European Court of Human Rights

The Commission’s request referred to Articles 44 and 48 (art. 44, art. 48) and to the declaration whereby Sweden recognised the compulsory jurisdiction of the Court (Article 46) (art. 46). The purpose of the request was to obtain a decision as to whether or not the facts of the case disclosed a breach by the respondent State of its obligations under Article 6 para. 1 (art. 6-1) of the Convention and Article 1 of Protocol No. 1 (P1-1).

Subsequently, the newly elected judge of Swedish nationality, Mrs E. Palm, who took up her duties before the hearing, replaced Mr Lagergren, who had resigned (Rule 2 para. 3) and Mr R. Macdonald, substitute judge, replaced Mr Carrillo Salcedo, who had withdrawn (Rule 22 para. 1 and Rule 24 para. 2).

By letter of 25 October 1988, the Secretary to the Commission informed the Registrar that the Delegate would submit his observations at the hearing. On 23 March 1989 the Commission submitted certain documents the production of which had been requested by the President.

There appeared before the Court:

- for the Government

       Mr H. Corell, Ambassador,

                            Under-Secretary for Legal and Consular Affairs,        Agent,

       Mr L. Lindgren, Legal Adviser,

                            Ministry of Health and Social Affairs,

       Mr P. Boqvist, Legal Adviser,

                            Ministry for Foreign Affairs,                                  Advisers;

- for the Commission

               Mr Gaukur Jörundsson,                                                Delegate;

- for the applicant

       Mr G. Ravnsborg, Lecturer in Law

                            at the University of Lund,                                        Counsel.

The Court heard addresses by Mr Corell for the Government, by Mr Gaukur Jörundsson for the Commission and by Mr Ravnsborg for the applicant, as well as their replies to certain of its questions. Replies by the Government and the applicant to the remaining questions, as well as their observations on the application of Article 50 (art. 50), were received at the registry on various dates between 10 April and 31 May 1989. The Delegate of the Commission made no comments on the Article 50 (art. 50) issue.

AS TO THE FACTS

I.   THE PARTICULAR CIRCUMSTANCES OF THE CASE

A. Background to the case

1. Investigation by the tax authorities

On 1 February 1988, however, the County Court (Länsrätten) reduced this amount to approximately one half and the local tax department in Helsingborg issued the corresponding reassessment notice (omräkningsbesked).

2. Criminal proceedings against Mrs Flenman

On 27 May 1983 the District Court (Tingsrätten) of Helsingborg acquitted her on the following grounds: it was not established either that the result of the calculations concerning alcohol and tobacco could be explained by book-keeping mistakes, or that the discrepancies regarding the period from 6 to 17 March 1980, which were due to the absence of a cash register, had been caused deliberately or through gross negligence; and the other alleged discrepancies could not be considered to be of such a nature and extent as seriously to hinder control, within the meaning of the said section 10.

B. Proceedings concerning the withdrawal of the licence

1. Introduction

On 10 June 1982 the Police Board submitted a negative opinion, on the basis of a complaint filed against Mrs Flenman by the tax authority (see paragraphs 11 and 12 above); in its opinion, her capacity to deal with the serving of alcoholic beverages was open to doubt. The Social Council likewise expressed a negative opinion on 5 July.

After TTA had been given the opportunity to file its own observations, the County Administrative Board decided on 29 October 1982 to postpone its ruling on the request until it had finally determined whether the company could be considered fit to hold a licence to serve alcoholic beverages.

2. Proceedings before the County Administrative Board

After TTA had filed observations, its representatives produced the current books of the company to the County Administrative Board. They stated that the discrepancies as regards the sale of alcoholic beverages were due to thefts.

"In view of what was established during the audit and as the company has not been able to explain the discrepancies satisfactorily, the County Administrative Board finds that there are reasons to revoke the licence under section 64 of the 1977 Act. Accordingly, it ought to be revoked now. The only argument against a revocation is that the negligence took place in the spring of 1980, that is almost three years ago. As far as has been ascertained, no criticism has been levelled against the management of the restaurant thereafter. Against this background, the County Administrative Board has not found it necessary to revoke the licence. Instead it issues a serious admonition against the company pursuant to section 64 of the 1977 Act."

