FOURTH SECTION

PARTIAL DECISION

AS TO THE ADMISSIBILITY OF

Application no. 36288/97 by Peter FRYCKMAN and FRYCKMAN-YHTIÖ OY against Finland registered on 30 May 1997

The European Court of Human Rights (Fourth Section), sitting on 15 November 2005 as a Chamber composed of:

Sir Nicolas Bratza , President , Mr G. Bonello , Mr M. Pellonpää , Mr K. Traja , Mr L. Garlicki , Mr J. Borrego Borrego , Ms L. Mijović, judges , and Mr M. O ’ Boyle , Section Registrar ,

Having regard to the above application lodged with the European Commission of Human Rights on 21 May 1997 ,

Having regard to Article 5 § 2 of Protocol No. 11 to the Convention, by which the competence to examine the application was transferred to the Court,

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

The first applicant is a Finnish national, born in 1951 and currently serving a prison sentence in Finland . The second applicant was a limited liability company owned by the first applicant but eventually wound-up. In the proceedings before the Court t he applicants are represented by Mr Petteri Snell, a lawyer practisi ng in Helsinki. The respondent Government were represented by their Agent, Mr Arto Kosonen, Director in the Ministry for Foreign Affairs.

A. The circumstances of the case

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

1. Transactions between the applicant company and its subsidiaries

In May-June 1988, the applicant company (until 1997 named Osakeyhtiö Six) bought through two subsidiaries Six-Myynti Oy (later Cenoporex Oy) and Aromimauste Oy (later Seroponex Oy), both limited liability companies owned 100% by the applicant company, significant numbers of the shares of a Finnish bank, Suomen Yhdyspankki Oy. The transactions were financed by a competing bank, Kansallis-Osake-Pankki.

According to the applicants, during November and December 1988 the subsidiaries divested their security holdings realising a notable pre-tax profit (ordinary income).

On 30 December 1988 the applicant company sold the shares of its aforementioned subsidiaries to the limited liability company to be established later (Moniplan Oy). It gained a pre-tax profit (capital gain).

2. Taxation of the applicant company

In 1991 taxation proceedings were initiated after the applicant company had submitted its tax return concerning the taxation year 1989. It had requested that 80 % of its income from a transaction with Moniplan Oy be considered exempted from taxation. Under the relevant legislation such an exemption was possible for income obtained from the disposal of fixed assets which had been owned for more than five years and if their disposal had taken place before 1 January 1989 . The applicant company had owned the shares of Seroponex Oy and Cenoporex Oy for the requisite period.

In their report to the Tax Board ( verolautakunta, skattenämnden) of Helsinki the tax auditors considered the transaction between the applicant company and Moniplan Oy to be a sham as it had aimed at having the subsidiaries evade the taxes due on their transactions during the taxation year 1989. Relying on sections 56-57 of the Taxation Act ( verotuslaki, beskattningslagen 482/1958), the auditors considered that the applicant company ’ s pre-tax profit amounted to a disguised dividend which should be added to its taxable income. In particular, the auditors noted that the sale had been financed by a withdrawal of a sum from the bank accounts of the sold subsidiaries, of which parts had been transferred into the bank account of the applicant company, and by setting off against the sales price the claims which the subsidiaries had held against the applicant company. Moreover, despite having sold the two subsidiaries, the first applicant had maintained the use of their bank accounts.

The Tax Board agreed with the tax auditors and imposed taxes on the applicant company.

The applicant company appealed in vain to the Tax Appeal Board ( verotuksen oikaisulautakunta, skatterättelsenämnden , later replaced by the A ssessment A djustment B oard ) and further to the County Administrative Court ( lääninoikeus, länsrätten) of Uusimaa which, on 29 January 1993 , also upheld the decision.

The applicant company then sought leave to appeal from the Supreme Administrative Court ( korkein hallinto-oikeus, högsta förvaltnings-domstolen ) which, on 23 June 1994 , returned the case to the Tax Office ( verotoimisto, skattebyrå) of Helsinki for reconsideration in light of new evidence adduced.

In light of the District Court ’ s judgment of 18 November 1994 (see point 3 below) the Tax Office, on 22 March 1995 , retracted its previous tax assessment. The disguised dividends were no longer taxed as the applicant company ’ s income; it took into account the loss of business profits by virtue of section 72 of the Assessment Act. The Helsinki Tax Office thus deducted from the taxes to be imposed on the applicant company the income obtained from the sale of its subsidiaries. Capital gains tax was imposed on the transaction as an ordinary sale of shares. As a result the amount of taxes was reduced significantly. On 3 May 1995 the State and Municipal Representative in Tax Matters appealed to the A ssessment A djustment B oard . The applicant company did not appeal.

3. Winding-up proceedings

Winding-up proceedings against Cenoporex Oy and Seroponex Oy were initiated in 1992. The companies were declared wound up by the District Court on 4 December 1992 , their sole assets consisting of claims against the applicant company.

On 20 January 1997 the County Tax Office and the estates of Cenoporex Oy and Seroponex Oy initiated winding-up proceedings against the applicant company. On 22 February 2000 the latter company was wound up by the District Court. The company ’ s appeal was dismissed by the Court of Appeal on 18 May 2000 and on 25 August 2000 the Supreme Court refused leave to appeal.

4. Civil proceedings against the applicant company

Meanwhile, in July 1992 the estates of Cenoporex Oy and Seroponex Oy as well as the County Tax Office had initiated civil proceedings against the applicant company, arguing that its transaction in December 1988 with Moniplan Oy had been a sham.

