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Cite as: [2010] ECHR 1569

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FIFTH SECTION

CASE OF BENET CZECH, SPOL. S R.O. v. THE CZECH REPUBLIC

(Application no. 31555/05)

JUDGMENT

STRASBOURG

21 October 2010

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 Benet Czech, spol. s r.o. v. the Czech Republic,

The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of:

Peer Lorenzen, President,
Renate Jaeger,
Karel Jungwiert,
Rait Maruste,
Mark Villiger,
Isabelle Berro-Lefèvre,
Zdravka Kalaydjieva, judges,
and Claudia Westerdiek, Section Registrar,

Having deliberated in private on 28 September 2010,

Delivers the following judgment, which was adopted on that date:

PROCEDURE

The case originated in an application (no. 31555/05) against the Czech Republic lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Czech company, Benet Czech, spol. s r.o. (“the applicant company”), on 26 August 2005.

The applicant company was represented by Mr P. Klimeš, a lawyer practising in Prague. The Czech Government (“the Government”) were represented by their Agent, Mr V.A. Schorm, of the Ministry of Justice.

The applicant company alleged a violation of its right to property under Article 1 of Protocol No. 1 to the Convention.

On 10 September 2007 the President of the Fifth Section decided to give notice of the application to the Government. It was also decided to examine the merits of the application at the same time as its admissibility (Article 29 § 1).

THE FACTS

I. THE CIRCUMSTANCES OF THE CASE

The applicant, Benet Czech, spol. s r.o., is a limited liability company incorporated under Czech law with its registered seat in Prague.

In April 2001 criminal proceedings were instituted against Mr B., who was manager of the applicant company until July 2001 and its sole shareholder until October 2008, on suspicion of having committed tax evasion (zkrácení daně, poplatku a jiné povinné platby). According to the Government the damage caused to the State exceeded CZK 200,000,000 (EUR 8,000,000). Mr. B was replaced as manager and shareholder by Mrs. B.

On 13 September 2001 the prosecuting authorities seized CZK 8,861,401.13 (EUR 319,942) and USD 41,677.80 (EUR 29,769) deposited in the applicant company’s bank accounts on the suspicion that these assets represented the profits of Mr B.’s criminal activities.

Mr B. was prosecuted for acts which are not related to the business pursued by the applicant company. On 4 June 2009 Mr B. was acquitted by the Prague Municipal Court (městský soud), and on 30 April 2010 the Prague High Court (vrchní soud) upheld the judgment. During the investigation the prosecuting authorities, inter alia, collected over 100,000 pages of documentary evidence, interviewed several hundred witnesses, including homeless persons with unknown whereabouts whose names the accused had allegedly used in sham transactions to evade customs and other duties, and requested legal assistance from the competent authorities of 16 countries.

On 15 November 2002 the applicant company requested that the seizure be lifted. Its request was dismissed by the Prague High Prosecutor (vrchní státní zástupce) on 17 March 2003. In his view, the investigation so far confirmed that there was a reasonable suspicion that the assets represented the profits of Mr B.’s alleged criminal activities.

The applicant company appealed to the Prague High Court which dismissed its complaint on 2 July 2003.

On 19 September 2003 the applicant company lodged a constitutional appeal (ústavní stíZnost) in which it alleged that the reasoning of the High Court’s decision was insufficient. It further complained of an excessive length of the seizure of its assets.

On 23 February 2005 the Constitutional Court (Ústavní soud) declared the applicant company’s constitutional appeal inadmissible for being manifestly ill-founded. It held that unjustified prolonged seizure of assets could in principle constitute a disproportionate interference with property rights. Nevertheless it did not find that the seizure which had lasted over three years to that date was, in the circumstances of the case, disproportionate. It found the challenged decisions to be neither arbitrary nor in any other way unconstitutional. The decision was served on the applicant company’s lawyer on 28 February 2005.

Subsequent developments

On 9 October 2006 the Prague High Prosecutor dismissed a further request of the applicant company to lift the seizure, at least in part. The Prague High Court (vrchní soud) upheld the decision on 21 November 2006. On 30 January 2008 the Constitutional Court, however, quashed that decision finding a violation of the applicant company’s right to property. The court held that the length of the seizure, over six years, was already unreasonable, which thus disrupted the fair balance between the general interest of fighting serious crime and the protection of the rights of the applicant company. Consequently on 11 March 2008 the Prague High Prosecutor lifted fully the seizure of the applicant company’s bank accounts.

II. RELEVANT DOMESTIC LAW

Code of Criminal Procedure (Act no. 141/1961) as in force at the material time

Pursuant to Article 9, prosecuting authorities shall assess on their own preliminary issues arising in course of proceedings; should a final and binding decision on such an issue be already adopted by a court or another State authority, prosecuting authorities shall be bound by it unless it concerns an issue of guilt of accused.

Article 42 provides for rights of a concerned person. According to it anyone whose property was seized, or ought to be seized pursuant to a motion, must be provided with an opportunity to comment on the given case, may attend a hearing, raise own motions, consult the case file within the meaning of Article 65, and file appeals provided for by this law.

Article 79a provides for a seizure of financial instruments deposited on a bank account. Under paragraph 1, if the facts indicate that the financial instruments on a bank account are destined for the commission of a crime, or have already been used for such purposes, or represent the profit from criminal activities, a president of a chamber and a prosecutor, or the police authority at the pre-trial stage of criminal proceedings, are empowered to seize them.

Pursuant to Article 79a(3), the State authority listed in paragraph (1) lifts or reduces the seizure if such a measure is no more necessary, or it is not necessary to maintain it at the given amount.

Under Article 79a(4) the owner of a bank account, whose assets are seized, has the right to request at any time that the seizure be lifted or reduced. A decision on such a request must be given without delay. If the request is dismissed, the owner of the bank account can lodge a new request that does not contain new reasons no sooner than 14 days after the dismissal became final.

Article 79a(5) provides that decisions adopted pursuant to paragraphs (1), (3) and (4) may be appealed by a complaint.

THE LAW

The applicant company complained that the seizure of its financial assets deposited in its bank accounts had infringed its property rights, in breach of Article 1 of Protocol No. 1, which states:

“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.”

The Government contested that argument.

A. Admissibility

The Government submitted that the application was premature since at the time of lodging it there was a constitutional appeal of the applicant company regarding the seizure pending before the Constitutional Court.

The applicant company disputed this argument.

The Court reiterates that the only remedies which an applicant is required to exhaust are those that relate to the breaches alleged and which are at the same time available and sufficient. The existence of such remedies must be sufficiently certain not only in theory but also in practice, failing which they will lack the requisite accessibility and effectiveness. Moreover, an applicant who has exhausted a remedy that is apparently effective and sufficient cannot be required also to have tried others that were available but probably no more likely to be successful (see T.W. v. Malta [GC], no. 25644/94, § 34, 29 April 1999).

The Court notes that as regards the seizure and its length to 23 February 2005, the applicant company pursued the natural remedies in respect of a seizure, namely, it asked for the seizure to be lifted, and pursued the subsequent refusals through the courts, in accordance with the rules of domestic law, up to the Constitutional Court. To that extent, the applicant company has exhausted domestic remedies. As regards the continuing seizure beyond that date, the Court notes that the applicant company again requested the prosecutor to lift the seizure, and again pursued refusals through the courts. The applicant company’s complaints in respect of that period have been registered under application no. 38333/06, and do not fall to be considered in the present application.

The Court therefore rejects the Government’s contention that the applicant company has not exhausted domestic remedies.

The Court notes that the application is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.

B. Merits

The applicant company claimed in the present application that the seizure of its assets deposited in its bank accounts was unreasonably long, that there were unreasonable delays in the investigation by the authorities and that the authorities had not presented any evidence justifying the seizure.

The Government admitted that there had been an interference with the applicant company’s property rights but maintained that it was necessary for the efficient fight against organised crime and was proportionate to that aim. The Government referred particularly to the possibility of the applicant company at any time to petition the authorities and courts, to terminate the seizure and maintained that the length of the seizure had been necessitated by the complexity and extensiveness of the investigation.

The Court recalls that Article 1 of Protocol No. 1, which guarantees in substance the right of property, comprises three distinct rules. The first, which is expressed in the first sentence of the first paragraph and is of a general nature, lays down the principle of peaceful enjoyment of property. The second rule, in the second sentence of the same paragraph, covers deprivation of possessions and makes it subject to certain conditions. The third, contained in the second paragraph, recognises that the Contracting States are entitled, among other things, to control the use of property in accordance with the general interest. The second and third rules, which are concerned with particular instances of interference with the right to peaceful enjoyment of property, must be construed in the light of the general principle laid down in the first rule (see Immobiliare Saffi v. Italy [GC], no. 22774/93, § 44, ECHR 1999 V).