Beshiri et al. v. Albania: a nail in the coffin for compensation claims for properties nationalized during the communist regime in Albania?

Giulia Borgna, PhD. Attorney-at-law at Saccucci & Partners and Co-Editor at eXtradando

Rivers of ink have flowed on the issue of compensation for former owners whose properties had been nationalized during the communist regime in Albania. Over the past decades, domestic reparation schemes and findings of violation have chased one another in an exhausting role-play on the stage of the European Court: every compensation scheme passed by the Albanian Government in the attempt to solve this systemic and structural problem would, time and again, be repudiated by the Strasbourg Court. The recent inadmissibility decision in the case of Beshiri and Others v. Albania of 17 March 2020 marks a turning point in this seemingly never-ending confrontational drama. The Court decided to pull itself away from this tiresome complex situation and waved the white flag of surrender. Even though the umpteenth revised compensation scheme passed by Albania in 2015 failed to transpose the vast majority of the directions laid down in the pilot-judgment of Manushaqe Puto, the Court sanctioned this legislative scheme in the name of budgetary constraints and subsidiarity, albeit wedging the door open for possible future reconsiderations.

Albania’s structural problem of non-compensation for properties nationalized during the communist regime: the pilot-judgment in Manushaqe Puto and the 2015 Property Act

Between 2006 and 2011 the European Court delivered a number of judgments concerning the non-enforcement of final administrative or court decisions recognizing the applicants’ entitlement to restitution or compensation for properties which had been confiscated or otherwise taken by the former communist regime. In all of these cases, the Court found either a breach of Articles 6(1) and 13 ECHR, and/or Article 1 of Protocol no. 1 to the ECHR (see, in particular, Beshiri and Others v. Albania; Ramadhi and Others v. Albania; Driza v. Albania; Hamzaraj v. Albania (no. 1); Vrioni and Others v. Albania and Italy; Eltari v. Albania).

The underlying issue, however, was never solved. The various pieces of legislation passed by Albania in almost three decades, with a view to tackle the problem, consistently proved ineffective. Confronted with a relentless influx of repetitive cases, the Court eventually decided to apply the pilot-judgment procedure and selected the case of Manushaqe Puto and Others. In its judgment of 31 July 2012, the Court ordered that the Albanian authorities ‘take general measures, as a matter of urgency, in order to secure in an effective manner the right to compensation’ (ivi, § 110). The Court adjourned all new applications lodged after the delivery of the pilot-judgment for a term of 18 months, but continued examination of applications lodged before the relevant date.

Between 2013 and 2016, the Court handed down subsequent judgments in a number of cases (e.g., Karagjozi and Others v. Albania; Metalla and Others v. Albania; Sharra and Others v. Albania; Halimi v. Albania).

On 5 December 2015, the Albanian Parliament passed Law no. 133/2015 (“2015 Property Act”), establishing a new compensation scheme with a view to implement the pilot-judgment in the case of Manushaqe Puto. In particular, the 2015 Property Act provides for the financial evaluation of claims concerning properties that have been nationalized during the regime and for the award of compensation (either financial or in-kind). To this end, the legislation establishes a Financial Compensation Fund and a Land Fund, the latter collecting all State-owned properties and lands that may be allocated as compensation in-kind.

In September 2018, the Committee of Ministers adopted a resolution whereby it decided to close the examination of the Manushaqe Puto pilot-judgment, having been satisfied that the measures required under Article 46(1) ECHR had been adopted.

The facts of the case and the Court’s inadmissibility decision

The applicants were former owners (or their heirs) whose properties had been nationalized during the communist regime. They had all received domestic decisions recognizing their right to compensation in lieu of restitution. However, those decisions had never been enforced in full.

With applications lodged between 2006 and 2014, the applicants claimed a breach of Articles 6, 13 and 1 of Protocol no. 1 on account of the authorities’ failure to award them compensation and the lack of an effective remedy in respect of their entitlement to receive compensation.

These applications were the first to be examined following the introduction of the new domestic compensation scheme. The Court had to determine, within the context of the applicants’ compliance with the rule of exhaustion of domestic remedies, whether the 2015 Property Act could be considered as an effective remedy.

