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FOURTH
SECTION
CASE OF ROCK RUBY HOTELS LTD v. TURKEY
(Application
no. 46159/99)
JUDGMENT
(merits)
STRASBOURG
22
September 2009
This
judgment will become final in the circumstances set out in Article 44
§ 2 of the Convention. It may be subject to editorial
revision.
In the case of Rock Ruby Hotels Ltd v. Turkey,
The
European Court of Human Rights (Fourth Section), sitting as a Chamber
composed of:
Nicolas Bratza, President,
Lech
Garlicki,
Ljiljana Mijović,
David Thór
Björgvinsson,
Ján Šikuta,
Päivi
Hirvelä,
Işıl Karakaş, judges,
and
Fatoş Aracı, Deputy
Section Registrar,
Having
deliberated in private on 1 September 2009,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 46159/99) against the Republic
of Turkey lodged with the Court under Article 34 of the Convention
for the Protection of Human Rights and Fundamental Freedoms (“the
Convention”) by a company incorporated under Cypriot law, Rock
Ruby Hotels Ltd (“the applicant”), on 25 January 1999.
- The
applicant was represented by Mr A. Demetriades, a lawyer practising
in Nicosia. The Turkish Government (“the Government”)
were represented by their Agent, Mr Z.M. Necatigil.
- The
applicant alleged that the Turkish occupation of the northern part of
Cyprus had deprived it of its properties.
- The
application was transmitted to the Court on 1 November 1998, when
Protocol No. 11 to the Convention came into force (Article 5 § 2
of Protocol No. 11).
- By
a decision of 28 May 2002 the Court declared the application
admissible.
- The
applicant and the Government each filed observations on the merits
(Rule 59 § 1). In addition, third-party comments were received
from the Government of Cyprus, which had exercised its right to
intervene (Article 36 § 1 of the Convention and Rule 44 § 1
(b)).
THE FACTS
- The
applicant company, whose headquarters were in Kyrenia
(northern Cyprus), is owned by Mr Agathoklis Neokleous, a
Greek-Cypriot, Mrs Erato Neokleous-Goodbody, a British national of
Greek-Cypriot origin, and Mrs Maria Neokleous-Deutschmann, a German
national of Greek-Cypriot origin. Its directors are Mr Agathoklis
Neokleous and Mrs Anastasia Neokleous, an American citizen of
Greek-Cypriot origin.
- In
1972 the applicant company acquired a five storey 3-star hotel called
the “Rock Ruby”, located in Conon street in Kyrenia, and
the plot of land on which the hotel was built. The latter consisted
of 56 rooms (each one with a private bath or shower and veranda) and
116 beds. Twenty of these rooms had been created following an
expansion programme completed by late 1973. The hotel was
situated on a seaside plot (plot no. 192, sheet/plan 12/12,
block D, land area 1,989 m²) at a short distance west of Kyrenia
harbour. The plot had a rectangular shape, flat surface at sea level,
with a frontage of 60 metres on Conon street and 30 metres on the
sea. The hotel was fully air conditioned and centrally heated and had
a number of facilities (reception area, cafeteria, open-air
restaurant, outdoor swimming pool, garden). The applicant company
alleged that the hotel was operating at an annual profit of about
66,400 Cypriot pounds (CYP –
approximately 113,451 euros (EUR)).
- In
support of its claim to ownership, the applicant company produced a
certificate of affirmation of property (registration no. 3-506934)
issued on 23 December 1992 by the Republic of Cyprus.
- In
July 1974, as the Turkish troops were advancing, the shareholders of
the applicant company, the members of its board of directors and most
of the hotel's guests were evacuated from Kyrenia by a British
helicopter-carrier. Since then the shareholders of the applicant
company had been prevented from having access to and enjoying their
property. According to information available to them, after July 1974
the hotel had been used by the Turkish armed forces.
THE LAW
I. THE GOVERNMENT'S PRELIMINARY OBJECTIONS
- The
Government raised preliminary objections of inadmissibility for
non-exhaustion of domestic remedies and lack of victim status. The
Court observes that these objections are identical to those raised in
the case of Alexandrou v. Turkey (no. 16162/90, §§
11-22, 20 January 2009), and should be dismissed for the same
reasons.
II. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1 TO
THE CONVENTION
- The applicant company complained
since July 1974, Turkey had prevented its managers and shareholders
from exercising their right to the peaceful enjoyment of their
possessions.
It invoked Article 1 of Protocol No. 1, 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.”
- The
Government disputed this claim.
- The
applicant company relied, essentially, on the principles laid down by
the Court in the cases of Loizidou v. Turkey ((merits),
Reports of Judgments and Decisions 1996-VI, 18 December
1996) and Cyprus v. Turkey ([GC], no. 25781/94, ECHR
2001–IV).
- The
Government of Cyprus observed that the respondent Government did not
contest the applicant company's claim to ownership. It further
noted that the present case was similar to that of Loizidou v.
Turkey ((merits), cited above), where the Court had found that
the loss of control of property by displaced persons arose as a
consequence of the occupation of the northern part of Cyprus by
Turkish troops and the establishment of the “Turkish Republic
of Northern Cyprus” (the “TRNC”), and that the
denial of access to property in occupied northern Cyprus constituted
a continuing violation of Article 1 of Protocol No. 1.
- The
Court first notes that the document submitted by the applicant (see
paragraph 9 above) provide prima facie evidence that it had a
title of ownership over the properties at issue. As the respondent
Government failed to produce convincing evidence in rebuttal, the
Court considers that the applicant had a “possession”
within the meaning of Article 1 of Protocol No. 1.
- The
Court recalls that in the aforementioned Loizidou case
((merits), cited above, §§ 63-64), it reasoned as follows:
“63. ... as a consequence of the fact
that the applicant has been refused access to the land since 1974,
she has effectively lost all control over, as well as all
possibilities to use and enjoy, her property. The continuous denial
of access must therefore be regarded as an interference with her
rights under Article 1 of Protocol No. 1. Such an interference
cannot, in the exceptional circumstances of the present case to which
the applicant and the Cypriot Government have referred, be regarded
as either a deprivation of property or a control of use within the
meaning of the first and second paragraphs of Article 1 of Protocol
No. 1. However, it clearly falls within the meaning of the first
sentence of that provision as an interference with the peaceful
enjoyment of possessions. In this respect the Court observes that
hindrance can amount to a violation of the Convention just like a
legal impediment.
64. Apart from a passing reference to the
doctrine of necessity as a justification for the acts of the 'TRNC'
and to the fact that property rights were the subject of
intercommunal talks, the Turkish Government have not sought to make
submissions justifying the above interference with the applicant's
property rights which is imputable to Turkey.
It has not, however, been explained how the need to
rehouse displaced Turkish Cypriot refugees in the years following the
Turkish intervention in the island in 1974 could justify the complete
negation of the applicant's property rights in the form of a total
and continuous denial of access and a purported expropriation without
compensation.
Nor can the fact that property rights were the subject
of intercommunal talks involving both communities in Cyprus provide a
justification for this situation under the Convention. In such
circumstances, the Court concludes that there has been and continues
to be a breach of Article 1 of Protocol No. 1.”
- In
the case of Cyprus v. Turkey (cited above) the Court
confirmed the above conclusions (§§ 187 and 189):
“187. The Court is persuaded that both
its reasoning and its conclusion in the Loizidou judgment (merits)
apply with equal force to displaced Greek Cypriots who, like Mrs
Loizidou, are unable to have access to their property in northern
Cyprus by reason of the restrictions placed by the 'TRNC' authorities
on their physical access to that property. The continuing and total
denial of access to their property is a clear interference with the
right of the displaced Greek Cypriots to the peaceful enjoyment of
possessions within the meaning of the first sentence of Article 1 of
Protocol No. 1.
...
189. .. there has been a continuing violation
of Article 1 of Protocol No. 1 by virtue of the fact that
Greek-Cypriot owners of property in northern Cyprus are being denied
access to and control, use and enjoyment of their property as well as
any compensation for the interference with their property rights.”
- The
Court sees no reason in the instant case to depart from the
conclusions which it reached in the Loizidou and Cyprus v.
