Communicated on 6 May 2014

FIFTH SECTION

Application no. 49538/12 GLOTAR ESTABLISHMENT and others against Liechtenstein lodged on 2 August 2012

STATEMENT OF FACTS

The applicants, Glotar Establishment, KRH Capital Establishment, Kurita Establishment and Peltora Establishment, are companies registered in Liechtenstein.

They are jointly represented before the Court by Mr N. Reithner, a lawyer practising in Schaan, and by Mr B. O ’ Sullivan, a lawyer practising in London.

A. The circumstances of the case

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

1. The proceedings before the Regional Court

On 23 July 2008 the Regional Court, sitting as a criminal court, ordered the applicant companies and the R. company to pay jointly and severally 185,331,381.29 euros (EUR) to the Principality of Liechtenstein under Article 20 §§ 4 and 5 of the Criminal Code (see Relevant domestic law and practice below).

The Regional Court found that the applicant companies had been unlawfully enriched by proceeds of an embezzlement ( Untreue ; Article 153 §§ 1 and 2 of the Criminal Code, see Relevant domestic law and practice below) committed by the late President of the Federal Republic of Nigeria, General Sani Abacha, to the detriment of that State.

(a) The offence of embezzlement

The Regional Court considered that the offence of embezzlement under Article 153 §§ 1 and 2 of the Criminal Code had been committed by General Abacha in the following manner. In 1989 the Ferrostaal company, a stock corporation registered in Germany, concluded a contract with the Aluminium Smelter Company of Nigeria Ltd. (Alscon), a company registered in Nigeria and majority-owned by the State of Nigeria, for the construction of an aluminium smelter and power plant in Ikot Abasi, Nigeria, for 2.4 billion Deutschmarks (DEM).

In 1993 General Sani Abacha came to power in Nigeria following a coup d ’ état. At that time, the Ferrostaal company had started constructing the aluminium smelter and power plant and already had outstanding claims amounting to some DEM 500 million against the Alscon company. General Abacha made it clear to the Ferrostaal company that a condition for the continuation of the project was that he would receive a share of the sums payable to that company. It was then agreed between General Abacha and the Ferrostaal company, with senior executives M., L. and B. participating in the negotiations for that company, that the Ferrostaal company would increase the construction costs payable by the State of Nigeria (via the Alscon company majority-owned by it) to DEM 4 billion. These increased costs included expenses incurred by the Ferrostaal company due to the construction having been delayed, but were to cover, in addition, an amount corresponding to General Abacha ’ s claim of one quarter of the construction costs, or of at least one quarter of the Ferrostaal company ’ s outstanding claims.

In accordance with that agreement, the Ferrostaal company paid the sums claimed by General Abacha, in particular, to several companies registered in Liechtenstein, the beneficiary of which was General Abacha, following fictitious invoices for “consultancy fees” issued by those companies. A total of DEM 242 million were thus paid by the Ferrostaal company to four Establishments (the so-called “MLS companies”), and another DEM 144 million were paid to the R. company. On payment of the sums due by the Ferrostaal company to the said Liechtenstein companies, General Abacha ordered the Nigerian Central Bank to pay the invoices the Ferrostaal company had made out to the Alscon company. In the latter invoices, the construction costs the Alscon company was charged with had been covertly increased by the sum of the “consultancy fees” previously paid by the Ferrostaal company to General Abacha. The Regional Court found in that context General Abacha, in his position as head of State of the Republic of Nigeria and chief of the armed forces, had knowingly abused the power conferred to him either by statute or by commission of a public authority to dispose of assets owned by the State of Nigeria and, in particular, to order the Central Bank of Nigeria to carry out transfers of money. He had thereby caused a particularly serious damage to the State of Nigeria.

The Regional Court further found that General Abacha had been aided and abetted in the commission of his offence, in particular, by his son M., who had requested the foundation of the “MLS companies” in Liechtenstein and had controlled their accounts. Due to these acts committed in Liechtenstein, the Liechtenstein courts had jurisdiction in the case.

