THIRD SECTION
DECISION
Applications nos. 1284/21 and 14181/21
EUROFOOTBALL OOD against Bulgaria
and NATIONAL LOTTERY AD and Others against Bulgaria
The European Court of Human Rights (Third Section), sitting on 10 December 2024 as a Chamber composed of:
Ioannis Ktistakis, President,
Peeter Roosma,
Lətif Hüseynov,
Darian Pavli,
Diana Kovatcheva,
Úna Ní Raifeartaigh,
Mateja Đurović, judges,
and Milan Blaško, Section Registrar,
Having regard to the above applications lodged on 23 December 2020 and 27 February 2021 respectively,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicants,
Having deliberated, decides as follows:
THE FACTS
1. A list of the applicants is set out in the appendix. The applicants were represented before the Court by Mr M. Ekimdzhiev and Ms K. Boncheva, lawyers practising in Plovdiv.
2. The Bulgarian Government (“the Government”) were represented by their Agents, Ms M. Kotseva, Ms M. Dimitrova and Ms R. Nikolova from the Ministry of Justice.
3. The facts of the case, as submitted by the parties, may be summarised as follows.
4. Before 2020 the limited liability company Eurofootball OOD (applicant in application no. 1284/21, hereinafter “the first applicant”) and the joint-stock company National Lottery AD (one of the applicants in application no. 14181/21, hereinafter “the second applicant”) were among the largest land-based gambling operators in Bulgaria, with gambling as their only business activity. The first applicant was operating in the field of sports betting and the second applicant was most notably organising different lottery games.
5. The first and second applicants operated under the Gambling Act of 2012 (see paragraphs 37 et seq. below) and on the basis of gambling licences issued in accordance with that Act.
6. In 2013 the Gambling Act was amended, in particular with regard to the system of gambling fees payable to the State by holders of gambling licences, with the amendments entering into force on 1 January 2014. Section 30(3) of the Act was accordingly revised to provide for two options, namely: 1) land-based gambling operators organising traditional games (specified after further amendments as lotteries, bingo, keno and other similar games) and sports betting operators would pay “fees amounting to 15% of the value of the stakes in each game”, while 2) the operators of “gambling games for which fees and commissions [were] to be paid” would pay fees amounting to 20% of the value of the fees and commissions received.
7. From 2014 to the beginning of 2020 the first and second applicants paid gambling fees in accordance with the second option listed above, filing monthly tax statements, in accordance with the law. The statements were accepted without objection by the competent body, the State Commission on Gambling.
8. Fifty-one percent of the shares in the first applicant are owned by another company, which in turn is fully controlled by Mr Vasil Bozhkov (one of the applicants in application no. 14181/21, hereinafter “the third applicant”). Mr Bozhkov also owns 51% of the second applicant through the companies Nove Development EOOD and Nove Internal EOOD (two of the applicants in application no. 14181/21, hereinafter “the fourth and fifth applicants”).
9. In December 2019 the Minister of Finance tasked the Public Financial Inspection Agency with auditing the State Commission of Gambling. On 28 January 2020 the Agency published a report in which it observed that different gambling operators organising similar games had been paying different gambling fees, some in accordance with the first and others in accordance with the second option under section 30(3) of the Gambling Act (see paragraph 6 above). According to the Agency, this situation was the result of inadequate supervision of gambling operators on the part of the State Commission on Gambling and had resulted in substantial losses for the State budget.
10. On 14 February 2020, after verifying the first and second applicants’ situation and obtaining their written explanations, the Chair of the State Commission on Gambling issued three decisions establishing public receivables. Two of those decisions, namely those numbered 1 and 2 (hereinafter “Decision no. 1” and “Decision no. 2”), concerned the second applicant, and a further decision numbered 5 (hereinafter “Decision no. 5”) concerned the first applicant. According to Chair of the State Commission on Gambling, the companies had been incorrectly paying lower gambling fees under the second option of section 30(3) of the Gambling Act rather than the first. The companies were thus ordered to pay in the difference.
11. The sum demanded from the first applicant was 261,164,891 Bulgarian levs (BGN), the equivalent of 133,588,179 euros (EUR), for the period from 2014 to 2019. In addition, the company was ordered to pay BGN 67,717,779 (EUR 34,638,250) in interest. As to the second applicant, it was ordered to pay BGN 14,945,470 (EUR 7,644,741) in outstanding gambling fees for the period from 2015 to the beginning of 2020, plus BGN 4,015,496 (EUR 2,053,962) in interest. The overall amount demanded from the first applicant was accordingly some BGN 329 million (EUR 168 million), and the one considered due by the second applicant was approximately BGN 19 million (EUR 9.7 million).
