EHRM, 30-04-2013, nr. 37265/10

From the 1980s onwards the Netherlands, in common with other European Union countries, introduced measures aimed at limiting the quantity of dung, or faecal matter, produced by certain animals including pigs. This initially involved a system of ‘dung production quotas’.

On 1 September 1998 the Pig Farming Restructuring Act (Wet herstructurering varkenshouderij) entered into force.

The Pig Farming Restructuring Act, according to its preamble, was enacted with a view to implementing European Union Council Directive 91/676/EEC concerning the protection of waters against pollution caused by nitrates from agricultural sources, and also in order to preserve amenity, the quality of the environment and the health and well-being of animals.

The Pig Farming Restructuring Act transformed ‘dung production quotas’ into a maximum number of pigs per farm — the so-called ‘pig entitlement’ (varkensrecht). Pig entitlements (except in so far as they concerned breeding sows, which were treated as a special category) were transferable, within certain (especially territorial) limits (sections 16–17 of the Pig Farming Restructuring Act) and subject to the lapse of a variable proportion of the entitlement upon transfer (section 18 of the Pig Farming Restructuring Act); they could not, however, be used as collateral (section 22).

The pig entitlement was calculated in each case by reducing the average number of pigs held on the farm in 1996 or, in certain cases, 1995 by 10% (sections 6 and 7 of the Pig Farming Restructuring Act). A further reduction by 15% was foreseen with effect from 1 January 2000 (section 31 of the Pig Farming Restructuring Act). It was the actual number of pigs kept in those years that was decisive; any ‘latent capacity’ (latente ruimte), that is the difference between the number of pigs a farmer would have been allowed to keep at the relevant time and the number actually kept, was lost.

Provision for special cases of hardship was made in the Pig Farming Restructuring (Hardship) Decree (Besluit hardheidsgevallen herstructurering varkenshouderij); such cases included, among others, farms which — as determined by precise formulae — had, for specific reasons (a farmer's ill-health not among them), been working significantly below the capacity allowed them in 1995 and 1996 by the dung production quota legislation then in force.

The Pig Farming Restructuring Act and the Pig Farming Restructuring (Hardship) Decree were repealed with effect from 1 January 2006.

The applicants are, or were at the relevant time, pig farmers resident and farming in the Netherlands.

The applicants Lohuis and Lohuis-Voshaar, who ran a farm as a partnership (maatschap), were farming at considerably less than full capacity in 1995 and 1996 owing to ill-health. They ended up losing over 30% of their original pig entitlements as ‘latent capacity’, in addition to the 25% total reduction prescribed by the Pig Farming Restructuring Act. They have since given up farming.

The applicant Van Gerwe farmed at two locations, on one of which he was building a new pig shed in 1995; farming began there in 1996. Thanks to a clause beneficial to him in the Pig Farming Restructuring (Hardship) Decree he lost only 5% of his entitlements for that location as ‘latent capacity’. For the other location he lost the full 25%.

The applicant Schutte lost the full 25% of his 1995–1996 entitlement plus 5% as ‘latent capacity’. He also stated that he had run into financial difficulties as a result of the uncertainty facing pig farming in the late 1990s, which had forced him to sell off some of his land and purchase pig entitlements from elsewhere.

The applicant Van den Heuvel lost the full 25% of his former entitlements, plus a claimed 30% as ‘latent capacity’.

On 26 June 1998 the applicants, together with other pig farmers and a non-governmental organisation set up to further the interests of pig farmers (hereafter ‘the original plaintiffs’), brought a civil action in tort against the State before the Regional Court (arrondissementsrechtbank) of The Hague, arguing among other things that the new legislation constituted a ‘deprivation of possessions’ within the meaning of Article 1 of Protocol No. 1.

On 23 December 1998 the Regional Court gave judgment holding, as relevant to the case, that pig entitlements constituted ‘possessions’, and that depriving the applicants thereof without any compensation constituted a tort as long as adequate arrangements for compensation were not made. The Pig Farming Restructuring (Hardship) Decree was not sufficient to mend matters since it could merely limit the damage, not compensate for it.

The State appealed to the Court of Appeal (gerechtshof) of The Hague. The original plaintiffs lodged a cross-appeal.