Turkey cases (op. cit.; see also Demades v. Turkey
(merits), no. 16219/90, § 46, 31 July 2003).
- Accordingly,
it concludes that there has been a violation of Article 1 of Protocol
No. 1 to the Convention by virtue of the fact that the applicant was
denied access to and control, use and enjoyment of its properties as
well as any compensation for the interference with its property
rights.
III. ALLEGED VIOLATION OF ARTICLE 14 OF THE CONVENTION,
TAKEN IN CONJUNCTION WITH ARTICLE 1 OF PROTOCOL NO. 1
- The
applicant company complained of a violation under Article 14 of
the Convention on account of discriminatory treatment against it in
the enjoyment of its rights under Article 1 of Protocol No. 1. It
alleged that this discrimination had been based on the national
origin and/or religious beliefs of its managers and shareholders.
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.”
- The
Court recalls that in the Alexandrou case (cited above, §§
38-39) it has found that it was not necessary to carry out a separate
examination of the complaint under Article 14 of the Convention. The
Court does not see any reason to depart from that approach in the
present case (see also, mutatis mutandis, Eugenia
Michaelidou Ltd and Michael Tymvios v. Turkey, no. 16163/90,
§§ 37-38, 31 July 2003).
IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION
- Article 41 of the Convention provides:
“If the Court finds that there has been a
violation of the Convention or the Protocols thereto, and if the
internal law of the High Contracting Party concerned allows only
partial reparation to be made, the Court shall, if necessary, afford
just satisfaction to the injured party.”
A. Pecuniary and non-pecuniary damage
1. The parties' submissions
(a) The applicant
- In
its just satisfaction claims of 31 July 2002, the applicant requested
CYP 1,686,014 (approximately EUR 2,880,723) for pecuniary damage. It
relied on an expert's report assessing the value of its losses which
included the loss of annual rent collected or expected to be
collected from renting out the property, plus interest from the date
on which such rents were due until the day of payment. The rent
claimed was for the period dating back to January 1990 until
1 January 2003. The applicant did not claim compensation for any
purported expropriation since it was still the legal owner of the
property. The evaluation report contained a description of the Rock
Ruby hotel (see paragraph 8 above) and of the town of Kyrenia, which,
according to the applicant, in 1974 was one of the most popular
tourist resorts of Cyprus. The demand for hotel accommodation in
Kyrenia was high and good hotels were achieving high occupancy rates.
- The
starting point of the valuation report was the income receivable in
July 1974. Having regard to the attractiveness of the hotel and to
the profits made by other similar hotels in Cyprus, the Rock Ruby
could have obtained CYP 35 (approximately EUR 59) per room per month.
Taking into account that the hotel had 56 rooms and after the
deduction of a percentage of 10% for possible outgoings, the 1974
annual rental value was estimated at CYP 21,168 (approximately
EUR 36,167). This sum was subsequently adjusted to 1990 values by
taking into account:
(a)
the nature of the area were the property was situated;
(b) the
trends of rents for the period 1970 – 1974 in similar areas;
(c)
the trends of rents for the period after 1974 in the unoccupied areas
of Cyprus (based on the Consumer Price Index 1960 – 2002 for
Rents and Housing issued by the Department of Statistics and Research
of the Government of Cyprus, increased by a percentage of 25%).
- Finally,
compound interest for delayed payment was applied at a rate of 8% per
annum up to the end of 2000 and of 6% per annum for the years
2001 – 2002 (the total interest claimed amounted to
CYP 643,567 – approximately EUR 1,099,598).
- On
23 January 2008, following a request from the Court for an update on
the developments of the case, the applicant submitted updated claims
for just satisfaction, which were meant to cover the loss of the use
of the property from 1 January 1987 to 31 December 2007. It produced
a revised valuation report, which, on the basis of the criteria
adopted in the previous report, concluded that the whole sum due for
the loss of use was CYP 1,775,803,
plus CYP 1,795,483 for interest. The total sum claimed under this
head was thus CYP 3,571,287 (approximately EUR 6,101,900). The
applicant also requested the additional amount of EUR 17,000 per
month, to be adjusted in accordance with inflation for a period of 18
years or until the date on which the Turkish army will leave its
possession vacant.
