FOURTH SECTION

DECISION

Application no . 15396/12 VP-KULJETUS OY and O thers against Finland

The European Court of Human Rights ( Fourth Section ), sitting on 6 January 2015 as a Chamber composed of:

Guido Raimondi , President, Päivi Hirvelä , George Nicolaou , Nona Tsotsoria , Zdravka Kalaydjieva , Krzysztof Wojtyczek , Faris Vehabović , judges, and Françoise Elens-Passos, Section Registrar ,

Having regard to the above application lodged on 12 March 2012,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicants,

Having deliberated, decides as follows:

THE FACTS

1 . The applicant company, VP- Kuljetus Oy , is a Finnish limited liability company which has its seat in Rauha . The second and third applicants, Mr Kyösti Juhani Hynninen and Mr Arto Sakari Piiparinen , are Finnish nationals who live in Ruokolahti and Helsinki respectively. The applicants are represented before the Court by Mr Kari Uoti , a lawyer practising in Helsinki.

2. The Finnish Government (“the Government”) were represented by their Agent, Mr Arto Kosonen of the Ministry for Foreign Affairs .

A. The circumstances of the case

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

4. The second and third applicants are the owners and the only board members of the applicant company. The applicant company was in the transport business in Russia. Before returning from Russia, the tanks of the company trucks were normally filled with diesel and legally imported into Finland. Such diesel was tax and customs free and there was no obligation to inform the authorities about it. However, such diesel could not be used in any other vehicles unless customs and excise duties were paid.

5. Between December 2000 and December 2006 some of the diesel brought to Finland in the applicant company ’ s trucks was removed from the tanks and transferred to a container situated on the company premises. From there the diesel was further transferred to other company cars, as well as to the personal cars of the second and third applicants. No customs and excise duties or other fees were paid.

Administrative proceedings concerning customs duties

6. On 15 May 2007 the Customs Office ordered the applicant company, jointly with the second and third applicants, to pay custom s duties, value ‑ added tax and excise in the amount of 61,520.24 euros (EUR) for the years 2004, 2005 and 2006. These import taxes were levied because the diesel imported from Russia had been removed from the tanks of the trucks and transferred to a container for purposes other than the repa ir of the vehicles in question. Apparently th is decision w as not appealed against.

Criminal proceedings

7. On 19 March 2008 the public prosecutor brought charges against the second and third applicants f o r aggravated tax fraud ( törkeä veropetos , grovt skattebedrägeri ) concerning the time between December 2 000 and December 2006. They were accused of aggravated tax fraud because , as board members of the applicant company together with a third person and in their personal capacity , they had participated in tax evasion by transferring 234 , 138 litres of diesel imported from Russia to other cars without paying any import taxes , namely customs duties, value-added tax and excise . The amount of eva ded taxes had totalled EUR 115, 839.10.

8. On 3 October 2008 the Lappeenranta District Court ( käräjäoikeus , tingsrätten ) convicted the second and third applicants as charged and sentenced both of them to an 8-month suspended prison sentence. They were ordered to pay jointly to the customs authorities EUR 54,318.29 plus interest as compensation for different taxes evaded during the years 2001, 2002 and 2003.

9. By letter dated 30 October 2008 the second and third applicants appealed to the Kouvola Appeal Court ( hovioikeus , hovrätten ), requesting that the District Court judgment be quashed.

10. On 4 June 2009 the Kouvola Appeal Court upheld the District Court judgment.

11. By letter dated 25 June 2009 the second and third applicants appealed to the Supreme Court ( korkein oikeus , högsta domstolen ), requesting that the charges be dismissed and the compensation claims be rejected.

12. By letter dated 3 Ju ly 2009 the second and third applicants referred to a recent case of the Court concerning ne bis in idem and requested the Supreme Court to take it into account as an alternative to their primary claims.

