Case Summary and Outcome

The Grand Chamber of the European Court of Human Rights held that Italian legislative measures which had the effect of excluding an audio-visual broadcaster from accessing broadcasting frequencies was a violation of the right to freedom of expression. After a company had been awarded a license to transmit programs it was ten years before it was allocated a frequency on which to broadcast. The Italian courts awarded damages to the broadcaster but the company brought an application to the Court, arguing that the compensation it had received was insufficient. The Court held that the Italian government had breached the broadcaster’s legitimate expectations and prevented it from pursuing its economic activities for more than ten years, and that the legislative framework was vague and imprecise and the interference in the broadcaster’s right to freedom of expression was not justified.

---

Facts

On July 28, 1999, Centro Europa 7 S.R.L (the Applicants), a limited liability company registered in Rome that operated in the television broadcasting field, was granted a television broadcasting license under Law No. 249/1997of 31 July 1997. According to the license, the company was allowed to set up and operate a television network with analog technology. The company was also entitled to the allocation of three frequencies covering 80% of the national territory. Before the allocation of frequencies, the company was given twenty-four months to upgrade its installations as per the relevant requirements established by the Communications Regulatory Authority and the Ministry of Communications. However, the allocation of broadcasting frequencies was made dependent on the adoption of a set of national laws and plans concerning the regulation of terrestrial broadcasting activities, including the adjustment program to be drafted by AGCOM (the Italian Authority for Communications) and the frequency-allocation plan for terrestrial television broadcasting, which was not implemented until 2008.

Meanwhile, other channels continued to operate using frequencies meant to be allocated under the frequency-allocation plan which contributed to reinforcing a duopoly in the national television market, dominated by Mediaset Group, the biggest broadcasting company in Italy, and RAI, Mediaset’s main competitor. In light of the Government’s negligence to assign the corresponding frequencies, the Applicants filed a number of complaints before national courts.

In November 1999, the Applicant company requested the Ministry of Communications to allocate the corresponding frequencies, which was denied on December 22, 1999. In 2000, the Applicant company filed a complaint with the Lazio Regional Administrative Court arguing that no frequency was ever allocated despite its broadcasting license. On September 16, 2004, the Lazio Regional Administrative Court ruled in the Applicant company’s favor by requesting the Ministry of Communications to assign the Applicant the corresponding frequencies or revoke the license. RTI – a network owned by Mediaset Group – appealed to the Consiglio di Stato (Council of State, responsible for ensuring the legality of public administration) which upheld the Lazio Regional Administrative Court’s judgment on May 31, 2008.

On October 23, 2008, with still no action from the Ministry of Communications the Applicant company approached the Consiglio di Stato arguing that the judgment of May 31, 2008 had not been executed. On December 11, 2008, the Ministry of Communications renewed the Applicant company’s license and allocated the company a single frequency effective from June 30, 2009. Accordingly, on January 20, 2009, the Consiglio di Stato held that the Ministry of Communications had executed the judgment of May 31, 2008.

Although the single frequency had been allocated, this assigned channel was not enough to cover 80% of the national territory as per the terms and conditions set forth in the 1999 license. This was despite the Applicant company having fulfilled the corresponding requirements pertaining to the upgrade of its installations. On February 18, 2009, the Applicant company lodged a complaint with the Regional Administrative Court arguing that the allocation of the frequency did not comply with the terms and conditions of the license, and seeking the annulment of the decree allocating the frequency and an award of damages. Mr. Francescantonio Di Stefano, a statutory representative of the company signed an agreement with the Ministry of Communications to allocate more frequencies and so the Applicant company struck out the proceedings before the Regional Administrative Court. However, the Ministry of Communications breached its obligation under the agreement and the Applicant company reactivated the procedure before the Regional Administrative Court. This decision was still pending decision when the complaint was filed to the European Court of Human Rights Grand Chamber.

Parallel to this, on November 27, 2003, the Applicant company filed a complaint to the Regional Administrative Court arguing that the company was entitled to the allocation of three frequencies as per the license of 1999 and sought damages. On September 16, 2004, the Regional Administrative Court denied the Applicant company’s complaint, holding that the company had a legitimate interest in obtaining such frequencies but not a personal right. The company then appealed the decision to the Consiglio di Stato, arguing that it held a legitimate right to be allocated the corresponding broadcasting frequencies. The Consiglio di Stato limited its examination of the merits to the damages alleged by the Applicant company and not the allocation of frequencies and referred the case to the European Court of Justice (ECJ) to interpret relevant provisions on the freedom to provide services and competition as per European law, including “Article 10 of the European Convention on Human Rights, in so far as Article 6 of the Treaty on European Union referred to it” [para. 32]. The Consiglio di Stato stated that the Government’s relevant regulations must be in place prior to assessing the damages and deferred its final decision until December 16, 2008 when it concluded that the Government’s delay in allocating the corresponding frequencies prevented the Applicant company from pursuing its commercial activities for more than ten years. Consequently, the Court of Appeal awarded the company EUR 391,418 for the losses sustained and EUR 650,000 for the loss of earnings.

