EHRM, 12-06-2012, nr. 13221/08, nr. 2139/10

Although the State enjoyed a wide margin of appreciation, the applicants could discern no real ‘public interest’ that could reasonably be held up as a justification for the contested interference with their property right.

From the preparatory work it appeared that, while the general level of compensation for redemption of ground lease contracts under section 37 was set at a level that should be affordable for lessees with limited financial means, the aim of section 33 had been to secure to lessees who did not even have such means a lasting right of disposal over the plot — a right of extension on the same conditions as in the lease contract. Weight had allegedly been attached to social policy considerations in housing aimed at protecting the latter group of lessees.

However, despite this alleged targeting of social housing needs, the provision had been made applicable to all of the approximately 300,000 lessees in Norway, in a society with a high degree of social equality and among a population which was generally particularly well off. It had repeatedly received the highest score (notably in terms of purchasing power) of the 182 countries in the United Nations Human Development Index. In other words, there was no ground for maintaining that lessees in general had such needs as stated in the justification given for the extension provision in section 33. Indeed, the Government did not argue the contrary. In fact, with very few exceptions, the lessees in the present case enjoyed a higher or considerably higher income than the average income in Norway.

In the applicants' view, section 33 could not be said to have been aimed at correcting a defined and existing injustice, unlike the situation in such cases as, for instance, James and Others (cited above). They disputed the Government's contention that ‘[s]ocial problems on a massive scale would probably have been the result had the legislature not intervened …’. The entire Norwegian economy had evolved immensely over the last decades, and there had been a significant increase in the standard of living. As a result, the need for social housing schemes had decreased steadily, as illustrated, for instance, by the repeal in 2000 of the former Rent Control Act that provided for below-market-level rent for persons with special financial or social needs. This cast serious doubts over whether the social housing arguments presented in support of the Ground Lease Act were genuine. There was no reason to fear that applying a market ground rent would lead to the lessees' losing their permanent homes or holiday homes.

In particular, no strong public interest could be said to apply to holiday homes since owning a second home by definition meant that the person's need for accommodation had been fulfilled.

On this basis, it could be forcefully argued that section 33 in reality did not pursue a legitimate aim in the public interest.

Furthermore, whilst accepting in general that the margin of appreciation was wide in cases involving social and economic policies within housing, the applicants pointed to several considerations which in their opinion militated in favour of circumscribing the Norwegian authorities' margin of appreciation in the present case. Unlike the cases of Urbárska Obec Trenčianske Biskupice and Hutten-Czapska, the present case was not one where fundamental changes in the respondent State's political system formed a backdrop. Moreover, from Hirst v. the United Kingdom (no. 2) ([GC], no. 74025/01, ECHR 2005-IX) it could be deduced that the margin of appreciation would be narrower when Parliament had not analysed and carefully weighed the competing interests or assessed the proportionality of blanket rules. Nor had Parliament assessed section 33 in the light of the European Convention.

In reality section 33 only pursued a legitimate aim in the public interest in respect of a minority of lessees. Simply tagging a piece of legislation with the label ‘public interest’ could not be deemed sufficient if that label did not correspond to the underlying reality.

The applicants concluded that, in any event, the public interest, should there be any, was weak and, bearing in mind the far-reaching scope of section 33, could not be given significant weight in the balancing of interests involved under the proportionality test (below).

The Government pointed to the social considerations behind section 33 of the Ground Lease Act and invited the Court to find that the ‘public interest’ requirement in Article 1 of Protocol No. 1 was satisfied in the present case. This applied not only to permanent homes but also to holiday homes, as pointed out in the Supreme Court's judgment of 21 September 2007 in Mrs Lindheim's case.

The Government considered that social problems on a massive scale would probably have been the result had the legislature not intervened to secure an appropriate regulation of ground lease contracts. A number of amendments to the Ground Lease Act had been proposed prior to the enactment of the current section 33. Underlying all the proposals had been the recognition of the need, in the face of socio-economic changes, to approach the matter of the ground lease system with due regard for both parties to the lease agreements and the relevant social issues and the need to find technically appropriate legislative solutions that did not generate large numbers of new ground lease disputes.