13. On 22 December 2009 the Supreme Court refused the second and third applicants leave to appeal.

Administrative proceedings concerning fuel fees and additional tax

14. On 5 September 2007 the Vehicle Administration ( A joneuvohallintokeskus , F ordonsförvaltningscentralen ) , the current Finnish Transport Safety Agency ( Liikenteen turvallisuusvirasto , T rafiksäkerhetsverket ) , imposed on the applicants a fuel fee ( polttoainemaksu , bränsleavgift ) and an additional tax ( lisävero , tilläggsskatt ) concerning the years from 2002 to 2006 for having used more leniently taxed diesel than diesel oil in their vehicles without giving any prior notification to the authorities . The fee and the additional tax for the applicant company amounted to EUR 1,827,570. The second applicant was ordered to pay EUR 51,381 and the third applicant EUR 99,045 respectively in fuel fees and additional tax for having used untaxed diesel in their private cars.

15. By letter dated 14 September 2007 the applicants appealed to the Administrative Court ( hallinto-oikeus , förvaltningsdomstolen ), claiming that the taxes and fees should be quashed as they had no legal basis.

16. On 24 September 2007 the Vehicle Administration decided to stay the order to pay the above fuel fees and additional taxes until the Administrative Court could decide on the enforcement of the taxes in question.

17. On 16 October 2007 the Administrative Court stayed the attachment of the above fees and taxes by allowing a seizure but prohibiting their sale. This stay on enforcement was to remain in force until the final decision in the case.

18. On 2 July 2008 the Administrative Court rejected the applicants ’ appeals.

19. By letter dated 30 August 2008 the applicants appealed further to the Supreme Administrative Court ( korkein hallinto-oikeus , högsta förvaltningsdomstolen ), reiterating the grounds of appeal already presented before the Administrative Court.

20. During the written phase, the Supreme Administrative Court asked the parties ex officio to comment on the Court ’ s recent judgment Ruotsalainen v. Finland in the context of the present case. The tax authorities affirmed in their statement of 6 May 2010 that the subject of the tax fraud proceedings and the obligation to pay fuel fees did not concern the same set of events but events which were distinct in time and place. The applicants argued in their submission of 11 September 2010 that all sanctions imposed in the case (taxes, fees, order to pay compensation and criminal sanctions) were based on the same set of facts.

21. On 16 September 2011 the Supreme Administrative Court granted the applicants leave to appeal but rejected their appeals. It thus upheld the Administrative Court ’ s decisions. It found that the fuel fees concerning the years 2002 and 2003 had been imposed threefold and those concerning the years 2004 to 2006 had been increased by 50%. The second and third applicants had been convicted of aggravated tax fraud for failure to pay import taxes on diesel imported between 2000 and 2006 by a judgment that had become final on 22 December 2009. As the criminal proceedings concerned failure to pay import taxes on the imported diesel and the fuel fees concerned the use of such diesel after the importation into Finland, it was not a question of the same matter. The ne bis in idem principle had thus not been violated.

B. Relevant domestic law

22. According to Chapter 29, sections 1 and 2, of the Penal Code ( rikoslaki , strafflagen ; as amended by Acts no. 1228/1997 and no. 769/1990), a person who (1) gives a taxation authority false information on a fact that influences the assessment of tax, (2) files a tax return concealing a fact that influences the assessment of tax, (3) for the purpose of avoiding tax, fails to observe a duty pertaining to taxation, influencing the assessment of tax, or (4) acts otherwise fraudulently and thereby causes or attempts to cause a tax not to be assessed, or too low a tax to be assessed or a tax to be unduly refunded, shall be sentenced for tax fraud to a fine or to imprisonment for a period of up to two years. If by the tax fraud (1) considerable financial benefit is sought or (2) the offence is committed in a particularly methodical manner and the tax fraud is aggravated when assessed as a whole, the offender shall be sentenced for aggravated tax fraud to imprisonment for a period between four months and four years.

23. If a more leniently taxed oil than diesel oil is used as motor fuel, prior notice of such intended use must be given and additional tax and/or a fuel fee shall be paid. According to the Fuel Fee Act ( laki polttoainemaksusta , lagen om bränsleavgift , Act no. 337/1993), which was in force until 31 December 2003, the fuel fee was not collected on the fuel contained in the tank of a vehicle when the vehicle was imported. If the use of a more leniently taxed fuel than diesel oil was discovered in a vehicle during a time in respect of which no prior notification had been given, the fuel fee collected was to be three times the normal amount. The current Fuel Fee Act (Act no. 1280/2003), which entered into force on 1 January 2004, contains the same provisions except for the increased amount of the fee. The fee shall be increased by a maximum of 30% if no prior notification has been made, by a maximum of 50% if the use is repetitive and at most it can be doubled in aggravated cases.

