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MINISTERS’ DEPUTIES |
Notes on the Agenda |
7 December 2023 |
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1483rd meeting, 5-7 December 2023 (DH) Human rights
H46-12 Statileo group v. Croatia (Application No. 12027/10) Supervision of the execution of the European Court’s judgments Reference documents DH-DD(2023)1186, DH-DD(2023)1407, CM/Del/Dec(2023)1468/H46-9 |
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Application |
Case |
Judgment of |
Final on |
Indicator for the classification |
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35444/12+ |
BEGO AND OTHERS |
15/11/2016 |
15/11/2016 |
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25815/14 |
MIROŠEVIĆ-ANZULOVIĆ |
04/10/2016 |
04/10/2016 |
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37006/13 |
GOŠOVIĆ |
04/04/2017 |
04/04/2017 |
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23414/15+ |
SKELIN-HRVOJ AND ĐURIČIĆ |
10/06/2021 |
10/06/2021 |
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48981/17 |
ARAMBAŠIN |
23/06/2022 |
23/06/2022 |
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41306/18 |
HEGEDIŠ |
23/06/2022 |
23/06/2022 |
Case description
These cases concern violations of the applicants’ right to the peaceful enjoyment of their property between 1997 and 2015 on account of statutory limitations on the use of private flats by landlords, including through the rent control scheme for flats subject to protected leases (violations of Article 1, Protocol No. 1).
The European Court noted that under domestic law a landlord who intended to move into the flat, or to install his or her children, parents or dependents in it, was entitled to terminate the contract for the letting of the flat to a protected lessee only if (i) the landlord did not have other accommodation for him or herself or his or her family, and was either entitled to permanent social assistance or was over 60 years of age, or (ii) the lessee owned a suitable habitable flat in the same municipality or township (Statileo, §§ 46, 126, 127). As a result of this, and in view of the statutory right of members of a lessee’s household to succeed to his or her status as a protected lessee, the restrictions could in many cases last for two or sometimes even three generations (Statileo, § 132).
The European Court indicated under Article 46 that the problem underlying the violation concerned shortcomings in the legislation itself, namely the inadequate level of protected rent, restrictive conditions for the termination of protected leases and the absence of any temporal limitation to the protected lease scheme. The Court therefore considered that the Croatian authorities “should take appropriate legislative and/or other general measures to secure a rather delicate balance between the interests of landlords, including their entitlement to derive profit from their property, and the general interest of the community – including the availability of sufficient accommodation for the less-well-off” (Statileo, § 165).
Status of execution
Overview of the execution process: In 2018, the authorities amended the Lease of Flats Act, providing for, inter alia, a progressive increase in the amount of protected rent until the abolishment of the protected rent scheme in September 2023 (for more details see CM/Notes/1331/H46-8). In September 2020, the Constitutional Court invalidated those legislative amendments as unconstitutional considering that they failed to strike the right balance and placed a disproportionate burden on the protected tenants. In December 2020 the Ministry of Physical Planning, Construction and State Assets initiated a new law-making procedure.
Last decision of the Committee: At its 1468th meeting (June 2023) (DH), the Committee, inter alia, recalled with profound concern the lack of progress made in the legislative process given the invalidation by the Constitutional Court of amendments to the Lease of Flats Act aimed at addressing the shortcomings identified by the European Court. While noting the steps taken by the authorities with a view to preparing new draft legislation and the assurances provided (during the meeting) by the Deputy Prime Minister that it would be tabled before Parliament by the end of 2023, the Committee called upon the authorities to finalise the legislative process as a matter of utmost priority in order to eliminate the effects of the impugned protected lease scheme. Pending the adoption of a global legislative solution to the protected lease scheme, the Committee encouraged the authorities to continue developing the domestic case-law providing greater protection to landlords’ property rights through taking into account other lessees’ properties when deciding whether to allow them benefits under the protected lease scheme. The Committee also noted with interest information on the development of a compensatory remedy enabling the landlords to claim compensation covering the difference between the protected rent and the market rent and invited the authorities to keep it informed about further developments of the domestic case-law.
