HODOROG v. HUNGARY - 46626/13 (Judgment (Merits and Just Satisfaction) : Court (Second Section Committee)) [2015] ECHR 974 (03 November 2015)

In the case of Hodorog v. Hungary,

The European Court of Human Rights (Second Section), sitting as a Committee composed of:

          Helen Keller, President,
          András Sajó,
          Robert Spano, judges,

and Abel Campos, Deputy Section Registrar,

Having deliberated in private on 13 October 2015,

Delivers the following judgment, which was adopted on that date:

PROCEDURE

1. The case originated in an application (no. 46626/13) against Hungary lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Hungarian national, Ms László Istvánné Hodorog (“the applicant”), on 16 July 2013.

2. The applicant was represented by Mr G. Magyar, a lawyer practising in Budapest. The Hungarian Government (“the Government”) were represented by Mr Z. Tallódi, Agent, Ministry of Justice.

3. On 16 December 2014 the application was communicated to the Government.

Having been informed of the Court’s intention to examine the case sitting as a Committee of three judges, the Government objected. The Court rejects this objection.

THE FACTS

THE CIRCUMSTANCES OF THE CASE

4. The applicant was born in 1961 and lives in Balatonszabadi.

5. On 11 September 2012 Parliament enacted Act no. CXXXIV of 2012 on the Repression of Smoking of the Youth and on Tobacco Retail. The Act was published on 24 September 2012.

6. According to the Act, tobacco retail was to become a State monopoly (exercised through a State-owned company, ND Nemzeti Dohánykereskedelmi Nonprofit Zrt), and tobacco retailers would become authorised through a concession tender, advertised on 15 December 2012. The time-limit for applying was 22 February 2013.

7. Entities or persons previously engaged in tobacco retail had no privileges in the tender.

8. The Act was subsequently amended on several occasions, and the final version was enacted on 6 June 2013, with entry into force on 1 July 2013. Government Decree no. 181/2013. (VI.7.), which contained the detailed rules for the operations of the future concession-holders, was published on 8 June 2013, that is, after the completion of the tendering process, the results of which had become public on 22 April 2013. The decision about the tenders was taken by ND Zrt itself.

9. The applicant, a tobacco retailer active in this business since 2008, applied for a concession and paid the relevant application fee.

10. On 10 July 2013 the applicant was informed, in a letter sent by ND Zrt, that she had not obtained a tobacco retail concession. The decision said that her application did not fully meet the requirements, without developing the shortcomings. The Government submitted that her application scored 59 out of 120.

No compensation is available for ex-tobacco-retailers who, by not being awarded a concession, lost part of their livelihood.

11. The refusal was not subject to any legal remedy. The applicant submitted that she pursued a constitutional complaint, and that although the outcome was not known on introducing the present application, this legal avenue could not in any case provide material redress.

12. The applicant further submitted that others in comparable situations - and in the case of those who had never been engaged in tobacco retail beforehand, in non-comparable situations - were granted concessions, which difference in treatment cannot be explained by any circumstance other than political adherence.

THE LAW

I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1

13. The applicant complained under Article 1 of Protocol No. 1 of the Convention that the effective removal of her tobacco retail licence amounted to an unjustified deprivation of possessions. She also argued that, contrary to Article 13 of the Convention, there had been no available domestic remedies in respect of the loss of her retail. She further complained that she had been subject of political discrimination, in breach of Article 14 of the Convention read in conjunction with Article 1 of Protocol No. 1.

14. The Government contested those arguments.

15. The Court considers that the complaint falls to be examined under Article 1 of Protocol No. 1 alone (see Vékony v. Hungary, no. 65681/13, § 18, 13 January 2015).

Article 1 of Protocol No. 1 provides 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.”

16. The Government submitted that the applicant should have lodged a constitutional complaint which was a remedy capable of enabling an ensuing official liability action. The applicant disagreed with this view, pointing out that she had availed herself of this remedy, but in vain. The Court observes that a similar objection was already dismissed by the Court in Vékony (cited above, §§ 22 to 24). For essentially the same reasons, it holds that the application cannot be rejected for non-exhaustion of domestic remedies.

17. The Government further argued that the complaint, in so far as the non-acquisition of a new licence was concerned, was incompatible ratione materiae with the provisions of the Convention. The applicant disagreed. In Vékony, a similar objection was already dismissed (cited above, § 29). The Court sees no reason to hold otherwise in the present case.

18. The Court further notes that the complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It also notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.

19. On the merits, the Government in essence reiterated their arguments set out in paragraph 28 of the Vékony judgment. The applicant primarily argued that the measure complained of constituted an excessive individual burden.

20. The Court considers that the considerations outlined in paragraphs 29 to 37 of the Vékony judgment equally hold true in the present case and finds that there has been a violation of Article 1 of Protocol No. 1.

II. APPLICATION OF ARTICLE 41 OF THE CONVENTION

21. Relying on Article 41, the applicant claimed 29,150.5 euros (EUR) in respect of pecuniary damage, corresponding to lost stock and investments (EUR 6,252) and lost business (EUR 22,898.5). He also claimed EUR 10,000 in non-pecuniary damage.

22. The Government contested these claims.

23. Without speculating on the profits which the applicant would have achieved if the violation of the Convention had not occurred, the Court observes that she suffered a real loss of business. It therefore considers it appropriate to award a lump sum in compensation for the loss of future earnings. In addition, the Court considers that the violation it has found of Article 1 of Protocol No. 1 in the instant case must have caused the applicant prolonged uncertainty in the conduct of her business and feelings of helplessness and frustration, entailing some non-pecuniary damage.

24. Thus, the Court considers it reasonable, making its assessment on the basis of equity, to award the applicant an aggregate sum of EUR 20,000, covering all heads of damage (see, mutatis mutandis, Centro Europa 7 S.r.l. and Di Stefano v. Italy [GC], no. 38433/09, §§ 219 to 222, ECHR 2012; Vékony, cited above, § 41).

25. The applicant also claimed EUR 3,810 for the costs and expenses incurred before the Court. This sum corresponds to 15 hours of legal work billable by her lawyer, charged at an hourly rate of EUR 200 plus VAT.

26. The Government contested the claim.

27. Regard being had to the documents in its possession and to its case-law, the Court considers that the sum claimed should be awarded in full.

28. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

1. Declares the application admissible;

2. Holds that there has been a violation of Article 1 of Protocol No. 1;

3. Holds

(a) that the respondent State is to pay the applicant, within three months, the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement:

(i) EUR 20,000 (twenty thousand euros), plus any tax that may be chargeable, in respect of pecuniary and non-pecuniary damage combined;

(ii) EUR 3,810 (three thousand eight hundred and ten euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses;

(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;

4. Dismisses the remainder of the applicant’s claim for just satisfaction.

Done in English, and notified in writing on 3 November 2015, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Abel Campos Helen Keller
Deputy Registrar President

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