Information Note on the Court’s case-law No. 166
August-September 2013
De Luca v. Italy - 43870/04
Judgment 24.9.2013 [Section II]
Article 1 of Protocol No. 1
Article 1 para. 1 of Protocol No. 1
Peaceful enjoyment of possessions
Inability to recover judgment debt from local authority in receivership: violation

Facts – In December 1993 the municipality of Benevento declared itself insolvent. An extraordinary liquidation committee (the OSL) was entrusted with the management of its finances. In a judgment given in November 2003 further to an action in damages brought in 1992 the local court ordered the municipality to pay the applicant damages in the amount of EUR 17,604.46, plus statutory interest and compensation to offset inflation. However, under a decree passed in 2000, from the declaration of insolvency until final approval of the accounts no enforcement proceedings could be brought in respect of debts on the list drawn up by the OSL. Nor could the insolvent local authority be required to pay statutory interest on its debts or compensation for inflation. In June 2005 the OSL acknowledged that the municipality owed the applicant EUR 42,028.58. In February 2006 the OSL offered the applicant a friendly settlement in the amount of 80% of the outstanding debt. The applicant declined the offer.
Law – Article 1 of Protocol No. 1: Following the declaration of insolvency it had been impossible for the applicant to bring enforcement proceedings against the municipality of Benevento, which had failed to honour its debts, in breach of the applicant’s right to the peaceful enjoyment of his possessions. By failing to enforce the Benevento court’s judgment the domestic authorities had prevented the applicant from receiving money he could reasonably have expected to receive. It was true that the OSL had offered the applicant a friendly settlement, to the tune of 80% of the sum owed to him; but had he accepted that offer the applicant would have lost the other 20% as well as forfeiting any interest or compensation for inflation. The reasons given by the Government to justify this interference with the applicant’s right to the peaceful enjoyment of his possessions were the insolvency of the municipal authority and the concern to guarantee that all creditors were treated equally in recovering their debts. However, a local authority could not use financial difficulties as an excuse not to honour its obligations arising from a final judgment against it. The debt in this case was that of a local authority, a State body, ordered by a court to pay damages. In that respect this case differed from that of Bäck v. Finland*, which concerned social-policy plans to reduce the salaries and pensions of public servants. 
Conclusion: violation (unanimously).
Article 41: EUR 50,000 for pecuniary and non-pecuniary damage.
* Bäck v. Finland, 37598/97, 20 September 2004, Information Note 66.

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