FOURTH SECTION

CASE OF S.C. SERVICE BENZ COM S.R.L. v. ROMANIA

( Application no. 58045/11 )

JUDGMENT

STRASBOURG

4 July 2017

FINAL

04/10/2017

This judgment is final in the circumstances set out in Article 44 § 2 of the Convention. It may be subje ct to editorial revision.

In the case of S.C. Service Benz Com S.R.L. v. Romania ,

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

Vincent A. De Gaetano, President, András Sajó, Nona Tsotsoria, Paulo Pinto de Albuquerque, Krzysztof Wojtyczek, Egidijus Kūris, Gabriele Kucsko-Stadlmayer, judges, and Marialena Tsirli , Section Registrar ,

Having deliberated in private on 24 May 2016 and 16 May 2017 ,

Delivers the following judgment, which was adopted on th e latter date:

PROCEDURE

1 . The case originated in an application (no. 58045/11) against Romania lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Romanian commercial company , S.C. Service Benz Com S.R.L. (“the applicant”), on 15 August 2011 .

2 . The applicant was represented by Ms M. E. Marzavan, a lawyer practising in Bucharest . The Romanian Government (“the Government”) wer e represented by their Agent, M s C. Brumar, of the Ministry of Foreign Affairs .

3 . The applicant company com plains about the confiscation by the Romanian authorities of its two fuel tankers , which they allege were c onfiscated despite the fact that they had committed no offence and no fault on their part had ever been lawfully established . In that connection , the company relied on A rticle 6 of the Convention and A rticle 1 of Protocol No. 1 to the Convention .

4 . On 18 December 2012 the application was communicated to the Government .

5 . Following the withdrawal of Ms Iulia Motoc, judge elected in respect of Romania (Rule 28 of the Rules of Court ), Mr Krzysztof Wojtyczek was appointed to sit as an ad hoc judge (Article 26 § 4 of the Convention and Rule 29 § 1 of the Rules of Court ).

THE FACTS

I. THE CIRCUMSTANCES OF THE CASE

6 . The applicant company, Service Benz Com S.R.L., is a Commerciale company founded in 1993 under Romanian law and based in Aduna ţ ii Cop ă ceni.

7 . On 11 May 2010 the applicant company, whose main activity is the retail distribution of fuel in specialised outlets, entered into a contract with company “ N. ” SARL for the carriage of “ automobile lubricants and other goods ” . The contract stipulated that it was incumbent on the company N. to “complete the transport documents with the requisite, correct and accurate information ” .

8 . On the same day, two fuel tankers belonging to the company S.C. Service Benz Com S.R.L. were loaded in Bulgaria , in the presence of a tax office representative . A fter the tankers had been loaded the representative sealed them.

9 . Before the two fuel tankers could reach their destination, they were stopped for inspection by representatives of the Romanian fraud squad . After laboratory analyses, the Romanian authorities found that the liquid transported did not have the same specifications as those indicated in the transport documents .

10 . By official report of offence of 7 June 2010, the fraud squad representatives decided to :

– impose on the company “ N ” , the owner of the goods carried , a fine of RON 100, 000 ( approximately EUR 23 , 000) f or non- compliance with the regulations on goods subject to excise duty pursuant to A rticle 220 § 1 ( k) of the C ode of Tax Procedure ( “ CPF ” ); and

– confiscate the goods ( the liquid carried ) and the two fuel tankers belonging to the applicant company , pursuant to A rticle 220 § 2 ( a) and ( b) CPF.

11 . The applicant company challenged the part of that official report relating to the confiscation of its two fuel tankers . Before the Slobozia Court of First Instance it argued that :

– it had only carried its customer ’ s goods and accordingly held no responsibility for their compliance   with the law ;

– A rticle 220 § 1 ( k) CPF had not been applicable to it since , according to the transport documents in its possession, it had not been transporting goods subject to excise duty .

