially protected tenancy permitted use of the dwellings for housing purposes only. They observed that the holder of the occupancy right could use the dwelling without restrictions for himself and for the members of his family, did not need any consent to enlarge the number of family members, could use part of the dwelling for business activities and could sublease part of it for an agreed rent. He could modernise the dwelling with the agreement of the housing organisation managing the building; if such agreement was denied – which in practice almost never occurred – he could demand substitution of consent in legal proceedings. The dwellings in question could be sold only to holders of occupancy rights, who could – with few very specific exceptions – exchange their dwellings. Any sales to third persons were null and void.
11. In legal theory and judicial practice the specially protected tenancy was described as a right sui generis. On 26 November 1998 the Constitutional Court delivered a decision (Up-29/98) in which it considered that under the legislation of the former Socialist Republic of Slovenia, the specially protected tenancy enjoyed stronger protection than a purely contractual tenancy right. The legal relationship was not limited in time and was linked not only to the holder of the right, but also to persons living with him. It concluded that, because of the very limited volume of transactions involving socially-owned dwellings, the specially protected tenancy had been more akin to a property right than to a tenancy right.
12. When a holder of a specially protected tenancy died, his or her rights were transferred to the surviving spouse or long term partner (who held the specially protected tenancy jointly) or to a registered member of the family household who was also using the flat. According to the applicants, this also applied if they moved out or divorced. Thus, specially protected tenancies could be passed on from generation to generation.
13. In the Government’s opinion, however, this was not a succession of the occupancy right but rather a specifically regulated transfer of it to one of the users of the dwelling. In this respect, the spouse and long term partner enjoyed a privileged status. Special provisions applied in the event of divorce (Section 17 of the ZSR), and if it considered that none of the users of the dwelling met the conditions for obtaining the occupancy right after the death of the previous holder, the housing administration could request the said users to vacate the premises (Section 18 of the ZSR).
14. The occupancy right could be cancelled only on limited grounds (Sections 56, 58 and 61 of the ZSR), the most important of which was failure by the holder to use the flat for his or her own housing needs for a continuous period of at least six months without good reason (such as military service, medical treatment, or temporary work elsewhere in the former Socialist Federal Republic of Yugoslavia (the “SFRY”) or abroad; see Section 19 of the ZSR). In this case, the users of the dwelling who had been living together with the holder of the occupancy right for a minimum of two years had the same rights as they would have had if the holder had died. Other grounds were inappropriate and detrimental behaviour, failure to pay the fee, full sublease, use of the dwelling by a person other than the holder of the occupancy right and possession of an unoccupied flat suitable for residence. Although inspections were to be carried out to ensure compliance with these requirements, the specially protected tenancy was rarely, if ever, cancelled on these grounds (see Đokić v. Bosnia and Herzegovina, no. 6518/04, § 6, 27 May 2010). In this connection, the applicants pointed out that it was true that in theory holders of a specially protected tenancy could be moved to a substitute dwelling if the dwelling they were occupying was too large for them and the other users with regard to social standards (see the Government’s submissions in paragraph 9 above). However, according to the applicants, this possibility was in practice never used and there was no case-law on the matter.
15. All employed citizens were required to pay a special monthly housing contribution (approximately 4.5 to 6 per cent of their monthly income) to the Joint Housing Fund. The funds thus obtained were used to build and maintain socially-owned flats. The Housing Fund granted benefits (allocation of a flat under specially protected tenancy, or loan to purchase, construct or renovate a dwelling) on the basis of the principles of mutuality and solidarity with those in need. All socially-owned dwellings were part of the Joint Housing Fund and administered by State institutions, municipalities, social enterprises and other legal entities governed by public law.
16. Before Slovenia became independent, the applicants or their legal predecessors acquired specially protected tenancies in socially-owned dwellings which had been expropriated under the legislation on nationalisation. Under the legislation in force prior to 1991, no difference in specially protected tenancy conditions was made between tenants of State-constructed dwellings and tenants of nationalised dwellings.
17. On 25 June 1991 the Republic of Slovenia declared its independence. Among the first reforms enacted were the Housing Act 1991 ( Stanovanjski zakon ) and the Denationalisation Act 1991 ( Zakon o denacionalizaciji ), aimed at redressing the wrongs committed after the Second World War. The new Constitution of the Republic of Slovenia (Section 33) guaranteed the right of private ownership.
18. The Housing Act 1991 (hereinafter referred to also as the “SZ”) provided for the transformation and privatisation of socially-owned dwellings. The Joint Housing Fund (see paragraph 15 above) was dissolved and, with few exceptions, the socially-owned dwellings were transferred ex lege into State ownership or into that of local communities or the National Pension Fund. Those dwellings which had become socially-owned property after having been expropriated from private owners were transferred into the ownership of the municipalities (Section 113).
19. The specially protected tenancy was replaced ex lege with a normal lease contract (Section 141). The previous holders of specially protected tenancies or, in the event of their death, their family members living in the flats, were given the possibility of renting the flats for an indefinite period and for a non-profit rent (which covered maintenance, management of the flat and capital costs – Section 147) or of purchasing them on favourable terms, paying an administratively defined price which was calculated on the basis of a discount of 30% (in the event of payment in instalments) or 60% (in the event of one-off payment) off the estimated value (Sections 117-124).
20. According to the applicants, in practice this meant a price of 5-10% of the real market value of the dwelling payable in instalments over 20 years or 5% of that value payable within 60 days. The right to purchase on favourable terms could be transferred inter vivos or mortis causa to close family members. However, previous holders of specially protected tenancy in flats which had been expropriated could only purchase them on favourable terms if the owners agreed to sell them within one year from the restitution of the dwelling (Sections 117 and 125). In that case the 30 or 60 per cent discount (Sections 117 and 119) was offered by the owner, who would then be reimbursed by the municipality.
21. It follows from the above that all previous holders of specially protected tenancies were given the possibility of taking out new leases (to be signed within six months from the entry into force of the Housing Act 1991). However, the applicants contended that these new leases were less advantageous than the specially protected tenancy. In particular, tenants no longer had secured tenancy of their homes since the owners could move them to other adequate flats without any particular justification (Section 54). There were now nine grounds on which tenants could be evicted for misconduct, compared with three previously. The fault-based grounds for termination of the lease were (Section 53 of the SZ):
“- if the tenant and any person living with him uses the dwelling counter to the law or the terms of the lease;
- if, by the way they use the dwelling, the tenant or any person living with him causes major damage to the dwelling or to common areas, parts, facilities and installations of a multi-dwelling building;
- if the tenant fails twice in succession or for two out of the last twelve months to pay rent or costs payable in addition to rent within the time-limit specified in the lease;
- if the tenant or any person living with him, by their manner of using the dwelling, frequently or seriously disturbs other residents in their peaceful use of the dwelling;
- if the tenant makes changes to the dwelling and fixtures without the prior consent of the owner;
- if, in addition to the tenant, a person who is not named in the lease contract uses the dwelling for more than thirty days without the owner’s knowledge;
- if the tenant leases out the dwelling without the agreement of the owner or charges a subtenant a higher rent;
- if the tenant does not allow access to the dwelling in cases [specified by law];
- if the tenant or any other person who uses the dwelling engages in a prohibited activity there, or a permitted activity in an unlawful manner.”
22. However, before terminating the lease the owner had to give prior written notice to the tenant who was allegedly violating its provisions; no termination was allowed if the inability to pay the rent in full and to entirely fulfil other obligations was due to the social distress of the tenant and the other persons using the dwelling.
23. Without the owner’s permission, tenants could not sublet a flat, renovate it or decorate it. Nor could they bring new people into the flat (Section 53). The owner could renovate the flat at any time and enter it twice a year (Section 44). The tenant could not freely transfer the lease to another family member or exchange the flat. After the death of the original tenant, only the spouse or a person having lived with the tenant in a permanent relationship, or an immediate family member living in the flat, had the right to take over the lease (Section 56). The tenant had to pay the legally regulated non-profit rent (Section 63), which, unlike the fee (see paragraph 8 above), not only covered maintenance costs and depreciation, but also included a sum to offset capital costs and management of the dwelling.
3. The Denationalisation Act 1991
24. The Denationalisation Act 1991 (hereinafter referred to also as the “ZDen”) regulated the denationalisation of property which had previously passed into State ownership through legislation on agrarian reform, nationalisation, confiscation or other forms of expropriation of privately owned properties. Previous owners or their heirs (hereinafter referred to as “previous owners”) were entitled (until 7 December 1993) to claim restitution of the expropriated property. Wherever possible, the property itself was to be returned in natura, including dwellings which had been let under the specially protected tenancy scheme. Where such restitution was not possible, claimants were entitled to substitute property and/or compensation (Section 2).
25. The restitution of dwellings occupied by a tenant did not affect the leases concluded in the meantime, which remained in force (see Section 125 of the SZ and Section 24 of the ZDen).
26. The applicants pointed out that after the enactment of the housing reform, a number of former holders of specially protected tenancies in previously expropriated flats filed requests to purchase the flats. The deadline for filing such requests expired before that for “previous owners” to file restitution claims. Only when it became clear in individual cases (especially in 1994) that denationalisation proceedings had been initiated, were the former holders of specially protected tenancies informed that their requests to purchase had been rejected.
(a) The denationalisation proceedings
27. Holders of occupancy rights had no part in the denationalisation proceedings to determine the ownership of the property, which meant that they were not notified when a request was filed for the restitution of the dwelling they were occupying. According to the data submitted by the applicants, 37,000 restitution requests had been filed and in the period until the end of 1999 a yearly average of 2,000 to 5,000 decisions had been rendered, which meant a total of approximately 29,000 decisions, out of which only approximately 24,000 became final. Until 1999 approximately 18% of decisions were for restitution in the form of compensation, 27% for restitution of ownership of free dwellings, 44% for restitution of ownership of occupied dwellings and 8% were refusals or rejections of the requests. This meant that by the end of 1999 a substantial portion of denationalisation procedures had not been completed. Initially in such procedures the property was returned to the pre-war owners; however, in the vast majority of cases those owners had passed away, which meant that in order to identify the “previous owners” a complex and time-consuming inheritance procedure was necessary.
28. The Government pointed out that tenants were not party to the denationalisation proceedings because restitution did not affect the tenancy relationship and did not prejudice the tenants’ rights or benefits which had a direct basis in law. Moreover, the existence of a tenancy relationship did not affect the decision on denationalisation and restitution (see Constitutional Court decision no. Up-237/97, point 5). However, tenants could participate if they demonstrated a legal interest, notably an interest in recovering their investments. In this regard, the status of party to the denationalisation proceedings was recognised in respect of: (a) any person who, before 7 December 1991 (date of entry into force of the ZDen), had invested in nationalised real estate, whenever and insofar as the proceedings might lead to a ruling on that person’s rights deriving from the investments concerned, and (b) the entities liable for restitution, which in the case of former socially-owned dwellings usually meant municipalities (Section 60 of the ZDen).
(b) Reimbursement of investments
29. The principle of restitution in natura applied also in cases in which the value of the property had increased. Former holders of the occupancy right who had invested in the dwelling could only claim compensation under the law, but not acquire ownership of the dwelling by virtue of such investments. In particular, the occupant could claim total recovery of costs on the condition that the investments had been made prior to 7 December 1991 and that they constituted major maintenance investments and not simple routine maintenance. Upon a judicial action introduced by the tenant, the competent court would appoint a construction expert to assess the value of the property at the time of nationalisation and its value at the time of its restitution; a tenant who could provide evidence of the investments made (they were not required to provide evidence that the community of residents had consented to the investments) could then obtain the difference between the two values of the property (Section 25 of the ZDen). In cases in which a final decision on restitution had already been adopted, a claim for recovery of investments could be filed within one year from the entry into force of the 1998 Act amending the ZDen.
30. The applicants observed that in the event of an increase in the value of the property due to the investments made by the tenant, Section 25 of the ZDen gave three options to the “previous owners”: (a) to request compensation instead of restitution in natura; (b) to request part ownership of the dwelling; (c) to recover the full property and reimburse the tenant. As a rule, the tenants’ requests for reimbursement were examined in sets of proceedings initiated after the denationalisation proceedings, often after the year 2005. However, according to the applicants, the evaluation of the dwellings according to the relevant domestic rules was totally unrealistic, which made the evaluation of the increased value due to new investments unrealistic also. Moreover, only those investments which had increased the value of the dwelling – and not those which had kept the value of the property at the same level since its expropriation – were taken into account. The time-limit for reimbursement of investments was ten years and the parties could reach a friendly settlement on these matters. “Previous owners” frequently made the reimbursement conditional upon the tenants vacating the premises. In the applicants’ opinion, these rules did not guarantee former holders of occupancy rights a fair possibility of recovering the real value of their investments.
4. The 1994 amendments to the Housing Act and the three “models of substitute privatisation”
31. In the following years, the SZ and the ZDen, as well as the legal acts implementing them, underwent numerous amendments, which on some occasions were more favourable to the tenants, and on others to the “previous owners”.
32. The 1994 amendments to the Housing Act 1991, enacted on 6 April 1994, were more in favour of the tenants. Former holders of a specially protected tenancy who occupied previously expropriated flats which had not been returned to “previous owners” (because no request for restitution had been filed, or the request had been rejected) were allowed to purchase the flats they were occupying (amended Sections 117 and 123).
33. The amended Section 125 further provided that where the dwelling had been returned to the “previous owner”, if he agreed to sell he was eligible for an additional financial reward from public funds (this was the so-called “first model” of substitute privatisation).
34. If the “previous owner” declined to sell the dwelling and the tenant decided, within two years from the restitution, to move out and purchase a flat or construct a house, and if the “previous owner” so agreed, he would pay the tenant compensation amounting to 30 per cent of the value of the dwelling. If, however, the “previous owner” refused this solution, the tenant was entitled to claim the same amount from the entity liable for restitution, which was usually a municipality (see paragraph 28 above). The tenant was entitled to further compensation amounting to 50 per cent of the value, in thirds, from the municipality, the Slovenian Compensation Fund and the Development Fund of the Republic of Slovenia. In addition, the tenant also had the right to a State loan under certain conditions. This was the so-called “second model” for settling the housing issue.
35. The 1994 amendments also introduced a so-called “third model”, where a tenant to whom the “previous owner” was not prepared to sell the dwelling could purchase a comparable substitute flat on favourable terms from the municipality if he decided not to purchase another flat or construct a house (amended Section 125). Under this model, the applicants were in the same position as previous holders of specially protected tenancies in State-constructed dwellings who could not purchase the dwelling they had occupied because of practical and legal obstacles.
36. The applicants noted that the right to purchase established by the amended Section 125 of the SZ was legally directly applicable and was not subjected either to preclusive time-limits or to a statute of limitations. It was a permanent legal option, to be realised on the basis of a unilateral request by the former holder of the specially protected tenancy (Supreme Court decision of 14 January 2010, no. II Ips 370/2007).
37. However, the “third model” was repealed on 25 November 1999 by the Constitutional Court (decision U-I-268/96), which considered that the additional financial burden had unduly restricted the municipalities’ newly acquired ownership rights over dwellings which had previously been socially owned. In the Constitutional Court’s opinion, this restriction could not be justified by the tendency of the legislature to ensure that the previous protected tenants of denationalised dwellings enjoyed a position resembling as closely as possible that of other tenants, in particular with regard to the possibility of purchasing a flat.
38. On 21 March 1996 the Constitutional Court delivered a decision (U-I-119/94) concerning the pre-emption right of tenants having contracts of unlimited duration (Section 18), such as the previous holders of specially protected tenancies. It held that that pre-emption right, already provided for by the previous legislation, did not interfere with the property rights in respect of dwellings subject to original privatisation under the SZ and the ZDen, since the property right had not yet been established at the time of the entry into force of those acts. However, where property rights had been acquired by other means, the pre-emption right interfered with the right of property and was unconstitutional. The dissenting opinion of Judge Lojze Ude was appended to the Constitutional Court decision.
5. The Housing Act 2003 and further developments
39. Subsequent amendments to the Housing Act 1991, and the new Housing Act enacted in 2003 (hereinafter referred to also as the “SZ-1”), were more favourable to the “previous owners”, who were authorised to raise the non-profit rent by up to 37% in order to cover maintenance costs and other expenses. That increase in the non-profit rent was to be applied only to leases taken out after the amendments entered into force (22 March 2000). However, on 20 February 2003 the Constitutional Court (decision no. U-I-303/00-12) declared this limitation unconstitutional as being discriminatory. It underlined that protecting the status of former occupancy right holders did not mean that the non-profit rent could not change, and that eliminating the discrepancy in the previous system (under which rents did not cover the real cost of the use of a dwelling) could not be deemed to be an inadmissible interference with the terms of the lease contracts. The protection of acquired rights and the principle of non-retroactivity did not protect tenants from increases in rent. The increase in the non-profit rent was thus extended to all the leases that predated the enactment of the 2000 amendments.
40. The Housing Act 2003 increased from nine to thirteen the number of fault-based grounds on which tenants could be evicted from their homes (unauthorised persons living in the flat, violation of the house rules, tenant’s absence in excess of three months, ownership of another suitable dwelling, either by the tenant or by his or her partner – Section 103). However, tenants could avoid termination of the lease by proving that the problem was not their fault or that it had not been possible for them to rectify the problem within the given time-limit (Section 112(6)). The “previous owner” could also move the tenant to another adequate flat (defined in Section 10 as a flat satisfying the housing needs of the tenant and his immediate family members living with him or her) at any time and without any reason; however, this could be done to the same tenant only once and the removal costs were borne by the “previous owner” (Section 106). In respect of the transferability of the lease after the tenant’s death, a request to take the lease over had to be filed within 90 days (Section 109). For this purpose, a relative up to the second generation who had lived in economic community with the former holder of the occupancy right for more than two years on the day of entry into force of the Housing Act was considered to be an “immediate family member” (Section 180). The tenant had a pre-emption right if the flat was for sale.
41. Furthermore, rent subsidies (up to 80% of the non-profit rent) were available to tenants in the event of financial difficulties; socially disadvantaged people could also apply to the municipalities to obtain another non-profit rental dwelling or a temporary solution for their housing needs (Sections 104 and 121). The 2009 Housing Act Amendment introduced Sections 121a and 121b, which provided for the possibility, for people who were paying market rents and had unsuccessfully applied for the allocation of a non-profit rental dwelling, to obtain subsidies (amounting to the difference between the market and non-profit rents). These provisions were aimed at compensating the shortage of non-profit dwellings.
42. The 2003 Housing Act also introduced a “new model” of so-called “substitute privatisation” for former occupancy right holders. Within five years after the enactment of the Act or after the decision on denationalisation had become final, they could exercise their right to purchase another dwelling or to build a house, thus becoming entitled to special compensation (up to 74% of the price of the dwelling – Section 173) and to a subsidised loan for the remaining amount. Entitlement to and level of compensation were determined by the Ministry responsible for housing matters. Tenants who decided to buy another dwelling or build a house were obliged to vacate their rented accommodation no later than one year after receiving the compensation.
43. Furthermore, tenants who did not wish or could not afford to buy a flat could apply to rent a non-profit dwelling (Section 174). The latter was defined as a dwelling rented out by the municipality, the State or a public housing fund or non-profit organisation, allocated on the basis of a public call for applications (Section 87). Under this procedure “tenants of a dwelling expropriated under nationalisation regulations and returned to the previous owner” were awarded a rather high number of points (190), which, according to the Government, offered them good prospects of being given priority and actually being declared eligible. Lease agreements for non-profit dwellings would be concluded for an unlimited period (Section 90).
44. According to information available on the Internet, in 1991 there were some 11,000 housing units eligible for return to “previous owners”. Some 6,300 housing units were returned to ownership in full title, while some 4,700 were returned to “previous owners” while still occupied by tenants who previously had specially protected tenancies. According to the Government, in 2012 some 2,780 such tenants had managed to solve their housing situation by substitute privatisation, that is, by purchasing or building a substitute dwelling with the help of a financial incentive from the State. A further 288 tenants had lodged requests and proceedings were still pending at the time of submission of the Government’s observations. An estimated 1,500 tenants would eventually continue to live in the flats they had previously occupied as holders of specially protected tenancies.
45. The applicants emphasised that at the beginning of the housing reform, out of approximately 650,000 housing units in Slovenia 230,000 were socially-owned dwellings housing approximately one-third of the Slovenian population under specially protected tenancies (see paragraph 7 above). At the time the legislation did not distinguish between expropriated dwellings and other socially-owned dwellings (see paragraph 16 above) and, in general, individuals acquiring occupancy rights did not even know which source the dwelling came from. This was especially true for those who had acquired occupancy rights several decades after the expropriation. The great majority of holders of occupancy rights who had been given the opportunity to purchase the dwellings on favourable terms had availed themselves of this possibility; only a few of them had stayed in the flats on a contractual basis. However, as explained in paragraph 20 above, the possibility to purchase without the “previous owners’” consent was not given to those who were living in previously expropriated dwellings subject to denationalisation (approximately 4,700 properties, covering 2% of all specially protected tenants). According to the available estimates, in February 2009 approximately 1,500 families (most likely those who could not afford to buy a dwelling) had continued to lease their denationalised dwellings, while approximately 3,200 families had vacated the premises and found a solution to their housing needs elsewhere. According to the applicants, for the former category of families relations with the “previous owners” had often been burdened with judicial and personal conflicts. “Previous owners” applied constant pressure through, inter alia, illegal evictions, rent increases or simply poor building maintenance.
46. Since 1995, in his regular annual reports the Slovenian Ombudsman has illustrated the difficulties facing tenants in denationalised flats. In his Special Report of 8 January 2002 on the Situation of Tenants in Denationalised Flats he also made a number of proposals designed to remedy the situation: feasible models for substitute privatisation (greater financial incentives to solve the housing issue, for both tenants and “previous owners”), protection of the duration of leases and definition of the non-profit rent, legal mechanisms for the protection of tenants’ rights, such as free legal aid, improved implementation of the right to pre-empt, realistic evaluation of tenants’ investments for the refurbishment of the dwellings.
B. The Association’s undertakings
47. On 3 February 1998 the Association of Tenants (hereinafter, “the Association”), lodged a “petition” with several State authorities, including the National Assembly, the President of the Republic and the Government. It challenged the Housing Act 1991 and the Denationalisation Act 1991, on the ground that they deprived the Association’s members of their specially protected tenancy rights in a manner incompatible with the Constitution of the Socialist Republic of Slovenia, which was still in force at the time when the two acts were passed in 1991. Instead of the privileged specially protected tenancy, which in the Association’s view was in many respects equal to a property right, tenants were granted leases with a temporary non-profit rent. Moreover, once the dwelling had been taken over by a “previous owner”, that contract became an ordinary lease contract. This effectively deprived the tenants of their property and home. In 1991 approximately 45,000 individuals (previous holders of specially protected tenancies and their families), living in 13,000 flats, were concerned by these measures. They considered themselves victims of the transition, in the same manner as “previous owners” whose property had been taken away under the previous regime.
