VALICO s.r.l. v. ITALY DECISION - 70074/01 [2012] ECHR 1167 (21 March 2006)

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VALICO S.r.l. v. ITALY DECISION 21

The applicant is an Italian limited liability company whose registered office is in Turin. It was called Marina di Alessandro S.r.l. when it lodged its application with the Court, but by a resolution dated 20 November 2002 changed its name to Valico S.r.l. It was represented before the Court by Mr N. Paoletti, a lawyer practising in Rome. The respondent Government were represented by their Agent Mr I.M. Braguglia and co-Agent Mr F. Crisafulli.

The facts of the case, as submitted by the parties, may be summarised as follows.

In 1978 the Municipality of Bardonecchia (Turin) issued an urban development plan (piano regolatore generale) in which it designated land situated in a district known as “Campo Smith” as suitable for hotel construction. Pursuant to that plan, the Bardonecchia District Council approved a detailed plan (piano particolareggiato) on 14 November 1986 for a 12,000 m³ development at Campo Smith known as the “3D” building.

On 3 June 1993 the Municipality sold the applicant company the land required for the construction of the 3D building. On the same day the two parties signed an agreement (convenzione edilizia) in which it was stated that the Piedmont Regional Authority (Giunta regionale) had, in a resolution dated 11 May 1992, granted the necessary authorisation under the landscape and environmental regulations (vincolo paesaggistico ed ambientale) for the construction of the building. The authorisation was subject to certain conditions as a result of building restrictions that had been introduced in Bardonecchia by a ministerial decree of 21 February 1953 in order to protect the landscape. As a result, all new building projects had to be submitted to the Piedmont Regional Authority for prior approval.

On 24 June 1993 the Municipality granted the applicant company planning permission (concessione edilizia) for the 3D project. The permission referred to the detailed plan of 14 November 1986, as amended by two district council resolutions dated 8 February 1991 and 9 March 1993.

The building works began on 27 July 1993. The applicant company claims that in order to comply with the 9 March 1993 amendment to the detailed plan, it was compelled to move the location of the building “a few metres” to the north.

By Order no. 65 of 16 February 1996, an extraordinary committee of the Municipality of Bardonecchia ordered the suspension of the works on the ground that the new location did not comply with the conditions set out in the planning permission of 24 June 1993.

On 21 March 1996 the applicant company requested the Municipality to either certify that the works were compliant or to amend the planning permission (concessione in sanatoria). In a memorandum dated 13 May 1996, the Municipality informed the applicant company that it had decided to defer the examination of this point until a decision had been taken by the Piedmont Regional Authority.

The applicant company then issued proceedings in the Piedmont Regional Administrative Court, which in a judgment of 24 July 1997 declared the 9 March 1993 amendment to the detailed plan valid.

In a resolution of 6 October 1997, the Bardonecchia District Council endorsed the amendment and on 30 October 1997 the Municipality informed the applicant company that the works could resume.

In the interim, the Piedmont Regional Authority had reminded the Bardonecchia Municipality in a note dated 2 May 1996 that the 3D building did not comply with the stipulated conditions and that those responsible were accountable under section 16(5) of Regional Law no. 20 of 3 April 1989. Under the terms of that provision, anyone erecting a building in a manner that is wholly non-compliant (totale difformità) with the authorisations granted by the competent regional authorities is liable to a fine equal to 100% of the value of the unlawfully erected building.

On the basis of an expert report, the extraordinary committee of the Bardonecchia Municipality imposed a fine of 2,682,237,401 Italian lire (approximately 1,385,260 euros (EUR)) on the applicant company on 8 August 1996.

The applicant company challenged the fine in the Piedmont Regional Administrative Court.

In a judgment of 2 July 1997, which was lodged with the registry on 24 July 1997, the Regional Administrative Court dismissed an appeal by the applicant company.

In giving judgment it observed that the District Council’s resolution of 9 March 1993 and the planning permission granted on 24 June 1993 were of no relevance to the case, as the applicant company had been under a duty to comply with the Piedmont Regional Authority’s resolution of 11 May 1992. Even assuming that, as the applicant company had alleged, the 3D building had been erected under the supervision of the district and regional authorities and that its relocation had not caused any real damage, there had nevertheless been a failure to comply with the conditions laid down by the Regional Authority. Furthermore, there was no requirement for the landscape or environment to have been harmed or for the person liable to pay the fine to have obtained a profit for a penalty to be imposed under section 16 of Regional Law no. 20 of 1989. The justification for this was that the building as erected was completely different to that for which the regional authorities had granted authorisation. The relocation of the building to the north at a distance which the regional authority experts estimated at 13 m (and which the applicant company put at between “5 and 10 m”) constituted a major change of location.

In a judgment of 4 July 2000, which was lodged with the registry on 11 September 2000, the Consiglio di Stato upheld the Regional Administrative Court’s decision.

It stated that the possible conformity (which was contested by the authorities) of the building with the urban development regulations had no bearing on whether the penalty laid down by section 16 of Law no. 20 of 1989 should be imposed, as it was justified by the violation of the regional authority’s landscape protection regulations. In the Consiglio di Stato’s view, the relocation of the building constituted a major modification to the original project. The issue of compliance with the landscape regulations ought therefore to have been submitted for reassessment by the regional authority. It was noted in that connection that the change in location had resulted in the occupation of 958 sq. m of land designated as “green belt” under the urban development plan.

