EHRM, 13-12-2016, nr. 53080/13

The Court reiterates that Article 1 of Protocol No. 1, which guarantees in substance the right of property, comprises three distinct rules. The first rule, which is set out in the first sentence of the first paragraph, is of a general nature and enunciates the principle of peaceful enjoyment of property. The second rule, contained in the second sentence of the first paragraph, covers deprivation of possessions and subjects it to certain conditions. The third rule, stated in the second paragraph, recognises that the Contracting States are entitled, amongst other things, to control the use of property in accordance with the general interest, by enforcing such laws as they deem necessary for the purpose. However, the rules are not ‘distinct’ in the sense of being unconnected. The second and third rules are concerned with particular instances of interference with the right to peaceful enjoyment of property and should therefore be construed in the light of the general principle enunciated in the first rule (see, among many other authorities, James and Others v. the United Kingdom, 21 February 1986, § 37, Series A no. 98; and Sargsyan v. Azerbaijan [GC], no. 40167/06, § 217, ECHR 2015).

The concept of ‘possession’ within the meaning of Article 1 of Protocol No. 1 has an autonomous meaning which is not limited to ownership of material goods and is independent from the formal classification in domestic law: certain other rights and interests constituting assets can also be regarded as ‘property rights’, and thus as ‘possessions’ for the purposes of this provision (see Iatridis v. Greece [GC], no. 31107/96, § 54, ECHR 1999-II; Beyeler v. Italy [GC], no. 33202/96, § 100, ECHR 2000-I; and Parrillo v. Italy [GC], no. 46470/11, § 211, ECHR 2015).

Although Article 1 of Protocol No. 1 applies only to a person's existing possessions and does not create a right to acquire property (see Stummer v. Austria [GC], no. 37452/02, § 82, ECHR 2011), in certain circumstances a ‘legitimate expectation’ of obtaining an asset may also enjoy the protection of Article 1 of Protocol No. 1 (see, among many authorities, Anheuser-Busch Inc. v. Portugal [GC], no. 73049/01, § 65, ECHR 2007-I).

A legitimate expectation must be of a nature more concrete than a mere hope and be based on a legal provision or a legal act such as a judicial decision. The hope that a long-extinguished property right may be revived cannot be regarded as a ‘possession’; nor can a conditional claim which has lapsed as a result of a failure to fulfil the condition (see Gratzinger and Gratzingerova v. the Czech Republic (dec.) [GC], no. 39794/98, §§ 69 and 73, ECHR 2002-VII). Further, no ‘legitimate expectation’ can be said to arise where there is a dispute as to the correct interpretation and application of domestic law and the applicant's submissions are subsequently rejected by the national courts (see Kopecký v. Slovakia [GC], no. 44912/98, § 50, ECHR 2004-IX). At the same time, a proprietary interest recognised under domestic law — even if revocable in certain circumstances — may constitute a ‘possession’ for the purposes of Article 1 of Protocol No. 1 (see Beyeler, cited above, § 105).

In cases concerning Article 1 of Protocol No. 1, the issue that needs to be examined is normally whether the circumstances of the case, considered as a whole, conferred on the applicant title to a substantive interest protected by that provision (seeIatridis, cited above, § 54; Beyeler, cited above, § 100; and Parrillo, cited above, § 211). In applications concerning claims other than those relating to existing possessions, the idea behind this requirement has also been formulated in various other ways throughout the Court's case-law. By way of example, in a number of cases the Court examined, respectively, whether the applicants had ‘a claim which was sufficiently established to be enforceable’ (see Gratzinger and Gratzingerova, cited above, § 74); whether they demonstrated the existence of ‘an assertable right under domestic law to a welfare benefit’ (see Stec and Others v. the United Kingdom (dec.) [GC], nos. 65731/01 and 65900/01, § 51, ECHR 2005-X); or whether the persons concerned satisfied the ‘legal conditions laid down in domestic law for the grant of any particular form of benefits’ (see Richardson v. the United Kingdom (dec.), no. 26252/08, § 17, 10 April 2012).

In Kopecký, the Grand Chamber recapitulated the Court's case-law on the notion of ‘legitimate expectation’. Following an analysis of different lines of cases concerning legitimate expectations, the Court concluded that its case-law did not contemplate the existence of a ‘genuine dispute’ or an ‘arguable claim’ as a criterion for determining whether there was a ‘legitimate expectation’ protected by Article 1 of Protocol No. 1. It took the view that ‘where the proprietary interest is in the nature of a claim it may be regarded as an ‘asset’ only where it has a sufficient basis in national law, for example where there is settled case-law of the domestic courts confirming it’ (see Kopecký, cited above, § 52).

One of the lines of case-law on ‘legitimate expectation’ referred to above involved situations where the persons concerned were entitled to rely on the fact that a legal act, on the basis of which they had incurred financial obligations, would not be retrospectively invalidated to their detriment (see Pine Valley Developments Ltd and Others v. Ireland, 29 November 1991, § 51, Series A no. 222; and Stretch v. the United Kingdom, no. 44277/98, § 35, 24 June 2003). In this line of cases, the ‘legitimate expectation’ was thus based on a reasonably justified reliance on a legal act which had a sound legal basis and which bore on property rights (see Kopecký, cited above, § 47). Respect for such reliance follows from one aspect of the rule of law, which is inherent in all the Articles of the Convention and which implies, inter alia, that there must be a measure of legal protection in domestic law against arbitrary interferences by public authorities with the rights safeguarded by the Convention (see, as a recent authority, Karácsony and Others v. Hungary [GC], no. 42461/13, § 156, 17 May 2016, with further references).

Notwithstanding the diversity of the expressions in the case-law referring to the requirement of a domestic legal basis generating a proprietary interest, their general tenor can be summarised as follows: for the recognition of a possession consisting in a legitimate expectation, the applicant must have an assertable right which, applying the principle enounced in paragraph 52 of Kopecký (rendered in paragraph 77 above) may not fall short of a sufficiently established, substantive proprietary interest under the national law.