In their action plan of 5 October 2023 (DH-DD(2023)1186) and the communication of 17 November 2023 (DH-DD(2023)1407), the authorities provided information which may be summarised as follows.
Individual measures: The amounts of just satisfaction awarded were paid in due time. As concerns the applicants in Bego and Others, the authorities reported that two constitutional complaints, as well as proceedings concerning eviction, are still pending. Furthermore, the applicant in Gošović lodged a constitutional complaint against a negative decision on his civil claim for damages, and those proceedings are also pending.[1]
Concerning the possible repossession of flats, the authorities recalled that full implementation of individual measures is closely linked to the general measures and depends on the legislative reform envisaged to bring an end to the protected lease scheme. It remains open to the applicants to seek compensation for the subsequent period until the abolishment of the protected rent scheme.
General measures: On 15-16 November 2023, the Execution Department carried out a mission to Croatia and met with the Deputy Prime Minister and Minister of Physical Planning, Construction and State Assets, who informed them about the most recent developments in the awaited legislative process required to execute this group of judgments.
Draft Law: estimated time frame: The authorities reported that the initial plan to amend the Lease of Flats Act has been put to one side, and that instead, after a number of meetings of a working group which included representatives of landlords and protected tenants, a new draft Law has been prepared specifically for the execution of this group of judgments. On 13 November 2023, the new draft Law was published and sent for public consultations for 30 days, i.e. until 13 December 2023. At the end of this period, the draft Law will be transmitted to all competent authorities for their final opinions, the Government for approval and then to the Parliament for adoption. They expect that the first reading in Parliament will take place in late January or early February 2024 and that the law will be adopted in March 2024 at the latest.
Draft Law: key features: The key features of the draft Law, which aims to secure the balance between the rights of landlords and tenants, as reported by the Government, are as follows. First, it provides for three phases to fully resolve the outstanding issues:
Phase One: the establishment of an E-Register containing all relevant data on the flats, owners and the protected tenants currently under the protected lease scheme and the adoption of by-laws for the implementation of the law (the registration process is expected to be completed by June/July 2024 and the E-Register to be finalised by October 2024);
Phase Two: the choice by landlords and protected tenants of the measures envisaged by the law to bring the protected tenancy to an end (see below for details) in 2025; and
Phase Three: full implementation of the law, by the finalisation of those measures, by the end of 2026.
From the finalisation of the E-Register, as of 1 January 2025 until the final resolution of the protected lease scheme, landlords will receive full market rent which will be paid in part by the tenants (50%) and in part by the Government (50%).
The draft Law provides for five possible measures to end the protected tenancies (the landlord must approve of the measure to be chosen):
a) an agreement between the parties (landlords and protected tenants) on the amount of the rent and duration of the tenancy;
b) the payment of the protected tenant by the State, with the amount calculated under the conditions provided in the draft Law, so that he/she vacates the flat;
c) the move of the protected tenant to a flat in the ownership of the State, where he/she would pay minimum rent and have the possibility of buying it under favourable conditions;
d) the acquisition of the landlord’s flat by the State, with a possibility for the protected tenant to buy it under favourable conditions; or
e) an exchange of flats between the landlord and the State, with a possibility for the protected tenant to buy the flat he/she is occupying under favourable conditions.[2]
Landlords, protected tenants or sub-tenants, who are considered vulnerable (persons older than 70 years, or of poor financial situation, or are vulnerable due to serious health condition or disability) will also be entitled to a one-off payment of EUR 1,000 for relocation.
Under the conditions provided in the draft Law, landlords are also entitled to compensation for the excessive limitation of the right of ownership over the flats since 1996 (“a solidary surcharge”), pursuant to a fixed formula (in practice that amounts to approximately EUR 3,500 for a flat measuring 50m2 and EUR 7,000 for a 70m2 flat).
The authorities estimate that EUR 107 million will be required for the full implementation of the legislative solutions above which will both resolve the longstanding issues identified by the Court and take into account the issues identified by the Constitutional Court in 2020.