Referring to the Court's ruling in James and Others (cited above), the Government argued that in implementing social and economic policies the national authorities enjoyed a wide margin of appreciation with regard both to the existence of a problem of public concern and to the remedial action to be taken. The Court should further ‘respect the legislature's judgment as to what was in the ‘public interest’ unless that judgment was manifestly without reasonable foundation’. Accordingly, the Court should approach the question of satisfaction of the legitimate aim criterion with considerable restraint. That this held particularly true in the present case, and regardless of the purpose of the lease and the leaseholder's financial or social situation, was supported by the Grand Chamber judgment in Hutten-Czapska (cited above):

It was further supported by the Grand Chamber judgment in J.A. Pye (Oxford) Ltd and J.A. Pye (Oxford) Land Ltd v. the United Kingdom [GC], no. 44302/02, § 71, ECHR 2007-III), where the Court (referring to James and Others) had acknowledged an important additional reason for allowing a wide margin of appreciation with regard to the public interest criterion: when the issue to be subject to regulation involved ‘longstanding and complex’ issues which also entailed regulation of contractual matters between individuals, the margin necessarily ought to be extensive.

In the Government's view, this was so because such matters involved social, economic and political questions about which there would never be one ‘right’ solution in terms of chosen ends and means since the issues themselves were intrinsically contestable. The Court's deference to domestic democratic discourse in such areas clearly called for a wide margin of appreciation with regard to the general interest criterion also in this case.

In its recommendation to Parliament the Standing Committee on Justice had referred to social policy considerations in the area of housing (‘boligsosiale hensyn’) as one important rationale for the provision in section 33 and had agreed with the Ministry as to its constitutionality (see Recommendation no. 105, p. 18 cited above). As could be seen from these discussions, the aim of section 33 had been at least three fold:

The Government maintained that these aims — social justice in housing, the avoidance of legal disputes, and the acknowledgment of leisure in contemporary society — were all legitimate under the Convention. The Government also maintained that section 33 was a permissible means to realise those aims, especially having regard to the wide margin of appreciation afforded.

Finally, the Government pointed out that the lessees' interests were also protected by Article 1 of Protocol No. 1.

As to the question whether the disputed interference was ‘in accordance with the general interest’, the Court reiterates the principles in its case-law as summarised in Hutten-Czapska (cited above):

The Court observes that from the Parliamentary debates that preceded the adoption of the impugned provision in section 33 of the Ground Lease Act, it can be seen that the aim was to secure to lessees, who were financially unable to purchase their plots under section 37, a lasting right of disposal over the plot. The method adopted was the one set out in section 33 granting the lessee a right of extension of the lease contract indefinitely, on the same conditions as applied previously. It further appears that in adopting this solution Parliament attached considerable weight to social policy considerations in the area of housing.

Moreover, the Court notes that the Government also referred to the justifications presented in the Government Bill to Parliament with respect to section 15 of the New Ground Lease Act. That provision placed limitations on the lessors' right to impose upward adjustments of the ground lease rent in those instances where it unequivocally followed from the ground lease contract — so-called ground value clauses that were not in issue here — that adjustments were to be made in accordance with developments in price levels in the property market. From a survey carried out by the Ministry of Justice and Police Affairs in 2002, it emerged that the repeal on 1 January 2002 of the rent control system under the former version of section 15 had resulted in many lessees seeing a dramatic, unexpected increase in the rent payable under contracts with ground value clauses. This had made drastic inroads into a number of families' and single persons' household budgets. It was further observed that clauses linking rent adjustment to the increase in property prices had often been conducive to conflict and might have ramifications unforeseen by the parties, hence the interest in avoiding legal disputes and ensuring foreseeability. Presumably, this experience in relation to section 15 was also capable of shedding light on the social policy considerations militating in favour of the introduction of section 33.

It is true, as the applicants pointed out, that section 33 was generally applicable to lease contracts among the estimated 300,000 to 350,000 lease contracts in Norway that were of a certain age and were up for renewal, irrespective of the financial means of the lessee concerned or of whether the land was used for a permanent home or a holiday home. It most likely had a much wider reach than merely addressing situations of potential financial hardship and social injustice and rather reflected social policy in a broad sense (compare James and Others, cited above, §§ 48–49; and Hutten-Czapska, cited above, § 178).

Nonetheless, having regard to the above-mentioned observations made in the preparatory work, the Court does not find manifestly unreasonable the Norwegian Parliament's view that, on grounds of social policy considerations, there was a legitimate need to protect, in the way provided for by section 33 of the Ground Lease Act, the interests of lease holders who lacked the financial means to exercise their right of redemption under section 37, whether the plots were used for permanent homes or for holiday homes. The Court concludes that the impugned interference may therefore be deemed to be in accordance with the general interest.