COMPLAINT

24. The applicants complained under Article 4 of Protocol No. 7 to the Convention of double jeopardy . This principle had allegedly been violated as the applicants had been punished twice, in administrative and criminal proceedings.

THE LAW

25. The applicant s complained under Article 4 of Protocol No. 7 to the Convention about a violation of the ne bis in idem principle.

26 . Article 4 of Protocol No. 7 to the Convention reads as follows:

“1. No one shall be liable to be tried or punished again in criminal proceedings under the jurisdiction of the same State for an offence for which he has already been finally acquitted or convicted in accordance with the law and penal procedure of that State.

2. The provisions of the preceding paragraph shall not prevent the reopening of the case in accordance with the law and penal procedure of the State concerned, if there is evidence of new or newly discovered facts, or if there has been a fundamental defect in the previous proceedings, which could affect the outcome of the case.

3. No derogation from this Article shall be made under Article 15 of the Convention.”

27. The Government observed that the applicant company could not claim to be a victim of a violation of Article 4 § 1 of Protocol No. 7 to the Convention as it had not itself been convicted of tax fraud, and indeed could not be convicted under Finnish legislation. The application should therefore be rejected pursuant to Article 35 § 4 of the Convention.

28. Were the Court of a different opinion, the Government found it indisputable that both sets of proceedings, the criminal proceedings as well as the proceedings relating to the fuel fee, had been criminal in nature for the purposes of the provision relied on.

29. However, the Government argued that the fuel fee and additional taxes imposed on the applicants on the one hand, and their tax fraud sentences, on the other hand, had been based on separate incidents. The fuel fee and additional taxes had been imposed on the ground that the applicant company had used diesel in its own vehicles without paying tax on it in Finland. A fuel fee and additional taxes had been imposed on the second and third applicants for using such diesel in the cars owned by them personally. The Customs Office had ordered the applicants, together with a third person, to pay customs duties, value-added tax and excise on the ground that diesel imported from Russia in the tanks of the applicant company ’ s vehicles had been transferred from these tanks to a storage container located on the company premises and moved from there to other vehicles for further use.

30. As to the criminal proceedings, the Government maintained that only the second and the third applicants had been defendants in the criminal proceedings. The applicant company had not been convicted of tax fraud, and indeed could not be convicted under Finnish legislation. As a limited liability company, the applicant company was an independent legal subject and separate from the second and third applicants. It was not relevant that the second and third applicants were owners and board members of the applicant company. According to the Limited Liability Companies Act, shareholders had no personal liability for the obligations of the company. Nor could the second and third applicants be considered de facto liable for the applicant company ’ s taxes. Therefore, as far as the applicant company was concerned, it could not be said that two sanctions had been imposed in two different sets of proceedings.

31. By contrast, the Government noted that two kinds of sanctions had been imposed on the second and third applicants in two different sets of proceedings but they had not been based on the same or essentially the same set of facts. The second and third applicants ’ convictions for aggravated tax fraud had been based on their evasion of import taxes whereas the imposition of the fuel fee was based on the fact that they had used imported diesel in Finland. As noted by the Supreme Administrative Court, the cases had not concerned the same or essentially the same set of facts and they had not had any link in time. Moreover, the evasion of import taxes had taken place when the applicants had transferred the diesel from vehicle tanks to a container located on the company premises.

32. The Government argued thus that the fuel fees and additional taxes imposed on the applicants personally and the tax fraud charges due to their conduct in the applicant company were separate issues. Even though the sanctions partly concerned the same persons, this was not significant to the legal assessment of the matter from the standpoint of the ne bis in idem prohibition. There was thus no violation of Article 4 § 1 of Protocol No. 7 to the Convention .

33. The applicants claimed that the relevant facts in the two sets of proceedings had been exactly the same. The identical fact in both sets of proceedings was that the diesel had been transferred to other company cars as well as to the personal cars of the second and third applicants. It was also indisputable that in relation to the second and third applicants, the parties in the proceedings had been the same. They had been convicted in the criminal case and in the administrative proceedings and had been ordered to pay EUR 51,381 and E UR 99 ,045 respectively for the same reason.