On 18 November 1994 the sales contracts in question were declared null and void by the District Court ( käräjäoikeus, tingsrätten) of Helsinki . The applicant company was ordered to return the amount that it had gained as a profit in share transactions with Moniplan Oy with interest to the estates of Cenoporex Oy and Seroponex Oy.

The applicant company appealed, but on 4 December 1996 the Court of Appeal ( hovioikeus, hovrätten) of Helsinki upheld the judgment. One of the judges considering the appeal was K..

The applicant company applied to the Supreme Court ( korkein oikeus, högsta domstolen) for leave to appeal claiming, inter alia , that the proceedings before the Court of Appeal were unfair as judge K. was biased having already decided on protective measures and thus having a preconceived view as to the result of the case.

On 12 February 1997 the Supreme Court refused the applicant company leave to appeal.

Subsequently on several occasions the applicant company requested the Supreme Court to annul the judgment of the Court of Appeal claiming, inter alia , that judge K. was biased as he allegedly was the first applicant ’ s public enemy.

By its decisions of 9 February 2000 , 12 May 2000 and 18 September 2001 the Supreme Court rejected the requests noting that the applicant company had expressed its misgivings outside the requested time limit provided in the domestic legislation.

5. Taxation of the applicant company ’ s subsidiaries

Cenoporex Oy and Seroponex Oy did not file statutory tax returns for the fiscal year 1989. Relying on information gathered from the tax auditors ’ report on the applicant company, the tax authority estimated the subsidiaries ’ taxable incomes. In light of these estimates the tax authority, on 28 March 1991 , ordered the subsidiaries to pay taxes on the profits generated during 1989. A tax surcharge of 20 % was ordered.

The subsidiaries appealed to the Helsinki A ssessment A djustment B oard enclosing the tax returns which they had just filed and referring to their respective income statements which had shown a loss for the fiscal year in question.

On 12 December 1994 the A ssessment A djustment B oard dismissed the appeals. In light of new information, the Tax Office added further amounts to the respective company ’ s taxable income and imposed a tax surcharge of 20 %.

The subsidiaries appealed to the County Administrative Court against the aforementioned decisions of the two taxation bodies.

On 21 December 1995 the A ssessment A djustment B oard revoked all previous taxation decisions and returned the matter to the Tax Office for a full re-assessment.

On 29 January 1996 the County Tax Office ( lääninverovirasto, länsskatteämbetet) assessed the subsidiaries ’ taxable gross incomes for 1989. Having accepted their deductions from those sums of losses incurred during preceding years, the County Tax Office imposed taxes.

Following appeals by the representatives of the wound-up subsidiaries the County Administrative Court , on 8 October 1997 , returned the cases to the A ssessment A djustment B oard in order to hear the applicants.

On 10 December 1997 the A ssessment A djustment B oard found the companies liable to pay the previously assessed taxes for the fiscal year 1989.

Following further appeals by the subsidiaries, the County Administrative Court , on 11 March 1999 , upheld the decision.

On 8 June 1999 the Supreme Administrative Court stayed the execution of the taxes subject to appeal until its final decision.

On 2 December 1999 the Supreme Administrative Court dismissed the companies ’ final appeals.

Subsequently, the subsidiaries and the applicant company have filed extraordinary appeals to the Supreme Administrative Court .

6. The execution levied on the applicant company ’ s assets

On 19 August 1991 applicant company ’ s assets were seized in order to ensure the payment of taxes assessed on the basis of the presumption that its transaction with Moniplan Oy had been a sham. That seizure was in force until summer 1995. On 10 June 1992 the District Registry ( maistraatti, magistrat ) of Helsinki ordered a parallel provisional seizure of the applicant company ’ s assets following a petition lodged by the County Tax Office of Uusimaa ( lääninverovirasto, länsskatteämbetet) and the estates of Cenoporex Oy and Seroponex Oy. The estates claimed that they had outstanding debts up to the said amount against the applicant company.

On 19 August 1992 the District Registry repealed the provisional seizure ordered earlier on the grounds that the wound-up companies had withdrawn their petition and as the County Tax Office had no independent right to pursue the proceedings.

The County Tax Office appealed to the Court of Appeal which, on 9 February 1993 , repealed the decision of the District Registry and ordered that the applicant company ’ s assets be seized to secure the claims by the estates of the subsidiaries. Judge K. sat as one of the three members of the Court of Appeal. The Supreme Court refused leave to appeal on 19 July 1993 . Apparently the latter seizure was in force until December 1996.

By virtue of a decision made by the creditors of the applicant company on 16 August 2000 , the seized property of the applicant company was liquidated. According to the applicant, the value of the seized property exceeded the sum it was worth in 1991.

7. C riminal proceedings against the first applicant

In December 1992 the tax authority filed a criminal complaint against the first applicant and two other persons, suspecting them of debtor ’ s dishonesty or aiding and abetting that offence.

According to the first applicant, he was first questioned as a suspect in November-December 1992. According to the Government, the first applicant was first questioned as a suspect in March 1993.

In May 1993 the administrator of the wound-up estates of Cenoporex Oy and Seroponex Oy requested that charges be brought. On 16 November 1993 the public prosecutor preferred charges against the first applicant.

On 15 December 1993 the first applicant and two others were charged with two counts of debtor ’ s dishonesty and a further defendant was charged with aiding and abetting before the District Court of Helsinki. The case was heard on 26 occasions before the court.

Questioned by the police on 26 October 1995 , the first applicant alleged that judge K. had received a free trip from a company which at the time had some important cases pending in the Court of Appeal of Helsinki . Apparently judge K. later initiated libel proceedings against the first applicant.

At the 11 th hearing, held on 2 April 1996 , H., one of the witnesses, was heard.

After the 19 th hearing, held on 27 May 1998 , the presiding judge died and she was replaced by another judge.

