EHRM, 26-04-2018, nr. 48921/13

The Court reiterates at the outset that the concept of ‘possessions’ referred to in the first part of Article 1 of Protocol No. 1 has an autonomous meaning which is not limited to the ownership of physical goods and is independent from the formal classification in domestic law: certain other rights and interests constituting assets can also be regarded as ‘property rights’, and thus as ‘possessions’ for the purposes of this provision (see, among many authorities, Iatridis v. Greece [GC], no. 31107/96, § 54, ECHR 1999-II, and Depalle v. France [GC], no. 34044/02, § 62, ECHR 2010).

Although Article 1 of Protocol No. 1 applies only to a person's existing possessions and does not create a right to acquire property in certain circumstances a ‘legitimate expectation’ of obtaining an asset may also enjoy the protection of Article 1 of Protocol No. 1 (see, among many authorities, Anheuser-Busch Inc. v. Portugal [GC], no. 73049/01, § 65, ECHR 2007-I; and Béláné Nagy v. Hungary [GC], no. 53080/13, § 74, ECHR 2016).

A legitimate expectation must be of a nature more concrete than a mere hope and be based on a legal provision or a legal act such as a judicial decision. The hope that a long-extinguished property right may be revived cannot be regarded as a ‘possession’; nor can a conditional claim which has lapsed as a result of a failure to fulfil the condition. Further, no ‘legitimate expectation’ can be said to arise where there is a dispute as to the correct interpretation and application of domestic law and the applicant's submissions are subsequently rejected by the national courts. The mere fact that a property right is subject to revocation in certain circumstances does not prevent it from being a ‘possession’ within the meaning of Article 1 of Protocol No. 1, at least until it is revoked (see Béláné Nagy, cited above, § 75; Beyeler v. Italy [GC], no. 33202/96, § 105, ECHR 2000-I; and Krstić v. Serbia, no. 45394/06, § 83, 10 December 2013).

The Court recalls that in each case the issue that needs to be examined is whether the circumstances of the case, considered as a whole, conferred on the applicant title to a substantive interest protected by Article 1 of Protocol No. 1 (see Depalle, cited above, § 62, with further references).

The question whether the circumstances of the present case come within the scope of application of Article 1 of Protocol No. 1, i.e. whether the applicant's right to peaceful enjoyment of her possessions is engaged, must be assessed with a view to the fact that between 10 June 1998 and 27 March 2001 the applicant had received payments on the basis of an administrative decision granting her unemployment benefits (see paragraph 10 above). In other words, the competent administrative authority had made regular disbursements of money (cash), which the applicant had obtained the effective enjoyment of in reliance on the underlying administrative decision in her favour. Subsequently, however, the domestic courts made a finding to the effect that the payments had taken place without a legal basis and ordered the applicant to refund the respective amounts as unjust enrichment (see paragraph 27 above). The Court therefore finds that the issue of whether Article 1 of Protocol No. 1 is applicable ratione materiae should be analysed by considering whether, under those specific circumstances, the applicant can be said to have had a legitimate expectation, within the autonomous meaning of the Convention, of being able to retain the funds already received as unemployment benefits without her entitlement to those past disbursements being called into question retrospectively.

The Court notes that the grant of the benefit in question depended on various statutory conditions, the assessment of which was the sole responsibility of the social security authority. In the present case, the competent authority had taken a decision to extend the applicant's entitlement to unemployment benefits (see paragraph 10 above) and subsequently continued to make the respective payments beyond the date on which such an entitlement was, according to the applicable statutory limit, due to expire.