48. The Association also complained that its members were not given all the rights and benefits that other former specially protected tenancy holders enjoyed, such as the right to purchase the dwelling and to have a permanent lease with a non-profit rent. It argued that tenants who – like all its members – were living in dwellings once expropriated, could not purchase their homes, which were subject to restitution to the “previous owners”, whereas all other previous beneficiaries of specially protected tenancies had that possibility. In addition, “previous owners” of flats returned in denationalisation proceedings were selling them to third parties but not to the tenants, who were facing eviction proceedings. In the Association’s view, the restitution of the dwellings to the “previous owners” deprived the tenants of the right to purchase them and resulted in differential treatment between the two groups of tenants on no reasonable ground.
49. The offending legislation allegedly also failed to provide for proper compensation for the money the tenants had invested in the maintenance and improvement of the dwellings. Moreover, the Association complained that its members did not have locus standi in the denationalisation proceedings which were to rule on the ownership of “their” dwellings. It also criticised the constant increases in the non-profit rent, which in its view was approaching levels comparable to the rents charged on the free market. The Association concluded that privatisation and restitution of previously expropriated dwellings should be achieved by paying compensation to the “previous owners” of the dwellings rather than returning their property, as recommended by Resolution 1096 of the Parliamentary Assembly of the Council of Europe (see paragraphs 87-89 below). It requested that an independent expert commission be set up, that the SZ and the ZDen be amended, that the restitution of property as such be stayed and that the National Housing Programme be supplemented.
50. On 2 April 1998 the Government adopted a decision concerning the petition, with an accompanying opinion. The Government did not agree that tenants were the victims of transition. Regarding the right of previous holders of specially protected tenancies to purchase the dwellings, different factual circumstances had to be taken into account. While in some cases the dwellings had been built with State funds, in other cases they had been expropriated from private owners. These “previous owners” might also claim restitution of, and therefore property rights over the dwellings. This meant that they had priority over the former holders of specially protected tenancy rights. In conclusion, as far as the purchase of dwellings was concerned, the two categories of previous holders of specially protected tenancies were not in a comparable position.
51. On the other hand, with respect to other rights and benefits the tenants had been put on an equal footing with all those previous holders of specially protected tenancies who decided not to purchase their dwellings but to rent them on favourable terms. They were all granted the right to rent the dwellings for an indefinite period for a non-profit rent, even after the “previous owner” took over the flat. This had been upheld by the Constitutional Court.
52. The Government also disputed the objection that the impugned legislation did not take into account the investments the tenants had put into the dwellings. They referred to the relevant provisions of the SZ, which granted former specially protected tenancy holders the right to compensation. The Government pointed out that the needs and expectations of the tenants had to be reconciled with those of the “previous owners” of the dwellings, as well as with the limited financial capacities of the State to provide them with housing on favourable terms. They further acknowledged that the tenants, especially elderly people, encountered certain difficulties in their new situation (pressure to move out or to pay a higher rent), but such circumstances had no foundation in the existing legislation. The Government supported the establishment of an expert commission with representatives of both tenants and “previous owners”. It appears that no other authority took a position with respect to the petition.
2. The administrative proceedings
53. On 8 May 1998 the Association instituted proceedings against the Government with the Ljubljana Administrative Court, for not initiating the necessary amendments to the SZ and the ZDen. In their view, the legislation in question breached the tenants’ rights under the Constitution and the European Convention on Human Rights, and disregarded Resolution 1096 of the Parliamentary Assembly of the Council of Europe. In particular, the Association repeated the complaints from its petition that the dwellings should not be returned as such, that the tenants had only a limited right to purchase the dwellings, that they did not have locus standi in the denationalisation proceedings and that their investments in the dwellings had not been taken into account.
54. On 3 March 1999 the Administrative Court rejected the complaints, holding that the Government’s decision and the accompanying opinion did not qualify under Section 1 of the Administrative Disputes Act, as then in force, as an individual act or an action infringing the individual’s constitutional rights.
55. On 6 April 1999 the Association appealed to the Supreme Court.
56. On 20 September 2001 the Supreme Court dismissed the appeal and upheld the Administrative Court’s decision of 3 March 1999.
57. On 8 March 2002 the Association lodged a constitutional complaint with the Constitutional Court, challenging the Supreme Court’s decision. It repeated the arguments from the petition and the subsequent court proceedings, and argued in particular that the legislation in issue deprived the tenants of their property and homes.
58. On 11 February 2004 the Constitutional Court rejected the complaint. It upheld the decisions of the Administrative Court and the Supreme Court that the relevant governmental decision and the accompanying opinion could not be challenged in administrative proceedings. In the Constitutional Court’s view, they merely reflected the Government’s policy position with respect to the petition lodged, and were therefore not subject to court review.
3. The Constitutional Initiative (Ustavna pobuda)
59. On 8 March 2002, at the same time as the constitutional complaint (see paragraph 57 above), the Association, representing a group of previous specially protected tenancy holders, also lodged a constitutional initiative for review of the constitutionality of the SZ, the ZDen, the Administrative Disputes Act 1997 and the relevant judicial practice, and their compatibility with international law binding on Slovenia.
60. On 25 September 2003 the Constitutional Court dismissed the constitutional initiative (decision U-I-172/02-40). It acknowledged that the Association, relying on a number of court proceedings initiated by its members, had a legal interest in challenging the existing legislation since it directly interfered with their rights, interests and legal position, but it ruled that the Constitutional Court did not have jurisdiction to examine the compatibility of the disputed legislation with the provisions of the Constitution of the Socialist Republic of Slovenia, which was no longer in force.
61. Relying on the case-law of the European Court of Human Rights, the Constitutional Court went on to say that in any event the specially protected tenancy could not be interpreted as an absolute right to property under Article 1 of Protocol No. 1, guaranteeing the acquisition of a particular dwelling. Nor could it be said that the claimants’ right to a home had been breached under Article 8 of the Convention, since they could remain in the dwellings, with a contract of unlimited duration and for a non-profit rent. In addition, after the tenant’s death, the right of a spouse or a person having lived with the tenant in a permanent relationship, or an immediate family member living in the flat, to take over the tenancy was also guaranteed (Section 56 of SZ).
62. The Constitutional Court had held in its previous decisions that the specially protected tenancy from the former system was a right to be protected by the rule of law. However, in the new system, this right encountered other rights. In transposing the system of specially protected tenancy relations into lease relations, the legislator could not fulfil all the expectations arising from the former socio-economic and political system, which was founded on social property, and not on private property. The rights from the former system could not have remained unchanged and untouched.
63. The State had undergone political and social changes, including the transformation of social property into private property. The challenged legislation and the transformation of specially protected tenancy into simple tenancy rights should therefore be understood as part of these changes. Tenants’ rights were now limited by the rights of the “previous owners” of the dwellings.
64. In particular, the tenants’ right to purchase now competed with the property rights of the “previous owners” of the dwellings. In this conflict of rights, priority was given to the property rights of the “previous owners”. With this argument the Constitutional Court also dismissed the objection that tenants who could not purchase their dwellings because they were subject to restitution to the “previous owners” were discriminated against in comparison with all other tenants, who had the right to buy their dwellings. It held that the factual circumstances of the two groups of tenants were profoundly different. While the rights of one group of tenants had to be reconciled with the rights of the “previous owners” of the dwellings, no such limitation on the rights of the other group of tenants was necessary. The tenants also had a pre-emption right in the event that the “previous owner” decided to sell the dwelling, which could be entered in the land register and was weaker only than the pre-emption right of a co-owner (Section 176 of the SZ-1).
65. As for other rights and benefits, including the right to a non-profit rent, the Constitutional Court considered that all the previous holders of occupancy rights had been placed on an equal footing, regardless of the origin of their dwellings. These rights, in turn, were comparable to the level of protection granted to tenants in other States. General allegations that the legislative definition of the non-profit rent was inappropriate were not sufficient to warrant constitutional review.
66. The Constitutional Court also dismissed the complaint that the tenants did not have locus standi in the denationalisation proceedings. Inasmuch as the proceedings were decisive for tenants’ rights, tenants did have locus standi. In particular, this concerned the tenants’ right to compensation for any money invested in the dwelling, which could be claimed from the “previous owner”. On the other hand, on the basis of such financial investments, the tenants did not acquire a property right or a claim to the property itself in the denationalisation proceedings.
67. As to the restitution to the “previous owners” of expropriated dwellings in which tenants were living, the Constitutional Court had already ruled that the relevant provisions of the ZDen were not contrary to the Constitution. Furthermore, the “previous owners” were not free to enter into any lease agreements with the tenants; they merely took over the existing leases the tenants had signed with the municipalities. Finally, the Constitutional Court dismissed the Association’s allegations that Section 1 of the Administrative Disputes Act as then in force was unclear and contrary to the Constitution.
C. Other relevant domestic proceedings
68. On 21 April 2005 the Supreme Court deliberated in a case, brought by applicant no. 6 (Mr Primož Kuret), concerning the right of a family member to demand a new non-profit lease after the tenant of the denationalised flat in question had died. The Supreme Court reversed the case-law and decided that users of denationalised flats could not demand the continuation of a non-profit lease following the demise of the tenant; in the Court’s view, they were entitled only to a lease, and the “previous owner” should be free to determine the amount of the rent without any limitations.
69. Subsequently, a close family member of a deceased former holder of occupancy rights filed a petition for a review of the constitutionality of this new case-law, and a constitutional complaint. In a decision of 7 October 2009 (no. U-I-128/08, Up-933/08), the Constitutional court held that it was unconstitutional to interpret Article 56 of the SZ (see paragraph 23 above) in such a manner that, after the death of the holder of a protected tenancy, the “previous owner” was obliged to lease it to the family members of the deceased for a non-profit rent. It thus confirmed the 2005 decision of the Supreme Court. However, the Constitutional Court did clarify that the spouse or the long term partner of a deceased tenant at the time of the enactment of the SZ was entitled to continue the lease at a non-profit rent.
70. The applicants observed that this case-law allowed “previous owners” to fix an unreasonably high rent, thereby preventing the family members of the deceased tenant (other than the spouse or the long term partner) from continuing the lease. They alleged that from 2009 onwards a mortis causa transferability of the right to lease had de facto been eliminated.
D. Individual situations of the applicants
71. As the file contained no specific examples of individual situations, in September 2008 the Court requested the applicants to submit factual information in respect of the amount of the original rent in 1991 and that of the present non-profit rent, the surface area of the flat, its state of repair and its current market value, as well as a chronological overview of the increases in rent and in the statutory minimum wage.
72. In their reply of 9 November 2008, the applicants gave evidence that they were all original former holders of specially protected tenancies or their legal successors.
73. They stated that the first significant increase (of 100%) in the non-profit rent took place in 1995. At that time, its ceiling annual amount was still 2.9% of the value of the dwelling. Further gradual changes were introduced by the 2000 amendments to the SZ (rent increase of 31%), by the Constitutional Court’s decision and by the SZ-1 (rent increase of 23%). The ceiling amount for the annual non-profit rent was currently 4.69% of the value of the dwelling. They stated that a further rent increase of 43% was foreseen in different municipalities. The non-profit rent paid at the time by the tenants equalled 434.5% of the non-profit rent fixed in 1992.
74. However, the applicants stated that factual information provided by them showed that the non-profit rent in Ljubljana and Maribor was still relatively affordable, as it was below the market rent (see annex 1 – “Table summarising the situation of the individual applicants”). The situation was allegedly different in the countryside, but no concrete information was provided. In certain cases there was no historical data as the documentation no longer existed because of the lapse of time and because the tenants had moved.
75. In 2008, the average market price of property per square metre in Ljubljana city centre ranged between 2,000 and 3,000 euros (EUR) and in Maribor it was between EUR 1,000 and 2,000 per square metre. As to the statutory minimum wage, in 1991 it amounted to 6,000 Slovenian tolars (SIT, nominally EUR 25.03). In August 2003 it was SIT 110,380 (nominally EUR 460.6) and in July 2008 EUR 566.53.
76. The applicants also stated that they had made significant financial investments in the renovation and refurbishment of the dwellings.
77. Five applicants (Mr Kuret, Ms Berglez, Ms Bertoncelj, Mr Milič and Ms Jerančič) had been forced to move out. Mr Kuret was the only applicant who pursued the legal avenues up to the Constitutional Court. His constitutional complaint was dismissed on 6 July 2006 for lack of legal interest, as he had reached a settlement with the “previous owner” on 17 March 2006 (see annex 1 – “Table summarising the situation of the individual applicants”).
78. The other applicants, who still occupied the dwellings, were allegedly under pressure, either through court proceedings or through correspondence with the lawyers representing the “previous owners”. They complained about various forms of chicanery and intimidation. All the applicants had had to seek legal advice.
E. The method of calculation of the non-profit rent
79. The parties also gave details as to the method of calculating the non-profit rent which was introduced by the SZ. Its level might be agreed upon by the parties to the lease contract, but they had to apply the method provided for by the law and not exceed the maximum permitted level of non-profit rent. This was always a percentage (2.9% for dwellings more than 25 years old) of the administrative value of the flat, which was determined by the housing authorities according to the following formula:
Value of the dwelling = number of points x value of the point x usable area x effect of size of the dwelling (corrective factor)
80. The rent for dwellings for which tenancy agreements were concluded with the former holders of occupancy rights could not exceed the rent level charged for dwellings more than 25 years old. The values of the point and the correction factor for surface measurements had always been determined by primary or secondary legislation and as such amended several times. As a general rule, the non-profit rent for newly constructed or renovated flats, of better quality and better equipped, was higher than for older, less well-maintained flats. The non-profit rent was also determined in the light of the state of repair at the time the dwelling was allocated to the tenant, that is, before any investment was made.
81. The Government pointed out that the non-profit rent was a cost-based rent covering the economic costs of a dwelling. It did not include taxes to be paid by the “previous owner” and was meant to cover:
- the depreciation of the dwelling (to enable the owner to replace a run-down dwelling after a certain number of years – initially 200, then 60);
- the cost of the capital invested;
- the management of the dwelling;
- investment and routine maintenance.
82. Under the 1991 rules, for previous holders of occupancy rights the annual non-profit rent could not exceed 2.9% of the value of the dwelling. The rules were revised in 1995 for ordinary tenants, bringing the percentage to 3.8% for dwellings constructed after 1991. From March 2000 until December 2004, the percentage was 3.81% for dwellings more than sixty years old and 5.08% for dwellings less than sixty years old. For former holders of occupancy rights or persons with whom the “previous owner” was obliged to conclude a lease contract under Section 56 of the SZ (see paragraph 23 above) the percentage could not exceed 3.81%.
83. The Government observed that the new calculation method had been applied progressively over a span of five years; thus, according to them, for tenants of denationalised dwellings the rent, in real terms, had decreased from 2.9% in 2000 to 2.54% in 2004.
84. The Housing Act 2003 brought the value of the maximum permitted annual non-profit rent up to 4.68% of that of the dwelling, and this notwithstanding the fact that a study ordered by the Ministry responsible for the Environment and Spatial Planning had shown that a rent covering all costs of the use of the dwelling should amount to at least 5.63%. A progressive increase in rents was scheduled up to 31 December 2006 (see Section 181 of the SZ-1 and the Government Decree on the method for calculating rents in non-profit dwellings). As a result, for dwellings less than sixty years old, the non-profit rent was immediately decreased by 8%, from 5.08% to 4.68%; for dwellings more than sixty years old (which were the majority), it increased by 21.80%, from 3.81% to 4.68%; lastly, in the approximately 2,500 denationalised dwellings it increased by 84.20%, from 2.54% to 4.68%. On 1 January 2007, the annual non-profit rent in all buildings amounted to 4.68% of the value of the dwelling. It did not increase any more after that date.
85. The Government also emphasised that the value of the “housing point”, which was based on the annual average price per square metre of constructed non-profit dwellings divided by 320 (average number of points for newly constructed non-profit dwellings), increased from 1.88 German Marks (DEM) in 1991 to DEM 3.75 in August 1996. Non-profit rents increased no further in real terms, but they did increase in relation to the DEM. For dwellings rented after the implementation of the new calculation method introduced in 2000 the value of the point was fixed at DEM 5.39 (and later at EUR 2.63). Each dwelling was given a certain number of points which would take into account the time and quality of construction, the type and quality of joinery elements, floorings, walls, fitted installations, the type and availability of common areas, thermal and acoustic insulation and any negative impacts on the use of the dwelling.
86. According to the SZ-1 (Section 118(8) and (9)) the location of the dwelling could also affect its value. The effect of the location on the level of the non-profit rent could be determined by each municipality and might amount to a maximum of 30% of the rent; however, at the time of the Government’s observations, only two municipalities (Nova Gorica and Mengeš) had adopted provisions in this respect; this meant that in all other municipalities, the location of the building did not affect the rent.
II. RELEVANT INTERNATIONAL DOCUMENTS
A. Resolution 1096 (1996) of the Parliamentary Assembly
87. On 27 June 1996 the Parliamentary Assembly of the Council of Europe adopted Resolution 1096 on measures to dismantle the heritage of former communist totalitarian systems. In the resolution, the Parliamentary Assembly confirmed that in the transition of the former communist totalitarian systems into democratic systems, the principles of subsidiarity, freedom of choice, equality of opportunity, economic pluralism and transparency of decision-making should play a role. Some of the principles which were mentioned in the resolution as means of achieving these goals were the separation of powers, freedom of the media, protection of private property and the development of civil society. The Parliamentary Assembly also considered that the key to peaceful coexistence and a successful transition process lay in striking the delicate balance of providing justice without seeking revenge.
88. The Parliamentary Assembly advised that property, including that of the churches, which was illegally or unjustly seized by the State, nationalised, confiscated or otherwise expropriated during the reign of communist totalitarian systems in principle be restored to its “previous owners” in integrum, if that was possible without violating the rights of current owners who acquired the property in good faith, or the rights of tenants who rented the dwelling in good faith, and without harming the progress of democratic reforms. In cases where this was not possible, just satisfaction should be awarded. Claims and conflicts relating to individual cases of property restitution should be decided by the courts.
89. The Parliamentary Assembly also recommended that the authorities of the countries concerned verify that their laws, regulations and procedures complied with the principles contained in the Resolution, and revise them if necessary. This would, in the view of the Parliamentary Assembly, help to avoid complaints about these procedures being lodged with the control mechanisms of the Council of Europe under the European Convention on Human Rights, the Committee of Ministers’ monitoring procedure, or the Assembly’s monitoring procedure under Order No. 508 (1995) on the honouring of obligations and commitments by member States.
B. Policy Guidelines on Access to Housing for Disadvantaged Categories of Persons, adopted by the European Committee for Social Cohesion
90. On 14-16 November 2001 the European Committee for Social Cohesion (the “ECSC”) adopted the Policy Guidelines on Access to Housing for Disadvantaged Categories of Persons, prepared by the Group of Specialists on Access to Housing. In the guidelines the ECSC reaffirmed the significance of housing and the corresponding responsibilities of national governments, as recognised in a number of international documents such as the European Social Charter, the UN Habitat Agenda and the Declaration on cities and other human settlements in the new millennium adopted by the UN General Assembly. The ECSC established that according to these documents the Council of Europe member States should ensure affordable housing to disadvantaged categories of persons, by creating an appropriate legal framework for housing markets with regard to property rights, security of tenure and consumer protection. The policies adopted should expand the supply of affordable housing and provide better legal security of tenure and non-discriminatory access to housing for all.
91. In paragraph 15, the ECSC also stated:
“In countries that have privatised considerable parts of their public housing stock in recent years, appropriate housing policy measures should be introduced which counteract undesirable consequences of housing privatisation and restitution for disadvantaged categories of persons. For example, in countries with a high rate of “poor owner-occupiers”, more emphasis should be given to a general housing allowance system and to public support for the renewal of housing units, for the benefit of both owners and tenants in restituted dwellings.”
92. The ECSC defined the term “disadvantaged categories of persons” as denoting all persons or groups of persons who are disadvantaged on the housing market for economic, social, psychological and/or other reasons and who consequently require appropriate assistance to facilitate their access to housing.
C. The 2003 Report of the Commissioner for Human Rights on his visit to Slovenia
93. On 15 October 2003 the Commissioner for Human Rights, Mr Alvaro Gil-Robles, issued a Report on his visit to Slovenia in May 2003, in which, among other topics, he addressed the situation of tenants living in former socially-owned dwellings which were eventually returned to the “previous owners”. He likened the position of tenants who lost their privileged specially protected tenancy to the position of landlords who acquired the ownership of such dwellings but not the use of them. He observed that, in contrast to the majority of other holders of specially protected tenancy, the tenants in denationalised dwellings did not have the advantage of being entitled to purchase the flats they lived in, and he acknowledged the fear of many of them, now already elderly, that they would not be able to afford possible rent increases in the future.
94. Concerning the landlords, however, he noted that they could not really take possession of the dwellings either. They took over ownership of the property with a number of obligations vis-à-vis the tenants, whom they had not themselves selected and for whom they had to maintain the social character of the rent charged. Thus, the “previous owners” were not supposed to make any substantial profit from their property, nor could they terminate the tenancy agreement without complying with a number of specific conditions. He also pointed out that the fact that the landlords had finally recovered their expropriated dwellings was fair and could not be contested as such.
95. The Commissioner thus established that “there can be neither winners nor losers in this situation, because both sides may be considered disadvantaged,” and concluded his report by recommending that the legislator consider a new amendment to the legislation “to settle the problems facing one side while also protecting the interests of the other.”
D. Collective complaint No. 53/2008, European Federation of National Organisations Working with the Homeless (FEANTSA) v. Slovenia
96. Following its ratification, the Revised European Social Charter became a part of the Slovenian legal order as from 11 April 1999. In September 2008 the international non-governmental organisation FEANTSA (European Federation of National Organisations Working with the Homeless) filed a collective complaint (no. 53/2008) with the European Committee of Social Rights. It alleged that tenants of flats denationalised at the end of the socialist regime had suffered a loss of their title to property, an increase in the price of accommodation and a reduction of the possibilities of acquiring adequate accommodation.
97. In a decision on the merits, of 8 September 2009, the European Committee of Social Rights concluded that Slovenia was violating the right to housing of former holders of occupancy rights under Article 31 §§ 1 (promotion of access to housing of an adequate standard) and 3 (accessibility of price of housing to those without adequate resources), Article 16 ( right of the family to social, legal and economic protection ) and Article E (prohibition of discrimination) of the Revised European Social Charter.
