CEDH · PRESS;CHAMBERJUDGMENTS;ENG — 18 mai 2010

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Italy (application no. 16021/02)     DELAYS IN PUBLIC SUBSIDIES PROCEDURE RESULTED IN APPLICATION OF AN UNfavoUrable LAW TO A COMPANY   Unanimously   Violation of Article 1 of Protocol No. 1 (protection of property) to the European Convention on Human Rights     Principal facts   The applicant is a joint-stock company with its registered office in Ascoli Piceno. It specialises in manufacturing.   In 1985 it applied for funding from the Southern Italy Promotion and Development Agency (”the Agency”) for the expansion of an industrial plant, under a 1979 law whereby companies operating in southern Italy could be granted public subsidies in proportion to the amounts they invested.   The Agency “provisionally” approved the granting of subsidies for the applicant company’s industrial project in 1987, and confirmed several days later that it was entitled to funding equivalent to approximately 1,880,550 euros (EUR), subject to the satisfactory operation of the industrial plant once the work was completed.   In 1988, while the work was in progress, the applicant company, having increased its investment, applied to the Agency for the subsidy to be reassessed. Since the company’s plans simply entailed a “refinement” of the project, it was entitled, under the applicable law, to a proportional increase in the subsidies.   The committee responsible for inspecting the industrial plant concluded in 1994 that it was operating properly and that the cost of the work carried out was consistent with the documents produced. However, as a result of a 1992 amendment to the legislation on the funding of investments in southern Italy, it found that the subsidy to be granted could be calculated only in proportion to the investment initially envisaged. As a result, the original amount awarded to the applicant company was confirmed in 1995. The Regional Administrative Court dismissed an application by the applicant company for judicial review of that decision, and an appeal it subsequently lodged with the Consiglio di Stato was likewise dismissed in 2001.     Complaints, procedure and composition of the Court   Relying on Article 1 of Protocol No. 1, the applicant company complained about the implementation of a law on public funding which had come into force after the approval of its application for subsidies.   The application was lodged with the European Court of Human Rights on 27 March 2002.   Judgment was given by a Chamber of seven judges, composed as follows:   Françoise Tulkens (Belgium), President, Ireneu Cabral Barreto (Portugal), Vladimiro Zagrebelsky (Italy), Danutė Jočienė (Lithuania), Dragoljub Popović (Serbia), Işıl Karakaş (Turkey), Kristina Pardalos (San Marino), Judges,   and also Sally Dollé , Section Registrar .     Decision of the Court   Since the applicant company had “provisionally” been granted public subsidies by the Agency, it had had a "legitimate expectation" of obtaining them and had therefore had a “possession” within the meaning of Article 1 of Protocol No. 1. It could also legitimately have expected to be entitled to a proportional increase in the subsidies as it had satisfied the criteria set out in the relevant 1979 law. The Court noted in that connection that the amount of public funding promised by the authorities was a factor that influenced the scale of industrial projects planned by businesses such as the applicant company. By late June   1990 the company could legitimately have believed that it had done everything necessary to be awarded the increase it was seeking.   The decision to calculate the amount of the subsidies by reference to the initial investment had had a legal basis in Italian law, namely the new 1992 legislation on the funding of investments in southern Italy, which had pursued the legitimate aims of reducing public expenditure and avoiding an uncontrolled increase in the subsidies granted to companies. Since the domestic authorities had a wide measure of discretion in the complex area of managing the State budget, the law in question could not be considered arbitrary in itself.   The Court noted that the industrial plant had not been inspected until 1994, four years after full-scale production had commenced. If the relevant formalities had been carried out properly and promptly, the funding awarded to the applicant company would not have been subject to the rule that no adjustment could be envisaged in the event of an increase in investment while work was in progress. The Court further noted that the authorities had allowed procedures concerning subsidies for additional expenses to be suspended pending decisions by the Government and Parliament.   The Court considered that the fair balance between the demands of the general interest and the requirements of the protection of the applicant company’s fundamental rights had been upset, and therefore held that there had been a violation of Article   1 of Protocol No. 1.   ***   Article 41: The Court held that the question of the application of Article 41 (just satisfaction) was not ready to be determined and reserved it for a subsequent decision.   ***   The judgment is available only in French. This press release is a document produced by the Registry. It does not bind the Court. The judgments are available on its website .   Press contacts Céline Menu-Lange (tel: + 33 (0)3 90 21 58 77) or Stefano Piedimonte (tel: + 33 (0)3 90 21 42 04) Tracey Turner-Tretz (tel: + 33 (0)3 88 41 35 30) Kristina Pencheva-Malinowski (tel: + 33 (0)3 88 41 35 70) Frédéric Dolt (tel: + 33 (0)3 90 21 53 39) Nina Salomon (tel: + 33 (0)3 90 21 49 79)   The European Court of Human Rights was set up in Strasbourg by the Council of Europe Member States in 1959 to deal with alleged violations of the 1950 European Convention on Human Rights.   [1] Under Article 43 of the Convention, within three months from the date of a Chamber judgment, any party to the case may, in exceptional cases, request that the case be referred to the 17 ‑ member Grand Chamber of the Court. In that event, a panel of five judges considers whether the case raises a serious question affecting the interpretation or application of the Convention or its protocols, or a serious issue of general importance, in which case the Grand Chamber will deliver a final judgment. If no such question or issue arises, the panel will reject the request, at which point the judgment becomes final. Otherwise Chamber judgments become final on the expiry of the three-month period or earlier if the parties declare that they do not intend to make a request to refer. All final judgments   are transmitted to the Committee of Ministers of the Council of Europe for supervision of their execution. Further information about the execution process can be found here: www.coe.int/t/dghl/monitoring/execution .