34. The applicants noted that the second and third applicants had been charged in the criminal proceedings as board members of the applicant company. They had acted thus as an organ of the applicant company, not as individuals. They were thus identified with the applicant company and it would be artificial to distance them from it when interpreting the Convention. The second and third applicants could not therefore be separated from the applicant company in respect of the rights guaranteed by the Convention.

35 . The Court notes first of all that, a s to the criminal nature of the impugned proceedings, it is clear that the criminal proceedings for aggravated tax fraud were criminal in nature. It is equally clear that the imposition of the customs duties in the first administrative proceedings seems only to have included the amount of evaded customs duties without any element of punishment or deterrent from re-offending. The obligation to pay customs duties must therefore be considered as purely fiscal.

36. As far as the fuel fees are concerned, t he Court reiterates that the legal characterisation of the procedure under national law cannot be the sole criterion of relevance for the applicability of the principle of ne bis in idem under Article 4 § 1 of Protocol No. 7. Otherwise, the application of this provision would be left to the discretion of the Contracting States to a degree that might lead to results incompatible with the object and purpose of the Convention (see for example StorbrÃ¥ten v. Norway ( dec. ), no. 12277/04 , ECHR 2007 ‑ ... ( extracts ), with further references). The notion of “penal procedure” in the text of Article 4 of Protocol No. 7 must be interpreted in the light of the general principles concerning the corresponding words “criminal charge” and “penalty” in Articles 6 and 7 of the Convention respectively (see Haarvig v. Norway ( dec. ), no. 11187/05 , 11 December 2007; Rosenquist v. Sweden ( dec. ), no. 60619/00 , 14 September 2004; Manasson v. Sweden ( dec. ), no. 41265/98 , 8 April 2003; Göktan v. France , no. 33402/96 , § 48, ECHR 2002-V; Malige v. France , 23 September 1998, § 35, Reports of Judgments and Decisions 1998 ‑ VII; and Nilsson v. Sweden ( dec. ), no. 73661/01 , ECHR 2005 ‑ XIII).

37 . The Court ’ s established case-law sets out three criteria, commonly known as the “ Engel criteria” (see Engel and Others v. the Netherlands , 8 June 1976, Series A no. 22), to be considered in determining whether or not there was a “criminal charge”. The first criterion is the legal classification of the offence under national law, the second is the very nature of the offence and the third is the degree of severity of the penalty that the person concerned risks incurring. The second and third criteria are alternative and not necessarily cumulative. This, however, does not rule out a cumulative approach where separate analysis of each criterion does not make it possible to reach a clear conclusion as to the existence of a criminal charge (see Jussila v. Finland [GC], no. 73053/01, § § 30-31 , ECHR 2006 ‑ XIV; and Ezeh and Connors v. the United Kingdom [GC], nos. 39665/98 and 40086/98 , §§ 82-86, ECHR 2003 ‑ X).

38 . The Court has taken a stand on the criminal nature of fuel fees in the case Ruotsalainen v. Finland ( no. 13079/03, §§ 41-4 5 , 16 June 2009) . In that case the Court found that , in respect of the first of the Engel criteria, it wa s apparent that the fuel fee was not classified as criminal but as part of the fiscal regime. However, this was not decisive as the second criterion, the nature of the offence, was the more important. The Court observed that the relevant provision of the Fuel Fee Act was directed towards all citizens rather than towards a group possessing a special status. An applicant was liable in his capacity as owner or user of a diesel engine vehicle. Moreover, the fuel fee collected was trebled. In the Court ’ s view, this had to be seen as a punishment to deter re-offending, recognised as a characteristic feature of criminal penalties (see Ezeh and Connors v. the United Kingdom [GC] , cited above, §§ 102 and 105). It could therefore be concluded that the fuel fee was imposed by a rule, the purpose of which was not only compensatory but also deterrent and punitive, and that this established the criminal nature of the offence. The issuing of the fuel fee thus brought the administrative proceedings within the ambit of “penal procedure” for the purposes of Article 4 of Protocol No. 7 (see Ruotsalainen v. Finland , cited above, §§ 46 ‑ 47).