The Consiglio di Stato accepted that the Piedmont Regional Authority had, in a decree of 21 April 1997, permitted buildings that had been erected in breach of regional authorisations to remain standing and that a technical report of 15 April 1997 had stated that, as regards the protection of the landscape, the fact that the building had been moved to the north did not significantly alter its ability to blend into the surrounding natural setting. However, it considered that, while the absence of damage to the landscape meant that no order could be made for the demolition of the building, it did not prevent a fine being imposed for the failure to submit the amended plans to the competent regional authority.

The protection of areas of “natural beauty” (bellezze naturali) is regulated by Law no. 1497 of 29 June 1939, which entitles the State to impose a “landscape restriction” (vincolo paesaggistico) on, inter alia, “panoramic beauty spots regarded as natural settings [quadri naturali]”. By a ministerial decree of 21 February 1953, all the land in the Municipality of Bardonecchia became subject to such a restriction. As a result, anyone wishing to build within the Municipality must, in addition to obtaining planning permission in accordance with the urban development plan, also obtain prior authorisation from the authority responsible for the protection of the landscape. Breaches of the regulations may result in an order for the demolition of the unlawfully built property or payment of an “indemnity” (indennità) corresponding to the “damage caused” or profit made by the offending party (section 15 of Law no. 1497 of 1939).

By Presidential Decree no. 616 of 24 July 1977, the State transferred its administrative role in the protection of sites of natural beauty to the regions. Section 10 of the Piedmont Regional Law no. 20 of 3 April 1989 reaffirms the need to obtain approval for landscape-protection purposes in the cases referred to in Law no. 1497 of 1939. Section 16 of the Regional Law makes the mayor responsible for investigating whether unauthorised or non-compliant buildings have been erected and, where infringements of the regulations are found, for imposing within thirty days “the penalties set out in section 15 of Law no. 1497 of 1939”. Section 16(5) provides: “The imposition of the pecuniary indemnity [indennità pecuniaria] provided for by section 15 of Law no. 1497 of 1939 ... shall entail the payment of a penalty [sanzione] equal to 100% of the value of the work that has been performed and, in any event, of not less than 10,000,000 lire [approximately EUR 5,164].” Section 16(7) reads as follows:

“The penalties set out in this section shall be combined with an obligation to reinstate the land [ripristinare i luoghi] in compliance with the directives set out in ... decrees issued by the President of the Regional Authority. To that end, the mayor shall send to the President of the Regional Authority a copy of the report indicating the nature of the breach.”

The Consiglio di Stato (see the opinions of the First Division, no. 3167 of 26 May 1972, and of the special commission, no. 5 of 9 May 1977) initially construed this provision to mean that the indemnity referred to in section 15 of Law no. 1497 of 1939 was not a penalty, but compensation for the damage caused. It therefore considered that the indemnity was not due if the building did not damage the landscape. However, in a separate decision it held that the indemnity was a penalty that was payable because of the failure to submit building plans, irrespective of the nature of the works, for prior approval from the authorities, even in cases where no damage had been caused.

The State subsequently introduced legislation concerning the rectification of breaches of the building regulations (condono edilizio). Law no. 30 of 28 February 1997 stipulated that “for buildings erected in the zones subject to protection under Law no. 1497 of 1939 ..., payment of the amount due for rectification [oblazione] shall not preclude an order for the payment of compensation [indennità risarcitoria] referred to in section 15 of Law no. 1497 of 1939 ...”.

Pursuant to that Law, the government adopted a ministerial decree on 26 September 1997, Article 4 of which provides:

“The payment of compensation shall also be mandatory ... if the level of damage [parametro danno] is equal to zero ...”

In judgment no. 1531 of 21 June 1999, the Latium Regional Administrative Court ruled that the ministerial decree of 26 September 1997 was unlawful in so far as it made the compensation referred to in section 15 of Law no. 1497 of 1939 payable even in the absence of damage to the landscape.

That decision was set aside by the Sixth Division of the Consiglio di Stato in judgment no. 3184 of 2 June 2000. Relying on its earlier case-law (judgments of the Second Division nos. 2479 of 4 June 1997, 2065 of 29 October 1997 and 2066 of 29 October 1997), it held that the obligation to pay compensation arose in all cases where there had been a breach of the duty to protect the landscape, even in the absence of any proven damage. It noted that the law made no distinction between breaches which caused damage to the landscape and those which did not and stated that the penalties laid down by Law no. 1497 of 1939 served not only to secure reparation for the damage but also as a deterrent (si tratta di misure che hanno una funzione non solo ripristinatoria, ma anche deterrente). The fact that Law no. 1497 of 1939 used the word “compensation” rather than “penalty” was not decisive, as the former word had not always been used in the same way by the legislature and did not always mean compensation for loss, but could simply be a synonym for “sum of money”. The Consiglio di Stato stated, lastly, that the penalties payable for breaches of the landscape regulations were set out in Law no. 689 of 1981 (a decriminalisation statute that contains general rules on breaches of administrative regulations). The imposition of a penalty was subject to the rule of criminal procedure that for statute-of-limitations purposes time started to run on the date the unlawful situation ceased (that is to say, the date the requisite authorisations were granted – see Article 158 § 1 of the Criminal Code).

The principles established in this judgment (no. 3184 of 2 June 2000) were subsequently confirmed in other decisions of the Consiglio di Stato (judgments nos. 6007 of 8 November 2000, 5373 of 9 October 2000 and 6279 of 12 November 2002).

