Background
Odeska Buterbrodna Kompaniya, TOV lost its registered title to a café after Ukrainian courts determined that the building was an unauthorised construction erected on municipal land. In its principal judgment of 12 December 2024, the European Court of Human Rights found a violation of Article 1 of Protocol No. 1. It emphasized that the company had acquired the café in good faith, that successive titles had been duly registered, that the authorities had long tolerated the situation, and that compensation appeared unavailable.
The Court awarded non-pecuniary damages and costs in the principal judgment but reserved the question of pecuniary damage. The company sought compensation based on the approximately EUR 115,000 its founders had paid for the café in 2011. It later also requested approximately EUR 900 for a success fee paid to its representative. Meanwhile, Ukraine reported that the company had arranged in 2016 to sell the café for approximately EUR 13,000, although the parties disputed whether that price was actually paid and domestic courts ultimately declared the sale void.
The Court’s Holding
The Court unanimously dismissed the claim for pecuniary damage. Although invalidation of the company’s title had consequences comparable to deprivation of property, the company did not establish the café’s value when its title was invalidated. Its claim instead relied on the price paid years earlier by its founders, and it supplied no current valuation. The substantially lower price in the documented 2016 sale arrangement further undermined the claimed amount, even though the Court could not determine whether that price had actually been paid and retained.
The Court also refused reimbursement of the success fee. The fee did not correspond to actual, unavoidable costs incurred to prevent the violation or obtain redress, and a private lawyer-client fee agreement could not bind the Court. In addition, the underlying obligation had existed under a 2023 agreement and should have been included in the company’s original just-satisfaction submissions rather than first claimed after the principal judgment.
Key Takeaways
- A finding that property rights were violated does not automatically establish the amount of compensable pecuniary loss.
- An applicant seeking compensation must substantiate the property’s relevant value with timely evidence, such as an up-to-date valuation.
- A contractual success fee is not necessarily recoverable under Article 41, particularly when it was neither unavoidable nor claimed at the proper procedural stage.
Why It Matters
The judgment illustrates the separation between proving a Convention violation and proving monetary loss. Even where the State’s interference effectively deprives an applicant of the use of property, the Court may deny pecuniary compensation if the applicant does not document the property’s value at the relevant time.
It also underscores the need to present all foreseeable costs claims during the initial just-satisfaction phase. Private fee arrangements alone do not establish that legal expenses were reasonable, necessary, and recoverable before the Court.