12. The above decisions further stated that they were immediately enforceable. These parts contained similar reasoning, referring to the need to protect “very important State and public interests”. It was also reasoned that, when a debt to the State budget was so large, it threatened the normal functioning of the budgetary system and “all possible measures in accordance with the law” had to be taken to secure payment. The applicants had already demonstrated “a lack of financial discipline” in the previous years and their paying lower fees had put their competitors in a disadvantageous position.
13. The immediate enforcement of Decisions nos. 1, 2 and 5 was upheld by the national courts in final decisions of the Supreme Administrative Court of 11 and 23 March 2020.
14. In several decisions taken on 13 and 25 March 2020, namely mere days after the immediate enforcement of Decisions nos. 1, 2 and 5 had become final (see paragraph 13 above), the State Commission on Gambling suspended the first and second applicants’ gambling licences for three months, on the ground that the companies had not paid or sufficiently secured the debts established in the decisions at issue. The measure was taken pursuant to section 85 of the Gambling Act (see paragraph 40 below).
15. The decisions of 13 and 25 March 2020 were immediately enforceable (see paragraph 42 below). While the second applicant’s business was already in difficulty as a result of legislative amendments which are not the subject of the present case (see paragraph 45 below), it was the above-mentioned suspension decisions which effectively put an end to the first applicant’s business. In May 2020 the company laid off many of its employees.
16. In further decisions dated 22 June and 14 July 2020, noting that the first and second applicants had still not paid the debts established in Decisions nos. 1, 2 and 5, the State Commission on Gambling definitively revoked the two companies’ gambling licences. The measure was taken on the basis of section 86 of the Gambling Act (see paragraph 41 below).
17. The decisions mentioned in the previous paragraph were subject to immediate enforcement (see paragraph 42 below). The first and second applicants’ attempts to have such enforcement stayed were rejected by the national courts, which found that the applicants had not proven the damage they would sustain as a result of immediate enforcement, that the cessation of business was the intended result of the revocation of a gambling licence, and that any damage sustained would be purely material and thus recoverable under the State and Municipalities Responsibility for Damage Act (see paragraphs 46 et seq. below).
18. The decisions on the suspension and revocation of the applicants’ licences were subject to judicial review. As to those ordering suspension, some were upheld by the courts, and some were quashed.
19. However, all the decisions concerning the revocation of the licences were upheld in final judgments of the Supreme Administrative Court delivered on 29 July and 22 December 2022. In particular, the domestic court found that the fact that Decisions nos. 1, 2 and 5 had been subject to immediate enforcement sufficed to justify the conclusion, which the applicants had disputed, that they had outstanding and recoverable debts to the State, meaning that the revocation decisions had been validly taken.
20. The first and second applicants also applied for judicial review of Decisions nos. 1, 2 and 5.
21. In a judgment of 8 March 2021 the Sofia City Administrative Court partly upheld Decision no. 5. It considered that the Chair of the State Commission on Gambling had correctly applied section 30(3) of the Gambling Act in respect of the period after November 2014, but that the State’s claims for unpaid gambling fees in respect of the preceding months had been time-barred.
22. Despite holding that this was not a valid ground for quashing Decision no. 5, the domestic court also discussed, obiter dictum, the State’s responsibility for the situation, noting that this situation had arisen with the authorities’ “express or tacit acceptance”. The authorities had not reacted to the fist applicant’s payment of lower fees over a lengthy period of time, despite having carried out numerous inspections, and had created a situation where even a gambling operator acting in good faith would have been confused as to the correct course of action.
23. In a final judgment of 8 November 2022 the Supreme Administrative Court set aside the lower court’s judgment and declared Decision no. 5 null and void, on the ground that the Chair of the State Commission on Gambling had not had the necessary competence to take such a decision.
24. As to Decision no. 1, it was upheld in a judgment of the Sofia City Administrative Court of 23 March 2022.
25. Regarding Decision no. 2, the Sofia City Administrative Court delivered a judgment on 4 May 2023 which partly upheld the decision, finding that the State’s entitlement to claim gambling fees in respect of the period prior to 31 December 2014 had been time-barred.
26. The second applicant lodged appeals against the above judgments. The Supreme Administrative Court opened proceedings, but stayed them in two decisions of 28 April 2023 and 24 January 2024, respectively, noting that, in the meantime, it had been seised of a request for an interpretative decision on the competence of the Chair of the State Commission on Gambling (which had already been dismantled at that time – see paragraph 38 below) to issue decisions establishing public receivables such as those at stake in the second applicant’s case. As of the time of the latest communication from the parties (September 2024), the interpretative decision had yet to be delivered.
