LESHCHENKO & PARTNERS successfully defended a business’s interests before the ECtHR in a property rights case

The European Court of Human Rights (ECtHR), in the case of “Odessa Sandwich Company LLC v. Ukraine,” upheld the company’s complaint and found a violation by Ukraine of Article 1 of Protocol No. 1 to the Convention for the Protection of Human Rights and Fundamental Freedoms regarding the right to peaceful enjoyment of possessions.

The Court awarded just satisfaction for non-pecuniary damage and legal costs, while the amount of pecuniary compensation will be determined in a separate decision.

The applicant company was represented before the ECtHR by Andrii Leshchenko, attorney, partner, and head of the Odesa office of LESHCHENKO & PARTNERS. This case marked another important step in shaping modern legal practice for the protection of business and property rights in Ukraine.

Case Background: The Path of a Good Faith Owner Toward Justice

The subject of the dispute was a café built on the Luzanivka beach in Odesa. Its initial construction began in the early 2000s, but the café was never put into operation. Although a 2008 court decision ordered the demolition of the property as an unauthorized structure, in practice, the demolition never occurred. Later, the original owners sold the café, and the court recognized the new owner’s right to the property. On the basis of that initial decision, public authorities registered the new owner’s title to the café as immovable property.

Over the years, the café changed ownership several times through notarized purchase agreements and official registration of ownership by state authorities. Eventually, in 2012, the property was contributed to the share capital of Odessa Sandwich Company LLC, which received an official certificate of ownership.

In 2012, the prosecutor’s office, representing the interests of the Odesa City Council, initiated a review of the original court decision that had recognized the ownership rights to the café. The court accepted the prosecutor’s arguments, noting that previous owners lacked proper evidence of registered property rights, and therefore annulled the initial decision.

In 2014, the prosecutor once again appealed to the court, seeking to invalidate all subsequent transactions related to the café, including the applicant company’s registered ownership. The argument was that the café was an unauthorized construction on municipal land, and therefore all purchase transactions concerning the property should be declared null and void.

Three levels of national courts supported the prosecutor’s position, effectively depriving the applicant company—a good faith acquirer of lawfully registered property rights—of ownership.

ECtHR’s Legal Assessment: Key Findings

1. Recognition of “Possessions” under the Convention

Despite the Ukrainian courts’ classification of the café as an unauthorized construction, the ECtHR, applying the principle of autonomous interpretation, firmly established that:

• The company was the owner of the property;

• It was a good faith acquirer;

• The café constituted “possessions” within the meaning of Article 1 of Protocol No. 1 to the Convention.

The Court disagreed with the Ukrainian Government’s claim that the applicant did not own “possessions” under the Convention because the property had allegedly been acquired unlawfully. The ECtHR explicitly stated:

• There was no evidence in the case materials that the company or its founders had acted unlawfully or been involved in any illicit activity;

• The café had been purchased under a formal agreement from a previous owner whose title had been duly registered pursuant to a valid court decision;

• The company’s own title was also registered by public authorities, and it had enjoyed uninterrupted possession of the café for at least two years (2012–2014).

Therefore, the ECtHR found that the café constituted “possessions” within the meaning of the Convention, and the company’s dispossession without compensation constituted interference with property rights.

2. State Mistakes Must Not Be Borne by Good Faith Acquirers

This judgment has significant implications for business protection. The ECtHR clearly stated:

• Correcting an old error by public authorities cannot justify violating the rights of a good faith party who relied on the legitimacy of state actions;

• The risk of administrative or legal mistakes by the state must be borne by the state itself, not by citizens or businesses;

• If previously granted ownership is revoked, the principle of good governance:

  • Obligates the state to act without delay;

  • May require compensation or other restitution to the good faith owner.

These findings highlight the obligation of the state to act carefully and consistently in property registration and protection of ownership rights.

3. Prolonged State Inaction as a Form of Tolerance

The Court drew attention to the state’s failure to enforce the 2008 demolition order, noting:

• Such inaction reflects a prolonged tolerance of the situation or, at minimum, a reluctance to resolve it definitively;

• A court order that remains formally valid and enforceable at any time creates a state of legal uncertainty for the property owner.

This approach reinforces the position of a good faith owner, who cannot be left in a permanent state of uncertainty due to state inaction or bureaucratic errors.

4. Compensation Still Pending

Despite finding a violation, the Court postponed the decision on just satisfaction under Article 41 of the Convention. It noted that this matter would be considered separately, and a separate judgment will be delivered regarding the amount of pecuniary damages owed.

Thus, the case remains open in terms of compensation, giving the applicant company further grounds to seek protection of its financial interests.