- In
its just satisfaction claims of 31 July 2002, the applicant further
claimed CYP 873,000 (approximately EUR 1,491,607) in respect of
non-pecuniary damage. In particular, it claimed CYP 30,000
(approximately EUR 51,258) for the anguish and frustration
suffered on account of the continuing violation of its property
rights. It stated that this sum had been calculated on the basis of
the sum awarded by the Court in the Loizidou case ((just
satisfaction), Reports 1998-IV, 28 July 1998), taking
into account, however, that the period of time for which the damage
was claimed in the instant case was longer. The applicant also
claimed CYP 843,000 (approximately EUR 1,440,349) for the
violation of its rights under Article 14 of the Convention,
which was aggravated by the fact that the Turkish army was using the
hotel for its own purposes.
- Finally,
in its updated claims for just satisfaction of 23 January 2008, the
applicant requested the additional sum of EUR 50,000 for
non-pecuniary damage.
(b) The Government
- The
Government filed comments on the applicant's updated claims for just
satisfaction on 30 June 2008 and 15 October 2008. They pointed out
that the present application was part of a cluster of similar cases
raising a number of problematic issues and maintained that the claims
for just satisfaction were not ready for examination. The Government
had in fact encountered serious problems in identifying the
properties and their present owners. The information provided by the
applicants in this regard was not based on reliable evidence.
Moreover, owing to the lapse of time since the lodging of the
applications, new situations might have arisen: the properties could
have been transferred, donated or inherited within the legal system
of southern Cyprus. These facts would not have been known to the
respondent Government and could be certified only by the
Greek-Cypriot authorities, who, since 1974, had reconstructed the
registers and records of all properties in northern Cyprus.
Applicants should be required to provide search certificates issued
by the Department of Lands and Surveys of the Republic of Cyprus. In
cases where the original applicant had passed away or
the property had changed hands, questions might arise as to whether
the new owners had a legal interest in the property and whether they
were entitled to pecuniary and/or non-pecuniary damages.
- The
Government further noted that some applicants had shared properties
and that it was not proved that their co-owners had agreed to the
partition of the possessions. Nor, when claiming damages based on the
assumption that the properties had been rented after 1974, had the
applicants shown that the rights of the said co-owners under domestic
law had been respected.
- The
Government submitted that as an annual increase of the value of the
properties had been applied, it would be unfair to add compound
interest for delayed payment, and that Turkey had recognised the
jurisdiction of the Court on 21 January 1990, and not in January
1987. In any event, the alleged 1974 market value of the properties
was exorbitant, highly excessive and speculative; it was not based on
any real data with which to make a comparison and made insufficient
allowance for the volatility of the property market and its
susceptibility to influences both domestic and international. The
report submitted by the applicant had instead proceeded on the
assumption that the property market would have continued to flourish
with sustained growth during the whole period under consideration.
- The
Government produced a valuation report prepared by the
Turkish-Cypriot authorities, which they considered to be based on a
“realistic assessment of the 1974 market values, having regard
to the relevant land records and comparative sales in the areas where
the properties [were] situated”. This report contained two
proposals, assessing, respectively, the sum due for the loss of use
of the properties and their present value. The second proposal was
made in order to give the applicant the option to sell the property
to the State, thereby relinquishing title to and claims in respect of
it.
- The
report prepared by the Turkish-Cypriot authorities specified that it
would be possible to envisage, either immediately or after the
resolution of the Cyprus problem, restitution of the property
described in paragraph 8 above. In case the conditions for
restitution were not fulfilled, the applicant could claim financial
compensation, to be calculated on the basis of the loss of income (by
applying a 5% rent on the 1974 market values) and increase in value
of the property between 1974 and the date of payment. Had the
applicant applied to the Immovable Property Commission, the latter
would have offered CYP 292,145.54 (approximately EUR 499,159) to
compensate the loss of use and CYP 311,174.61 (approximately EUR
531,672) for the value of the property. According to an expert
appointed by the “TRNC” authorities, the 1974 open-market
value of the applicant's property was CYP 50,847 (approximately EUR
86,877). Upon fulfilment of certain conditions, the Immovable
Property Commission could also have offered the applicant exchange of
its properties with Turkish-Cypriot properties located in the south
of the island.