In the modern, democratic State, many individuals are, for all or part of their lives, completely dependent for survival on social-security and welfare benefits. Many national legal systems recognise that such individuals require a degree of certainty and security, and provide for benefits to be paid — subject to the fulfilment of the conditions of eligibility — as of right (see Stec and Others (dec.), cited above, § 51). The principles which apply generally in cases under Article 1 of Protocol No. 1 are equally relevant when it comes to social and welfare benefits (see Stec and Others (dec.), cited above, § 54). The Court has previously addressed the issue of legitimate expectation in the context of social benefits on a number of occasions (see, for example,Kjartan Ásmundsson v. Iceland, no. 60669/00, § 44, ECHR 2004-IX, and Klein v. Austria, no. 57028/00, § 45, 3 March 2011.

In those legal systems where the national legislation requires mandatory contributions of employees to the social-security system, the legislation normally provides that those who have made adequate contributions and satisfied the statutory requirements of disability will receive some form of long-term disability benefit, on grounds of the principles of social solidarity and equivalency, for the period of the disability persisting or until the age of retirement. Such insurance schemes, which are typically mandatory, provide such protection, that is, the availability of benefits, for the entire period of insurance and on every occasion when the conditions of the insurance are satisfied. The relevant legal conditions are however subject to evolution. In this connection, it may be reiterated that in Gaygusuz v. Austria (16 September 1996, § 41, Reports of Judgments and Decisions 1996-IV) the Court found that the right to emergency assistance — a social benefit linked to the payment of contributions to the unemployment insurance fund — was, in so far as provided for in the applicable legislation, a pecuniary right for the purposes of Article 1 of Protocol No. 1. In Klein (cited above, § 43) it was noted that entitlement to a social benefit — in that instance, a pension payable from a lawyers’ pension scheme — was linked to the payment of contributions, and, when such contributions had been made, an award could not be denied to the person concerned. Contributions to a pension fund may thus, in certain circumstances and according to the domestic law, create a property right (see Kjartan Ásmundsson, cited above, § 39; Apostolakis v. Greece, no. 39574/07, §§ 28 and 35, 22 October 2009; Bellet, Huertas and Vialatte v. France (dec.), nos. 40832/98,40833/98 and 40906/98, 27 April 1999; Skórkiewicz v. Poland (dec.), no. 39860/98, 1 June 1999; and Moskal v. Poland, no. 10373/05, § 41, 15 September 2009).

The Court has also held that Article 1 of Protocol No. 1 imposes no restriction on the Contracting States' freedom to decide whether or not to have in place any form of social-security scheme, or to choose the type or amount of benefits to provide under any such scheme (see Sukhanov and Ilchenko v. Ukraine, nos. 68385/10 and 71378/10, §§ 35–39, 26 June 2014; Kolesnyk v. Ukraine (dec.), no. 57116/10, §§ 83, 89 and 91, 3 June 2014; and Fakas v. Ukraine (dec.), no. 4519/11, §§ 34, 37–43, 48, 3 June 2014). If, however, a Contracting State has in force legislation providing for the payment as of right of a welfare benefit — whether conditional or not on the prior payment of contributions — that legislation must be regarded as generating a proprietary interest falling within the ambit of Article 1 of Protocol No. 1 for persons satisfying its requirements (see Stec and Others (dec.), cited above, § 54).

In certain circumstances the making of compulsory contributions, for example to a pension fund or a social insurance scheme, may create a property right protected by Article 1 of Protocol No. 1 even before the contributor fulfils all the conditions to actually receive the pension or other benefit. This is the case when there is a direct link between the level of contributions and the benefits awarded (see Stec and Others (dec.), cited above, § 43). The payment of contributions to a pension fund may in certain circumstances create a property right in a portion of such a fund and a modification of the pension rights under such a system could therefore in principle raise an issue under Article 1 of Protocol No. 1; even if it is assumed that Article 1 of Protocol No. 1 guarantees to persons who have paid contributions to a special insurance system the right to derive benefit from the system, it cannot be interpreted as entitling that person to a pension of a particular amount (see Müller v. Austria, no. 5849/72, Commission's report of 1 October 1975, DR 3, p. 25, § 30, quoted in T. v. Sweden, no. 10671/83, Commission decision of 4 March 1985, DR 42, p. 229, at p. 232).

In this connection, it ought to be reiterated that Article 1 of Protocol No. 1 to the Convention does not guarantee, as such, any right to a pension of a particular amount (see Kjartan Ásmundsson, cited above, § 39), although where the amount of a benefit is reduced or discontinued, this may constitute interference with possessions which requires to be justified (see Valkov and Others v. Bulgaria, nos. 2033/04, 19125/04, 19475/04, 19490/04, 19495/04, 19497/04, 24729/04, 171/05 and 2041/05, § 84, 25 October 2011; and Grudić v. Serbia, no. 31925/08, § 72, 17 April 2012).

In determining whether there has been an interference, the Court's enquiry will focus on the domestic law in force at the time of the alleged interference (see, as an example from the law on compensation, Maurice v. France [GC], no. 11810/03, § 67, ECHR 2005-IX).

Where the person concerned did not satisfy (see Bellet, Huertas and Vialatte, cited above), or ceases to satisfy, the legal conditions laid down in domestic law for the grant of any particular form of benefits or pension, there is no interference with the rights under Article 1 of Protocol No. 1 (see Rasmussen v. Poland, no. 38886/05, § 71, 28 April 2009) where the conditions had changed before the applicant became eligible for a specific benefit (see Richardson, cited above, § 17). Where the suspension or diminution of a pension was not due to any changes in the applicant's own circumstances, but to changes in the law or its implementation, this may result in an interference with the rights under Article 1 of Protocol No. 1 (see Grudić, cited above, § 77).