Article 167 of Legislative Decree no. 42 of 2004 (which was entitled “payment of financial compensation”) amended section 15 of Law no. 1497 of 1939. The word “compensation” was replaced by “sum” (somma). Law no. 308 of 15 December 2004 characterises the sum referred to in the aforementioned Article 167 as a “pecuniary penalty” (sanzione pecuniaria).

The applicant company complained that the fine it had been ordered to pay violated Article 1 of Protocol No. 1.

“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.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

The Government argued that the provision was not applicable, as it could not be brought into play simply by the fact that a fine was pecuniary in nature. They observed that Article 1 of Protocol No. 1 contained exceptions to the peaceful enjoyment rule, which included “laws ... necessary ... to secure the payment of ... penalties [amendes]”. That paragraph had to be construed as meaning that the payment of a fine was not in itself subject to the relevant provision, which only applied to subsequent measures (protective or replacement measures) used to secure payment.

The Government concluded from this that the only possessions of relevance for determining whether there had been a breach of Article 1 of Protocol No. 1 were those that could be distinguished from cash or from the fine itself.

The applicant company contested the Government’s submissions. It stated that the Court had held on numerous occasions that Article 1 of Protocol No. 1 applied to sums of money, which constituted “possessions” within the meaning of that provision.

The Court reiterates that the imposition of a fine will in principle constitute interference with the right guaranteed by the first paragraph of Article 1 of Protocol No. 1 as it deprives the person concerned of an item of property, namely the sum that has to be paid (see Phillips v. the United Kingdom, no. 41087/98, § 50, ECHR 2001-VII). In the present case, the applicant company was forced to pay approximately EUR 1,385,260 as a result of its failure to comply with the building restrictions set out in the Piedmont Regional Authority’s resolution of 11 May 1992. Article 1 of Protocol No 1 is therefore applicable.

The applicant company maintained that the impugned fine had been imposed solely because the location of the 3D building had been moved a few metres to the north and even though the change had not caused any discernible damage to the landscape. In those circumstances, it submitted that there had been an interference with its right to the peaceful enjoyment of its possessions that had upset the fair balance required between the general interest of the community and the need to protect the fundamental rights of individuals. It referred, in particular, to the amount of the fine and submitted it had had to bear an individual and excessive burden for a purely formal breach of the law. It added that it was the Bardonecchia Municipality that had forced the change of location of the 3D building as a result of the amendment to the urban development plan and the grant of the new planning permission in 1993. Since the latter document made reference to the authorisation that had been issued by the Piedmont Regional Authority on 11 May 1992, the applicant company had thought that no new authorisation was necessary.

In its submission, Law no. 20 of 1989 was not sufficiently precise and foreseeable. In particular, the Consiglio di Stato’s ruling, in a reversal of its previous case-law, that the penalty laid down in section 15 of Law no. 1497 of 1939 applied even in the absence of any proven damage to the landscape could not have been foreseen from the wording of the relevant domestic legislation.

The Government contended that the interference with the applicant company’s right of property was the result of the application of a law that was “necessary to secure the payment of fines”. More specifically, it constituted a limitation on the right to build that was necessary in order to regulate the use of land in accordance with the general interest in the protection of the landscape. In any event, in the Government’s submission, “no one ... would seriously suggest that the imposition of a fine was in itself contrary to Article 1 of Protocol No. 1”.

Reasonable proportion had been maintained between the legitimate aim pursued and the means used to achieve it. In view of the need to deter people from constructing buildings in breach of laws protecting the landscape and the environment, penalties “of the highest severity” were justified. Indeed, the purpose of Regional Law no. 20 of 1989 was to avoid a situation in which people decided for themselves whether a building was environmentally compatible and the authorities were forced to wait until the building works had been completed and the damage had become wholly or partly irreversible. For this reason, the fact that no serious damage had been done to the landscape was of no relevance to the question whether a fine should be imposed, but only to the issue whether a demolition order could be avoided.

Lastly, even in absolute terms, a fine was not disproportionate. In that connection, the Government pointed out that the applicant company’s right of property had not been called into question and that it was free to enjoy the property and derive profits from it.

The Court notes at the outset that the impugned interference was justifiable under the second paragraph of Article 1 of Protocol No. 1, which expressly excludes from the general rule the payment of taxes or other contributions or penalties (see Phillips, cited above, § 51, and, with respect to taxation, Buffalo S.r.l. in liquidation v. Italy, no. 38746/97, § 32, 3 July 2003). This does not, however, mean that the Court’s supervisory role on this issue is entirely ousted as it must verify whether Article 1 of Protocol No. 1 has been correctly applied (see Orion-Břeclav, s.r.o., v. the Czech Republic (dec.), no. 43783/98, 13 January 2004).

For the purposes of the first sentence of the first paragraph of Article 1 of Protocol No. 1, the Court must therefore examine whether a fair balance has been struck between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights (see Phillips, cited above, § 51; Sporrong and Lönnroth v. Sweden, 23 September 1982, §§ 69 and 73, Series A no. 52; and James and Others v. the United Kingdom, 21 February 1986, § 50, Series A no. 98). Consequently, a financial liability arising out of a fine may undermine the guarantee afforded by that provision if it places an excessive burden on the person or entity concerned or fundamentally interferes with his or its financial position (see, mutatis mutandis, Buffalo S.r.l. in liquidation, cited above, § 32).