(b) Absorption of unjustified enrichment obtained by embezzlement

As regards the order under Article 20 §§ 4 and 5 of the Criminal Code against the applicant companies for the absorption of unjustified enrichment obtained as a result of the embezzlement committed by General Abacha, the Regional Court found the following.

Following General Abacha ’ s death in 1998, the so-called “MLS companies”, to which the Ferrostaal company had paid DEM 242 million, were reorganized and the assets transferred to the newly established four applicant companies, which remained beneficially owned by General Abacha ’ s successors. The applicant companies and the R. company (which had received DEM 144 million from the Ferrostaal company) currently, at least partly, still held the assets in question. The companies had thus been enriched by DEM 386 million, that is, EUR 197,357,940. The Regional Court deducted from that amount assets which had been held by one of the applicant companies but had been transferred to Switzerland and confiscated there and assets transferred to a different Liechtenstein company (the N. company) who was equally ordered to reimburse that sum. It therefore ordered the applicant companies and the R. company to pay jointly and severally EUR 185,331,381.29 in unjustified enrichment.

The Regional Court explained that the absorption of unjustified enrichment under Article 20 of the Criminal Code was not a supplementary penalty, but a pecuniary consequence of an offence. The provision required that an offence had been committed, but did not necessitate a finding of guilt on the part of the perpetrator. It aimed at absorbing the unjustified enrichment. The perpetrator had to render also the fruits of the assets obtained by the offence, in particular, interests gained; on the other hand, expenses such as costs for the asset management had to be deducted.

The companies concerned, which had been set up by the same perpetrators to conceal assets stemming from embezzlement to the detriment of the State of Nigeria, had to be treated as a unity in the relationship between themselves and as an economic unity with the perpetrators. For the absorption of their unjustified enrichment it was irrelevant whether the particular assets received directly by the offence still existed or had been exchanged into different assets. It was sufficient to prove the amount by which the perpetrator had been enriched by the offence for ordering the perpetrator to pay that amount under Article 20 of the Criminal Code.

(c) Evaluation of evidence

The Regional Court found that an essential part of the facts of the case had been established by the credible statements made by witnesses M., L. and B., who had been involved as senior executives for the Ferrostaal company in the transactions. It noted that M., L. and B. had been questioned several times by German and Swiss courts, first in the context of criminal proceedings against them in Germany for having aided and abetted an embezzlement, and, as regards M. and L., subsequently in the context of a request for legal assistance made by the Regional Court itself. B. ’ s statements before a German court had been read out in the hearing before the Regional Court because according to a public health officer, he was no longer fit to testify. M. and L. had been questioned by way of judicial assistance, with a Liechtenstein judge, the prosecution and the defence having been present and able to put questions to them. They had referred to the statements which they had previously made as accused before the German and Swiss courts – which could, therefore, be read out in court – and, after having answered a number of questions, had subsequently relied on their right not to testify as they risked incriminating themselves in view of potential further criminal proceedings against them, in particular in Nigeria.

The Regional Court considered that the witness statements made by M., L. and B. had been confirmed by various documents. In determining the manner in which General Abacha generally, and in the case at issue, had embezzled assets of the State of Nigeria, the Regional Court had regard to the findings made by the Nigerian authorities in letters rogatory to the Liechtenstein authorities, by the Geneva investigative judge in several penal orders issued against further accused and by the Swiss Federal Court concerning assets transferred to Switzerland. Documents on the so-called “MLS companies” seized in Liechtenstein confirmed that General Abacha was the covert beneficiary of these companies. The documentary evidence further included meeting minutes of the Alscon company and amendments to the initial contract between the Ferrostaal company and the Alscon company which confirmed the Ferrostaal company ’ s outstanding claims in 1993/1994 and the total construction costs. An expert report, police reports and documents submitted by the Ferrostaal company (including copies of the invoices sent by the so-called “MLS companies” and of bank statements) as well as documents issued by the Nigerian Central Bank further set out the payments made by that bank to the Ferrostaal company and by the Ferrostaal company to the so-called “MLS companies” and the R. company. Furthermore, the Regional Court considered copies of several letters in which General Abacha had authorised payments to the Ferrostaal company by the Nigerian Central Bank.