98. The Committee held that prior to SZ the right of tenants of non-profit flats in Slovenia to adequate housing was clearly protected by law. The rules introduced by SZ (allowing former holders of occupancy rights to purchase, at an advantageous price, the flats in which they were living, and whose ownership had been transferred, on a transitional basis, to public entities) were also deemed to ensure sufficient legal security in the occupation of the dwellings. The Committee considered, however, as regards former tenants of flats that had been returned to the “previous owners”, that the combination of insufficient measures for the acquisition of or access to a substitute flat, the evolution of the rules on occupancy and the increase in rents, were likely to place a significant number of households in a very precarious position, and to prevent them from effectively exercising their right to housing.
99. Moreover, Slovenia had failed to show that the affordability ratio of the poorest applicants for housing was compatible with their level of income. Former holders of occupancy rights, in particular elderly persons, had been deprived of the opportunity to purchase the flat they lived in, or another one, on advantageous terms, and of the opportunity to remain in the flat, or move to and occupy another flat, in return for a reasonable rent.
100. Lastly, the treatment accorded to former holders of occupancy rights in respect of flats acquired by the State through nationalisation or expropriation, and returned to the “previous owners”, was manifestly discriminatory in relation to the treatment accorded to tenants of flats that were transferred to public ownership by other means. The Committee observed that there was no evidence of any difference in the situation of the two categories of tenants, and that the original distinction between the forms of public ownership in question was in no way imputable to them and had no bearing on the nature of their own relationship with the public owner or administrator.
101. On the basis of the decision of the European Committee of Social Rights on the merits, on 15 June 2011 the Committee of Ministers of the Council of Europe adopted Resolution CM/ResChS(2011)7, welcoming the measures already taken by the Slovenian authorities and their commitment to bring the situation into conformity with the Social Charter. The Committee of Ministers looked forward to Slovenia reporting, in its next report concerning the relevant provisions of the European Social Charter, that the situation had been brought into full conformity.
102. The applicants alleged that in spite of the above decision and resolution, no substantial step had been taken to positively regulate their situation.
E. Agreement on Succession Issues
103. The Agreement on Succession Issues was the culmination of nearly ten years of intermittent negotiations under the auspices of the International Conference on the former Yugoslavia and the High Representative (appointed pursuant to Annex 10 to the Dayton Peace Agreement). It entered into force between Bosnia and Herzegovina, Croatia, the then Federal Republic of Yugoslavia, “The former Yugoslav Republic of Macedonia” and Slovenia on 2 June 2004 (see Đokić, cited above, § 43). Article 6 of Annex G, concerning specially protected tenancy, reads as follows:
“Domestic legislation of each successor State concerning dwelling rights (‘ stanarsko pravo/ stanovanjska pravica/ станарско право’ ) shall be applied equally to persons who were citizens of the SFRY and who had such rights, without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”
III. RELEVANT ELEMENTS OF COMPARATIVE LAW
104. After declaring the application admissible, the Court invited the parties to submit additional information on how the housing reform undertaken in other former socialist countries has dealt with the issue of protecting the rights of holders of occupancy rights over denationalised dwellings. The information provided by the parties may be summarised as follows.
105. The applicants emphasised that specially protected tenancy was a sui generis right which was known and enforced only in the SFRY, and not in other former socialist states of Central and Eastern Europe. After the collapse of the SFRY a housing reform was enacted not only in Slovenia but also in Croatia, Serbia and Bosnia and Herzegovina. All these States abolished social ownership of social dwellings and specially protected tenancy rights; however, in Croatia, Serbia and Bosnia and Herzegovina the latter had been transformed into ownership through a right to purchase under favourable terms (regulated price in the amount of 10 to 20 per cent of the market value, possibility to pay in instalments). In particular, former holders of occupancy rights were able to purchase the dwellings in which they were living, while “previous owners” were guaranteed the payment of just compensation for the loss of their properties. In Bosnia and Herzegovina an exception to the right to purchase was provided for as far as dwellings of former religious entities were concerned; however, former holders of specially protected tenancy in respect of these particular dwellings could buy a substitute flat instead. According to the information available to the applicants, in no other former SFRY Republic than Slovenia was discrimination in the enjoyment of the right to purchase provided for when the dwelling had been expropriated by the State through nationalisation or confiscation.
106. The Government first observed that even if it had introduced the notion of “social ownership” into its legal system, the SFRY did not completely banish private property. Private ownership of residential units was allowed but limited to a certain size of living space. Due to amendments to the Constitution, in 1971 the power to pass laws in the housing field was transferred from the Federal State to the constituent republics. The Government submitted the following information concerning former SFRY republics other than Slovenia.
107. In Bosnia and Herzegovina social ownership was transformed into state ownership during the 1992-95 war. After 1998, pre-war occupants were allowed to claim repossession of the apartments which they had left during the war and to purchase them on favourable terms. Moreover, occupancy right holders were entitled to purchase the apartments they lived in, with the exception of privately-owned dwellings. The relevant legislation initially indicated that the apartments subject to restitution would be regulated by special provisions on restitution. However, this rule was later amended, and occupancy right holders were given the right to purchase the apartments they were occupying even when the latter had been nationalised or confiscated. The “previous owners” were to be granted comparable apartments or an equivalent amount of money or other advantages or rights. If they did not purchase the flats, occupancy right holders became lessees. Restitution in natura of expropriated property never took place in Bosnia and Herzegovina. A similar situation existed in the Republika Srpska, where all occupancy right holders were allowed to purchase the apartments they lived in, with the exception of the privately-owned ones. When the latter were returned to their owners, the occupancy right holders had the right to buy another comparable flat.
108. In Croatia, occupancy right holders were allowed to purchase the apartments they lived in under favourable conditions. However, this did not apply to privately owned apartments. In 1997 the Croatian legislator decided that apartments expropriated by way of nationalisation on which occupancy rights existed could not be returned in natura to “previous owners”, who would only receive financial compensation; they could therefore be purchased by the occupancy right holders. A different rule applied to confiscated apartments, which were subject to restitution in natura, with the consequence that occupancy right holders would become lessees and would be given a pre-emption right should the “previous owner” decide to sell. All occupancy right holders who did not or could not purchase were entitled to a protected lease.
109. In Serbia, occupancy right holders and their household members could file a purchase request for the apartments they occupied, irrespective of whether the latter had been nationalised or acquired through solidarity and mutual housing funds. If the apartment was not bought before the end of 1995, the occupants would become lessees, but would retain the possibility to purchase. This possibility was excluded ab initio for privately-owned apartments. The occupancy right holders of these flats would become lessees and could be evicted only if the owner provided them with alternative accommodation; the municipalities were obliged to secure alternative accommodation for this category of tenants by 31 December 2000. Serbia adopted a law providing for restitution of expropriated real estate in kind, similar to the Slovenian one, only in 2011. However, this only concerned properties which had not meanwhile been purchased by former holders of occupancy rights.
110. In 1995, Montenegro provided for the transformation of occupancy rights into private ownership through the purchase of the flats. However, this did not apply to apartments in private ownership or which had been previously expropriated. A law on restitution in kind to “previous owners” was adopted in 2004; it provided that within a period of ten years from its entry into force the Republic of Montenegro had to provide holders of occupancy rights over dwellings returned in natura with a corresponding apartment which they could purchase under the same conditions as applied to the purchase of apartments in social ownership. This right was not conferred on occupancy right holders who owned another flat.
111. As far as other former Central and Eastern European countries are concerned, the Government noted that in Poland people living in flats returned to “previous owners” were not entitled to buy a substitute or equivalent dwelling. The municipalities could provide a flat to persons in a particularly difficult individual or economic situation. Protected tenants, that is to say people who had been allocated a dwelling on the basis of administrative decisions, were given contractual leases concluded for an indefinite period at a controlled rent; they were protected against eviction. There was a possibility, under advantageous conditions, to buy flats which had been built by a co-operative, taking into account, inter alia, the contributions the buyer had paid as a member of the co-operative.
112. Hungary did not provide for the restitution in kind of expropriated dwellings; “previous owners” could only receive partial compensation the amount of which depended on the country’s economic capacity.
113. In Slovakia in 1992 occupancy rights were transformed into a lease. Holders of occupancy rights over flats acquired through solidarity and housing co-operatives could acquire ownership of the premises concerned on special terms. By way of contrast, it was not possible to purchase a flat returned to its “previous owner”; however, the occupancy right holder had the possibility to acquire a substitute flat from the municipality if he or she had received notice of termination of the lease and did not own another flat or any other real estate. The lessee was not obliged to vacate the premises until the municipality had assigned him or her a substitute flat. The rent was regulated by law, but as of 2011 “previous owners” were allowed to raise it by 20 per cent per year.
114. In the Czech Republic, occupancy rights were transformed ex lege into traditional tenancies. If the owner of the flat (that is, the State or the “previous owner”) decided to terminate the lease, the tenant had the right to a substitute flat provided by the owner, but did not have the right to buy the flat in which he or she was living. If the State was the owner and decided to sell the flat, only the former holder of occupancy rights could buy it. However, in May 1994 this exclusive right to buy was replaced by a simple pre-emption right. An enforceable right to buy existed only in relation to flats owned by a co-operative association, as the latter was obliged, at the tenant’s request, to sell the dwelling concerned.
115. In Estonia, all dwellings occupied under lease agreements were subject to privatisation, with the exception of flats returned to “previous owners”. The price of the sale could be paid in vouchers and public capital bonds. In the event of restitution to “previous owners”, tenants had an automatic right to a lease contract (first for a duration of three years and then for five years) and enjoyed pre-emption rights. If they agreed to vacate the premises, these tenants were entitled to be allocated a new dwelling or could apply for a loan or grant from the State for resettlement or to purchase a dwelling.
116. After the reunification of Germany plots of land in the territory of the former Democratic Republic of Germany had been returned to “previous owners”; however, restitution was excluded for those plots in respect of which a third party had in good faith acquired a right of use from the State prior to 1990 and had built a house. For these plots, the “previous owners” would only receive financial compensation, which would cover only a certain percentage of the market-value of the property. German Federal Law provided for strong social protection of the tenant: fixed-term leases and termination of the lease by the landlord were permissible only in limited cases and the agreed rent could be raised only up to the level of the “local comparative rent”. Even stronger protection was afforded to tenants in the new German Länder (in particular, the amount of the rent was regulated by law, and for a certain period of time landlords could not terminate tenancies when they needed the premises for their own personal use). Given the high level of protection afforded to tenants, it was felt that in the new German Länder there was no need to offer substitute housing to the tenants.
I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1 TO THE CONVENTION
117. The applicants complained that they had been deprived of their specially protected tenancy without receiving adequate compensation.
They relied on Article 1 of Protocol No. 1 to the Convention, which reads 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.”
A. Applicability of Article 1 of Protocol No. 1
118. In its decision of 28 May 2013 on the admissibility of the application (paragraph 184), the Court considered that the question of the applicability of Article 1 of Protocol No. 1 was linked to the substance of the applicants’ complaint and decided to join it to the merits.
119. The Government objected that the applicants’ complaint was incompatible ratione materiae with the provisions of Article 1 of Protocol No. 1, as the right of an occupant to reside in a real estate unit he or she did not own could not constitute a “possession” (they referred to J.L.S. v. Spain (dec.), no. 41917/98, ECHR 1999-V; Kozlovs v. Latvia (dec.), no. 50835/00, 23 November 2000; Kovalenok v. Latvia (dec.), no. 54264/00, 15 February 2001; H.F. v. Slovakia (dec.), no. 54797/00, 9 December 2003; Bunjevac v. Slovenia (dec.), no. 48775/09, 19 January 2006; and Gaćeša v. Croatia (dec.), no. 43389/02, 1 April 2008; and also Durini v. Italy, no. 19217/91, Commission’s decision of 12 January 1994).
120. The Government argued that the applicants’ (unrealistic) expectation that dwellings constructed before the Second World War with private funds (and not with social resources) and nationalised under the socialist system would not be returned to their “previous owners” was based on a misinterpretation of the nature of the occupancy right. They pointed out that Article 1 of Protocol No. 1 should apply only to a person’s existing possessions. The occupancy right did not confer ownership rights and the dwellings had been allocated to the applicants for “management” and permanent use. In compliance with the social order then in force, they had to recognise the authority of the “indirect possessor” of the so-called “socially-owned property” (which according to the then applicable principles of real-property law was jointly owned by the people of Slovenia). The possession of the dwelling was linked to the duration of the occupancy relationship, but was not based on a permanent and inalienable right to ownership or another right in rem. This was demonstrated, inter alia, by the fact that for a certain period of time the occupancy right could even be allocated in respect of privately owned flats.
121. Even though it might be difficult to compare anachronistic concepts of socially-owned property with traditional property in a democratic society, it was clear that the occupancy right was, mutatis mutandis, more akin to a tenancy. According to the Commentary to the former legislation, it was a special set of “management” entitlements, on the basis of which the holder had the right to use the socially-owned dwelling for the purpose of satisfying personal and family housing needs. It was not associated with a particular dwelling but rather with the holder’s personal housing needs and those of his family: should these needs change (for instance because the number of users decreased), the occupancy relationship could be terminated provided that another dwelling that suited the altered circumstances was allocated to the holder of the occupancy right. Moreover, the occupancy relationship could be terminated if the holder had not been using the dwelling, had fully sublet it or if the dwelling was occupied by a third party.
122. The holder had to pay the “socially agreed price in the form of rent”; the occupancy right was not transferable (except in cases provided for by law) and could not be inherited. Regulated transition was possible to one of the users of the dwelling: the heir of a tenant who at the time of the latter’s death was living in the same flat might enter into the same tenancy relationship with the owner. The holder of the occupancy right could not dispose of the dwelling (with the exception of an exchange of socially-owned dwellings) and was not allowed to make alterations without the prior approval of the community of tenants. The occupancy relationship could be terminated for fault-based reasons which were very similar to the grounds for terminating any tenancy relationship.
123. In the light of the above, the Government argued that the occupancy right was comparable to a tenancy relationship, albeit concluded for an indefinite period. The applicants merely had the right to reside in a dwelling which was not owned by them; this right was considered neither a property right nor any other real right, but was in essence an obligation, established or terminated according to the provisions of the law on obligations. The Constitutional Court’s decision no. Up-29/98, to which the applicants referred (see paragraph 11 above), was an isolated one and could not constitute “case-law”; moreover, it should be understood in the context of the peculiar status of the complainant in that case, who had suffered harm because of the actions of the municipal authority, which had encumbered an asset that was subject to a ban on trade.
124. The Government further observed that the possibility of purchasing the dwelling, provided for in the SZ, did not apply to socially-owned dwellings which had become public property by way of nationalisation, as they were subject to the obligation of restitution. That possibility did not constitute an entitlement arising from the former occupancy right, and was introduced only later (with the “third model”) for flats other than those occupied by the applicants, as a method of privatisation (and not, as wrongly argued by the applicants, as a kind of compensation for the withdrawal of the occupancy right). Moreover, the right to purchase the dwelling should be differentiated from the pre-emption right guaranteed to any occupancy right holder, which depended upon the “previous owner’s” free decision to sell the property. Thus, the applicants had no enforceable right to purchase the flats in which they were living and had no legitimate expectation to acquire ownership of them. In any event, Article 1 of Protocol No. 1 did not guarantee the right to acquire property (see Sorić v. Croatia (dec.), no. 43447/98, 16 March 2000; Slivenko and Others v. Latvia (dec.) [GC], no. 48321/99, § 121, ECHR 2002-II; and Kopeckỳ v. Slovakia [GC], no. 44912/98, § 35 (b), ECHR 2004-IX).
125. It was true that the “third model” provided for the option of purchasing another dwelling; however, this model had been abrogated in November 1999 (see paragraph 37 above). As none of the applicants had applied to purchase a dwelling under this model, it could not be argued that they had an enforceable claim in this regard.
126. The applicants’ claims for recovery of investments (see Article 25 of the ZDen) could not be considered “possessions” within the meaning of Article 1 of Protocol No. 1 unless there was a “legitimate expectation” based on a regulation or a final judgment. The mere hope that such claims might be granted could not bring Article 1 of Protocol No. 1 into play. The Government had never denied the rights of those applicants who had obtained a final favourable decision in this regard. In any event, entitlement to recover investments could not be the basis for the establishment of ownership of the dwellings.
127. As far as applicant no. 2 (Mrs Berglez) was concerned, the Government observed that she had applied to sign a lease contract out of time; her conditional claim had therefore lapsed as a result of her failure to comply with a statutory regulation and could not, for this reason also, be considered a “possession”.
128. The case of Mago and Others relied on by the applicants (see paragraph 130 below) could not be compared with the present one as, unlike Slovenian law, the Dayton Peace Agreement had established that all occupancy right holders in Bosnia and Herzegovina were entitled to return to the homes they had lived in before the war. It was true that under the former regime a socially-owned dwelling could be sold only to its occupancy right holder; however, this was not an entitlement deriving from the occupancy right, but a measure aimed at the preservation of the value of socially-owned property used for housing, and sale was permissible only under certain conditions and at the price determined by a certified valuator.
129. The applicants pointed out that the “specially protected tenancy”, which they had acquired in good faith, implied the exclusive right to live in the dwelling for an indefinite period, the right to transmit it inter vivos or mortis causa to family members who lived with the tenant concerned, and the exclusive right to purchase the dwelling. It thus had all the essential characteristics of a right of ownership and the only thing missing was the title of owner. It was not based on a precarious contract but on a constitutionally protected civil right of a permanent nature, which could be terminated only in legally regulated extreme cases, connected to the fact that in the former social order all individuals were meant to have access to goods according to their needs. Therefore, the specially protected tenancy constituted a “possession” within the meaning of Article 1 of Protocol No. 1.
130. In any event, according to the Court’s case-law, even a legitimate expectation to lease could be regarded as a possession ( Stretch v. the United Kingdom, no. 44277/98, § 32, 24 June 2003). The Court had also held that the cancellation of a specially protected tenancy amounted to a deprivation of possession ( Mago and Others v. Bosnia and Herzegovina, nos. 12959/05, 19724/05, 47860/06, 8367/08, 9872/09 and 11706/09, §§ 77-78 and 95, 3 May 2012).
131. Furthermore, it should be kept in mind that at the time of Slovenia’s ratification of the Convention and until the end of 1999, all former holders of specially protected tenancies had the right, not subjected to time limitations, to purchase a dwelling on very favourable terms, either the one they were occupying or, under the “third model”, another comparable flat. In the applicants’ view, this right also constituted a “possession”, as it guaranteed the possibility to acquire ownership of a dwelling upon payment of a minimum financial contribution (5 to 10% of the market value of the property – see paragraph 20 above). Its exercise depended upon a unilateral request by the former holder of the occupancy right, and in most cases the tenants had to wait until the end of the denationalisation proceedings merely to establish whether the right to purchase was to be exercised on the existing dwelling or on a substitute dwelling.
132. The applicants underlined that the Court had considered as a “possession” the right of former holders of specially protected tenancies in another Republic of the SFRY to purchase a dwelling ( Brezovec v. Croatia, no. 13488/07, § 45, 29 March 2011). The present case, concerning a right to purchase with no temporal limitation, was to be distinguished from that of Gaćeša v. Croatia, cited by the Government (see paragraph 119 above), where the law clearly fixed a time-limit for exercising the said right and the applicant had missed it. In Slovenia, the so-called “third model” had been repealed by the Constitutional Court without any prior announcement or warning.
133. Contrary to the Government’s allegations, the right to purchase was not just a legal privilege but also a means of compensating for the forceful deprivation of the specially protected tenancy, which was the form the legal title to housing took at that time. This was clear from the nature of the specially protected tenancy, in so far as only its holder – and not other users of the dwelling – was granted the right to purchase, and that right was recognised also in respect of a substitute dwelling. In this connection, the applicants pointed out that the Court had already classified as a “possession” an existing legal right to just compensation for deprivation of property taken prior to the ratification of the Convention ( Broniowski v. Poland [GC], no. 31443/96, § 133, ECHR 2004-V).
134. The International Union of Tenants (hereinafter, the “IUT”), a non-governmental organisation whose headquarters are located in Stockholm, argued that a right to tenancy constituted a “possession” within the meaning of Article 1 of Protocol No. 1 ( Larkos v. Cyprus ([GC] no. 29515/95, ECHR 1999-I). Even more so the “specially protected tenancy”, which assured a high level of legal protection to the applicants and their families.
135. The Court does not consider it necessary to examine the Government’s objection of incompatibility ratione materiae since it has come to the conclusion that, even assuming Article 1 of Protocol No. 1 to be applicable, the requirements of this provision were not violated (see, mutatis mutandis and in the ambit of Article 6 of the Convention, Ashingdane v. the United Kingdom, 28 May 1985, § 54, Series A no. 93).
B. The substance of the applicants’ complaint
136. In their application, the applicants alleged that the respondent Government had never stated any reasonable grounds or public interest that justified depriving them of their specially protected tenancy. The only reason given had been the transition from the previous socialist system to a market economy. In the applicants’ view, only the “previous owners” had benefited from these changes, and conferring a private benefit on a private party could not be in the public interest as defined by Article 1 of Protocol No. 1.
137. In their observations in reply, however, the applicants stated that it was not, as such, the abolition of the specially protected tenancy and/or the restitution of the dwellings to the “previous owners” that they held against Slovenia. Still, a number of actions and omissions imputable to the State during the period of implementation of the reforms had, in their opinion, violated their Convention rights and created a situation which was unbearable both for the previous holders of occupancy rights and for the “previous owners”. The result of the denationalisation was a purely formal restitution of the dwellings: “previous owners” were obliged to lease them out for a non-profit rent at least until the death of the former holder of the specially protected tenancy and could, in principle, remove the tenant only by offering substitute rented accommodation.
138. The legislation which existed from 1994 until 1999, contemplating the “third model”, was “more sensible and ... in accordance with the Convention”. However, this model had been withdrawn before the majority of former holders of specially protected tenancies could benefit from it, and from that time onwards the State had failed to ensure the required fair balance. The applicants referred to the dissenting opinion of Judge Lojze Ude appended to the Constitutional Court’s decision of 25 November 1999 (see paragraph 38 above). Since the end of 1999 former holders of occupancy rights living in denationalised dwellings had been left without any suitable compensation for the loss of their specially protected tenancy rights, while at the same time “previous owners” could not fully enjoy their restituted dwellings.
(ii) Whether there was an interference with possessions
139. Citing the case of Velikovi and Others v. Bulgaria (nos. 43278/98 and others, § 161, 15 March 2007), the applicants alleged that the question whether their rights under Article 1 of Protocol No. 1 had been interfered with should be examined in the light of the multitude of measures adopted “from 1991 to at least the end of 1999 and possibly also until today”.