In a number of cases the Court has been prepared to accept that the grant of a pension benefit, of which the applicant was subsequently divested on the grounds that the legal conditions for such a grant had not been fulfilled to begin with, could give rise to a possession for the purposes of the Protocol (see Moskal, cited above, § 45; and Antoni Lewandowski v. Poland, no. 38459/03, §§ 78 and 82, 2 October 2012). In another case it considered that the failure to fulfil a condition (namely the requirement of affiliation to a professional association), which under national law was a sufficient reason for forfeiture of a pension claim, did not lead to the conclusion that the applicant had no possession within the meaning of Article 1 of Protocol No. 1 (see Klein, cited above, § 46). Nor was the Court prevented from finding that an applicant, whose application for disabled adults allowance had been rejected on the grounds of his non-fulfilment of a statutory nationality condition, had a pecuniary right for the purposes of Article 1 of Protocol No. 1 (see Koua Poirrez v. France, no. 40892/98, §§ 37–42, ECHR 2003-X). By contrast, in yet a further case, the mere fact that the public authorities had tolerated the cumulating of two pensions and, where it was permitted, reimbursement of the contributions for one of them, did not give rise to a right protected by the Protocol (see Bellet, Huertas and Vialatte, cited above).

The fact that a person has entered into and forms part of a State social-security system (even if a compulsory one, as in the instant case) does not necessarily mean that that system cannot be changed, either as to the conditions of eligibility of payment or as to the quantum of the benefit or pension (see, mutatis mutandis, Carson and Others v. the United Kingdom [GC], no. 42184/05, §§ 85–89, ECHR 2010; and Richardson, cited above, § 17). Indeed, the Court has accepted the possibility of amendments to social-security legislation which may be adopted in response to societal changes and evolving views on the categories of persons who need social assistance, and also to the evolution of individual situations (see Wieczorek v. Poland, no.18176/05, § 67, 8 December 2009).

Thus, as can be seen from the above case-law, where the domestic legal conditions for the grant of any particular form of benefits or pension have changed and where the person concerned no longer fully satisfies them due to the change in these conditions, a careful consideration of the individual circumstances of the case — in particular, the nature of the change in the requirement — may be warranted in order to verify the existence of a sufficiently established, substantive proprietary interest under the national law. Such are the demands of legal certainty and the rule of law, which belong to the core values imbuing the Convention.

At the outset, the Grand Chamber notes that in the proceedings before it the applicant reverted to her argument made before the Chamber concerning the allegedly ‘continuing situation’ of the interference originating in the discontinuation of her disability pension in 2010 (see paragraph 57 above). However, the Grand Chamber also notes that the Chamber considered that the Nyíregyháza Labour Court's judgment of 1 April 2011 dismissing the applicant's appeal was final, and that the application to the Strasbourg Court had been filed more than six months later. For that reason, the Chamber considered that it was prevented, pursuant to Article 35 § 1 of the Convention, from examining the procedure having led to the judgment of 1 April 2011 (see § 31 of the Chamber judgment). The Grand Chamber therefore has no jurisdiction to examine the proceedings that ended with the judgment of 1 April 2011.

The Grand Chamber will accordingly limit its examination to the case as it was declared admissible by the Chamber (see K. and T. v. Finland [GC], no. 25702/94, § 141, ECHR 2001-VII), namely the applicant's grievance resulting from the proceedings which began with the applicant's request for a disability pension submitted on 20 February 2012 and which ended with the Nyíregyháza Administrative and Labour Court's judgment of 20 June 2013, in which she was found ineligible for a disability pension under the 2012 rules on account of an insufficient period of social cover (see the description of the relevant proceedings in paragraphs 19 to 23 above).

However, in examining whether the outcome of the proceedings ending with the judgment of 20 June 2013 (see paragraph 23 above) was compatible with Article 1 of Protocol No. 1, the Court is not prevented from taking into account facts that occurred before and after the decision of 1 February 2010.

The Court notes that the system of disability allowances in question, both in its pre-2012 and its current form, essentially operated on the basis of two cumulative eligibility criteria: (i) a ‘health condition’, under which the benefit was due only to persons whose health and employment status so required, and (ii) a ‘contribution condition’, which required the fulfilment of a certain service period (as under the pre-2012 legislation) or, in essence, a period covered by social-security contributions (see paragraphs 28 and 29 above).

Thus, when the applicant completed the requisite service period (on a date not specified but by 2001 at the latest) she fulfilled the ‘contribution condition’ as contained in the law in force at the time; and, when in 2001 her disability was established as exceeding the requisite level, the second criterion (the ‘health condition’) was also met. Accordingly, from 2001 until 2009/10, that is, for almost ten years, the applicant fulfilled all the conditions of eligibility for receiving a disability pension as of right (seeStec and Others (dec.), cited above, § 51, quoted in paragraph 80 above). The decision granting her a disability pension in accordance with the provisions of the 1997 Act and which formed the basis of her original entitlement could thus be regarded as representing an ‘existing possession’ (see Kopecký, § 35(c)). Further, it seems undeniable that throughout the said period, she could, on the basis of the said ‘legal act’, entertain a ‘legitimate expectation’ (ibid., § 47) of continuing to receive disability benefits should her disability persist to the requisite degree, there being no dispute as to the correct interpretation and application of domestic law (ibid., § 50).

However, the question arises whether the applicant's legitimate expectation still existed on 1 January 2012, when the legislature changed the contribution criteria for the disability benefit, effectively invalidating the legal effect of the fact that she had already once fulfilled the ‘contribution condition’. Due to that legislative change, she was denied disability allowance on the ground that she was not eligible under the newly introduced contribution rules. This state of affairs was then reaffirmed in the applicant's individual case, with authoritative force, by the final judgment of the Nyíregyháza Administrative and Labour Court, adopted on 20 June 2013 (see paragraph 23 above). It is only if her legitimate expectation continued to exist until 1 January 2012 that this legislative amendment could be considered to constitute an interference with the applicant's possessions within the meaning of Article 1 of Protocol No. 1.

