EHRM, 26-03-2024, nr. 75088/17

The Government referred at the outset to the reservation made by Spain to Protocol No. 1, which reads:

They argued that this reservation implied a broader margin of appreciation of the State in relation to the content and limits of property rights.

Moreover, the Government put forward three objections as to the admissibility of the application. First, they argued that the complaint was incompatible ratione materiae with the Convention, stating that the alleged possessions invoked by the applicant company could not be considered as such within the meaning of Article 1 of Protocol No. 1, as that concept did not cover expectations of future income. They stressed that States had a wide margin of appreciation when establishing and regulating national State aid schemes and that Article 1 of Protocol No. 1 did not preclude any evolution in those schemes or any changes in the rules governing benefits at a given time, including their amount or their conditions of access. Second, the Government argued that the applicant company had not suffered any significant disadvantage within the meaning of Article 35 § 3 (b) of the Convention. They alleged that the applicant company had not specified the damage resulting from the application of the new system, that it had not provided any evidence of damage and that it had maintained a similar level of income from public subsidies after 2013. Third, they considered that the applicant company had abused the right of individual application within the meaning of Article 35 § 3 of the Convention by concealing elements that were essential for the examination of the case, such as the specific safeguards included in the new legal framework preventing the reimbursement of subsidies already paid and the subsidies received by the applicant pursuant to the new regulation.

As to the merits of the case, the Government reiterated that the applicant company had not had a right to the immutability of future subsidies. They argued that the formulas contained in the 2014 regulation had calculated the remuneration payable to companies by taking into account any such amounts already received, with the sole effect that, if the cost of the investment had been recovered before the new rules had entered into force with a return higher than 7.398%, the companies would not have received any more subsidies but nor would they have been required to reimburse any excess amounts. There had thus been no interference with the applicant company's rights. Alternatively, even considering that the new regulation had amounted to control of the use of property, it would have met the requirements of Article 1 of Protocol No. 1, namely, to be provided for by law, to be in pursuance of a legitimate aim and to be proportionate.

The applicant company claimed that the implementation of the new regime had deprived it of its possessions. It stated that the subsidies received between 2002 and 2013 under the previous legal framework had been integrated into its assets and that the new legal framework adopted in 2014, retrospectively classifying part of those earnings as unreasonable and applying complicated mathematical formulas to calculate the future subsidies, had implied an obligation to reimburse some of the subsidies already received. It maintained that, under the new system, any earnings classified as ‘unreasonable’ would be deducted from future subsidies and returned to the State with interest. It claimed that while a future change to the system had been foreseeable and legitimate, its retrospective application had not. It advanced that the legal instruments had not identified a legitimate aim and that the interference had been disproportionate.

In reply to the Government's admissibility objections, the applicant company stated, first, that it did not seek the protection of ‘expectations’ but rather of past remuneration incorporated into its possessions, which it claimed it had been forced to reimburse on the basis of ‘obscure mathematical formulas’. Second, it maintained that it had suffered a reduction in revenues of about 12.5 million euros per year and that, in any event, the Government were ‘obliging it to give back past excess remuneration by reducing its future remuneration’. Lastly, it denied having omitted any relevant information.

Concerning the merits, in the applicant company's view, the interference had led to a deprivation of possessions, as the new remuneration system had impinged on past remuneration that had been fully integrated into its possessions. In so far as it considered the reform of the system unforeseeable, it stated that the interference had not been provided for by law. Furthermore, it held that the deprivation of possessions had not been covered by the public interest as claimed to justify the reform of the system. Lastly, it argued that the interference had not struck a fair balance between the general interest and the protection of the individual's rights and was thus disproportionate.

The Court notes, at the outset, that the domestic proceedings brought by the applicant company aimed to challenge two domestic rules — namely Royal Decree no. 413/2014 and Order IET/1045/2014 — and not an individual measure against the applicant company.

The Court reiterates that, in order to be able to lodge an application in pursuance of Article 34, a person, non-governmental organisation or group of individuals must be able to claim ‘to be the victim of a violation … of the rights set forth in the Convention …’. In order to claim to be a victim of a violation, a person must be directly affected by the impugned measure. The Convention does not, therefore, envisage the bringing of an actio popularis for the interpretation of the rights set out therein or permit individuals to complain about a provision of national law simply because they consider, without having been directly affected by it, that it may contravene the Convention (see Burden v. the United Kingdom [GC], no. 13378/05, § 33, ECHR 2008). It is, however, open to a person to contend that a law violates his or her rights, in the absence of an individual measure of implementation, if he or she is required either to modify his or her conduct or risk being prosecuted or if he or she is a member of a class of people who risk being directly affected by the legislation (ibid., § 34).

In the present case, the Court observes that it is not disputed that the applicant company was subject to the special regime's remuneration system under the Electricity Sector Act, as in force at the relevant time. It further observes that the remuneration system, as established by the 2013 and 2014 regulations, has been applied to the applicant company in practice. In these circumstances, the applicant company is directly affected by the legislation and can claim to be a victim of the alleged violation of the Convention (ibid., § 35).