"REGULATIONS

1. This licence is not transferable.

2. There must be a person responsible for serving ....

3. Alcoholic beverages may not be served unless the person responsible or his or her substitute is present ....

4. Any change of activity should be reported to the County Administrative Board ....

5. This licence or a copy thereof shall be exhibited in the restaurant.

6. The activities shall be carried on in such a way as not to be aimed at a young public, i.e. under 22 years of age. The licence-holder is therefore obliged to take this into account, inter alia when advertising.

The County Administrative Board recalls that the licence has been granted on the assumption that the provision of cooked food will be a major part of the business and that the company, in accordance with its ‘programme’, does not intend to run a discotheque. It is further noted that the company has undertaken to discourage too young a clientele by its choice of music and by not playing recorded music.

The County Administrative Board orders that serving shall end at 2 a.m."

In the latter respect the Council relied on the report of an inspection carried out at the restaurant on 13 February 1982. This revealed, inter alia, that the restaurant was then overcrowded, many customers not having seats; that most of the customers, whose ages ranged from 18 to 25, were 18 years old; and that in the upper part of the premises there was a discotheque which was open all evening. According to the conditions of the licence, there was to be live dance-music and activities were to be aimed at young people above the age of 22.

On 10 February 1983 the applicant company was given an opportunity to file observations on the appeal. It did so on 22 March 1983.

"The provisions of section 64(2) of the 1977 Act are connected, inter alia, with the requirement in section 40 of the 1977 Act that a new holder of a licence must be suitable. This requirement of suitability has in practice been considered to include a requirement of personal suitability to sell alcoholic beverages, an activity involving great social responsibility. As regards companies, this requirement is applicable to those individuals who have a considerable influence on the business.

The unsuitability of the licence-holder which constitutes a reason for revoking the licence may be of many different types. In the Bill 1981/1982: 143, page 82, economic mismanagement, even if it is not criminal, is given as one example of personal unsuitability.

According to section 70 of the 1977 Act, the book-keeping of a business involved in the sale of alcoholic beverages must be such as to permit control of the business.

In the instant case the County Administrative Board referred to an audit report as the basis for its decision. From this report it appears that the book-keeping of AB Citykällaren was deficient in several respects. For instance, there are differences to be found concerning the recorded sale of beverages. The explanations given by the company regarding, inter alia, thefts of such beverages show, in the opinion of the National Board of Health and Welfare, that those who have had a decisive influence on the business have failed to demonstrate sufficient competence regarding both book-keeping and internal control. Section 64 of the 1977 Act is therefore applicable in this case.

The National Board of Health and Welfare finds that the deficiencies concern compliance with section 70 of the 1977 Act and, as far as suitability is concerned, are of such a nature that a measure other than revocation of the licence cannot be considered. The fact that in the instant case the District Court has rejected the charges of hindering a tax investigation does not affect this assessment.

In view of the above the appeal is allowed.

The National Board of Health and Welfare quashes the decision under appeal and refers the matter back for further action."

This decision was not open to appeal.

On 15 August 1983 the National Board of Health and Welfare rejected the appeal. It considered that, having regard to its previous decision, there were no reasons to depart from the general rule in section 67 of the 1977 Act that decisions under that Act should take effect immediately. This decision was not open to appeal.

On 16 February 1984 the Government decided to refer the claim for compensation to the Chancellor of Justice (justitiekanslern) and not to take any measures in the matter as regards the other issues. On 5 March 1984 the Chancellor of Justice expressed the opinion that the claim for compensation should be rejected; he found no indication that any authority had committed any error which could make the State liable under the Tort Liability Act 1972 (skadeståndslagen; see paragraph 32 below).

II.   RELEVANT DOMESTIC LAW AND PRACTICE

The present Act on the Sale of Beverages was adopted in 1977 and regulates trading in beer, wine and liquor. It also lays down rules on the serving of these beverages for consumption on the premises of restaurants and bars as well as on the issuing of licences for and inspection of these premises. The Act is supplemented by an Ordinance on the Sale of Beverages (förordning om handel med drycker).

"In examining whether to issue a licence special regard should be had to the need for the restaurant, the applicant’s suitability and the suitability of the premises for the purpose."