On January 31, 2008, the ECJ issued a decision holding, inter alia, that the national legislature had adopted measures which authorized the existing channels to pursue their broadcasting activities “to the detriment of new broadcasters which nevertheless held licenses for terrestrial television broadcasting” [para. 35]. It described the legislature’s measures as being “structured in favor of the incumbent networks” which prevented “operators without broadcasting frequencies, such as the applicant company, from accessing the television broadcasting market even though they had a license” [para. 35].

On May 31, 2008, the Consiglio di Stato held that “…it could not allocate frequencies in the government’s place or compel the government to do so” [para. 37]. It ordered the government to “deal with the applicant company’s request for frequencies in a manner consistent with the criteria laid down by the ECJ” [para.37].

On July 16, 2009, Centro Europa 7 S.R.L. and Francescantonio Di Stefano lodged a complaint to the European Court of Human Rights, arguing that Italy had infringed Articles 14 and 6(1) of the Convention and Article 1 of Protocol No. 1.

Article 14 states “The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”

Article 6 states “In the determination of his civil rights and obligations …, everyone is entitled to a fair … hearing … by an independent and impartial tribunal …”

Article 1 of Protocol No. 1 states “Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

On November 30, 2010, a chamber of the Court’s second section relinquished jurisdiction in favor of the Grand Chamber with no objection from the parties.

---

Decision Overview

The Grand Chamber of the European Court of Human Rights (“ECtHR”) issued a majority judgment. Judge Vajić delivered a concurring judgment; Judges Sajó, Karakaş and Tsotsoria delivered a partly dissenting judgment, which was joined in part by Judge Steiner; Judges Popović and Mijović delivered a partly dissenting judgment; and Judge Steiner delivered a dissenting judgment.

The central issue for the Court’s determination was whether there had been an interference with the Applicant company’s right to “impart information and ideas” and, if so, whether that interference was justified.

Before embarking on an analysis of the merits, the Court held that Di Stefano’s capacity as statutory representative of the Applicant company did not conform to the term “victim” as per Article 34 of the Convention, and so the Court only examined the submissions brought on behalf of the company.

The Applicant company argued that despite being granted a broadcasting license, it had been unable to broadcast television programs due to a set of domestic legislative and judicial measures implemented by the Government to favor existing operators. It submitted that the Government’s failure to fulfill its promise to allocate the frequencies was a violation of Article 10 of the Convention as the interference with its right to freedom of expression had not been prescribed by law and was not justified or necessary.  The Applicant company argued that the damages it had been awarded by the Italian courts were “insufficient” as it had lost income through the expenses it incurred preparing for when it would be able to broadcast as well as the loss of earnings from not broadcasting [para. 201] and that the compensation awarded by the domestic courts “did not reflect the full value of its ‘possession’” [para. 164].

The Government submitted that the delay in allocating the frequencies was due to the “general reorganization of national and local analog frequencies in a context of limited availability, and because several companies that had submitted unsuccessful bids in 1999 had appealed to the national courts and been allowed to continue broadcasting without a license on the basis of the former rules” [para. 117]. It argued that domestic regulation of television broadcasting was “compatible with Article 10 of the Convention” [para. 122]. The Government argued that the granting of the license had not created a “legitimate expectation” that the Applicant company would be allocated frequencies and so it did not have a “possession” under Article 1 of Protocol No. 1. It submitted that the Applicant company had been awarded compensation and that its damages claims were “excessive” [para. 205].

The Open Society Justice Initiative was admitted as a third-party intervenor and it argued that European standards “recognised that the duty to ensure pluralism necessitated limits on media ownership, especially in broadcasting” [para. 126]. It highlighted that some European countries had implemented measures to prevent political control of broadcasting and suggested that, if the Court found a violation of Article 10, it should order the Italian State “to implement measures of a general and systemic nature with a view to guaranteeing the pluralism of its broadcasting system” [para. 128].

The Court stressed that there is “no democracy without pluralism” and, with reference to Manole v. Moldova App. No. 13936/02 and Socialist Party v. Turkey 25 May 1998, noted that “[i]t is of the essence of democracy to allow diverse political programmes to be proposed and debated, even those that call into question the way a State is currently organised, provided that they do not harm democracy itself” [para. 129]. The Court commented that media plays an important role in democracy by conveying information and noted the specific role audio-visual media plays and that “[b]ecause of their power to convey messages through sound and images, such media have a more immediate and powerful effect than print” [para. 132]. With reference to VgT Verein gegen Tierfabriken v. Switzerland, No. 24699/94, and De Geillustreerde Pers N.V. v. the Netherlands, No. 5178/71, the Court cautioned against allowing political or economic groups dominance over the media and emphasized that Article 10 is undermined when those groups “exercise pressure on broadcasters and eventually curtail their editorial freedom” [para. 133]. Accordingly, and with reference to the European Council of Ministers’ Recommendation CM/Rec (2007)2 on media pluralism, the Court held that “the State has a positive obligation to put in place an appropriate legislative and administrative framework to guarantee effective pluralism” [para. 133].