The parties' positions diverged as to whether the applicant's legitimate expectation to receive disability benefits whenever eligible (see paragraphs 51, 55 and 60 above) was extinguished after the discontinuation of her entitlement to the pension in 2010. Thus, the question to be determined by the Court is whether in 2012, when the applicant applied for disability allowance on the basis of the new finding that her health was sufficiently impaired, she still had a legitimate expectation, satisfying the criteria in its case-law, of receiving disability benefits.

In examining this question, the Court does not find it necessary to resolve the disagreement between the parties as to whether or not the applicant's health had actually improved in the period at issue. It notes that, according to the expert opinion of 16 February 2011 submitted to the Labour Court (see paragraph 15 above), her condition had not significantly improved since 2007. Moreover, it was not in dispute between the parties that her medical situation would have made her eligible for the disability benefit in 2012 had the new law not entered into force earlier that year. Indeed the Government even confirmed that this would have been the case (see paragraphs 22 and 60 above).

The question whether the applicant still had a legitimate expectation, satisfying the criteria in the Court's case-law, at the time of the entry into force of the new legislation in 2012 cannot be answered solely on the basis of that legislation. The underlying reason for such as assertion is that the principles which exclude the finding of an interference where the person concerned ceases to satisfy the legal conditions laid down in domestic law cannot be mechanically applied to situations where the complaint specifically concerns the very change in the legal conditions that is at issue.

Therefore, to limit the Court's scrutiny to the question as to whether Article 1 of Protocol No. 1 is inapplicable on the sole ground of the absence of a domestic legal basis in 2012 would be tantamount to deliberately circumventing the crux of the applicant's grievance, that crux being precisely the change in the law (see Lakićević and Others, cited above, § 70) annihilating the previously existing legal basis for her disability allowance. The change in the law effectively imposed on a certain category of insured persons, including the applicant, a condition whose advent had not been foreseeable during the relevant potential contributory period and which they could not possibly satisfy once the new legislation entered into force — a combination of elements which is ultimately difficult to reconcile with the rule of law. The Court points out at this juncture that the Convention is intended to guarantee rights that are ‘practical and effective’ rather than theoretical and illusory (see Perdigão v. Portugal [GC], no. 24768/06, § 68, 16 November 2010). To hold that although a person has contributed to an insurance scheme and has satisfied its contributory requirement, he or she could be totally deprived of the legitimate expectation of eventual benefits would sit uncomfortably with this principle.

As mentioned above, a proprietary interest recognised under domestic law — even if revocable in certain circumstances — may constitute a ‘possession’ for the purposes of Article 1 of Protocol No. 1 (see Beyeler, cited above, § 105). In following such an approach, the Court has declared Article 1 of Protocol No. 1 applicable in a number of cases where the applicants, by the time they lodged their application with the Court, no longer satisfied the conditions of entitlement laid down in national law for the benefit in question (see, for example, Kjartan Ásmundsson, cited above, § 40).

A closer examination is therefore warranted as to whether, at least until the alleged legislative interference in 2012, the applicant had a sufficiently established, substantive proprietary interest that qualified as a ‘possession’ for the purposes of Article 1 of Protocol No. 1 (see paragraph 79 above).

In this connection, the Court observes in particular that during the intervening period between the discontinuation of the applicant's disability pension in 2010 and the legislature's introduction of the new contribution requirement in 2012, the applicant not only continued to be part of the social-security system but also continued to fulfil the relevant length-of-service requirement for disability benefits. Co-operating with the authorities at all times, and actively and continuously pursuing her disability claim, she underwent several periodic reassessments of her condition in the years 2011 and 2012; further such assessments were scheduled for November 2012, April and September 2014 and March 2015.

In its ruling of 1 April 2011, the Nyíregyháza Labour Court noted that the applicant had accrued 23 years and 71 days of service time (see paragraph 16 above), which, the Court observes, far exceeds the five-year minimum period (prior to contingency) warranting at least a reduced invalidity benefit under the European Code of Social Security and ILO Conventions nos. 102 and 128 (see paragraph 42 above). Furthermore, whilst approving the withdrawal of the applicant's disability pension as of 1 February 2010, the Labour Court expressly confirmed that a new medical assessment could take place in 2012 and drew her attention to the possibility of making a renewed application should her health deteriorate (see paragraph 16 above).

Moreover, although for a while her degree of disability was considered somewhat below the minimum level required (40% in December 2009 and April 2011, then 45% in September 2011, see paragraphs 12 to 17 above), in December 2011, that is, before the end of the said period, it reached 50%, as it did again in February 2012. It was undisputed that this disability level would have qualified the applicant for a disability benefit in February 2012 had it not been for the new retroactive contribution requirement, which was not met by her. In the meantime, on 13 December 2011, she had been recommended for rehabilitation and for the accompanying allowance — a type of benefit closely related to disability pension (see paragraph 17 above) and introduced to take the place of the disability pension for individuals capable of being rehabilitated. However, the authorities did not implement this recommendation. Had they done so, the applicant might have been in receipt of a benefit on 31 December 2011, which would have altered her situation under the new law.

The Court reiterates that the applicant contributed to the insurance scheme on a mandatory basis and satisfied the statutory requirements of eligibility for disability benefits. The Court has already noted that contributions to a pension fund may, in certain circumstances and according to the domestic law, create a property right for the purposes of Article 1 of Protocol No. 1 (see paragraphs 81 and 83 above) and finds that such circumstances exist in the present case, in view of the fact that her contribution was recognised as sufficient at the latest on 1 April 2001 (see paragraph 11 above). She could therefore reasonably rely on the promise of the law that she would be entitled to disability benefits whenever she satisfied the applicable health-related conditions.

In these circumstances, the Court does not consider that the reduction in the applicant's disability degree in 2009, the resultant discontinuation of her disability pension in 2010 or any other factors pertaining to her pension status during the intervening period until 31 December 2011 were sufficient to extinguish her legitimate expectation that she would receive disability benefits should her disability again attain the requisite degree. On the contrary, the measures taken by the authorities and the judgment of 1 April 2011 in particular indicate that the authorities acted in full recognition of the applicant's insured status, and therefore the applicant could have relied in a reasonably justified manner on the applicable legislation and had a legitimate expectation of receiving a disability benefit should the statutory conditions be satisfied. As the Government admit, but for the new conditions of the 2012 Act she would have qualified for disability allowance in 2013.