Licences are issued by the County Administrative Board in the county where the premises are situated. When the application concerns a new establishment for the serving of alcoholic beverages, the County Administrative Board has to consult the local municipal council (kommunfullmäktige) and the local police authority before a decision is taken. Even in cases concerning the transfer of licences to new owners, extended serving-hours and the revocation of licences the County Administrative Board may consult these local authorities.

The County Administrative Board has to inform the local Social Council of its decisions concerning the serving of alcoholic beverages. For their part, the Social Council and the police have to inform the County Administrative Board of such circumstances as may be relevant in connection with the application of the 1977 Act.

"1. The licensing authority shall revoke the licence or limit it to certain beverages where such sale of alcoholic beverages as takes place under a licence according to this Act causes annoyance relating to public order, drunkenness or disturbance of the peace or where the provisions of this Act or the conditions imposed under it are not complied with. If it may be assumed that a satisfactory situation can be achieved without such a severe measure, the licence-holder may instead be given an admonition or special instructions.

2. The first paragraph also applies, mutatis mutandis, if the conditions for granting a licence are no longer satisfied.

3. In cases covered by the first or the second paragraph the approval of a director or a substitute director may be withdrawn."

"The first paragraph also applies when the licence-holder can no longer be considered suitable to sell alcoholic beverages or when for other reasons the conditions for granting a licence are no longer satisfied."

In this connection, the Government’s Bill (p. 82) referred to recent complaints filed before the National Board of Health and Welfare concerning revocation of licences on account of economic mismanagement by the licensee. The Bill also stated (p. 87) that the amendment would make it clearer that economic mismanagement may be a reason for considering the licence-holder unsuitable, even if the sale of alcoholic beverages has been carried out in conformity with the applicable legislation. Only considerable economic mismanagement is relevant in this connection. Anyone who systematically mismanages the payment of taxes and contributions or seriously disregards his obligations regarding book-keeping or the supplying of information shall be considered unsuitable to hold a licence. It is, however, not a condition that the mismanagement is criminal or even intentional. A considerable degree of negligence in the performance of these obligations can also constitute sufficient reason for intervention.

"The book-keeping of an establishment which carries on the sale of alcoholic beverages shall be so organised as to permit control of the activities. The manager of the establishment is obliged to produce the books of the establishment at the request of the licensing authority. He is also obliged to produce statistical information pursuant to the regulations issued by the Government or, after the Government’s decision, by the National Board of Health and Welfare."

The travaux préparatoires of section 70 state that unsatisfactory book-keeping is in itself proof of unsuitability to conduct a business involving the sale of alcoholic beverages.

PROCEEDINGS BEFORE THE COMMISSION

In its report of 10 November 1987 (Article 31) (art. 31), the Commission expressed the opinion:

(a) by ten votes to one, that there had been no violation of Article 1 of Protocol No. 1 (P1-1);

(b) by nine votes to two, that there had been a violation of Article 6 para. 1 (art. 6-1) of the Convention.

The full text of the Commission’s opinion and of the dissenting opinion contained in the report is reproduced as an annex to the present judgment.

AS TO THE LAW

I.   ALLEGED VIOLATION OF ARTICLE 6 (art. 6) OF THE CONVENTION

"1. In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a ... hearing by [a] ... tribunal ....

2. Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law."

The first issue to be resolved is the applicability of Article 6 para. 1 (art. 6-1) and, in particular, whether the case involved a "determination" either of a "civil right" or of a "criminal charge".

A. Applicability of Article 6 para. 1 (art. 6-1)

1. Determination of "civil rights and obligations"

(a) Existence of a dispute ("contestation") over a "right"

First of all, subject to the possibility of its being revoked, the licence conferred a "right" on the applicant company in the form of an authorisation to sell alcoholic beverages in the restaurant Le Cardinal in accordance with the conditions set out in the licence and with the provisions of the 1977 Act (see, mutatis mutandis, the above-mentioned Pudas judgment, Series A no. 125-A, p. 15, para. 34). Section 64 of this Act prescribes the conditions under which a licence to serve alcoholic beverages may be revoked (see paragraphs 27-28 above), that is to say, where the sale of alcoholic beverages causes annoyance relating to public order, drunkenness or disturbance of the peace or where the conditions of the licence or the provisions of the 1977 Act, including the requirement of suitability of the licensee, are not complied with. The last condition allows the competent administrative authorities a certain discretion; decisions revoking licences of this kind must, however, be taken within the framework of the 1977 Act. In the instant case, the National Board of Health and Welfare, in giving its decision of 13 July 1983 as to the suitability of TTA, interpreted section 64 in conjunction with sections 40 and 70 of the Act, and arrived at the conclusion that the only possible action was the revocation of the licence (see paragraph 19 above).