(iii) Whether the interference was lawful
140. The applicants first alleged that, regard being had to the fact that the previous Constitution was still in force at the moment of the enactment of the SZ, depriving them of their specially protected tenancy had been unlawful. However, in their observations in reply they specified that they would not persist in this claim, as the facts in issue occurred in 1991, before the Convention was ratified by Slovenia.
141. The applicants argued instead that the interference with their possessions had not been lawful on other grounds. They noted that at the time of the Constitutional Court’s decision repealing the “third model” (November 1999 – see paragraph 37 above), Slovenia had already ratified the Revised European Social Charter, making it fully part of its domestic legal order. In its decision of 8 September 2009 (see paragraphs 97-100 above), the European Social Committee had found that the “combination of insufficient measures for the acquisition of or access to a substitute flat, the evolution of the rules on occupancy and the increase in rents” were contrary to Article 31 § 1 of the Charter and that the discrimination between former holders of occupancy rights in the right to purchase was incompatible with Article E. It followed that the Constitutional Court’s decision had violated a binding ratified international instrument.
(iv) Whether the interference was in the general interest
142. The applicants did not contest that the abolition of the specially protected tenancy and the restitution of nationalised property might have been regarded as pursuing a legitimate aim and as being in the general interest. They considered, however, that the same could not be said of the absence of compensation for the loss of their occupancy rights and for the abolition of the right to purchase.
143. By repealing the “third model”, the Constitutional Court had acted against the public interest. This model was meant to balance the interests of the former holders of occupancy rights and the “previous owners” on one side and those of the municipalities on the other side. It had somehow compensated for the fact that for dwellings expropriated through nationalisation or confiscation after the Second World War, the right of “previous owners” to restitution was given precedence over the right of former holders of specially protected tenancies to purchase on favourable terms. It was the only model that represented an actual right to purchase a dwelling and was possible to use even in the event of restitution and despite the “previous owner’s” reluctance to sell.
144. The Constitutional Court had repealed the “third model” suddenly, without any warning or transition period in which former holders of specially protected tenancy might exercise the right to purchase. It did so merely because the “third model” interfered with the property rights of the municipalities, without taking into account the intention behind the legislation, the interests of the private actors involved and the fact that the municipalities had acquired the socially-owned dwellings free of charge via the enactment of the SZ.
(v) Proportionality of the interference
145. The applicants recalled that in the restitution process the State was not supposed to create disproportionate new wrongs while trying to attenuate old injuries. The legislation should make it possible to take into account the particular circumstances of each case, avoiding putting a disproportionate burden on persons who had acquired possessions in good faith (see Pincová and Pinc v. the Czech Republic, no. 36548/97, § 58, 5 February 2003, and Velikovi and Others, cited above, § 178). In the present case, the disproportion lay in the repeal of the tenant’s right to purchase under the “third model”. From the year 2000 onwards the two alternatives available to the applicants (namely, continuing to lease the existing dwelling or moving out of it and obtaining a financial incentive) were neither a suitable compensation for the loss of the specially protected tenancy nor a comparable alternative to the right to purchase. In this connection, the applicants submitted the following arguments.
(α) Specially protected tenancy
146. The applicants argued that the specially protected tenancy was the strongest civil right over a socially-owned dwelling. It was a sui-generis right comparable to ownership, and the exclusive right to purchase precluded everybody else from acquiring ownership of the same dwelling. The specialised literature cited by the Government, stating that the protected tenancy was a non-property right, should not be understood in a negative sense but in the sense that it represented more than a property right, as it also comprised some managerial entitlements. In any event, the Government’s allegations did not take due account of the reasoning followed by the Constitutional Court in its decision Up-29/98 (see paragraph 11 above).
147. It was true, as pointed out by the Government, that specially protected tenancies existed only over socially-owned dwellings; indeed, specially protected tenancy and private ownership were mutually exclusive. The former was a permanent right which could cease to exist only in exceptional situations defined by law (see paragraph 14 above), which could be divided into fault-based grounds (damage, disturbance to other residents, failure to pay the fee) and grounds of needlessness, reflecting the general principle that no-one should have more property than they needed (failure to live in the dwelling for more than six months, total sublet of the dwelling, ownership of another suitable empty dwelling).
148. Under the previous system, dwellings could be sold only to specially protected tenancy holders (see paragraph 10 in fine above); this situation changed dramatically with the housing reform, as former holders of occupancy rights were only given a pre-emptive right; if the tenant refused to pay the “previous owner’s” asking price the dwelling could be sold on the free market.
149. By contrast, the right to continue the lease entailed an essential degradation of the status enjoyed by the applicants under the specially protected tenancy. For the majority of holders of occupancy rights a new leasing relationship (even for an indefinite period) was only a temporary solution until they could purchase a dwelling. However, they had to postpone the realisation of their right to purchase, as in most cases they had to wait for the conclusion of a denationalisation procedure to find out whether the dwelling was being returned to a “previous owner”; they then had to wait for that “previous owner” to say whether he consented to a favourable sale as per the “first model” of substitute privatisation; if not, they could opt for the so-called “third model”. In practice, therefore, until the end of 1999 (when it was repealed by the Constitutional Court – see paragraph 37 above) the latter model was used to good effect only in few cases. After it was repealed the right to lease became a permanent solution, allowing tenants to remain in the dwellings they were occupying.
150. The right to lease was weaker than the specially protected tenancy in that: (a) only persons named in the lease contract were allowed to reside with the tenant; (b) tenants could not engage in commercial activities in the dwelling or sublet it without the “previous owner’s” consent; (c) tenants had to pay a rent (rather than a simple fee) which, even if it was a non-profit rent, had risen considerably (more than 600%) since 1991 and not only covered maintenance but was also meant to provide a profit to the “previous owner”; according to the Constitutional Court’s decision of 20 February 2003 (paragraph 39 above), the new method of calculation of the non-profit rent was to be applied retroactively; (d) tenants could not exchange dwellings; (e) the exclusive right to purchase was replaced by a simple pre-emption right (paragraphs 40 in fine and 64 above); (f) in the event of eviction or death of the original tenant, the right to lease at a non-profit rent was not transferrable to family members other than the spouse or long term partner (paragraphs 68-70 above); (g) the right to use the dwelling was no longer a constitutionally and legally protected right, but merely an ordinary contractual right; (h) it could be terminated at any moment by the “previous owner” if he found the tenant another suitable dwelling (paragraph 40 above); (i) new fault-based and needlessness-based grounds for eviction were introduced, including ownership of another dwelling (Section 103 of the Housing Act 2003, paragraph 40 above), regardless of whether the latter was empty or “real” (in the sense that it was not just a holiday home) and moving entailed a substantial deterioration of the tenant’s living conditions (all these things were guaranteed under the former legislation). The applicants considered that it was irrational, in 2003, to introduce ownership of another dwelling as a ground for eviction, as this would be consistent with the principles of socialism but not with those of a free market economy. Moreover, if a tenant moved to his own dwelling, the rest of his or her family could not stay in the original dwelling.
151. It was true that the SZ-1 regulated the right of tenants to modernise the dwelling and defined situations in which the “previous owner” could not deny his or her consent to do so; however, a similar right, while not regulated by law, had also been recognised by legal doctrine and case-law with regard to holders of occupancy rights. And in any event, under the previous regulation modernisation without the required consent was not a ground for eviction, while it was so under the new rules.
(γ) The “second model” of substitute privatisation
152. In his report of 8 January 2002 (paragraph 46 above) the Ombudsman stated that former holders of specially protected tenancy in denationalised dwellings were victims of systematic violations of human rights, and suggested suitable solutions (higher payments to former holders of occupancy rights, or incentives for the “previous owners” to sell). Even though the Ombudsman’s report was formally examined and accepted by the National Assembly, the suggestions it contained were not implemented in the SZ-1, which completely abolished the concept of the right of former specially protected tenancy holders to purchase an existing or substitute dwelling in accordance with the “first and third models” of substitute privatisation. Instead, the 2003 legislation focused on the “second model” (paragraph 34 above), which had rarely been used and which allowed the tenant to receive financial compensation if he or she decided to move out of the dwelling and purchase another flat on the free market or to build a house.
153. However, according to the SZ-1, in such cases the State contribution amounted only to 15-20% of the market value of the dwelling the tenant was leaving. This meant that in order to acquire a comparable property, he or she had to pay approximately 80-85% of its value. By contrast, the right to purchase under the “third model” allowed former specially protected tenancy holders to accede to ownership by paying approximately 5-10% of the value of the dwelling in instalments over a span of twenty years. It was true that under the “second model”, the tenant could apply for a loan from the Housing Fund for the remaining sum to be paid. However, according to the applicants only people who would be eligible for ordinary bank loans could obtain such loans, and the interest rate on them was even worse than on commercial bank loans.
154. The abolition of the “third model” effectively forced a majority of former holders of occupancy rights to buy dwellings on the free market (which were worse than the dwellings they were leaving in terms of surface, construction and location) by dint of great sacrifices and in numerous cases with the help of their family members. In any event, the proportionality issue to be assessed in the present case was not whether former holders of occupancy rights managed, in one way or another, to have a roof over their heads, but rather whether there was fair compensation for the loss of their rights. The European Committee of Social Rights had found that a disproportionate burden had been put on them, and the applicants asked the Court to reach the same conclusion.
155. Lastly, the applicants claimed that many of them had invested substantial amounts in the maintenance and refurbishment of the dwellings, which had initially been poorly maintained, thereby considerably increasing the value of the flats; yet ownership rights had nevertheless been restored to the “previous owners”.
(i) Whether there was interference with possessions
156. The Government argued that the adoption of the SZ did not in any way change the legal status of the applicants, as their occupancy rights were transformed into a tenancy for an indefinite period, with protection against arbitrary eviction by the “previous owner”. The lease could not be terminated if rent was not paid for reasons of financial hardship, there was a possibility of obtaining a subsidised rent and moving to another suitable non-profit dwelling, the lease was transferrable to the tenant’s heirs and the “previous owner” was obliged to maintain the dwelling in good repair, thereby ensuring a reasonable standard of living. The only essential difference with the previous system was that while under the former social ownership regime the owner was not really identifiable – a fact which might have led the applicants to consider themselves as the “owners” of the dwellings –, in the market economy dwellings had identifiable owners. In the Government’s view, this fact alone could not amount to an interference with the rights guaranteed by Article 1 of Protocol No. 1.
157. In this connection, the Government also noted that the holders of occupancy rights were granted leases at non-profit rent levels irrespective of their financial situation. In the past twenty years such rents had increased, but the standard of living in general had radically changed and the non-profit rents paid by the applicants were nothing like free-market rents. Had the “previous owners” not received a sum to cover their costs, their obligation to maintain the flats in good repair would have constituted a disproportionate burden (see, mutatis mutandis, Hutten-Czapska v. Poland [GC], no. 35014/97, § 198, ECHR 2006-VIII).
158. With regard to individual applicants, the Government made the following observations.
159. At the date of entry into force of the SZ, applicant no. 6 (Mr Kuret) was not the holder of the occupancy right but merely one of the legal users of the dwelling to which his father held the right. At that time, as an immediate family member, he did not even have the right to a tenancy relationship. Therefore, in the Government’s opinion, the provisions of the SZ had not had any direct effect on his legal situation. Moreover, applicant no. 6 had concluded a friendly settlement “of all mutual relations”, in which he explicitly withdrew any further claims against the “previous owner” of the dwelling, and therefore also the possibility to appeal against the Supreme Court judgment of 21 April 2005 (no. II Ips 98/2004 – see paragraph 68 above). He had thus forfeited any victim status he might have had.
160. The same applied to applicant no. 2 (Mrs Berglez), who had not lodged a request to purchase the dwelling she was living in or any other suitable dwelling. She had refused to sign a lease and thus lived in the dwelling without the necessary legal title. In the Government’s opinion, she was in no position to claim that her legal status had deteriorated because of the action taken by the Republic of Slovenia.
161. The Government also pointed out that, by analogy with the former legislation of the Socialist Republic of Slovenia, the SZ had established that where a former holder of occupancy rights no longer needed housing protection (because he owned another dwelling or because of other circumstances), the “previous owner” of the dwelling in which he was living was not obliged to sign a lease contract. This was notably the case for applicants nos. 2 (Mrs Berglez), 7 (Mr Logar), 9 (Mr Milič) and 10 (Mrs Zalar), who had resolved their housing needs by purchasing another dwelling. The Government argued that under these circumstances, they could not be considered victims of the alleged violations.
162. The Government also pointed out the following:
- The spouse of applicant no. 1 (Mrs Cornelia Berger-Krall) owned a vineyard cottage and a house of 91 square metres (m²) suitable for habitation;
- Applicant no. 2 (Mrs Berglez) had received a grant of EUR 38,752.08 and a soft loan of EUR 28,774.92; she had purchased a dwelling in Maribor;
- Applicant no. 7 (Mr Logar) had received a grant of EUR 53,276.42 and a soft loan of EUR 89,223.57; he had purchased an 82 m² dwelling;
- Applicant no. 8 (Mrs Marguč), together with her husband, owned a 64 m² house in a prestigious location by the sea in Piran, which was suitable for habitation;
- Applicant no. 9 (Mr Milič) had received a grant of EUR 45,975.98 and a soft loan of EUR 21,524.02, and had purchased a 75 m² dwelling;
- Applicant no. 10 (Mrs Zalar) had received a grant of EUR 32,262.99 and a soft loan of EUR 72,737.02; she had purchased two dwellings, one measuring 84 m² and the other 148 m².
163. Moreover, in their observations of 5 June 2012 the applicants had stated that they had never explicitly or implicitly claimed that they did not have sufficient means of subsistence or that they had no property and were therefore entitled to social benefits or subsidised rent. In the Government’s opinion, this statement was an admission that being unable to continue the tenancy at a non-profit rent did not constitute a threat to the family lives of any of the applicants, and that the increases in the non-profit rent did not violate their Convention rights. As a close family member could not purchase the dwelling unless he or she obtained the written consent of the former occupancy right holder, applicant no. 6 (Mr Primož Kuret), who had not obtained such consent, could not be considered a victim from this point of view, as he was not a member of a protected category.
164. The Government observed that under the previous regime housing policy had mainly been addressed in a spirit of social policy and protection of the standard of living, and thus had a destabilising impact on economic and social development trends. A dwelling was considered as a social, not an economic entity. The introduction of market relations in the housing economy meant eliminating anachronistic legislative solutions, such as occupancy rights. At the same time, the Government had to provide an appropriate transitional regime in accordance with the principle of trust in the law (which should not be understood to mean that the legislation must remain unchanged). As the Constitutional Court rightly pointed out, in the new legal system the occupancy right encountered other rights and a fair balance had to be struck between them.
165. As explained in paragraph 156 above, the legal status of former occupancy right holders remained, in substance, untouched. They maintained the pre-emption right to which they had been entitled under the previous system. Inspections could be made by the national housing inspectorate, which, in the event of poor maintenance of the dwelling, could order that the defect be remedied at the “previous owner’s” expense. The tenant had the right to obtain compensation for damage suffered due to poor maintenance and reimbursement of excessively high rent. He or she could also demand that the level of rent be checked by a competent body. This degree of protection was not extended, however, to users who under the previous system did not have occupancy rights or had lost them.
166. As to the tenant’s obligations, he or she had to use the dwelling in accordance with the terms of the lease, to allow the “previous owner” access to the premises (no more than twice a year), and could not change the dwelling layout or install fittings and appliances without the prior written agreement of the “previous owner”. These were basically the same obligations as under the previous regime. However, under that regime failure to respect them resulted in liability for damages, while under the new rules unauthorised changes to the dwelling were grounds for termination of the lease (unless the tenant removed the modifications upon written request by the “previous owner”). When moving out, the tenant was entitled to reimbursement of the non-depreciated part of any useful investment in the dwelling he had made with the consent of the “previous owner”. With such written consent he or she could also sublet part of the dwelling.
167. With ninety days’ notice, the tenant could at any time unilaterally terminate the lease contract without any justification; the “previous owner” could do so only upon providing the tenant with another suitable dwelling.
168. As to the new fault-based grounds for termination of the lease (paragraph 21 above), they were imposed by the nature of the civil-law relationship and the protection of the other contractual party. Tenants in social distress who could not pay the rent in full were entitled to help from a municipal administrative body, which would pay the “previous owner” the difference in the rent or give the tenant the possibility of renting a socially-owned dwelling. The right to subsidised rent (Sections 26-31 of the Social Assistance Act) was implemented by the social work centres and the method for calculating it was modified in 2005. The cash benefits (including the subsidised rent) could not exceed the legal minimum wage.
169. According to Section 56 of the SZ, when a tenant died the “previous owner” was obliged to sign a lease agreement with the surviving spouse or long term partner or with one of the immediate family members indicated in the lease contract (paragraph 23 above). As the Constitutional Court had pointed out (paragraph 69 above), the transfer of the tenancy to another family member ensured the social function of the dwelling. However, a distinction was to be made between the spouse and/or long term partner on the one hand and the other immediate family members on the other: while the purpose of marriage (or long-term partnership) was to permanently live together, the same could not be said of relations with other family members such as children and parents. Had the latter been allowed to continue the tenancy relationship ad infinitum under the same conditions as the former holder of occupancy rights, the balance between the protection of property and the pursuit of its social function would have been upset. In particular, had the family members continued to benefit from the non-profit rent, the “previous owner” would have been prevented from obtaining income from his property, an element which is of special importance in the market economy system. Protection of family members could have been achieved by other means, such as allowances and loans or opportunities to rent other non-profit dwellings.
170. The non-profit rent (paragraph 19 above) was not an encroachment on the property right of the “previous owner”, but a regulation of the method of enjoyment of the property and a form of protection of the legal situation of former holders of occupancy rights. In assessing it, the financial situation of the tenant was not relevant, whereas the protection of his or her legal status, originating from the former regulation, was a factor to be taken into account. The Government referred to the part of their observations describing the method of calculation of the non-profit rent (paragraphs 79-86 above).
171. The Government also pointed out that the SZ-1 maintained the principle of protection of the status of former holders of occupancy rights. It introduced the right of the tenant to require the “previous owner” to provide another suitable dwelling or demand a relative reduction in rent for the time during which the dwelling could not be used normally. If renovation work required the tenant’s temporary removal, the “previous owner” was obliged to provide substitute premises and to pay the costs of the move. Moreover, the SZ-1 laid down the conditions under which the “previous owner” could not refuse consent to alterations by the tenant (Section 97), introduced the tenant’s right to a refund of the non-depreciated part of any useful and necessary investments made (Section 98) and stipulated that the “previous owner” could not request the tenant’s removal before having reimbursed the investments the tenant had made in the dwelling (Section 112(2)). As to the fact that ownership of other real estate was a ground for termination of the tenancy, the Government considered that it would be disproportionate to burden the landlord with a tenancy relationship for an indefinite period and a non-profit rent where the tenant had other suitable accommodation at his or her disposal.
(iii) Proportionality of the interference
172. The Government argued that they enjoyed a wide margin of appreciation in reforming the country’s political and economic system. Restitution of dwellings to the “previous owners” was meant to correct the injustices committed in the post-war period and excluded the right of the occupancy right holder to acquire ownership of the same dwelling. The reforms had a legal basis in the SZ and ZDen, as well as in Amendment XCIX to the Constitution, which provided for the transformation of socially-owned property into public and other forms of property to be regulated by law. The occupancy right, a typical element of the former socialist system based on a planned economy and socially-owned property, could not continue to exist in a market economy.
173. The re-establishment of the ownership rights of “previous owners” of nationalised property and the redress of wrongs suffered by them was a legitimate aim in a democratic society based on the rule of law and respect for human rights. The national legislator had struck a fair balance between competing rights: ownership of dwellings could not be acquired by the holders of occupancy rights against the will of the “previous owner”, but the latter’s right of property was restricted by the obligation to enter into a lease contract for an unlimited period. Moreover, it should be taken into account that the right to purchase the dwelling was never one of the entitlements constituting the occupancy right under the previous system. Occupancy right holders had only a pre-emption right at a price determined by a certified valuator; they could not force or request the purchase.
174. The right to apply to purchase the dwelling bestowed on holders of occupancy rights in buildings acquired with solidarity and mutual housing funds was not meant to be just satisfaction for the withdrawal of the occupancy right, but a measure enabling privatisation and transition from the social-ownership system to a system of private ownership with known owners. The applicants did not have this option as the dwellings in which they were living had not been acquired with mutual funds, but had been coercively nationalised. The legislator had substantial reasons for regulating the situation of these dwellings differently.
175. Furthermore, should the “previous owner” not consent to sell the dwelling, tenants in the applicants’ situation could solve their housing problem by buying a dwelling or building a house on the favourable terms (financial compensation in the amount of a percentage of the dwelling’s value and a loan) provided for in Article 125 of the SZ, under the “second model” of substitute privatisation (paragraph 34 above).
176. As to the decision of the European Committee of Social Rights (see paragraphs 97-100 above), it should be emphasised that the obligations resulting from Article 31 of the European Social Charter are obligations of effort and not obligations of result. Moreover, in order to comply with the obligations arising from the said decision, in October 2011 Slovenia had adopted the Rules amending the Rules on the allocation of non-profit dwellings and was in the process of preparing a National Housing Programme, which would be a long-term housing policy for the coming ten-year period and would confer on the Housing Council the role of advising the Government and monitoring the implementation of the reforms.
177. As far as the abolition of the “third model” was concerned, the Government observed that the Constitutional Court’s decision was founded on the actual and modest financial capabilities of the municipalities. The latter could offer few dwellings for substitute purchase; indeed, in October 1993 there were only 531 vacant dwellings in the whole of Slovenia, and in former municipalities in Ljubljana they numbered 172. It was the duty of the municipalities to make a certain number of public dwellings available to socially weaker and endangered citizens, so they were obliged to give them to people in more urgent social need than the former occupancy right holders in denationalised dwellings. In any event, the financial incentives afforded by Slovenia to solve housing problems constituted adequate “compensation” for any possible encroachment on the occupancy right. It could also be argued that because of the financial participation of the State in the purchase of another dwelling, such compensation was not necessary.
178. The IUT considered that in the process of housing transition and reform Slovenia had excessively interfered with the rights of specially protected tenancy holders, withdrawing the minimum legal protection assured to tenants in other European countries. According to the IUT, the applicants had been deprived of their specially protected tenancy status without any suitable compensation. The new tenancy rights given to them by the housing reform laws were of a lesser quality. This degradation of their position was not proportionate and justified under Article 1 of Protocol No. 1.