It is in the first place for the national authorities to decide what kind of taxes or contributions are to be collected. The decisions in this area will commonly involve the appreciation of political, economic and social questions which the Convention leaves within the competence of the Contracting States. The margin of appreciation of the Contracting States is therefore a wide one (see, mutatis mutandis and in relation to fiscal policy, BaláZ v. Slovakia (dec.), no. 60243/00, 16 September 2003). The same applies to the authorities’ policy in such a complex and difficult sphere as urban development (see Terazzi S.a.s. v. Italy, no. 27265/95, § 85, 17 October 2002; Elia S.r.l. v. Italy, no. 37710/97, § 77, ECHR 2001-IX; and Abdilla v. Malta (dec.), no. 38244/03, 3 November 2005).

The Court notes that in the instant case a penalty was imposed on the applicant company under section 16(5) of Regional Law no. 20 of 1989. Under the terms of this provision, anyone failing to comply with the permission issued by the competent regional authorities when performing building works is liable to a fine corresponding to the value of the illegally performed works. The wording of the provision does not state that a fine cannot be imposed in the absence of proven damage to the landscape. The interference was therefore prescribed by law.

Further, it pursued the legitimate aim of protecting the landscape and developing the land in a rational and environmentally friendly manner; this was in the general interest (see, mutatis mutandis, Bahia Nova S.A. v. Spain (dec.), no. 50924/99, 12 December 2000).

It remains to be determined whether a fair balance was struck between the demands of the general interest and the requirements of the protection of the individual’s fundamental rights (see, mutatis mutandis, Casa Missionaria per le missioni estere di Steyl v. Italy (dec.), no. 75248/01, 13 May 2004).

In this connection, the Court notes that the Consiglio di Stato found that the relocation of the building by the applicant company had resulted in its occupying approximately 958 sq. m. of land that did not belong to it and which had been designated as “green belt”. In the Court’s view, that relocation interfered, at least to some extent, with the regional authority’s urban planning and development projects. Even assuming that, as the applicant company alleged, the relocation caused no damage to the environment, the breach of the conditions imposed by the authorities responsible for urban development and planning in itself constituted a violation of the relevant legal rules. The issue whether such conduct should be punished by a financial penalty with a deterrent effect such as a fine comes within the Contracting States’ margin of appreciation.

As regards the level of the fine imposed on the applicant company, the Court notes that it was calculated on the basis of the illegally performed works and might, at first sight, appear exorbitant. However, the relocation of the 3D building in its entirety substantially altered the original project. It is also necessary to take into account considerations relating to the scale of the applicant company’s building project – the building of a vast hotel complex with a total volume of 12,000 m³ – as the impact of a measure imposed as a deterrent must be proportionate to the size of the interests at stake. Lastly, it will be noted that the regional authorities did not order the demolition of the illegally erected building, and the applicant company’s right of property in the building and right to use it for commercial ends remain fully intact. In this connection, the Court observes that it held in a recent decision that an order to demolish a building constructed without prior permission from the authorities was not in itself incompatible with Article 1 of Protocol No. 1 (see Saliba v. Malta, no. 4251/02, §§ 45-48, 8 November 2005).

In these circumstances, the Court finds that the Italian authorities struck a fair balance between, on the one hand, the general interest and, on the other, respect for the applicant company’s right of property. The interference did not, therefore, impose an excessive burden on the applicant company such as to make the measure complained of disproportionate to the legitimate aim pursued.

It follows that this complaint is manifestly ill-founded and must be dismissed pursuant to Article 35 §§ 3 and 4 of the Convention.

“1. No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed.

2. This Article shall not prejudice the trial and punishment of any person for any act or omission which, at the time when it was committed, was criminal according to the general principles of law recognised by civilised nations.”

The Government argued that Article 7 of the Convention was not applicable. They pointed out that the notion of a “criminal penalty” for the purposes of the Court’s case-law was extremely unclear owing to its use of different criteria or a combination thereof (the classification under domestic law and the nature and severity of the sentence). The weight given to these criteria and the procedural aspects by the Court’s practice varied. In the instant case, however, various factors pointed to the conclusion that, for Convention purposes, the fine imposed on the applicant company was not a “penalty”.

Although the fine indisputably had a punitive and deterrent function, that was true of any penalty, including penalties which the Court did not regard as “criminal”. Secondly, under Italian law the offending penalty was undoubtedly classified as “administrative” and was not within the jurisdiction of the criminal courts. It was purely financial and did not entail any deprivation of property, such as confiscation or the destruction of the building. Lastly, the fine could not be converted into a prison sentence or be enforced by any form of imprisonment in default of payment.

The applicant company rejected the Government’s arguments and submitted that the financial penalty that had been imposed on it constituted a “penalty” within the meaning of Article 7 of the Convention. It pointed out that the sanction was of both a deterrent and punitive nature, was governed by Law no. 689 of 1981 entitled “changes to the criminal justice system” and was extremely onerous, as it could entail the payment of an amount equal to the value of the entire building. It said that in none of the cases the Court had previously examined was it possible to find such a severe penalty for what was a purely formal contravention of the rules. It further pointed out that the general principles set out in the decriminalisation law (Law no. 689 of 1981) were the same as in the Criminal Code.

The Court must determine whether the financial penalty imposed on the applicant company constituted a “penalty” within the meaning of Article 7 § 1 of the Convention. The wording of this provision indicates that the starting-point in any assessment of the existence of a penalty is whether the measure in question is imposed following conviction for a “criminal offence”. Other factors that may be taken into account as relevant in this connection are the nature and purpose of the measure in question; its characterisation under national law; the procedures involved in the making and implementation of the measure; and its severity (see Welch v. the United Kingdom, 9 February 1995, § 28, Series A no. 307-A).