In short, between 2010 and 31 December 2011 the applicant, while not in receipt of a pension, continued to entertain a ‘legitimate expectation’, covered by the notion of ‘possession’ in Article 1 of Protocol No. 1.

When, following the entry into force of the new law and relying on her newly re-assessed and sufficiently impaired health, the applicant applied for disability allowance in 2012, she did no more, in the Court's view, than seek to avail herself once again of an existing legitimate expectation to be provided with a social-security benefit, rather than pursuing the ‘acquisition’ of a ‘possession’. It was not in dispute between the parties that the applicant would have been eligible for the disability allowance from the date on which her health impairment was found in 2012 to have exceeded the relevant threshold, had the new law not entered into force earlier that year (see paragraphs 22 and 60 above).

The interference in question, which resulted from the entry into force of the new law as from 2012, consisted in a complete refusal of the applicant's request for the disability allowance; in other words, her right to derive benefits from the social-insurance scheme in question was infringed in a manner that resulted in the impairment of her pension rights.

These elements are sufficient for the Court to find that Article 1 of Protocol No. 1 is applicable in the present case. The Government's preliminary objection concerning incompatibility ratione materiae with the provisions of the Convention must thus be dismissed.

In view of this conclusion, the Court finds that it is not warranted to address the parties' further arguments intended to elucidate the nature of the disputed entitlement as it is described by various international texts.

An essential condition for an interference with a right protected by Article 1 of Protocol No. 1 to be deemed compatible with this provision is that it should be lawful. The rule of law, one of the fundamental principles of a democratic society, is inherent in all the Articles of the Convention (see Iatridis, cited above, § 58; Wieczorek, cited above, § 58; and Vistiņš and Perepjolkins v. Latvia [GC], no. 71243/01, § 96, 25 October 2012).

Moreover, any interference by a public authority with the peaceful enjoyment of possessions can only be justified if it serves a legitimate public (or general) interest. Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to decide what is ‘in the public interest’. Under the system of protection established by the Convention, it is thus for the national authorities to make the initial assessment as to the existence of a problem of public concern warranting measures interfering with the peaceful enjoyment of possessions. The notion of ‘public interest’ is necessarily extensive. In particular, the decision to enact laws concerning social-insurance benefits will commonly involve consideration of economic and social issues. The Court finds it natural that the margin of appreciation available to the legislature in implementing social and economic policies should be a wide one and will respect the legislature's judgment as to what is ‘in the public interest’ unless that judgment is manifestly without reasonable foundation (see, mutatis mutandis, The former King of Greece and Others v. Greece [GC], no. 25701/94, § 87, ECHR 2000-XII; Wieczorek, cited above, § 59; Frimu and Others v. Romania (dec.), nos. 45312/11, 45581/11, 45583/11, 45587/1 and 45588/11, § 40, 7 February 2012; Panfile v. Roumania (dec.), no. 13902/11, 20 March 2012, and Gogitidze and Others v. Georgia, no. 36862/05, § 96, 12 May 2015).

This is particularly so, for instance, when passing laws in the context of a change of political and economic regime (see Valkov and Others, cited above, § 91; the adoption of policies to protect the public purse (see N.K.M. v. Hungary, no. 66529/11, §§ 49 and 61, 14 May 2013); or to reallocate funds (see Savickas v. Lithuania and Others (dec.), no. 66365/09, 15 October 2013); or of austerity measures prompted by a major economic crisis (see Koufaki and ADEDY v. Greece (dec.), nos. 57665/12 and57657/12, §§ 37 and 39, 7 May 2013; see also da Conceição Mateus and Santos Januário v. Portugal (dec.) nos. 62235/12 and 57725/12, § 22, 8 October 2013; da Silva Carvalho Rico v. Portugal (dec.), § 37, no. 13341/14, 1 September 2015).

In addition, Article 1 of Protocol No. 1 requires that any interference be reasonably proportionate to the aim sought to be realised (see Jahn and Others v. Germany [GC], nos. 46720/99, 72203/01 and 72552/01, §§ 81-94, ECHR 2005-VI). The requisite fair balance will not be struck where the person concerned bears an individual and excessive burden (see Sporrong and Lönnroth v. Sweden, 23 September 1982, §§ 69–74, Series A no. 52; Kjartan Ásmundsson, cited above, § 45; Sargsyan, cited above, § 241; Maggio and Others, cited above, § 63; and Stefanetti and Others, cited above, § 66).

In considering whether the interference imposed an excessive individual burden the Court will have regard to the particular context in which the issue arises, namely that of a social-security scheme. Such schemes are an expression of a society's solidarity with its vulnerable members (see Maggio and Others, § 61, and Stefanetti and Others, § 55, both cited above, and also, mutatis mutandis, Goudswaard-Van der Lans v. the Netherlands (dec.), no. 75255/01, ECHR 2005-XI).

The Court reiterates that the deprivation of the entirety of a pension is likely to breach the provisions of Article 1 of Protocol No. 1 and that, conversely, reasonable reductions to a pension or related benefits are likely not to do so. However, the fair balance test cannot be based solely on the amount or percentage of the reduction suffered, in the abstract. In a number of cases the Court has endeavoured to assess all the relevant elements against the specific background (see Stefanetti and Others, cited above, § 59, with examples and further references; see also Domalewski, v. Poland (dec.), no. 34610/97, ECHR 1999-V). In so doing, the Court has attached importance to such factors as the discriminatory nature of the loss of entitlement (seeKjartan Ásmundsson, cited above, § 43); the absence of transitional measures (see Moskal, cited above, § 74, where the applicant was faced, practically from one day to the next, with the total loss of her early-retirement pension, which constituted her sole source of income, and with poor prospects of being able to adapt to the change); the arbitrariness of the condition (see Klein, cited above, § 46), as well as the applicant's good faith (see Moskal, cited above, § 44).