12 . By judgment of 15 November 2010 the Slobozia Court of First Instance a llowed the applicant company ’ s challenge and annul led the part of the official report relating to the confiscation of the fuel tankers . The trial court held as follows :

– the transport company ’ s responsibility could not be incurred because it had not been in a position to verify the legal conformity of the goods and a tax office representative had sealed the two fuel tankers after l oading ; and

– in the instant case the confiscation had therefore been unacceptable and unlawful.

13 . The tax authorities appealed against that judgment .

14 . On 28 February 2011 the Ialomiţa County Court allowed the tax authorities ’ appeal : i t quashed the judgment and , ruling on the merits, dismissed the applicant company ’ s challenge as being ill- founded . The court reasoned as follows :

– the administrative offence laid down in A rticle 220 § 2 ( b) CPF authorised the ancillary penalty of confiscation, without specifying whether the property to be confiscated belonged to the administrative offender or to a third party ;

– furthermore , A rticles 24 and 25 of Government Ordinance No. 2/2001 of 12 July 2001 governing administrative offences provided for the eventuality of the confiscated property belonging to someone other than the administrative offender .

The court gave the following reasons for its judgment :

“ ... the owner of the confiscated property , the company Service Benz Com SARL, is not an administrative offender , such that there is no need to [discuss] any fault on its part ; the confiscation is conducted exclusive ly in pursuance of the la w as an ancillary penalty ; it can only be annulled in the event of breach of the relevant legal provisions .

The ground of appeal based on negligence on the part of the transporter , who was direct ly responsible for the safety and lawfulness of the goods transported , is also well- founded . ”

II. RELEVANT DOMESTIC LAW AND PRACTICE

Article 1

“ The law on administrative offences defends social values which are not protected under criminal la w . An administrative offence is an act which is committed negligently and is foreseen and penalised by la w , under a Government Ordinance or , if appropriate, by decision of a municipality [ or ] city ... . ”

Article 5

“ (1) Main or ancillary administrative penalties may be imposed .

(2) The main administrative penalties are as follows :

...

(b) administrative fine ;

...

(3) The following are ancillary administrative penalties :

(a) confiscation of property originating in, or used or intended for, the commission of the administrative offences . ”

Article 24

“ (1) Officers imposing a fine shall also ord er the confiscation of the property originating in, or used or intended for, the commission of the administrative offences. ...

(3) Officers imposing the penalty must identify the owner of the confiscated property , and, if the latter belongs to a person other than the administrative offender , must, if possible, include in the official report the owner ’ s personal details , or else the reasons f or which he or she could not be identified . ”

Article 25

“ (1) A copy of the official report shall be presented to or, if appropriate , served on the administrative offender and, where necessary, the injured party and the owner of the confiscated property . ”

16 . The relevant provisions of the C ode of Tax Procedure in force at the material time read as follows :

Article 220 – Administrative offences and penalties in the sphere of good subject to excise duty

“ 1. The following acts are administrative offences :

...

( k) transport ing goods subject to excise duty without the accompanying document — DAI — provided for in Section VII of the Tax C ode , or goods in respect of which the document has only been part ly compl eted or comprises data which do not correspond to the actual quantity , the C N code or the transport document , a s well as transport ing products subject to excise duty by means of tanks or recipients which are unsealed or have damaged seal s.

2. The offences mentioned in the first paragraph shall be subject to a fine ... and :

...

( b) confiscation of the tanks , recipients and means of transport u sed to carry the goods subject to excise duty [ under the conditions described ] in paragraph 1 ( k) above . ”

17 . The Romanian Constitutional Court , as the “ guarantor of the supremacy of the Constitution ” , must interpret domestic legal provisions in the framework of its scrutiny of the constitutionality of legislation.

It has on several occasions dealt with the issue of the constitutionality – vis-à-vis protecting ownership rights – of the provisions of A rticle 190 § 2 ( b) CPF, later A rticle 220 § 2 ( b) CPF, in so far as those provisions authorise the confiscation of property potentially belonging to persons other than the administrative offender .

