(Application no. 12157/05)
25 June 2009
This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of Liivik v. Estonia,
The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of:
Mirjana Lazarova Trajkovska, judges,
and Claudia Westerdiek, Section Registrar,
Having deliberated in private on 2 June 2009,
Delivers the following judgment, which was adopted on that date:
I. THE CIRCUMSTANCES OF THE CASE
A. Background of the case
1. Privatisation of the Estonian railways
2. The State's representations and warranties under the privatisation agreement
(a) Warranty relating to the claims of AS Valga Külmvagunite Depoo
(b) Warranty relating to the purchase of locomotives of Russian origin
B. Charges against the applicant
C. The court proceedings
1. The proceedings in the Tallinn City Court
2. The proceedings in the Tallinn Court of Appeal
(a) The applicant's appeal to the Court of Appeal
(b) The Court of Appeal's judgment
“It is understandable that the commission of the acts of which [the applicant] was convicted by the judgment of the City Court is not in compliance with the general sense of justice. Thus [the applicant's] acts in his capacity as an acting Director General of the Privatisation Agency, which disrespected the laws, put in doubt the lawfulness and reliability of the activities of the Privatisation Agency as a State institution, thus materially impairing the authority of the State in society, and also damaged the reputation of the Republic of Estonia as a contractual partner on the international level, so that those acts, in aggregate, had to be considered to have caused significant moral damage to the interests of the State.”
3. Appeal to the Supreme Court
II. RELEVANT DOMESTIC LAW AND PRACTICE
A. Domestic law and practice at the material time
1. Relevant domestic law
According to section 9(2) the exclusive competence of the Board included, inter alia, the appointment and dismissal of the Director General of the Agency, the submission of the privatisation plan to the Government for approval, the establishment of supplementary conditions of privatisation, and the identification of the best bidder and (if necessary) the second-best bidder in tenders through preliminary negotiations.
Pursuant to section 10(5) the Agency may decide to cover debts relating to the assets to be privatised from the privatisation proceeds (according to section 2 of the Use of Privatisation Proceeds Act), if such debts are not objects of sale.
Section 21(8) stipulates that the Agency, in assessing the final tenders, determines the best bid, taking into account the established supplementary conditions and the purchase price. It may also determine the second-best bid.
Section 27(1) provides that privatisation agreements of purchase and sale are drawn up in unattested written form.
Article 28 establishes that the Director General of the Agency manages the everyday activities of the Agency.
Pursuant to Article 29(2), the Director General has to ensure the performance of the tasks arising from the Statutes and the execution of the resolutions of the Board.
According to Article 29(3) the Director General signs the privatisation agreements of purchase and sale and, if necessary, makes amendments to the agreements that have entered into force, pursuant to the procedure established by the Board.
“Proceeds from the privatisation of assets ... shall be used to cover the debts relating to privatised assets which are specified in points 7-9 of this procedure. Taking into account the conditions set forth in the points referred to, obligations relating to such assets shall also be deemed debts relating to privatised assets.”
“Proceeds from the privatisation of shares shall be used to cover such debts of the company being privatised which have been excluded from the agreement of purchase and sale or which occurred after the conclusion of the agreement of purchase and sale, provided that the debt was not disclosed on the balance sheet of the company ... and that the parties to the agreement were not aware of the debt.”
Article 161 – Misuse of official position
“Intentional misuse by an official of his or her official position, if it causes significant damage to the rights or interests of a person, enterprise, agency or organisation protected by law or to national interests, shall be punished by a fine or up to three years' imprisonment.”
2. Case-law of the Supreme Court
“11.4. ... Significant damage, which is an element of the offence under Article 161 of the [Criminal Code], can be both pecuniary and non-pecuniary damage caused to the interests of the State. ...
11.5. The Criminal Law Chamber of the Supreme Court finds that, as criminal law also protects values that cannot be measured in money, non-pecuniary damage inevitably has to be accepted as an element of the offence and cannot be assessed on the basis of the same criteria as pecuniary damage. The existence or absence of non-pecuniary damage and also the quantitative dimension of non-pecuniary damage (whether it is ordinary, significant or large-scale non-pecuniary damage) has to be established by a court in each individual case.