An important consideration is whether the applicant's right to derive benefits from the social-insurance scheme in question has been infringed in a manner resulting in the impairment of the essence of his or her pension rights (see Domalewski, cited above; Kjartan Ásmundsson, cited above, § 39; Wieczorek, cited above, § 57; Rasmussen, cited above, § 75; Valkov and Others, cited above, §§ 91 and 97; Maggio and Others, cited above, § 63; and Stefanetti and Others, cited above, § 55).

In the present case the parties differed as to whether the interference with the applicant's property right was ‘subject to the conditions provided for by law’ within the meaning of the second sentence of the first paragraph of Article 1 of Protocol No. 1 and whether it was possible to identify a legitimate aim pursued by it.

The Court notes that the interference consisted in the specific legislation introduced as of 2012 and in its application in the instant case. It is therefore satisfied that the interference complied with the requirement of lawfulness contained in the above provision.

The Court further considers that the interference complained of pursued the communal interest in protecting the public purse, by means of rationalising the system of disability-related social-security benefits.

As to the proportionality of the interference, the respondent Government offered little comment.

The Court notes that the applicant was subjected to a complete deprivation of any entitlements, rather than to a commensurate reduction in her benefits, such as by, for example, calculating an allowance pro rata on the basis of the existing and missing days of social cover (see Kjartan Ásmundsson, §§ 44–45; Lakićević, § 72; and, a contrario, Richardson, § 24; and Wieczorek, § 71, all cited above), in view of the fact that her social-security cover was only 148 days short of the required length. This element gains particular importance in view of the fact that the applicant did not have any other significant income on which to subsist (see paragraph 25 above; compare also Kjartan Ásmundsson, cited above, § 44) and that she evidently had difficulties in pursuing gainful employment and belonged to the vulnerable group of disabled persons (see Alajos Kiss v. Hungary, no. 38832/06, § 42, 20 May 2010). The Court is indeed mindful of the special characteristics of the type of pension at issue. Although, as mentioned above, the applicant was recommended for rehabilitation in December 2011, rehabilitation was not undertaken and she was not offered the related allowance (see paragraphs 17 and 104 above).

In the light of the above considerations, the Court is of the view that the disputed measure, albeit aimed at protecting the public purse by overhauling and rationalising the scheme of disability benefits, consisted in legislation which, in the circumstances, failed to strike a fair balance between the interests at stake. Such considerations cannot, in the Court's view, justify legislating with retrospective effect and without transitional measures corresponding to the particular situation (see Moskal, cited above, §§ 74 and 76; see also the ruling of the Court of Justice of the European Union referred to in Baka v. Hungary [GC], no. 20261/12, § 69, 23 June 2016), entailing as it did the consequence of depriving the applicant of her legitimate expectation that she would receive disability benefits. Such a fundamental interference with the applicant's rights is inconsistent with preserving a fair balance between the interests at stake (see, mutatis mutandis, Pressos Compania Naviera S.A. and Others, cited above, § 43).

It should also be noted that the applicant was deprived of entitlement to any allowance, despite the fact that there is no indication that she failed to act in good faith at all times, to co-operate with the authorities or to make any relevant claims or representations (compare Wieczorek, cited above, § 69 in fine).

The Court thus considers that there was no reasonable relation of proportionality between the aim pursued and the means applied. It therefore finds that, notwithstanding the State's wide margin of appreciation in this field, the applicant had to bear an excessive individual burden (see Kjartan Ásmundsson, cited above, § 45), amounting to a violation of her rights under Article 1 of Protocol No. 1.

Having reached this conclusion, there is no cause for the Court to consider the applicant's alternative argument based on Article 8 of the Convention (see paragraph 59 above).

The principles which apply generally in cases under Article 1 of Protocol No. 1 are equally relevant when it comes to social and welfare benefits. In particular, Article 1 of Protocol No. 1 does not create a right to acquire property (see Van der Mussele v. Belgium, 23 November 1983, § 48, Series A no. 70). Nor does it guarantee, as such, any right to a pension of a particular amount (see, for example, Kjartan Ásmundsson v. Iceland, no. 60669/00, § 39, ECHR 2004-IX). Indeed, the right to an old-age pension or any social benefit in a particular amount is not included as such among the rights and freedoms guaranteed by the Convention (see, for example, Aunola v. Finland (dec.), no. 30517/96, 15 March 2001).

Article 1 of Protocol No. 1 places no restriction on the Contracting State's freedom to decide whether or not to have in place any form of social security scheme, or to choose the type or amount of benefits to provide under any such scheme. If, however, a Contracting State has in force legislation providing for the payment as of right of a welfare benefit — whether conditional or not on the prior payment of contributions — that legislation must be regarded as generating a proprietary interest falling within the ambit of Article 1 of Protocol No. 1 for persons satisfying its requirements (see, in the context of Article 14 read in conjunction with Article 1 of Protocol No. 1, Stec and Others v. the United Kingdom (dec.) [GC], nos. 65731/01 and 65900/01, § 54, ECHR 2005-X). For the Court, the latter principle allows for a particular interpretation in the context of disability care, which is a welfare benefit of a special character. Since the making of contributions to a pension fund may, in certain circumstances, create a property right and such a right may be affected by the manner in which the fund is distributed (see Kjartan Ásmundsson, quoted above, § 39), the Court considers that if the benefit, which had been granted on the basis of the legislation in force and which had been generated by the making of appropriate contributions to the scheme and the satisfaction of the requirements of the legislation in force during one's active employment, was removed — notably by a retrospective amendment to the contribution rules — such a measure will require a convincing justification for the purposes of Article 1 of Protocol No. 1, as long as the other key requirement, namely a deteriorated health status, is in place.