In the instant case, neither the applicant company nor its directors were the subject of a criminal conviction by the Italian courts (see, mutatis mutandis, Yildirim v. Italy (dec.), no. 38602/02, ECHR 2003-IV, and Saliba v. Malta (dec.), no. 4251/02, 23 November 2004). Furthermore, under Italian law the impugned fine was not imposed under the provisions of the criminal law but under an administrative-law statute. The amount of the fine was determined by an administrative authority and its lawfulness examined by the administrative courts.

While these factors seem to militate against finding Article 7 of the Convention applicable, the Court cannot regard them as decisive. This is because the term “penalty” is autonomous in scope so that, in order to render the protection afforded by Article 7 effective, the Court must remain free to go behind appearances and assess for itself whether a particular measure amounts in substance to a “penalty” within the meaning of this provision (see Welch, cited above, § 27, and Coëme and Others v. Belgium, nos. 32492/96, 32547/96, 32548/96, 33209/96 and 33210/96, §145, ECHR 2000-VII).

In this connection, it observes that the penalty provided for by section 16(5) of Regional Law no. 20 of 1989 does not seek to afford pecuniary reparation for damage but essentially to inflict punishment in order to prevent the repetition of breaches of the building conditions laid down by the Regional Authority (see, mutatis mutandis and in relation to the notion of a “criminal charge”, Bendenoun v. France, 24 February 1994, § 47, Series A no. 284). Further support for this conclusion is to be found in the findings of the Consiglio di Stato, which in its judgment of 4 July 2000 stated that the absence of damage to the landscape did not prevent a fine being imposed. The penalty was therefore both deterrent and punitive, the latter being the characteristic that ordinarily serves to distinguish criminal penalties (see Öztürk v. Germany, 21 February 1984, § 53, Series A no. 73).

The Court considers that significant weight should be attached to the severity of the penalty, both potential and actual. Regional Law no. 20 of 1989 provides for a fine of 100% of the value of the illegally performed works and in any event of not less than the equivalent of EUR 5,164. The fine imposed by the extraordinary committee of the Bardonecchia Municipality in the instant case was very high, as it came to approximately EUR 1,385,260. While it cannot be converted into a prison sentence in the event of default, that is not decisive to the classification of the offence as “criminal” (see Lauko v. Slovakia, 2 September 1998, § 58, Reports of Judgments and Decisions 1998-VI).

Although the fine was imposed on the applicant company on objective grounds without the need to establish any criminal intent or negligence on its part, the lack of subjective elements does not necessarily deprive an offence of its criminal character; indeed, criminal offences based solely on objective elements may be found in the laws of the Contracting States (see Janosevic v. Sweden, no. 34619/97, § 68, ECHR 2002-VII, and Salabiaku v. France, 7 October 1988, § 27, Series A no. 141-A).

After noting and giving due weight to each of the various aspects of the case, the Court notes that they are predominantly of a criminal-law nature. Taken together and in combination, they gave the fine the character of a “penalty” within the meaning of Article 7 of the Convention.

The applicant company alleged that the wording of section 15 of Law no. 1497 of 1939 and section 16 of Regional Law no. 20 of 1989 was ambiguous and potentially misleading with respect to the effect of a breach that did not damage the landscape. In that connection, it observed that both provisions used the word “compensation” and that the latter expressly referred to the “damage caused”.

There were no judicial decisions on Regional Law no. 20 of 1989 until 1996, by which time the works for which the fine was imposed had already begun. Moreover, until its judgment no. 3184 of 2000, the Consiglio di Stato’s case-law on the interpretation of section 15 of Law no. 1497 of 1939 was not settled and the decision in the majority of the cases had been that without damage to the landscape there could be no order for “compensation”. The opposite view, which was unfavourable to the applicant company, had only prevailed on 2 June 2000, that is to say just over a month before the final domestic decision in its case (on 4 July 2000). In its submission, the Consiglio di Stato’s departure from the dominant line of case-law on 2 June 2000 was neither “consistent with the essence of the offence”, nor “reasonably foreseeable”.

The applicant company further pointed out that the Regional Law affected above all the level of the fine that was imposed. Whereas section 15 of Law no. 1497 of 1939 provided for the payment of compensation of an amount equal to the profit obtained by the offending party, the Regional Law of 1989 required the imposition of a penalty equal to 100% of the value of the work performed.

Lastly, the applicant company argued that there had been a violation of Article 7 of the Convention as the fine (of approximately EUR 1,385,260) was disproportionate to the – purely formal – breach of which it was accused and thus upset the balance that had to be maintained in this sphere between the general interest and the fundamental rights of the individual.

The Government submitted that the fact that the impugned fine was imposed under a regional statute was of no significance. While it was true that in Italy the regions had no jurisdiction to determine what conduct should constitute an offence or to impose criminal penalties, they were nevertheless required to protect the landscape and the environment, if necessary with the help of penalties that were classified as “administrative” under domestic law. The definitions employed in the national law could not be influenced by the “autonomous notions” used by the Court for the purposes of the Convention, and States could not be forced to adapt the former so as to make them consistent with the latter. Likewise, the trend towards decriminalisation witnessed in European States had not attracted criticism from the Court.

In the present case, the offence committed by the applicant company was classified as “administrative” in national law and the regional authorities had jurisdiction to deal with it and to impose penalties. The regional legislation formed part of “national law” for the purposes of Article 7 of the Convention and was accessible, clear, foreseeable and of a general nature. Regional laws were approved by democratically elected assemblies, published in official gazettes at the regional and national levels and subject to review by the Constitutional Court.

