THIRD SECTION
DECISION
AS TO THE ADMISSIBILITY OF
Application no. 12637/05
by PLÅT RÖR OCH SVETS SERVICE I NORDEN AB and OTHERS
against Sweden
The European Court of Human Rights (Third Section), sitting on 26 May 2009 as a Chamber composed of:
and ,
Having regard to the above application lodged on 21 March 2005,
Having deliberated, decides as follows:
THE FACTS
1 .  The first applicant (the applicant company) is a Swedish limited liability company, Plåt Rör och Svets Service i Norden AB. The other applicants, Mr P. Ernmark (the second applicant), Mr C. Hedberg (the third applicant), Mrs L. Brandtler (the fourth applicant) and Mrs A. Bergqvist (the fifth applicant), all of whom are Swedish nationals and live in the south of Sweden, are the owners of the applicant company. The applicants are represented before the Court by the second applicant.
2 .  The second applicant has also made some separate complaints. He is, regarding these complaints, represented before the Court by Mr. P. Friis, a lawyer practising in Malmö.
A.  The circumstances of the case
3 .  The facts of the case, as submitted by the applicants, may be summarised as follows.

1. The proceedings related to the applicant company

4 .  In January 2003 the Tax Authority decided to perform a tax audit of the applicant company. On 12 March 2003 a preliminary audit report (förhandspromemoria) was drawn up.
5 .  In March 2003, on the basis of the findings of the preliminary audit report, the Tax Authority requested the County Administrative Court (länsrätten) of the County of Skåne to sequestrate (belägga med betalningssäkring) the applicant company’s 3,341,097 Swedish kronor (SEK) The Tax Authority further requested that the decision be taken without the applicant company having been heard or informed of the request.
6.  The Tax Authority submitted that it had discovered invoices that appeared false (osanna), in that they gave the incorrect impression that the applicant company had hired labour from subcontractors (under-entreprenörer) in order to make deductions for costs and ingoing value-added tax (VAT), thereby avoiding paying employer’s contributions (arbetsgivaravgifter) for its own employees.  Furthermore, the Tax Authority pointed out several defects in the invoices, for example, that they lacked information proving the amount of hours worked and who the customer was. The Tax Authority further claimed, inter alia, that most of the subcontractors had not, during the time they were supposedly supplying the applicant company with labour, accounted for any salaries paid to employees.
7.  On 28 March 2003 the County Administrative Court rejected the request for sequestration as it found that the Tax Authority had not, to a sufficient degree, proven that the applicant company had the alleged tax debt.
8.  The Tax Authority appealed against the judgment to the Administrative Court of Appeal (kammarrätten) in Göteborg, maintaining its claim but no longer requesting that the decision be taken without the applicant company having been heard or informed of it. In particular, the Tax Authority stressed that a representative of one of the subcontractors who had been heard during the preliminary criminal investigation (see § 15 below) initiated by the National Economic Crimes Bureau (Ekobrottsmyndigheten – hereafter “the Bureau”) had denied any knowledge of the applicant company and had denied that he had issued any invoices to it.
9.  On 9 May 2003, on the applicant company’s request, an oral hearing was held before the Administrative Court of Appeal. At the hearing the Tax Authority referred to some interrogation reports (förhörsprotokoll) held with four persons during the Bureau’s preliminary criminal investigation. These reports had, prior to the oral hearing, not been referred to by the Tax Authority. The Administrative Court of Appeal adjourned the hearing for 25 minutes to give the applicant company’s representative time to consider the new material. When the hearing resumed, the applicant company objected to the fact that the Tax Authority had been allowed to refer to selected parts of the very extensive body of information to which only the Tax Authority had access.
10.  At the conclusion of the hearing the applicant company was afforded one week to supplement the grounds for its plea.
11.  The applicant company demanded that the Administrative Court of Appeal reject the Tax Authority’s appeal and that the court grant it access to all the information in the Bureau’s criminal investigation. It submitted that the invoices corresponded to services ordered and paid for and that it had verified that all subcontractors had certificates proving that they were responsible for paying taxes and contributions for their businesses (F‑skattebevis) and who their legal representatives were.