27. Upon the issuance of Decisions nos. 1, 2 and 5, the National Revenue Agency froze all bank accounts and other assets of the first and second applicants. In the following years, in enforcing the decisions, it managed to collect some BGN 14 million (EUR 7 million) from the first applicant and 13.5 million (EUR 6.9 million) from the second applicant.
28. In December 2022 the National Revenue Agency (which had taken over the tasks of the State Commission on Gambling – see paragraph 38 below) launched a new financial audit of the first applicant. It issued a fresh order freezing all company assets and held the sums previously collected under Decision no. 5 as security.
29. The National Revenue Agency issued a new decision establishing public receivables on 22 December 2023. The document concerned the period from December 2016 to November 2018. The National Revenue Agency was once again of the opinion that the first applicant had incorrectly paid lower gambling fees under the second rather than the first option of section 30(3) of the Gambling Act (see paragraph 6 above) and calculated the outstanding fees in respect of the period in issue, plus interest, at approximately BGN 220 million (EUR 112 million) in total.
30. The above decision had not entered into force by the time of the latest communication from the parties (September 2024).
31. In addition to the measures against the first and second applicants discussed above, the State Commission on Gambling and the National Revenue Agency imposed fines on the two companies for having incorrectly declared the gambling fees due during the periods covered by Decisions nos. 1, 2 and 5. These fines were the subject of separate judicial review proceedings initiated by the first and second applicants and, in many cases, were set aside. The national courts often observed, among other things, that the applicants had organised their games on the basis of, and acted in accordance with, general conditions that had been approved by the State Commission on Gambling and had also defined the manner of calculating gambling fees.
32. In another judgment of 23 February 2023, concerning the amount of gambling fees payable by the first applicant in respect of February 2020, the Supreme Administrative Court stated that it saw no viable indication as to which of the two options under section 30(3) of the Gambling Act (see paragraph 6 above) applied to the different types of gambling operators. This meant that the determination as to which of the two was applicable in each case had been left to the State Commission on Gambling, which had made that determination in approving the first applicant’s general conditions.
33. The same conclusion was reached in a judgment of 20 February 2023 concerning the gambling fees payable in a similar situation by another company controlled by the third applicant. The Supreme Administrative Court held that legal provisions concerning fiscal obligations had to be interpreted strictly, that it saw no clear distinction between the operators subject to each of the two options under section 30(3) of the Gambling Act, and that it had apparently been for the State Commission on Gambling to determine which option was applicable in each case in approving the general conditions of the games. In that case, the Chair of the State Commission on Gambling, in disregarding the decisions approving those general conditions, had acted in breach of the principle of legal certainty.
34. In December 2019 the prosecution authorities opened criminal proceedings against the third applicant and he was subsequently charged with tax evasion and with leadership of an organised criminal group. Some of the charges were based on the facts in issue in the present case, namely that his companies had allegedly paid less than the statutory amount of gambling fees under the Gambling Act. According to the prosecution, the third applicant had acted in collusion with several Chairs and employees of the State Commission on Gambling. In April 2024 the third applicant and his alleged accomplices were indicted and committed for trial.
35. In 2022 the prosecution authorities opened another set of criminal proceedings for suspected coercion committed by a public official against the third applicant between 2014 and 2019. The proceedings were brought in connection with the third applicant’s allegations that, during these years, he had had to pay substantial bribes to maintain the profitability of his gambling business, in particular to the then Minister of Finance.
36. Those proceedings were discontinued in a decision of a prosecutor of the Sofia City Public Prosecutor’s Office of 12 December 2023, concluding that it was not established that an offence had been committed and, in particular, that there was no proof that the third applicant had been blackmailed or coerced into paying regular bribes to maintain his business.
RELEVANT LEGAL FRAMEWORK AND PRACTICE
37. The Gambling Act (Закон за хазарта) was enacted in 2012. It regulates the licensing, organisation, and State supervision of gambling.
38. Initially, the body empowered to take decisions under the Gambling Act was the State Commission on Gambling. In August 2020 the Commission was dissolved and its functions were taken over by the National Revenue Agency. According to national media, the reason for this measure was the “scandal” involving the companies owned by Mr Bozhkov.
39. As concerns the gambling fees due by gambling operators, the provisions of section 30(3) of the Act have been described above (see paragraph 6). These provisions, as in force at the relevant time, were not applicable to companies operating casinos or slot machines, or to online gambling operators.
40. Section 85 of the Gambling Act details the conditions under which the competent State body can suspend a gambling licence, for a period of three to six months. These include, in particular, the situation where a gambling operator has an outstanding debt to the State exceeding BGN 5,000 (EUR 2,556), and where no security has been offered.