At an unspecified point after this hearing, another professional judge was added to the composition of the court.

At the 23 rd hearing on 23 June 1999 the case was adjourned in anticipation of the outcome of the taxation proceedings.

On 13 June 2000 the District Court of Helsinki issued its judgment, finding the applicant guilty of debtor ’ s dishonesty and sentenced him to one and a half year ’ s imprisonment.

The applicant appealed, having been granted a two-month extension of his time-limit for appealing. He argued, inter alia , that he should have been acquitted in view of the excessive length of the proceedings. He further argued that the evidence had not been assessed objectively before the District Court due to the change of the composition of the court. He asked the appellate court to hear ten witnesses, including H..

Following an oral hearing where four witnesses were examined, excluding H., the Court of Appeal on 23 November 2001 dismissed the first applicant ’ s request for an acquittal based on the length of the proceedings and upheld his conviction and sentence.

On 28 June 2002 the Supreme Court refused the first applicant leave to appeal.

B. Relevant domestic law and practice

1. Independence and impartiality of a judge

According to Chapter 13, section 1 of the Code of Judicial Procedure and the practice enshrined in the Code, a judge is disqualified if he or she has served as a judge in the case in another court or when the judge has previously decided a part of the case. However, under the provisions of the Code of Judicial Procedure, a judge is not disqualified from considering the merits of the case if he or she has previously participated in the consideration of a petition for protective measures in the same court, relating to the same case. The consideration of a petition for protective measures and the subsequent consideration of the merits of a case in the main proceedings involve different issues.

Under the existing practice in Finland , the impartiality of a judge may be jeopardised in a situation where the judge needs to consider the same case or decide on the same matter or a related issue on several occasions in the same court. However, the problem of impartiality does not always arise. In cases where the court considers the same matter several times, the disqualification of a judge may only become necessary if the judge has earlier made a decision which might result in his or her giving a biased opinion on the matter.

The question of the impartiality of a judge, who participated in the decision-making first concerning a petition for protective measures and subsequently concerning the merits of the case in the main proceedings, has been considered by the Supreme Court. On 30 October 2000 the Supreme Court issued a precedent ( KKO 2000:104 ) in which it found that there was no need to disqualify the judge on the grounds invoked.

An amendment to the legislative provisions on the disqualification of judges entered into force on 1 September 2001 . Under the new provisions in Chapter 13, section 7(2) of the Code of Judicial Procedure, a judge will be disqualified from considering the same case or a part thereof in the same court if there are reasonable grounds to believe that he or she is biased because of a decision made by him or her concerning the same case or for other particular reasons. The new provision will nevertheless not change the assessment of partiality in such a situation as the one described above. The statement of reasons for the relevant Government Bill ( HE 78/2000 vp ) contains the following observation:

“A decision on protective measures does not usually amount to such a preliminary opinion on the matter that the judge should be found disqualified from considering the merits of the case. The questions of evidence in respect of protective measures and the merits of a case differ from each other significantly. A decision in favour of the plaintiffs in respect of the merits requires full proof, whereas the proof of a probable cause is sufficient in respect of protective measures.”

2. Complaint against procedural delay

Under Chapter 16, section 4 of the Code of Judicial Procedure ( oikeudenkäymiskaari, rättegångsbalken ), as in force at the relevant time (Act no. 1052/1991), a district court was required to adjourn criminal proceedings on request, for example if a party wished to adduce further evidence and the court was satisfied there was a good reason for the adjournment. The court could not adjourn criminal proceedings of its own motion save for special reasons. If a party considered that civil or criminal proceedings had been delayed unjustifiably, a procedural complaint ( kantelu, klagan ) could be lodged with the court of appeal within 30 days from the adjournment (subsection 2). If it was important for the resolution of the case that an issue under examination in other proceedings be resolved first, or if there was another long-term impediment to the case being examined, the court could adjourn the case until such time as the impediment had ceased to exist (section 5). These provisions were repealed with effect from 1 October 1997 .

3 . Extraordinary means of appeal

Chapter 31 (109/1960) of the Code on Judicial Procedure, section 2 provides that a complaint for a procedural error shall be filed within six months of the date when the judgment complained against became final.

Under section 10, a request for the reversal of a judgment in a civil case shall be made within one year of the date when the applicant became aware of the circumstance upon which the request is based. However, the period referred to above shall not be calculated from a date earlier than that on which the judgment whose reversal is requested became final.

4 . Levying of execution to secure payment of a debt

Chapter 7, section 1 of the Code of Judicial Procedure reads as follows:

“If the petitioner can establish a probability that he or she holds a debt that may be rendered payable by a decision referred to in Chapter 3, section 1(1) of the Enforcement Act, and that there is a danger that the opposing party hides, destroys or conveys his property or otherwise takes action endangering the payment of the debt, the court may order the seizure of the real or movable property of the opposing party to an amount securing the debt.”

COMPLAINTS

1. The applicants complained under Article 1 of Protocol No. 1 that the applicant company was ordered to pay tax claims for Seroponex Oy and Cenoporex Oy, even though it was not responsible for those debts. As a result all three companies were wound up. Moreover, the transactions between the companies in question were declared null and void and execution was levied on their assets for no lawful reason, preventing them from pursuing their business activities and causing them significant economic loss.

Finally, the companies ’ assets were seized for too long a period of time. Instead they should have been sold, in which case the first applicant could not have been prosecuted for debtor ’ s dishonesty.

The applicants complained that they did not have an effective remedy against the tax authorities. They invoked Article 13 of the Convention in this respect.

