04 Jul Withdrawal of gambling licenses led to violation of Article 1 of Protocol No. 1

The case Svit Rozvag, TOV and others v. Ukraine (nos. 13290/11, 62600/12, and 49432/16, 27/06/2019, 27/06/2019) concerned the ban on gambling introduced in Ukraine in 2009. The applicants are two Ukrainian companies, Svit Rozvag, TOV, based in Kharkiv, and Igro-Bet, PP, based in Lviv; and one Ukrainian national, Nataliya Stanko. Two of the applicants operated gambling businesses, while the third (Igro-Bet, PP), who had obtained a licence shortly prior to the ban, was prevented from launching an actual business. 

In response to a fire in May 2009 in a gambling establishment in Dnipro, killing nine people and injuring eleven, Parliament passed into law a bill banning gambling altogether. Just prior to that total ban, the Ministry of Finance had also suspended all gambling licences with immediate effect. All of the applicants’ gambling licences were revoked under the new law.  They lodged claims for compensation, which were all dismissed.

All the applicants relied in particular on Article 1 of Protocol No. 1 (protection of property) to complain about the revocation of their gambling licences without compensation. Ms Stanko also complained under the same article about the suspension of her licence in May 2009. Svit Rozvag, TOV and Ms Stanko also brought complaints under Article 6 § 1 (right to a fair hearing) about the proceedings for compensation. They complained that the domestic courts had failed to address their references to the Convention and the Court’s case-law even though those references had been relevant to the proceedings they had brought for compensation.

The Court found the following:

• No violation of Article 6 § 1 – in respect of Svit Rozvag, TOV Ms Stanko’s complaint under Article 6 § 1 declared inadmissible. It was not sufficient for the Court to hold that the interpretation of the relevant domestic provisions by the domestic courts was arbitrary or manifestly unreasonable. What that interpretation revealed about the state of domestic law itself is a different matter, of relevance for the Court’s assessment of the applicants’ complaints under Article 1 of Protocol No. 1. 

• Violation of Article 1 of Protocol No. 1 – in respect of Ms Stanko, on account of the suspension of her licence. The applicant’s main argument in respect of the suspension of her licence was that an exhaustive list of grounds and a procedure for the revocation of licences were laid down in the Licensing Law and that the Cabinet of Ministers’ and the Ministry of Finance’s decisions suspending her licence had been issued in disregard of those rules. The interpretation of domestic law by the domestic courts meant that the executive’s discretion was unfettered by any rule indicating with sufficient clarity the scope and conditions of its exercise. It therefore provided no perceptible measure of protection against arbitrariness. These considerations are sufficient for the Court to conclude that the domestic legal provisions did not meet the requirements of the quality of “law” and, therefore, that the suspension was not lawful.

• Violation of Article 1 of Protocol No. 1 – on account of the manner in which the applicants’ licences were revoked. The Court reiterates that the lack of a sufficient transitional period and of any compensation were factors which led the Court to find violations of Article 1 of Protocol No. 1 in previous cases which concerned the revocation of licences in the absence of any breach of the law by the licence holder. Under such circumstances, the measure applied to the applicants was disproportionate, on account primarily of the quality of the decision-making process which led to it, the lack of any compensatory measures, even in respect of the direct costs imposed by the State itself, and the lack of a meaningful transition period.

References from the official website of the European Court of Human Rights