Neither the Convention nor the Court’s case-law required a “State monopoly on law” and there was nothing to suggest that it was necessary or desirable for territorial State entities to be deprived of their legislative power. The provision made in the legislation for an offence and a penalty was essentially designed to protect the individual against the retrospective application of provisions of criminal law. It did not, however, go so far as to lay down a particular form of instrument or require it to be issued by one authority rather than another.

The Government argued that while the severity of the penalty was relevant to the applicability of Article 7, it was not material to the question of compliance. The States were not prohibited from imposing relatively stiff penalties and Article 7 did not require a proportionate relation between the offence and the penalty. Provided that the limits set by Article 3 were not exceeded, the Convention did not afford any immunity from punishment beyond a certain level. The issue of proportionality was relevant only to the relationship between certain rights guaranteed by the Convention (for instance, freedom of expression under Article 10) and limitations on those rights justified by the general interest.

In any event, the Government considered that the penalty imposed on the applicant company was not disproportionate. They argued that it was necessary to take into account the special circumstances that obtained in Italy, a country which possessed many natural and artistic attractions which had for decades been under the constant threat of illegal constructions.

In the instant case, the location of the applicant company’s buildings had been changed from that originally intended. The change was not of a purely formal nature as it affected the environment by encroaching on the green belt area. Moreover, the purpose of Law no. 20 of 1989 was to ensure effective and systematic control within the region of activities that were liable to damage the landscape and the environment. For such control to be effective, rules had to be laid down requiring any building project that had been examined and approved in a specific form to be resubmitted for approval before implementation in the event of a subsequent alteration or modification of the project. The reason the penalty was so high, therefore, was to avoid damage to the landscape by penalising any acts which prevented the regional authorities from carrying out their supervisory function at the appropriate time. Where the applicant company had erred had been in failing to obtain approval of the amendments to the original plan in accordance with the procedures prescribed by law, thus creating a potential hazard to the environment and landscape.

The Court reiterates that Article 7 of the Convention embodies, inter alia, the principle that only the law can define a crime and prescribe a penalty (nullum crimen, nulla poena sine lege). While it prohibits in particular extending the scope of existing offences to acts which previously were not criminal offences, it also lays down the principle that the criminal law must not be construed extensively, to an accused’s detriment, for instance by analogy (see Puhk v. Estonia, no. 55103/00, § 25, 10 February 2004).

When speaking of “law” Article 7 alludes to the very same concept as that to which the Convention refers elsewhere when using that term, a concept which comprises statutory law as well as case-law and implies qualitative requirements, notably those of accessibility and foreseeability (see Cantoni v. France, 15 November 1996, § 29, Reports 1996-V; S.W. and C.R. v. the United Kingdom, 22 November 1995, § 35 and § 33 respectively, Series A nos. 335-B and 335-C; and E.K. v. Turkey, no. 28496/95, § 51, 7 February 2002).

Offences and the relevant penalties must be clearly defined by law. This requirement is satisfied where the individual can know from the wording of the relevant provision and, if need be, with the assistance of the courts’ interpretation of it, what acts and omissions will make him criminally liable (see Radio France and Others v. France, no. 53984/00, § 20, ECHR 2004-II, and Kokkinakis v. Greece, 25 May 1993, § 52, Series A no. 260-A). Nevertheless, Article 7 of the Convention does not outlaw the gradual clarification of the rules of criminal liability through judicial interpretation from case to case, “provided that the resultant development is consistent with the essence of the offence and could reasonably be foreseen” (see Streletz, Kessler and Krenz v. Germany [GC], nos. 34044/96, 35532/97 and 44801/98, § 50, ECHR 2001-II; Radio France and Others, cited above, loc. cit.; and Eurofinacom v. France (dec.), no. 58753/00, ECHR 2004-VII).

However clearly drafted a legal provision may be, in any system of law, including criminal law, there is an inevitable element of judicial interpretation. While it is primarily for the national authorities, notably the courts, to interpret and apply domestic law (see, mutatis mutandis, Kopp v. Switzerland, 25 March 1998, § 59, Reports 1998-II), the Court must ascertain whether the effects of such an interpretation are compatible with the Convention. It must therefore verify that at the time an accused person performed the act which led to his being prosecuted and convicted there was in force a legal provision which made that act punishable, and that the punishment imposed did not exceed the limits fixed by that provision (see K.A. and A.D. v. Belgium, nos. 42758/98 and 45558/99, § 52, 17 February 2005, and Coëme and Others, cited above, § 145).

The Court reiterates that the scope of the notion of foreseeability depends to a considerable degree on the content of the text in issue, the field it is designed to cover and the number and status of those to whom it is addressed. A law may still satisfy the requirement of foreseeability even if the person concerned has to take appropriate legal advice to assess, to a degree that is reasonable in the circumstances, the consequences which a given action may entail (see Tolstoy Miloslavsky v. the United Kingdom, 13 July 1995, § 37, Series A no. 316-B, and Grigoriades v. Greece, 25 November 1997, § 37, Reports 1997-VII). This is particularly true in relation to persons carrying on a professional activity, who are used to having to proceed with a high degree of caution when pursuing their occupation. They can on this account be expected to take special care in assessing the risks that such activity entails (see Cantoni, cited above, § 35; Delbos and Others v. France (dec.), no. 60819/00, ECHR 2004-IX; and K.A. and A.D. v. Belgium, cited above, § 53).

