PECOTOX-AIR S.R.L. v. THE REPUBLIC OF MOLDOVA - 45506/09 (Judgment : Article 1 of Protocol No. 1 - Protection of property : Second Section Committee) [2019] ECHR 23 (15 January 2019)

JUDGMENT STRASBOURG 15 January 2019 This judgment is final but it may be subject to editorial revision. In the case of Pecotox-Air S. R. L. v. the Republic of Moldova, The European Court of Human Rights (Second Section), sitting as a Committee composed of: Julia Laffranque, President, Valeriu Griţco, Stéphanie Mourou-Vikström, judges, and Hasan Bakırcı, Deputy Section Registrar, Having deliberated in private on 4 December 2018, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in an application (no. 45506/09 ) against the Republic of Moldova lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms ("the Convention") by a company incorporated in Moldova, Pecotox-Air S. R. L. ("the applicant"), on 10 August 2009. 2. The applicant was represented by Ms S. Raskatova residing in Chișinău. The Moldovan Government ("the Government") were represented by their Agent at the time, Mr L. Apostol. 3. On 18 October 2012 the application was communicated to the Government. THE FACTS I. THE CIRCUMSTANCES OF THE CASE 4. The applicant, is a company specialising in air transportation. 5. At the time of the events it had a valid air operator certificate (an "AOC") issued by the Moldovan Civil Aviation State Authority (the "CASA"). 6. On 1 June 2007 the CASA issued an order banning all flights of aircraft registered in Moldova to Iraq and Afghanistan, with effect from 15 July 2007. 7. Between 4 and 8 June 2007, all Moldovan aviation companies were subjected to a check by the European Union Safety Committee. As a result, some irregularities concerning compliance with the European norms in the field of aviation safety were detected. The European Union Safety Committee also found that some aviation companies did not comply with the rule according to which the companies have to have their principal place of business in the state of registration. One of the conclusions set down in the visit report drawn up by the European Union Safety Committee was that the CASA failed to demonstrate the ability adequately to enforce and implement the relevant safety standards. According to the report, the CASA had undertaken to remedy the situation within three months. 8. On 18 June 2007 the CASA sent the applicant company aviation instruction no. 2584 and asked it to present by 21 June 2007 a plan for remedying the irregularities found by the EU Safety Committee. The corresponding plan was sent by the applicant company to the CASA on 21 June 2007. 9. Also on 18 June 2007 the CASA sent the applicant company aviation instruction no. 2585 requesting it to undertake measures with a view to remedying some of the irregularities before 20 July 2007 and other irregularities before 20 September 2007. 10. On 21 June 2007 the CASA issued order no. 102/GEN withdrawing the applicant company's AOC, and thereby terminating its activity. The CASA relied on the fact that the applicant company flew to destinations such as Iraq, Afghanistan, Congo, Sudan, Sierra Leone, Kosovo, New Zealand and United Arab Emirates. The CASA argued that those destinations involved security risks and that it had no resources to ensure flight security in those territories. 11. On 22 June 2007 the applicant company wrote to the CASA and asked it to reverse its decision on the grounds that it had not explained exactly what irregularities formed the basis for the withdrawal of the AOCs and that the CASA had not afforded it enough time to remedy the alleged irregularities. 12. The CASA refused to reverse its decision, and on 28 June 2007 the applicant company challenged it in the Chişinău Court of Appeal. The applicant submitted, inter alia , that according to section 23 of the Law on Civil Aviation, the CASA was entitled to suspend or withdraw the AOCs only if the companies failed to remedy the irregularities found by the CASA within the prescribed time-limit. It also made reference to section RAC-AOC 0170 from the Regulations in the Field of Civil Aviation according to which an AOC could be revoked only after being initially suspended. Since the CASA had not observed those legal provisions, its actions were unlawful. 13. On 3 December 2008 the Chişinău Court of Appeal rejected the applicant company's action, finding that the CASA had been entitled to withdraw its AOC because serious irregularities threatening the safety of the flights had been found by European experts, and because those irregularities had not been remedied. The Court of Appeal did not indicate the irregularities to which it referred. The court also found that the applicant company had failed to comply with the CASA's order of 1 June 2007 prohibiting flights to Iraq and Afghanistan as of 15 July 2007. The applicant companies challenged the decision before the Supreme Court of Justice. 14. On 29 April 2009 the Supreme Court of Justice dismissed the appeal and upheld the judgment of the Court of Appeal after finding that the CASA was entitled to revoke the AOC since the applicant company had failed to comply with its instructions concerning the ban on all flights of aircraft registered in Moldova to Iraq and Afghanistan, with effect from 15 July 2007. II. RELEVANT DOMESTIC LAW 15. According to Section 5(m) of the Law on Civil Aviation No. 1237, as in force at the material time, the CASA is the authority empowered with the right to issue, suspend and revoke air operator certificates. 