The Court assessed whether there had been an interference with the Applicant company’s rights under Article 10. It held that as the failure to allocate frequencies meant that it was “de facto impossible” to implement the license granted to the Applicant company its rights were infringed. The Court emphasized that “the Convention is intended to guarantee not rights that are theoretical or illusory but rights that are practical and effective” [para. 138].

The Court then determined whether the interference was justified in terms of Article 10, and assessed whether it was “prescribed by law”.  The Court reiterated that for a measure to be prescribed by law, it must have a legal basis and be drafted in a way that is accessible to everybody and foreseeable as to its effects so that individuals can regulate their behaviors in conformity with such law. In the present case the Court had to determine whether the national legislation set out, “with the sufficient precision”, the conditions under which a frequency would be allocated after a license had been granted [para. 144]. It held that the Applicant company could have inferred from the legislation that while it was waiting for the frequency to be allocated “the possibility for the [other] channels to continue broadcasting would not affect the rights of new license holders” and that the frequencies would be allocated by 2004 [paras. 148-149]. The Court held that the legislation had the effect of blocking and preventing new operators and that “the laws in question were couched in vague terms which did not define with sufficient precision and clarity the scope and duration” of the period between when licenses were granted and frequencies would be allocated [para. 152]. This meant that the Applicant company could not “foresee, with sufficient clarity” when it would be able to start operating [para. 154]. Accordingly, the Court held that the interference in the Applicant company’s rights was not prescribed by law and the State had failed to comply with its obligation to “put in place an appropriate legislative and administrative framework to guarantee effective media pluralism” [para. 156].

As the Court had found that the interference was not prescribed by law it did not ascertain whether it pursued a legitimate aim or was necessary and held that there was a violation of Article 10.

The Court also examined whether the Applicant company’s right to its peaceful enjoyment of its possessions under Article 1 of Protocol No. 1, and noted that the first question for its determination was whether the Applicant company did have a “possession”. The Court emphasized that “possession” “is not limited to the ownership of material goods” and that the key question is whether “the circumstances of the case, considered as a whole, conferred on the applicant title to a substantive interest” [para. 171]. The Court held that “the ‘legitimate expectation’ of obtaining an asset may also enjoy the protection of Article 1 of Protocol No. 1” and that the Applicant company had a legitimate expectation that the authorities would take measures to regulate broadcasting and so allow it to utilize the license [para. 173]. The Court found that “without the allocation of broadcasting frequencies, [the license] was deprived of its substance” [para. 177]. Therefore, the Court ruled that the Applicant company’s expectation of operating an analog television network as per the license of 1999 fell under the protection of Article 1 of Protocol No.1. The Court rejected the Applicant company’s argument that it was deprived of its property as there had been “no expropriation of the applicant company’s substantive interest in operating an analogue television network” but held that the company’s ability to undertake activities under the license was affected by the government’s measures which amounted to a “means of controlling the use of property” [para. 186].

The Court recalled that an interference with the right enshrined in Article 1 must be prescribed by law, meaning that such laws must be accessible, foreseeable, and precise within the meaning of the Court’s case law. As the Court had found when examining Article 10 that Italy’s national laws delaying the start-up date of the frequencies allocation were not precise nor foreseeable as to the date when the Applicant could expect to be assigned the frequency it also held that this imprecision led to a violation of Article 1 of Protocol No. 1.

Article 41 of the Convention states “[i]f the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party”. The Court held that the compensation awarded by the Italian courts was insufficient and found it was “appropriate to award a lump sum in compensation for the losses sustained and the loss of earnings resulting from the impossibility of making use of the license” [para. 220]. The Court awarded damages of EUR 10,000,000 as well as EUR 100,000 for costs and expenses.

In the concurring judgment, Judge Vajić noted that referring to the notion of “legitimate expectation” was not necessary in the present case since according to the Court’s previous case-law “if a person has a proprietary interest in the nature of a claim which has a sufficient basis in national law, he or she has an asset capable of attracting the protection of Article 1 of Protocol No. 1” [p. 63].

Judges Sajó Karakaş and Tsotsoria joined by Judge Steiner, agreed with the majority’s opinions on most counts but disagreed with the award of damages as, in their view, the Court was not ready to decide over Article 41 of the Convention as it did not have access to an expert opinion on calculating the damages.

Judges Popović and Mijović disagreed with the majority that the Applicant company attained victim status on the grounds that it had lost its victim status when the Consiglio di Stato awarded it compensation, and they also believed the company had no right to lodge a complaint with the Court to simply rectify the damages awarded at domestic level.

Judge Steiner disagreed with the majority that there had been a violation of Article 10 of the Convention and Article 1 of Protocol No. 1, but would have held that the Applicant company’s claims had been res judicata since May 31, 2008 when the Consiglio di Stato decided on the delay in allocating frequencies and as it did not submit its complaint to the Court within six-months it should not have been examined. Concerning the claim pursued under Article 1 of Protocol No. 1, Judge Steiner held that “the State should be afforded a wide margin of appreciation in determining the damage resulting from an ‘unlawful act,’ in accordance with the principles governing noncontractual liability” [para. 68].

---