The Court replied in the affirmative on the following grounds:

  • Appropriateness of the form of redress: It falls within the State’s margin of discretion to determine the hierarchy of compensation forms to be awarded at the domestic level (ivi, §§ 179-188).
  • Adequacy of compensation: Reference to the original cadastral category of the expropriated property as a basis for carrying out the financial evaluation is not per se arbitary. Nor is reliance upon the average sales price as extracted from transactions registered with the Immovable Property Registration Office (“IPRO”) for calculating the property’s market value. Even though the new compensation formula leads to much lower levels of compensation than under previous legislation, the burden imposed upon former owners is neither disproportionate nor excessive, provided that the aggregate amount of compensation is equal to at least 10% of the current market value of the expropriated property (ivi, §§ 189-203).
  • Accessibility and efficiency of the remedy: The 2015 Property Act lays down clear and binding time-limits for the authorities to act, and envisages the possibility to challenge the financial evaluation before domestic courts. Although the Supreme Court is currently not functioning, it would be speculative to find that the domestic courts dealing with such appeals will not act with due diligence (ivi, §§ 204-214).

Having found that the remedy introduced by virtue of the 2015 Property Act is, in principle, effective within the meaning of Articles 13 and 35(1) ECHR, the Court held that the applicants could not be dispensed from having recourse to it, even if their applications had been lodged well before its entry into force (ivi, § 217). The Court thus declared the applications inadmissible on the ground of non-exhaustion of domestic remedies or on the ground that the applicants could no longer claim to be victims of the violations complained of.

However, in its closing remarks, the Court reserved the right to review, in the future, its position on the effectiveness of the remedy depending on the authorities’ capacity to demonstrate that the new remedy is also effective in practice (ivi, § 222).

The Court puts a reduced “price-tag” on repetitive violations

If, as the Court held, “the attenuation of old injuries sustained as a result of infringements of property rights by the communist regime [should] not create disproportionate new wrongs” (Dickmann and Gion v. Romania, § 96), this principle appears to have been obliterated in the present case.

The new compensation scheme is no more than a disguised reiteration of the same conditions and criteria that the Court had constantly rejected since Manushaqe Puto. Yet, the matter is apparently no longer worth standing fast. While it would be impossible to dissect the Court’s complex decision in the context of this comment, a number of salient issues are worth highlighting.

Most importantly, the Court changed its long-standing legal qualification of the claim, which is no longer framed as an “unlawful expropriation” (Sharra, § 79), but as an “unjust deprivation of property” (Beshiri, § 190). This is not just a branding change, but rather a seismic shift with material consequences, first and foremost in terms of compensation. While an unlawful expropriation traditionally requires an amount of compensation that corresponds to the current value of the property (see, ex multis, Brumărescu v. Romania (just satisfaction) [GC], §§ 19‑24; Sharra, §§ 79-81) or that is, at least, “reasonably related” thereto (Vistiņš and Perepjolkins v. Latvia (just satisfaction) [GC], § 36), an unjust taking of property apparently calls for a significantly reduced reimbursement. Admittedly, one that meets the very low threshold of 10% of the property’s current market value.

The revised legal qualification of the claim constitutes the lynchpin of the Court’s decision in Beshiri and the ultimate justification for the validation of the new compensation scheme, although this case differs in almost nothing from the previous ones.

Second, the Court argued that reference to the original cadastral category of the expropriated property may be used as a basis for carrying out the financial evaluation. In the past, however, the Court had always rejected this criterion (Halimi, § 21) because it meant calling into question the final domestic decisions that had explicitly recognized the owners’ right to compensation based on the current cadastral category. In practical terms, market value will be determined as though the plot of land were agricultural and not building, thus leading to much lower amounts of compensation.

Third, the Court sanctioned the new compensation methodology, although it is based on the same data that had always been deemed unreliable (Sharra, §§ 86-87). Rather tellingly, the Court is satisfied by the fact that former owners may challenge the financial evaluation before domestic courts. Nor will the former owners’ benefit from a clear legislative framework, since – as the Court itself notes – it is “somewhat unclear upon which basis the national courts will determine the pending property claims” (Beshiri, § 183).

Fourth, the Court implicitly held that compensation in-kind constitutes an effective form of redress. However, the new legislation still fails to offer any guidance as to the criteria for the allocation of land as compensation in-kind, as to the Land Fund’s endowment and to the duration of the process. These are only some of the problems that have prompted the Court to repeatedly rule, in the past, that compensation in-kind was not an effective remedy (see, e.g., Manushaqe Puto and Others, § 75; Çaush Driza v. Albania, §§ 78-83; Delvina v. Albania, § 13).

Fifth, despite the Court’s clear directions in Manushaqe Puto, monetary compensation: i) is still capped at a very low amount; ii) does not take into account non-pecuniary damage incurred as a result of excessively long non-enforcement; and iii) is not adjusted for inflation nor increased with interests.