On 20 January 2000 the Court of Appeal gave judgment holding that the measures complained of constituted not a ‘deprivation’ of possessions but a ‘control’ of their use. It accepted the necessity of measures to be taken, and also the proportionality of the first reduction of the pig entitlements by 10%. The second reduction by an additional 15%, however, it found disproportionate. It therefore held that section 31 of the Pig Farming Restructuring Act should not be put into effect as regards the original plaintiffs, dismissing their claims for the remainder.

A number of the original plaintiffs, including the applicants, lodged an appeal on points of law to the Supreme Court (Hoge Raad). The State lodged a cross-appeal.

On 16 November 2001 the Supreme Court delivered a judgment (LJN (Landelijk Jurisprudentie Nummer, National Jurisprudence Number) AD5493) quashing the judgment of the Court of Appeal. As relevant to the case before the Court, it found that Article 1 of Protocol No. 1 was applicable and that there had been an interference with the applicants' right to the peaceful enjoyment of their possessions. However, there was no ‘de facto expropriation’ as the applicants argued. On this point, the Supreme Court held as follows:

The Supreme Court went on to hold that the new legislation constituted a ‘control of use’ of the applicants' possessions. The legislature had not, in principle, overstepped its ‘margin of appreciation’. It had to be recognised, however, that the interests of the individual pig farmers among the plaintiffs deserved protection: in particular, a ‘fair balance’ had to be found in each case, implying a ‘reasonable relationship of proportionality between the means employed and the aim sought to be realised’. The case was remitted to a different Court of Appeal, that of Arnhem, which would have to review the individual cases of the pig farmers party to the proceedings. The instruction to the Arnhem Court of Appeal was phrased as follows:

The applicants lodged an application with the Court on 13 May 2002, complaining that the new legislation did not constitute a ‘control of the use of property’ within the meaning of Article 1 of Protocol No. 1 but a ‘deprivation of possessions’ without any form of compensation.

On 8 April 2004 the Court, sitting as a Committee of three judges (former Article 27 § 1 of the Convention), declared that application (no. 18689/02) inadmissible. It found that domestic remedies had not been exhausted as required by Article 35 § 1 of the Convention, since, after the case had been remitted by the Supreme Court to the Court of Appeal of Arnhem, the proceedings had not yet been pursued to a final decision.

It is obvious that the applicants have suffered an ‘interference’ with the peaceful enjoyment of their possessions in that the number of pigs they were entitled to keep was significantly reduced by the effect of the legislation here in issue.

The Court reiterates that, according to its case-law, Article 1 of Protocol No. 1, which guarantees in substance the right of property, comprises three distinct rules. The first, which is expressed in the first sentence of the first paragraph and is of a general nature, lays down the principle of peaceful enjoyment of property. The second rule, in the second sentence of the same paragraph, covers deprivation of possessions and subjects it to certain conditions. The third, contained in the second paragraph, recognises that the Contracting States are entitled, amongst other things, to control the use of property in accordance with the general interest. The second and third rules, which are concerned with particular instances of interference with the right to peaceful enjoyment of property, are to be construed in the light of the general principle laid down in the first rule (see James and Others v. the United Kingdom, 21 February 1986, § 37, Series A no. 98, which partly reiterates the terms of the Court's reasoning in Sporrong and Lönnroth v. Sweden, 23 September 1982, § 61, Series A no. 52; see also Fredin v. Sweden (no. 1), 18 February 1991, § 41, Series A no. 192; Iatridis v. Greece [GC], no. 31107/96, § 55, ECHR 1999-II; Broniowski v. Poland [GC], no. 31443/96, § 134, ECHR 2004-V; Jahn and Others v. Germany [GC], nos. 46720/99, 72203/01 and 72552/01, § 78, ECHR 2005-VI; J.A. Pye (Oxford) Ltd and J.A. Pye (Oxford) Land Ltd v. the United Kingdom [GC], no. 44302/02, § 52, ECHR 2007-III; and Depalle v. France [GC], no. 34044/02, § 77, ECHR 2010).

In determining whether there has been a deprivation of possessions within the second ‘rule’, it is necessary not only to consider whether there has been a formal taking or expropriation of property but to look behind the appearances and investigate the realities of the situation complained of. Since the Convention is intended to guarantee rights that are ‘practical and effective’, it has to be ascertained whether the situation amounted to a de facto expropriation (see, among other authorities, Sporrong and Lönnroth, cited above, §§ 63 and 69–74; Brumărescu v. Romania [GC], no. 28342/95, § 76, ECHR 1999-VII; and Depalle, cited above, § 78).