12 .  On 17 September 2003 the Administrative Court of Appeal rendered its judgment in the case. It found that the merits of the case were such as to make it probable that the applicant company would not be allowed to deduct the ingoing VAT. It further considered there to be an obvious risk that the applicant company would try to shirk responsibility for the debt. Therefore, and since the court did not find it disproportionate, it granted the Tax Authority’s request as regards the VAT. However, the court found that it would be in breach of Article 6 of the Convention to sequester the applicant company’s assets corresponding to the estimated tax surcharges. The court, therefore, rejected the Tax Authority’s appeal in that part. The court also found that it could not, within the instant case, try the applicant company’s request to grant it access to all the information in the Bureau’s criminal investigation. Therefore, it dismissed that request.
13 .  Both parties appealed against the judgment.  The Tax Authority requested the Supreme Administrative Court (Regeringsrätten) to sequester an additional part of the applicant company’s assets, corresponding to the debt regarding tax surcharges, whereas the applicant company requested the court to quash the Administrative Court of Appeal’s judgment. In its appeal, the applicant company complained, inter alia, that the Tax Authority had been allowed to use selected information from the criminal investigation and that the applicant company had not been allowed access to the entire investigation.
14 .  On 19 December 2003 the Supreme Administrative Court granted the Tax Authority leave to appeal and, on 22 September 2004, it found that the sequestration of assets to cover tax debts concerning tax surcharges would not be in violation of the Convention, as long as the principle of proportionality and the limitations set out in the Law on sequestration for taxes, tolls and fees (lagen om betalningssäkring för skatter, tullar och avgifter) were respected. The court then noted that the tax debt, including the tax surcharges, had at the time of its judgment been confirmed by the Tax Authority. After having observed that the tax debt concerned a substantial amount, the court found that there was a considerable risk that the applicant company would try to shirk responsibility for the debt. Therefore, and since the court did not find it disproportionate, it granted the Tax Authority’s appeal and sequestrated additional property corresponding to the tax surcharges. In the same judgment, the Supreme Administrative Court refused leave to appeal in all other parts of the case.
15 .  At some point the Bureau had initiated a criminal investigation regarding aggravated tax crimes and aggravated book-keeping crimes against several people involved with the applicant company, including the second applicant. In April 2003 the Bureau conducted a search of the applicant company’s premises, questioned several people and seized part of the applicant company’s books. However, on 30 December 2004 the Bureau dropped the criminal investigation against the second applicant, since it considered that it would not be able to prove that he had committed any criminal acts. In January 2006 the criminal investigation was dropped against the other suspects.
n 15 December 2003
17 .  On 14 January 2004 the Tax Authority decided VATand, i

2. The proceedings against the second applicant

19 .  Some time during 2004 the Tax Authority requested the County Administrative Court of the County of Skåne, in accordance with the rules on personal responsibility for representatives of corporations (företrädar-ansvar), to oblige the second applicant to pay SEK 517,711 with interest to the State.  The Tax Authority claimed that the applicant company, according to the audit report, had issued false invoices to cover up payment of salaries to the applicant company’s own employees. By making deductions for the ingoing VAT in the invoices, the applicant company had, inter alia, wrongfully been awarded repayment of a surplus of ingoing VAT to the amount of SEK 517,711. The Tax Authority further submitted that the second applicant, who owned shares in the applicant company and who had been its only board member and sole representative, had with intent or through gross negligence supplied the authorities with false information which had led to the applicant company being wrongfully awarded repayment of a surplus of ingoing VAT. Moreover, the Tax Authority noted that it had decided in accordance with the information in the tax audit and that neither the applicant company nor the second applicant had appealed against its decision, despite the fact that such a possibility existed before as well as after the Tax Authority had petitioned the County Administrative Court in the present case. Therefore, the Tax Authority argued, no examination of the validity of the underlying tax decision should be made in the present case.
