Rent-law compensation sticks to the Strasbourg formula

The Constitutional Court on 29 January 2026 raised the compensation owed to owners whose house became a controlled lease when a temporary emphyteusis ended. It held that courts should apply the criteria of the European Court of Human Rights for such losses unless the case shows specific reasons to depart from them. The case is C.M. vs M.C., and the court also held that the power to award compensation comes from Maltese law, not from the Convention itself.

The facts

The plaintiffs own a house that they granted by temporary emphyteusis, a lease for a fixed term against ground rent, in the 1980s. When the term ended in 2001, the occupier and her husband stayed on under a lease created by article 12 of the Housing (Decontrol) Ordinance (Chapter 158 of the Laws of Malta). The rent started at Lm210 a year and was later revised to €514.45 a year.

The First Hall of the Civil Court, in its constitutional jurisdiction, found on 15 November 2023 that the lease breached the owners' right to property under article 1 of the First Protocol to the European Convention on Human Rights. It limited the breach to the years from 2001 to 2018, when Act XXVII of 2018 gave owners a way to seek a rent review.

The first court ordered the State Advocate to pay €20,700: €15,600 for pecuniary loss and €5,100 for non-pecuniary loss. The owners appealed on the amount. The State Advocate filed an incidental appeal, arguing that article 41 of the Convention could not ground an award by a Maltese court.

What the court held

Chief Justice Mark Chetcuti, Mr Justice Giannino Caruana Demajo and Mr Justice Anthony Ellul first dealt with the owners' plea that the incidental appeal was null. The owners argued that the State Advocate had not declared that he was availing himself of the main appeal, as article 240(2) of the Code of Organization and Civil Procedure (Chapter 12) requires.

The court accepted that some case law treats that declaration as needed for validity, and that the words were not used. It rejected that reading as artificial. It followed an older line holding that it is enough if the reply shows a clear intention to appeal from part of the judgment.

On the incidental appeal, the court held that the State Advocate was technically right. The power to give a remedy for a breach of fundamental rights comes from article 4 of the European Convention Act (Chapter 319), not from article 41 of the Convention, which is not part of domestic law. The court noted that this changed nothing of substance.

On the main appeal, the court held that the Strasbourg criteria are only indicative and do not bind it. Still, it held that "fl-interess tal-uniformità u prevedibilità tas-sentenzi l-qorti ma għandhiex titbiegħed minnhom sakemm ma jintwerewx raġunijiet speċifiċi għall-każ partikolari" (in the interest of uniform and predictable judgments the court should not depart from them unless specific reasons for the particular case are shown).

No such reasons were shown. For the loss between June 2001 and June 2018, the court put market rent at €57,125.08, cut it by 30% and then by 20%, and deducted €8,829.07 in controlled rent. It raised the pecuniary award to €23,000.

The court refused a one-off 5% addition. It reasoned that market rent would have been taxed, while compensation for a breach of a fundamental right is not taxable.

On moral damages, the court held that "ma hemm l-ebda regola li torbot illi l-kumpens għal danni morali għandu jkun ta’ ħames mitt euro (€500) għal kull sena" (no binding rule sets moral damages at €500 for each year). It saw no reason to disturb the €5,100 awarded, so the total came to €28,100. The owners bear one-third of the costs of the main appeal and the State Advocate two-thirds.

Why it matters

Owners in controlled-lease claims can expect the Constitutional Court to work out pecuniary loss on the Strasbourg criteria and to correct an award that departs from them without stated reasons. Moral damages remain a matter of discretion, so a claim built on €500 a year is only a guide. Pleadings should seek compensation under article 4 of Chapter 319, not article 41 of the Convention.

Where it sits

The case applies the control-of-use rule in the second paragraph of article 1 of the First Protocol. A law that fixes rent must strike a fair balance between the general interest and the owner, and an owner who carries an excessive burden is owed a remedy. The first court found that balance missing for the years before Act XXVII of 2018, and that finding was not in issue on appeal.

The criteria come from the European Court of Human Rights (25 March 2021). That court accepted a reduction of about 30% for the legitimate social aim of the law, and of at least 20% because the property would not necessarily have been let throughout.

On the 5% addition, the court followed its own judgment of 30 June 2021, and on moral damages it referred to its judgment of 23 June 2025. On the incidental appeal, it preferred the Court of Appeal (30 June 1947) to the stricter line of the Court of Appeal (5 October 2018) that the owners relied on.

Source

Constitutional Court, C.M. vs M.C., 583/2022/1, 29 January 2026: 583/2022/1