39 . The Court notes that t he current Fuel Fee Act , which entered into force on 1 January 2004 and which was thus also applic able to the case at hand, contains the same provisions as the previous Act, except for the increased amount of the fee which in the present case was increased by 50%. Accordingly, the same conclusions must be drawn also in respect of the current provisions, namely that the 50% increase in the fuel fee render s it deterrent and punitive and thus establishes the criminal nature of the offence . Moreover, the Government found it indisputable that the proceedings relating to the fuel fee were criminal in nature.

40 . Therefore, in the present case, the Court considers that it is clear that both the tax fraud proceedings as well as the proceedings relating to the fuel fee are to be regarded as criminal for the purposes of Article 4 of Protocol No. 7 to the Convention , whereas the imposition of the customs duties in the first administrative proceedings falls outside its scope.

41. Turning now to the question of w hether the offences for which the applicants were prosecuted were the same ( idem ), t he Court has acknowledged in the case of Sergey Zolotukhin v. Russia (see Sergey Zolotukhin v. Russia [GC], no. 14939/03, §§ 81-84, ECHR 2009) the existence of several approaches to th is question. The Court presented an overview of the three different approaches to this question. It found that the existence of a variety of approaches engendered legal uncertainty incompatible with the fundamental right not to be prosecuted twice for the same offence. It was against this background that the Court provided in that case a harmonised interpretation of the notion of the “same offence” for the purposes of Article 4 of Protocol No. 7 to the Convention . In the Zolotukhin case the Court thus found that an approach which emphasised the legal characterisation of the two offences was too restrictive on the rights of the individual. If the C ourt limited itself to finding that a person was prosecuted for offences having a different legal classification, it risked undermining the guarantee enshrined in Article 4 of Protocol No. 7 rather than rendering it practical and effective as required by the Convention. Accordingly, the Court took the view that Article 4 of Protocol No. 7 had to be understood as prohibiting the prosecution or trial of a second “offence” in so far as it arose from identical facts or facts which were substantially the same. It was therefore important to focus on those facts which constituted a set of concrete factual circumstances involving the same defendant and inextricably linked together in time and space, the existence of which had to be demonstrated in order to secure a conviction or institute criminal proceedings.

42 . In the present case the parties disagree on whether the fuel fee proceedings, on the one hand, and the tax fraud proceedings, on the other hand, arose from the same facts. The Court notes, first of all, that the legal entities involved in both sets of proceedings were only partly the same. Leaving aside the fact that the applicant company was not, and indeed could not be, charged accord ing to Finnish law other than th r ough its board members, that is, the second and third applicants (see Isaksen v. Norway ( dec. ), no. 13596/02, 2 October 2003; and, mutatis mutandis , Pokis v. Latvia ( dec .), no. 528/02 , ECHR 2006 ‑ XV; and Agrotexim and Others v. Greece , 24 October 1995, §§ 66-68, Series A no. 330 ‑ A ), both the second and third applicants were also charged in their personal capacity in the tax fraud proceedings. In addition, t hey had also been ordered, in the administrative proceedings, to pay fuel fees separately from the applicant company.

43 . A s far as the second and third applicants are concerned, the Court notes , h owever , that the facts in these two sets of proceedings were not the same. T he fuel fee proceedings arose from the fact that between 2002 and 2006 the second and third applicants had used more leniently taxed diesel than diesel oil in their vehicles without giving any prior notification to the authorities. However, in the criminal proceedings the second and third applicants were , in their personal capacity , accused and convicted of aggravated tax fraud because they had participated in tax evasion between December 2000 and December 2006 by removing 234,138 litres of diesel imported from Russia from the tanks of the company trucks and transferring it to a container for purposes other than for the repair of the vehicles in question without paying any import taxes, namely customs duties, value ‑ added tax and excise. The Court thus agrees with the Supreme Administrative Court that these proceedings did not concern a same set of events but events which were connected but still distinct in time and place.

44. The Court therefore considers that the two impugned sets of proceedings did not constitute, as far as the second and third applicants were concerned in their person al capacity, a s ingle set of concrete factual circumstances ar i s ing from identical facts or facts which were substantially the same . Accordingly, t he application is thus manifestly ill-founded and must be declared inadmissible pursuant to Article 35 § 3 (a) and 4 of the Convention.

For these reasons, the Court, unanimously,

Declares the application inadmissible.

Done in English and notified in writing on 29 January 2015 .

Françoise Elens-Passos Guido Raimondi Registrar President