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Article 17 - Right to property
Article 52 - Scope and interpretation
Failure of a Member State to fulfil obligations — Article 63 TFEU — Free movement of capital — Article 17 of the Charter of Fundamental Rights of the European Union — Right to property — National legislation extinguishing, without compensation, the rights of usufruct over agricultural and forestry land acquired by legal persons or by natural persons who cannot demonstrate a close family tie with the owner of the land.
Outcome of the case:
On those grounds, the Court (Grand Chamber) hereby:
2) Article 17 of the Charter, entitled ‘Right to Property’, provides, in paragraph 1:
‘Everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions. No one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for their loss. The use of property may be regulated by law in so far as is necessary for the general interest.’
3) Article 51 of the Charter, entitled ‘Field of application’, provides in paragraph 1:
‘The provisions of this Charter are addressed to the institutions, bodies, offices and agencies of the Union with due regard to the principle of subsidiarity and to the Member States only when they are implementing Union law. …’
4) Article 52 of the Charter, entitled ‘Scope and interpretation of rights and principles’, provides, in paragraphs 1 and 3:
‘1. Any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others.
3. In so far as this Charter contains rights which correspond to rights guaranteed by the Convention for the Protection of Human Rights and Fundamental Freedoms, the meaning and scope of those rights shall be the same as those laid down by the said Convention. This provision shall not prevent Union law providing more extensive protection.’
18) On 17 October 2014, the Commission sent a letter of formal notice to Hungary, taking the view that, by adopting the restrictions relating to the right of usufruct over agricultural land, contained in certain provisions of the 2013 Law on transitional measures, including Paragraph 108(1) thereof, Hungary had infringed Articles 49 and 63 TFEU and Article 17 of the Charter. Hungary replied by a letter dated 18 December 2014 in which it disputed those infringements.
22) The Commission’s action thus seeks a declaration that, by adopting Paragraph 108(1) of the 2013 Law on transitional measures (‘the contested provision’) and thereby cancelling, by operation of law, rights of usufruct previously created over agricultural land in Hungary, as between persons who are not close members of the same family, Hungary has failed to fulfil its obligations under Articles 49 and 63 TFEU and Article 17 of the Charter.
37) In the fifth place, the Commission maintains that, as the contested provision restricts the freedom of establishment and the free movement of capital and since Hungary relies on overriding reasons in the public interest in order to justify those restrictions, the provisions of the Charter are applicable in the present case.
38) The Commission submits that the contested provision infringes Article 17 of the Charter. Indeed, in its view, the cancellation of the rights of usufruct at issue amounts to a person being deprived of property, within the meaning of that article and also of Article 1 of Protocol No 1 to the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950 (‘the ECHR’).
39) The removal of rights of usufruct to the detriment of thousands of non-Hungarian citizens is not justified here by any permissible reason in the public interest and, even assuming it to be justifiable, that cancellation is not proportionate, account being taken, in particular, of the matters set out above. Nor has the contested provision made provision for the compensation that is required by Article 17 of the Charter, which is intended to ensure that compensation is paid, using efficient procedures, for the loss of in rem rights of considerable economic value.
50) Hungary further submits that a separate examination of the contested provision in the light of the Charter is not necessary and that, in any event, it is apparent from judgment No 25 of 21 July 2015 of the Alkotmánybíróság (Constitutional Court) that the cancellation of the rights of usufruct at issue is not an expropriation and that it is, in addition, justified by the general interest, whilst the civil law rules enable the former usufructuaries to obtain fair, comprehensive and timely compensation for the losses incurred. Moreover, Article 17 of the Charter is not applicable in the present case since the usufruct contracts that have been cancelled were concluded unlawfully and in bad faith.
63) In addition, it should be borne in mind that the fundamental rights guaranteed by the Charter are applicable in all situations governed by EU law and that they must, therefore, be complied with inter alia where national legislation falls within the scope of EU law (see, in particular, judgments of 26 February 2013, Åkerberg Fransson, C‑617/10, EU:C:2013:105, paragraphs 19 to 21, and of 21 December 2016, AGET Iraklis, C‑201/15, EU:C:2016:972, paragraph 62).
