HAVET & VANHUFFEL – Association d’avocats
In a judgment delivered on 13 May 2026 (Case C-286/25), the Court of Justice of the European Union held that, where a Member State infringes EU law by unlawfully depriving individuals of property rights, the persons concerned must be granted full, effective, and adequate compensation. Consequently, a compensation scheme based solely on the value of the property at the time the rights were withdrawn does not satisfy that requirement, since it fails to take into account the loss of profit suffered by the rights holders, in particular the income they could have derived from the use or lease of the property concerned. The Court further held that EU law, in particular Article 63 TFEU and Article 17 of the Charter of Fundamental Rights, precludes national legislation that makes it excessively difficult to obtain full compensation for damage caused by a sufficiently serious breach of EU law.
The facts
The Regional Court of Győr, Hungary, is hearing a dispute concerning a person holding usufruct rights over agricultural land in Hungary. In 2014, those usufruct rights were automatically extinguished pursuant to a 2013 Hungarian law and removed from the land register.
Following actions brought before it, the Court of Justice of the European Union held, in its judgment of 6 March 2018, SEGRO and Horváth (C-52/16 and C-113/16), that this legislation was contrary to EU law, in particular to the free movement of capital guaranteed by Article 63 TFEU and to the right to property protected by Article 17 of the Charter of Fundamental Rights. It further clarified, in its judgment of 21 May 2019, Commission v Hungary (Usufruct rights over agricultural land) (C-235/17), that the legislation also infringed the right to property guaranteed by Article 17 of the Charter.
Following those judgments, Hungary amended its legislation in 2021 in order to allow the re-registration of unlawfully extinguished usufruct rights and to provide financial compensation. Mr Brandl therefore obtained the reinstatement of his rights together with compensation calculated according to a statutory formula based on the value of the land in 2014 and on the period elapsed between the removal and the reinstatement of the rights.
However, Mr Brandl considers that this compensation is insufficient because it does not cover the entirety of the damage suffered. In particular, he argues that he had previously farmed the land concerned and that, after losing his rights, the land was leased out, causing him a loss of income. He therefore maintains that the compensation should include both the loss of profit suffered during the period in which he was deprived of his rights and the increase in the value of the land during that period.
The Regional Court of Győr shares part of that analysis and doubts whether the national legislation guarantees “fair compensation” within the meaning of EU law. It points out that the current calculation method disregards the potential increase in the value of the property during the relevant period. The court therefore referred questions to the Court of Justice of the European Union as to whether such compensation is compatible with Article 63 TFEU and Article 17 of the Charter of Fundamental Rights.
In its judgment of 21 May 2019 concerning usufruct rights over agricultural land in Hungary, the Court of Justice of the European Union had already held that the automatic extinguishment of certain usufruct rights under the 2013 Hungarian law infringed both the free movement of capital guaranteed by Article 63 TFEU and the right to property protected by Article 17 of the Charter of Fundamental Rights. The present dispute therefore concerns a different issue, namely whether the compensation scheme introduced by Hungary in 2021 genuinely remedies the damage caused by that unlawful deprivation.
The Court’s reasoning
The Court recalls that, under EU law, individuals who suffer damage as a result of a sufficiently serious breach attributable to a Member State are entitled to compensation where there is a direct causal link between the breach and the damage suffered. Those conditions are satisfied in the present case, since the Court’s previous judgments had already established the unlawfulness of the Hungarian legislation and the damage flows directly from the removal of the usufruct rights. Compensation must therefore be effective and adequate in order to ensure genuine protection of the rights of injured parties.
Although Member States enjoy a degree of discretion in determining the rules governing compensation, the Court stresses that they may not adopt rules that render compensation impossible or excessively difficult in practice. It emphasises in particular that, in economic matters, loss of profit cannot be entirely excluded from compensation. In the present case, that loss of profit corresponds to the income which the usufruct holders could have derived from farming or leasing the agricultural land during the period in which their rights had been extinguished.
However, the Hungarian compensation scheme is based solely on the market value of the land at the time the usufruct rights were removed. According to the Court, that criterion does not make it possible properly to assess the income actually lost by the usufruct holders. The potential sale price of the land has no direct connection with the profits that a usufruct holder could have earned from using or leasing the land. Moreover, the scheme does not sufficiently take into account any increase in the value of the land during the years between the extinguishment and the reinstatement of the rights.
The Court therefore concludes that the Hungarian mechanism does not ensure adequate compensation for the damage suffered and is contrary to EU law. Neither the possibility of obtaining supplementary compensation nor the payment of interest is sufficient to remedy that deficiency, since those mechanisms do not ensure genuine compensation for the loss of profit suffered. Consequently, EU law precludes legislation limiting compensation solely to the value of the property at the time the usufruct rights were removed.
The answer to the preliminary question
“EU law must be interpreted as precluding national legislation providing for compensation for damage suffered by the holder of usufruct rights over immovable property following the ex lege extinguishment of those rights, where that extinguishment is incompatible with Article 63 TFEU and Article 17 of the Charter, by means of financial compensation calculated exclusively on the basis of the market value of the property at the time when those rights were removed from the land register.”
To access the judgment, follow the link: https://eur-lex.europa.eu/legal-content/FR/TXT/?uri=CELEX:62025CJ0286.