2. The applicants further complained under Article 6 of the Convention that judge K. of the Court of Appeal had taken part in the decision-making both on 9 February 1993, ordering the applicant company ’ s assets to be seized to secure the tax claims, and on 4 December 1996, when declaring null and void the sale of the shares of the applicant company ’ s subsidiaries. On the latter occasion, judge K. must have had a prejudged view as he had already found against the applicant company.

The applicants further complained that judge K. had not been impartial as he had been aware of the first applicant ’ s allegations that he had taken bribes, when sitting in the civil case concerning the validity of the transaction between the applicant company and Moniplan Oy.

The applicants further complained that the presiding judge who replaced the judge who died after the 19 th hearing in the criminal proceedings and the additional professional judge had to rely solely on the transcripts of the witness testimonies. Moreover, only one of the three lay judges deliberating on the case had examined witness H., and the Court of Appeal declined to hear H. despite the applicants ’ request.

3. The applicants complained about the allegedly incoherent outcome of the taxation, civil and criminal proceedings which in their view violated the principle of legal certainty implied in Articles 6 and 13. Whereas the transactions between the applicant company and Moniplan Oy were declared null and void in the civil proceedings, the contrary conclusion was reached in the taxation and criminal proceedings.

4. The applicants further complained that the proceedings against them lasted too long. They invoked Article 6.

5. The applicants finally complained under Article 14 of the Convention that they were discriminated against because they had succeeded in their businesses.

THE LAW

A. Alleged violation of Article 1 of Protocol No. 1

The applicants complained that the applicant company was ordered to pay tax claims against Cenoporex Oy and Seroponex Oy, that t he transactions between the companies were declared null and void for no convincing legal reason , that the seizure caused them significant economic loss and prevented them from continuing their activities and that they had no effective remedy against the tax authorities.

The applicants invoked Article 1 of Protocol No. 1 to the Convention 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.”

They also invoked 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.”

1. The parties ’ submissions

The Government considered that the applicants could not claim to be “victims” of a violation of Article 1 of Protocol No. 1. They pointed out that the Tax Office found that the applicant company had obtained a hidden dividend. The District Court, however, found that the transactions involving the shares of Cenoporex Oy and Seroponex Oy were null and void and ordered the applicant company to return the sales profit to its subsidiaries. As a result the Tax Office, in its decision of 22 March 1995 , did not consider the hidden dividend as the applicant company ’ s income for the purposes of reassessing its taxes. Instead its taxable income was estimated under section 72 of the Assessment Act. The taxes imposed upon the applicant company were paid on 1 June 1995 . In other words, the Tax Office deducted the income obtained from the sale of the subsidiaries when reassessing the taxes of the applicant company. Accordingly, the applicant company was not ordered to pay the tax claims against the Seroponex Oy and Cenoporex Oy.

In the alternative, the Government submitted that the applicants failed to exhaust domestic remedies as they did not appeal against the decision of the Tax Office of 22 March 1995 .

In the further alternative, the Government contended that the applicant company was not wound up as a result of the taxes imposed, but as a result of the outcome of the civil proceedings which ended in the nullification of its transactions with Moniplan Oy and ultimately obliged the applicant company to return the sales price to that company. The applicant company could have avoided the winding-up by arranging to pay its civil law debts.

In the Government ’ s view the taxation of the various companies was not arbitrary, which could be seen in the reversal of one of the tax assessments in light of new evidence. Neither were the tax claims time-barred. T he statute of limitations was tied to the date on which the taxes were imposed. Under the established practice there was no statutory time-limit for re-assessing taxes. A decision on re-assessment replaced the previous assessment and the new tax amount was recoverable within five years.

The Government further argued that even assuming that the State could be held responsible for the alleged actions, any interference with the applicants ’ property rights was justified under Article 1 of Protocol No. 1. The lawfulness of the impugned measures was not in doubt and t he domestic authorities ’ and courts ’ reasoning and interpretation of domestic law were not manifestly unreasonable.

The Government noted that Cenoporex Oy and Seroponex Oy had obtained income for which taxes had been imposed and attempts had been made to recover those taxes from them. As the applicant company did not pay the clear and undisputed sums to which the wound-up companies were entitled after the sale of shares in December 1988, their administrators applied for winding-up proceedings against the applicant company. The bankruptcy was thus mainly caused by the applicant company ’ s civil law debts.

As to the protective measures the Government observed that the applicant company ’ s failure to pay taxes in 1989 had led to the seizure in 1991. Due to the failure to pay those tax arrears, the measure was lawful. No tax arrears were recovered from the applicant company through the bankruptcy proceedings. It was the bankrupt companies which wished to recover their civil law claims, which were found to be “clear and undisputed” by the decision of the Supreme Court of 12 February 1997 . The seizures were carried out to protect the tax authorities ’ claims. The Government submitted that the first measure was to recover the tax arrears, and thereafter the creditors took action to protect their civil law claims by means of the bankruptcy proceedings. The Government maintained that the seizures were ordered to remain in force as the applicant company lost the dispute concerning the validity of the share transactions and was ordered to return its profit to the estates of its subsidiaries.

The applicants contended that their property rights had been violated. They maintained that the applicant company had been required to pay tax on behalf of Cenoporex Oy and Seroponex Oy even though it was not responsible for those debts. As a result all three companies were wound up. When the tax authorities initiated the winding-up proceedings the tax claims had not yet been finally determined as the companies had lodged appeals. Cenoporex Oy and Seroponex Oy had no creditors other than the County Tax Office which effectively controlled their estates. The total claims against the applicant company and its subsidiaries exceeded the net profit which the subsidiaries had gained when selling their shares.

The applicants submitted that the transactions between the companies in question were declared null and void and execution was levied on their assets for no lawful reason, preventing them from pursuing their business activities and causing them significant economic loss.