65) In that regard, as has already been held by the Court, the use by a Member State of the exceptions provided for by EU law in order to justify an impediment to a fundamental freedom guaranteed by the Treaty must be regarded as ‘implementing Union law’ within the meaning of Article 51(1) of the Charter (judgment of 21 December 2016, AGET Iraklis, C‑201/15, EU:C:2016:972, paragraph 64 and the case-law cited).
66) In this case, as has been stated in paragraphs 58 and 62 above, the contested provision constitutes a restriction of the free movement of capital and Hungary relies on the existence of overriding reasons in the public interest and of the grounds envisaged in Article 65 TFEU in order to justify that restriction. That being so, the compatibility of the contested provision with EU law must be examined in the light both of the exceptions thus provided for by the Treaty and the Court’s case-law, on the one hand, and of the fundamental rights guaranteed by the Charter, on the other hand (see, to that effect, judgment of 21 December 2016, AGET Iraklis, C‑201/15, EU:C:2016:972, paragraphs 65, 102 and 103), one of which is the right to property safeguarded by Article 17 of the Charter, which the Commission claims has been infringed in this case.
67) Under Article 17(1) of the Charter everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions and no one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for their loss. In addition, the use of property may be regulated by law in so far as is necessary in the general interest.
68) In that regard, it should be noted, as a preliminary point, that, as the Court has already stated, Article 17 of the Charter is a rule of law intended to confer rights on individuals (see, to that effect, judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB, C‑8/15 P to C‑10/15 P, EU:C:2016:701, paragraph 66).
69) As regards the substantive conditions set out in Article 17(1) of the Charter, it follows, first, from the Court’s case-law that the protection afforded by that provision concerns rights with an asset value creating an established legal position under the legal system concerned, enabling the holder to exercise those rights autonomously and for his or her own benefit (judgments of 22 January 2013, Sky Österreich, C‑283/11, EU:C:2013:28, paragraph 34, and of 3 September 2015, Inuit Tapiriit Kanatami and Others v Commission, C‑398/13 P, EU:C:2015:535, paragraph 60).
71) Indeed, where such rights of usufruct over agricultural land are acquired contractually, a price will, as a rule, be paid. Those rights enable their holders to make use of such land, in particular for economic purposes, or even, depending on the circumstances, to lease the land to third parties; such rights therefore fall within the scope of Article 17(1) of the Charter.
72) According also to the case-law of the European Court of Human Rights relating to Article 1 of Protocol No 1 to the ECHR, which must be taken into account pursuant to Article 52(3) of the Charter in interpreting Article 17 thereof, as the minimum threshold of protection (see, to that effect, judgments of 15 March 2017, Al Chodor, C‑528/15, EU:C:2017:213, paragraph 37; of 13 June 2017, Florescu and Others, C‑258/14, EU:C:2017:448, paragraph 49; and of 12 February 2019, TC, C‑492/18 PPU, EU:C:2019:108, paragraph 57), rights of use or of usufruct over immovable property are to be regarded as ‘possessions’ that are eligible for the protection guaranteed by Article 1 of that protocol (see, in particular, ECtHR, 12 December 2002, Wittek v. Germany, CE:ECHR:2002:1212JUD003729097, §§ 43 to 46; ECtHR, 16 November 2004, Bruncrona v. Finland, CE:ECHR:2004:1116JUD004167398, § 78; and ECtHR, 9 February 2006, Athanasiou and Others v. Greece, CE:ECHR:2006:0209JUD000253102, § 22).
73) In the second place, contrary to Hungary’s contention, the rights of usufruct that were cancelled by the contested provision must be regarded as having been ‘lawfully acquired’ for the purposes of Article 17(1) of the Charter.
82) It follows that the contested provision does not involve restrictions on the use of possessions but rather entails a person being deprived of his possessions within the meaning of Article 17(1) of the Charter.
84) In addition, by providing that ‘no one may be deprived of his or her possessions’, the second sentence of Article 17(1) of the Charter does not cover solely the taking of property for the purpose of transferring it to a public authority. Thus, contrary to what Hungary has also argued in this regard, the fact that the rights of usufruct concerned are not acquired by a public authority and that their extinction results in full ownership of the land concerned being restored to the owners has no impact whatsoever as regards the fact that the cancellation of those rights results in the former usufructuaries being deprived of the rights.
86) It follows from the reasoning set out in paragraphs 69 to 85 above that the cancellation of usufructuary rights brought about by the contested provision constitutes a deprivation of property within the meaning of Article 17(1) of the Charter.