20 .  The second applicant contested the claim. He submitted, inter alia, that the applicant company had not been wrongfully awarded repayment of ingoing VAT and that the Tax Authority had not been able to prove that the invoices were false. The applicant company had not appealed against the Tax Authority’s decision of 14 January 2004 because it had by then been declared bankrupt. Furthermore, he submitted that he had not acted with intent or gross negligence. He had come into an already on-going business and the actual administration of the company had been handled by two other persons who had been responsible for all invoices. The invoices had also been inspected by the applicant company’s accounting consultant, who had made no criticism of the invoices or how the company was run. The second applicant himself had made sure that all the subcontractors had certificates proving that they were responsible for paying taxes and contributions for their businesses and that the companies had complete boards of directors. Therefore, he had had no reason to believe that the invoices were false and no criticism could be made of his management of the company’s administration. Moreover, the second applicant claimed that there were special reasons to remit liability, in full or at least partly, because his influence and involvement in the company’s business had been limited and very brief.
21.  On 30 May 2006, after having held an oral hearing, the County Administrative Court rendered its judgment. It first noted that the second applicant had been a shareholder and the sole member of the board in the applicant company during the time when the incorrect information had been given and that he had signed the tax declarations which had contained the incorrect information. The court further considered that the second applicant had had an obligation to ensure that the applicant company promptly and correctly paid its taxes and fees. In its view, none of his objections were such as to call into question the validity of the underlying tax decision. In any event, the court observed that the second applicant had had the overall responsibility for the management of the company and that he could not relinquish this responsibility to his colleagues. Lastly, it stressed that he had been responsible for ensuring that the information given in the tax declarations was correct. Thus, the court found that the second applicant’s insufficient control over the management of the applicant company amounted to gross negligence. Therefore, and since there were no reasons to remit liability, the court granted the Tax Authority’s request.
22.  The second applicant appealed against the judgment to the Administrative Court of Appeal in Göteborg, requesting, in the first place, that the court reject the Tax Authority’s petition. In the alternative, he requested that the liability be remitted in full or lowered. He maintained his claims and stressed, inter alia, that, despite a lengthy investigation into the applicant company by the Bureau, no one had been charged with any criminal acts.
23.  The Tax Authority disputed the appeal and submitted that the Bureau had dropped the criminal investigation because it had not deemed it possible to prove whether the acts had been committed by the second applicant or another person involved with the company.
24.  On 27 December 2006, after having held an oral hearing, the Administrative Court of Appeal rendered its judgment. It first noted that the case before it had come to concern mainly the question of the significance of the underlying tax decision of 14 January 2004. In this respect, it noted that there had been no appeal against the tax decision and that the second applicant had not requested that the decision be tried in accordance with Chapter 22, section 15 of the Tax Payment Act (skattebetalningslagen). Hence, the court found that, because of the existing possibilities for the second applicant to have the underlying tax decision tried, before as well as after the Tax Authority had petitioned the County Administrative Court in the present case, the validity of the underlying tax decision could not be tried within the instant proceedings. The court then considered that the second applicant’s management of the applicant company had been lacking to such an extent he had to be considered grossly negligent. Therefore, and since there were no special reasons to remit liability, the second applicant’s appeal was rejected.
25 .  The second applicant appealed against the judgment to the Supreme Administrative Court where he maintained his claims. He also complained about the fact that the Administrative Court of Appeal had refused to try the validity of the underlying tax decision within the instant proceedings. Furthermore, he stressed that the criminal investigation against all persons involved in the applicant company had been dropped, for which reason the Tax Authority should not have been allowed to refer to the allegedly false invoices. He further claimed that the courts had violated the presumption of innocence when they based their judgments on criminal acts which had not been proven.
26 .  On 10 May 2007 the Supreme Administrative Court refused leave to appeal.
B.  Relevant domestic law
27 .  The Law on sequestration for taxes, tolls and fees (lagen om betalningssäkring för skatter, tullar och avgifter, SFS 1978:880 – hereafter “the 1978 Act”) contains provisions that give the State a possibility to sequester property to ensure payment for a claim for taxes, tolls, or fees in situations where it is feared that the debtor might otherwise try to shirk payment. The provisions roughly correspond to the provisions on provisional attachment (kvarstad) possible in civil or criminal cases and their purpose is to secure temporarily payment of the State’s claims until voluntary payment of the debt is made or it can be secured through attachment (indrivning).