They further maintained that the multiple seizures of the assets of the applicant company deprived them of their property rights. In their view the seized property should have been liquidated earlier to cover the unpaid taxes.

2. The Court ’ s assessment

Leaving aside the Government ’ s preliminary objections, the Court recalls that Article 1 of Protocol No. 1 guarantees in substance the right to property. It 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 the peaceful enjoyment of possessions. The second, 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 to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties. However, the three rules are not “distinct” in the sense of being unconnected: the second and the third rules are concerned with particular interferences with the right to peaceful enjoyment of property and should therefore be construed in the light of the general principle enunciated in the first rule (see , among many other authorities, AGOSI v. the United Kingdom , judgment of 24 October 1986 , Series A no. 10 8 , p. 17 , § 48 ).

The Court recalls that taxation, as an interference with the rights guaranteed in Article 1 of Protocol No. 1, is justified under the second paragraph of Article 1. This provision expressly reserves the right of Contracting States to enforce such laws as they may deem necessary to secure the payment of taxes (see, for example, Å paček , s.r.o. v. the Czech Republic , no. 26449/95, § 41 , 9 November 1999 ). The Court reiterates that the first and most important requirement of Article 1 of Protocol No. 1 is, however, that any interference by a public authority with the peaceful enjoyment of possessions should be lawful: the second sentence of the first paragraph authorises a deprivation of possessions only “subject to the conditions provided for by law” and the second paragraph recognises that the States have the right to control the use of property by enforcing “laws” (see, e.g . Iatridis v. Greece [GC], no. 31107/96, § 58 , ECHR 1999 ‑ II ).

Furthermore, there has to exist a “fair balance” between the demands of the general interest of the community and the requirements of the protection of the individual ’ s fundamental rights in this respect. The concern to achieve this balance is reflected in the structure of Article 1 as a whole, including the second paragraph: there must be a reasonable relationship of proportionality between the means employed and the aims pursued. Furthermore, in determining whether this requirement has been met, it is recognised that a Contracting State, not least when framing and implementing policies in the area of taxation, enjoys a wide margin of appreciation and the Court will respect the legislature ’ s assessment in such matters unless it is devoid of reasonable foundation (see the National & Provincial Building Society, the Leeds Permanent Building Society and the Yorkshire Building Society v. the United Kingdom , judgment of 23 October 1997, Reports of Judgments and Decisions 1997-VII, §§ 80-82).

As to the applicants ’ complaint in the present case that the share transaction between the applicant company and Moniplan Oy was declared null and void and execution was levied on their assets without any legal reason, the Court notes that the applicant company ’ s tax liability changed as a result of the decision of the Court of Appeal, upholding the finding of the District Court that the transactions had been a sham. The civil proceedings in question were undoubtedly carried out in accordance with the legislative provisions in force in Finland . The Court recalls that its power to review domestic law is limited (see, inter alia , Håkansson and Sturesson v. Sweden , judgment of 21 February 1990, Series A no. 171-A, p. 16, § 47). Questions as to the proper interpretation of the provisions of domestic legislation lie primarily with the domestic authorities. In the present case the Court does not find any errors committed by the domestic courts involving a possible violation of any of the rights and freedoms set out in the Convention or one of its Protocols. As to the seizure, the Court finds that they were imposed on the applicant company ’ s assets in order to secure the payment of taxes in the general interest and contributions as recognised in the second paragraph of Article 1 of Protocol No. 1. Nor does it find that the impugned measures placed a disproportionate burden on the applicants.

As to the allegation that the applicant company was held liable for the debts of its subsidiaries, the Court notes that the subsidiaries had earned income in respect of which taxes had been imposed in accordance with the applicable national law in force and attempts had been made to recover the taxes from the companies. As the applicant company did not repay the profits from the void sale transactions to the subsidiaries, their trustees lodged an application for the winding-up of the applicant company.

In the circumstances of the present case, and having regarded the legitimate aim pursued by the legislation and the wide margin afforded to the national authorities in taxation matters, the Court is persuaded that the applicants have not been made to carry an individual and excessive burden and that a fair balance has been struck between the applicants ’ rights and the public interest in securing the payment of taxes and other contributions , regard also being had to the procedural safeguards afforded. Accordingly, there is no appearance of a violation of Article 1 of P rotocol No. 1 to the Convention . It follows that this complaint is manifestly ill-founded.

Since Article 13 applies only where an individual has an “arguable claim” to be the victim of a violation of a Convention right (see Boyle and Rice v. the United Kingdom , judgment of 27 April 1988, Series A no. 131, § 52), it also follows that the applicants ’ complaint under this provision fails.

This part of the application must therefore be rejected as manifestly ill-founded pursuant to Article 35 §§ 3 and 4 of the Convention.

B. Alleged violation of Article 6

The applicants complained under Article 6 of the Convention that judge K. in the Court of Appeal lacked impartiality due to his previous participation in the execution proceedings and because he was aware of the first applicant ’ s allegations that he had taken bribes. The first applicant furthermore complained that the presiding judge who replaced the judge who died after the 19 th hearing in the criminal proceedings against him and the additional professional judge had not participated in the proceedings when the witnesses were heard and that only one of the three lay judges deliberating on the case had examined witness H.. He further complained that the Court of Appeal refused to hear H. in the criminal proceedings.

Article 6 of the Convention reads, in so far as relevant to the present case, 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 and public hearing within a reasonable time by an independent and impartial tribunal established by law. ...

3. Everyone charged with a criminal offence has the following minimum rights: ...

(d) to examine or have examined witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him. ...”

