Practice Areas Review: Human Rights

Limitation Period: What ECHR has to Say

Ivan LISHCHYNA

Ivan LISHCHYNA

Partner, Trusted Advisors

PROfile

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One of many problems, posed by the new members of the Convention who joined after 1989, was related to the mass privatisation launched by post-soviet states. The massive character of the privatisation inevitably led to numerous mistakes, which were often uncovered late, after the limitation period for bringing civil proceedings expired. Accordingly, whenever the courts found for the authorities in spite of the limitation, this created a problem under the Convention in the context of the right to a fair trial and the right to peaceful enjoyment of possessions.

In the first case regarding this interference, Zhigalev v. Russia (No. 54891/00, 6 July 2006), the applicant, former head of a collective farm, arranged in 1992 to have all the land that belonged to the farm to be registered in his name disregarding the interests of the other five former employees of the farm. In 1999, i.e. around four years after the expiry of the 3-year limitation period, the prosecutor’s office brought proceedings against the decisions of the local authorities challenging the validity of the land certificate issued in the applicant’s name. The latter participated in the proceedings as a third person. Under Russian law, the limitation period may be invoked as a defence by the respondent and the applicant’s motion to this effect was rejected on the grounds that he was not a respondent in these proceedings. The court found for the prosecutor and declared the land certificate invalid.

The applicant invoked Article 6 of the Convention (fair trial. A6) and Article 1 of Protocol 1 (right to property. P1-1). In dealing with P1-1 complaint, the Court relied on the apparent fairness of the proceedings in domestic courts, which, apart from the applicant’s inability to plead the expiry of a limitation period on account of his status as a third party, was not challenged by the applicant. The Court found no indication that the conclusions of the national judicial authorities were arbitrary or unreasonable and concluded that the applicant cannot, for the purposes of Article 1 of Protocol No.1, be deemed to have had “existing possessions” or a claim amounting to a “legitimate expectation” in the sense of the Court’s case law. The Court did not consider the non-application of the limitation period as a separate issue under P1-1.

As to A6, the Court relied on its established case law that this Article extends only to a dispute over a “civil right” which can be said, at least on arguable grounds, to be recognised under domestic law. Based on this, the Court took the rather controversial view that as it had found the complaint under P1-1 to have no basis in law, the applicant had no recognisable “civil right” under A6, which, accordingly could not be applied. 

In the case of Dacia S.R.L. v. Moldova (No. 3052/04, 18 March 2008) the Court took a different approach. In 1999 a company purchased a hotel from the State at auction and ran if for the next four years. Following an application by the Prosecutor in 2003, after the expiry of the limitations period for civil actions (3 years) the Economic Court annulled the sale of the hotel on the grounds of procedural irregularities and ordered its return to the State and repayment of the 1999 purchase price to the applicant company. The limitation period was not applied because of a provision in the law exempting the claims of the authorities for the recovery of State property from the unlawful possession of private persons.

As to P1-1 the Court had no problem in finding that the applicant had “possession” within the meaning of P1-1 (Para. 53). The Court also found that the applicant company had been forced to bear an individual and excessive burden, as the irregularities in the privatisation of the hotel had been formal in character or unsubstantiated and were not attributable to the applicant. The issue of the limitation period was mentioned in the context of P1-1 as grounds for finding a violation under A6.

As to the latter, the Court considered the situation from the angles of “equality of arms” and “legal certainty”. The Court acknowledged the importance of the limitation period in the stability of civil relations, indicating that “the role played by limitation periods is of major importance when interpreted in the light of the Preamble to the Convention which, in its relevant part, declares the rule of law to be part of the common heritage of the Contracting States” (Para. 75).

The Court further found that “no reasons were given in the present case for exempting State organisations … from the obligation to observe established limitation periods” (Para. 76). Moreover, the Court indicated in Para. 77 that the altering of a legal situation which has become final due to the application of a limitation period is incompatible with the principle of legal certainty.

This position was developed further in Baroul Partner-A v. Moldova, (No. 39815/07, 16 July 2009). The case concerned the sale in 2000 of a 65.86% shareholding in a State-owned quarry. In December 2006 the prosecutor’s office filed a civil action for the recovery of the shares on the ground that the initial price for them paid by the applicant was calculated erroneously. The applicant in defence referred to the expiry of the 3-year long limitation period. The domestic courts rejected this defence, finding that this period started to run only when the prosecutor’s office learned about the violations.