41. Section 86 of the Gambling Act, on the other hand, provides for the revocation of a gambling licence, which can be ordered, in particular, where the infringement having led to the suspension of the licence has not ceased.
42. Any decisions under sections 85 and 86 of the Act are subject to judicial review but are immediately enforceable regardless of any such proceedings.
43. Under section 8(1) of the Gambling Act, the previous holder of a gambling licence that has since been revoked cannot apply for a new gambling licence.
44. According to data provided by the National Revenue Agency, upon request by the applicants, six land-based gambling operators were paying gambling fees under section 30(3) of the Gambling Act (see paragraph 6 above) between 2014 and 2019. Of these, two companies paid fees in accordance with the first option under that provision, and the remaining four companies – all of which, including the first and second applicants, controlled by the third applicant – paid their fees under the second option.
45. During the period in question, the third applicant’s companies held the largest share of the land-based gambling industry in Bulgaria. The situation changed at the beginning of 2020: in addition to the measures taken against the first and second applicants, which form the subject matter of the present case, and to similar measures taken against the third applicant’s two other companies, his companies’ business was also affected by legislative amendments to the Gambling Act that were passed in February 2020. As a cumulative result of the events described above, the third applicant’s four gambling companies ceased to operate, and the gambling market was eventually taken over by other operators.
46. Section 1 of the State and Municipalities Responsibility for Damage Act (“the 1988 Act”) provides that the State is liable for damage sustained by private persons as a result of unlawful decisions or actions by the administration.
47. The Government submitted several judgments delivered in 2021 and 2022 in which the Supreme Administrative Court had upheld lower courts’ judgments awarding damages to companies to remedy the effects of quashed decisions of the National Revenue Agency establishing public receivables. Two cases had been brought by the same claimant, who had incurred expenses for the issuance and maintenance of bank guarantees to secure the debts established in the impugned decisions. In another case the interlocutory measures imposed by the National Revenue Agency, such as the freezing of bank accounts, had prevented the claimant from meeting its obligations vis‑à‑vis business partners, and in yet another case the Agency had sold off one of the claimant’s assets in the process of immediate enforcement of a decision which was ultimately declared null and void. In the last case the claimant company had been unable to pay down a bank loan owing to the Agency’s initial denial of its right to deduct value-added tax, thereby incurring unwarranted expenses in the form of interest and bank fees. In all these judgments the Supreme Administrative Court had found that the damage claimed had been the direct and immediate consequence of the respective unlawful decisions establishing public receivables (Решение № 8174 от 6.07.2021 г. на ВАС по адм. д. № 11276/2020 г.; Решение № 8273 от 7.07.2021 г. на ВАС по адм. д. № 9445/2021 г.; Решение № 10522 от 18.10.2021 г. на ВАС по адм. д. № 5541/2021 г.; Решение № 4909 от 23.05.2022 г. на ВАС по адм. д. № 1493/2020 г.; Решение № 7104 от 13.07.2022 г. на ВАС по адм. д. № 2059/2022 г.).
48. The Government submitted another judgment in which the Plovdiv Administrative Court had granted a claim under the 1988 Act against the State Commission on Gambling, based on the fact that the Commission’s decision to revoke the claimant’s gambling licence had ultimately been set aside (Решение № 1438 от 3.08.2020 на АдмС-Пловдив по адм.д. 3326/2019 г.).
49. In two more judgments submitted by the Government and delivered in 2021 and 2022 the Supreme Administrative Court and the Supreme Court of Cassation had granted that they could, in principle, award compensation in respect of non-pecuniary damage to legal persons (Решение № 3445 от 16.03.2021 г. на ВАС по адм. д. № 10209/2020 г.; Решение № 35 от 12.08.2022 г. на ВКС по гр. д. № 3901/2018 г.). The Supreme Court of Cassation noted, in particular, that the Bulgarian courts had previously refused to do so, but that the practice had changed. The criteria for the assessment of such damage could be derived, in particular, from the Court’s case-law.
50. The applicants, for their part, submitted judgments concerning claims brought under the 1988 Act in which, between 2021 and 2023, the Supreme Administrative Court had refused to award damages to the claimants or had upheld the lower courts’ refusal to do so. In particular, in a case concerning an allegedly unlawful search, it had pointed out that the causal link between any unlawful action or decision of a public body and any damage sustained had to be “immediate”, that is “unaffected by other decisions or actions” (Решение № 5624 от 30.05.2023 г. на ВАС по адм. д. № 930/2023 г.).