In the modern democratic State many individuals are, for all or part of their lives, completely dependent for survival on social security and welfare benefits. Many domestic legal systems recognise that such individuals require a degree of certainty and security, and provide for benefits to be paid — subject to the fulfilment of the conditions of eligibility — as of right. Where an individual has an assertable right under domestic law to a welfare benefit, the importance of that interest should also be reflected by holding Article 1 of Protocol No. 1 to be applicable (see, among other authorities, Stec, cited above, § 51; Moskal v. Poland, no. 10373/05, § 39, 15 September 2009).

The Court has accepted the possibility of reductions in social security entitlements in certain circumstances. In particular, the Court has noted the significance which the passage of time can have for the legal existence and character of social insurance benefits. This applies both to amendments to legislation, which may be adopted in response to societal changes and evolving views on the categories of persons who need social assistance, and also to the evolution of individual situations (see Wieczorek v. Poland, no. 18176/05, § 67, 8 December 2009, and further case-law references cited therein). However, where the amount of a benefit is reduced or discontinued, this may constitute interference with possessions which requires to be justified (see Kjartan Ásmundsson, cited above, § 40; and Rasmussen v. Poland, no. 38886/05, § 71, 28 April 2009).

An essential condition for interference to be deemed compatible with Article 1 of Protocol No. 1 is that it should be lawful.

Moreover, any interference by a public authority with the peaceful enjoyment of possessions can only be justified if it serves a legitimate public (or general) interest. Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to decide what is ‘in the public interest’. Under the system of protection established by the Convention, it is thus for the national authorities to make the initial assessment as to the existence of a problem of public concern warranting measures interfering with the peaceful enjoyment of possessions (see Terazzi S.r.l. v. Italy, no. 27265/95, § 85, 17 October 2002; and Wieczorek v. Poland, cited above, § 59).

Article 1 of Protocol No. 1 also requires that any interference be reasonably proportionate to the aim sought to be realised (see Jahn and Others v. Germany [GC], nos. 46720/99, 72203/01 and 72552/01, §§ 81–94, ECHR 2005-VI). The requisite fair balance will not be struck where the person concerned bears an individual and excessive burden (see Sporrong and Lönnroth v. Sweden, 23 September 1982, §§ 69–74, Series A no. 52).

The applicant was, as of 2001, entitled to receive a disability pension because she met all the statutory conditions (see paragraph 7 above). Under the rules in force at that time, one of the conditions of eligibility for disability pension was the accumulation of the requisite service period (see paragraph 18 above).

It is true that she subsequently lost her pension (see paragraph 8 above) because, under a new methodology of assessment, her health was no longer considered sufficiently impaired to qualify her for the pension. The Court notes at this juncture that this was due to a change in the applicable methods rather than to an actual improvement in her health.

The Court observes that, as of January 2012, the disability pension system was replaced by an allowance system, which contained new criteria of eligibility. When in 2012 the applicant applied for the allowance which replaced the pension, she was found ineligible, not because she did not have the requisite disability condition, but because of the insufficient period of social cover — and this irrespective of the volume of her past contributions to the social security system, previously recognised, in terms of service time, as sufficient (see paragraphs 11, 13 and 14 above).

For the Court, these changes in the applicant's status under the regulations on disability pension/allowance must be examined from the perspective of the inherent features of such schemes. It is noteworthy in this connection that the Constitutional Court found that allowances acquired by compulsory contributions to the social security scheme may partly be seen as ‘purchased rights’ (see paragraphs 21 and 22 above); in particular, that court categorised disability pensions ‘partly as an allowance prompting protection of property and partly as a social service provision’. In the Constitutional Court's view, the guarantees flowing from requirements of the rule of law, namely the protection of legitimate expectations, apply to social allowances as well.

Largely sharing the views of the Constitutional Court, the Court is therefore satisfied that the disability pension/allowance is an assertable right to a welfare benefit recognised under the domestic law, and therefore Article 1 of Protocol No. 1 is applicable (see paragraph 37 above). Indeed, being a special element of the pension system, the disability pension/allowance is nothing less than a security, guaranteed by virtue of societal solidarity, that where a person has made the requisite contributions to the scheme, for example by paying payroll burdens over a certain period of time, he or she should be entitled to an allowance, if a serious deterioration of health, resulting in inability to perform gainful activities, so requires.

In the particular case, the applicant had made such contributions to the social security scheme as were required during the time of her employment. The resultant legitimate expectation to receive disability care was recognised and honoured by the authorities when the contingency occurred, and she was granted a disability pension in 2001. She continued to enjoy that ‘possession’ until 2010. Her health situation appears to have remained materially unchanged throughout this and the ensuing period, and the various disability degrees attributed to this condition were only the consequence of successive changes in the methodology.

For the Court, the existence of the applicant's continued, recognised legitimate expectation to receive disability care — if her health so requires and even after the withdrawal of the pension in 2010 — is well demonstrated by the fact that she, as a person who had satisfied the requirement of contributions, was subject to ensuing periodic reviews (in September 2011, as well as in April and August 2012, with reassessment scheduled for 2014 and 2015).

Although it has not been ratified by Hungary or the majority of the Council of Europe Member States, the Court nevertheless finds noteworthy Article 57 § 1(b) of the ILO Convention on Social Security (see in paragraph 23 above), according to which a person protected who has completed a qualifying period of three years of contribution and in respect of whom, while he or she was of working age, the prescribed yearly average number of contributions has been paid is considered to be eligible for benefits.

In these circumstances, the Court is satisfied that, once meeting the administrative requirement of the disability pension scheme as in force at the first material point in time (that is, in 2001), the applicant obtained, for the purposes of Article 1 of Protocol No. 1, a formal recognition of her legitimate expectation to receive a disability pension/allowance as and when her medical condition would so necessitate. This expectation originates in the law in force during her employment and at the time of the original acquisition of disability pension rights. Given the statutory provisions on eligibility, this recognised legitimate expectation is of a nature more concrete than a mere hope as it was based on legal provisions (compare and contrast Gratzinger and Gratzingerova v. the Czech Republic (dec.), no. 39794/98, § 73, ECHR 2002-VII).