In assessing the circumstances of the case in accordance with the 1977 Act, the competent authorities could have taken, under section 64(1), measures less severe than revocation, such as limiting the licence to certain alcoholic beverages, an admonition or special instructions (see paragraph 27 above). In this connection reference may in fact be made to the first decision of the County Administrative Board, dated 7 January 1983, in which it considered it sufficient to issue a serious admonition against the applicant company (see paragraph 16 above).

Furthermore, the proceedings in question led to the withdrawal by the County Administrative Board on 18 July 1983 of the applicant company’s licence (see paragraph 20 above), and were thus directly decisive for the right at issue.

(b) "Civil" character of the right at issue

Finally, the Government argued that it had not been established that the licence in question was essential to the applicant’s entire activity and that, therefore, the effect of its revocation on TTA’s business had in fact been only "indirect or tenuous".

It is true that in Sweden the wholesale distribution of alcohol is a State monopoly; however, the serving of alcoholic beverages in restaurants and bars is entrusted mainly to private persons and companies through the issuing of licences (see paragraph 24 above). In such a case, the persons and companies concerned carry on a private commercial activity, which has the object of earning profits and is based on a contractual relationship between the licence-holder and the customers (see the above-mentioned Pudas judgment, Series A no. 125-A, p. 16, para. 37).

Taking into account these circumstances, the Court is of the view that the features of public law mentioned by the Government do not suffice to exclude from the category of "civil rights" within the meaning of Article 6 para. 1 (art. 6-1) the rights conferred on TTA by virtue of the licence.

(c) Conclusion

2. Determination of a "criminal charge"

It follows that Article 6 para. 1 (art. 6-1) is not applicable to the case in this respect; nor are Article 6 para. 2 and Article 7 (art. 6-2, art. 7).

B. Compliance with Article 6 para. 1 (art. 6-1)

In these circumstances, this remedy does not meet the requirements of Article 6 (art. 6).

C. Conclusion

II.   ALLEGED VIOLATION OF ARTICLE 13 (art. 13) OF THE CONVENTION

Taking into account that the requirements of Article 13 (art. 13) are less strict than, and are here absorbed by, those of Article 6 para. 1 (art. 6-1), and that it has already found a violation of the latter Article (art. 6-1) (see paragraph 50 above), the Court does not find it necessary to consider the matter further (see, inter alia, the above-mentioned Pudas judgment, Series A no. 125-A, p. 17, para. 43).

III.  ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1 (P1-1)

"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."

A. Applicability of Article 1 of the Protocol (P1-1)

Like the Commission, however, the Court takes the view that the economic interests connected with the running of Le Cardinal were "possessions" for the purposes of Article 1 of the Protocol (P1-1). Indeed, the Court has already found that the maintenance of the licence was one of the principal conditions for the carrying on of the applicant company’s business, and that its withdrawal had adverse effects on the goodwill and value of the restaurant (see paragraph 43 above).

Such withdrawal thus constitutes, in the circumstances of the case, an interference with TTA’s right to the "peaceful enjoyment of [its] possessions".

B. The Article 1 (P1-1) rule applicable to the case

The Court finds, however, that the withdrawal of TTA’s licence to serve alcoholic beverages in Le Cardinal constituted a measure of control of the use of property, which falls to be considered under the second paragraph of Article 1 of the Protocol (P1-1).

C. Compliance with the requirements of the second paragraph

1. Lawfulness and purpose of the interference

The Court’s power to review compliance with domestic law is limited. It is in the first place for the national authorities to interpret and apply that law (see the Chappell judgment of 30 March 1989, Series A no. 152-A, p. 23, para. 54), and nothing in the above-mentioned decision suggests that it was contrary to Swedish law.