88) As regards those requirements, account must also be taken of the provision made by Article 52(1) of the Charter, under which limitations may be imposed on the exercise of the rights recognised by the Charter, as long as the limitations are provided for by law, respect the essence of those rights and, subject to the principle of proportionality, are necessary and genuinely meet objectives of general interest recognised by the European Union or the need to protect the rights and freedoms of others.
89) It follows from a reading of Article 17(1) of the Charter in conjunction with Article 52(1) thereof, first, that when the public interest is invoked in order to justify a person being deprived of his or her possessions, compliance with the principle of proportionality as required by Article 52(1) of the Charter must be ensured with regard to the public interest concerned and the objectives of general interest which the latter encompasses. Secondly, such a reading implies that, if there is no such public interest capable of justifying a deprivation of property, or — even if such a public interest is established — if the conditions laid down in the second sentence of Article 17(1) of the Charter are not satisfied, there will be an infringement of the right to property guaranteed by that provision.
123) As regards the deprivation of property, within the meaning of Article 17 of the Charter, to which the cancellation of the rights of usufruct concerned gives rise, it should be added, taking account of the requirements set out in paragraphs 87 to 89 above which must be met if such deprivation is to be lawful, that the cancellation is provided for by law.
125) In any event, the contested provision does not satisfy the requirement laid down in the second sentence of Article 17(1) of the Charter, according to which fair compensation must be paid in good time for a deprivation of property such as the loss of the rights of usufruct concerned.
126) According to the words actually used in that provision, a person may be deprived of his or her property ‘only in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for [its] loss’, meaning that such compensation, which is thus one of the conditions laid down by the Charter if a person is to be deprived of his or her property, must be provided for by law. Accordingly, a rule of national law depriving a person of his or her property must provide, in a clear and precise manner, for that loss to give rise to an entitlement to compensation and for the conditions of that compensation. It cannot but be noted that the contested provision contains no terms ensuring that the usufructuaries who have been deprived of their property receive compensation or laying down the arrangements for such compensation.
127) In that regard, the possibility of referring to the general rules of civil law, which Hungary mentions in its defence, cannot satisfy the requirements arising under Article 17(1) of the Charter. Moreover, even if it were legally possible for a Member State, under that provision, to make private parties responsible for the payment of compensation for deprivations of property which have been caused exclusively by the State itself, a reference of that kind to civil law would in the present case place on the usufructuaries the burden of having to pursue the recovery, by means of procedures that may prove lengthy and expensive, of any compensation which might be payable to them by the landowner. Such rules of civil law do not make it possible to determine easily and in a sufficiently precise and foreseeable manner whether compensation will in fact be able to be obtained at the end of such procedures nor do they disclose the nature of any compensation there may be.
129) Having regard to the findings made in paragraphs 123 to 128 above, it must be held that the deprivation of property effected by the contested provision cannot be justified on the ground that it is in the public interest; nor are any arrangements in place whereby fair compensation is paid in good time. Accordingly, that provision infringes the right to property guaranteed by Article 17(1) of the Charter.
130) In view of all the foregoing, it must be concluded, first, that Hungary has not established either (i) that the cancellation effected by the contested provision of rights of usufruct held directly or indirectly by nationals of Member States other than Hungary is intended to secure the attainment of objectives in the general interest that are recognised by the case-law of the Court or mentioned in Article 65(1)(b) TFEU or (ii) that that cancellation is appropriate and coherent, or indeed limited to the measures necessary, for the purpose of seeking to secure such objectives. Secondly, that cancellation does not comply with Article 17(1) of the Charter. Consequently, the restrictions on the free movement of capital thus arising from the deprivation of property acquired using capital protected by Article 63 TFEU cannot be justified.
131) Accordingly, the Court finds that, by adopting the contested provision and thereby cancelling, by operation of law, the rights of usufruct over agricultural land located in Hungary that are held, directly or indirectly, by nationals of other Member States, Hungary has failed to fulfil its obligations under Article 63 TFEU in conjunction with Article 17 of the Charter.
132) Under Article 138(1) of the Rules of Procedure of the Court of Justice, the unsuccessful party must be ordered to pay the costs if they have been applied for in the other party’s pleadings. Since the Commission has applied for costs and Hungary has been unsuccessful, the latter must be ordered to pay the costs.