51. In another case the claimant had sought compensation for lost profit, on the ground that a State body’s refusal to take a technical decision concerning his land had deprived him of the possibility of receiving an agricultural subsidy. The State body’s refusal had not been found to be unlawful, but even if it had been, there was no direct causal link between the refusal and the loss of the subsidy, given that the grant of the subsidy required a separate administrative decision (Решение № 9416 от 15.09.2021 г. на ВАС по адм. д. № 9446/2020 г.). In yet another case a company had claimed compensation in respect of damage stemming from an unlawful order to close its farm on the basis of health-and-safety considerations. The Supreme Administrative Court had found that any damage sustained, in particular as a result of the company’s inability to meet contractual obligations vis-à-vis third parties, had not been the direct consequence of the unlawful order: in a previous decision which had not been quashed the company had already been ordered to meet the relevant health-and-safety standards and had not complied, despite the fact that such compliance did not appear particularly burdensome. The damage it had sustained had also been due to poor management (Решение № 2459 от 16.03.2022 г. на ВАС по адм. д. № 3863/2021 г.). The last case also concerned an unlawful order to close a farm. However, the owner company had not complied with the order and had otherwise mismanaged its farm, such that any damage it had sustained could not have been the direct and immediate consequence of the unlawful order (Решение № 835 от 25.01.2023 г. на ВАС по адм. д. № 8250/2021 г.).
52. In an interpretative decision delivered on 13 January 2023 the Supreme Court of Cassation, in discussing the standard of proof for assessing any award of compensation for lost profit (not necessarily under the 1988 Act), held that such loss had to be proven “with certainty” (Тълкувателно решение № 3 от 13.01.2023 г. по т. д. № 3/2021 г., ОСГТК).
COMPLAINTS
53. The applicants complained under Article 1 of Protocol No. 1, relying in addition on Article 6 § 1 of the Convention, about the immediate enforcement of Decisions nos. 1, 2 and 5 and the revocation of the first and second applicants’ gambling licences. They contended that the relevant State bodies had taken action without due regard for the grave consequences of their decisions and on the basis of an interpretation of the Gambling Act that had only been adopted in early 2020. They had required the first and second applicants to pay large sums of money within short periods of time and had ultimately taken measures which had caused irreparable damage to the two companies’ business.
54. The applicants further complained under Article 18 of the Convention that the measures against the first and second of them had not been aimed at collecting unpaid gambling fees, but at destroying the business of their main shareholder, the third applicant, who had been in a position to implicate high‑ranking public officials in a large-scale corruption scheme. The measures had thus aimed to remove him from Bulgarian economic, political and public life. The measures had been tailored in such a manner that they had eliminated all likelihood that the first and second applicants might restore their businesses, and had never achieved their “official” aim, namely, to ensure effective payment of the gambling fees claimed by the State.
THE LAW
55. Having regard to the similar subject matter of the applications, the Court finds it appropriate to examine them jointly in a single decision.
56. The Government contended that the third, fourth and fifth applicants (Mr Vasil Bozhkov and two companies holding shares in the second applicant – see paragraph 8 above and the appended table) were not directly affected by the alleged violations of the Convention. The fact that these applicants’ interests may have suffered as a result of those violations was insufficient to render them “victims” within the meaning of Article 34 of the Convention.
57. The third, fourth and fifth applicants argued that they had been directly affected by the measures taken by the authorities against the second applicant. Those three applicants had previously received significant dividends but, as a result of the impugned measures, the successful business they had developed for years had collapsed. Moreover, the third applicant effectively held 51% of the capital of the second applicant, and was identified with the company, such that distinguishing between the two of them would be artificial.
58. The Court has held that the term “victim” used in Article 34 of the Convention denotes the person directly affected by the act or omission which is in issue. A person cannot complain of a violation of his or her rights in proceedings to which he or she was not a party, even if he or she was a shareholder of a company which was party to the proceedings (see, among other authorities, Centro Europa 7 S.r.l. and Di Stefano v. Italy [GC], no. 38433/09, § 92, ECHR 2012).
59. When it comes to cases brought by shareholders of a company, it is crucial to draw a distinction between complaints brought by shareholders about measures affecting their rights as shareholders and those about acts affecting companies, in which they hold shares (see Albert and Others v. Hungary [GC], no. 5294/14, § 122, 7 July 2020). In the former group, shareholders themselves may be considered victims whereas in the latter group the general principle is that shareholders of companies cannot be seen as victims within the meaning of Article 34 of the Convention. For shareholders to be able to claim to be the victims, the impugned measures or acts must impact their legal rights both directly and personally and go beyond merely disturbing their interests in the company (ibid., §§ 123-124 and 134).