Neither is there anything in the facts to support the applicant company’s contention that the revocation of its licence did not seek the same purpose as the 1977 Act. In the said decision, the National Board of Health and Welfare had referred to the "great social responsibility" involved in the selling of alcoholic beverages, and had concluded, taking into account the explanations given by TTA as to the thefts of such beverages, that "those who have had a decisive influence on the business have failed to demonstrate sufficient competence regarding both book-keeping and internal control" (see paragraph 19 above).

Thus, the withdrawal of TTA’s licence was lawful and pursued the general interest.

2. Proportionality of the interference

It is true that the measure in question could have been foreseen, especially after the County Administrative Board had informed TTA on 4 November 1982 that it was considering taking this course of action (see paragraph 15 above). But it must be borne in mind that, after that date, the competent authorities took three positive decisions in respect of the applicant company: on 7 January 1983 the County Administrative Board decided in the same proceedings to issue only an admonition against TTA under section 64, having regard to the considerable time which had elapsed - almost three years - since the discrepancies in the book-keeping of AB Citykällaren had occurred and to the fact that in the meantime there had been no further deficiencies (see paragraph 16 above); on 14 January the same Board renewed the applicant company’s licence for Le Cardinal, extending the serving hours until 2.00 a.m. (see paragraph 17 above); and on 27 May the District Court of Helsingborg acquitted Mrs Flenman of the offence of hindering control by the fiscal authorities (see paragraph 13 above).

On the other hand, the discrepancies in the book-keeping of AB Citykällaren concerning the sale of alcoholic beverages were very significant in relation to the total turnover of the company (see paragraph 11 above). The fact that, according to TTA’s representatives, these discrepancies were due to thefts does not invalidate the conclusion of the National Board of Health and Welfare that this showed inadequate book-keeping and internal control (see paragraphs 15 and 19 above), though the District Court had found that the existence of intent or gross negligence had not been established (see paragraph 13 above).

Even though the County Administrative Board and the National Board of Health and Welfare could have taken less severe measures under section 64 of the 1977 Act (see paragraph 27 above), the Court, having regard to the legitimate aim of Swedish social policy concerning the consumption of alcohol, finds that the respondent State did not fail to strike a "fair balance" between the economic interests of the applicant company and the general interest of Swedish society.

3. Conclusion

IV.   APPLICATION OF ARTICLE 50 (art. 50) OF THE CONVENTION

"If the Court finds that a decision or a measure taken by a legal authority or any other authority of a High Contracting Party is completely or partially in conflict with the obligations arising from the ... Convention, and if the internal law of the said Party allows only partial reparation to be made for the consequences of this decision or measure, the decision of the Court shall, if necessary, afford just satisfaction to the injured party."

The applicant company sought compensation for pecuniary damage and reimbursement of its costs and expenses.

A.   Pecuniary damage

No award can therefore be made in respect of pecuniary damage.

B.   Costs and expenses

(a) the fees of Mr Bergkrans, TTA’s counsel during the initial phase of the domestic proceedings (16,000 SEK);

(b) Mr Ravnsborg’s fees - 65 hours’ work at 1,400 SEK per hour (91,000 SEK);

(c) the expenses in connection with Mr Ravnsborg’s journeys to Strasbourg for the proceedings before the Commission and the Court (11,000 SEK).

FOR THESE REASONS, THE COURT

1. Holds by six votes to one that Article 6 para. 1 (art. 6-1) of the Convention is applicable in the present case in its civil aspect but not in its criminal aspect;

2. Holds by six votes to one that there has been a violation of Article 6 para. 1 (art. 6-1);

3. Holds unanimously that it is not necessary also to examine the case under Article 13 (art. 13) of the Convention;

4. Holds unanimously that Article 1 of Protocol No. 1 (P1-1) is applicable in the present case;

5. Holds unanimously that there has been no violation of Article 1 (P1-1);

6. Holds by six votes to one that Sweden is to pay to the applicant company, for costs and expenses, 60,000 (sixty thousand) Swedish crowns;

7. Rejects unanimously the remainder of the claim for just satisfaction.