Why, then, did the Court validate a compensation scheme that just pays lip service to former owners?

The answer is to be found in the Court’s controversial approach in pilot-judgment follow-up cases. According to the Court, a wider margin of appreciation should be left to the domestic authorities in respect of the implementation of a pilot-judgment and in assessing the amount of compensation to be paid at the national level, even if that results in the award of amounts that are lower than those fixed by the Court in similar cases (see Cocchiarella v. Italy [GC], § 80; Anastasov and Others v. Slovenia (dec.), § 71; Domján v. Hungary (dec.), § 28).

Still, even against these stringent standards, the compensation threshold set by the Court in Beshiri seems “incommensurably small” and does not “even approach the awards usually made by the Court in comparable circumstances” (see Mironovas and Others v. Lithuania, § 99).

While the Court has always refrained from the stare decisis rule (Pellegrin v. France [GC], §§ 60-63), the fact that it departed from its previous rulings without providing strong reasons – and not acknowledging this departure (as it has done, for example, in Guiso-Gallisay v. Italy (just satisfaction) [GC], §§ 102-107) – is significant and upsetting at the same time. Given the relevance of the case and the novelty of the findings, it would have been preferable if the Chamber had relinquished jurisdiction in favour of the Grand Chamber on the grounds that the resolution of the questions before it could lead (as it did) to a “result inconsistent with a judgment previously delivered by the Court”.

What is even more debatable is that the Court disposed of the case by means of an inadmissibility decision. This is a direct consequence of the retrospective application of the rule of previous exhaustion of domestic remedies under Article 35 § 1 ECHR to applications that were lodged before the introduction of the new remedy at the domestic level. Although this is a rather common approach in the Court’s case-law (see, for all, Stella and Others v. Italy), its “one-size-fits-all” application in the present case is questionable. Six out of the twelve joined applications decided in Beshiri had been lodged prior to the Manushaqe Puto pilot-judgment. Since the Court had committed itself to continue their examination, the fairest and more balanced approach would have been to exonerate these applicants from the burden of having to avail themselves of the new remedy and, thus, to declare their applications admissible. The Court could still have dismissed their claims on the merits, but at least it would have done so by means of a judgment (and not a decision), thus leaving open the possibility for a referral to the Grand Chamber.

Yet, in spite of appearances, Beshiri is not the final nail in the coffin.

The key to unravelling the Court’s reasoning lies in the operative part of the decision. The Court could have struck the applications out of its list of cases under Article 37(1)(b) ECHR for having found the matter to be resolved and could have consequently closed the pilot-judgment procedure applied in the case of Manushaqe Puto (see, e.g., Anastasov and Others (dec.), §§ 97-101; Association of Real Property Owners in Łódź and Others v. Poland (dec.), § 90; Zadric v. Bosnia and Herzegovina (dec.); E.G. v. Poland and 175 Other Bug River Applications (dec.), §§ 25-29). Instead it didn’t. The Court declared the applications inadmissible for failure to exhaust domestic remedies, but did not close the pilot-judgment procedure. This course of action is notable given that, whenever the Court has ruled after the Committee of Ministers’ decision to close its supervision of a pilot judgment, it has always followed the Committee and approved the remedy without any hesitation (see Zadric (dec.); Anastasov (dec.), §§ 86-87).

This unusual procedural path may thus be read as a sign that the Court is not fully convinced that the new remedy is indeed capable of providing adequate redress, as transpires also from the Court’s closing remarks.

The difficult marriage between individual justice and judicial politics

 The valuable (so to speak) lesson that Contracting States may learn from the decision in the case of Beshiri is that foot-dragging on enforcing a judgment(s) ultimately pays off. The solution adopted by the Court has the perverse effect of encouraging States to delay, as much as possible, the introduction of general measures where a structural problem has been found to exist and, ultimately, to adopt a pale simulacrum thereof. This is, by all means, rewarding non-compliance (see, on this subject-matter, the Dissenting Opinion annexed to the much controversial decision in Burmych v. Ukraine [GC]).

The decision in Beshiri seems to be the product of a carefully construed compromise that serves the dual purpose of easing excessive pressure off the Albanian authorities (and, consequently, off the Court’s overburdened docket) and of safeguarding what’s left of individual justice. It may be argued that the Court handed an almost “blank check” to the domestic authorities with the possible exception that it reserved the right to partially ask it back should the authorities fail to properly discharge their duties.

Given the magnitude of problems raised by the 2015 Property Act, it is a safe bet that former owners will soon return knocking at the Court’s door.

 

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