16. Section 23 of the Law on Civil Aviation entitled "Breaches" (Contravenții) reads as follows: "(1) The following shall be considered a breach in the field of civil aviation: a) absence on the board of the airplane of documents provided for by the regulations in force; b) breach of regulations concerning the use of the airplane...; c) breach of regulations concerning the maintenance of the airplane; d) exercise of duties by the airplane's personnel without a valid authorisation or with an expired authorisation or with an authorisation which was not validated by the administration...; e) failure to keep track of the working time, flight time and rest time of the crew; f) transportation of dangerous cargo without proper authorisation from the administration; g) failure to observe the load limitations applicable for take-off and taxi-ing of the airplane...; h) refusal to present documents to persons authorised by the administration and refusal to allow them to carry out an inspection; i) operation of aircraft without the proper insurance for passengers, luggage and crew...; j) failure to inform the administration about incidents and accidents involving the airplane. (2) The breaches enumerated at para. (1) shall be sanctioned in accordance with the Code of Administrative Offences. (3) The sanctioning of the breaches enumerated in para. 1 shall not relieve those responsible from the duty to fix the discovered breaches. Breaches shall be fixed within one month, unless the administration provided another time limit, and the administration shall be informed accordingly. (4) If the breaches found were not fixed within the allocated time limit or if they have a recurring (sistematic) character, the administration is entitled to suspend or revoke the authorisation documents." 17. On the basis of the Law on Civil Aviation, the CASA issued in 2005 Regulations in the Field of Civil Aviation. They served the purpose of regulating the procedure of issuing AOCs. According to section RAC-AOC 0160, the CASA may suspend an AOC in the following cases: "(a) the aviation company concerned is not complying with the conditions and requirements of the AOC; (b) the aviation company fails to observe the laws and regulations in force; (c) the aviation company refuses to present documents to persons authorised by the CASA...." 18. Section RAC-AOC 0170 provides that an AOC can be revoked in the following cases: "(a) the aviation company concerned fails to fix within the allocated time-limit the irregularities which led to the suspension of its AOC; (b) the aviation company carried out commercial air transportation operations or unauthorised flights during the period of suspension of its AOC; (c) in other cases provided for by the regulation in force...." THE LAW I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION 19. The applicant company complained that the withdrawal of its AOC had had the effect of infringing its right to peaceful enjoyment of its possessions as secured by Article 1 of Protocol No. 1 to the Convention which, in so far as relevant, provides: "Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law...." A. Admissibility 20. The Court notes that the complaint under Article 1 of Protocol No. 1 to the Convention is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that the application is not inadmissible on any other grounds. It must therefore be declared admissible. B. Merits 21. The applicant company argued that its AOC constituted a possession for the purposes of Article 1 of Protocol No. 1 to the Convention. Its revocation by the CASA constituted an interference with its right to the peaceful enjoyment of that possession. It also submitted that the interference was not lawful under domestic law and that it was not proportionate to the aim pursued. 22. The Government did not contest the fact that the AOC constituted a possession whose revocation amounted to an interference with the applicant's right under Article 1 of Protocol No. 1 to the Convention. In their observations, the Government argued that the European inspectors had found that the applicant company had failed to comply with the European standard that their place of principal activity be in the State that had delivered the AOC. According to the Government, the interference had a basis in domestic law, namely under Section 5 of the Law on Civil Aviation (see paragraph 15 above) and was proportionate to the aim pursued. 23. It is undisputed between the parties that the applicant company's AOC constituted a possession for the purposes of Article 1 of Protocol No. 1 to the Convention and that its withdrawal constituted an interference with the applicant company's right to the peaceful enjoyment of its possessions. The Court reiterates that, according to its case-law, the termination of a valid licence to run a business amounts to an interference with the right to the peaceful enjoyment of possessions guaranteed by Article 1 of the Protocol No. 1 to the Convention ( Tre Traktörer AB v. Sweden judgment of 7 July 1989, Series A no. 159, § 55, and Rosenzweig and Bonded Warehouses Ltd. v. Poland , no. 51728/99 , § 48, 28 July 2005). 24. Consistent with the Court's case-law referred to in the preceding paragraph, such interference constitutes a measure of control of the use of property which falls to be examined under the second paragraph of Article 1 of Protocol No. 1 to the Convention. 25. In order for a measure constituting control of use to be justified, it must be lawful (see Katsaros v. Greece , no. 51473/99 , § 43, 6 June 2002) and "for the general interest". The measure must also be proportionate to the aim pursued. 26. The Court recalls that Article 1 of Protocol No. 1 to the Convention contains no explicit procedural requirements and the absence of judicial review does not amount, in itself, to a violation of that provision (see Capital Bank AD v. Bulgaria , no. 49429/99 , § 50, ECHR 2005-XII (extracts)). Nevertheless, it implies that any interference with the peaceful enjoyment of possessions must be accompanied by procedural guarantees affording to the individual or entity concerned a reasonable opportunity of presenting their case to the responsible authorities for the purpose of effectively challenging the measures interfering with the rights guaranteed by this provision. In ascertaining whether this condition has been satisfied, a comprehensive view must be taken of the applicable judicial and administrative procedures (see Capital Bank AD , ibid ; Hentrich v. France , judgment of 22 September 1994, p. 21, § 49, Series A no. 296-A; and Jokela v. Finland , no. 28856/95 , § 45, ECHR 2002-IV). 