State omission to compensate unharvested wood, towards more consolidation? Associations of communally-owned forestry proprietors v. Romania

By Emma De Clerq

In a recent judgment from 28 November 2023, the Strasbourg Court found a violation of the right to property, as environmental protections kept the applicants from enjoying the economic benefits of their forests, without compensation. The forests in question were designated as protected areas under the European “Natura 2000” network. This judgement adds to the ongoing discourse surrounding the complex and often tense relation between property protection and environmental protection.

An important uncertainty surrounding this relation concerns the role of compensation in achieving a fair balance between property protection and broader environmental interests. Nevertheless, rather than providing further clarity, the court decided it was unnecessary to assess whether a fair balance was struck. Instead, it primarily based its argument on a violation of the principle of lawfulness. To that end, it referred to a European Commission decision and the Romanian Law on the Forestry Code, both establishing a legal right to compensation. It is somewhat regrettable that the Court did not further engage with the balancing exercise an sich and the tension between communal property rights and use restrictions benefitting environmental protection.

Facts of the case

This joint case involves two Romanian associations representing communally-owned forestry proprietors: Obștea de Pădure Porceni Pleșa, located in Pleșa, and Composesoratul Piciorul Bătrân Banciu, based in Recea. This particular structure, referred to as obşte, is a form of communal ownership that is characteristic for Romanian forest land ownership and involves forest associations managing the forest and holding the legal title to it. In this setup, every individual in the village typically has the right to equal shares of wood from the communally managed forest. The forests in question were designated as protected natural area in 2005 and 2008, respectively. This means the areas are part of the “Natura 2000” network, bringing together Europe’s most valuable and threatened species and habitats. Due to their protected status, the State determined that the owners could not utilise their forest land and were responsible for its maintenance. To that end, both associations concluded maintenance contracts, at their own expense, with the regional forestry departments. In reparation for these arrangements, the Romanian Law no. 46/2008 on the Forestry Code stipulates that the owners are entitled to compensation payments.

Following preliminary administrative proceedings, informing the association based in Pleșa of its entitlement to compensation for the year 2013, the association brought an administrative action against the Romanian Environmental Ministry seeking compensation. The amount of the claimed compensation largely corresponded to the value of the wood it had been unable to harvest in that year. The Ministry objected, asserting that it had not yet adopted a decision regarding “the methodology” of the procedure, determining the calculation method and eligibility criteria to implement the compensation scheme outlined in the Law on the Forestry Code. In a judgement of 5 September 2014, the Craiova Court of Appeal sided with the association, stating that the failure to adopt the methodology was no justification to deny the compensation payment. However, in a final judgement of 3 February 2016, the High Court of Cassation accepted the Ministry’s argument.

Similarly, the association based in Recea was informed of its right to compensation for the years 2010 to 2014 through preliminary administrative proceedings. Subsequently, it claimed these compensatory sums, again corresponding to the value of the unharvested wood. In a judgement of 8 December 2017, the Brașov Court of Appeal dismissed this claim, upholding the first instance judgement. The basis for dismissal was the Government’s failure to adopt the decision on the methodology for the compensation scheme.

In their claim before the Strasbourg Court, both associations contended that the prohibition on any form of use and the obligation to bear the maintenance costs for the forests, without receiving any compensation, amounted to a disproportionate burden. They argued that this situation rendered their right to property – as protected by article 1 of Protocol No. 1 to the Convention – without substance. Due to their similarity in subject-matter, the Court decided to examine these cases jointly in a single judgement.

Summary of the judgement

The Strasbourg Court deemed the State’s omission to adopt and publish the methodology for the compensation scheme, to which the associations had a legal entitlement, an interference with the effective exercise of the right to property. Consequently, it acknowledged a causal relation between the State’s delay to enact legislation and the non-payment of compensation. The Court then proceeded to inquire whether this interference could be justified in light of the principles of legality, legitimacy of the aim pursued and proportionality, as outlined in previous cases, such as Broniowski v. Poland (para 146) and Ališić and others (para 102).

The Court began by highlighting that both the Law on the Forestry Code and Government Regulation no. 14/2010, governing financial measures related to the State aid granted to agricultural producers, mandate the granting of “authorised State aid” concerning payments linked to the designation of the Natura 2000 sites. This led to a governmental draft decision, setting out the methodology for granting this aid, which was validated by the European Commission. However, the Court observed a significant lapse of more than ten years after this validation decision, with the government draft decision remaining unpublished and with no payment made to date. This was the case, even though both associations were constrained from using the forests designated as protected areas and had complied with the obligation to maintain these forests at their own expense.