In arguing that the impugned interference was disproportionate, the applicants stressed that it was ‘extensive and perpetual’. The lease could not be terminated by the lessor and the effects of section 33 of the Ground Lease Act by far exceeded what could be deemed necessary in order to safeguard any alleged ‘considerations of social justice within housing’. The public interest at stake had been stronger and the impugned interference less intrusive in other cases previously dealt with by the Court.

The applicants claimed that they found support in James and Others (cited above) for the argument that full market value should be paid for the plot. Urbárska Obec Trenčianske Biskupice (cited above, § 144) underlined in their view the importance of whether compensation was reasonably related to the real value of the property concerned, and that if the compensation bore no relation to the actual value of the land there would be a violation of Article 1 of Protocol No. 1. In Hutten-Czapska (cited above, § 225) the Court had held that the ‘burden cannot […] be placed on one particular social group, however important the interests of the other group or the community as a whole’. The importance of market value was once again emphasised in Amato Gauci (cited above, §§ 58, 61–63), where ‘amounts of rent allowing only a minimal profit’ was a situation found to exceed the State's wide margin of appreciation.

The level of rents in the applicants' cases — less than 0.25% of the land's market value — was certainly low, in stark contrast with the market value of the plots, and was either equal to or lower than the statutory level of the real-estate tax on the plots (0.2%–0.7%), even though it was for the lessee to pay the tax, as if he or she owned the property.

The statutory right of redemption further added to the imbalance. The lessee might opt to redeem the plot in future — every other year for a main residence and every tenth year for a holiday home — at 40% of the undeveloped plot value. The lessee might then resell the plot at market price immediately thereafter and thus reap the benefit of the increase in market value. Similarly, if the lessee opted to sell the house with the lease-hold contract, he or she would also profit from the increase in market value of the plot.

The applicants also disputed the Government's argument that nothing suggested that the applicants' income from the ground lease had been reduced, which in the applicants' view was clearly formalistic. The key point was that the landowners' rights had been violated because the ground rent remained the same beyond, and despite the expiry of, the contracted period.

The Government's argument that the price increase of the leased property was predominantly a result of the lessee's and not the lessors' efforts was untenable. It was rather the market value of the undeveloped plot that should be reflected in the new ground rent.

Contrary to what was argued by the Government, the applicants had borne an individual and excessive burden. They should be entitled to compensation for the full market value of the undeveloped plot.

The absence of any distinction between holiday homes and permanent homes in the disputed rules was a clear expression of the fact that social injustice and social problems did not constitute a genuine reason for those rules. The applicants disputed the Government's argument that it lay within the margin of appreciation of the State to operate a general arrangement that did not distinguish between lessees who were in financial or social need and those who were not. With regard to holiday homes, it was especially clear that the ‘necessity test’ had not been fulfilled.

Weight should be given to the fact that section 33 of the Ground Lease Act intervened in a situation already created by the parties themselves. A fundamental feature of that situation was that the lease contracts were limited in time. Had the parties proceeded as agreed, a new contract of lease would have been required in order for the lessee to lease the plot in the future, on new terms including market ground rent. Alternatively, the lessee could have purchased the plot at an agreed market price.

By having intervened in a situation already created by the parties section 33 had undermined legal certainty. The parties could not have foreseen that the contracts were to be compulsorily extended on the same terms as had been agreed upon at the outset. In view of the agreed limitation on the contract period, both the lessees and the lessors ought to have been able to expect that at the expiry of the lease contracts new contracts would be negotiated to reflect a fair market rent.

Finally, the law did not provide for procedural safeguards aimed at achieving a fair balance between the interests of the lessors and those of the lessees. It was a blanket law taking no account of individual circumstances and favouring to a large degree lessees in no pressing social need of housing protection.

In sum, the impugned legal scheme was so far-reaching as to exceed what was necessary in order to secure the public interest, and thus overstepped the State's margin of appreciation.

In the Government's opinion the authorities of the respondent State had struck a fair balance (James and Others, cited above, §§ 46, 47, 50, Series A no. 98; Immobiliare Saffi, cited above, §§ 49, 59): there was no ‘excessive and individual burden’, the State enjoyed a wide margin of appreciation and the Court should respect the legislature's judgment as to what was in the general interest unless that judgment was manifestly ill-founded. The disputed legislation had been enacted in full awareness of obligations under the Convention, which also formed part of national law, and was the result of lengthy and continuing debate in Parliament and other bodies, including the Supreme Court. This was an area of great complexity with fluctuating social and market conditions (markt intern Verlag GmbH and Klaus Beermann v. Germany, 20 November 1989, Series A no. 165). The Ground Lease Act was ‘justifiable in principle and proportionate’. The applicants' income from the ground lease contract had not been reduced and their income would remain the same as before.