60. In the present case, the measures complained of in application no. 14181/21 directly affected the second applicant, the company National Lottery AD, and the Court is not satisfied that the third, fourth and fifth applicants were the direct or indirect victims of the violations alleged on account of these measures, notwithstanding the fact that their pecuniary interests were undoubtedly affected by the collapse of the second applicant’s business. The Court notes in addition that the case does not concern measures “directed at the rights of the shareholders as such” (see Olczak v. Poland (dec.), no. 30417/96, § 59, ECHR 2002-X (extracts)).
61. Nor does the Court consider that the third applicant can be regarded as the victim of the alleged violations on the ground that he and the second applicant should be seen as so closely identified with one another that it would be artificial to distinguish between them (see, for the application of such an approach, Ankarcrona v. Sweden (dec.), no. 35178/97, ECHR 2000-VI). The second applicant is a joint-stock company, and the third applicant owns, through the fourth and fifth applicants, 51% of its shares (see paragraphs 4 and 8 above). In this regard, therefore, the case is similar to Agrotexim and Others v. Greece (24 October 1995, §§ 64-66, Series A no. 330-A), where the applicants owned a similar share of the company involved and the Court refused to grant them locus standi to complain before it of the measures affecting that company.
62. In view of the above, the Court finds that the third, fourth and fifth applicants cannot claim to be the “victims” of the alleged violations of the Convention in application no. 14181/21.
63. Accordingly, their complaints are incompatible ratione personae with the provisions of the Convention within the meaning of Article 35 § 3 (a) and must be rejected in accordance with Article 35 § 4.
64. The Government argued that the first and second applicants had not exhausted the available domestic remedies.
65. As to the second applicant, the proceedings concerning the validity of Decisions nos. 1 and 2 remained pending (see paragraph 26 above), which meant that the matter had not been resolved at the domestic level and the complaints had been prematurely raised.
66. As to the first applicant, the Government pointed out that it had not brought proceedings under the 1988 Act to claim compensation for the damage it had sustained as a result of the immediate enforcement of Decision no. 5, which had ultimately been found to be null and void. The possibility of bringing such proceedings remained open. According to the Government, the quashing of Decision no. 5 meant that all decisions related to it had to be considered “flawed”. Relying on the case-law of the domestic courts cited above (see paragraph 47), the Government claimed that the remedy in question was, in principle, effective, and that, in resorting to it, the first applicant would have a reasonable chance of obtaining adequate compensation. There was no reason to accept, a priori, that the national courts would take an arbitrary or excessively formalistic stance on a claim for loss of profit, as feared by the applicants (see paragraph 70 below). The first applicant would also have been entitled to claim compensation for any non‑pecuniary damage inflicted on it.
67. The second applicant would also have the possibility to claim damages under the 1988 Act if Decisions nos. 1 and 2 were ultimately set aside by the national courts. In support of their argument with regard to the second applicant, the Government relied on the domestic case cited in paragraph 48 above. They contended that the remedy in question was not “obviously futile”.
68. For its part, the second applicant pointed out that, even though the proceedings against Decisions nos. 1 and 2 were pending, its complaints did not depend on the outcome of these proceedings. The complaints concerned the suspension and revocation of its gambling licences and the ensuing damage to its business.
69. The first and second applicants also disagreed with the Government’s argument as to the potential effectiveness of the remedy under the 1988 Act. The first applicant pointed out that the damage caused to its business had not been the result of Decision no. 5 alone, but had stemmed especially from the State Commission on Gambling’s decisions to revoke its gambling licences, which had been the subject of separate judicial review proceedings and had been upheld by the national courts. These additional decisions “diluted” any causal link between Decision no. 5 and the damage caused to the applicant’s business, as had happened in the cases cited in paragraphs 50-51 above on which the applicants relied. The first and second applicants argued that any potential recourse to the remedy at issue on their part would be “bound to fail”.
70. The first and second applicants contended in addition that, if required to prove any loss of profit in tort proceedings against the State, they would have to meet an “unachievable” standard of proof, following the Supreme Court of Cassation’s interpretative decision of 13 January 2023 (see paragraph 52 above).
71. The general principles concerning exhaustion of domestic remedies have been summarised in Vučković and Others v. Serbia ([GC] (preliminary objection), nos. 17153/11 and 29 others, §§ 69-77, 25 March 2014). In particular, the Court has pointed out that applicants are required to have recourse to domestic remedies which are effective, that is, capable of remedying directly the impugned state of affairs and offering reasonable prospects of success. The existence of mere doubts as to the prospects of success of a particular remedy which is not obviously futile is not a valid reason for failing to exhaust that avenue of redress.
72. As regards the burden of proof, it is incumbent on the Government claiming non-exhaustion to satisfy the Court that the remedy is an effective one, available in theory and in practice. Once this burden has been satisfied, it falls to the applicant to establish that the remedy advanced by the Government was in fact exhausted or is for some reason inadequate and ineffective in the particular circumstances of the case (see, among other authorities, Romeo Castaño v. Belgium, no. 8351/17, § 54, 9 July 2019, and Gutsanovi v. Bulgaria, no. 34529/10, § 89, ECHR 2013 (extracts)).