The applicants argued that their pig entitlements were ‘possessions’ within the meaning of Article 1 of Protocol No. 1, of which they had been, in part, ‘deprived’. They observed that the understanding of ‘possessions’ in the Court's case-law was not limited to physical goods, whether movable or immovable, but could include assets that had no physical existence, as was reflected by, inter alia, Pressos Compania Naviera S.A. and Others v. Belgium, 20 November 1995, § 31, Series A no. 332; Gaygusuz v. Austria, 16 September 1996, § 41, Reports of Judgments and Decisions 1996-IV; Iatridis, cited above, § 54; and Chassagnou and Others v. France [GC], nos. 25088/94, 28331/95 and 28443/95, § 74, ECHR 1999-III.

Moreover, it followed from the Netherlands Civil Code (see paragraph 33 above) that pig entitlements, being transferable proprietary rights, were assets within the meaning of domestic civil law and therefore ‘possessions’. It was, in the applicants' suggestion, for this precise reason that they had perversely been excluded as collateral (see paragraph 6 above).

The applicants' argument presupposes that the reduction of pig entitlements resulting from the Pig Farming Restructuring Act constituted a de facto expropriation, to be considered under the second sentence of Article 1 of Protocol No. 1.

The Court reiterates that ‘possessions’ within the meaning of Article 1 of Protocol No. 1 can be either existing possessions or assets, including claims, in respect of which an applicant can argue that he has at least a ‘legitimate expectation’ that they will be realised (see Gratzinger and Gratzingerova v. the Czech Republic (dec.), no. 39794/98, § 69, ECHR 2002-VII).

However, as the Court has frequently held, it is in the first place for the national authorities, notably the courts, to interpret and apply domestic law (see, among many other authorities, Tre Traktörer AB v. Sweden, 7 July 1989, § 58, Series A no. 159; Fredin (No. 1), cited above, § 50; Pine Valley Developments Ltd and Others v. Ireland, 29 November 1991, § 52, Series A no. 222; Jahn and Others, cited above, § 86; and Bimer S.A. v. Moldova, no. 15084/03, § 58, 10 July 2007). Furthermore, no ‘legitimate expectation’ protected by Article 1 of Protocol No. 1 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 (see Kopecký v. Slovakia [GC], no. 44912/98, § 50, ECHR 2004-IX) — as in the present case the applicants' submissions were by the Supreme Court in its judgment of 16 November 2001 (see paragraph 20 above).

The Court cannot, therefore, find on the basis of the provisions of the Civil Code cited that the limitations imposed on the applicants' pig entitlements constituted a de facto expropriation such as to bring the present case within the scope of the second sentence of Article 1 of Protocol No. 1.

The Court next observes that the measures complained of did not deprive the applicants of the ownership, or of all meaningful use, of their farms (see Megadat.com SRL v. Moldova, no. 21151/04, § 65, ECHR 2008, and Antunes Rodrigues v. Portugal, no. 18070/08, § 24, 26 April 2011).

The Convention institutions have recognised as ‘control of the use of property’ in the sense of the second paragraph of Article 1 of Protocol No. 1 such Government acts as the imposition of a milk quota system in pursuance of a European Economic Community regulation (see Procola and Others v. Luxembourg, no. 14570/89, Commission decision of 1 July 1993, Decisions and Reports (DR) 75, p. 5, and Coopérative des agriculteurs de la Mayenne and Coopérative laitière Maine-Anjou v. France (dec.), no. 16931/04, ECHR 2006-XV), the limitation of fishing rights linked to the lease or the ownership of the waters concerned (see Posti and Rahko v. Finland, no. 27824/95, § 76, ECHR 2002-VII, and Alatulkkila and Others v. Finland, no. 33538/96, § 66, 28 July 2005), and the refusal of a permit to extract peat from a peat bog which the applicant company had leased (see Pindstrup Mosebrug A/S v. Denmark (dec.), no. 34943/06, 3 June 2008).

The Court has also held that the withdrawal of valid licenses or permits to run a business, even though such licenses may themselves be seen as ‘possessions’ (see Megadat.com SRL, cited above, § 62), constitutes a measure of ‘control’ of the ‘use of property’, which falls to be examined under the second paragraph of Article 1 of Protocol No. 1 (see Tre Traktörer AB, cited above, § 55, Series A no. 159; Fredin (No. 1), cited above, §§ 45–47; Capital Bank AD v. Bulgaria, no. 49429/99, § 131, ECHR 2005-XII (extracts); Rosenzweig and Bonded Warehouses Ltd v. Poland, no. 51728/99, § 49, 28 July 2005; Bimer SA, cited above, § 51; and Megadat.com SRL, cited above, § 65).