In its Decisions Nos. 685 of 16 November 2006, 603 of 19 July 2011 and 1521 of 24 January 2012, it ruled that those provisions were not unconstitutional, having regard to the following fact or s :

– by entrusting the confiscated means of transport to the administrative offender , its owner had accepted the risk that the latter would use it in a manner that was dangerous to society ;

– the owner of the confiscated property could in any case obtain compensation from the administrative offender for the damage caused, by means of a legal action base d on the contract entered into with the latter;

– a different interpretation would make it easy to circumvent the legal provisions , given that the administrative offender could plead in his defence that he had only h el d possession of the means of transport by permission , such that the unlawful transport activity could continue .

18 . At th e material time civil contractual liability had been governed by the provisions of A rticles 1073 - 1090 of the Romanian Civil C ode. Romanian case-law considers that civil contractual liability, including in the sphere of transport law, can only be engaged where several conditions have concurrently been fulfilled , that is to say damage, an unlawful act, negligence and a causal link between the act and the damage ( see Gheorghe Piperea, Dreptul transporturilor , All Beck publishers , 2005, p. 50-51).

19 . The relevant provisions of the Commercial Code as in force at the material time read as follows:

Article 416

“ The forwar der is required to hand over to the transporter the customs papers and any other necessary documentation ; the former is responsible for the content and lawfulness of those documents. ”

Article 1961 § 3

“ The forwar der is li able vis-à-vis th e transporter f or any damage caused by a defect in the goods or for any other omission, shortcoming or incorrect entries i n the transport document or , where appropriate , in any additional documents. Th e transporter is [ li able] vis-à-vis third parties for any damage thus caused , but can file an action for damages against the forwarder . ”

THE LAW

I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1 TO THE CONVENTION

The Court note s that the applicant company ’ s main complaints concern the confiscation of the vehicles . It considers therefore that the application should be analysed solely under Article 1 of P rotocol No. 1 to the Convention (see Andonoski v. the Former Yugoslav Republic of Macedonia , no. 16225/08, § 19, 17 September 2015). That provision 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

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

B. Merits

1. The parties ’ submissions

23 . The Government accept ed that the confiscation of the applicant company ’ s fuel tankers amounted to an interference with its property rights . They nevertheless considered that :

– that interference had been prescribed by law, that is to say Article 220 §§ 1 (k) and 2 (b) CPF; those provisions had been accessible and foreseeable, particularly given the applicant ’ s status as a company with extensive experience in the field of fuel for motor vehicles (see paragraph 7 above);

– the interference with the right of ownership had pursued a legitimate aim , that is to say preventing tax evasion in the sphere of petroleum products and thereby improving the state of public finance ;

– a fair balance had been struck between the public interest and the interests of the applicant company .

24 . On the latter point, the Government exp lained that :

– although a major penalty had been imposed on the applicant company, certain restrictive measures could be applied to private property , such as those concerning items of property which had been the instrument s , or embodi ed the proceeds , of the commission of criminal or administrative offences;

– in the present case the confiscation had concerned not just any vehicle unconnected to the offence noted, but two fuel tankers which, having regard to the applicant company ’ s stated business activities, could reasonably have been thought to have been used for transport ing fuel;

– regard should also be had to the fact that by entering into a contract with the company N., the applicant company had accepted the risk of any unlawfulness in the latter ’ s activities , in view, in particular, of the following factors : the nature of the goods carried ( petroleum products , which type of goods was frequently the subject of tax evasion ), its status as a professional firm involved in retail distribution of fuel, its long experience in that sphere ( the applicant company had been set up in 1993), a nd its obligatory acquaintance with the relevant legal provisions ;

– the tax authorities had had no discretionary power as regards the appropriateness of ordering confiscation, which was required by la w in cas es of such offences ( see, to converse effect , Waldemar Nowakowski v. Poland , n o. 55167/11 , § 51 in fine , 24 July 2012).