That section 33 did not distinguish between ground lease for permanent homes and holiday homes should clearly fall within the margin of appreciation. The Government stressed the importance of respecting the legislature's judgment as to what was in the general interest, and that that judgment in the instant case could not be viewed as manifestly unreasonable. In this regard, the Government relied on the Grand Chamber rulings in Mellacher and Immobiliare Saffi, both cited above.

While the Court had not explicitly stated the same with regard to policies affecting holiday homes, the Government did not see why the same very lenient standard of scrutiny ought not to apply here: the regulation of land to secure housing for leisure ought surely also to ‘play a central role in the welfare and economic policies of modern societies’ within the meaning of that phrase as used by the Court in Immobiliare Saffi (cited above, § 49). It should be added, in this connection, that in Chassagnou and Others v. France [GC] (nos. 25088/94, 28331/95 and 28443/95, § 108, ECHR 1999-III) the Grand Chamber observed, as regards the value, under Article 1 of Protocol No. 1, of protecting pure leisure activities such as hunting, that ‘the organisation and regulation of a leisure activity might also be a matter for which the State bore responsibility …’.

The Government further invited the Court to have regard, in accordance with its own case-law, to the legitimate expectations of parties to ground lease agreements and to what had been reasonably foreseeable for the applicants. In the proportionality assessment, weight should be given to the fact that section 33 intervened in a situation already created by the parties themselves. The ground lease arrangement appeared to be a singular Norwegian legal phenomenon. It had come into being because Norway, at the time, was one of the poorest countries of Europe and a particularly rural society. Many individuals, who predominantly did not live in city dwellings, simply did not have the financial means to acquire real property as well as to erect houses on such land. The ground lease system had provided for long-term lease of land for a reasonable price, and had enabled the lessees to build houses on that land and to retain those buildings as their homes for the foreseeable future. Landowners received income in the form of rent from the lessees.

As the years passed, the market value of real property had increased dramatically in Norway — comparatively more so than in other Western European countries. This had surely not been anticipated by either party when concluding any ground lease contract; otherwise the contracts would have provided for a mechanism for continuous rent adjustment. That the authorities would eventually have to intervene and regulate an arrangement which had been created by the parties could not have been unforeseeable for the landowners. Upon the expiry of a ground lease, the lessee — who owned the house but not the ground on which it was built — could not simply terminate the lease and move the house. Faced with an exceptional increase in the value of real estate, the lessee might not even have the financial means to redeem the lease and acquire the ground. Nor could the landowners have legitimately expected that they would be the party to gain from the windfall profit that accrued because of the increase in property prices. The Court should bear in mind what the Grand Chamber had stated in J.A. Pye (Oxford) Ltd and J.A. Pye (Oxford) Land Ltd (cited above, § 83), namely:

Finally, the Government recalled the Court's deference to democratic processes. The issue of what should be done with the expiry of ground lease contracts established long ago had been the subject of at least eleven proposed amendments to the 1996 Ground Lease Act. There had been heated debate for many years among the leading political parties. In 2004, however, all but one of the parties represented in Parliament finally found a middle ground. Section 33 of the Ground Lease Act was one important part of that middle ground, the democratic bargain made in the Norwegian Parliament in 2004. In the Government's submission, this significant political compromise should be taken into account by the Court, it being an example of democratic deliberation wholly in line with the ideal of an effective political democracy, which according to the Court in its 1998 judgment in the United Communist Party of Turkey and Others v. Turkey, (30 January 1998, § 45, Reports of Judgments and Decisions 1998-I) was ‘the only political model contemplated by the Convention, and, accordingly, the only one compatible with it’.

The Court reiterates that in the above-cited Grand Chamber judgment in Hutten-Czapska, it stated the following principles:

In the Court's view, the above principles, although they were enunciated with regard to the particular situation governing tenancy agreements imposed by law (ibidem, § 152), are also pertinent for its assessment of the issue of proportionality in the present case. Like an ordinary tenancy agreement, a ground lease agreement of the kind in issue here would normally be entered into voluntarily at a rent reflecting the market level at the time when the agreement was concluded.

