Background
The case concerned restrictions imposed by Polish tax authorities on Andrzej Ruciński’s personal and business property between May 2003 and June 2006. In its principal judgment of 5 October 2023, the European Court of Human Rights held that the restrictions, imposed in the context of protracted tax proceedings, had placed an individual and excessive burden on him.
The Court found a violation of Article 1 of Protocol No. 1 because Poland had provided no compensation for the pecuniary damage caused by those measures. It reserved the Article 41 just-satisfaction question. The parties subsequently failed to reach a settlement.
The Court’s Holding
Unanimously deciding the reserved Article 41 issue, the Court awarded Ruciński €80,000 for pecuniary damage. It found a sufficient causal connection between the Article 1 of Protocol No. 1 violation and business losses, while recognizing that calculating lost profit was inherently uncertain and that the domestic expert assessment had limitations, including its treatment of business fluctuations and tobacco-market regulation changes after Poland joined the European Union.
The Court made no separate award for non-pecuniary damage, having regard to the parties’ positions and the pecuniary award. It also awarded €7,935 in costs and expenses: €6,190 for costs imposed on the applicant in domestic proceedings and €1,745 for his representation before the Strasbourg Court. The remaining claims were dismissed.
Key Takeaways
- A disproportionate control of the use of property can warrant compensation for resulting business losses under Article 41.
- Where exact lost-profit calculations are uncertain, the Court may make an equitable pecuniary award rather than accept either party’s figure in full.
- The award is payable within three months after the judgment becomes final, with default interest at the ECB marginal lending rate plus three percentage points.
Why It Matters
The judgment illustrates the Court’s remedial approach after finding that tax-enforcement measures imposed an excessive individual burden. Even where the underlying loss calculation is contested and dependent on uncertain business projections, the absence of domestic compensation can lead to a substantial equitable award.
For businesses and practitioners, the decision underscores that Article 1 of Protocol No. 1 protection extends to disproportionate restrictions on the use of business assets, not only formal deprivation of property.