25 . Finally , the Government emphasised that the applicant company could have sought redress from the other party to the contract , in the form of compensation for the damage suffered following the confiscation of the fuel tankers . They submitted that :

– the transport contract entered into with that company laid down that it was incumbent on the company N. to “ complete the transport documents with the requisite, correct and accurate information” ( see paragraph 7 above );

– accordingly , the applicant company had been at complete liberty to bring an action for damages in contract before the domestic courts if the company N. had refus ed to pay compensation .

26 . The applicant company, for its part, considered that the confiscation of its property had had no legal basis in d omestic law . It submitted that :

– the domestic authorities ’ interpretation of the combined effect of the provisions of paragr aphs 1 ( k) and 2 ( b) of A rticle 220 CPF was erroneous as far as it was concerne d , since, according to the transport documents , the carg o which it was supposed to be carrying had not consisted of goods subject to ex cise duty ;

– the fuel tankers had been sealed after loading, such that even the tax authorities had taken some time to verify the nature of the goods transported ;

– under those circumstances, no fault , lack of diligence or mala fide could be attributed to it ;

– it emerged from its activities on the Romanian market for the past twenty years that it had never, at any stage, attempted to evade tax ;

– it was strange that the County Court had not taken the trouble to verify whether there had been any fault on its part, and had confined itself to formalistic appli cation of the la w .

2. The Court ’ s assessment

a) General principles

27 . The Court r eiterates that A rticle 1 of Protocol No. 1 to the Convention, which in substance guarantees the righ t of property , comprises three distinct rules: the first rule, set out in the first sentence of the first paragraph, is of a general nature and enunciates the principle of the peaceful enjoyment of property; the second rule, contained in the second sentence of the first paragraph, covers deprivation of possessions and subjects it to certain conditions; the third rule, stated in the second paragraph, recognises that the Contracting States are entitled, amongst other things, to control the use of property in accordance with the general interest, by bringing in legislation which they consider necessary to that end. The three rules are not, however, “distinct” in the sense of being unconnected. The second and third rules are concerned with particular instances of interference 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 aut ho r iti es, James and Others v . the Uni ted Kingdom , 21 February 1986, § 37, Series A n o. 98, and, more recently , Béláné Nagy v . Hungary [GC], n o. 53080/13, § 72, E CH R 2016 ).

28 . In order to be compatible with A rticle 1 of Protocol No . 1 , an interference with the right of property must be effected “ in the public interest” and “subject to the conditions provided for by law and by the general principles of international law” . The interference must strike 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 ( see Sporrong and Lönnroth v . Sweden , 23 September 1982, § 69, Series A n o. 52, and Granitul S.A. v . Romania , n o. 22022/03 , § 46, 22 March 2011 ). In determ ining whether that requirement has been complied with , the Court recognises that the State enjoys a wide margin of appreciation with regard both to choosing the means of enforcement and to ascertaining whether the consequences of enforcement are justified in the general interest for the purpose of achieving the object of the law in question ( see AGOSI v . the Uni ted Kingdom , 24 October 1986, § 52, Series A n o. 108).

b) Application of those principles to the instant case

Inasmuch as the applicant company alleges a violation of the legality principle , the Court observe s that it raised that plea before the domestic courts ( see paragraph 11 above ), which dismissed it. In the present case the Court sees no sign of arbitrariness in the interpretation in question. Having regard to the foregoing consideration and bearing in mind the fact that it has limited power, however, to review compliance with domestic law ( see Beyeler v . Italy [GC], n o. 33202/96, § 108, E CH R 2000 ‑ I), the Court concludes therefore that the interference was in conformity with the domestic law of the respondent S tat e .