In this respect, the Court considers that an individual should in principle be entitled to rely on the validity of a final (or otherwise enforceable) administrative decision in his or her favour, and on the implementing measures already taken pursuant to it, provided that neither the beneficiary nor anyone on his or her behalf has contributed to such a decision having been wrongly made or wrongly implemented. Thus, while an administrative decision may be subject to revocation for the future (ex nunc), an expectation that it should not be called into question retrospectively (ex tunc) should usually be recognised as being legitimate, at least unless there are weighty reasons to the contrary in the general interest or in the interest of third parties (compare Kopecký v. Slovakia [GC], no. 44912/98, § 47, ECHR 2004-IX; Pressos Compania Naviera S.A. and Others v. Belgium, 20 November 1995, §§ 34 and 39, Series A no. 332).

The Court has held that, as a rule, a legitimate expectation of being able to continue having peaceful enjoyment of a possession must have a ‘sufficient basis in national law’ (see ibid., § 52; see also Depalle, cited above, § 63). It has, however, also held that the fact that the domestic laws of a State do not recognise a particular interest as a ‘right’ is not always decisive, in particular in circumstances where the lapse of time justifies concluding that the individual's interest in the ‘status quo’ had become vested in a sufficiently established manner for being recognised as capable of engaging the application of Article 1 of Protocol No. 1 (see, mutatis mutandis, Depalle, cited above, § 68).

In the present case, the Court considers that although the domestic courts found that as a matter of domestic law, the applicant had no protection against the authorities' reclaim of the funds already received, which according to them constituted unjust enrichment (see paragraph 27 above), several circumstances speak in favour of recognising the applicant's legal position as protected by a ‘legitimate expectation’ for the purposes of the application of Article 1 of Protocol No. 1.

Firstly, there is no indication or even allegation that the applicant had in any way contributed to the impugned situation, namely that the disbursement of the benefits had been continued beyond the applicable statutory time-limit. The Government accepted that payment of the unemployment benefits beyond the prescribed time-limit was the sole responsibility of the authorities (see paragraph 70 below).

Secondly, the applicant's good faith in receiving the contested unemployment benefits is not contested.

Thirdly, the administrative decision in reliance on which the applicant had received the payments had not contained any express mention of the fact that under the relevant statutory provisions the entitlement would expire on a certain date, i.e. after twelve months.

Fourthly, there was a long lapse of time, amounting to over three years, after the expiry of the statutory time-limit during which the authorities failed to react while continuing to make the monthly payments.

The Court finds that these circumstances were capable of inducing in the applicant a belief that she was entitled to receive those payments (compare Chroust v. the Czech Republic (dec.), no. 4295/03, 20 November 2006).

Moreover, the Court considers that, taking into account in particular the nature of the benefits as current support for basic subsistence needs, the question of whether the situation was capable of giving rise to a legitimate expectation that the entitlement was duly in place must be assessed with a view to the situation prevailing at the time when the applicant was in receipt of the payments and consumed the proceeds. The fact that the administrative courts subsequently established that the payments had taken place without a legal basis in domestic law is under these circumstances not decisive from the point of view of determining whether at the time when the payments were received for the purpose of covering the applicant's living costs she could entertain a legitimate expectation that her presumed entitlement to those funds would not be capable of being called into question retrospectively (see, mutatis mutandis, Pine Valley Developments Ltd and Others v. Ireland, 29 November 1991, § 51, Series A no. 222; and Stretch v. the United Kingdom, no. 44277/98, § 35, 24 June 2003).

The Court therefore concludes that in the circumstances of the present case, the applicant had a legitimate expectation of being able to rely on the payments she had received as rightful entitlements and that Article 1 of Protocol No. 1 is applicable ratione materiae to her complaint.

The applicant alleged that the Rijeka Employment Bureau had adopted a decision granting her unemployment benefits ‘until further notice’. Moreover, on 26 May 1999, that is one year after her right to unemployment benefits had allegedly ceased, the Rijeka Employment Bureau had provided her with an ‘unemployment benefit card’, which had stated that she was entitled to unemployment benefits until 31 December 2010. She alleged that she had had no reason to doubt that the payments were legitimate. In her opinion, she had received the unemployment benefits legally, and there was no legal basis for repaying the amount at issue, as had been established by the Rijeka Municipal Court. Moreover, section 211 of the Civil Obligations Act had been totally disregarded by the courts (see paragraph 43 above). The Rijeka Employment Bureau had known that she would not be entitled to the unemployment benefits after 10 June 1998, because it had stated that in its decision of 27 March 2001. Therefore, the Rijeka Employment Bureau had not retained its right to seek reimbursement.