28.  Section 1 of the 1978 Act states that a debtor’s property may be sequestered to cover the State’s claim for taxes, tolls or fees. If the claim has not yet been confirmed (fastställd), sequestration may be utilised only if there is probable cause (sannolika skäl) to believe that the claim will be confirmed and only to the expected amount of the confirmed claim.
29.  From section 2 of the 1978 Act it follows that sequestration may be used also as regards claims for VAT and tax surcharges.
30.  According to section 4 of the 1978 Act, sequestration may be used only if there is a considerable risk that the debtor will try to shirk payment of the debt and the debt concerns considerable amounts. Furthermore, sequestration may only be used if the reasons for sequestration outweigh the encroachment or harm suffered by the debtor or any other opposing interest.
31.  The Tax Payment Act (skattebetalningslagen, SFS 1997:483 – hereafter “the 1997 Act”) contains, inter alia, provisions regulating how to account for and how to pay one’s preliminary and final tax and VAT. It also prescribes responsibility regarding payment of taxes that can be levied on representatives of corporations.
32.  Chapter 12, section 6 (a) of the 1997 Act states that if a representative of a corporation, with intent or by gross negligence, has supplied incorrect information which has led to the corporation being wrongfully awarded a surplus of ingoing VAT, the representative is responsible for the repayment of the amount with interest, together with the corporation.
33 .  If there are special reasons (särskilda skäl) the liability for the representative may, according to Chapter 12, section 6 (b) of the 1997 Act be remitted, fully or in part.
34.  Chapter 22, section 15 of the 1997 Act states that a representative of a corporation, against whom proceedings in accordance with Chapter 6, section 6 (a) have been instituted, may institute proceedings before a court to have the validity of the underlying tax decision tried.
COMPLAINTS
35 .  The applicants complained under Article 6 §§ 1 and 3 (b) of the Convention that:
a)	the Tax Authority was given an unfair advantage when, at the Administrative Court of Appeal’s hearing, it was allowed to refer to new circumstances which had up to that point been part of the confidential criminal investigation, whilst the applicant company was given only approximately thirty minutes to prepare to refute the new circumstances;
b)	the applicant company was not allowed access to the entire criminal investigation, from which the Tax Authority had chosen to refer only to parts;
c)	the applicant company did not have a possibility to hear any witnesses before the Administrative Court of Appeal.
Furthermore, the applicants complained that the Tax Authority’s actions had caused the applicant company’s owners large economic losses for which they were entitled to compensation in accordance with Article 1 of Protocol No. 1 to the Convention.
36 .  Additionally, the second applicant complained under Article 6 §§ 1 and 2 of the Convention that, in the proceedings against him:
a)	the presumption of innocence was violated when the national courts based their judgments on the underlying tax decision, which in turn was based on the assumption that false invoices had been handled, even though the criminal investigation against him, and everyone else involved with the applicant company, had been dropped;
b)	 the national courts refused to try the validity of the underlying tax decision, although they had an obligation to do so. He further submitted that, under all circumstances, the Administrative Court of Appeal had had an obligation to inform him that, if he wanted to challenge the underlying tax decision, he had to request that this be done in different proceedings;
c)	the national courts did not sufficiently reason their judgments.
THE LAW
A. The complaints concerning the proceedings against the applicant company
37 .  The applicants made several complaints under Article 6 §§ 1 and 3 (b) of the Convention, which insofar as relevant, read as follows:
“1.  In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...
3.  Everyone charged with a criminal offence has the following minimum rights:
...
 (b)  to have adequate time and facilities for the preparation of his defence;
...”

38 .  The Court considers it unnecessary to determine in the present case whether the criminal limb of Article 6 of the Convention is applicable to these proceedings since, in any event, the Court finds that the complaints have to be declared inadmissible for the reasons set out below.
39 .  Firstly, the applicants complained that the Tax Authority was given an unfair advantage when, at the Administrative Court of Appeal’s hearing, it was allowed to refer to new circumstances which had up to that point been part of the confidential criminal investigation, whilst the applicant company was given only approximately thirty minutes to prepare to refute the new circumstances.