34 . The Court note s that in the instant case, the confiscation of the applicant company ’ s fuel tankers was ordered in the framework of administrative offence proceedings against the company which owned the goods being carried by the applicant company .

While the first court found no fault attributable to the applicant company and decided to declare the confiscation order wrongful and unlawful, the court of last resort adopted a different position .

It ruled, first of all, that there was no need to establish any specific fault on the part of the applicant company because the confiscation had been carried out pur s uant to the relevant legislation.

Secondly, it declared well - founded – without giving further details – the tax authorities ’ ground of appeal regarding the lack of diligence on the part of the transporter , who was direct ly liable for the safety and lawfulness of the goods transported .

In fact , the Court notes that pursuant to paragraphs 1 ( k) and 2 ( b) of A rticle 220 CPF, taken together , the confiscation of the means of transport u sed for unlawfully carrying goods subject to ex cise duty was mandatory ( see , mutatis mutandis , Andonoski , cited above , § 37, and Vasilevski v . the Former Yugoslav Republic of Macedonia , n o. 22653/08 , § 57, 28 April 2016 ; see also , to converse effect , Waldemar Nowakowski , cited above , § 51). In the present case the court which determined the case at last instance held that recourse had been had to an automatic confiscation which had to be implemented without any need to a scertain whether the means of transport belonged to the administrative offender himself or to a third party, or, in the latter cas e , to take account of the third party ’ s personal attitude or his or her connection to the offence . I t follows that in the framework of the proceedings brought by the applicant company , the County Court applied an irrebuttable presumption which rend ered nugatory the applicant company ’ s submission that it had acted in good faith ( see paragraph 14 above ).

35 . As regards the object of the offence in question, that is to say the transport of goods subject to ex cise duty in the absence of the requisite “ document accompanying the goods” , i t would appear that the decision to confiscate the fuel tankers was in line with the domestic legal provisions geared to combating tax fraud .

36 . However, the Court note s the Government ’ s argument , undisputed by the applicant company , that the latter could have sought redress from the other party to the contract in the form of compensation for the damage suffered following the confiscation of the fuel tankers , by bring ing an action for damages in contract before the domestic courts if th at party had refused to pay compensation ( see paragraph 25 above ).

37 . The Court considers that such judicial review might in principle meet the requirements of A rticle 1 of Protocol No. 1 to the Convention. Indeed , it reiterates that in previous cases it did not rule out the possibility that such a remedy might induce it to conclude that there was a fair balance between the means used by the authorities to safeguard the general interest and the protection of the person ’ s fundamental right to the peaceful enjoyment of his property . In those cases it held that the remedies had not been effective for reasons linked to the particular circumstance s , for example the bankruptcy or closure of the liable commercial company ( see Merot D.O.O. and Storitve Tir D.O.O. v . Croatia ( de c.), n os. 29426/08 and 29737/08, § 33, 10 December 2013, and Vasilevski , cited above , § 60) , a serious risk of bankruptcy owing to the severity of the fines imposed on the perpetrators of the fraud ( see Bowler International Unit v . France , n o. 1946/06 , § 44, 23 July 2009), the death of the perpetrator of the offence leading to the confiscation ( see Vasilevski , cited above , § 59) and the lack of examples of practice in the domestic courts in dealing with such cases ( see Andonoski , cited above , § 39 ). On the other hand , where a remedy enabling the owner of confiscated property to obtain compensation proved effective , the Court has been prepared to find the existence of a proper balance between the means used by the authorities to safeguard the general interest and the protection of the person ’ s fundamental right to the peaceful enjoyment of his property ( see Sulejmani v . the Former Yugoslav Republic of Macedonia , n o. 74681/11 , § 41, 28 April 2016).

38 . Consequently , i t must be ascertained whether, in the present case , the applicant company did indeed have access to a remedy as described by the Government under which it could have more effectively invoked its good faith plea before a domestic court .