As to the Government's allegations that she had failed to respond to the Rijeka Employment Bureau's proposals regarding repayment of the amount due in sixty instalments, the applicant argued that this was not true, because it could be seen from the documents she had submitted to the Court that she had replied and informed the Rijeka Employment Bureau about her difficult economic and health situation. In this connection, the applicant maintained that dividing the burden between the Rijeka Employment Bureau, whose negligence and misconduct had created the situation, and herself, an unemployed person with no income and in poor health, would not be fair, and would impose a burden on her as a result of the State organ's error.

The Government argued, were the Court to find that the applicant had possession, that the interference with the applicant's rights under Article 1 of Protocol No. 1 was lawful. The judgment ordering the applicant to repay the unemployment benefits had had its legal basis in section 210 of the Civil Obligation Act, which had been clear, foreseeable and publicly available. Further to this, it had been in the general interest for the unduly received benefits to be paid back.

In conclusion, the Government stated that depriving the applicant of the amount at issue had been necessary for the protection of State's finances and the principle of rule of law, and had not imposed an excessive individual burden on her because she had been not entitled to this amount. They pointed out that, just as it could not be expected that the mistakes of the State would be remedied at the expense of citizens, it was not fair to allow the unlawful acquisition of property by citizens as a result of those mistakes. In this context, the Government pointed out that the Rijeka Employment Bureau had been fully aware of its own mistake. That is why the Rijeka Employment Bureau had proposed an agreement whereby the applicant would repay the amount due in sixty individual instalments, in order to share the burden of the situation. However, the applicant had failed to respond to this proposal. In view of the foregoing, the Government were of the opinion that there had been no violation of the applicant's rights protected by Article 1 of Protocol No. 1 to the Convention.

The Government does not contest that the impugned judgment adopted in the civil proceedings against the applicant amounted to an interference with her rights under Article 1 of Protocol No. 1, and the Court sees no reason to hold otherwise.

In the circumstances of the present case, the Court considers that the applicant's complaint should be examined under the general rule enunciated in the first sentence of the first paragraph of Article 1 of Protocol No. 1, especially as the situations envisaged in the second sentence of the first paragraph and in the second paragraph are only particular instances of interference with the right to peaceful enjoyment of property as guaranteed by the general rule set forth in the first sentence (see Beyeler, cited above, § 106; and Perdigão v. Portugal [GC], no. 24768/06, § 62, 16 November 2010). The Court will now assess whether that interference was prescribed by law, whether it pursued a legitimate aim, and whether there was a reasonable relationship of proportionality between the means employed and the aim pursued (see Broniowski v. Poland [GC], no. 31443/96, §§ 147–151, ECHR 2004-V).

The Court reiterates that any interference by a public authority with the peaceful enjoyment of possessions must be lawful. In particular, the second paragraph of Article 1 of Protocol No. 1, while recognising that States have the right to control the use of property, subjects their right to the condition that it be exercised by enforcing ‘laws’. Moreover, the principle of lawfulness presupposes that the applicable provisions of domestic law are sufficiently accessible, precise and foreseeable in their application (see, Konstantin Stefanov v. Bulgaria, no. 35399/05, § 54, 27 October 2015).

The parties' views differed as to whether the interference with the applicant's property right was lawful (see paragraphs 49 and 68 above).