It is common ground that the fine imposed on the applicant company in the instant case was prescribed by law – namely section 16 of Regional Law no. 20 of 1989 – which came into force before the offence was committed. There is not, in the Court’s view, anything to suggest that that provision was not accessible.

What the applicant company does contest, however, is the foreseeability of that Law. In its submission, it had not been clearly established that the penalty concerned could be inflicted even in cases where there was no damage to the landscape. In that connection, it observed at the outset that section 16 of Regional Law no. 20 of 1989 referred to the “compensation” provided for by section 15 of Law no. 1497 of 1939 and that this latter provision established an equivalence between the penalty and the “damage caused”. In the applicant company’s submission, that wording indicated that the fine was compensatory in nature and was only justified in the event of clearly established damage or loss.

The Court does not, however, consider the matters raised by the applicant company decisive. While it is true that section 16(5) of Regional Law no. 20 of 1989 contains a cross-reference to “the financial compensation provided for by section 15 of Law no. 1497 of 1939”, the Piedmont Regional Law nevertheless stipulated that the penalty had to be “equal to 100% of the value of the work performed”, thereby replacing the equivalence with the “damage caused” principle with a statutory parameter linked to the scale of the works carried out. That provision did not state that the mayor had to establish whether damage had been caused to the landscape before imposing the penalty. Moreover, Regional Law no. 20 of 1989 was clearly consistent with the aim of ensuring regional-authority control over building works that required compliance with the conditions laid down by the competent technical bodies as well as with the procedures for obtaining prior permission.

In the light of the foregoing, the Court finds that, in the special context of the application of Regional Law no. 20 of 1989, the interpretation in the applicant company’s case was consistent with the essence of the offence and could “reasonably be foreseen” (see, mutatis mutandis, Radio France and Others, cited above, loc. cit).

The Court further notes that, as the applicant company rightly pointed out, this aspect of the interpretation of section 16 of Regional Law no. 20 of 1989 was not settled case-law at the date of the offence for which the penalty was imposed. The first judicial decision concerning that provision appears to have been adopted in 1996, in other words after the building works had begun. It was not until 2 June 2000 that the Consiglio di Stato resolved the conflict in the case-law by clarifying that the “compensation” was payable in all cases of breaches of the regulations for the protection of the landscape, including those in which there was no proven damage. This cannot, however, be decisive as it formed part of the process of gradual clarification of the rules on criminal liability.

As a member of the building trade, the applicant company could be expected to take particular care to evaluate the risks its activity entailed. At the material time it should have been aware, with the help of appropriate advice where necessary, that, by carrying out works that were different to those for which planning permission had been obtained from the regional authorities without submitting the new project for prior approval, it ran the risk of incurring the penalty laid down by section 16 of Regional Law no. 20 of 1989. This would have enabled it to find out, in particular, that in some instances the courts had held that the compensation provided for in section 15 of Law no. 1497 of 1939 was payable even in the absence of damage to the landscape. The possibility that that line of authority would become dominant and be followed in its case was, moreover, reflected in the wording of section 16 of Regional Law no. 20 of 1989 and the clarification which that provision provided on the amount of the “financial compensation” (see, mutatis mutandis, Eurofinacom, cited above, and Chauvy and Others v. France (dec.), no. 64915/01, 23 September 2003).

Lastly, the Court observes that section 16(5) of Regional Law no. 20 of 1989 clearly indicates that the amount of the fine is equal to 100% of the value of the works performed. It has not been alleged that the penalty imposed in the instant case exceeded the limits set out in that provision.

The Court has found above with respect to Article 1 of Protocol No. 1 that the penalty imposed on the applicant company was not disproportionate to the legitimate aim pursued by the authorities. In these circumstances, no appearance of a violation of Article 7 of the Convention can be found.

It follows that this complaint is manifestly ill-founded and must be dismissed pursuant to Article 35 §§ 3 and 4 of the Convention.

“In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”

The applicant company noted that the right of access to a court guaranteed by Article 6 of the Convention included the right to seek review, by a judicial body with full jurisdiction, of the decision to impose an administrative fine. The judicial body had to have the power to set aside all the factual and legal findings of the impugned decision, and jurisdiction to examine all questions of fact and law of relevance to the dispute before it.

In the instant case, however, the Regional Administrative Court and the Consiglio di Stato only had power to quash the fine if the decision to impose it was taken without jurisdiction, or was in breach of the law or ultra vires. However, other than enabling an order to be made for the destruction of the building (which was not envisaged in the instant case), the law did not make provision for the penalty to be adapted to the seriousness of the alleged misconduct. The administrative courts had therefore been unable to review the severity of the penalty or, in particular, to draw a distinction between formal violations (which did not cause any damage to the landscape) and substantive violations (which did).

The applicant company pointed out, lastly, that the interference with its right of access to a court had been aggravated by the fact that a reduction in the financial penalty was possible only when an application for regularisation was made. Accordingly, had it built the building without applying for planning permission it might have obtained more favourable treatment.

The Government said that because the applicant company had failed to apply for the necessary permission there could be no reduction in the penalty payable under Law no. 20 of 1989. That situation was, however, totally unrelated to the right of access to a court, as Article 6 of the Convention did not lay down the extent of the powers with which a court or tribunal had to be vested and did not state that the “tribunal” had to be able to fit the penalty to the offence. Financial penalties were often of a fixed amount, either in absolute terms or as a percentage. In such cases, the courts continued to have a role to play as they remained competent to establish the facts and interpret and apply the law. They thus adjudicated on all the essential points in issue, both of fact and law.