39 . The Court notes that the Romanian C onstitutional Court has deal t on several occasions with the question of the constitutionality of the provisions of A rticle 220 § 2 ( b) CPF, following challenges relying on the peaceful enjoyment of property, on the grounds that they authorised the confiscation of property belonging to persons other than the administrative offender .

Constitutional Court Decision n o. 685 of 16 November 2006 – which therefore predates the beginning of the present cas e – ruled that those provisions were indeed constitutional , reasoning as follows : first of all , by entrusting the vehicle to the administrative offender , its owner had accepted the risk of the latter using it in a manner po tentially causing a danger to society ; secondly, the owner of the confiscated property could always claim compensation from the administrative offender for the damage caused , by means of an action for damages base d on the contract which they had concluded ( see paragraph 17 above ); and thirdly , a different interpretation would have made it easy to circumvent the legal provisions, given that the administrative offender could have prayed in aid his status as holder by permission of the m e a n s of transport, thus enabling the unlawful transport activity t o continue .

40 . The Court therefore finds that , long before the facts of the present case , the Constitutional Court confirmed the existence of a remedy which the owner of a confiscated means of transport could exercise against the administrative offender on the basis of the general rules of contractual civil l iability ( see also , mutatis mutandis , Sulejmani , cited above , § 41). In the Court ’ s view , that case-law of the Constitutional Court , which comprises an authoritative interpretation of domestic law, is sufficient for it to conclude that the aforementioned remedy is effective .

41 . M oreover , the Court note s that that approach has been explicit ly enshrined in legislation, as regards transport , under the provisions of A rticle 1961 § 3 of the New Civil Code . Even though that provision came into force a few months after the end of the legal proceedings brought by the applicant company ( see paragraph 20 above ), it had already been public since July 2009, when the New Civil Code was first publi shed .

43 . Under those conditions, the Court considers that in the present case a fair balance had been struck between respect for the applicant ’ s rights as secured under A rticle 1 of Protocol No. 1 to the Convention and the general interest of society . There has accordingly been no violation of that prov ision .

FOR THESE REASONS, THE COURT ,

1. Declares , unanimously, the application admissible;

2 . Holds , by four votes to three , that there has been no violation of Article 1 of Protocol No. 1 to the Convention.

Done in French , and notified in writing on 4 July 2017 , pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Marialena Tsirli Ganna Yudkivska Registrar President

In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the following separate opinions are annexed to this judgment :

– concurring opinion of Judge E. Kūris ;

– joint dissenting opinion of Judges A. Sajó, P. Pinto de Albuquerque and K. Wojtyczek.

V.D.G. M.T.

CONCURRING OPINION OF JUDGE KŪRIS

1. The present judgment is in line with the trend dominating the Court’s case-law pertaining to the (in)compatibility of confiscation of crime-related property with Article 1 of Protocol no. 1 of the Convention. I dealt with this case-law in my dissenting opinion in the recent case which goes against that trend, B.K.M. Lojistik Tacimacilik Ticaret Limited Sirketi v. Slovenia (no. 42079/12, 17 January 2017). This dispenses me from discussing these issues here again.

2. Unlike in B.K.M. Lojistik Tacimacilik Ticaret Limited Sirketi (cited above), the majority (of which I am a part) did not confine itself within the limits of the dogma as suggested by too literal (and only literal) reading of Article 1 of Protocol no. 1, but paid heed, even if implicitly, to the broader context of combating smuggling and some other types of crime (especially trans-border crime).

3. This case is about culpa in eligendo . The employment of the legal tool of culpa in eligendo in such cases pursues the undoubtedly legitimate goal of “prevention of further commission of crime” (ibid., § 37). True, this tool is not uncontroversial, and the practice of its application is not completely mistake-proof. Still, there must be a compelling reason for member States (for Romania is not an isolated exception which knows this tool) not to dispose of it but to continuously use it, whenever applicable. This reason has a lot to do with authorities’, alas, limited possibilities to fight smuggling (and certain other types of crime) by “less uncontroversial” means.