(a) Whether there was an interference with possessions
179. The Court first recalls that in its decision of 28 May 2013 on the admissibility of the application (paragraph 149), it considered that insofar as the Government referred to the particular circumstances of individual applicants (notably, their entitlement to occupy the flats they lived in, their ownership of other real estate, their financial situation and/or the financial grants received by them – see paragraphs 159-163 above), these issues were relevant considerations to assess whether there was interference with the applicants’ rights under Article 1 of Protocol No. 1 and Article 8 of the Convention and, in the affirmative, whether this interference was proportionate and necessary in a democratic society.
180. It is to be noted in this connection that the applicants have specified that their complaints are not directed against the abolition of the specially protected tenancy and/or the restitution of the dwellings to the “previous owners” per se (see paragraphs 137 and 142 above), but rather against the alleged insufficient protection of the category of former holders of occupancy rights in denationalised flats and against the repeal of the “third model” of substitute privatisation. In their opinion, the violation of Article 1 of Protocol No. 1 did not depend upon a direct or potential individual risk of eviction, but on the effects the general legal framework of the housing reform had on their situation. This distinguishes this complaint from the one raised under the same provision in the case of Liepājnieks v. Latvia ((dec.), no. 37586/06, §§ 88-89, 2 November 2010), which was essentially based on the loss of a dwelling without compensation and which was declared inadmissible by the Court because the applicant had chosen to vacate the premises of his own accord and to move into the property of his spouse.
181. That being so, the Court considers that the housing reform and the repeal of the “third model” of substitute privatisation have interfered with the applicants’ right to the peaceful enjoyment of their possessions since the entry into force of the Convention in respect of Slovenia (28 June 1994). The replacement of the specially protected tenancy with normal leases restricted the applicants’ rights in several respects. They were no longer able to enjoy the protection which the previous legislation afforded to holders of occupancy rights, namely the possibility of using the premises for an indefinite period in exchange for the payment of a fee, protection against eviction, the right to transmit the lease to family members other than spouses or long-term partners and the possibility of subletting, renovating or decorating the flat without the owner’s permission. Moreover, the fee was replaced by a higher non-profit rent, and the obligation to tolerate visits of the “previous owners”, and new grounds for eviction were introduced. It is also to be noted that the Constitutional Court’s decision repealing the “third model” of substitute privatisation (see paragraph 37 above) deprived the applicants of the possibility, provided for by the 1994 amendments to the Housing Act 1991, of purchasing a substitute flat on favourable terms from the municipalities. The applicants thus lost an enforceable right to acquire property at a price significantly lower than the market price, a fact that has adversely affected their substantive interests protected by Article 1 of Protocol No. 1.
182. The applicants’ financial situation and/or their ownership of other real estate could not change these conclusions, but are relevant factors in evaluating the proportionality of the interference. The Court has also examined the Government’s allegations concerning applicants nos. 2 (Mrs Ljudmila Berglez) and 6 (Mr Primož Kuret – see paragraphs 159, 160 and 163 above). It observes that the fact that Mrs Berglez allegedly refused to sign a lease contract with the “previous owners” did not, as such, affect her status as a previous holder of occupancy rights. As to Mr Kuret, even if he was not the holder of the occupancy rights, but only one of the legal users of the dwelling, the Court is of the opinion that his status as legitimate heir of the previous specially protected tenant would in principle have entitled him to have the protected tenancy transferred to him upon the demise of his father. Under these circumstances, the Court concludes that the Article 1 of Protocol No. 1 rights of applicants nos. 2 and 6 were also interfered with.
183. The Court refers to its established case-law on the structure of Article 1 of Protocol No. 1 and the manner in which the three rules contained in that provision are to be applied (see, among many other authorities, Jokela v. Finland, no. 28856/95, § 44, ECHR 2002 ‑ IV, and J.A. Pye (Oxford) Ltd and J.A. Pye (Oxford) Land Ltd v. the United Kingdom [GC], no. 44302/02, § 52, ECHR 2007-III).
184. In line with that case-law, the Court considers that the interferences described above fall to be considered under the so-called third rule, relating to the State’s right “to enforce such laws as it deems necessary to control the use of property in accordance with the general interest” set out in the second paragraph of Article 1 of Protocol No. 1 (see, mutatis mutandis, Almeida Ferreira and Melo Ferreira v. Portugal, no. 41696/07, § 26, 21 December 2010).
185. It remains to be ascertained whether this interference complied with the requirements of Article 1 of Protocol No. 1.
(b) Whether the interference was justified
(i) Whether the interference was “lawful”
186. The Court reiterates that the first and most important requirement of Article 1 of Protocol No. 1 is that any interference by a public authority with the peaceful enjoyment of possessions should be lawful: the second sentence of the first paragraph authorises a deprivation of possessions only “subject to the conditions provided for by law” and the second paragraph recognises that States have the right to control the use of property by enforcing “laws” (see OAO Neftyanaya Kompaniya Yukos v. Russia, no. 14902/04, § 559, 20 September 2011). Moreover, the rule of law, one of the fundamental principles of a democratic society, is inherent in all the Articles of the Convention (see Capital Bank AD v. Bulgaria, no. 49429/99, § 133, ECHR 2005-XII (extracts), and The former King of Greece and Others v. Greece [GC], no. 25701/94, § 79, ECHR 2000-XII).
187. In the present case, it is not disputed between the parties that the suppression of the specially protected tenancies and their replacement with normal lease contracts had a legal basis in domestic law, as it was provided for by the Housing Act 1991 (see paragraphs 18-23 above) and subsequent amendments to it (see paragraphs 31-43). As to the decision to repeal the “third model” of substitute privatisation, it was adopted by the Constitutional Court in a procedure prescribed by law (see paragraph 37 above).
188. The applicants, however, argued that the interference with their possessions was not lawful as at the time of the adoption of that decision (25 November 1999), Slovenia had already ratified the Revised European Social Charter, thereby incorporating it into its domestic legal order, and in 2009 the European Social Committee had found that the repeal of the “third model” was contrary to Article 31 § 1 and to Article E of the Charter (see paragraph 141 above). The Government replied that the obligations resulting from the European Social Charter were obligations of effort and not of result (see paragraph 176 above).
189. The Court recalls that in defining the meaning of terms and notions in the text of the Convention, it has on several occasions taken into account elements of international law other than the Convention, such as the European Social Charter, and the interpretation of such elements by competent organs (see, for instance, Demir and Baykara v. Turkey [GC], no. 34503/97, §§ 74-86, ECHR 2008-..). However, when requiring that a measure be “lawful”, the Convention essentially refers back to national law and states the obligation to conform to the substantive and procedural rules thereof (see, for instance and in the ambit of Article 5 § 1 of the Convention, Olymbiou v. Turkey, no. 16091/90, § 85, 27 October 2009).
190. It is also worth noting that in its decision of 8 September 2009 (see paragraphs 97-100 above), the European Committee of Social Rights emphasised that it was “clear from the actual wording of Article 31 [of the Revised Social Charter] that it cannot be interpreted as imposing on States an obligation to achieve results” and that for the situation to be in conformity with the Revised Social Charter, States Parties should, in particular, “adopt the necessary legal, financial and operational means of ensuring steady progress towards the goals laid down in the Charter” (see paragraphs 28 and 29 of the decision in question). The obligations arising from Article 31 being obligations of means and the European Committee not being vested with the power of annulling the impugned national legislation and case-law, the latter was still valid and binding in the Slovenian legal order after the adoption of the decision of 8 September 2009.
191. In the light of the above, the Court considers that the measures complained of were “lawful” within the meaning of Article 1 of Protocol No. 1.
(ii) Whether the interference was “in accordance with the general interest”
192. The Court recalls that because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to decide what is “in the public interest”. Under the system of protection established by the Convention, it is thus for the national authorities to make the initial assessment as to the existence of a problem of public concern warranting measures to be applied in the sphere of the exercise of the right of property (see Hutten-Czapska, cited above, § 165). The notion of “general interest” is necessarily extensive (see Hutten-Czapska, cited above, § 166). The Court finds it natural that the margin of appreciation available to the legislature in implementing social and economic policies, especially in the context of a change of political and economic regime, should be a wide one, and will respect the legislature’s judgment as to what is “in the general interest” unless that judgment is manifestly without reasonable foundation (see, inter alia, Zvolský and Zvolská v. the Czech Republic, no. 46129/99, § 67-68 and 72, ECHR 2002-IX; Kopecký, cited above, § 35; Jahn and Others v. Germany [GC], nos. 46720/99, 72203/01 and 72552/01, § 113, ECHR 2005-VI; and Wieczorek v. Poland, no. 18176/05, § 59, 8 December 2009; see also, mutatis mutandis, The former King of Greece and Others, cited above, § 87, and Kozacioğlu v. Turkey [GC], no. 2334/03, § 53, 19 February 2009).
193. It is a matter of common knowledge that the political transition in the post-communist countries has involved numerous complex, far-reaching and controversial reforms which necessarily had to be spread over time. The dismantling of the communist heritage has been gradual, with each country having its own, sometimes slow, way of ensuring that past injustices are put right. Even though following the collapse of the totalitarian regimes those countries faced similar problems, there is, and there can be, no common pattern for the restructuring of their political, legal or social systems. Nor can any specific time-frame or speed for completing this process be fixed. Indeed, in assessing whether in a given country, considering its unique historical and political experience, “the general interest” requires the adoption of specific de-communisation measures in order to ensure greater social justice or the stability of democracy, the national legislature empowered with direct democratic legitimation is better placed than the Court (see, mutatis mutandis, Cichopek and 1,627 other applications v. Poland (dec.), nos. 15189/10 and others, §§ 143, 14 May 2013).
194. In the present case, the Court sees no reason to depart from the national authorities’ assessment that the interference in issue pursued legitimate aims, namely the promotion of social, political and economic reforms, the removal of relics of the country’s communist past in the social and economic spheres and the protection of the rights of “previous owners”. It also notes that the applicants themselves did not contest that the abolition of the specially protected tenancy and the restitution of nationalised property might have been regarded as pursuing a legitimate aim and as being in the general interest (see paragraph 142 above).
195. As to the Constitutional Court’s decision repealing the “third model” of substitute privatisation, it was justified by the need to avoid putting an additional financial burden on the municipalities’ newly acquired ownership rights over dwellings which had previously been socially owned (see paragraph 37 above). It was thus aimed at ensuring the financial well-being of local communities, a goal which falls within the notion of “general interest”.
(iii) Whether the interference was proportionate
196. It remains to be ascertained whether in implementing these reforms the State managed to strike a “fair balance” between the demands of the general interest of the community and the requirements of the protection of the individuals’ fundamental rights (see J.A. Pye (Oxford) Ltd and J.A. Pye (Oxford) Land Ltd, cited above, § 53).
197. In respect of interferences which fall under the second paragraph of Article 1 of Protocol No. 1, there must exist a reasonable relationship of proportionality between the means employed and the aim sought to be realised (see, among many other authorities, Zehentner v. Austria, no. 20082/02, § 72, 16 July 2009). Thus the balance to be maintained between the demands of the general interest of the community and the requirements of fundamental rights is upset if the person concerned has had to bear a “disproportionate burden” (see, among many other authorities, Sporrong and Lönnroth v. Sweden, 23 September 1982, §§ 69-74, Series A no. 52; The Holy Monasteries v. Greece, 9 December 1994, §§ 70-71, Series A no. 301-A; Brumărescu v. Romania, no. 28342/95, § 78, ECHR 1999-VII; Moskal, cited above, § 52; and Depalle v. France [GC], no. 34044/02, § 83, ECHR 2010-..).
198. Moreover, the principle of “good governance” requires that where an issue in the general interest is at stake it is incumbent on the public authorities to act in an appropriate manner and with utmost consistency (see Beyeler v. Italy [GC], no. 33202/96, § 105, CEDH 2000-I; Megadat.com S.r.l. v. Moldova, no. 21151/04, § 72, 8 April 2008; and Moskal, cited above, § 51).
199. Where a measure controlling the use of property is in issue, the lack of compensation is a factor to be taken into consideration in determining whether a fair balance has been achieved, but is not of itself sufficient to constitute a violation of Article 1 of Protocol No. 1 (see Anonymos Touristiki Etairia Xenodocheia Kritis v. Greece, no. 35332/05, § 45, 21 February 2008, and Depalle, cited above, § 91).
200. A reform of the housing system in the context of the gradual transition from State-controlled rent to a fully negotiated contractual rent during the fundamental reform of the country following the collapse of the communist regime was examined by the Court in Hutten-Czapska v. Poland (cited above, §§ 194-225), a case brought by a landlady complaining about the poor amount of the rent she was receiving under the State rent-control scheme. The Court held that the scheme was not compatible with Article 1 of Protocol No. 1 when, for purely mathematical reasons, it made it impossible for landlords to receive an income from rent or at least recover their maintenance costs. Moreover, the Polish reform provided for various restrictions on landlords’ rights in respect of the termination of leases, the statutory financial burdens imposed on them and the absence of any legal ways and means making it possible for them either to offset or to mitigate the losses incurred in connection with the maintenance of property or to have the necessary repairs subsidised by the State in justified cases (see Hutten-Czapska, cited above, §§ 223-224).
201. In the case of Lindheim and Others v. Norway (nos. 13221/08 and 2139/10, 12 June 2012) the Court found that the limitations imposed by law on the level of the annual rent landowners could demand from ground lease holders (less than 0.25% of the plots’ alleged market value) and the indefinite extension of the ground lease contracts had infringed the landowners’ right of property. The Court held that albeit pursuing the legitimate aim of protecting lease holders lacking financial means and of implementing a social policy in the field of housing, the measures in issue had failed to strike a fair balance between the interests of the lessors, on the one hand, and those of the lessees, on the other hand. Notably, the level of rent was particularly low and could be adjusted only on the basis of changes in the consumer price index (thus excluding the possibility of taking into account the value of the land as a relevant factor) and the lease contracts were extended for an indefinite duration. In these circumstances, the social and financial burden involved was placed solely on the applicant lessors (see Lindheim and Others, cited above, §§ 75-78, 96-100 and 119-136).
202. The Court is of the opinion that the cases of Hutten-Czapska and Lindheim are the mirror image of the present case, in which the tenants alleged, inter alia, that the increase in rent to which they were subjected as a consequence of the housing reform was excessive. In adjudicating the merits of their complaint, the Court will have regard, among other factors, to one of the main principles expressed in Hutten-Czapska, namely that in balancing the exceptionally difficult and socially sensitive issues involved in reconciling the conflicting interests of landlords and tenants the State should ensure a “fair distribution of the social and financial burden involved in the transformation and reform of the country’s housing supply” (see Hutten-Czapska, cited above, § 225). In Hutten-Czapska and in Lindheim, the Polish and Norwegian States violated this principle because they placed this burden almost exclusively on one particular social group, the landlords. The Court will examine whether in the present case a similar burden was placed on the tenants. In considering whether this is the case, the Court must keep in mind the particular context in which the issue arises, namely that of a reform of the housing system, which cannot but be, at least in part, the expression of society’s concern for the social protection of tenants (see Velosa Barreto v. Portugal, 21 November 1995, § 16, Series A no. 334, and Almeida Ferreira and Melo Ferreira, cited above, §§ 29 and 32; see also, mutatis mutandis and in the context of a social security scheme, Goudswaard-Van der Lans v. the Netherlands (dec.), no. 75255/01, ECHR 2005 ‑ XI, and Wieczorek, cited above, § 64).
203. It is to be noted, in particular, that the Court has considered justified and proportionate several measures aimed at protecting vulnerable tenants. They included legislation entailing rent reductions (see Mellacher and Others v. Austria, 19 December 1989, § 57, Series A no. 169), a temporary suspension of the eviction of some categories of tenants (see Spadea and Scalabrino v. Italy, 28 September 1995, § 41, Series A no. 315 ‑ B) and different restrictions on the landlord’s right to terminate the lease (see Velosa Barreto, cited above, §§ 26 and 29-30, where this right was conditional on the landlord needing the premises for his or her own accommodation; Almeida Ferreira and Melo Ferreira, cited above, §§ 32-36, where the lease could not be terminated if the tenant had occupied the premises for 20 or more years; see also Crux Bixirão v. Portugal, no. 24098/94, Commission’s decision of 28 February 1996, unpublished, where the Commission found that the impossibility of terminating a rent contract when the tenant was 65 years old or older was not incompatible with Article 1 of Protocol No. 1).
204. As the Court stated in the case of James and Others v. the United Kingdom (21 February 1986, § 47, Series A no. 98), “[e]liminating what are judged to be social injustices is an example of the functions of a democratic legislature. More especially, modern societies consider housing of the population to be a prime social need, the regulation of which cannot entirely be left to the play of market forces. The margin of appreciation is wide enough to cover legislation aimed at securing greater social justice in the sphere of people’s homes, even where such legislation interferes with existing contractual relations between private parties and confers no direct benefit on the State or the community at large.”
(β) Application of these principles to the present case
205. Turning to the circumstances of the present case, the Court notes that as a result of the housing reform, in their quality of former holders of occupancy rights in denationalised dwellings the applicants had to face a general degradation of the legal protection they enjoyed in the housing field. In particular, they had to pay a non-profit rent whose amount increased over the years up to levels which some of the applicants alleged they could hardly afford, and they had no possibility of transmitting the right to live in the dwelling to family members other than the spouse or long term partner. As new fault-based grounds for eviction had been introduced, the applicants faced a higher risk of eviction and had to tolerate visits from the “previous owners”, as well as the pressures sometimes exerted by the latter in order to recover the dwellings. Furthermore, they could be moved by the landlord to another adequate flat at any time and without any reason (see paragraph 40 above).
206. The Court can accept, however, that these were somehow unavoidable consequences of the legislature’s decision to provide for a possibility of restitution in natura of dwellings which had been nationalised after the Second World War. The presence of a “previous owner” meant that his or her rights had to be secured, and this could not but result in a corresponding restriction of the rights of the persons occupying the dwellings. As pointed out by the Government (see paragraph 169 above), fixing an excessively low ceiling for rent or imposing the continuation of the lease with the tenants’ descendants, and thus for a potentially endless period of time, would have been hard to reconcile with the property rights of “previous owners” acquired through the denationalisation proceedings (see, mutatis mutandis, Hutten-Czapska, cited above).
207. Furthermore, the Court observes that the obligations arising from the lease contracts “previous owners” had to sign with the applicants were in substance similar to the normal and traditional duties that tenants have vis-à-vis landlords. This is true, in particular, of the obligation not to cause major damage to the dwelling, not to disturb other residents, not to perform prohibited activities in the flat, not to change the dwelling and fixtures, not to sublet and not to allow new people to use the dwelling without the prior consent of the owner (see paragraph 21 above). The Court considers that the fact that such obligations were imposed on the applicants in the process of transition into a market economy cannot, as such, be contrary to the Convention or its Protocols.
208. In addition to that, it is worth noting that the applicants enjoyed and continue to enjoy, more than 22 years after the enactment of the Housing Act 1991, special protection which goes beyond that usually afforded to tenants’ rights. In particular, the lease contracts were concluded for an indefinite period (see paragraph 19 above) and were transmissible, also for an indefinite period, to the spouse or long term partner of the tenant (see paragraph 69 above). The latter did not have to pay a full market rent, but only an administratively-determined non-profit rent, meant to cover only the depreciation, management and routine maintenance of the dwelling and the cost of the capital invested (see paragraphs 79-86 above). It is shown by the data submitted by the Government (see paragraph 239 below), and not contested by the applicants, that they were paying sums comprised between EUR 49.16 and EUR 280.78 per month and that in spite of a market rental price of between EUR 6 and EUR 11 per square metre, the applicants were charged between EUR 1.13 and EUR 3.33 per square metre. The Court concludes that the non-profit rent imposed on the applicants was significantly lower than the rents charged on the free market, and that the fact that they still enjoyed such favourable terms more than 22 years after the enactment of the housing reform shows that the transition to a market economy was conducted in a reasonable and progressive manner. Moreover, none of the applicants has shown that the level of the non-profit rent was excessive in relation to his or her income.
209. It is true that in April 1994 former holders of specially protected tenancy in denationalised dwellings were given the possibility of purchasing a substitute dwelling from the municipalities under very favourable financial terms under the so-called “third model” of substitute privatisation (see paragraph 35 above) and that this possibility was abolished by the Constitutional Court in November 1999 (see paragraph 37 above). However, the Court notes that, as underlined by the Government (see paragraph 125 above) and not contested by the applicants, none of the latter filed a valid and complete request to purchase a substitute dwelling during the five years and seven months which elapsed before the Constitutional Court’s decision. It is true that for applicants nos. 1 and 10, this failure might be explained by the length of the denationalisation and inheritance proceedings (see paragraphs 223 and 232 above); this, however, does not apply to the other applicants who, in the Court’s opinion, have not provided any convincing explanation capable of justifying their omission.
210. Moreover, it cannot be overlooked that the domestic legal system was contemplating several measures other than the “third model” aimed at protecting vulnerable tenants. In particular, the first and second models of substitute privatisation were contemplating, respectively, a public financial reward for “previous owners” willing to sell their flats to former holders of occupancy rights (see paragraph 33 above) and compensation of up to 80 per cent of the administrative value of the dwelling for tenants who agreed to move out and purchase a flat or build a house (see paragraph 34 above). In addition to that, rent subsidies (up to 80 per cent of the non-profit rent) were available to tenants in financial difficulties, socially disadvantaged people could apply to obtain another non-profit rental dwelling (see paragraph 41 above) and special compensation (up to 74 per cent of the administrative value of the dwelling) and a subsidised loan were available to tenants who exercised their right to purchase another dwelling or build a house (see paragraph 42 above). Some of the applicants did obtain non-refundable sums and soft loans under these schemes (see paragraphs 241-251 below).
211. In the light of the above, the Court considers that in balancing the exceptionally difficult and socially sensitive issues involved in reconciling the conflicting interests of “previous owners” and tenants, the respondent State has ensured a distribution of the social and financial burden involved in the housing reform which has not exceeded its margin of appreciation.
212. Accordingly, even assuming it to be applicable to the facts of the present case, Article 1 of Protocol No. 1 has not been violated.
II. ALLEGED VIOLATION OF ARTICLE 8 OF THE CONVENTION
213. The applicants alleged that they had been deprived of their homes in breach of Article 8 of the Convention.
This provision reads as follows:
“1. Everyone has the right to respect for his private and family life, his home and his correspondence.
2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.”