1. A lleged partiality of judge K. in the civil proceedings

The Government considered that the suspicions against judge K. on the basis that he had participated as a judge in the decision-making with regard to both the protective measure and the merits of the case were ill-founded. The two sets of proceedings in which judge K. took part concerned different questions. At any rate, his participation in the proceedings concerning the seizure of assets was limited to ascertaining whether the County Tax Office could claim standing, whether the claimed debt had any basis and whether there was a danger that the applicant company would hide, destroy or convey its property within the meaning of Chapter 7, section 1 of the Code of Judicial Procedure. When judge K. participated in the Court of Appeal ’ s subsequent examination of the validity of the transaction between the applicant company and Moniplan Oy, the court was in no way bound by its earlier decision concerning protective measures.

As to the applicant company ’ s complaint that judge K. was biased on the ground that the applicants had reported to the police an offence allegedly committed by him, the Government considered that the applicants failed to exhaust domestic remedies by not raising the allegations when seeking leave to appeal to the Supreme Court in the civil proceedings.

The applicants submitted that according to the subjective test judge K. was not impartial and they had serious reasons to doubt whether they received impartial justice before the Court of Appeal. Judge K. was bound to have taken a prejudged view on 4 December 1996 when the court decided on the merits of the civil case as he had already taken part in the decision on 9 February 1993 when the court decided on the seizure.

T he Court reiterates that the existence of impartiality for the purposes of Article 6 § 1 must be determined according to a subjective test, that is to say whether the judge held any personal prejudice or bias in a given case, and also according to an objective test, that is to say by ascertaining whether the tribunal itself and, among other aspects, its composition offered sufficient guarantees to exclude any legitimate doubt in respect of its impartiality (see, inter alia , Fey v. Austria , judgment of 24 February 1993, Series A no. 255, p. 12, §§ 28 et seq.). As to the subjective test, the personal impartiality of a judge must be presumed until there is a proof to the contrary. Under the objective test, when determining whether there were ascertainable facts capable of raising doubts as to the impartiality of a judge, even appearances may be of a certain importance. The objective impartiality may be jeopardised if a judge takes part in several consecutive stages of the same set of proceedings (see, e.g ., the Piersack v. Belgium judgment of 1 October 1982, Series A no. 53, pp. 14-15, § 30). However, the mere fact that a judge has already taken pre-trial decisions cannot by itself be regarded as justifying concerns about his impartiality. What matters is the scope and nature of the measures taken by the judge before the trial. Likewise, the fact that the judge has detailed knowledge of the case file does not entail any prejudice on his part that would prevent his being regarded as impartial when the decision on the merits is taken. Nor does a preliminary analysis of the available information mean that the final analysis has been prejudged (see Morel v. France , no. 34130/96, § 45 , ECHR 2000 ‑ VI ).

In the present case it is true that judge K. took part in the respective decisions in the proceedings against the applicant company concerning the question whether there existed conditions for the ordering of a seizure and later, in the decision in the civil proceedings against it. The Court notes, however, that judge K. ’ s participation in the first-mentioned proceedings was limited to examining the necessity for protective measures, whereas in the second proceedings he decided on the merits of civil claims. The legal questions before the courts in the two proceedings were thus distinctly different ( see mutatis mutandis , Nikula v. Finland (dec.), no. 31611/96 , 30 November 2000 ). There is no indication that in deciding the protective measure of seizure that judge K. would have formed any views on the issues to be finally determined in the civil proceedings.

Against this background the Court does not find that the applicant ’ s concerns were objectively or subjectively justified. Accordingly, there is no appearance of a violation of Article 6 in this respect.

As for the bias allegedly arising from the applicants ’ allegations that judge K had taken a bribe, the Court reiterates that by Article 35 § 1 of the Convention it may only deal with the matter after all domestic remedies have been exhausted, according to the generally recognised rules of international law, and in compliance with domestic formal requirements and time-limits (see, e.g ., Yahiaoui v. France , no. 30962/96, judgment of 14 January 2000, § 31). The Supreme Court found this allegation to be time-barred in the extraordinary proceedings. Seeing no reason to differ, this Court concludes that the applicant company failed to exhaust domestic remedies within the meaning of Article 35 § 1 of the Convention.

In conclusion, the complaint as to the alleged bias of judge K. is inadmissible in part as manifestly ill-founded within the meaning of Article 35 § 3 of the Convention and in part for non-exhaustion of domestic remedies pursuant to Article 35 § 1 of the Convention, and must therefore be rejected under Article 35 § 4 of the Convention .

2. The change in the District Court ’ s composition and an alleged failure to hear a witness before the Court of Appeal in the criminal proceedings

The Government considered that the first applicant had failed to exhaust domestic remedies in this respect. While the new judges had not heard the witnesses, the witness testimony was available in the form of transcripts. The Government further observed that the Court of Appeal had the trial materials of the District Court at its disposal when preparing the hearing, and there were also other witnesses in the applicant ’ s long list of witnesses not heard by the Court of Appeal. Thus, the Court of Appeal apparently found their hearing unnecessary for the examination of the case. Nor did the Supreme Court find it necessary to grant leave to appeal on the grounds that not all the witnesses had been heard by the Court of Appeal.

The first applicant submitted that he did not receive a fair trial, i.e . a fair evaluation of all the critical evidence, due to the fact that the composition of the District Court had altered during the proceedings. He asserted that Finnish case-law required that the judges participating in the deliberations should have heard the witnesses themselves and thus made personal and direct observations during the testimonies. He complained that the presiding judge who replaced the judge who died after the 19 th hearing in the criminal proceedings and the additional professional judge had to rely solely on the transcripts of the witness testimonies. Moreover, only one of the three lay judges deliberating on the case had examined witness H.. The first applicant further complained that the Court of Appeal refused his request to hear witness H. although he found the hearing of the said witness necessary. He submitted that the reason that a witness H. was not heard before the Court of Appeal was that at that time she was working abroad and her employer restricted her travel.