4. Had the opposite finding been reached in the instant case, that is to say, had a violation of Article 1 of Protocol 1 been found in the instant case, not only the ages-tested raison d’être of the institution of culpa in eligendo would have been undermined, but also the wisdom of the Constitutional Court of Romania would have been contemptuously dropped of the scales. That court on yet three (!) occasions confirmed the conformity of the relevant provision of the Code of Fiscal Procedure with the constitutional provisions pertaining to inviolability of property (see paragraph 17 of the judgment). Moreover, that Constitutional Court is far from being the only constitutional court of a member State which had reached the same conclusion (for example, the Lithuanian Constitutional Court decided on the constitutionality of confiscation of instrumentum sceleris yet in 1997).

5. The decisive criterion for finding or not finding a violation of Article 1 of Protocol 1 in culpa in eligendo cases is whether domestic law allows the owner of the confiscated property to obtain compensation for the damage sustained. The Romanian law explicitly, most clearly allows to obtain such compensation. The existence of such possibility under Romanian law was confirmed, not once (!), by that country’s Constitutional Court. It would be pretentious, indeed proud-stomached for the Court to ask for a “firmer” proof.

6. Deciding culpa in eligendo disputes in the spirit of appreciation that reality – especially crime-related reality (!) – does not easily lend itself to be squeezed in library-developed legal formulas detached from life has long been the Court’s principled stance prior to its judgment in B.K.M. Lojistik Tacimacilik Ticaret Limited Sirketi (cited above). The latter case (which dealt with not “mere” smuggling but drug trafficking) stands out as some lonely exception. The said principled stance should persist, at least if (as I sincerely want to believe) the Court really cares about public good and bona fide believes that member States care about it, too.

[1 June 2017]

JOINT DISSENTING OPINION OF JUDGES SAJÓ, PINTO DE ALBUQUERQUE AND WOJTYCZEK

[(Translation)]

1. The hard core of the present case concerns a crucial question of contemporary criminal and administrative law, namely objective vicarious liability. The majority’s answer to this question blatantly contradicts one of the Court’s previous judgments. We disagree with the majority. In our view there was a violation of Article 1 of Protocol No. 1 to the Convention, for the following reasons.

2. The Court notes that the Romanian Constitutional Court has on several occasions been called upon to examine the constitutionality of the provisions of Article 220 § 2 (b) of the Code of Tax Procedure, following challenges for non-compliance with the right of property on the grounds that the said provisions authorised the confiscation of property belonging to persons other than the administrative offender. It notes that Constitutional Court Decision no. 685 of 16 November 2006 declared those provisions constitutional, having held, in particular, that the owner of the confiscated property was at liberty to claim damages from the administrative offender by means of an action for damages based on the contract which they had concluded [1] .

3. We, for our part, observe that the Government have failed to provide any example of a domestic decision demonstrating that the domestic courts have followed the approach adopted by the Constitutional Court and that the latter’s findings were not merely theoretically valid at the material time. In other words, the present case is not different from that of Andonoski v. the Former Yugoslav Republic of Macedonia [2] , in which the Court found that the domestic remedy was not effective because of the absence of relevant practice in the domestic courts. It cannot be overlooked that the majority has here effected a “covert” reversal of the Andonoski case-law, in breach of the procedure set out in Article 30 of the Convention. That fact alone would warrant involving the Grand Chamber in this case, but there are also further arguments which would render such involvement indispensable should the applicant company choose to exercise the option under Article 43 of the Convention.