40 .  The Court notes that the Administrative Court of Appeal, after the oral hearing, gave the applicant company the opportunity to supplement the grounds for its plea in writing within one week. Moreover, the court did not render its judgment until more than four months after the oral hearing, during which time the applicant company could have submitted further arguments for its consideration. Consequently, the applicant company must be considered to have been afforded sufficient time to refute the new circumstances.
41 .  It follows that this complaint is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.
42 .  Secondly, the applicants complained that the applicant company was not allowed access to the entire criminal investigation, of which the Tax Authority had chosen to refer only to parts.
43 .  The Court notes that the Tax Authority made use of only a limited part of the criminal investigation, namely the reports of interrogations held with four persons. These interrogation reports were also delivered to the Administrative Court of Appeal and to the applicant company. The rest of the criminal investigation was not relied on by the Tax Authority or submitted to the court. The complaint therefore relates to documents that were not in the file produced to the Administrative Court of Appeal and were not those on which the applicant company’s adversary relied (see Bendenoun v. France, 24 February 1994, § 52, Series A no. 284). Thus, the applicant company’s right to a fair trial cannot be considered to have been violated in this respect.
44 .  The Court does not rule out that, in accordance with its case-law (see Bendenoun, cited above, § 52), the concept of a fair trial may nevertheless entail an obligation to supply a litigant, not just with certain documents from a file on him that is being used in proceedings against him, but with the file in its entirety. However, it is necessary, at the very least that the litigant should give, even if only briefly, specific reasons for his request. In this respect the Court observes that, in the instant case, the applicant company sought production in full of an on-going criminal investigation concerning several suspects. The evidence before the Court does not show that the applicant company ever put forward any detailed arguments as to why it should be allowed to receive a copy of the entire investigation file.
45 .  In conclusion, it does not appear from the information available to the Court that the failure to produce the entire criminal investigation infringed the principle of equality of arms or any other aspects of the concept of a fair trial. It follows that this complaint is also manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.
46 .  Thirdly, the applicants complained that the applicant company did not have a possibility to hear any witnesses before the Administrative Court of Appeal.
47 .  In this respect, the Court observes that it does not appear from the minutes of the hearing at the Administrative Court of Appeal, or anywhere else in the case file, that the applicant company requested to have any witnesses heard. Furthermore, the applicant company failed to address this question in its appeal to the Supreme Administrative Court.
48 .  It follows that this part of the application is inadmissible for non-exhaustion of domestic remedies within the meaning of Article 35 § 1 of the Convention, and must be rejected pursuant to Article 35 § 4.
49 .  Lastly, the applicants complained that the Tax Authority’s actions had caused the applicant company’s owners large economic losses, for which they were entitled to compensation in accordance with Article 1 of Protocol No. 1 to the Convention. This provision provides:
“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.”
50 .  The Court finds that the applicants have not provided any material capable of supporting this allegation. It follows that this complaint is  and must be rejected as manifestly ill-founded in accordance with Article 35 §§ 3 and 4 of the Convention.
B. The complaints concerning the proceedings against the second applicant
51 .  The second applicant made several complaints under Article 6 §§ 1 and 2 of the Convention, which insofar as relevant, read as follows:
“1.  In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...
2.  Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law.”

52 .  The second applicant complained that, since the Bureau had dropped the criminal investigation against him and everyone else involved with the applicant company, the presumption of innocence was violated when the national courts based their judgments in the proceedings against him regarding personal responsibility for representatives of corporations on the underlying tax decision.

53 .  The question first arises whether the proceedings were “criminal” within the autonomous meaning of Article 6 of the Convention and thus attract the guarantees under that head. In determining whether an offence qualifies as “criminal”, three criteria are to be applied: the legal classification of the offence in domestic law, the nature of the offence and the nature and degree of severity of the possible penalty (see, among other authorities, Engel and Others v. the Netherlands, 8 June 1976, § 82, Series A no. 22, and Balsytė-Lideikienė v. Lithuania, no. 72596/01, § 53, 4 November 2008).