However, when considering the proportionality issue the Court will also have regard to the differences in nature between a ground lease contract and a tenancy contract with regard to both performance and duration. Whilst under the latter type of contract the tenant would pay a rent to occupy premises financed by the landlord, in the former type the situation would most frequently be the reverse: it would be the lessee who had invested in the buildings and constructions on the land. The landowner, the lessor, would do little more than make the ground available to the lessee against payment of a rent. In so doing the lessor would renounce the possibility of using the property for financial gain by any other means than by receiving the said rent. As a result of these differences, a ground lease contract would ordinarily be of a much longer duration than an ordinary tenancy agreement, usually 99 years, and in the present case between 40 and 60 years.

At the heart of the conflict of interests in the case under consideration is a contract of long and definite duration that once reflected the mutual interests of the contracting parties and which at its expiry was no longer perceived as being in their mutual interest.

From the lessor's point of view, the ground rent he or she received, adjusted in keeping with inflation, had with time lost touch with price increases in the property market generally and the market for undeveloped properties specifically, and was out of tune with the drastic price increases in the real estate market generally since the 1980s. Had the lessor been free to negotiate the level of the rent of a new contract, the new rent, reflecting the market level, would have been far higher.

From the lessee's point of view, because of the investments that he or she or their predecessors had made on the property, the lessee had a strong interest in maintaining the status quo of the contractual relationship at the expiry of the ground lease contract. Unlike a tenant, who could leave the rented premises with his or her movable property, the lessee would have a strong interest in preserving the possibility of keeping his or her immovable property on the rented ground. These were interests, it may be added, that were arguably also protected by Article 1 of Protocol No. 1, as pointed out by the Government, and by Article 8 of the Convention. For this reason, at the end of the lease period, the lessee would not be on an equal footing with the lessor in any negotiations about the rental terms of a new lease.

As can be seen from the above, the interests at stake on each side were markedly different in nature and difficult to reconcile and the issues with which the Norwegian Parliament was confronted were particularly complex. In view of the very large number of ground lease contracts in Norway, the Court further understands the need emphasised in the national legislative process for clear and foreseeable solutions and the need to avoid costly and time-consuming litigation on a massive scale before the national courts. This is the background against which the Court will examine whether in the instant case the national authorities acted within the wide margin of appreciation accorded to them under Article 1 of Protocol No. 1.

Turning to the concrete circumstances of the applicants' case, the Court notes that when Parliament considered the disputed amendment to section 33 granting the lessee the option, upon expiry of the lease, to renew it indefinitely on the same conditions, a survey and assessment had been carried out with regard to the implementation of the Ground Lease Act 1996 after its entry into force on 1 January 2002, in particular its section 15 governing the adjustment of the ground lease rent. That version, like its successor, contained a general rule, according to which adjustments to the rent should take into account developments in the consumer price index, and an exception to that rule (for lease agreements concluded on or before 26 May 1983) providing for upward adjustment according to other factors, notably the value of the land (so-called ground rent clauses), where this had been expressly agreed on between the parties, and fixing ceilings to such upward adjustment. Experience had shown that, in the period thereafter, many lessees had seen a drastic upward adjustment of their ground lease rents for which they were unprepared. As mentioned above, as the gap between rents subject to rent control and price increases in the housing market widened over time, this (partial) lifting of rent control had made substantial inroads into the household budgets of many families and single persons. In the Bill to Parliament special attention was given to the particular provision in section 15 governing rent adjustment under contracts containing ground value clauses, which, it was observed, concerned a minority of ground lease contracts. The solution favoured by the Ministry and adopted by Parliament was a rule permitting a one-off upward adjustment for contracts with ground value clauses, followed by the introduction of an adjustment scheme linked to changes in the consumer price index. In the Ministry's opinion balancing the interests of the lessors and those of the lessees required that there should be no intervention in rent adjustment clauses in existing contracts other than what would follow from this proposal.

In dealing with the provisions governing the calculation of compensation upon redemption, the Ministry of Justice suggested that these ought to be seen in the light of the provisions on rent adjustment, the general conditions governing redemption and the right to extend the lease. The Ministry considered that these provisions, seen as a whole, should not be framed in such a way as to substantially alter the balance of interests in the ground lease contracts. The aim of the above-mentioned solution, as expressed by the Ministry, had been to pay due regard to what had been agreed on between the parties and to make it possible to introduce a balanced provision on the calculation of compensation for redemption.