4. Indeed, it is impossible to speculate about the effectiveness of the remedy mentioned by the Government, particularly since the applicant company’s main objective was to recover its fuel tankers. We consider that the majority is doing just that, speculating, in reaching the conclusion that the applicant company could have exercised the remedy concerning contractual liability in order to secure just satisfaction for the damage caused by the confiscation. In those conditions, we would consider it excessive to ask the applicant company to bring new proceedings against the other party to its contract in order to claim compensation for the actions of the public authorities. Moreover, the majority’s rationale would lead to an inadmissibility decision because they consider that the applicant company had a judicial remedy at its disposal which it failed to exhaust. Hence we find it hard to understand how the majority managed to reach a no-violation finding on the basis of such a line of reasoning.

5. What is more, the applicant company’s liability could not have been incurred under the particular circumstances of the case for the following three reasons.

First of all, the contract concluded between the applicant company and company N. stipulated that it was incumbent on the company N. to “complete the transport documents with the requisite, correct and accurate information” [3] . That clause corresponded to the legal framework applicable at the material time. This confirms that the applicant company was under no obligation to verify the liquid being carried by the fuel tankers. Therefore, it could not be criticised for not having checked the product being transported.

Secondly, the Government followed the Constitutional Court in speaking of liability for risk [4] . They submitted that the applicant company had taken on the “risk that the company N. might potentially act unlawfully”. That line of reasoning is highly problematic in the sphere of criminal and administrative law, because it presupposes some form of vicarious liability. Even in civil law, vicarious liability is exceptional and must be prescribed by law. However, the Government have not presented any legal basis for establishing the transporter’s liability for a risk originating in the forwarder’s goods. Quite to the contrary, the relevant provision of the Code of Commerce in force at the material time, Article 416, provided that the forwarder, and not the transporter, was liable for the content and lawfulness of the customs papers and any other necessary documentation [5] .

Thirdly, in any event, the applicant company had had no opportunity to check the conformity of the goods, and a tax office representative sealed the two fuel tankers after loading. In other words, the applicant company at no point showed any lack of due diligence.

6. We do not believe that the confiscation of the property of third parties without evidence of mala fide, fault or even lack of due diligence in the framework of criminal or administrative proceedings is compatible with Article 1 of Protocol No. 1 to the Convention. Having regard to the punitive nature of such a measure, as acknowledged by the County Court itself [6] , the automatic and mandatory confiscation of possessions belonging to third parties raises a serious issue not only of lack of proportionality but also of a gross breach of the presumption of innocence. The manner in which confiscation as laid down in Article 220 (k) of the Code of Tax Procedure was applied to the applicant company’s two fuel tankers by the domestic courts in the administrative proceedings against the company N. left the administrative and judicial authorities no choice but to carry out the confiscation in accordance with the factual circumstances, and even prevented them from opting for a less intrusive penalty. The measure therefore amounted to a “blind” restriction on the right to property, making no distinction between the status of owner and that of holder by permission of the property used for the unlawful transport of goods subject to excise duty. Furthermore, the penalty is imposed despite the courts’ inability to assess or take into account the particular circumstances of the individual cases and, in particular, the damage inflicted on the owner.

7. In the light of the above considerations we conclude that the mandatory confiscation of the fuel tankers, combined with the lack of any realistic opportunity for the applicant company to defend itself or obtain compensation for the damage thus caused, failed to take sufficient account of that company’s interests. Consequently, while acknowledging the need for action to combat tax fraud, and even though the States must benefit from a broad margin of appreciation in this sphere, we consider that the interference with the applicant company’s right to respect for its property failed to strike a fair balance between the requirements of the general interests of society and those of the protection of the applicant’s fundamental rights. In the present case there was therefore a violation of Article 1 of Protocol No. 1 to the Convention.

[1] See paragraph 17 of the judgment.

[2] See Andonoski v. the Former Yugoslav Republic of Macedonia , no. 16225/08, 17 September 2015.

[3] See paragraph 7 of the judgment.

[4] See paragraph 17 of the judgment for the Constitutional Court’s position and paragraph 24 for that of the Government.

[5] See paragraph 14 of the judgment.

[6] The County Court described the confiscation as an “ ancillary penalty ” see (paragraph 14 of the judgment).