The purpose of the limitation on the courts’ powers in the instant case was the legitimate aim of protecting the landscape. The size of the fixed penalty contributed to its deterrent effect and removed any hope the offender might have had of more lenient treatment. The Convention did not require the States to lay down “variable” penalties between minimum and maximum limits even in criminal cases. Indeed, for Convention purposes, “fixed” penalties had the advantage of being more foreseeable.

The Government added that, in any event, it was not entirely accurate to say that the penalty was not variable. When an unlawfully erected building had a genuine negative impact on a protected area, the financial penalty was combined with an order for the building’s demolition. It could therefore be argued that the penalty for the offence varied according to its gravity. In the instant case, the penalty imposed by the authorities was already at the lowest level and could not be reduced further.

The Court found above that the fine prescribed by Regional Law no. 20 of 1989 constituted a “penalty” within the meaning of Article 7 of the Convention. Accordingly, the statutory provision which the applicant company contravened created an offence of a criminal nature for the purposes of Article 6 of the Convention.

The impugned penalty was not imposed by the courts following adversarial judicial proceedings, but by an extraordinary committee of the Bardonecchia Municipality. While entrusting the prosecution and punishment of similar minor offences to administrative authorities is not inconsistent with the Convention, the person concerned must have an opportunity to challenge any decision made against him or her before a tribunal that offers the guarantees of Article 6 (see Kadubec v. Slovakia, 2 September 1998, § 57, Reports 1998-VI, and Čanády v. Slovakia, no. 53371/99, § 31, 16 November 2004).

The Court reiterates that the notion of “penalty” has an autonomous meaning. Accordingly, sanctions imposed following administrative or tax proceedings may be classified as “penalties” if they satisfy the criteria established by the Court in this sphere. The Court is, however, aware that the nature of such proceedings may differ in various ways from the nature of criminal proceedings within the strict meaning of that term. Although these differences do not release the Contracting States from their obligation to comply with all the guarantees afforded by the criminal limb of Article 6, they may nevertheless have a bearing on the manner in which they are applied.

Therefore, in administrative proceedings, the obligation to comply with Article 6 of the Convention does not preclude a “penalty” being imposed by an administrative authority in the first instance. For this to be possible, however, decisions taken by administrative authorities which do not themselves satisfy the requirements of Article 6 § 1 of the Convention must be subject to subsequent control by a judicial body that has full jurisdiction (see Schmautzer, Umlauft, Gradinger, Pramstaller, Palaoro and Pfarrmeier v. Austria, 23 October 1995, §§ 34, 37, 42, 39, 41 and 38 respectively, Series A nos. 328 A-C and 329 A-C). The characteristics of a judicial body with full jurisdiction include the power to quash in all respects, on questions of fact and law, the decision of the body below. It must in particular have jurisdiction to examine all questions of fact and law relevant to the dispute before it (see Chevrol v. France, no. 49636/99, § 77, ECHR 2003-III, and Silvester’s Horeca Service v. Belgium, no. 47650/99, § 27, 4 March 2004).

In the instant case, the applicant company was able to appeal to the Piedmont Regional Administrative Court against the impugned administrative penalty and to lodge a further appeal against that court’s decision with the Consiglio di Stato. The Court has already found in previous decisions that these courts satisfy the requirements of independence and impartiality so as to constitute a “tribunal” for the purposes of Article 6 of the Convention (see Predil Anstalt S.A. v. Italy (dec.), no. 31993/96, 8 June 1999).

The Court further notes that the administrative courts examined the various factual and legal submissions made by the applicant company. They thus examined whether the municipal and regional supervisory systems were ineffective, whether there had been a material change in the location of the 3D building and, therefore, a breach of the conditions laid down by the Regional Authority, whether an application for planning permission had been made for the new project prior to construction and whether it was possible to impose the penalty prescribed by Regional Law no. 20 of 1989 even in the absence of proven damage to the landscape. Their jurisdiction was not confined to verifying the lawfulness of the authority’s acts, but included a review of whether, in the special circumstances of the case, the authority had made an appropriate use of its powers.

Although the administrative courts referred to by the applicant company did not have jurisdiction to fix the amount of the fine, since this was determined by the value of the works, the applicant company could nevertheless have contested the value of the unlawfully performed works and thereby obtained a reduction in the amount of the fine.

It should also be noted that the equivalence between the value of the works and the amount of the fine was established by the legislature, which set a statutory measure that was binding on both the administrative authorities and courts. In the absence of manifest signs of arbitrariness, the Court cannot under Article 6 § 1 of the Convention review the appropriateness of that choice. For the purposes of deciding whether that provision has been complied with, it would merely observe that the extraordinary committee of the Bardonecchia Municipality had no more power to set the amount of the fine than the administrative courts.

Since the administrative authority’s decision was subsequently reviewed by judicial bodies with full jurisdiction, no appearance of a violation of Article 6 § 1 of the Convention can be found in the instant case. It follows that this complaint is manifestly ill-founded and must be dismissed pursuant to Article 35 §§ 3 and 4 of the Convention.

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You are here: BAILII >> Databases >> European Court of Human Rights >> VALICO s.r.l. v. ITALY DECISION - 70074/01 [2012] ECHR 1167 (21 March 2006) URL: http://www.bailii.org/eu/cases/ECHR/2006/1167.html Cite as: [2012] ECHR 1167

European Court of Human Rights