What has to be considered non-pecuniary damage of an ordinary, significant or large extent is an issue of fact. In order to resolve the issue of the extent of non-pecuniary damage in an individual case, it is necessary to consider how dangerous the committed act was in view of the general sense of justice and legal awareness of society and to what extent it has damaged legally protected interests... . The extent of the damage can also be affected by factors such as the status of the official position ... of the person who had committed the act, the duration of the corrupt activity, whether it was a single instance or systematic, the number of persons affected by the unjustified or unlawful acts or decisions and their location at the local, national or international level, the type of the damage caused – the level of the ... authorities whose reputation was damaged, to what extent their credibility was damaged, whether there was interference in the normal functioning of the state authority and what that interference was, and so on. In considering those questions, it has to be taken into account that sometimes an act and its criminal consequence can be inseparable (for example, the unlawful activities of a public official constitute at the same time impairment of the reputation of a public authority).”
B. Subsequent development of the legislation and case-law
Article 289 – Misuse of official position
“Intentional misuse by an official of his or her official position with the intention to cause significant damage or if thereby significant damage is caused to the legally protected rights or interests of another person or to public interests, shall be punished by a fine or up to three years' imprisonment.”
Another reason provided in the explanatory memorandum for repealing Article 289 of the Penal Code was that an assessment of the significance of non-pecuniary damage caused by misuse of official position made by a court retroactively constituted a discretionary decision. Accordingly, it could be difficult for an official to predict at the time of commission of the act whether the non-pecuniary damage caused by him or her could, based on the general principles of law, be regarded as “significant” for the purposes of the definition of misuse of official position. Hence, at the time of committing the act it might not be possible to predict with sufficient certainty whether the particular misuse of official position resulting in non-pecuniary damage was punishable as a criminal offence or not. Thus, according to the memorandum, it could be concluded that in the case of a vague definition of an offence, there was a risk that damage might be deemed to be caused merely on the ground that a breach of regulations had been committed, and this, in principle, made it possible to bring charges against an official for any kind of misuse of office. Also assessment of the extent of damage in individual cases was considered to cause problems.
The Criminal Law Chamber in the above case also raised the issue of whether, if a commercial company were to be able to claim compensation for non-pecuniary damage, Article 161 of the Criminal Code was partially contrary to the Constitution. It noted that Articles 13 § 2 and 23 § 2 of the Constitution and Article 7 § 1 of the Convention embodied the principle that only the law can define a crime and prescribe a penalty (nullum crimen, nulla poena sine lege certa). It referred to a judgment of the European Court of Human Rights in which the Court had found that an offence had to be clearly defined in law and that this requirement was satisfied where the individual could know from the wording of the relevant provision and, if need be, with the assistance of the courts' interpretation of it, what acts and omissions would make him criminally liable (see Veeber (no. 2), cited above, § 31). The Criminal Law Chamber noted that criminal liability for misuse of an official position under Article 161 of the Criminal Code was dependent on whether the damage caused was “significant”. While there existed criteria to assess whether the pecuniary damage was “significant”, there were no objective criteria to determine the extent of non-pecuniary damage. The latter was expressed in the opinion of the court, for the purposes of which the court would consider the general principles of law, the level of society's general welfare and case-law.
Accordingly, the Criminal Law Chamber observed, a court's retrospective assessment of the significance of non-pecuniary damage caused by misuse of official position was a discretionary decision. Therefore, it could be difficult for an official to predict at the time of the commission of an act whether on the basis of the general principles of law the non-pecuniary damage caused by him or her would amount to “significant” damage within the meaning of the offence of misuse of official position. Thus, at least in cases not covered by earlier case-law, it was not necessarily predictable with sufficient certainty whether a particular act of misuse of official position causing non-pecuniary damage would be punishable as a criminal offence.
However, by a judgment of 4 November 2005, the plenary Supreme Court acquitted the defendant in the above case on the grounds that the act committed by him had not corresponded to the elements of the offence under Article 161 of the Criminal Code. Accordingly, the Supreme Court was procedurally prevented from ruling on the constitutionality of Article 161.
“13. ... [I]n order to guarantee [the defendant] the right to defence, all the factual circumstances serving as a basis for his or her criminal liability must be presented in the text of the bill of indictment in a sufficiently clear and precise manner. ...
14. The conclusion made in the bill of indictment that [the defendant] “[had] damaged fair competition as a basis of the market economy, and thus had damaged other persons' rights and interests”, did not make it clear who were the “other persons” referred to whose rights and interests [the defendant] had damaged, what change was caused in the situation of the legally protected interests of these persons by the alleged damage and what was the extent of the damage. Charges of causing significant damage, which do not specify the injured person or the facts on the basis of which one could render a legal opinion on the nature and extent of the alleged damage, are not specific enough and the courts are not able to establish the existence of significant damage as a necessary element of the criminal offence on the basis of such charges.