The Court notes that, according to the first applicant, he had presented these grievances to the Supreme Court, which on 28 June 2002 refused him leave to appeal. The first applicant has accordingly exhausted domestic remedies within the meaning of Article 35 § 1 of the Convention.

Turning to the substance of his complaints, the Court would underline that according to Article 19 of the Convention, its duty is to ensure the observance of the engagements undertaken by the Contracting Parties in the Convention. In particular, it is not the function of this Court to deal with errors of fact or law allegedly committed by a national court unless and in so far as they may have infringed rights and freedoms protected by the Convention. In particular, while Article 6 guarantees the right to a fair hearing, it does not lay down any rules on the admissibility of evidence or the way it should be assessed, which are therefore primarily matters for regulation by national law and national courts (see, e.g. Pitkänen v. Finland , no. 30508/96, § 60 , 9 March 2004 ) . The Court ’ s task is to ascertain whether the proceedings as a whole, including the way in which the evidence was taken, were fair.

As the Court has confirmed on numerous occasions, all evidence must normally be produced at a public hearing, in the presence of the accused, with a view to adversarial argument. Article 6 §§ 1 and 3 (d) require that the defendant be given an adequate and proper opportunity to challenge and question a witness against him, either when he was making his statement or at a later stage of the proceedings (see Isgro v. Ital y , judgment 19 February 1991, Series A no 194, p. 12, § 34; Van Mechelen and others v. the Netherlands , judgment of 23 April 1997, 1997-III, p. 711 § 51).

The Court has also considered that an important element in criminal proceedings is also the opportunity for an accused to be confronted with the witness in the presence of the judge who ultimately decides the case. This principle of immediacy is an important guarantee of fairness as the observations made by the court about the demeanour and credibility of a witness may have important consequences for an accused. Therefore, normally a change in the composition of the trial court after the hearing of an important witness should lead to the rehearing of that witness (see Pitkänen v. Finland , cited above , § 58).

In the present case it has not been shown that the change of the presiding judges of the District Court or the addition of a second professional judge deprived the first applicant of his right to challenge or question any of the witnesses heard by the court, including H., who were heard by the original composition of the District Court prior to the 19 th hearing.

While the change of judges after that hearing did not lead to the rehearing of the witnesses, the Court considers that in the specific circumstances of the present case this defect alone does not constitute a violation of Article 6. First, the credibility of witness H. in question was at no stage challenged, nor was there any indication in the file justifying doubts about the credibility of that testimony. In these circumstances the fact that the subsequent presiding (and lay) judges had at their disposal the minutes of the session at which this witness had been heard to a large extent compensates for the lack of the immediacy of the proceedings. Secondly, the first applicant ’ s conviction was not based only on the evidence of witness H.. Thirdly, there is nothing suggesting that the judges were changed in order to affect the outcome of the case or for any other improper motives.

In so far as the first applicant criticised the findings made by the new presiding judge and the other members of the court on the basis of the evidence, the Court recalls the primary role of domestic courts in the assessment of evidence. The conclusions drawn by the domestic court in this case do not disclose any apparent arbitrariness, capable of raising issues under Article 6 (see also (C.) below). The Court further notes that the first applicant could challenge those conclusions before two further court instances.

As to the complaint that the Court of Appeal did not hear H., the Court recalls that in regard to the hearing of witnesses it is as a general rule for the national courts to assess the evidence before them as well as the relevance of the evidence which defendants seek to adduce. Article 6 § 3 (d) of the Convention leaves it to the national courts to assess whether it is appropriate to call witnesses and it does not require the attendance and examination of every witness. Its essential aim is to secure an equality of arms in the matter (see, e.g. , Vidal v. Belgium , judgment of 22 April 1992 , Series A no. 235 ‑ B, p. 32 , § 33). In the present case the Court recalls that the Court of Appeal heard four witnesses and, implicitly, did not consider it necessary to hear H. It would also note that on the applicant ’ s version of events H. was unable to attend as she was working abroad and on that basis no fault would attach to the authorities for her absence from the proceedings.

It follows that these complaints must be rejected as being manifestly ill-founded within the meaning of Article 35 § 3 and 4 of the Convention.

C. Alleged incoherent outcome of the different proceedings

The applicants have further complained about the incoherent outcome of the taxation, civil and criminal proceedings which in their view violated the principle of legal certainty implied in the above-cited Articles 6 and 13. Whereas the transactions between the applicant company and Moniplan Oy were declared null and void in civil proceedings, the contrary conclusion was reached in the taxation and criminal proceedings. The applicants maintained that a legal system should be logical and offer sufficient legal certainty, and thus the same transaction could not be valid and simultaneously null and void. Furthermore, the Finnish legal system does not offer a remedy against this kind of injustice.

The Government noted that in the District Court ’ s judgment of 13 June 2000 finding the first applicant guilty of debtor ’ s dishonesty the court took no position with regard to the validity of the applicant company ’ s sale of its subsidiaries. The charges and the first applicant ’ s conviction were based on his conduct in financing that sale which had significantly weakened the financial position of the subsidiaries, leading to their being wound-up after being unable to pay their tax arrears. The Government further recalled that the fact that the share transactions were declared null and void as a result of the action brought by the estates of the bankrupt companies, had no relevance when the criminal nature of the applicant ’ s conduct relating to the transactions was assessed.

Noting its findings above on its role under Article 19 of the Convention, t he Court , agreeing with the Government, finds no indication of any unfairness or arbitrarin ess stemming from the differing outcomes of the various proceedings which could raise an issue under Article 6. N o separate issue arises in the circumstances under Article 13.