214. The applicants basically relied on the same reasons put forward under Article 1 of Protocol No. 1. They argued that by losing their specially protected tenancy, they had been deprived not only of their property but also of their homes. The changes in the leases had further restricted their rights and the new entitlements of the “previous owners” had jeopardised their situation, especially as the non-profit rent had been rising to levels that many of them could hardly afford, exposing them to the risk of eviction for overdue rent. They complained about various forms of chicanery, intimidation and lawsuits on the part of the “previous owners”.
215. The applicants noted that both in 1991 (beginning of the housing reform) and in 1994 (date of Slovenia’s ratification of the Convention) the denationalised dwellings in which they resided constituted their “homes” and the homes of their families. When they and their families had moved into the dwellings and formed a home there, they had done so in good faith and trusting in the permanence and the transferability mortis causa of the occupancy right. At the time of Slovenia’s ratification of the Convention, the specially protected tenancy had already been transformed into a lease; however, this lease was transferable after death to family members, with a fixed ceiling of non-profit rent. “Previous owners” could terminate the lease only on regulated fault-based grounds. This legislation properly protected the Article 8 rights of the applicants and their families.
216. However, the subsequent evolution of the rules on occupancy and the increase in rents forced former holders of occupancy rights either to leave their existing homes or to stay there under worse terms. Indeed, their situation had significantly worsened in the following respects: (a) since 1996, “previous owners” could terminate the lease and evict the tenant if they provided him or her with another suitable dwelling (see paragraph 40 above); (b) since 1995 the structure and ceiling of the non-profit rent had changed in such a manner that it had risen to more than 600% of its initial value and every authority now had the power to arbitrarily raise the ceiling; (c) in 2003 new grounds for eviction had been added, including the ownership of another suitable dwelling, irrespective of whether it was empty and whether moving would entail a fundamental deterioration of the residents’ status (see paragraph 40 above); (d) since 2005 mortis causa transferability of the lease to family members had de facto been excluded (see paragraphs 68-70 above); (e) the “previous owner” was given the right to enter the dwelling twice a year and refusal of entry became a ground for eviction (see paragraph 23 above); (f) in general, there was an essentially limited possibility of freely founding a family home in existing housing, there were limitations on the possibility of using and arranging the dwelling in conformity with one’s own needs and wishes, and a threat of eviction was established, causing permanent distress. The applicants argued that the guarantees afforded by Article 8 should not be understood as only covering the right to a dwelling, but as protecting the status of an individual in his or her existing home.
217. The leasing relationship imposed by the State was unbearable not only for the former holders of occupancy rights but also for the “previous owners”, who were limited in their disposal of the returned real estate. This created personal and judicial disputes as “previous owners” massively and understandably used all legal possibilities to evict the former holders of occupancy rights and their families. Under these circumstances, the latter tried to solve their housing problem by moving out of their existing dwellings. The situation had become so unbearable that moving became a lesser evil than staying in the dwelling.
218. The case of Sorić v. Croatia, cited by the Government (paragraph 233 below), was different from the present case in that it concerned a tenant of a private dwelling who had been a tenant ab initio (and not a former holder of specially protected tenancy). The Court had held that even if eviction had not been executed, the threat of eviction was a measure relevant within the meaning of Article 8 of the Convention ( Larkos, cited above, § 28). The same should apply to all actions imputable to the State that effectively limited the protection and free use of an existing home.
219. The applicants considered that the interference with their right to respect for their home was not lawful, for the same reasons put forward under Article 1 of Protocol No. 1 (paragraph 141 above).
220. The Government essentially argued that the measures complained of were aimed at protecting the “previous owners”. The applicants could accept that this was a legitimate aim. However, they alleged that the measures in issue were not “necessary in a democratic society”. In this connection, they recalled that when a “home” was established lawfully, this factor would weigh against the legitimacy of requiring the individual to move. Moreover, removal of an applicant from his or her home was more serious where no suitable alternative existed; the more suitable the alternative accommodation, the less serious the interference with the existing accommodation. The evaluation of the suitability of the alternative accommodation would also involve consideration of the particular needs of the person concerned (see Coster v. the United Kingdom [GC], no. 24876/94, §§ 116-118, 18 January 2001).
221. In the present case, there was no “pressing social need” to reduce the legal protection of former holders of specially protected tenancy. In its case-law, the Court accepted a number of limitations of landlords’ rights which were aimed at ensuring the social protection of tenants. Slovenia, on the other hand, had enacted a number of measures in order to provide “previous owners” with stronger protection than was required under the Convention. Moreover, the interferences complained of were not proportionate to the legitimate aim pursued (the protection of the “previous owners”), especially after the abolition of the “third model”.
(b) Remarks concerning the individual applicants
222. The applicants provided the following details, in particular, about their individual situations.
223. Applicant no. 1 (Mrs Cornelia Berger-Krall) had been unable to reach an agreement on the reimbursement of investments with the “previous owners”; an administrative authority had awarded her a little less than EUR 5,000 in this respect. As the denationalisation proceedings were still pending in November 1999, she had not been able to benefit from the “third model”; having no means to buy another dwelling on the free market, she had decided to stay in her existing dwelling on a contractual lease.
224. Applicant no. 2 (Mrs Ljudmila Berglez) considered that the Government’s observations on her case were, in substance, a copy of the arguments and allegations made before the domestic courts by the “previous owners”. She had inherited a specially protected tenancy from her late mother in 1991. The denationalisation decision of the Municipality of Maribor of 16 April 1993 stated, inter alia, that the “previous owners” had to conclude a lease contract with her. They never did so, but continued to charge rent. When applicant no. 2 was evicted in 2000, her lawyer had filed a lawsuit to have a lease contract drawn up; this legal action was dismissed as it had been filed against a “previous owner” who had died some months earlier. A new lawsuit was rejected in 2011 as time-barred and because applicant no. 2 had meanwhile received public financial assistance. Contrary to what the Government and the “previous owners” asserted, Mrs Berglez had never refused to sign a lease and the allegations of wrongful behaviour on her part (keeping flammable material, endangering other residents of the building, lack of maintenance of the flat) had never been proven. The Slovenian courts themselves had found that the forceful eviction of the applicant was an arbitrary and unlawful action. It was not true that the applicant had given false information to the Court. Mrs Berglez had inherited agricultural land of negligible value (approximately EUR 15,000) from her parents. Since her eviction in 2000, she had been living on the verge of poverty, moving to different flats rented on the free market and student rooms. Eleven years later the agricultural land she had inherited had been classified as building land, its value had shot up and Mrs Berglez had been able to sell it and buy a 65 m² flat in Maribor, which was worse and smaller than her previous home.
225. Because of the chicanery of the “previous owners”, in 1999 applicant no. 3 (Mrs Ivanka Bertoncelj) had decided to leave her dwelling and take advantage of the “third model”; however, this model had been repealed and Mrs Bertoncelj, who had no financial means, could not afford to purchase another dwelling on the free market. She had reached an agreement with the “previous owners” only to obtain reimbursement of her investments. Applicant no. 3 had gone through severe emotional distress and needed psychiatric help. Because of the pressures exerted on her, she had left her dwelling and settled in a flat that her daughter had purchased.
226. Applicant no. 4 (Mrs Slavica Jerančič) stressed that, as pointed out by the Government, the requests she was receiving from the “previous owners” lacked any foundation under national law; she had nevertheless been a victim of everyday chicanery and pressure which had led her to seek psychiatric help, and had finally decided to move out of her dwelling. The apartment in Kamnik of which she owned half was worse than her previous home; it was significantly smaller and was located in a totally new environment in a different town. Because of her age and the change of environment, Mrs Jerančič had started suffering from depression; she had tried to commit suicide and had been hospitalised for four months in a psychiatric clinic. Subsequently, from 2008 onwards, a friend who was aware of her problems had offered her the use of an empty flat in Ljubljana free of charge.
227. Applicant no. 5 (Mrs Ema Kugler) had not had any problems with the “previous owners” and had not seen any need to leave her dwelling. It was only the selling of her home to new owners that had triggered a number of disputes, while at the same time the “third model” had been abrogated. She had obtained the reimbursement of investments in the administratively determined amount of EUR 3,000.
228. Applicant no. 6 (Mr Primož Kuret) was not the original holder of the specially protected tenancy. The original holder was his late father, Mr Niko Kuret, who died on 25 January 1995 and with whom the applicant had been living. Until 2005 the right to purchase a returned dwelling and the right to a lease had been transferable mortis causa to close family members. After the death of his father, applicant no. 6 had wanted to remain in the premises and had accordingly insisted on signing a lease contract. At the end of 1999 he learned that the “third model” had been repealed and that he could no longer purchase a substitute dwelling on favourable conditions. However, after two favourable judgments, in 2005 the Supreme Court had reversed the existing case-law and decided that users of denationalised flats could not demand the continuation of a non-profit lease following the demise of the tenant (paragraph 68 above). This meant that Mr Niko Kuret’s family had unjustifiably used the dwelling for more than ten years and that the “previous owners” could require them to pay a market rent for that period (a claim which would amount to at least DEM 150,000 plus interest). If such a request had been filed, the applicant and his wife – who had two dependent children – would have gone bankrupt. In 2009 the Constitutional Court confirmed the new case-law of the Supreme Court, to the detriment of the applicant (paragraph 69 above). Under the circumstances, Mr Kuret chose the lesser evil of a friendly settlement with the “previous owner”. He vacated the premises and, being unable to afford a dwelling in the capital, he moved out of Ljubljana.
229. Applicant no. 7 (Mr Drago Logar) had been unable to contact the “previous owners”, and therefore had not known whether they wished to sell the dwelling. For this reason, he had been unable to take advantage of the “third model” before the end of 1999. After 2006 it became clear that the “previous owners” did not intend to sell and that they wished to evict Mr Logar. After a few years of dispute, the “previous owners” offered Mr Logar the reimbursement of his investments plus interest provided that he moved out of the dwelling. Mr Logar accepted this proposal and obtained a public financial contribution under the so-called “second model” of substitute privatisation.
230. Applicant no. 8 (Mrs Dunja Marguč) owned a flat in Piran, which was a holiday house. She explained that by a judgment of the Ljubljana District Court of 12 May 2009 (upheld by a higher court on 6 January 2010), she had been ordered to vacate the premises she was occupying in Ljubljana. Execution proceedings had started in the summer of 2010 and since then Mrs Marguč had been living in constant fear of being evicted from her home. Should this happen, she would have to choose between homelessness and moving to the flat in Piran, which would mean losing her job. She had needed psychiatric help.
231. Applicant no. 9 (Mr Dušan Milič) had been unable to benefit from the “third model” because the denationalisation proceedings concerning his dwelling had been pending until 2005. He had decided to move out two years later and to solve his housing problem elsewhere. Notwithstanding some savings and loans from acquaintances and relatives, Mr Milič could not afford to pay a substantial part of the purchase price of his new dwelling and had therefore not been able to enter it in the land register.
232. Applicant no. 10 (Mrs Dolores Zalar) had been unable to take advantage of the “third model” because until 1999 it had not been clear who the “previous owners” were (inheritance proceedings concerning the deceased denationalisation owners were still pending) and whether they wished to sell the dwelling. Subsequently, she had agreed with the “previous owners” that she would vacate the premises and that they would pay her EUR 50,000 for her investments. By severely sacrificing her own savings, obtaining a loan from a commercial bank (on more favourable terms than the State loan) and with the financial help of her daughter, Mrs Zalar had solved her housing problem by buying a property outside Ljubljana. This property was not composed of two separate residential buildings (as wrongly stated by the Government – paragraph 251 below), but of one building only, for which the total floor space and the internal surface had been recorded separately.
233. The Government stressed that Article 8 of the Convention did not include the right to buy a home, but only protected a person’s right to respect for his or her present home (see Sorić, decision cited above). As the SZ protected the legal status of former holders of occupancy rights, by guaranteeing them tenancy for an indefinite period and a non-profit rent, the applicants’ direct possession of the dwellings was not in any way disturbed by the impugned provisions. As the Constitutional Court pointed out, the holders of occupancy rights and their spouses and close family members had the right to continue to live in denationalised dwellings in conditions comparable to those in other European countries (paragraph 65 above).
234. For the applicants the SZ maintained all the entitlements provided for under the previous arrangement. The continuation of the non-profit tenancy by close family members of the former holder of the occupancy right was excluded (paragraph 69 above) as it would have placed an excessive burden on the “previous owners”. Ownership of another dwelling had also been a ground for termination of the lease under the previous regulation and it would have been disproportionate to impose a protected tenancy and a non-profit rent where the tenant had other suitable accommodation at his or her disposal.
235. Under the laws of the Socialist Republic of Slovenia there was no guarantee that the holder of the occupancy right would have been able to live in the same dwelling permanently or that the occupancy relationship would remain unchanged. Under Article 106 of SZ-1 (paragraph 40 above) the protection of the tenant was greater, as the “previous owner” could terminate the lease without justifiable reasons only once with the same tenant, and was obliged to provide him or her with another suitable dwelling. The legal notions of “suitable dwelling” and “justifiable reason” were meant to strike a fair balance between the general interest on the one hand and the protection of the tenant’s and “previous owner’s” rights on the other.
236. In response to the applicants’ submissions about the non-profit rent covering not only the actual rent plus maintenance costs on the dwelling but also the reimbursement of capital costs, thus allowing the “previous owners” to make a profit, and about the changes in the formula for calculating the non-profit rent to their detriment, the Government recalled the method for calculating the non-profit rent (paragraphs 79-86 above) and underlined that, as pointed out by the Constitutional Court, the national legislation was not supposed to guarantee the permanence and stability of non-profit rents. The dwelling’s value was determined administratively, which meant independently from its market value and, thanks to the legislative formula for calculating it, the non-profit rent had effectively remained unchanged throughout the relevant period. It did not guarantee a profit for the “previous owner”, but covered the cost of any loan or capital the “previous owner” invested in the renovation of the dwelling.
237. The Government objected that the applicants’ allegation of a 700% increase in the non-profit rent was incorrect. Even if it was true that the “point value” had increased, it should not be overlooked that the value of the point depended on the average cost of construction and the estimated average cost of serviced land, thus taking into account the movement of prices in the market. Otherwise, the non-profit rent would have had no connection with maintenance costs, which would then have had to be borne by the “previous owners”. As in the last twenty years economic standards, prices and salary levels had changed, it would be unrealistic to expect the non-profit rent to remain unchanged. Non-profit rents had increased from 1.88% of the value of the dwelling in 1990 to a maximum of 4.68% of the value of the dwelling by 2012. This increase represented a 148% increase in rents. As salaries had also increased, in 1990 the rent for an average two-room dwelling amounted to 7.30% of the average salary, while in 2012 it was 14.70% of it. This meant that rents had only increased by about 100% in real terms (and not by 700%). Furthermore, non-profit rents were substantially lower than market rents.
238. In view of the above, the Government considered that any purported interference with the applicants’ right to respect for their homes had been in accordance with the law, pursued a legitimate aim and was necessary in a democratic society. In fact, a fair balance had been struck between the applicants’ rights under Article 8 of the Convention and the rights of the “previous owners”, protected by Article 1 of Protocol No. 1.
(b) Remarks concerning the situation of individual applicants
239. According to the Government’s data, the current non-profit rents paid by the applicants (or which the applicants would be paying had they continued to live in the dwellings) were the following:
- Applicant no. 1 (Mrs Cornelia Berger-Krall): EUR 178.73 (EUR 1.73 per m²; estimated market rent: EUR 10 per m²);
- Applicant no. 2 (Mrs Ljudmila Berglez): EUR 204.09 (EUR 1.93 per m²; estimated market rent: EUR 6 per m²);
- Applicant no. 3 (Mrs Ivanka Bertoncelj): EUR 132.83 (EUR 1.17 per m²; estimated market rent: EUR 10 per m²);
- Applicant no. 4 (Mrs Slavica Jerančič): EUR 161.61 (EUR 1.42 per m²; estimated market rent: EUR 11 per m²);
- Applicant no. 5 (Mrs Ema Kugler): EUR 49.16 (EUR 1.13 per m²; estimated market rent: EUR 11 per m²);
- Applicant no. 6 (Mr Primož Kuret): EUR 149.12 (EUR 1.75 per m²; estimated market rent: EUR 10 per m²);
- Applicant no. 7 (Mr Drago Logar): EUR 280.78 (EUR 1.87 per m²; estimated market rent: EUR 11 per m²);
- Applicant no. 8 (Mrs Dunja Marguč): EUR 154.85 (EUR 1.32 per m²; estimated market rent: EUR 10 per m²);
- Applicant no. 9 (Mr Dušan Milič): EUR 229.67 (EUR 3.33 per m²; estimated market rent: EUR 10 per m²);
- Applicant no. 10 (Mrs Dolores Zalar): EUR 170.93 (EUR 1.41 per m²; estimated market rent: EUR 11 per m²).
240. Former holders of occupancy rights who found themselves in financial difficulty could apply for rent subsidies or the allocation of another non-profit dwelling; however, none of the applicants had applied for such benefits and none of them – with the exception of applicant no. 2 (Mrs Ljudmila Berglez) – had ever been recipients of welfare benefits. If they considered that their non-profit rent had not been calculated in accordance with the law, the applicants could have requested a review of its level and – if need be – a reduction of the rent and the repayment of overpaid rent.
241. The Government further observed that it was not established that applicant no. 1 (Mrs Cornelia Berger-Krall) had ever requested the “previous owners” to remedy defects in the dwelling. Moreover, she had failed to institute judicial proceedings requesting the “previous owners” to carry out maintenance work (Section 92 of SZ) in order to make the dwelling suitable for normal use. In a decision of 29 November 2010 the Ljubljana Court had ordered the said “previous owners” to pay applicant no. 1 compensation for the investments she had made in the dwelling. Lastly, the husband of applicant no. 1 was the owner of a vineyard cottage and the co-owner of a 91 m² residential building. As a family member of applicant no. 1 owned property suitable for occupation, the applicant was no longer entitled to “protected tenant” status.
242. In response to the allegation of applicant no. 2 (Mrs Ljudmila Berglez) that on 8 September 2000 the “previous owners” had broken into her dwelling and emptied it while she was away, the Government noted that the “previous owners” had an interim eviction order to carry out urgent maintenance work requested by the Environment and Spatial Planning Inspectorate. Applicant no. 2 was using the dwelling in a way that was putting other residents in the building at risk, notably by keeping flammable materials in the attic. Mrs Berglez, who according to the Government had on several occasions been offered the keys of the place where her furniture was being held, had lodged an action for trespassing; in 2007 the Maribor Higher Court upheld her claim and on 25 August 2008 the Maribor Local Court issued an enforcement order which at the time of introduction of the application had not yet been complied with, as the “previous owners” had objected that in 2000 applicant no. 2 did not have any right to be living in the dwelling. Applicant no. 2 alleged that because of the behaviour of the “previous owners”, since September 2000 she had been forced to rent alternative accommodation, a fact which had placed her in financial difficulties. The Government could confirm that applicant no. 2 had never concluded a lease contract with the provisional public owner and had thus never become a protected tenant; her use of the dwelling had been unlawful or not based on a legal title. The two actions filed by Mrs Berglez to force the “previous owners” to sign a lease contract had failed on procedural grounds and because applicant no. 2 had purchased a two-room dwelling in Maribor in the meantime (on 26 November 2010) and had thus resolved her housing issue. The Government further noted that applicant no. 2 had been receiving welfare benefits, that she had inherited a large estate from her father, that on 16 May 2011 she had obtained the non-refundable sum of EUR 38,752.08 and that she had been granted a soft loan of EUR 28,774.92 by the National Housing Fund, which she did not use to buy the two-room dwelling in Maribor.
243. In their observations of 13 July 2012, the Government provided additional information concerning the circumstances of applicant no. 2. They noted that she had purchased a dwelling worth EUR 65,000; as she had received only EUR 38,752.08 from the State, it could be deduced that the land she had inherited had been sold for more than its estimated value (EUR 15,000). Three of the plots were building sites; therefore, the applicant’s allegation that the inherited property consisted only of agricultural land of the poorest quality was false. The new dwelling was acquired on 26 November 2006, while the State financial support was not transferred to the applicant’s account until 16 May 2011. As Mrs Berglez did not indicate that she had obtained a loan, it could be inferred that she had sufficient financial means to purchase the dwelling. Finally, it was worth noting that in 1993 the manager of the building had started proceedings against applicant no. 2 for non-payment of rent between April and September 1992, which was a ground for terminating the tenancy relationship.
244. The Government further responded as follows to the allegations of applicants nos. 3, 4, 5, 6, 7, 8, 9 and 10. Applicant no. 3 (Mrs Ivanka Bertoncelj) alleged that the dwelling had been completely renovated by her husband three times, in 1958, 1969 and 1984. The “previous owner” had allegedly exerted pressure on applicant no. 3 – through her lawyer and by hiring detectives – to get her to move out of the dwelling, and had refused to authorise repairs. The “previous owner” had eventually filed a lawsuit against applicant no. 3, which was rejected on formal grounds (the “previous owners” had already sold the dwelling and therefore had lost legal interest in the case). The new owners subsequently requested the termination of the lease, claiming that they needed the dwelling for their son and his family. These proceedings ended with a court settlement in 2005. Applicant no. 3 vacated the premises and waived all her claims for the recovery of investments; in exchange, she received compensation in the amount of EUR 100,000. Mrs Bertoncelj allegedly later discovered that she had been deceived by the buyers: the dwelling was not for use by their son, but had been connected to their own flat. The Government observed that Mrs Bertoncelj had never started proceedings with a view to having maintenance work done and normal living conditions restored in the dwelling, nor had she introduced an action for trespassing or obstructive conduct. Lastly, applicant no. 3 had never received any welfare benefits and had failed to apply for a subsidised non-profit rent.
245. Applicant no. 4 (Mrs Slavica Jerančič) alleged that the dwelling needed renovation and that the new owner who had bought the property was inspecting the dwelling twice a year, had asked her to pay a normal rent and to put certain deficiencies right and had threatened her with lawsuits. The pressure exerted by the owner was such that Mrs Jerančič had eventually vacated the premises. The Government observed that tenants in denationalised dwellings were protected by the legislation from payment of an excessive rent and that alleged inadequate use of the dwelling did not constitute a ground for termination of the lease. In any event, no such lawsuits had been filed by the owner against applicant no. 4. The applicant was the co-owner of an 83 m² dwelling in Kamnik built in 2006 and suitable for living in. Finally, applicant no. 4 had never received any welfare benefits and had failed to apply for a subsidised non-profit rent; she had never submitted a claim for the reimbursement of investments made in the dwelling.