2. The proceedings before the Court of Appeal

On 11 August 2010 the Court of Appeal dismissed the applicants ’ appeals.

Endorsing the reasons given by the Regional Court, the Court of Appeal confirmed, in particular, that the absorption of unjustified enrichment under Article 20 of the Criminal Code was not a penalty. It found that the latter provision, which had been inserted into the Criminal Code in the year 2000, laid down a criminal sanction sui generis . It was aimed at securing that crime did not pay. The perpetrator was to lose the enrichment obtained by the offence even in cases in which the victim had not claimed compensation. It thereby served the same purpose as the civil law provisions on compensation and unjustified enrichment. It was not a penalty in its nature as the perpetrator did not suffer a disadvantage or reprimand because of his offence. He was only deprived of the advantages he had illegally drawn from the offence.

The Court of Appeal stressed that, having regard to these elements, the Constitutional Court had repeatedly found that the absorption of unjustified enrichment, just as forfeiture under Article 20b of the Criminal Code (see Relevant domestic law and practice below), was not a penalty, but was rather of a civil-law nature (it referred, inter alia , to the judgment of the Constitutional Court of 17 November 2003, file no. StGH 2003/44; see Relevant domestic law and practice below). It therefore did not require a finding of guilt of the perpetrator. The burden of proof was distributed in a similar manner as in civil law on compensation and unjustified enrichment. As the provisions of Article 20 of the Criminal Code thus were not to be classified as provisions of a criminal nature, the prohibition on retrospective punishment of Article 7 § 1 of the Convention did not apply. The Court of Appeal considered that the European Court of Human Rights had confirmed this finding in its decision of 10 July 2007 in application no. 696/05.

The Court of Appeal further stressed that only the perpetrator ’ s expenses for committing the offence could be deducted from the amount absorbed for unjustified enrichment, as opposed, for instance, to costs for the subsequent asset management. Therefore, amounts which the successors of General Abacha had already paid to the State of Nigeria did not have to be deducted as expenses from the amount to be absorbed. This was even more so because the absorbed amount was payable to the Principality of Liechtenstein (and not to the Federal Republic of Nigeria) and because the proceedings under Article 20 of the Criminal Code only concerned unjustified enrichment which occurred in Liechtenstein.

As to the Regional Court ’ s taking of evidence, the Court of Appeal considered, in particular, that it had not been unfair and contrary to the principle of equality of arms to read out the statements made by witnesses M. and L. before they had relied on their right not to testify in court. Both the defence and the prosecution had no longer been able to put further questions to the witnesses after their refusal to further testify.

3. The proceedings before the Constitutional Court

On 14 October 2010 the applicant companies lodged a complaint with the Liechtenstein Constitutional Court (file no. StGH 2010/134). They argued, inter alia , that their right to a fair trial had been disregarded in that the testimonies of M. and L. had been read out in the hearing before the Regional Court. Moreover, the payment order against them, which largely exceeded their alleged enrichment, under a provision inserted into the Criminal (as opposed to the Civil) Code after the alleged commission of the embezzlement at issue had violated the prohibition on retrospective punishment. Finally, in the applicants ’ submission, the payment order against them, which was the result of an arbitrary application of the law and thus lacked a legal basis, had also breached their right to property.

On 20 October 2010 the president of the Constitutional Court granted the applicants ’ request for a stay of execution of the Court of Appeal ’ s impugned judgment.

On 6 February 2012 the Constitutional Court dismissed the applicants ’ constitutional complaints.

(a) On the respect of the principle of equality of arms

The Constitutional Court addressed, in particular, the applicants ’ complaint that the principle of equality of arms enshrined in the right to a fair trial under Article 6 § 1 of the Convention had been violated in that the statements of witnesses M. and L. had been read out at the trial despite the fact that the defence had been unable to question them sufficiently. It argued that in the absorption proceedings at issue, that principle did not apply with the same rigour as in criminal proceedings. Moreover, in accordance with the European Court of Human Rights ’ case-law, the lower courts ’ finding that there had been embezzlement had not exclusively been based on the statements made by M. and L. The courts could notably rely on numerous further witness statements, in particular that of witness B., as well as documents and an expert report.