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 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. The issue that needs to be examined in each case 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 Anheuser-Busch Inc. v. Portugal [GC], no. 73049/01, § 63, ECHR 2007-I).

Article 1 of Protocol No. 1 applies only to a person's existing possessions. Thus, future income cannot be considered to constitute ‘possessions’ unless it has already been earned or is definitely payable. Further, 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 (ibid., § 64).

However, in certain circumstances, a ‘legitimate expectation’ of obtaining an ‘asset’ may also enjoy the protection of Article 1 of Protocol No. 1. Thus, where a proprietary interest is in the nature of a claim, the person in whom it is vested may be regarded as having a ‘legitimate expectation’ if there is a sufficient basis for the interest in national law, for example where there is settled case-law of the domestic courts confirming its existence. However, 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 (ibid., § 65, with further references).

In certain circumstances, the retrospective application of legislation whose effect is to deprive someone of a pre-existing ‘asset’ that was part of his or her ‘possessions’ may constitute interference that is liable to upset the fair balance that has to be maintained between the demands of the general interest on the one hand and the protection of the right to peaceful enjoyment of possessions on the other (ibid., § 82).

The Court notes, at the outset, that the new legal framework included specific safeguards preventing the reimbursement of subsidies paid before July 2013, even if the reasonable return had been exceeded by that date (see paragraph 23 above). Accordingly, facilities which had already achieved a reasonable return would not receive any further subsidies, but nor would they be asked to reimburse those received in excess of what had been considered reasonable under the new rules (see paragraphs 11 and 23 above). The applicant company has not advanced any evidence to show that those safeguards were not applied in practice in its case or that it was actually asked to reimburse any sums previously received. On the other hand, the information submitted by the Government shows that the calculation of the applicant's return on investment from 2013 was equal to zero for some years, but was never a negative figure (see paragraph 15 above). Since there is no evidence of any direct or indirect reimbursement of the sums already received, the Court is satisfied that the new regulations did not entail a retrospective deprivation of the possessions acquired by the applicant company prior to the change in the remuneration system.

The applicant company argued that the calculation method introduced by the new regulation, by taking into account past subsidies to reduce future benefits, had effectively offset all sums previously received in excess of the reasonable return, as calculated in accordance with newly established criteria.

The Court observes in this regard that the previous rules governing the electricity system in Spain did not set a specific amount to be received as a return on investment. On the contrary, the subsidy system was based on the concept of a reasonable return on investment (see paragraph 21 above). It further observes that, according to the Supreme Court's case-law, the reasonable return on investment could be adjusted in view of financial or technical factors and that the right to a reasonable return on an investment in renewable-electricity facilities did not imply a right to obtain the same remuneration throughout a facility's useful life (see paragraphs 24–28 above). Thus, in the Court's view, it cannot be said that the domestic courts created ‘a legitimate expectation’ that the reasonable return or the remuneration for the investment would remain unchanged for the duration of the useful life of the facility were it not for the changes in the regulatory framework of 2013 (see, by contrast, Smokovitis and Others v. Greece, no. 46356/99, § 32, 11 April 2002). Indeed, the applicant company accepted that the Government had the power to change future subsidies.

It is undisputed that the calculation method took into account previously received sums to set future subsidies. In the applicant company's case, however, this simply meant that it temporarily stopped receiving a return on investment. As previously stated, according to the information provided by the Government, the return on investment granted to the applicant company was reduced to zero in the three years following the approval of the new regulations, as it was considered that the applicant company had already achieved a reasonable return (see paragraph 15 above). While the applicant company disagreed with the figures submitted by the Government concerning the return achieved, there is no information in the case file on any action taken by the applicant company to challenge the calculation of this figure before the domestic authorities (see paragraph 14 above). Indeed, the applicant company has not provided any evidence to challenge the documentation submitted by the Government. In particular, it has not submitted to the Court any documentation concerning its income and expenses during the relevant period; its allegations are based solely on an expert report.

The Court thus considers that, while the new regulations may have impacted the applicant company's revenues by reducing the reasonable return and the sums to be received as a return on investment, they only affected subsidies to be received after the relevant provisions had entered into force; that is, subsidies which are to be considered future income. Furthermore, since the domestic law and case-law did not grant a right to a fixed and unchangeable amount to be paid as a reasonable return or as a return on investment (see paragraph 46 above), the Court finds that the subsidies to be received as of the entry into force of the new regulations did not have a sufficient basis in the national law to qualify as ‘possessions’ within the meaning of Article 1 of Protocol No. 1 to the Convention and that the guarantees of that provision therefore do not apply (see Radomilja and Others v. Croatia [GC], nos. 37685/10 and 22768/12, § 151, 20 March 2018).

Accordingly, the application is incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3 (a) and must be rejected in accordance with Article 35 § 4.

For these reasons, the Court, unanimously,

Declares the application inadmissible.

Done in English and notified in writing on 18 April 2024.

Martina Keller

Deputy Registrar

Georges Ravarani

President