The Court, as in the Dacia case, found Moldova guilty of violation of A6 and P1-1, but unlike in the Dacia case the question of the limitation period had a prominent position in P1-1 reasoning of the Court. The Court first considered the case from the standpoint of A6. It decided that the interpretation by domestic courts of the limitation period rule was incompatible with the principle of legal certainty and that there was nothing to prevent the Government, which had owned the shares before 2000, to learn earlier about the alleged insufficiency of the price (Para. 41). 

In the context of P1-1 the Court found that, in the circumstances of the case, it was unable to see any element of bad faith in the applicant’s conduct during the privatisation as opposed to that of the Government (Para. 50). The Court next found that “[f]or the Court, the reasons underpinning the finding of a breach [of A6] would, of themselves, ground a separate breach of [P1-1] of the Convention” (Para. 51).

However, the subsequent practice of the Court demonstrated that the above position was subject to certain qualifications. Thus, in the Maksymenko and Gerasymenko v Ukraine case ([2013], ECHR 439,16 May 2013) the Court examined the following situation: in 1995 a title to a certain hostel was transferred to company S., which subsequently became insolvent. In 2004, the applicants jointly bought a hostel from the creditors of S. In 2006, the Court of Appeal declared at the prosecutor’s request that the hostel had been a state asset and should never have come into the possession of the insolvent company. It transferred the hostel to the local council without compensation to the applicants. As to the expiry of the 3-year limitation period (from 1995), the court found that the prosecutor had only learned about the situation in 2005.

While finding the breach of P1-1 the Court relied heavily on the rule that the State cannot benefit from its wrongdoing where it had itself failed to put in place or adhere to its own procedures and on the fact that the Applicants did not obtain any compensation from the State for the expropriated property. The Court did not find the prosecutor’s consideration after the limitation period as grounds for the violation of P1-1, nor did it refer to either Dacia or Baroul Partner-A cases.

The Court further found no violation of A6 in this case. The applicant’s reasoning was similar to that in the Baroul Partner-A case. However, the Court, in stark contrast to this case, agreed with Ukrainian courts that “[t]here is no evidence that the prosecutor was aware of the transactions in question before this complaint was submitted”.

Finally, in the most recent case on the matter, of Bogdel v. Lithuania (No. 41248/06, 26 November 2013) the Court added a further layer of uncertainty to this issue. In this case, a plot of land was bought from the local municipality in 1995. The applicants ran a café on the land, which was close to a tourist attraction. Following a series of investigations by the State Audit Office launched in August 1999, the decisions of the municipal bodies granting the applicants ownership of the land were cancelled on the grounds that they were contrary to the legislation on the protection of cultural heritage, protected territories and territorial planning.

The applicant appealed to the court and the municipal authorities counterclaimed, seeking the invalidation of the sale contract for the land. The courts found for the authorities, indicating that the limitation period of 3 years was not breached as the authorities learned of the violations only when the State Audit Office had concluded that the land had been purchased in breach of legislation. What distinguishes this case, however, from the Maksymenkocase was that the applicants were repaid the amount initially paid for the plot and that the municipality leased the land back to them for eighty-seven years, which allowed them to continue their business as before.

As to P1-1, the Court found that the applicant did have possession of which they were deprived (para 55). However, it decided by a majority of 5:2 that the compensation (the payment of the initial price, plus an opportunity to lease the land for eighty-seven years) was sufficient and rejected the complaint under this head. The Court did not distinguish this judgment from the judgment in Baroul Partner-A case and did not discuss the limitation period’s issue in the context of P1-1.

As regards A6, the Court did mention in its reasoning in the Dacia case. However, it rejected the complaint on the ground that “on the basis of the submissions by the Government and, above all, the Court’s conclusion, it considers that the effect of [the discriminating application of limitation period to the public authorities’ claims as opposed to that of a private person] on the applicants was compatible with their ‘right to a court’ under the Convention” (Para. 81).

The above argumentation was, in the author’s opinion, correctly criticised in the dissenting opinion of Judges Popović and Paulo Pinto de Albuquerque as being “tantamount to rewarding the negligence and inertia of the administration and punishing a bona fide private party”.

As can be seen from the above, the Court has not yet found a balance in its views on the issue of exoneration of the Government for bringing proceedings for recovery of its former property outside the limitation period on the grounds that the particular body filing the suit learned of the situation late. The issue may well be worthy Grand Chamber material. In the meantime,  applicants should take into account all possible eventualities of their complaints and hope for the better.