It follows that this complaint is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.

D. Length of the criminal proceedings concerning the first applicant

1. The Government ’ s preliminary objection

The Government submitted that the first applicant had not exhausted domestic remedies as he had failed to complain about any of the District Court ’ s sixteen adjournments between 15 December 1993 and 10 June 1997 . Under the Code of Judicial Procedure as in force at the relevant time and as borne out by the domestic practice referred to by the Government a party could complain to the appellate court against an adjournment. Moreover, on seven occasions the applicant himself requested an adjournment.

The first applicant considered that the remedy provided by Chapter 16, section 4, subsection 2, of the Code of Judicial Procedure, as in force at the time, did not meet the requirements of a remedy whereby he could have obtained an acceleration of the proceedings. Such a complaint could only be effective if the time required for processing it were shorter than the adjournment in question. The District Court adjourned the proceedings for up to five months, whereas a complaint about the adjournment might have taken up to a year to decide.

As for this Government ’ s preliminary objection, the Court notes that it has found in the context of Article 13 that no effective remedy existed for the enforcement of a right to a hearing within a reasonable time ( Kangasluoma v. Finland , no. 48339/99, § 49, 13 January 2004). In that case the Court rejected the Government ’ s argument, raised also in this application, that effective redress was provided by the provisions of the Code of Judicial Procedure. The preliminary objection must therefore be dismissed.

2. The substance of the case

The Government submitted that the complaint was at any rate manifestly ill-founded. The proceedings commenced in March 1993, when the first applicant was first questioned as a suspect. The case was complex, involving three accused and three complainants, and the file contained some 2,000 pages of evidence. The parallel proceedings regarding taxation, preventive seizure of assets, and the validity of the transaction between the applicant company and Moniplan Oy also delayed and complicated the criminal proceedings. Further, the conduct of the first applicant and his co-defendants contributed to the length. The first applicant requested on eleven occasions that the case be adjourned, occasionally for three or four months. He never objected to any adjournment requested by other parties. Whereas the prosecutor and the complainants left the case to be decided in April 1996, the defendants obtained an adjournment. The defendants were also granted an extension of the time-limit for appealing to the Court of Appeal.

The Government considered therefore that the courts acted as expeditiously as possible in the circumstances of the case and that insofar as the District Court adjourned the case of its own motion, in particular in anticipation of the outcome of the taxation proceedings, that outcome could have affected the consideration of the criminal case to the defendants ’ advantage.

The first applicant took the view that the proceedings began in November-December 1992, when he was first questioned as a suspect of the debtor ’ s dishonesty in question. The delay in the proceedings was solely attributable to the authorities. The County Tax Office was the sole creditor of the wound-up subsidiaries of the applicant company and their estates had appealed against the taxation decision of 12 December 1994 . Against this background the constitutive element of debtor ’ s dishonesty, which at the time presupposed that he or she had been unable to fulfil the total claims of the creditors, could not be proven until the taxation proceedings had come to an end. As a result of the premature charges against the first applicant the criminal proceedings came to depend on the length of the taxation proceedings. The first applicant finally pointed out that the extension of his time-limit for appealing in the criminal proceedings was due to the District Court ’ s inability to provide transcripts from its trial within the normal period. He cannot therefore be blamed for that extension.

The Court considers, in the light of the criteria established by its case-law on the question of “reasonable time”, and having regard to all the material in its possession, that an examination of the merits of this complaint is required. The Court concludes therefore that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. No other ground for declaring it inadmissible has been established.

E. Length of the civil and taxation proceedings

The Court notes that the civil proceedings against the applicant company were initiated in July 1992. They ended in February 1997, when the Supreme Court refused the applicant company leave to appeal. The total length of the proceedings was thus approximately four years and seven months. Taken into account the complexity of the case, the total length can not be considered excessive. Accordingly, there is no indication of a violation of Article 6 § 1 in this respect. It follows that this part of the application must be rejected as being manifestly ill-founded, within the meaning of Article 35 §§ 3 and 4 of the Convention.

In so far as the applicants can be regarded as complaining about the length of the taxation proceedings against the applicant company and its subsidiaries, the Court firstly notes that no tax surcharges were imposed on the applicant company in the taxation proceedings against it. The Court has consistently held that, generally, tax disputes fall outside the scope of “civil rights and obligations” under Article 6 of the Convention, despite the pecuniary effects which they necessarily produce for the taxpayer ( Västberga Taxi Aktiebolag and Vulic v. Sweden , no. 36985/97, § 75 , 23 July 2002 ). Since the taxation proceedings against the applicant company do not determine any civil rights or obligations, this part of the complaint must be rejected as being incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3 and 4.

Secondly, as regarded the length of the taxation proceedings against the subsidiaries, the Court notes that the subsidiaries have not introduced an application before this Court. The present application was lodged only by the first and the second applicant who cannot claim to be victims of the alleged violation for the purposes of Article 34 of the Convention and this part of the complaint must therefore be rejected as being incompatible ratione person ae with the provisions of the Convention within the meaning of Article 35 § 3 and 4.

6. Alleged discrimination

The applicants, finally, complain under Article 14 of the Convention that they were discriminated against because they had succeeded in their businesses. The said Article reads as follows:

“The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”

The Court notes that the applicants have not provided any substantiation of this complaint. It is therefore manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.

For these reasons, the Court unanimously

Declares admissible, without prejudging the merits, the first applicant ’ s complaint concerning the length of the criminal proceedings against him;

Declares inadmissible the remainder of the application.

Michael O ’ Boyle Nicolas Bratza Registrar President