In attempts to solve the emerging housing crisis resulting from the coronavirus pandemic, some countries like the United States and Spain, have introduced moratoria on evictions. If past housing crises have taught us anything, it is that a moratorium is effective in the protection of the community, but barely a one-size-fits-all approach: a clash between the interests of the owner of an apartment and tenant is inevitable. It is possible that the European Court of Human Rights (hereinafter: the Court) took the pandemic into account when it decided on the conflict in Béla Néméth v Hungary in December 2020. The case epitomises the stand-off between two human rights: the right to peaceful possession of property and that of home and private life, in the wake of a legislative moratorium on evictions during the foreign-currency loan crisis of 2014.
The case epitomises the stand-off between two human rights.
The Case Béla Néméth v Hungary
Even years later, the ripple effects of the 2008 financial crisis were rattling the governments of Europe. In Hungary, this took the form of defaulted foreign currency loans. By Rabobank estimate, 1.1 million Hungarians were struggling to manage their foreign loan payments in 2010. Four years later, the Hungarian government decided to prevent the emerging housing crisis by introducing a moratorium on evictions until further notice. The effects of this were felt by the applicant, who had recently purchased an apartment, whose former owner was indebted with foreign currency loans. As the former owner was still residing in the apartment on the day the moratorium was issued, no eviction proceedings could be taken against him. This resulted in the inability of the applicant to take possession of the property belonging to him.
Even years later, the ripple effects of the 2008 financial crisis were rattling the governments of Europe.
Thus, the applicant invoked article 1 of Protocol No. 1 European Convention on Human Rights (hereinafter: the ECHR), by claiming that the peaceful enjoyment of his possession (i.e. the residential property) had been interfered with by the government. He claimed the amendment to the law was unlawful, partly due to the uncertainty caused by the moratorium, as the measure was initially introduced with no specific time-limit. In doing so, he alleged that given the fact that the financial crisis only affected a portion of the population, it was not enough to trigger public interest. In addition, the applicant questioned the fairness of the conditions of the moratorium. According to the applicant, there was a lack of countermeasures he could have taken while waiting for the eviction proceedings to resume, such as retracting his bid on the property. He particularly scrutinised the condition for being excepted from the measure since such a clause was only available to the State’s economic operators. This amounts to discrimination towards private actors under article 14 ECHR, according to the applicant.
These arguments were contested by the government. Whereas the financial crisis did not concern all of the Hungarian population, the amount and severity were still significant to trigger public interest. The uncertainty of the moratorium (caused by the unspecified time-limit) could be explained by the uncertainty caused by the crisis itself. Additionally, the government presented the Court with the applicant’s status regarding the apartment as noted in the land registry – instead of being associated as the owner, his claim to the apartment was documented under ‘auction buyer’. With this in mind, the government posited that the aforementioned fact negated legitimate expectations that only an owner could have towards the property.
The Court’s decision
The applicant’s status of ownership was verified by the Court, who declared that legitimate expectations had been raised due to the rightful belief that proper registration of status would happen following payment. As evident, the inability of the applicant to take action resulted in an interference by the State of his right. The point of contention was thus whether the interference was justified. For this to be the case, the weight of public interest, the domestic law and the general principles of international law were analysed with special regard to the criteria of pursuing a legitimate aim and striking a fair balance between housing rights and property rights.
In deciding the matter, the Court firstly noted that the basis for the measure in domestic law was never declared unconstitutional. Therefore, the restriction to the applicant’s right was subjected to conditions provided for by law. Secondly, the moratorium pursued a legitimate aim, namely the prevention of a multitude of evictions, as well as the prevention of irreversible harm to consumers resulting from unfair loan terms. Thirdly, the Court ruled that the moratorium was proportionate. Due to the wide margin of appreciation granted to States under article 1 Protocol No. 1, it is noted in case law that a system that momentarily freezes court proceedings, but later on allows the reinstatement of a landlord in his property, is not inherently unlawful. Consequently, ownership was merely delayed, not denied, which is permitted under the second paragraph of article 1 – it contains the rule that the State should be able to control the use of property while enforcing laws, which in this case points to the moratorium.
For the reasons above, the effects of the moratorium on the applicant were justified. While it was true that initially the moratorium had no end date, this was set through subsequent legislation that was passed not more than seven months after evictions were frozen. Thus, because the state of uncertainty did not persist and the interference was limited, no violation was found to the applicant’s right to peaceful enjoyment of possessions under article 1 of Protocol No. 1.
Sometimes ensuring the effectiveness and practicality of the human right to housing means that other individual rights are compromised.
Finally, the applicant resorted to Article 14 of the ECHR (prohibition of discrimination), on the ground that the moratorium did not apply to State actors. According to the applicant this was discriminatory, as he could have undertaken similar actions to that of the State, such as offering subsidised housing to workers. The government disagreed, arguing that the functions performed by State entities while representing the public interest could not be achieved on the same scale in the private sector. As State measures can be seen as a reflection of a more general social policy, in this case the preservation of rural communities, the government successfully asserted that differential treatment was justified in the light of the wide margin of appreciation afforded to States. For the lack of demonstration on the part of the applicant that their situation was comparable to that of the State, the Court dismissed the claim of the applicant.
Rights of the Individual in the Community – the Court’s Reserved Approach
Sometimes ensuring the effectiveness and practicality of the human right to housing means that other individual rights are compromised, such as the right to property, as happened in the case of Béla Néméth v Hungary. The ideology behind the right to property may explain its position as a secondary priority: it is argued that the right to property only exists when necessary for subsistence (see American Declaration on the Rights and Duties of Man, article XXIII). The very same rationale may lie behind the loophole in the current moratorium in force in the United States, where eviction proceedings are possible during such a moratorium if the landlord themself or their close family move to the property in question. The trend insinuating that property rights should aim to uphold basic subsistence is also present in the Court’s case law.
It is argued that the right to property only exists when necessary for subsistence.
With this in mind, it is surprising that the judgement at hand did not further inspect the economic position of the applicant in determining the magnitude of the individual burden. It is unclear if the applicant wished to move into the property himself during the two years of the moratorium and if so, whether he would have been compensated. This shows some hesitation on the part of the Court to recognise an independent right to subsistence. The lack of analysis on the economic position of the applicant may be explained through the proportionality test – the protection of subsistence through the right to property is not guaranteed, but likely to be taken into account in said test. In the case at hand, maintaining the right to a home for as many people as possible outweighed these concerns. Until this day, foreign currency loans remain in Hungarian headlines and have facilitated the effects of the Covid pandemic, leading to another moratorium that has only recently been lifted. By showing the importance and weight of the right to housing during a national emergency, the case Béla Néméth v Hungary will surely be significant case law for the future cases of the pandemic.