The European Court of Human Rights (ECtHR) has declared inadmissible an appeal alleging that the terms of the financial assistance given by the Troika, which resulted in reductions to retirement pensions, constituted a breach of Article 1 of Protocol 1 of the European Convention on Human Rights (ECHR).
Following the negotiation of a joint financing package between the Portuguese Government and the EU, ECB and IMF in April 2011, a number of measures were taken by the State in accordance with the terms of the bailout so as to improve its financial situation and ensure continued financial assistance from the EU. These included the introduction of additional taxes on pensions over a certain amount, called the Extraordinary Solidarity Contribution (Contribuição Extraordinária de Solidariedade, or CES). The CES was introduced with the intention of being an “exceptional and temporary measure.” Once implemented in the State Budget Acts of 2013 and 2014, it had the effect of reducing the applicant’s overall monthly income from her pension. In Da Silva Carvalho Rico v. Portugal, she claimed that the policies adopted as part of the overall financial package breached her right to property under Article 1 of Protocol 1 of the ECHR.
In its ruling, the ECtHR stated that Article 1 does not create a right to acquire property or to social security entitlements. However, where a State has developed legislation which provides for the payment of a welfare benefit, then that legislation must be regarded as creating a proprietary interest per Article 1. Thus, the reduction or discontinuance of a pension may constitute a breach of property rights under the ECHR.
The Court rendered its decision with reference to three central issues: the lawfulness of the interference, public interest and proportionality. The Court held that the implementation of the CES did constitute an interference with the applicant’s property rights. However, as the interference had been prescribed by law in the form of the State Budget Acts 2013 and 2014, and found lawful by the Portuguese Constitutional Court, the CES was deemed in accordance with Article 1 of the ECHR.
With regard to consideration of the public interest, the Court noted that “[a]ny interference by a public authority with the peaceful enjoyment of possessions can only be justified if it serves a legitimate public (or general) interest.” Considering the “extreme economic situation” in which the Portuguese Government was operating, the implementation of the CES and other austerity measures was clearly in the public interest and intended to bring about medium-term economic recovery.
Finally, the Court determined that the measures taken by the Portuguese Government were within the limits of the margin of appreciation afforded to it and did not result in the appellant suffering a substantial deprivation of her income. Thus, the Court noted that the measures adopted in the form of the CES and other austerity measures were proportionate given the overall public interests at stake in Portugal at the time, and the limited extent and temporary effect on the applicant’s pension.
Click here to read the full judgment of the ECtHR.