The Court notes that the Rijeka County Court's judgment relied on section 210 of the Civil Obligations Act related to unjust enrichment (see paragraphs 28 and 44 above). However, it did not give any explanation as to why section 55 of the Employment Mediation and Unemployment Rights Act was not to be applied in the applicant's case since that rule appears to be a more specific one as regards the applicant's situation. That provision obliged an unemployed person granted an allowance to which he or she had not been entitled to pay this back if it had been granted on the basis of false or inaccurate data which he or she had known to be false or inaccurate, or if it had been granted in some other unlawful manner (see paragraph 41 above). This question can nevertheless be left open, as in the present case it is more essential to decide on the proportionality of the interference.

The Court reiterates that the domestic Court's judgment in this case was based on the general rules of civil law governing unjust enrichment and not on the legislation governing unemployment benefits. The Court considers therefore that the interference pursued a legitimate aim since it is in the public interest that property received on a basis which does not exist or which has ceased to exist should be returned to the State. In particular, the interference was aimed at correcting a mistake of the social security authority.

The Court must examine whether the interference struck the requisite fair balance between the demands of the general interest of the public and the requirements of the protection of the applicant's right to the peaceful enjoyment of her possessions, and whether it imposed a disproportionate and excessive burden on the applicant (see, among other authorities, Béláné Nagy, cited above, § 115).

The Court finds it natural that the margin of appreciation available to the legislature in implementing social and economic policies should be a wide one, and will respect the legislature's judgment as to what is ‘in the public interest’ unless that judgment is manifestly without reasonable foundation (ibid., § 113). However, that margin may be narrower in cases such as the present one, where the mistake is attributable solely to the State authorities.

The Court has held, in the context of the discontinuation of a social benefit, that bearing in mind the importance of social justice, public authorities should not be prevented from correcting their mistakes, even those resulting from their own negligence. Holding otherwise would be contrary to the doctrine of unjust enrichment. It would also be unfair to other individuals contributing to the social security fund, in particular those denied a benefit because they failed to meet the statutory requirements. Lastly, it would amount to sanctioning an inappropriate allocation of scarce public resources, which in itself would be contrary to the public interest (see Moskal v. Poland, no. 10373/05, § 73, 15 September 2009).

The present case, however, stands to be distinguished from the situation prevailing in Moskal, because unlike the latter case, what is at issue now is not the discontinuation of the applicant's unemployment benefit but an obligation imposed on her to repay benefits already received in reliance on an administrative decision. In the present context, it is therefore more pertinent to recall the Court's case-law to the effect that mistakes solely attributable to State authorities should in principle not be remedied at the expense of the individual concerned, especially where no other conflicting private interest is at stake (see, mutatis mutandis, Platakou v. Greece, no. 38460/97, § 39, ECHR 2001-I; Radchikov v. Russia, no. 65582/01, § 50, 24 May 2007; Freitag v. Germany, no. 71440/01, §§ 37–42, 19 July 2007; Gashi, cited above, § 40; and Šimecki v. Croatia, no. 15253/10, § 46, 30 April 2014). The Court has also held that where an issue in the general interest is at stake, it is incumbent on the public authorities to act in good time, in an appropriate and consistent manner (see Tunnel Report Limited v. France, no. 27940/07, § 39, 18 November 2010, and Zolotas v. Greece (no. 2), no. 66610/09, § 42, ECHR 2013 (extracts)).

In assessing compliance with Article 1 of Protocol No. 1, the Court must carry out an overall examination of the various interests in issue (see Perdigão, cited above, § 68), bearing in mind that the Convention is intended to safeguard rights that are ‘practical and effective’ (see, for example, Chassagnou and Others v. France [GC], nos. 25088/94, 28331/95 and 28443/95, § 100, ECHR 1999-III). It must look behind appearances and investigate the realities of the situation complained of (see Broniowski, cited above, § 151; Hutten-Czapska v. Poland [GC], no. 35014/97, § 168, ECHR 2006-VIII; and Zammit and Attard Cassar v. Malta, no. 1046/12, § 57, 30 July 2015). That assessment may involve the conduct of the parties, including the means employed by the State and their implementation. In that context, it should be stressed that uncertainty — be it legislative, administrative or arising from practices applied by the authorities — is a factor to be taken into account in assessing the State's conduct. Indeed, where an issue in the general interest is at stake, it is incumbent on the public authorities to act in good time, in an appropriate and consistent manner (see Tunnel Report Limited v. France, no. 27940/07, § 39, 18 November 2010, and Zolotas v. Greece (no. 2), no. 66610/09, § 42, ECHR 2013 (extracts)).