27. The Government's position is that the interference in question was lawful under domestic law, namely under section 5 of the Law on Civil Aviation. Furthermore, and to the extent that the Governments' argument as set out in paragraph 22 can be understood as also supporting the lawfulness of the interference, it suffices to note that this argument did not form the basis of the impugned decisions, either by the CASA or the domestic courts. Therefore, the Court does not consider it necessary to examine it further. 28. The Court notes that section 5 of the Law on Civil Aviation establishes in general terms the right of the CASA to revoke flight authorisations. It is, however, section 23 of the same law that enumerates the breaches for which an aviation company may be sanctioned and the procedure to be followed by the CASA. Paragraphs (3) and (4) of that section provide that an AOC can be suspended or revoked only if and when the company concerned has failed to remedy the irregularities signalled by the CASA within the time-limit allowed or if the irregularities prove to be of a recurring nature. 29. The Regulations in the Field of Civil Aviation issued by the CASA on the basis of the Law on Civil Aviation, provide in section RAC-AOC 0170 paragraphs (a) and (b) that an AOC can be revoked in certain circumstances after being initially suspended. They also provide for a third possibility under paragraph (c), namely "in other cases provided for by the regulation in force". The Court was not, however, informed of such other regulations in force. 30. The Court notes that in its order of 1 June 2007 the CASA informed the applicant applicant company that all flights to Iraq and Afghanistan were to be banned with effect from 15 July 2007. On 21 June 2007, i.e. more than three weeks before the ban was to become effective, the CASA withdrew the AOC from the applicant company on the ground that it flew to various destinations involving security risks, including Iraq and Afghanistan (see paragraph 10). Not only was the applicant company not given a chance to be heard by the CASA before the revocation of its AOC but also the domestic courts did not explain on what basis they found that the company had failed to comply with the ban, in circumstances in which the ban was not yet in force at the time of revocation (see paragraphs 13 and 14). 31. In the light of the foregoing, the Court comes to the conclusion that the interference with the applicant's possessions in the form of its AOC was not surrounded by sufficient guarantees against arbitrariness and was thus not lawful within the meaning of Article 1 of Protocol No. 1 to the Convention (see, mutatis mutandis , Capital Bank AD , cited above , § 139). This conclusion makes it unnecessary to ascertain whether the other requirements of that provision have been complied with. The Court thus expresses no opinion on the issue of whether they struck a fair balance between the applicants' rights and the demands of the general interest. 32. There has therefore been a violation of Article 1 of Protocol No. 1 to the Convention. II. APPLICATION OF ARTICLE 41 OF THE CONVENTION 33. Article 41 of the Convention provides: "If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party." A. Damage 34. The applicant company claimed 1,195,909 euros (EUR) in respect of pecuniary damage suffered as a result of the breach of its Convention rights. It also claimed EUR 30,000 in respect of non-pecuniary damage. 35. The Government disagreed with the amounts claimed by the applicant companies and asked the Court to dismiss their claims. 36. While the withdrawal of the certificate might well have had adverse financial consequences for the applicant company, the Court cannot speculate as to what the eventual result might have been if it had been able to challenge the imposition of that measure in administrative or judicial proceedings which fulfilled the necessary procedural guarantees required by Article 1 of Protocol No. 1 to the Convention. 1. It also notes that it is open to the applicant company under the domestic law in force to seek the re-opening of the proceedings. No award can therefore be made in respect of pecuniary damage. 37. In so far as the non-pecuniary damage is concerned, making its assessment on an equitable basis, the Court awards the applicant EUR 3,000. B. Costs and expenses 38. The applicant also claimed EUR 2,985 for the costs and expenses incurred before the Court. 39. The Government argued that the amounts were excessive and asked the Court to dismiss the claims. 40. The Court reiterates that in order for costs and expenses to be made under Article 41 of the Convention, it must be established that they were actually and necessarily incurred and were reasonable as to quantum (see, for example, Amihalachioaie v. Moldova , no. 60115/00 , § 47, ECHR 2004-III). 41. In the present case, regard being had to the documents in its possession, the Court considers it reasonable to award the applicant EUR 2,500 for costs and expenses. FOR THESE REASONS, THE COURT 1. Declares the application admissible; 2. Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention; 3. Holds (a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement: (i) EUR 3,000 (three thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage; (iv) EUR 2,500 (two thousand five hundred euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses; (b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points; 4. Dismisses the remainder of the applicant's claim for just satisfaction. Done in English, and notified in writing on 15 January 2019, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Hasan Bakırcı Julia Laffranque Deputy Registrar President BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII