European Court of Human Rights

 

 

FIFTH SECTION

CASE OF TREYD 2008, TOV v. UKRAINE

(Application no. 55765/12)

 

 

 

 

 

 

JUDGMENT

STRASBOURG

15 April 2021

 

This judgment is final but it may be subject to editorial revision.

In the case of Treyd 2008, TOV v. Ukraine,

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

          Arnfinn Bårdsen, President,
          Ganna Yudkivska,
          Mattias Guyomar, judges,
and Martina Keller, Deputy Section Registrar,

Having regard to:

the application (no. 55765/12) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by “Treyd 2008, TOV”, a legal entity under Ukrainian law, (“the applicant company”), on 17 August 2012;

the decision to give notice to the Ukrainian Government (“the Government”) of the complaints under Article 1 of Protocol No. 1 and Article 13 of the Convention, as well as the complaint under Article 6 § 1 of the Convention (access to a court), and to declare the remainder of the application inadmissible;

the parties’ observations;

Having deliberated in private on 18 March 2021,

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

INTRODUCTION

1.  The application concerns a seizure of the applicant company’s bank account in the context of ongoing criminal proceedings against officials of a different company and its inability to contest that measure. The applicant company invokes Article 1 of Protocol No. 1, Article 13 of the Convention and Article 6 § 1 of the Convention.

THE FACTS

2.  The applicant company is a limited liability company, which has its registered office in the Donetsk region. It was represented by Mr Valentyn Bodryaga, a lawyer practising in Mariupol.

3.  The Government were represented by their Agent, Mr Ivan Lishchyna.

4.  The facts of the case, as submitted by the parties, may be summarised as follows.

5.  On 29 March 2012 the Donetsk Budyonivskyy District Court (“the Budyonivskyy Court”) ordered, at the prosecution authorities’ request, to seize the applicant company’s bank account. The reasoning provided by the investigator and endorsed by the court was as follows. There were ongoing criminal proceedings in respect of officials of a private company “B.” on suspicion of public funds’ embezzlement. Notably, the “B.” company’s officials were suspected of having charged a municipal enterprise, “R.”, for some services which had never been provided. Having regard to the fact that in 2010-2012 the “R.” enterprise had also made some payments into the applicant company’s bank account, it was considered appropriate, under Articles 125 and 126 of the Code of Criminal Procedure (see paragraphs 9 and 10 below), to seize that account with a view to securing a potential civil claim within the criminal proceedings.

6.  The Budyonivskyy Court delivered the above ruling following a hearing, of which the applicant company had not been notified. It was final and not amenable to appeal.

7.  On 25 September 2012 the Budyonivskyy Court lifted the seizure, also at the investigator’s request, on the grounds that, as established by the investigation, the applicant company “had no relation to the criminal offence” in question.

8.  The Government submitted that they were not in a position to provide any additional information regarding those proceedings, given that they had lost access to the Budyonivskyy Court’s files after the creation of the self‑proclaimed entity known as the “Donetsk People’s Republic” in April 2014.

RELEVANT LEGAL FRAMEWORK

9.  Article 125 of the Code of Criminal Procedure of 1960 (“the CCP”) [1], stipulated, in particular, that it was the investigator’s obligation to take necessary measures with a view to securing a potential civil claim within criminal proceedings.

10.  Article 126 of the CCP regulated the procedure for securing a civil claim within criminal proceedings. It stipulated that it was to be achieved by a seizure of assets, valuables and other property of an accused or a suspect, or other persons who could be held materially liable for his or her actions.

11.  Under the CCP, third parties whose interests were affected by seizure and/or confiscation in criminal proceedings had no standing and no procedural rights within those proceedings.

THE LAW

I.        ALLEGED VIOLATION OF ARTICLE 1 of protocol no. 1 to the convention

12.  The applicant company complained that the seizure of its bank account had been in breach of its rights under Article 1 of Protocol No. 1, which reads as follows:

“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.    Admissibility

13.  The Court notes that this complaint is neither manifestly ill-founded nor inadmissible on any other grounds listed in Article 35 of the Convention. It must therefore be declared admissible.

B.     Merits

14.  The parties agreed that the seizure of the applicant company’s bank account had amounted to an interference with its rights under Article 1 of Protocol No. 1 to the Convention.

15.  The applicant company argued that that measure had been unlawful and arbitrary and that it had blocked its business activities for six months.

16.  The Government contested those arguments. They submitted that the seizure had been based on law and had been justified in the circumstances.

17.  The Court notes that the seizure had the effect that the applicant company could not dispose of its bank account for six months. It therefore constituted a measure of control of the use of property (see, for example, BENet Praha, spol. s r. o. v. the Czech Republic, no. 33908/04, § 92, 24 February 2011, and International Bank for Commerce and Development AD and Others v. Bulgaria, no. 7031/05, § 123, 2 June 2016).

18.  The Court reiterates that any control of the use of property by a public authority should be lawful (see BENet Praha, spol. s r. o., cited above, § 93). The concept of lawfulness requires firstly that the measures should have a basis in domestic law. It also refers to the quality of the law in question, requiring that it be accessible to the persons concerned, precise and foreseeable in its application (see, among others, Batkivska Turbota Foundation v. Ukraine, no. 5876/15, § 56, 9 October 2018).

19.  The Court has consistently held that its power to review compliance of impugned acts with national law is limited and it is not its task to take the place of the domestic courts. However, that does not dispense with the need for the Court to determine whether the interference in issue complied with the requirements of Article 1 of Protocol No. 1 (see Beyeler v. Italy [GC], no. 33202/96, § 108, ECHR 2000‑I, and Sovtransavto Holding v. Ukraine, no. 48553/99, § 95, ECHR 2002-VII).

20.  Turning to the present case, the Court notes that the applicant company’s bank account was seized within the framework of criminal proceedings against a third party on the basis of Articles 125 and 126 of the Code of Criminal Procedure in force at the material time (see paragraphs 9 and 10 above). Those provisions defined in an unequivocal manner the categories of persons to whom such a measure could be applied: a suspect, an accused or a person “materially liable” for actions of a suspect or an accused. The applicant company did not belong to any of those categories. Accordingly, the Court cannot but observe that the interference with the applicant company’s property rights was not in compliance with domestic law (compare Rafig Aliyev v. Azerbaijan, no. 45875/06, §§ 122-25, 6 December 2011). It did not therefore comply with the lawfulness requirement enshrined in Article 1 of Protocol No. 1.

21.  The above conclusion makes it unnecessary to ascertain whether a fair balance was struck between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights (see Yunusova and Yunusov v. Azerbaijan (no. 2), no. 68817/14, § 169, 16 July 2020).

22.  There has therefore been a violation of Article 1 of Protocol No. 1.

II.     ALLEGED VIOLATION OF ARTICLE 13 OF THE CONVENTION in conjunction with article 1 of protocol no. 1

23.  The applicant company complained that it had not had effective domestic remedies at its disposal in respect of its complaint under Article 1 of Protocol No. 1. It relied on Article 13 of the Convention, which reads as follows:

“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”

24.  The Government contested that claim. They observed that, under the domestic legislation in force at the material time, the applicant company had had no procedural rights in the criminal proceedings, in the framework of which the impugned seizure had been ordered. Referring to the Court’s case-law principle that Article 13 of the Convention did not guarantee a remedy whereby a law as such could be challenged before a domestic organ, the Government argued that that provision was not applicable in the present case and invited the Court to dismiss the applicant company’s complaint on that ground.

25.  The Court notes that, in accordance with its case-law, Article 13 of the Convention does not compel States to allow individuals to challenge domestic laws before a national authority on the ground of being contrary to the Convention, but seeks only to ensure that anyone who makes an arguable complaint of a violation of a Convention right will have an effective remedy in the domestic legal order (see, for example, De Tommaso v. Italy [GC], no. 43395/09, § 180, 23 February 2017). That provision guarantees the availability at national level of a remedy to enforce the substance of the Convention rights and freedoms in whatever form they may happen to be secured. The effect of Article 13 of the Convention is thus to require the provision of a domestic remedy to deal with the substance of an “arguable complaint” under the Convention and to grant appropriate relief (see, among many other authorities, N.D. and N.T. v. Spain [GC], nos. 8675/15 and 8697/15, § 240, 13 February 2020).

26.  Having regard to its finding of a violation of Article 1 of Protocol No. 1 (see paragraph 22 above), the Court considers that the applicant company had an “arguable complaint” under the Convention.

27.  The Court does not agree with the Government’s argument that Article 13 of the Convention was inapplicable in the present case. It notes that the applicant company’s complaint was not targeted against the applicable legal provisions (see, for a converse example, Roche v. the United Kingdom [GC], no. 32555/96, §§ 127 and 137, ECHR 2005‑X). Indeed, the applicant company did not seek to challenge a domestic legal provision as being contrary to the Convention but the authorities’ interference with its property rights as being in breach of the domestic law (see paragraph 20 above).

28.  The respondent State failed to provide to the applicant company any remedies to contest that interference with its rights under Article 1 of Protocol No. 1.

29.  This consideration is sufficient for the Court to conclude that there has been a violation of Article 13 of the Convention in conjunction with Article 1 of Protocol No. 1.

III.  OTHER ALLEGED VIOLATION OF THE CONVENTION

30.  Lastly, the applicant company complained under Article 6 § 1 of the Convention that it had not had access to a court to challenge the seizure of its bank account.

31.  Having regard to the facts of the case, the submissions of the parties and the Court’s findings under Articles 1 of Protocol No. 1 and Article 13 of the Convention, the Court considers that it has examined the main legal questions raised in the present application and that there is no need to give a separate ruling on the remaining complaint under Article 6 of the Convention (see, for the approach, B. Tagliaferro & Sons Limited and Coleiro Brothers Limited v. Malta, nos. 75225/13 and 77311/13, § 111, 11 September 2018, and the reference therein to Centre for Legal Resources on behalf of Valentin Câmpeanu v. Romania [GC], no. 47848/08, § 156, ECHR 2014).

IV.  APPLICATION OF ARTICLE 41 OF THE CONVENTION

32.  Article 41 of the Convention provides:

“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.”

A.    Damage

33.  The applicant company claimed 30,000 euros (EUR) in respect of pecuniary damage and EUR 20,000 in respect of non-pecuniary damage. It referred to the disruption of its business activities, as well as its inability to pay wages to its staff, during the period of six months when its bank account remained seized. The applicant company submitted a copy of its tax returns showing that its revenues had amounted to about EUR 415,600 for 2011 and to about EUR 97,200 for the first quarter of 2012.

34.  The Government contested the above claims as unsubstantiated and excessive.

35.  The Court refers to its most relevant case-law principles summarised, for example, in East West Alliance Limited v. Ukraine (no. 19336/04, §§ 245-53, 23 January 2014).

36.  The Court has no doubt that the seizure of the applicant company’s bank account entailed pecuniary losses for it. At the same time, all the imponderables involved prevent the Court from establishing the precise amount of those losses.

37.  The Court also considers that the violations it has found in the instant case must have caused the applicant company disruption and uncertainty in the conduct of its business. It must also have caused its managers feelings of helplessness and frustration (compare Centro Europa 7 S.R.L. and di Stefano v. Italy [GC], no. 38433/09, § 221, ECHR 2012).

38.  Having regard to all the material in its possession, the Court finds it appropriate to rule in equity and make a global assessment in the present case (see Agrokompleks v. Ukraine (just satisfaction), no. 23465/03, §§ 80 and 93, 25 July 2013, and East West Alliance Limited, cited above, § 264). It considers it reasonable to award the applicant company an aggregate sum of EUR 5,000, covering all heads of damage, plus any tax that may be chargeable on that amount.

B.    Costs and expenses

39.  The applicant company also claimed EUR 2,000 for costs and expenses.

40.  The Government submitted that the applicant company had not provided any proof of the costs and expenses incurred.

41.  According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum (see, among many other authorities, Guðmundur Andri Ástráðsson v. Iceland [GC], no. 26374/18, § 307, 1 December 2020).

42.  In the present case, regard being had to the absence of any documents in support of the applicant company’s claim in respect of costs and expenses, the Court rejects it.

C.    Default interest

43.  The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

1.      Declares the complaints under Article 1 of Protocol No. 1 and Article 13 of the Convention in conjunction with Article 1 of Protocol No. 1 admissible;

2.      Holds that there has been a violation of Article 1 of Protocol No. 1;

3.      Holds that there has been a violation of Article 13 of the Convention in conjunction with Article 1 of Protocol No. 1;

4.      Holds that there is no need to examine the admissibility and merits of the complaint under Article 6 § 1 of the Convention;

5.      Holds

(a)   that the respondent State is to pay the applicant company, within three months, EUR 5,000 (five thousand euros) in respect of pecuniary and non-pecuniary damage, plus any tax that may be chargeable;

(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;

6.      Dismisses the remainder of the applicant company’s claim for just satisfaction.

Done in English, and notified in writing on 15 April 2021, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.              {signature_p_2}

   Martina Keller                                                                   Arnfinn Bårdsen
Deputy Registrar                                                                       President