- Finally,
the Government did not comment on the applicant's submissions under
the head of non-pecuniary damage.
2. The third party intervener
- The
Government of Cyprus fully supported the applicant's updated claims
for just satisfaction.
3. The Court's assessment
- The
Court first notes that the Government's submission that doubts might
arise as to the applicant's title of ownership over the properties at
issue (see paragraph 30 above) is, in substance, an objection of
incompatibility ratione materiae with the provisions of
Article 1 of Protocol No. 1. Such an objection should have been
raised before the application was declared admissible or, at the
latest, in the context of the parties' observations on the merits. In
any event, the Court cannot but confirm its finding that the
applicant had a “possession” over the properties in
Kyrenia within the meaning of Article 1 of Protocol No. 1 (see
paragraph 16 above).
- In
the circumstances of the case, the Court considers that the question
of the application of Article 41 in respect of pecuniary and
non-pecuniary damage is not ready for decision. It observes, in
particular, that the parties have failed to provide reliable and
objective data pertaining to the prices of land and real estate in
Cyprus at the date of the Turkish intervention. This failure renders
it difficult for the Court to assess whether the estimate furnished
by the applicant of the 1974 market value of its properties is
reasonable. The question must accordingly be reserved and the
subsequent procedure fixed with due regard to any agreement which
might be reached between the respondent Government and the applicant
(Rule 75 § 1 of the Rules of Court).
B. Costs and expenses
- In
its just satisfaction claims of 31 July 2002, relying on bills from
its representative, the applicant company sought CYP 4,034.1
(approximately EUR 6,892) for the costs and expenses incurred before
the Court. This sum included CYP 800 (approximately EUR 1,366) for
the costs of the expert report assessing the value of its properties.
On 15 January 2004, it claimed additional expenses amounting to
CYP 2,645 (approximately EUR 4,519). Finally, in its updated claims
for just satisfaction of 23 January 2008, the applicant company
submitted additional bills of costs for the new valuation report and
for legal fees amounting to EUR 392.15 and EUR 2,955.5
(including V.A.T.) respectively. It indicated that the overall sum
claimed for cost and expenses was EUR 10,240.32 (including V.A.T.).
- The
Government did not comment on this point.
- In
the circumstances of the case, the Court considers that the question
of the application of Article 41 in respect of costs and expenses is
not ready for decision. The question must accordingly be reserved and
the subsequent procedure fixed with due regard to any agreement which
might be reached between the respondent Government and the applicant.
FOR THESE REASONS, THE COURT
- Dismisses by six votes to one the Government's
preliminary objections;
- Holds by six votes to one that there has been a
violation of Article 1 of Protocol No. 1 to the Convention;
- Holds unanimously that it is not necessary to
examine whether there has been a violation of Article 14 of the
Convention taken in conjunction with Article 1 of Protocol No. 1;
- Holds unanimously that the question of the
application of Article 41 is not ready for decision;
accordingly,
(a) reserves
the said question in whole;
(b) invites
the Government and the applicant to submit, within three months from
the date on which the judgment becomes final in accordance with
Article 44 § 2 of the Convention, their written
observations on the matter and, in particular, to notify the Court of
any agreement that they may reach;
(c) reserves the further procedure and delegates
to the President of the Chamber the power to fix the same if need be.
Done in English, and notified in writing on 22 September 2009,
pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Fatoş Aracı Nicolas Bratza
Deputy Registrar President
In accordance with Article 45 § 2 of the Convention and Rule 74
§ 2 of the Rules of Court, the separate opinion of Judge Karakaş
is annexed to this judgment.
N.B.
F.A.
DISSENTING OPINION OF JUDGE KARAKAŞ
Unlike
the majority, I consider that the objection of non-exhaustion of
domestic remedies raised by the Government should not have been
rejected. Consequently, I cannot agree with the finding of a
violation of Article 1 of Protocol No. 1 of the Convention, for the
same reasons as those mentioned in my dissenting opinion in the case
of Alexandrou v. Turkey (no. 16162/90, 20 January 2009).