73. In the present case, the rights alleged to have been breached are in particular those under Article 1 of Protocol No. 1 to the peaceful enjoyment of one’s possessions (the applicants relied in addition on Article 6 § 1, without, however, making substantive arguments under that provision) (see paragraph 53 above). The consequences of a breach of the right protected by Article 1 of Protocol No. 1 should in principle be capable of being made good through an award of compensation. Or, more generally, from the Convention’s perspective, property can be compensated for by a monetary award (see Demopoulos and Others v. Türkiye (dec.) [GC], nos. 46113/99 and 7 others, § 115, ECHR 2010).
74. The Government pointed out, in the first place, that the proceedings concerning the validity of Decisions nos. 1 and 2 brought by the second applicant remained pending (see paragraph 65 above). Indeed, both sets of proceedings have been stayed to await an interpretative decision of the Supreme Administrative Court (see paragraph 26 above).
75. The Court takes note of the second applicant’s position that its complaints were not related to the validity of Decisions nos. 1 and 2, but solely to the suspension and revocation of its gambling licences and the ensuing disruption of its gambling business (see paragraph 68 above). The Court, however, finds the outcome of the pending proceedings concerning Decisions nos. 1 and 2 sufficiently relevant. The potential quashing of these decisions, as in the case of Decision no. 5 with regard to the first applicant, could cast doubt on the lawfulness and appropriateness of the subsequent decisions on the suspension and revocation of the second applicant’s gambling licences. While such an outcome remains, for the time being, in the realm of speculation, the second applicant retains a reasonable chance of success in the proceedings, in particular in view of the position of the national courts as expressed thus far. Firstly, in the case of the first applicant, Decision no. 5 was quashed. Secondly, in the additional judgments referred to in paragraphs 31-33 above, the Supreme Administrative Court considered that the distinction between the two options under section 30(3) of the Gambling Act was unclear and that the first and second applicants and a company in a similar position had not acted contrary to law. A positive outcome of the pending judicial-review proceedings would allow the second applicant to bring proceedings against the State in tort under the 1988 Act.
76. The above-mentioned possibility to bring an action under the 1988 Act is already open to the first applicant, which has not informed the Court of having brought such an action. It is still entitled to do so, the applicable limitation period under domestic law being five years (see Tsonev v. Bulgaria (dec.), no. 9662/13, § 41, 30 May 2017, and Harizanov v. Bulgaria (dec.), no. 53626/14, § 52, 5 December 2017). That period must have started running as from the judgment of 8 November 2022 (see paragraph 23 above).
77. Under section 1 of the 1988 Act individuals and companies can seek compensation from the State in tort for damage caused by unlawful decisions or actions of the administration (see paragraph 46 above). In that connection, the Government submitted several domestic judgments in which the Supreme Administrative Court had awarded damages to companies to remedy the effects of unlawful decisions establishing public receivables (see paragraph 47 above). In the case under examination, Decision no. 5, which also concerned the establishment of public receivables, has already been declared null and void (see paragraph 23 above) and, as observed, the second applicant has a fair chance of obtaining similar findings with regard to Decisions nos. 1 and 2 (see paragraph 75 above). The Government submitted another domestic judgment, where the damage in question had resulted from the unlawful revocation of a gambling licence (see paragraph 48 above).
78. The first and second applicants argued that they would not be able to prove a causal link between the damage they had sustained and the unlawful, or potentially unlawful, decisions of the administration. In their view, this was because the administration had taken further decisions, in particular those concerning the revocation of their gambling licences, which had themselves been upheld by the national courts. According to the first and second applicants, these additional decisions “diluted” the causal link between the damage sustained by them and Decisions nos. 1, 2 and 5 (see paragraph 69 above).
79. However, as already noted above, mere doubts as to the effectiveness of a domestic remedy such as those expressed by the first and second applicants cannot be a sufficient ground to eschew it (see paragraph 71 above citing Vučković and Others; see in addition, among other authorities, Pellegriti v. Italy (dec.), no. 77363/01, 26 May 2005, and Zihni v. Türkiye (dec.), no. 59061/16, § 23, 29 November 2016). This can only be the case if the applicants can show, by providing relevant domestic case-law or any other suitable evidence, that the remedy at issue was bound to fail, or that it had a negligible prospect of success (see, among other authorities, Vomočil and Art 38, a.s. v. the Czech Republic (dec.), nos. 38817/04 and 1458/07, § 47, 5 March 2013, and Kužmarskienė v. Lithuania (dec.), no. 54467/12, § 66, 11 July 2017).