246. Applicant no. 5 (Mrs Ema Kugler) complained about the poor condition of the dwelling and about the conduct of a new owner who had bought part of the building in 1999 and started construction work and asked Mrs Kugler to move out. The Government observed that in its decision of 14 January 2002 the Environment and Spatial Planning Inspectorate noted that Mrs Kugler had failed to prove her eligibility to use some common areas in which the work had been done. Moreover, the applicant had not lodged an action for trespassing against the owner, or an action to put an end to the disturbances allegedly caused by the work. The work had ended, at the latest, by the middle of 2003, which was more than six months before the introduction of the application before the Court (15 March 2004). Two lawsuits lodged by the owner to force applicant no. 5 to vacate the premises (on the basis of the invalidity of the lease agreement, non-payment of the rent and the housing needs of the owner) were unsuccessful. These proceedings lasted respectively one year and five months and two years and two months at two levels of jurisdiction. Lastly, applicant no. 5 had never received any welfare benefits and had failed to apply for a subsidised non-profit rent; the “previous owners” had had to pay her compensation for the investments made in the dwelling.
247. Applicant no. 6 (Mr Primož Kuret) had filed an action against the “previous owner” of the dwelling to secure a lease for a non-profit rent. The Supreme Court dismissed the action, considering that the rent should be a normal market rent (paragraph 68 above). On 17 March 2006 Mr Kuret struck an agreement with the “previous owner”; however, the increased rent and the legal costs had allegedly become unbearable, and applicant no. 6 and his family had left the building in July 2006. The Government argued that applicant no. 6 had lost his victim status by entering into an agreement with the “previous owner” which explicitly and conclusively settled all the issues between them (paragraph 77 above). Moreover, applicant no. 6 had never received any welfare benefits and had failed to request a subsidised non-profit rent.
248. Applicant no. 7 (Mr Drago Logar) alleged that he had completely renovated the dwelling; in June 1994, he was informed that the dwelling had been returned to “previous owners”. From that date until 2006 he had no contact with the “previous owners” and the bills for payment of the non-profit rent stopped coming. As a result, he stopped paying the rent but continued to carry out ordinary maintenance of the dwelling. In April 2006 the “previous owners” asked applicant no. 7 to vacate the dwelling, but no such claim was registered in the Ljubljana District Court. The Government observed that Mr Logar never requested to purchase a substitute dwelling; he never applied for subsidies for non-profit rent, but on 27 October 2011 he received the non-refundable sum of EUR 53,276.42, and he was granted a soft loan of EUR 89,223.57 by the National Housing Fund. Without using this loan, Mr Logar purchased a dwelling of 82 m² in Ljubljana. Finally, by a decision of 7 March 2011, the Ljubljana Administrative Unit ordered the “previous owners” to pay the applicant compensation for the investments in the dwelling.
249. Applicant no. 8 (Mrs Dunja Marguč) and her husband bought a holiday home of about 50 m² in Piran. The “previous owner” of the dwelling she was occupying in Ljubljana then started proceedings for the termination of the lease, on the ground that Mrs Marguč possessed another adequate dwelling. Applicant no. 8 challenged this action, alleging that the holiday home had no heating and no thermal insulation, and was therefore not adequate for living during the winter season. The first-instance court allowed the claim of the “previous owner” and rescinded the lease; it held, in particular, that the Piran home’s shortcomings were the result of Mrs Marguč’s subjective decisions and could easily be overcome by installing insulation and heating. The first-instance court also took into account the fact that the applicant and her husband were employed and that the home in Piran was above-standard property by reason of its elite location. The proceedings were currently pending before the Supreme Court. Applicant no. 8 had never received any financial assistance and had not applied for a subsidised non-profit rent; she had submitted a claim for the reimbursement of investments in the dwelling, but had failed to follow it up.
250. Applicant no. 9 (Mr Dušan Milič) had failed to substantiate his allegations of “daily harassment” by the “previous owners” of the dwelling. Moreover, he was unsuccessful in his claim that the building in which he was living had been built in 1987 and therefore could not have been confiscated from the legal predecessor: it appeared from the Ljubljana Local Court’s judgment of 11 June 2002 that the building in question, confiscated in 1949, had only been renovated – and not newly built – in 1987. The “previous owners” were also ordered to pay SIT 400,000 (approximately EUR 1,670) to applicant no. 9, representing the revaluation of the 20% participation paid by Mr Milič for the acquisition of the occupancy right. Lastly, on 28 June 2007 he had obtained the non-refundable sum of EUR 45,975.98.
251. Applicant no. 10 (Mrs Dolores Zalar) had failed to establish that she had filed two actions against the “previous owners”: one for failure to maintain the dwelling and the other for the establishment of her right to continue to reside there (this latter action was not necessary, as the change in ownership had no effect on her rights as a tenant). Having paid the non-profit rent to the custodian of the denationalised property, applicant no. 10 could easily have defended herself against further potential financial claims from the “previous owners”. At Mrs Zalar’s request, the Environment and Spatial Planning Inspectorate ordered the “previous owners” to replace the windows of the dwelling. Applicant no. 10 could have used the same procedure to solve the problems of poor maintenance of the chimney and the roof. She had never applied for subsidies for non-profit rent, but on 27 October 2011 she had received the non-refundable sum of EUR 32,262.99 and was granted a soft loan of EUR 72,737.02 by the National Housing Fund. Without using this loan, Mrs Zalar had purchased two pieces of residential property (one measuring 84 m² and the other 148 m²); she had also filed a claim for the recovery of the investments in the dwelling she was occupying, but had later withdrawn it.
252. The IUT observed that the applicants should have enjoyed protection under Article 8 of the Convention. However, they had been deprived of their rights in relation to existing housing in a way which was incompatible with that provision.
1. The applicants’ victim status
253. In its decision of 28 May 2013 on the admissibility of the application (paragraph 263), the Court specified that at the merits stage it would address the question of whether those applicants who voluntarily vacated the premises could still claim to be “victims”, under Article 34 of the Convention, of the facts complained of under Article 8 of the Convention.
254. In this connection, the Court reiterates that once an eviction order has been issued it amounts to an interference with the right to respect for the home, irrespective of whether it has yet been executed (see Ćosić v. Croatia, no. 28261/06, § 18, 15 January 2009, and Gladysheva v. Russia, no. 7097/10, § 91, 6 December 2011; see also, mutatis mutandis, Stanková v. Slovakia, no. 7205/02, § 57, 9 October 2007). By way of contrast, an applicant who moved out of the apartment without any steps having been taken with a view to evicting him or her cannot claim to be a victim of an alleged breach of his or her right to respect for the home (see, mutatis mutandis, Liepājnieks, decision cited above, §§ 88 and 109).
255. In the present case, according to the information submitted by the applicants and the Government (see paragraphs 225, 226, 229, 231, 232, 244, 245, 248 and 251 above), five applicants, namely nos. 3 (Mrs Ivanka Bertoncelj), 4 (Mrs Slavica Jerančič), 7 (Mr Drago Logar), 9 (Mr Dušan Milič) and 10 (Mrs Dolores Zalar) voluntarily vacated the premises before any eviction order was issued. Under these circumstances, and notwithstanding their allegations that pressure had been exerted by the “previous owners”, the Court considers that these applicants lack victim status within the meaning of Article 34 of the Convention.
256. By contrast, applicant no. 2 (Mrs Ljudmila Berglez) was evicted in 2000 (see paragraph 224 above) and an eviction order was issued against applicant no. 8 (Mrs Dunja Marguč) in May 2009 (see paragraphs 230 and 249 above). These applicants can therefore claim to be “victims” of the alleged violation of their right to respect for their homes. The same applies to applicant no. 6 (Mr Primož Kuret); although no formal eviction order seems to have been issued against him, he decided to vacate the flat he was occupying in Ljubljana only when the judgment given by the Supreme Court made it clear that he was not entitled to continue the lease contract signed by his late father and thus had no title to occupy the premises (see paragraphs 228 and 247 above).
257. According to the information available to the Court (see paragraphs 223 and 246 above), the two remaining applicants, nos. 1 (Mrs Cornelia Berger-Krall) and 5 (Mrs Ema Kugler), are still occupying their dwellings on the basis of a contractual lease. No eviction order has been issued against them and they essentially confined themselves to alleging a “risk of eviction”.
258. The Court reiterates that Article 34 of the Convention “requires that an individual applicant should claim to have been actually affected by the violation he or she alleges. It does not institute for individuals a kind of actio popularis for the interpretation of the Convention; it does not permit individuals to complain against a law in abstracto simply because they feel it contravenes the Convention. In principle, it does not suffice for an individual applicant to claim that the mere existence of a law violates his rights under the Convention; it is necessary that the law should have been applied to his detriment” (see Klass and Others v. Germany, 6 September 1978, § 33, Series A no. 28). This principle also applies to decisions that are allegedly contrary to the Convention (see Fairfield v. the United Kingdom (dec.), no. 24790/04, ECHR 2005-VI). Moreover, the exercise of the right of individual petition cannot be used to prevent a potential violation of the Convention: in theory, the Court cannot examine a violation other than a posteriori, once that violation has occurred. It is only in highly exceptional circumstances that an applicant may nevertheless claim to be a victim of a violation of the Convention owing to the risk of a future violation (see, for instance, Association for European Integration and Human Rights and Ekimdzhiev v. Bulgaria, no. 62540/00, §§ 58-62, 28 June 2007, and Noël Narvii Tauira and 18 Others v. France, application no. 28204/95, Commission decision of 4 December 1995, Decisions and Reports (DR) 83-B, p. 112).
259. In the present case, in the absence of any formal decision from a public body ordering the eviction of applicants nos. 1 and 5, the Court considers that a purely hypothetical and future risk that such a decision may be adopted is not sufficient to confer victim status on the said applicants within the meaning of Article 34 of the Convention. In this connection, it is also worth noting that according to the information submitted by the Government (see paragraph 246 above) and not contested by the applicants, the two lawsuits lodged by the “previous owner” to evict Mrs Kugler were unsuccessful.
260. In the light of the above, the Court considers that the complaints of applicants nos. 1 (Mrs Cornelia Berger-Krall), 3 (Mrs Ivanka Bertoncelj), 4 (Mrs Slavica Jerančič), 5 (Mrs Ema Kugler), 7 (Mr Drago Logar), 9 (Mr Dušan Milič) and 10 (Mrs Dolores Zalar) are 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.
261. It remains to be ascertained whether the Article 8 rights of the remaining applicants (nos. 2, 6 and 8 – Mrs Ljudmila Berglez, Mr Primož Kuret and Mrs Dunja Marguč) have been violated in the present case.
2. Whether there was interference with the right to respect for the home
262. The Court recalls that in its decision of 28 May 2013 on the admissibility of the application (paragraph 149), it considered that in so far as the Government referred to the particular circumstances of individual applicants (notably, their entitlement to occupy the flats they live in, their ownership of other real estate, their financial situation and/or the financial grants received by them – see paragraphs 242, 243, 247 and 249 above), these issues were relevant considerations in assessing whether there was interference with the applicants’ rights under Article 1 of Protocol No. 1 and Article 8 of the Convention and, in the affirmative, whether this interference was proportionate and necessary in a democratic society.
263. The Court first notes that disputes have arisen as to the entitlement of applicants nos. 2 (Mrs Ljudmila Berglez) and 6 (Mr Primož Kuret) to occupy the premises. In the case of Mrs Berglez, no formal lease agreement was signed with the “previous owners”; the parties disagree as to the reasons for this (see paragraphs 224 and 242 above). In any event, the Court observes that Mrs Berglez obtained a specially protected tenancy from her late mother in 1991 and that she continued to live in the dwelling and to pay rent until 2000, when she was evicted (see paragraph 224 above). It was only some ten years later that, allegedly because of the increase in value of land she had inherited, she was able to purchase a 65 m² flat in Maribor (see paragraphs 224 and 243 above). Under these circumstances, the Court considers that the eviction order interfered with her right to respect for her home.
264. As to Mr Kuret, even after his late father’s demise on 25 January 1995 he had continued to reside in the flat in respect of which his father had held a specially protected tenancy (see paragraph 228 above). Until 2005 the existing case-law allowed the transferability mortis causa of occupancy rights to cohabiting close family members (see paragraphs 68 and 228 above). The Court is accordingly of the opinion that the applicant had a legitimate expectation of signing a lease agreement with the “previous owners”. Not until April 2005, when that expectation was frustrated by a reversal of case-law (see paragraph 68 above), did Mr Kuret – also in order to avoid the risk of being asked to pay arrears of rent at the free-market rate – envisage reaching a friendly settlement with the “previous owner” and resolve his housing needs by moving out of Ljubljana (see paragraph 228 in fine, above). Under these circumstances, the Court is of the opinion that the decision of the Supreme Court of 21 April 2005 interfered with Mr Kuret’s right to respect for his home.
265. Lastly, an eviction order was issued against applicant no. 8 (Mrs Dunja Marguč) because she owned another adequate dwelling in Piran (see paragraphs 230 and 249 above). Even though, according to the information available to the Court, the said order has not yet been enforced, its execution would oblige Mrs Marguč to vacate the premises in which she has been living for several years and to move outside the city where she works. The issuing of the order has therefore interfered with her right to respect for her home.
266. As to the assets and financial situation of applicants nos. 2, 6 and 8, the Court is of the opinion that these elements should be taken into account in the evaluation of the proportionality of the interference.
3. Whether the interference was justified
(a) Whether the interference was lawful and pursued legitimate aims
267. Interference with the right to respect for the home would be contrary to Article 8 of the Convention, unless it was in accordance with the law, pursued one or more legitimate aims and was “necessary in a democratic society”. As far as the first two requirements are concerned, the Court cannot but reiterate the conclusions reached under Article 1 of Protocol No. 1 of the Convention, notably that the suppression of the specially protected tenancies and their replacement with normal lease contracts had a valid legal basis in domestic law (see paragraph 191 above) and that the interference with the applicants’ rights pursued a legitimate aim, namely the protection of the rights of others (see paragraphs 194 above).
(b) Whether the interference was “necessary in a democratic society”
268. In assessing whether the interference was “necessary in a democratic society”, the Court will have to examine whether it answered a “pressing social need” and, in particular, whether it was proportionate to the legitimate aims pursued. It has previously held that the margin of appreciation in housing matters is narrower when it comes to the rights guaranteed by Article 8 compared with those in Article 1 of Protocol No. 1, regard being had to the central importance of Article 8 to the individual’s identity, self-determination, physical and moral integrity, maintenance of relationships with others and settled and secure place in the community (see Connors v. the United Kingdom, no. 66746/01, §§ 81–84, 27 May 2004; Orlić v. Croatia, no. 48833/07, §§ 63-70, 21 June 2011; and Gladysheva, cited above, § 93).
269. It must be recalled that the requirement of necessity in a democratic society under paragraph 2 of Article 8 raises a question of procedure as well as one of substance. The Court set out the relevant principles in assessing the necessity of an interference with the right to respect for the “home” in the case of Connors (cited above, §§ 81-83) which concerned summary possession proceedings. The relevant passage reads as follows:
“81. An interference will be considered ‘necessary in a democratic society’ for a legitimate aim if it answers a ‘pressing social need’ and, in particular, if it is proportionate to the legitimate aim pursued. While it is for the national authorities to make the initial assessment of necessity, the final evaluation as to whether the reasons cited for the interference are relevant and sufficient remains subject to review by the Court for conformity with the requirements of the Convention ...
82. In this regard, a margin of appreciation must, inevitably, be left to the national authorities, who by reason of their direct and continuous contact with the vital forces of their countries are in principle better placed than an international court to evaluate local needs and conditions. This margin will vary according to the nature of the Convention right in issue, its importance for the individual and the nature of the activities restricted, as well as the nature of the aim pursued by the restrictions. The margin will tend to be narrower where the right at stake is crucial to the individual’s effective enjoyment of intimate or key rights ... On the other hand, in spheres involving the application of social or economic policies, there is authority that the margin of appreciation is wide, as in the planning context where the Court has found that ‘[i]n so far as the exercise of discretion involving a multitude of local factors is inherent in the choice and implementation of planning policies, the national authorities in principle enjoy a wide margin of appreciation’ ... The Court has also stated that in spheres such as housing, which play a central role in the welfare and economic policies of modern societies, it will respect the legislature’s judgment as to what is in the general interest unless that judgment is manifestly without reasonable foundation ... It may be noted however that this was in the context of Article 1 of Protocol No. 1, not Article 8 which concerns rights of central importance to the individual’s identity, self-determination, physical and moral integrity, maintenance of relationships with others and a settled and secure place in the community ... Where general social and economic policy considerations have arisen in the context of Article 8 itself, the scope of the margin of appreciation depends on the context of the case, with particular significance attaching to the extent of the intrusion into the personal sphere of the applicant ...
83. The procedural safeguards available to the individual will be especially material in determining whether the respondent State has, when fixing the regulatory framework, remained within its margin of appreciation. In particular, the Court must examine whether the decision-making process leading to measures of interference was fair and such as to afford due respect to the interests safeguarded to the individual by Article 8 ...”
270. In the case of Ćosić (cited above, §§ 21-23), the Court reiterated that a person at risk of losing his or her home should in principle be able to have the proportionality and reasonableness of the measure determined by an independent tribunal in the light of the relevant principles under Article 8 of the Convention, notwithstanding that, under domestic law, his or her right of occupation had come to an end (see also McCann v. the United Kingdom, no. 19009/04, § 50, 13 May 2008). It subsequently concluded that the applicant in the Ćosić case was not afforded such an opportunity, as the national courts had confined themselves to finding that occupation by the applicant was without legal basis, without making any further analysis as to the proportionality of the measure to be applied against her (see also Paulić v. Croatia, no. 3572/06, 22 October 2009). The Court reached similar conclusions in the case of Gladysheva (cited above, §§ 94-97), in which the domestic authorities made no analysis of the proportionality of the applicant’s eviction from the flat they declared to be State-owned and made it clear that they would not contribute to the solution of her housing needs.
271. By contrast, in the case of Galović v. Croatia ((dec.), no. 54388/09, 5 March 2013) the Court rejected a claim under Article 8 brought by a former holder of a specially protected tenancy who had been evicted from the dwelling by the owner. The Court underlined that the applicant’s son and daughter-in-law – with whom she lived in the flat in issue – had a 120 m 2 house and a 74 m 2 flat respectively and could therefore meet her and their own housing needs much easier than the owner of the flat could meet the housing needs of his two adults sons, with whom he and his wife lived in a 65.82 m 2 flat.
272. The considerations which led the Court to find that the applicants’ rights under Article 1 of Protocol No. 1 had not been violated allow it to reach the same conclusion under Article 8 of the Convention in respect of applicants nos. 2 (Mrs Ljudmila Berglez), 6 (Mr Primož Kuret) and 8 (Mrs Dunja Marguč) (see, mutatis mutandis, Zeno and Others v. Italy, no. 1772/06, 27 April 2010). It observes, in particular, that the applicants were afforded the possibility of concluding leases of an indefinite duration, transmitting them to their spouses or long term partners and occupying the premises for a non-profit rent. As noted above, the data submitted by the Government, and not contested by the applicants, show that these rents were significantly lower than free-market rents and none of the applicants has submitted evidence showing that they could not afford the rent. In any event, public subsidies were available under domestic law for socially or financially disadvantaged tenants (see paragraph 41 above).
273. As to the fault-based grounds for eviction introduced by the Housing Act 1991 (see paragraph 21 above), they were essentially similar to those traditionally contained in lease agreements in other Member States and cannot, as such, be considered incompatible with Article 8 of the Convention. It is true that the Housing Act 2003 introduced a new ground for eviction – namely ownership of another suitable dwelling – and the possibility for the “previous owner” to move the tenant to another adequate flat at any time and without any reason. The Court considers, however, that these legislative measures were justified in view of the special, reinforced protection which was afforded to persons in the applicants’ situation and the corresponding limitations placed on the rights of the “previous owners”. Upon obtaining restitution of the property, the latter were obliged to enter into a permanent, lifelong agreement with a tenant they did not choose and in exchange for a particularly low rent. It was therefore not disproportionate to offer them the possibility of moving the tenant to another adequate flat. In this regard, the Court notes that the removal costs were borne by the “previous owner” and that the same tenant could be made to move only once (see paragraph 40 above). Moreover, as the rules governing the lease agreement were aimed at protecting vulnerable tenants, it was not arbitrary to provide for the possibility of eviction when, as in the case of Mrs Marguč, ownership of another suitable dwelling showed that a given tenant was not in a situation of social or financial distress and that his or her housing needs could be satisfied elsewhere without limiting the “previous owner’s” property rights. In any event, as noted above, the Court has already considered compatible with Article 8 an eviction order justified by the fact that members of the tenant’s household owned other real estate (see Galović, decision cited above).
274. The same considerations apply to the change of case-law by which, to the detriment of Mr Kuret, the Supreme Court and the Constitutional Court excluded the transmissibility of the right to a lease for a non-profit rent mortis causa to close family members (see paragraphs 68 and 69). The Court considers that the new rule resulting from the decisions of the Slovenian judicial authorities was aimed at ensuring a fair balance between the protection of the rights of the tenants on the one hand and those of the “previous owners” on the other. In particular, the latter’s ability to obtain any profit from their real estate would have been frustrated for a significant and potentially excessive length of time had they been prevented from imposing market rents not only on the former holder of the specially protected tenancy, but also, after his or her demise, on his or her close family members (see also the similar arguments developed by the Court under Article 1 of Protocol No. 1 in paragraph 206 above).
275. As to the procedural guarantees enjoyed by the applicants, it is not contested that they had a possibility of challenging any eviction order before the competent domestic courts, which had jurisdiction over all related questions of fact and law. This is particularly relevant to the case of Mrs Berglez, in which the domestic courts were able to assess whether she was performing prohibited activities in the dwelling (see paragraphs 224 and 242 above) and whether the failure to sign a lease agreement was her fault or that of the “previous owners”. The same applies to any possible act of intimidation and chicanery on the part of a “previous owner” against a former protected tenant.
276. In the light of the above, the Court considers that the interference with the right of applicants nos. 2 (Mrs Ljudmila Berglez), 6 (Mr Primož Kuret) and 8 (Mrs Dunja Marguč) to respect for their home was “necessary in a democratic society” within the meaning of the second paragraph of Article 8 of the Convention. There has therefore been no violation of this provision.
III. ALLEGED VIOLATION OF ARTICLE 14 OF THE CONVENTION, TAKEN IN CONJUNCTION WITH ARTICLE 1 OF PROTOCOL NO. 1
277. The applicants alleged that they had been discriminated against vis-à-vis bona fide buyers of nationalised dwellings and other previous holders of specially protected tenancies. They relied on Article 14 of the Convention, taken in conjunction with Article 1 of Protocol No. 1.