Therefore, the Court considered the State’s failure to adopt and publish the methodology for granting State aid hampers the implementation of the Law on the Forestry Code and the Government Regulation on State aid. The above-stated interference with the right to property was thus concluded to lack lawfulness and to not pursue a legitimate aim. This amounted to a violation of article 1 Protocol No. 1 to the Convention. Finally, and by means of just satisfaction in the sense of article 41 ECHR, the Court ordered Romania to compensate both associations for pecuniary and non-pecuniary damages, along with covering costs and expenses. The awarded non-pecuniary damages correspond to the amounts to compensate for the value of the wood they were unable to harvest in 2013, and for the years 2010 to 2014, respectively.

Use restriction through an omission

Under Article 1 Protocol No. 1 to the ECHR, individuals are entitled to the peaceful enjoyment of their possessions. Yet, according to the second paragraph, this provision does not impair the right of the State “to enforce such laws as it deems necessary to control the use of property in accordance with the general interest”. The designation as a protected area is considered such a restriction of the right to use one’s property.  Indeed, the Strasbourg Court generally acknowledges use restrictions to protect the environment in the public interest, as demonstrated in cases such as Lazaridi v Greece (para 34). While the European Habitats Directive, in principle, does not outright forbid activities in protected areas, Member States retain the authority to prohibit such activities. This discretionary power allows them to control the use of property rights, when this is deemed necessary to ensure the objectives of habitat protection.

However, in this case, the applicants did not contest the designation of their forests as protected areas, nor the use restrictions themselves, acknowledging their necessity for the conservation of these valuable forestry ecosystems. Instead, their challenge focused on the absence of compensation to offset the consequences of this designation for their property rights. The Court therefore noted that the complaint concerned a failure to act, specifically the non-adoption of a decision on the methodology, which resulted in a lack of compensation. According to the forest owners, this inaction imposed a disproportionate burden on the peaceful enjoyment of their possessions. The real and effective exercise of the right to property cannot depend solely on the duty of the State to refrain from any interference. As recognised by the Court for the first time in Öneryildiz v. Turkey (para 134), article 1 Protocol No. 1 also mandates positive measures of protection. This is especially crucial when there is a direct link between the measures that an applicant could legitimately expect from the authorities and the effective enjoyment of property.

Justification without compensation?

In various cases, such as Taşkin and Others v. Turkey and Fadeyeva v. Russia, the Strasbourg Court has emphasised the importance of environmental protection, generally considered to be in the public interest. Public measures intended to promote the protection of the environment can therefore limit the use of property. This is particularly evident in the context of environmental protection legislation that defines the scope and the content of property and limits its use. Additionally, the Court has asserted that States enjoy a large margin of appreciation in case of use restrictions, especially when these measures aim to protect the environment (Budayeva a.o. v. Russia, para 128). Consequently, the Romanian State contended that national authorities must be awarded a wide margin both in selecting the means for implementing necessary measures for environmental protection and assessing the justified nature of the consequences thereof.

However, despite the wide margin left to the state, the core issue in this case revolved around the absence of compensation. Article 1 Protocol No. 1 does not contain an explicit provision on the necessity of compensation and generally use restrictions do not require compensation. Nevertheless, the Court takes compensation into consideration in the proportionality assessment. The lack of compensation can therefore give rise to a violation of the right to property (see Z.A.N.T.E. – Marathonisis A.E. v. Greece). In this particular case, the Court concluded that the lack of compensation constituted a violation. Romania’s failure to adopt and publish the methodology for granting State aid, more than a decade after the European Commission’s decision in favour of granting such compensatory measures and in spite of the Law on the Forestry Code, violated the principles of lawfulness and legitimate aim. This failure was deemed an unlawful omission in breach of article 1 Protocol No.1. Referring to Ališić and others (para 124), the Strasbourg Court held that, even though delays can be justified in exceptional circumstances, the Romanian State did not provide any explanation for this omission to publish the methodology. Interestingly, the fact that the awarded compensation corresponds to the value of the unharvested wood demonstrates that the right to property is still mainly regarded as an economic right.

The case-law of the European Court of Human Rights on property and the protection of the environment is still developing. The Court has established some general lines of argument, which it uses again and again to outline its general understanding of this relationship. Nevertheless, some uncertainties persist, and progress in resolving them appears to be limited. This is particularly the case in the context of compensation and its role in achieving a fair balance between the exigencies of the public interest and the protection of individual rights. With this judgement the Court merely concluded the absence of a published methodology, leading to the absence of compensation, did not respect the legal requirements enabling the use restrictions. It therefore held it was not necessary to consider whether a fair balance was struck between the general interest of the community and the safeguarding of individual rights. In a way, this judgement highlights the ongoing and evolving nature of the Court’s approach to the complex relation between property protection and environmental interests. Yet, rather than further clarifying the role of compensation in the proportionality assessment, the Court was able to ‘hide’ behind the principles of lawfulness and legitimate aim.