80. In order to establish the ineffectiveness of the remedy under the 1988 Act, the first and second applicants submitted several judgments of the Supreme Administrative Court (see paragraphs 50-51 above). However, the Court observes that those judgments concerned very different factual situations, in particular pertaining to farming and subsidies for agriculture, and to an unlawful search. In addition, in the judgments referred to in paragraph 51 above, the claims against the State were rejected on different grounds, and not for the lack of a causal link between the administration’s unlawful decisions and any damage that had been sustained.
81. The Court accordingly cannot conclude on the basis of the domestic case law submitted by the first and second applicants that the remedy under examination would be ineffective in their case, on the ground that Decisions nos. 1, 2 and 5 were followed by decisions on the revocation of the applicants’ gambling licences. At this stage the Court has no reason to consider that the domestic courts examining a potential claim by the applicants under the 1988 Act would not analyse their case properly, taking due account of all relevant circumstances and any responsibility of the State for the collapse of the applicants’ business.
82. The first applicant, and the second applicant in case Decisions nos. 1 and 2 are quashed, will be entitled to claim compensation in respect of both pecuniary and non-pecuniary damage (see paragraph 49 above). As to the possibility of a claim for loss of profit – which is likely to represent the bulk of the applicants’ claims, in view of the circumstances of the case – the Court cannot accept the applicants’ speculation that the standard of proof with regard to such loss is a priori “unachievable” after the Supreme Court of Cassation’s holding to the effect that loss of profit is to be proven “with certainty” (see paragraphs 52 and 70 above). The Court cannot speculate on the approach the domestic courts might take and sees no reason to consider that they would not examine the matter fairly, in the light of the relevant circumstances and the evidence presented (see, mutatis mutandis, Stefanov v. Bulgaria (dec.), no. 51127/18, § 77, 8 September 2020, and Zlatanov v. Bulgaria (dec.), no. 53050/21, § 192, 30 January 2024).
83. Accordingly, the Court concludes that the first and second applicants have not shown that the remedy proposed by the Government, namely a tort action against the State under the 1988 Act, would necessarily be bound to fail or would have negligible chances of success. The case-law presented by the applicants does not relate to this point, while the remedy at issue has been specifically tailored to offer protection against unlawful decisions or actions by the administration, and appears capable of affording appropriate redress. As has been previously held, even if there are doubts as to the effectiveness of a remedy, the issue must be tested in domestic proceedings (see, for example, Svoboden Zheleznicharski Sindikat “Promyana” v. Bulgaria (dec.), no. 5044/04, § 54, 28 May 2013).
84. It should further be noted that the domestic courts also referred to the possibility, in principle, of the applicants’ having recourse to the 1988 Act in the event that the immediate enforcement of Decisions nos. 1, 2 and 5 proved to have been unjustified (see paragraph 17 above in fine).
85. The first and second applicants also complained under Article 18 of the Convention that their rights had been restricted for a non-prescribed (ulterior) purpose (see paragraph 54 above). However, the Court observes that they have not complained in that regard before the domestic authorities. Furthermore, nothing prevents them from raising this issue in future tort proceedings, and in previous similar cases the Court has considered that the Bulgarian courts could, in principle, deal properly with such allegations (see, for example, Zlatanov, cited above, § 196). In Zlatanov, the Court outlined in addition the major principles established in its case law under Article 18 (see §§ 198-200 and 229 of the decision).
86. The Court concludes, in the light of the above considerations, that the remedy under the 1988 Act could be effective in the circumstances of the case, within the meaning of Article 35 § 1 of the Convention, with regard to the complaints both under Article 1 of Protocol No. 1 and Article 18 of the Convention. Accordingly, the first and second applicants are obliged to exhaust that remedy, provided, in the case of the second applicant, that the Supreme Administrative Court quashes Decisions nos. 1 and 2 in the domestic proceedings which are still pending.
87. The above means that this part of the application must be rejected under Article 35 §§ 1 and 4 of the Convention for failure to exhaust domestic remedies.
For these reasons, the Court, unanimously,
Decides to join the applications;
Declares the applications inadmissible.
Done in English and notified in writing on 16 January 2025.
Milan Blaško Ioannis Ktistakis
Registrar President
Appendix
List of cases:
Application no. | Case name | Lodged on | Applicant | |
1. | 1284/21 | Eurofootball OOD v. Bulgaria | 23/12/2020 | Company EUROFOOTBALL OOD |
2. | 14181/21 | National Lottery AD and Others v. Bulgaria | 27/02/2021 | Company NATIONAL LOTTERY AD |