Moreover, a representative of the applicant companies had been present during the interrogations of M. and L. before a German court and had put questions to them. When the witnesses then relied on their right not to testify, neither the defence nor the prosecution had been able to put any further questions to them. It was true that the prosecution had had the opportunity to put their questions to the witnesses prior to the defence, which may have caused a certain imbalance. Nevertheless, the lack of a possibility to question a witness was justified if there were legal grounds therefor, such as a witness ’ s right not to testify. In view of these elements, the applicants ’ rights under Article 6 of the Convention had been respected.

(b) On the respect of the prohibition on retrospective punishment

As regards the applicant companies ’ further complaints about a breach of the principle of nulla poena sine lege because of the absorption of their assets, the Constitutional Court found, in particular, that the said principle did not apply to proceedings concerning the absorption of enrichment under Article 20 of the Criminal Code. It referred to its judgment of 17 November 2003 (file no. StGH 2003/44; see Relevant domestic law and practice below), concerning forfeiture proceedings which it considered being comparable to the absorption proceedings at issue, to support its view. It further argued that the European Court of Human Rights had confirmed the non-applicability of Article 7 of the Convention to the forfeiture proceedings under Liechtenstein law in its decision in Dassa Foundation and Others v. Liechtenstein ((dec.), no. 696/05, 10 July 2007).

The Constitutional Court further found that, contrary to the applicants ’ submission, it had not breached the prohibition on retrospective punishment and had not been arbitrary for the Court of Appeal not to deduct from the sum absorbed for unjustified enrichment various amounts of money which had been seized in other countries and had been returned to the State of Nigeria. The latter sums had not been expenses for the commission of the offence of embezzlement here at issue, which alone could have been deducted from the sum to be absorbed, and had no link to the offence of embezzlement here at issue.

(c) Breach of the applicants ’ right to property

The Constitutional Court further considered that the interference with the applicants ’ property rights by the order for the absorption of the assets held by them had had a legal basis and had been justified. In particular, as shown above, only the absorption of assets had been ordered which had been obtained as a result of the embezzlement at issue.

B. Relevant domestic law and practice

1. Provisions of the Criminal Code

( a ) Provision on embezzlement

Article 153 of the Criminal Code, on embezzlement, in the version in force at the relevant time, provided:

“(1) Whoever knowingly abuses the power conferred to him by statute, by commission of a public authority or by legal transaction to dispose of assets of another person or to make binding agreements for another person and causes pecuniary damage to that person shall be liable to imprisonment not exceeding three years or a fine of up to 360 daily rates.

(2) Whoever, by his act, causes a particularly serious damage shall be liable to imprisonment not exceeding ten years.”

( b ) Provisions on penalties, absorption of enrichment, forfeiture and preventive measures

Articles 18 to 31a of the Criminal Code, according to their heading, cover penalties, the absorption of profits, forfeiture and preventive measures. Article 18 of that Code regulates prison sentences, Article 19 of the Code provides for fines, Articles 20 and 20a of the Code contain rules on the absorption of enrichment and Articles 20b and 20c of the Code regulate forfeiture. Articles 21 et seq. provide, in particular, for preventive measures such as the placement in an institution for mentally disturbed law breakers, in a detoxification facility or in an institution for dangerous recidivist offenders.

Article 20 of the Criminal Code, on the absorption of enrichment, was inserted into the Criminal Code by the Act on Amendments to the Criminal Code of 25 October 2000, which entered into force on 19 December 2000 (see the Liechtenstein Legislative Gazette (LGBl.) 2000, no. 256, issued on 19 December 2000) and, in so far as relevant, provides:

“(1) Whoever

1. committed a punishable act and obtained pecuniary advantages thereby or

2. received pecuniary advantages for committing a punishable act,

shall be sentenced to payment of a sum of money corresponding to the unjustified enrichment which occurred thereby. In so far as the extent of the enrichment cannot be established or can only be established by a disproportionate effort, the court shall fix the amount to be absorbed in accordance with its conviction.

