Landmark case sets precedent for real estate investors

A little-publicised decision by the European Court of Human Rights may have far-reaching repercussions for international property markets in areas ruptured by wars or legal disputes over land ownership.

The court has ordered the Turkish Government to pay €835,000 (Dh4.7 million) within the next three months to a Greek Cypriot refugee for the loss of use of his property in Kyrenia in northern Cyprus, which has been occupied by Turkish troops since 1974.

The court found Turkey guilty of continuous violations of the European Convention of Human Right as a result of its "complete denial of the applicant's rights with respect to his home and the peaceful enjoyment of his property". In other words, just because the applicant was displaced by the invasion, it did not mean he had lost 'title' of the land and should be allowed to return or at least have compensation.

This subject is as dry as dust to most people but to commercial and residential investors putting funds into countries with disputed past – from Montenegro and Kosovo in eastern Europe to new developing locations such as Botswana in Africa – it is of vital importance.

"This is the third successful case dealing with compensation from Turkey in matters of property rights. There are a further 1,500 additional petitions pending before the ECHR. The court decided to freeze them in view of the decisions to be taken regarding the eight pilot cases," says a spokesman for the umbrella groups of displaced people demanding compensation. Until recently no court had taken a view on this. Now that precedents have been set, investors at least know the risks of putting money into troubled regions.