That recognised legitimate expectation and the proprietary interests generated by the legislation of a Contracting State in force at the time of becoming eligible (see Stec, cited above, § 54) cannot be considered extinguished by the fact that, in a new methodology of assessment, the applicant's disability was scored down to 40 per cent in December 2009 (see paragraph 8 above), apparently without material change in her condition. For the Court, the crux of the matter is that during her employment, the applicant had contributed to the social security system as was required by the law, which fact alone prompted the social solidarity-based obligation on the State's side to provide disability care, should a contingency occur. By granting disability pension in 2001, the authorities implicitly recognised that she satisfied the relevant criteria. Between 2001 and 2010 the applicant enjoyed the resultant possession of disability pension, and when her disability was considered less serious, this possession was replaced with the recognised legitimate expectation of continued care, should the circumstances again so require.

Irrespective of the loss of the pension in 2010, the Court is therefore of the view that the expectation of the applicant, as a contributor to the social security scheme who once satisfied the condition of eligibility, is legitimate and continuous in its legal nature.

It should be recalled that ‘if any distinction can still be said to exist in the case-law between contributory and non-contributory benefits for the purposes of the applicability of Article 1 of Protocol No. 1, there is no ground to justify the continued drawing of such a distinction’ (see Stec, cited above, § 53). In the Court's view, this consideration cannot be regarded as doing away with any protection previously afforded to the contributory schemes, in excess to the one due to non-contributory ones. In any case, the Court notes that the disability pension scheme in question included elements of a contributory character, as held by the Constitutional Court (see paragraphs 21, 22 and 43 above).

This right of the applicant was then interfered with by the authorities, when in 2012 she was denied disability care on the strength of insufficient contributions made in the past, although her medical condition was again deemed sufficiently impaired. It must be stressed again that these contributions, originally formulated as service time, were once adequate for that purpose, and the new requirement, expressed in terms of duration of social security cover, was introduced only later, at a time when the applicant was virtually no longer able to meet it.

It was not in dispute between the parties that this interference was prescribed by law and the Court sees no reason to hold otherwise. Indeed, the denial of disability allowance was precisely due to a change in the law (see, mutatis mutandis, Lakićević and Others v. Montenegro and Serbia, nos. 27458/06, 37205/06, 37207/06 and 33604/07, § 70, 13 December 2011).

As regards public or general interest, the Court accepts that the impugned legislation pursued the legitimate aim of the society's economic well-being.

As regards the question of proportionality, the State obviously has a certain margin of appreciation in regulating citizens' access to disability benefits, notably by requiring a certain volume of contributions to the scheme as well as a statutory minimum level of disability. These elements are susceptible to evolution in the light of societal changes, development of the labour market and progress of medical science, including options of rehabilitation.

However, the liberty States enjoy in this field cannot go as far as depriving this entitlement, once granted, of its very essence. Moreover, the requirements of the rule of law must be observed, and a retrospective disregard of acquired rights and legitimate expectations, as is the case with social security contributions, must be avoided when passing measures of social reforms. As to the question whether the legitimate expectation to receive disability care entails a right not to have the eligibility conditions changed, the Court notes, by analogy, the Ethical guidelines of the WHO's document on International Classification of Functioning, Disability and Health which should not be employed to deny established rights or otherwise restrict legitimate entitlements to benefits for individuals (see paragraph 24 above). The rule of law, one of the fundamental principles of a democratic society, is inherent in all the Articles of the Convention (see Amuur v. France, 25 June 1996, § 50, Reports 1996-III). This consideration entails, in the context of the present case, a State obligation to secure, on the basis of societal solidarity, a certain income for those whose working capacity fell below the statutorily set level, provided that they have made sufficient contributions to the scheme — and this without prejudice to the general principle ubiquitous in the Court's case-law, according to which Article 1 of Protocol No. 1 does not create a right to acquire property, nor does it place any restriction on the Contracting State's freedom to decide whether or not to have in place any form of social security scheme, or to choose the type or amount of benefits to provide under any such scheme (see Stec, § 54, quoted above in paragraph 36).

The Court would add at this juncture that, as matter of the rule of law, the principle impossibilium nulla obligatio est is of particular relevance in the present case where the applicant was ex post reproached for not having made in the past sufficient contributions as determined by the new legislation — a condition she could not possibly meet at that point in time.

In the present case, when the applicant was forced to apply for the pension for the first time, she had already fulfilled the then relevant administrative requirement and was granted a pension.

Despite her essentially unchanged health status, years later she was excluded from the benefit, since the ailments she had were no longer considered substantial enough for the continuation of the pension.

Once her disability score was subsequently raised again, this could not result in granting a pension or allowance, because the intervening new administrative criterion was effectively unattainable in the applicant's particular case.

Eventually, the applicant was wholly denied the social security entitlements which would have been otherwise due to her in view of her ill-health. It is noteworthy from the perspective of proportionality that she was totally divested of her pension/allowance, due to a new condition of eligibility instead of being obliged to endure a reasonable reduction, commensurate with the proportion of her accumulated social security cover, that is, 947 days instead of 1,095 (see, mutatis mutandis, Kjartan Ásmundsson, cited above, § 45; Wieczorek, cited above, § 67; Maggio and Others v. Italy, nos. 46286/09, 52851/08, 53727/08, 54486/08 and 56001/08, § 62, 31 May 2011; Banfield v. the United Kingdom (dec.), no. 6223/04, 18 October 2005; and Lakićević and Others, cited above, § 72).

The Court considers that this course of events amounts to a drastic change in the conditions of the applicant's access to disability benefits which she was unable to foresee or pre-empt, in that her legitimate expectation of receiving disability pension, if in need and on the strength of the previously paid payroll burdens, was completely removed; and she was never in a position to rectify her situation.

Having regard to the above considerations, the Court finds that the applicant was made to bear an excessive and disproportionate individual burden. Consequently, there has been a violation of Article 1 of Protocol No. 1.