Wednesday 22 October 2008

New Method of Compensation under Article 41

Yesterday, the Court issued its judgment on just satisfaction in the case of Guiso-Gallisay v. Italy. The case concerned a rather straightforward situation of indirect expropriation. The Court seized the opportunity to introduce a new and more equitable method of awarding compensation under Article 41 ECHR. The Court's press release summarizes this new method as follows:

The method used hitherto was to compensate for losses that would not be covered by payment of a sum obtained by adding the market value of the property to the cost of not deriving earnings from the property, by automatically assessing those losses as the gross value of the works carried out by the State plus the value of the land in today’s prices. However, the Court considered that this method of compensation was not justified and could lead to unequal treatment between applicants, depending on the nature of the public works carried out by the public authorities, which was not necessarily linked to the potential of the land in its original state. In order to assess the loss sustained by the applicants, it therefore decided that the date on which they had established with legal certainty that they had lost the right of ownership over the property concerned should be taken into consideration. The total market value of the property fixed on that date by the national courts was then to be adjusted for inflation and increased by the amount of interest due on the date of the judgment’s adoption by the Court. The sum paid to applicants by the authorities of the country concerned was to be deducted from the resulting amount.
We will see in the future whether this new method makes the satisfaction indeed more just.