In the light of the above-cited case-law, the Court finds that there has been not a ‘deprivation of possessions’ as the applicants argue, but a measure of ‘control of the use of property’, to be examined under the second paragraph of Article 1 of Protocol No. 1.

In order to comply with the requirements of the second paragraph, it must be shown that the measure constituting the control of use was ‘lawful’, that it was ‘in accordance with the general interest’, and that there existed a ‘reasonable relationship of proportionality’ between the means employed and the aim sought to be realised (see, among other authorities, Bimer SA, cited above, § 52, and Megadat.com SRL, § 66).

Given its finding in paragraph 46 above, the Court sees no reason to doubt that the matters complained of were ‘lawful’ in terms of domestic law.

The aims pursued by the measures in question were protection of the environment and compliance with legislation of the European Economic Community. Both have been recognised by the Convention organs as legitimate in terms of Article 1 of Protocol No. 1 (in respect of the former, see, inter alia, Fredin (No. 1), cited above, § 48; Pine Valley Developments Ltd. and Others, cited above, § 57; and Depalle, cited above, § 81; in respect of the latter, see, inter alia and mutatis mutandis, the Commission's Procola decision, cited above; Bosphorus Hava Yolları Turizm ve Ticaret Anonim Şirketi v. Ireland [GC], no. 45036/98, § 150, ECHR 2005-VI; and Coopérative des agriculteurs de la Mayenne and Coopérative laitière Maine-Anjou (dec.), cited above).

It remains to be determined whether there was a ‘reasonable relationship of proportionality’ between the legitimate public interests pursued and the individual interests of the applicants.

According to well-established case-law, the second paragraph of Article 1 of Protocol No. 1 is to be read in the light of the principle enunciated in its first sentence. Consequently, an interference must achieve a ‘fair balance’ between the demands of the general interest of the community and the requirements of the protection of the individual's fundamental rights. The search for this balance is reflected in the structure of Article 1 of Protocol No. 1 as a whole, and therefore also in the second paragraph thereof: there must be a reasonable relationship of proportionality between the means employed and the aim pursued. In determining whether this requirement is met, the Court recognises that the State enjoys a wide margin of appreciation with regard both to choosing the means of enforcement and to ascertaining whether the consequences of enforcement are justified in the general interest for the purpose of achieving the object of the law in question (see Fredin (No. 1), cited above, § 51; Chassagnou and Others, cited above, § 75; and Depalle, cited above, § 83). The requisite balance will not be achieved if the person concerned has had to bear an ‘individual and excessive burden’ (see, among many other authorities, Depalle, loc. cit.).

Moreover, regional planning and environmental conservation policies, where the community's general interest is pre-eminent, confer on the State a margin of appreciation that is greater than when exclusively civil rights are at stake (see Depalle, cited above, § 84).

In the present case, the Court considers it relevant that the impugned legislation was intended precisely to reduce the environmental impact on an entire sector of farming, namely pig farming: all pig farmers in the Netherlands had to accept a reduction of the number of pigs they were allowed to keep. It cannot, therefore, be said that the applicants were singled out for special treatment.

Furthermore, the Court is satisfied that the interests of the applicants were not disregarded. General provision was made for cases of individual hardship through the Pig Farming Restructuring (Hardship) Decree which provided for certain categories of cases. Pig farmers whose situation was not alleviated by the Pig Farming Restructuring (Hardship) Decree had the option of taking their claims against the State to the civil courts — as indeed the applicants did. The fact that the applicants Lohuis and Lohuis-Voshaar obtained a judgment in their favour from the Arnhem Court of Appeal, even though not on the grounds they argued, which judgment moreover survived an appeal to the Supreme Court lodged by their opponent, demonstrates that the procedure available offered adequate protection of the rights of any pig farmer unduly affected. As regards the remaining applicants, the Court finds nothing to suggest that the decisions reached by the domestic civil courts were unreasonable or arbitrary.

Against this background, the Court cannot find that the applicants were made to bear an ‘individual and excessive burden’.

It follows that the application is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

Declares the applications inadmissible.

Marialena Tsirli

Deputy Registrar

Josep Casadevall

President