...

(4) Whoever has been directly and illegally enriched by the punishable act of another person or by a pecuniary advantage allocated for its commission shall be sentenced to payment of a sum of money corresponding to that enrichment. If a legal entity or partnership has been enriched, it shall be sentenced to that payment.

(5) If the person directly enriched died or if the directly enriched legal entity or partnership no longer exists, the enrichment shall be absorbed from the legal successor in so far as it remained at the time of the succession.”

Article 20b of the Criminal Code was equally introduced into that Code by said the Act on Amendments to the Criminal Code of 25 October 2000. Article 20b § 2 of the Criminal Code provides that assets which were derived from an act liable to punishment shall be declared forfeited, in particular, if the act from which they originate is punishable according to the laws of the place where it was committed, if Liechtenstein criminal law does not apply to that act and, as a rule, if the act did not constitute a fiscal offence.

2. Provisions of the Code of Criminal Procedure

Articles 353 to 357 of the Code of Criminal Procedure lay down special provisions for the proceedings for the absorption of unjustified enrichment, forfeiture and seizure.

3. Case-law of the Liechtenstein Constitutional Court

The Constitutional Court ruled on the question whether the prohibition on retrospective punishment was applicable to Article 20b of the Criminal Code, in particular, in a judgment of 17 November 2003 (file no. StGH 2003/44).

Having regard to criteria set up by the European Court of Human Rights in its judgment in the case of Welch v. the United Kingdom (9 February 1995, § 28, Series A no. 307 ‑ A) for determining whether a measure had to be classified as a “penalty” for the purposes of Article 7 § 1 of the Convention, the Constitutional Court concluded that forfeiture under Article 20b of the Criminal Code was not a “penalty”. It argued, in particular, that the provisions on forfeiture, just as those on the absorption of unjustified enrichment, served the purpose of securing by a pecuniary absorption of the profits that crime did not pay. These measures were thus no additional penalties for offences, but only were to secure the rescission of an enrichment by a “ contrarius actus ”. Therefore, these measures could also be ordered against perpetrators who had acted without guilt and against successors of the perpetrator. Forfeiture was therefore more of a civil than of a criminal nature.

COMPLAINTS

The applicants complain under Article 6 of the Convention that the criminal proceedings before the Liechtenstein courts violated their right to a fair trial. They submit that the courts relied to a decisive extent on evidence of three witnesses, senior executives of the Ferrostaal company, which the applicants had no opportunity to cross-examine, in breach of the principle of equality of arms.

The applicants further argue that the payment order made against them disregarded the prohibition on retrospective penalties under Article 7 of the Convention. The order for the absorption of the applicants ’ assets, which covered an amount vastly exceeding the applicants ’ enrichment and was thus a penalty, was based on legal provisions which were adopted after the commission of the alleged offences.

Furthermore, in the applicants ’ submission, the absorption of their assets constituted an arbitrary interference with the right to peaceful enjoyment of their possessions as guaranteed by Article 1 of Protocol no. 1 to the Convention. The measure lacked a foreseeable legal basis and was disproportionate in that it exceeded the amount of any net unlawful enrichment.

QUESTIONS TO THE PARTIES

1 . Did the order for the absorption of unjustified enrichment made against the applicant companies comply with the requirements of Article 7 § 1 of the Convention in that it was introduced in Article 20 of the Criminal Code?

2. Was Article 6 of the Convention under its civil or its criminal head applicable to the proceedings in the present case?

And did the applicants have a fair hearing in the determination of their civil rights and obligations or the criminal charges against them, in accordance with Article 6 of the Convention? In particular, was the principle of equality of arms respected as regards the use in evidence of the statements of witnesses M., L. and B. ?

3. Have the applicants been deprived of their possessions in accordance with the conditions provided for by law, within the meaning of Article 1 of Protocol No. 1?