Development of the existing remedies: With respect to the remedies developed by the courts pending the adoption of a global legislative solution to the protected lease scheme,[3] the authorities provided examples of more recent case-law of the Supreme Court, from 2021 and 2023, reaffirming the previous position of that court on the protection of the landlord’s property rights.
As regards the functioning of the compensatory remedy established by the Supreme Court in December 2018, the authorities indicated that there are 554 cases in which the landlords made use of the possibility to seek compensation from the State, with a total of approximately EUR 1,703,000 awarded, which the State is required to pay to the landlords. They also reported that in October 2023, the Constitutional Court, in a landmark decision quashing a judgment of the Supreme Court, held that the statute of limitations with respect to claims for pecuniary damages resulting from loss of rent, started to run only six months after the above-mentioned 2018 judgment of the Supreme Court in line with the Convention principle that it normally takes six months for such a development of the case-law to acquire a sufficient degree of legal certainty before the public may be considered to be effectively aware of the domestic decision which had established the remedy and the persons concerned be enabled and obliged to use it.
Rule 9.2 communications:
In their submissions dated 10 July, 8 August and 10 November 2023 (DH-DD(2023)890, DH-DD(2023)994, DH-DD(2023)1408) several NGOs representing the landlords reiterated their complaints about the lack of political will to adopt legislative amendments, and called on the authorities to provide a clear timeframe for their adoption, particularly in view of the upcoming elections in 2024.
In their submission dated 30 May 2023 (DH-DD(2023)710), an NGO representing protected tenants reiterated its previous call on the authorities to strike a fair balance between conflicting rights and interests of the landlord on one side and the protected tenants on the other. It noted that the State has sufficient economic means to take their interests into account.
Analysis by the Secretariat
Individual measures: It appears that in respect of some of the applicants the domestic proceedings are still pending, namely: (i) the civil proceedings regarding eviction of the protected lessees for one applicant in Bego and Others and (ii) in three cases proceedings before the Constitutional Court following the reopened proceedings, namely for two applicants in Bego and Others and one in Gošović.
In view of the above and pending the adoption of the legislation aiming to prevent similar violations of the Convention, the Committee might wish to invite the authorities to rapidly provide information in Bego and Others and Gošović on the outcome of the civil proceedings seeking eviction of the protected lessees and the above proceedings pending before the Constitutional Court.
General measures: At the outset, the Committee might wish to welcome the consultations that took place in November 2023 between the Secretariat and the Deputy Prime Minister and Minister of Physical Planning, Construction and State Assets of Croatia. It is a very positive development that the authorities have, after detailed domestic consultations with stakeholders, prepared, published and sent a comprehensive new draft Law for public consultation which aims to provide the necessary global solution to the issue of the protected lease scheme and thus the full implementation of the present group of cases.
Nevertheless, given that the draft Law was only published in mid-November 2023, a detailed assessment has not been possible for the present meeting. In addition, the public consultation on this draft Law, which might lead to some further amendments before it is tabled before Parliament, will only be concluded after the Committee’s examination at the present meeting. The Committee may therefore wish to instruct the Secretariat to prepare a detailed assessment of the legislative text for the Committee’s examination of the present group at its next Human Rights meeting in March 2024, in light of updated information to be provided by the authorities on all domestic developments by 15 January 2024.
In view of the significant number of landlords in a situation similar to that of the applicants, as well as the longstanding nature of this group of cases which have been pending since 2014, the Committee might wish to reiterate their call on the authorities to finalise the legislative process as a matter of utmost priority in order to eliminate the effects of the impugned protection lease scheme.
Lastly, pending the adoption of the above legislation, the Committee might note with satisfaction the recent decision of the Constitutional Court on the calculation of the statute of limitations with respect to landlords’ claims for pecuniary damages resulting from the loss of rent, which seems to have fully harmonised the domestic case-law with that of the European Court. The Committee should be kept informed about further developments of the domestic case-law.
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Financing assured: YES |