Background
Fly Service owned a TU-154B2 aircraft that Ukrainian tax authorities seized in January 2000 to recover alleged personal tax debts owed by its sole shareholder. The aircraft was sold at a public sale for UAH 380,502. Domestic courts later found that the seizure, valuation process and sale were unlawful because the aircraft belonged to Fly Service, not the shareholder.
In compensation proceedings begun in 2008, domestic courts awarded Fly Service the sale proceeds rather than the substantially higher value claimed in a 2004 private valuation report. They considered that report unreliable because it was prepared without inspecting the aircraft and did not adequately reflect its condition. The proceedings concluded in May 2017, and the award was enforced in October 2018.
The Court’s Holding
The Court rejected as manifestly ill-founded the complaint under Article 1 of Protocol No. 1 that the domestic compensation was insufficient. It found no arbitrariness or manifest unreasonableness in the domestic courts’ refusal to rely on the private valuation, which used a replacement-cost approach, did not consider comparable sales, and did not adequately account for the ageing aircraft’s technical condition or third-party-owned components.
The Court also noted that Fly Service had not produced reliable evidence that the amount awarded was significantly below the aircraft’s value at the time of the interference, nor explained why it had not sought a fresh valuation. It further noted insufficient disclosure concerning historical links among the companies involved in the aircraft transactions. However, it found violations of Article 6 § 1 and Article 13 because the compensation proceedings lasted more than nine years at three levels of jurisdiction without an effective domestic remedy for that delay. It awarded EUR 1,800 for non-pecuniary damage.
Key Takeaways
- The Court will generally defer to domestic courts on technical valuation questions unless their assessment is arbitrary or manifestly unreasonable.
- An applicant alleging inadequate compensation must substantiate the asset’s actual value with reliable evidence.
- More than nine years to determine compensation at three judicial levels violated the reasonable-time requirement and Article 13.
Why It Matters
The judgment distinguishes between an established unlawful deprivation of property and a separately substantiated claim that the resulting compensation was inadequate. A finding that a seizure was unlawful does not itself require Strasbourg to substitute its own valuation for a reasoned domestic assessment.
It also reinforces the Court’s settled approach to prolonged civil or administrative litigation: States must provide both timely adjudication and an effective remedy for excessive delay.