However, the Court has not been made aware, nor does it appear from the material submitted, that any specific assessment was made of whether the amendment to section 33 regulating the extension of the type of ground lease contracts at issue in the applicants' case achieved a ‘fair balance’ between the interests of the lessors, on the one hand, and those of the lessees, on the other hand.

The Court is further struck by the particularly low level of rent the applicants received under the terms of the various ground lease agreements as extended pursuant to section 33 of the Ground Lease Act. As quantified by the applicants, and as was undisputed by the Government, the level amounted to less than 0.25% of the plots' market value and was either equal to or lower than the statutory level of the real-estate tax chargeable on the plots (0.2%-0.7%). Although it was for the lessee to pay the tax, as if he or she owned the property, the comparison nonetheless illustrates the striking contrast. Any adjustment to the rent would be limited to taking into account changes in the consumer price index. In the applicants' case, there seem to have been no general interest demands sufficiently strong to justify such a low level of rent, bearing no relation to the actual value of the land (see Urbárska Obec Trenčianske Biskupice, cited above, § 144).

Indeed, as stated above, section 33 was generally applicable to contracts of a certain age that were up for renewal, irrespective of the financial means of the lessee concerned. It most likely had a much wider reach than merely addressing situations of potential financial hardship and social injustice and reflected social policy in a broad sense.

Moreover, the extension was for an indefinite duration without any possibility of upward adjustment in the light of factors other than the consumer price index (section 15(2)(1)), which excluded the possibility of taking account of the value of the land as a relevant factor. The same terms would continue in the event of transfer of the lease by the lessee to a third party or by the lessor to a third party. Only the lessee could opt to terminate the lease agreement, either by rescinding the contract or, more typically, by redeeming the plot in accordance with section 37. But for the lessee, continuing the lease would often be more attractive financially, as illustrated by the experience of the second applicant (see paragraph 21 above).

In the event that the lessee should sell the lease with dwellings to a third party, any increase resulting exclusively from changes in the value of the land, buildings exempted, would be reflected in the selling price and would accordingly accrue to the lessee. The same would not apply if the applicant lessor were to sell his or her rent entitlements according to the lease contract to a third party, in which case the price would reflect that the controlled rent would be kept at a low level indefinitely.

The Court accepts however that the applicants could entertain a legitimate expectation that the relevant lease contracts would expire as agreed according to their terms, independently of the intervening discussions on and adoption of legislative measures.

In these circumstances, it does not appear that there was a fair distribution of the social and financial burden involved but, rather, that the burden was placed solely on the applicant lessors (see, mutatis mutandis, Hutten-Czapska, cited above, §§ 222, 224–225). The Court is therefore not satisfied that the respondent State, notwithstanding its wide margin of appreciation in this area, struck a fair balance between the general interest of the community and the property rights of the applicants, who were made to bear a disproportionate burden.

The Court appreciates the fact that the Norwegian Supreme Court has assessed the present case also from the angle of Article 1 of Protocol No. 1 to the Convention (see paragraphs 125 to 132 of the judgment quoted at paragraph 16 above). However, in the first place, it is unable to share the latter's view that the following question ought to be taken as the starting point for this assessment: ‘[W]hether the fact that in the event of an extension the lessor does not have the right to regulate the ground lease upwards to an amount that reflects the actual land value means that the arrangement contravenes this Convention provision’ (paragraph 125 of the judgment). While this reflected a demand put forward by lessors in negotiations with lessees prior to the amendment of section 33 of the Ground Lease Act, it did not reflect the contents of this provision. This was so because section 33 in effect prohibited any rent increase (beyond what followed from consumer price index regulation in accordance with section 15). The lack of proportionality in this case was caused by the various factors highlighted in the Court's reasoning in paragraphs 128 to 134 above, not by the fact that the lessors could not claim market rent in the case of an extension of the lease contract. Secondly, the Supreme Court's analysis seems to have been based essentially on the Court's judgment in James and Others (cited above). However, that judgment dealt with a situation which in many respects was different from that at issue in the instant case. In its reasoning above, the Court has relied on it only in so far as it has deemed it relevant to the concrete circumstances of the case and has had regard also to several more recent rulings referred to from its case-law, representing jurisprudential developments in the direction of a stronger protection under Article 1 of Protocol No. 1.

There has accordingly been a violation of Article 1 of Protocol No. 1.