As to the applicant's conduct, the Court notes that the applicant has not been alleged to have contributed to the receipt of benefits beyond her legal entitlement by false submissions or other acts which would not have been in good faith.

As the competent authority had taken a decision in the applicant's favour and continued to make the respective payments, the applicant had a legitimate basis for assuming that the payments received were legally correct. While it is true that section 25 of the Employment Act clearly provides that a woman employed for less than twenty-five years has the right to unemployment benefits in respect of a temporary incapacity to work, for a maximum period of twelve months (see paragraph 41 above), the decision issued to the applicant had not contained any express mention of that time-limit, and the applicant was thus not put on notice of it. Moreover, given that two additional years of service had been entered into the applicant's employment book (see paragraph 11 above), it appears that she, as an unqualified worker, was not without grounds for believing that she met the requirements set out in section 23(3) of the Employment Act (see paragraph 40 above). Under these circumstances, the Court does not find it reasonable to conclude that the applicant was required to realise that she was in receipt of unemployment benefits beyond the statutory maximum period.

As to the conduct of the authorities, the Court notes at the outset that, in the context of property rights, particular importance must be attached to the principle of good governance. In the instant case, the Court considers that the authorities failed in their duty to act in good time and in an appropriate and consistent manner (see Moskal, cited above, § 72).

It is established that the Rijeka Employment Bureau made a mistake when it did not define the period during which the applicant was entitled to further unemployment benefits in its decision of 27 June 1997. That mistake was further perpetuated when unemployment benefits were paid to the applicant for a period of almost three years following the expiry of the maximum period set out in section 25(2)(1) of the Employment Act.

The Court also notes that, even though the unemployment benefit payments which the applicant should not have received were entirely the result of an error of the State, the applicant was ordered to repay the overpaid amount in full, together with statutory interest. Therefore, no responsibility of the State for creating the situation at issue was established, and the State avoided any consequences of its own error. The whole burden was placed on the applicant only.

The Court acknowledges that the applicant was offered to repay her debt in sixty instalments. However, the fact remains that the sum the applicant was ordered to repay to the State which included the statutory interests as well represented a significant amount of money for her given that she was deprived of her only source of income at the same time as well as her overall financial situation (see paragraphs 15, 24 and 31 above).

As to the applicant's personal situation, the Court notes that the sum she received on account of unemployment benefits is a very modest one and as such has been consumed for satisfying the applicant's necessary basic living expenses, that is to say for her subsistence.

The national courts in deciding on unjust enrichment did not take into consideration the applicant's health and economic situation. She has been suffering from a psychiatric condition since 1993 and has become incapable of working. She has been unemployed for a long period of time, since 1995. At the time her employment was terminated as a result of her employer becoming insolvent she was only two months short of qualifying for unemployment benefits until next employment or retirement under Section 23 of the Employment Act (see paragraphs 6 and 40, see also mutatis mutandis Béláné Nagy, cited above, § 123). The information from the enforcement proceedings suggests that she has no bank accounts, no income of any sort, and no property of any significance. In these circumstances paying her debt even in sixty instalments would put at risk her subsistence.

In view of the above considerations, the Court finds that under the circumstances of the present case, the requirement imposed on the applicant to reimburse the amount of the unemployment benefits paid to her in error by the competent authority beyond the statutory maximum period entails an excessive individual burden on her.

It follows that there has been a violation of Article 1 of Protocol No. 1 to the Convention.