SPAIN’S “land-grab” law, which has allowed developers to plunder land belonging to foreign homeowners, may be about to face its biggest challenge yet — in the courts.

The battle lines between campaigners fighting the law and the politicians of Valencia who defend it are about to move from Spain to the European Court of Human Rights in Strasbourg and the European Court of Justice.

British, French, German and Spanish homeowners who lost out under the law are to claim that their human rights have been abused by the Valencian authorities because they failed to respect their basic right to property.

A group of up to 30 plan to take cases to Strasbourg. The European Commission has also denounced the “new” version of the land grab law, introduced in February, for failing to abide by EU law — just as it did with the original one.

The EU says the new law contravenes European law on individual property rights. It gave the Valencia regional government two months to come up with good answers or be hauled before the European Court of Justice.

The European Commission has demanded to know why no environmental studies were carried out on three big building projects that took advantage of the land grab law.

Valencia could face unlimited fines as, under EU law, every project worth more than €806 million (£4.13 million) can go ahead only after an environmental study is carried out.

If Valencia still refuses to pay, the EU may threaten to withhold aid destined for large development projects in Spain. This might sting the Socialist Government in Madrid into bringing the Valencian politicians to heel.

Against this background, campaigners believe Valencia’s regional government has arrogantly paid no heed to threats from the EU and the European Parliament. Last year the parliament fiercely criticised the land-grab law in a report after receiving a petition from 15,000 foreign and Spanish homeowners.

The Urban Planning Regulation Law, which came into force in 1994, allows developers to purchase homes compulsorily and redesignate rural land for urban development. Originally, it was designed to stop speculation by developers, who would hold on to rural land until the price went up.

But, according to the European Parliament, it has been manipulated by ruthless developers who simply ask local authorities to reclassify rural land as “urban”. The developers then force homeowners to pay for amenities such as roads, lighting, sewage or water supplies.

Some of those homeowners, because they retired to Spain, cannot meet bills of tens of thousands of pounds and are forced to sell up.

Under mounting political pressure, the Valencian regional government amended the planning law, extending the consultation period in which affected homeowners can object to a compulsory purchase from 20 days to 3 months. It did not change the power to redesignate land, which is widely perceived as hugely favourable to developers.

Charles Svoboda, president of the No to Urban Abuses campaign, says that things are actually worse under the Valencian law. “If the town hall ignores a complaint, then an application is automatically approved,” he said.

“And they do not have to build on the land they have ‘grabbed’. They can just borrow money against it — though they have bought it at cheap rates as it was classified as rural.” He added: “I think there has been a definite drop in interest in people buying homes here because people have seen the way Spain has behaved.”

Maureen Marsh, 64, a retired legal secretary, who lives with her husband Michael in Albatera, near Alicante, is one of the first Britons to consider going to the European Court of Human Rights after a direct appeal to King Juan Carlos failed to stop her property being threatened. The Marshes face a bill of more than £80,000 for a 12-metre-wide road which would run through the land next to their three-bedroom home after surrounding land was “grabbed”.

She was allowed to see the plans that threatened her property only after she finally wrote to the King. Mrs Marsh said: “We cannot afford to pay the bill. This is our last hope.”

Michael Cashman, a Labour MEP who has supported Britons who have lost their homes, said: “An un-transparent and complicated law is being exploited by unscrupulous businesses and officials in Valencia.”

No developers would talk to The Times for this article. But Rafael Blasco, the Valencian land and homes minister, denied that the law was unfair. “The new law guarantees a transparent process with all the guarantees for the property owners,” he said.

Times recommends

• Second homes: credit crunch casualty or money-spinner?
• How I built my own sliding house
• Top 10 incentives for house buyers