54 .  The Court first observes that the provisions on personal responsibility for representatives of corporations do not belong to criminal law under the Swedish legal system. The Court further notes that the provisions are targeted, not at the population in general, but at a given group with a particular status, namely persons in leading positions within corporations. Finally, the Court points out that, although the system of personal responsibility for representatives of corporations to some extent seems to be of a deterrent and punitive nature, the main purpose of Chapter 12, section 6 (a) of the 1997 Act appears to be to afford the State pecuniary compensation for the damage caused by the corporation by not paying its VAT. In this regard the Court emphasizes that the amount levied on a representative of a corporation in accordance with the above-mentioned section does not comprise any surcharges, fees or similar punitive elements and can never be higher than the amount imposed on the corporation. Moreover, the responsibility is joint and several. The Court further observes that, although the amount for which the second applicant was held personally responsible was considerable, it could not in any circumstances be replaced by a custodial sentence in the event of non-payment.
55 .  In the Court’s view these aspects, taken as a whole, are not significant enough for the measure imposed on the second applicant to qualify as a “criminal charge”, within the meaning of Article 6 of the Convention. That provision is therefore not applicable under its criminal head. Consequently, this complaint is incompatible  with the provisions of the Convention within the meaning of Article 35 § 3 and must be rejected in accordance with Article 35 § 4.
56 .  The second applicant further complained that the national courts refused to try the validity of the underlying tax decision within the proceedings against him and that, under all circumstances, the Administrative Court of Appeal had had an obligation to inform him that, if he wanted to challenge the underlying tax decision, he had to request that this be done in different proceedings.
57 .  While it is true that the Administrative Court of Appeal found that it could not try the validity of the tax debt within the instant case, the Court notes that the second applicant was in fact not excluded from the possibility to have the validity of the underlying tax decision tried by a court. After the proceedings concerning personal responsibility were instituted against him he could, in accordance with Chapter 22, section 15 of the 1997 Act, have requested to have the validity of the underlying tax decision tried in separate proceedings. The Court considers this possibility sufficient for the purposes of ensuring a fair trial.
58 .  The Court further notes that whether or not the national courts should try the underlying tax decision within the proceedings against the second applicant was a question of dispute between the parties before the lower courts. The Tax Authority argued that, because of the existing possibilities to have the underlying tax decision tried in separate proceedings, the decision could not be tried within the present proceedings while the second applicant argued that it should. In fact, it appears from the Administrative Court of Appeal’s judgment that the proceedings before that court had come to concern mainly that question. Under these circumstances, the Court finds that the Administrative Court of Appeal did not violate Article 6 of the Convention by not notifying the second applicant beforehand about its considerations regarding this question.
59 .  It follows that this part of the application must be rejected as being manifestly ill-founded, pursuant to Article 35 §§ 3 and 4 of the Convention.
60 .  Lastly, the second applicant complained that the national courts did not sufficiently reason their judgments.
61 .  The Court reiterates that, according to its established case-law reflecting the need for the effective administration of justice, courts and tribunals should adequately state the reasons on which they base their decisions. The extent to which this obligation applies may vary according to the nature of the decision and must be determined in the light of the circumstances of the case. However, it cannot be understood as requiring a detailed answer to every argument (see, for example, García Ruiz v. Spain[GC], no. 30544/96, § 26, ECHR 1999‑I and Klemeco Nord AB v. Sweden, no. 73841/01, § 39, 19 December 2006). Nor is the Court called upon to examine whether arguments are adequately met (see , 19 April 1994, § 61, Series A no. 288).
62 .  Turning to the present case, the Court notes that the County Administrative Court and the Administrative Court of Appeal did consider all arguments put forward by the parties and that they explained, albeit somewhat briefly, why the second applicant was held personally responsible for part of the applicant company’s tax debts. Thus, in the circumstances of the present case, the second applicant may not validly argue that the judgments lacked reasons.

63 .  It follows that this part of the application must be rejected as being manifestly ill-founded, pursuant to Article 35 §§ 3 and 4 of the Convention.
For these reasons, the Court by a majority
Declares  the application inadmissible.
 	Stanley Naismith	Josep Casadevall
	Deputy Registrar	President