16. ... [A]ccording to the bill of indictment [the defendant] had breached the requirements applicable to public procurement proceedings and had thereby caused significant damage by casting doubt on the impartiality and integrity of the highest official of an executive body. ...
19. It does not appear from the bill of indictment ... in whose eyes and to what extent the trust in the impartiality and integrity of the highest official of the executive body had been undermined as a result of the act committed by the defendant and what were the circumstances that had evidenced the undermining of the trust. In other words, the charges did not point to any facts which, if established, would have allowed the courts to conclude that [the defendant's] act had actually undermined the credibility of state officials or to render a legal opinion as to whether such a consequence could be regarded as damage caused to a person and whether this damage was “significant” within the meaning of Article 300 of [the Penal Code]. Hence, the charges of causation of significant damage brought against [the defendant] were not specific enough in the part concerning the alleged casting of doubt on the integrity and credibility of the highest state officials either.
21. ... [Contrary to the requirements of the criminal procedure law], the courts were not guided – in establishing the consequence as a necessary element of the offence – by evidence which would have proved that actual changes in the reputation of state officials had occurred in the real world and that these changes had been caused by the act [of the defendant] but, instead, they were merely guided by the legal assessment of the nature of the violation committed by [the defendant]. In other words, the County Court and the Court of Appeal eliminated the boundary between the act and the consequence, considering that the breach of a law was automatically also a consequence.
22. ... [I]n criminal proceedings, none of the facts required to be proved, including consequence as a necessary element of an offence, can be established on the basis of a legal opinion. This is because a legal opinion says nothing about the changes that actually occurred or did not occur in the real world as a result of the act. A normative understanding according to which an unlawful act committed by the accused is of such a kind that it would undermine the trust of an “average person” in the integrity and impartiality of state officials cannot justify the conclusion that, in a specific case, there actually is a sufficient number of persons who are aware of this unlawful act and whose trust in the integrity and credibility of state officials is undermined as a result of this particular act.
27. In connection with the charge against [the defendant] that he “created a situation where there was a real danger to the purposeful and economical use of the funds from the state budget in the amount of at least 17,661,017 kroons”, the Criminal Chamber wishes to make it clear that creation of a danger and causing damage are two different types of consequences that constitute necessary elements of an offence. Creation of a danger (emergence of a dangerous situation) can be regarded as an increase in the possibility of actual damage being caused, and it comprises a necessary element of an offence only in the case of a specific danger-creating delict [ohudelikt], that is if the definition of the offence mentions the creation of a danger as a consequence being one of the necessary elements of the offence ... . If the definition of an offence mentions the causation of some kind of damage as a consequence being one of the necessary elements of the offence ... it is a delict consisting in the causation of material damage [materiaalne kahjustusdelikt]. The necessary elements of this type of offence are present only if actual damage – and not merely an increase in the possibility of damage being caused – has been caused as a result of the act. ...”
I. ALLEGED VIOLATION OF ARTICLE 7 OF THE CONVENTION
“1. No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed.
2. This article shall not prejudice the trial and punishment of any person for any act or omission which, at the time when it was committed, was criminal according to the general principles of law recognised by civilised nations.”
A. Arguments of the parties
1. The applicant
2. The Government
B. The Court's assessment
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
In respect of non-pecuniary damage the applicant claimed EEK 3,000,000 (EUR 191,735). He asserted that he had suffered extreme distress and discomfort during the pre-trial and trial proceedings and during the imprisonment in poor conditions. His wrongful conviction and imprisonment had caused serious damage to his reputation.
In respect of non-pecuniary damage the Government also emphasised that the applicant had been convicted in connection with two episodes and that the issues related to the privatisation of RAS Tallinna Farmaatsiatehas had not been raised before the Court. Neither had the applicant complained about the prison conditions. Therefore, the claims, in so far as they were related to these circumstances, should be dismissed.
Should the Court nevertheless find that the applicant had sustained non-pecuniary damage, the Government left the determination of an appropriate sum to the Court.
B. Costs and expenses
C. Default interest
FOR THESE REASONS, THE COURT UNANIMOUSLY
(a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts, to be converted into Estonian kroons at the rate applicable at the date of settlement:
(i) EUR 5,000 (five thousand euros) in respect of non-pecuniary damage;
(ii) EUR 9,000 (nine thousand euros) in respect of costs and expenses;
(iii) any tax that may be chargeable to him on the above amounts;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
Done in English, and notified in writing on 25 June 2009, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Claudia Westerdiek Peer Lorenzen