Article 14 of the Convention reads as follows:
“The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”
278. The applicants argued that, as tenants of nationalised flats, they had been deprived of the right to purchase their dwellings, unlike all those previous holders of specially protected tenancies who had been living in dwellings not subject to restitution. In addition, even though they had a right akin to a property right, they were treated differently from bona fide buyers of nationalised dwellings, who could not be compelled to restitute their properties.
279. Moreover, unlike other previous holders of specially protected tenancies, the applicants could no longer purchase a substitute dwelling because of practical and legal obstacles. They complained about the Constitutional Court’s decision of 25 November 1999 repealing the “third model” of substitute privatisation (see paragraph 37 above).
280. The applicants reiterated their submissions according to which the specially protected tenancy and the right to purchase under the “third model” were “possessions” (of which they had been deprived) within the meaning of Article 1 of Protocol No. 1 (see paragraphs 129-133 above). Article 14 of the Convention was therefore applicable in conjunction with that provision.
281. Under the “third model”, in force at the time of Slovenia’s ratification of the Convention, the difference between specially protected tenancy holders occupying dwellings acquired by social solidarity means and those who, like the applicants, lived in denationalised dwellings lay not in whether they had a right to purchase, but in whether they were able to realise that right over an existing dwelling or over a substitute dwelling. It was only with the abolition of the “third model” in November 1999 that the holders of occupancy rights in denationalised dwellings, unlike other specially protected tenancy holders, were deprived of the right to purchase.
282. In the applicants’ view, this difference in treatment had no objective and reasonable justification. They observed that all holders of occupancy rights had been deprived of their specially protected tenancy and that this deprivation required compensation, irrespective of whether the dwelling had been acquired by social solidarity means or had once been expropriated. Indeed, both kinds of dwellings were equally socially-owned property. Moreover, the right to purchase under the “third model” was not connected to the existing dwelling: it could also be exercised over another (substitute) dwelling. In the applicants’ view, this proved that the essence of the right to purchase did not derive from the dwelling itself and from its characteristics, but from the status of holder of a specially protected tenancy. The right to purchase continued to exist if the dwellings were not denationalised.
283. The applicants also believed, for the same reasons enumerated under Article 1 of Protocol No. 1 (see paragraphs 142-144 above), that the difference in treatment complained of did not pursue a legitimate aim in the public interest. The Constitutional Court’s reasoning could only be understood to mean that former specially protected tenancy holders residing in denationalised dwellings were less worthy than other former holders of occupancy rights. As persons in the applicants’ situation had to bear an excessive burden, there had not been a reasonable relationship of proportionality between the means employed and the aim sought to be realised. After the repeal of the “third model”, the burden of the denationalisation process was no longer carried by the State or the municipalities.
284. The applicants lastly emphasised that the European Committee of Social Rights had found a violation of the discrimination clause (Article E) contained in the Revised European Social Charter (see paragraphs 97 and 100 above).
285. The Government first maintained that, as the applicants’ claims were incompatible ratione materiae with the provisions of Article 1 of Protocol No. 1 (see paragraphs 119-128 above), Article 14 of the Convention was not applicable. This concerned, in particular, the right to purchase a dwelling, as the right to acquire property was not guaranteed by Article 1 of Protocol No. 1.
286. They further observed that with regard to the privatisation of dwellings the SZ rightly established two legal regimes: one for socially-owned dwellings acquired through solidarity and mutual housing funds and one for socially-owned dwellings that became general national property through nationalisation. The latter category included formerly privately-owned housing units, in respect of which the right of a denationalisation claimant excluded the right of the occupancy right holder to acquire the same property in kind. Only for the first category of dwellings was it possible to confer on the occupancy right holders a right of pre-emption, which was the right to purchase the property at a discount amounting to 30 per cent of its value, less the amount of own participation still not refunded and the value of own investments, which were reflected in the increased value of the dwelling. 90 per cent of that price could be paid in monthly instalments over a period of twenty years. In the event of a one-off payment within sixty days of the signing of the purchase contract, the buyer was entitled to a discount amounting to 60 per cent of the value of the property (see paragraph 19 above).
287. For denationalised dwellings, the holders of occupancy rights could acquire property on these terms only with the agreement of the “previous owners”. To regulate matters otherwise would have been tantamount to nationalising the properties anew. If they could not obtain the “previous owner’s” agreement, the occupants had the option to obtain a payment amounting to 30 per cent of the value of the property and a loan if they agreed to vacate the premises within two years from the restitution of the dwelling to the denationalisation claimant (see paragraph 34 above). In addition to that, the “third model” (see paragraph 35 above) had introduced the possibility of purchasing a comparable substitute flat on favourable terms from the municipality. Former occupancy right holders were unable to purchase dwellings owned by the Pension and Disability Insurance Community, as these dwellings had been built to cater for the housing needs of retired people.
288. According to the Constitutional Court, the right to denationalisation was an entitlement, based on the constitutional right to private property. The existence of a “previous owner” was an objective and reasonable justification for a difference in treatment of the holder of occupancy rights as far as the purchase of the dwelling was concerned. No discrimination between different categories of holders of occupancy rights existed with regard to the possibility of continuing the tenancy. The Government underlined that unequal treatment of unequal situations in proportion with their inequality could not amount to a violation of Article 14 of the Convention. As the circumstances of all former occupancy right holders were not equal, it was impossible to treat them in the same manner.
289. The IUT considered that the applicants had been discriminated against vis-à-vis other specially protected tenancy holders. While the latter had been given the right to purchase existing or substitute dwellings on favourable terms, this means of compensation had subsequently been repealed for the applicants.
1. Applicability of Article 14 of the Convention
290. In its decision of 28 May 2013 on the admissibility of the application (paragraph 277), the Court considered that the question of the applicability of Article 14 of the Convention, taken in conjunction with Article 1 of Protocol No. 1 was linked to the substance of the applicants’ complaint, and decided to join it to the merits.
291. As the Court has consistently held, Article 14 complements the other substantive provisions of the Convention and its Protocols. It has no independent existence since it has effect solely in relation to “the enjoyment of the rights and freedoms” safeguarded by those provisions. Although the application of Article 14 does not presuppose a breach of those provisions – and to this extent it is autonomous – there can be no room for its application unless the facts in issue fall within the ambit of one or more of the latter (see, among many other authorities, Van Raalte v. the Netherlands, 21 February 1997, § 33, Reports 1997-I; Petrovic v. Austria, 27 March 1998, § 22, Reports 1998-II; and Zarb Adami v. Malta, no. 17209/02, § 42, ECHR 2006-VIII).
292. In the present case, the Court considered that it was not necessary to examine whether Article 1 of Protocol No. 1 was applicable to the situation complained of (see paragraph 135 above). Accordingly, it will proceed on the assumption that also Article 14 taken in conjunction with Article 1 of Protocol No. 1 is applicable, as in any event the requirements of this provision were not violated.
2. Compliance with Article 14 of the Convention, taken in conjunction with Article 1 of Protocol No. 1
293. The Court has established in its case-law that only differences in treatment based on an identifiable characteristic, or “status”, are capable of amounting to discrimination within the meaning of Article 14 (see Kjeldsen, Busk Madsen and Pedersen v. Denmark, 7 December 1976, § 56, Series A no. 23). Moreover, in order for an issue to arise under Article 14 there must be a difference in the treatment of persons in analogous, or relevantly similar, situations (see D.H. and Others v. the Czech Republic [GC], no. 57325/00, § 175, ECHR 2007-IV, and Burden v. the United Kingdom [GC], no. 13378/05, § 60, ECHR 2008).
294. Such a difference of treatment is discriminatory if it has no objective and reasonable justification; in other words, if it does not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be realised. The Contracting State enjoys a margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justify a different treatment ( Burden, cited above, § 60). The scope of this margin will vary according to the circumstances, the subject-matter and the background (see OAO Neftyanaya Kompaniya Yukos, cited above, § 613). A wide margin is usually allowed to the State under the Convention when it comes to general measures of economic or social strategy. Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to appreciate what is in the public interest on social or economic grounds, and the Court will generally respect the legislature’s policy choice unless it is “manifestly without reasonable foundation” (see Stec and Others v. the United Kingdom, [GC], nos. 65731/01 and 65900/01, § 52, ECHR 2006-VI, and Carson and Others v. the United Kingdom [GC], no. 42184/05, § 61, ECHR 2010).
295. Article 14 does not prohibit Contracting Parties from treating groups differently in order to correct “factual inequalities” between them. Indeed, in certain circumstances a failure to attempt to correct inequality through different treatment may, without an objective and reasonable justification, give rise to a breach of that Article (see Thlimmenos v. Greece [GC], no. 34369/97, § 44, ECHR 2000-IV, and Sejdić and Finci v. Bosnia and Herzegovina [GC], nos. 27996/06 and 34836/06, § 44, ECHR 2009-...). The Court has also accepted that a general policy or measure that has disproportionately prejudicial effects on a particular group may be considered discriminatory notwithstanding that it is not specifically aimed at that group, and that discrimination potentially contrary to the Convention may result from a de facto situation (see D.H. and Others, cited above, §§ 175 and 196, and the authorities cited therein).
296. Lastly, as to the burden of proof in relation to Article 14 of the Convention, the Court has held that once the applicant has shown a difference in treatment, it is for the Government to show that it was justified (see D.H. and Others, cited above, § 177).
(b) Application of these principles to the present case
(i) Whether there has been a difference in treatment between persons in similar situations
297. The applicants compare themselves with two other categories of persons: previous holders of specially protected tenancy who were occupying dwellings not subject to restitution, and bona fide buyers of nationalised dwellings (see paragraph 277 above). However, the Court cannot share the applicants’ opinion that they were in a relevantly similar situation vis-à-vis bone fide buyers, as the position of a protected tenant cannot be equated to that of persons who obtained a legal title of ownership of a dwelling.
298. In contrast, the situation of the applicants was analogous to that of protected tenants occupying dwellings not subject to denationalisation and restitution: both categories of persons had been granted occupancy rights by the authorities of the former Socialist Republic of Slovenia and were occupying the flats by virtue of the same formal title and under the same legal conditions. However, only the protected tenants of State-constructed dwellings were given the enforceable right to purchase them on significantly favourable terms by paying a price amounting to approximately 5-10 per cent of the market value of the property. As the dwellings the applicants were occupying were previously expropriated flats, the applicants had the possibility to buy them at a 30 or 60 per cent discount only if, within one year from the restitution of the dwelling, the “previous owner” agreed to sell (see paragraphs 19 and 20 above).
299. There has therefore been a difference in treatment between two groups – protected tenants of denationalised dwellings and protected tenants of other dwellings – which, with respect to their right to occupy the flats they lived in, were in a similar situation.
(ii) Whether there was objective and reasonable justification
300. The Government argued that the difference in treatment depended on the existence of a “previous owner”, whose rights needed to be protected and who could not be forced to sell the property he or she had obtained through restitution (see paragraphs 287 and 288 above). The Court accepts that obliging the “previous owner” to sell would have rendered theoretical and illusory the principle of restitution in natura of expropriated real estate and could have been perceived as a de facto new expropriation (see, mutatis mutandis, Strunjak and Others v. Croatia (dec.), no. 46934/99, 5 October 2000).
301. The Court thus considers that the need to protect the rights of the “previous owners” was a valid reason for not conferring on the applicants the enforceable right to purchase on favourable terms the dwellings they were occupying. The difference in treatment complained of therefore had an objective and reasonable justification (see, mutatis mutandis, Strunjak and Others v. Croatia ((dec.), no. 46934/99, 5 October 2000).
302. The Court further notes that other schemes providing public financial support were available to the applicants to allow them to accede to ownership of real estate. Notably, according to the “first model” of substitute privatisation, the “previous owner” was incentivised to agree to the sale of the denationalised dwelling by the possibility of receiving an additional financial reward from public funds (paragraph 33 above), while according to the “second model”, a tenant who decided to move out and to purchase a flat or construct a house was entitled to compensation amounting to 50 per cent of the value of the dwelling (further compensation of 30 per cent was to be paid by the “previous owner” – see paragraph 34 above). A right to purchase a comparable substitute flat on favourable terms from the municipalities was introduced by the “third model” (see paragraph 35 above). It is true that this last model was later repealed by the Constitutional Court in order to avoid putting an excessive financial burden on the municipalities (see paragraph 37 above); however, the 2003 Housing Act introduced a “new model” of substitute privatisation, according to which former occupancy right holders who agreed to vacate their rented accommodation and decided to buy another dwelling or to build a house were entitled to special compensation (up to 74 per cent of the price of the dwelling) and to a subsidised loan (see paragraph 42 above).
303. Under these circumstances, the Court considers that the State took significant steps to provide the applicants with a fair possibility of access to real-estate ownership and to compensate them, insofar as practicable, for the disadvantage created by the objective fact of the existence of a “previous owner”.
304. Accordingly, even assuming it to be applicable to the facts of the present case, Article 14 taken in conjunction with Article 1 of Protocol No. 1 has not been violated.
IV. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION
305. The applicants maintained that since the most important changes in the housing policy had been introduced by statute, they did not have sufficient access to a court to challenge the alleged infringements of their rights. Moreover, they had been excluded from the denationalisation proceedings.
They relied on Article 6 § 1 of the Convention, which, insofar as relevant, reads as follows:
“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”
306. The applicants underlined that the only legal avenue open to them had been the “petition” and the subsequent constitutional complaint, and the constitutional initiative lodged by the Association on behalf of its members. After the decision of the Constitutional Court dismissing their initiative, the applicants had had no prospect of success with their individual complaints.
307. The applicants also complained about their exclusion from the denationalisation proceedings, which concerned the ownership of the dwellings they had been living in. The outcome of these proceedings had been decisive for their “civil rights”, as they would have been entitled to purchase the dwellings if they had not been returned to the persons who claimed to have been their owners before the nationalisation.
308. In the denationalisation proceedings, the administrative courts had to verify the existence of the legal grounds allowing restitution, and in the absence of these grounds the claimant’s request would be rejected. These proceedings were decisive not only for the civil rights of the denationalisation claimant but also for those of the former specially protected tenancy holder residing in the dwelling. Under the “third model”, the outcome of the denationalisation proceedings would determine whether the tenant could exercise the right to purchase the existing or a substitute dwelling. After the abolition of that model, their outcome would determine whether the tenant had a right to purchase at all.
309. This right to acquire ownership of a dwelling on extremely favourable financial terms was without doubt a “civil” right within the meaning of Article 6 § 1 of the Convention. The fact that an economic interest lay behind this right could not change that conclusion, as every property right was, in essence, an economic interest. Former holders of specially protected tenancies therefore had a right to participate in the denationalisation proceedings in order to be apprised of, and comment on, all evidence adduced or observations filed, with a view to influencing the court’s decision. The applicants were not required to indicate, in the international proceedings, what kind of arguments and proof they could have put forward in the denationalisation proceedings had they been given a chance to take part in them.
310. The Government first maintained that the applicants’ complaint was incompatible ratione materiae with the provisions of Article 6 § 1 of the Convention, as the denationalisation proceedings did not involve a dispute concerning their “civil rights and obligations” ( Ulyanov v. Ukraine (dec.), no. 16472/04, 5 October 2010). They emphasised that former holders of occupancy rights could not be parties in the denationalisation proceedings unless they proved that they had a legal interest in them, that is, either a claim for the repayment of investments or an ownership right (see Article 60 of the ZDen and paragraph 28 above). The applicants had failed to prove the probable existence of such a legal interest. The restitution of nationalised property to denationalisation claimants did not in any way affect the legal status of the applicants or their direct entitlements based on the law.
311. Moreover, the applicants could not have prevented the restitution of the dwellings to their “previous owners”, as the mere existence of a tenancy could not be an obstacle to restitution of nationalised property. Therefore, the applicants could not have realised their wish to purchase the dwellings by participating in the denationalisation proceedings, which were not directly decisive for their “civil rights”.
1. Applicability of Article 6 § 1 to the denationalisation proceedings
312. In its decision of 28 May 2013 on the admissibility of the application (paragraph 286), the Court considered that the question of the applicability of Article 6 § 1 of the Convention to the denationalisation proceedings was linked to the substance of the applicants’ complaint and decided to join it to the merits. The Court should therefore ascertain whether the civil limb of this provision applies to the alleged impossibility for the applicants to participate in the denationalisation proceedings. In this connection, it notes that, as pointed out by the Government, no such impossibility existed where the previous holder of occupancy rights had a claim for the recovery of investments made in the dwelling (see paragraphs 28, 66 and 310 above). It must therefore be determined whether, in the absence of such a claim, the denationalisation proceedings were determinant for any of the applicants’ “rights” within the meaning of Article 6.
313. The Court reiterates that for Article 6 § 1 in its “civil” limb to be applicable, there must be a dispute (“ contestation ” in the French text) over a “right” which can be said, at least on arguable grounds, to be recognised under domestic law, irrespective of whether it is protected under the Convention. The dispute must be genuine and serious; it may relate not only to the actual existence of a right but also to its scope and the manner of its exercise; and, finally, the result of the proceedings must be directly decisive for the right in question, mere tenuous connections or remote consequences not being sufficient to bring Article 6 § 1 into play (see, among other authorities, Micallef v. Malta [GC], no. 17056/06, § 74, 15 October 2009).
314. Article 6 § 1 does not guarantee any particular content for (civil) “rights and obligations” in the substantive law of the Contracting States: the Court may not create by way of interpretation of Article 6 § 1 a substantive right which has no legal basis in the State concerned (see, for example, Fayed v. the United Kingdom, 21 September 1994, § 65, Series A no. 294 ‑ B, and Roche v. the United Kingdom [GC], no. 32555/96, § 119, ECHR 2005 ‑ X). The starting-point must be the provisions of the relevant domestic law and their interpretation by the domestic courts (see Masson and Van Zon v. the Netherlands, 28 September 1995, § 49, Series A no. 327-A, and Roche, cited above, § 120). This Court would need strong reasons to differ from the conclusions reached by the superior national courts by finding, contrary to their view, that there was arguably a right recognised by domestic law (ibid.).
315. In carrying out this assessment, it is necessary to look beyond the appearances and the language used and to concentrate on the realities of the situation (see Van Droogenbroeck v. Belgium, 24 June 1982, § 38, Series A no. 50; Roche, cited above, § 121; and Boulois v. Luxembourg [GC], no. 37575/04, § 92, 3 April 2012).
316. Turning to the circumstances of the present case, the Court notes that the object of the denationalisation proceedings was to determine the ownership of the property subject to restitution (see paragraph 27 above). The applicants did not allege that they had an arguable claim for restitution. Therefore, in the Court’s opinion, the outcome of the proceedings was not directly decisive for their potential property rights. It was also not decisive for their right to occupy the dwelling, as denationalisation and restitution could not affect the tenancy relationship (see paragraph 28 above), and the “previous owners” were obliged to rent the flats for an indefinite period and for a non-profit rent to previous holders of occupancy rights (see paragraph 19 above).
317. It is true that in the event of rejection of the denationalisation claimants’ request for restitution, the former holders of specially protected tenancies would have had the possibility of purchasing the dwellings they were occupying on favourable terms (see paragraph 308 above). However, the Court considers that this was a mere remote consequence of the denationalisation proceedings not sufficient to bring Article 6 § 1 into play.
318. In view of all the foregoing considerations, the Court cannot consider that the result of the denationalisation proceedings was directly decisive for the applicants’ civil rights. Accordingly, it concludes, like the Government, that Article 6 § 1 of the Convention is not applicable.
319. It follows that the Government’s objection should be allowed. There has therefore been no breach of Article 6 § 1 with regard to the denationalisation proceedings.
2. Access to a court to challenge the housing reform
320. It remains to be ascertained whether the applicants had sufficient access to a court to challenge the infringements of their rights allegedly brought about by the housing reform.
321. The Court reiterates that Article 6 § 1 secures to everyone the right to have any claim relating to his or her civil rights and obligations brought before a court or tribunal (see Golder v. the United Kingdom, 21 February 1975, § 36, Series A no. 18). This “right to a court”, of which the right of access is an aspect, may be relied on by anyone who considers on arguable grounds that an interference with the exercise of his or her civil rights is unlawful and complains that no possibility was afforded to submit that claim to a court meeting the requirements of Article 6 § 1 (see, inter alia, Roche, cited above, § 117, and Salontaji-Drobnjak v. Serbia, no. 36500/05, § 132, 13 October 2009). The degree of access afforded by the national legislation must be sufficient to secure the individual’s right to a court, having regard to the principle of the rule of law in a democratic society. For the right of access to be effective, an individual must have a clear, practical opportunity to challenge an act that is an interference with his rights (see Bellet v. France, 4 December 1995, § 36, Series A no. 333-B).
322. The Court recalls, however, that Article 6 § 1 does not guarantee a right of bringing constitutional proceedings (see Mladenic v. Croatia (dec.), no. 48485/99, 14 June 2001). Moreover, in the ambit of Article 13, the Court has stated that the Convention does not go so far as to guarantee a remedy allowing a Contracting State’s laws as such to be challenged before a national authority on the ground of being contrary to the Convention or to equivalent domestic legal norms (see James and Others v. the United Kingdom, 21 February 1986, § 85, Series A no. 98, and Litgow and Others v. the United Kingdom, 8 July 1986, § 206, Series A no. 102).
323. In any event, the Court considers that in the circumstances of the present case, such a remedy was accessible to the applicants, who alleged that the overall framework of the housing reform had adversely affected their rights. In the Court’s view, nothing prevented the applicants, in their quality of former holders of specially protected tenancy in denationalised dwellings, from asking the Constitutional Court to review the constitutionality of the SZ, the ZDen and of the relevant judicial practice.
324. This is sufficient for the Court to conclude that there has been no violation of Article 6 § 1 of the Convention.
V. ALLEGED VIOLATION OF ARTICLE 13 OF THE CONVENTION
325. The applicants complained that they did not have at their disposal any effective legal remedies to challenge the alleged violation of their substantive Convention rights.
They relied on Article 13 of the Convention, which reads as follows:
“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”
326. The Government challenged this claim. They noted that with regard to all the alleged violations the applicants had had an effective national legal remedy at their disposal (the constitutional initiative review), which they had exhausted. Moreover, they could have availed themselves of civil remedies adapted to their individual circumstances.
327. The Court reiterates that where the right claimed is a civil right, the role of Article 6 § 1 in relation to Article 13 is that of a lex specialis, the requirements of Article 13 being absorbed by those of Article 6 § 1 (see, among other authorities, the British-American Tobacco Company Ltd v. the Netherlands, 20 November 1995, § 89, Series A no. 331, and Brualla Gómez de la Torre v. Spain, 19 December 1997, § 41, Reports 1997 ‑ VIII). Consequently, it is unnecessary to rule separately on the complaint.
1. Holds, by six votes to one, that there has been no violation of Article 1 of Protocol No. 1 to the Convention;