Published on 21 March 2022

FOURTH SECTION

Application no. 265/17 Rosen Marinov YORDANOV against Bulgaria lodged on 21 December 2016 communicated on 28 February 2022

STATEMENT OF FACTS

The applicant, Mr Rosen Marinov Yordanov, is a Belgian, Bulgarian and Turkish national who was born in 1965 and is currently living in Antwerpen, Belgium. He is represented before the Court by Mr L. Popov, a lawyer practising in Sofia.

The circumstances of the case

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

In a judgment of the Targovishte Regional Court of 20 November 2012 the applicant was convicted for not having filed a tax declaration for 2008 and having presented false documents to the fiscal authorities, thus evading the payment of about 90,000 Bulgarian levs (BGN), the equivalent of 46,000 euros (EUR), in taxes. He was relieved of criminal liability and ordered to pay a fine of BGN 4,000 (EUR 2,046).

In 2013 the Commission for the Forfeiture of Unlawfully Acquired Assets (hereinafter “the Commission”) opened proceedings under the Forfeiture of Unlawfully Acquired Assets Act 2012 (hereinafter “the 2012 Act”) against the applicant, his wife and a company owned by the applicant. It investigated their revenues and expenses between 2003 and 2013. In March 2014 the Commission introduced with the courts a forfeiture application, seeking the forfeiture of a flat, several vehicles, sums of money in bank accounts of the defendants, the value of shares in companies owned by the defendants, as well as numerous plots of land owned by them and the monetary equivalent of other plots of land purchased by them and subsequently resold to third parties.

The forfeiture application was allowed by the national courts – judgment of the Targovishte Regional Court of 26 June 2015, judgment of the Varna Court of Appeal of 10 February 2016, final decision of the Supreme Court of Cassation of 23 June 2016 refusing leave to appeal on points of law.

The courts noted that, according to information sent by the Belgian authorities under a mutual assistance procedure, the applicant had been investigated in Belgium for human trafficking, money laundering and breaches of the tax legislation. In 2011 the applicant had admitted before a Belgian authority that he had used “unlawful revenues” from such activities to acquire vehicles and immoveable properties in Bulgaria.

The Bulgarian courts found furthermore that during the period under examination the applicant and his wife had had a rather small income from lawful sources, namely BGN 5,800 (the equivalent of EUR 2,966), received from the sale of a vehicle in 2005. The applicant claimed that between 1999 and 2007 his brother had gifted him sums of money totalling BGN 900,000 (EUR 460,000), but the only evidence in that regard was a statement by the brother, which proved neither the gifts themselves, not the lawful provenance of the money. The applicant and his wife claimed in addition to have received remuneration as managers of several companies owned by them in Belgium, as well as dividends. Once again, these claims were based on their statements and on statements of their companies and employees, and were not substantiated by further evidence, such as entries in the companies’ accounting books. The applicant and his wife had submitted income tax declarations in Bulgaria and Belgium, declaring substantial income for the period 2006-2013, but this had only been done in 2014, after the initiation of the forfeiture proceedings, and did not prove any actual income or its lawful origin. Lastly, while it was established that in 2008 the applicant and his wife had brought to Bulgaria EUR 340,000, allegedly received from economic activities in Belgium, the relevant documents establishing what could be a lawful provenance of this sum had already been found to be false in the court judgment of 20 November 2012 convicting the applicant (see above).

At the same time, during the period under examination the applicant and his wife had spent more than BGN 1,600,000 (EUR 818,000), covering their daily expenses (calculated on the basis of statistical data on average expenses by households) and the price of the assets acquired by them.

Seeing their very low lawful income, the conclusion was that the assets for which forfeiture was being sought had been acquired with unlawfully received income.

On the applicant’s objection that no link had been established between the offence he had been convicted of and the assets for which forfeiture was being sought, the Varna Court of Appeal and the Supreme Court of Cassation responded that no such link was required. Under the 2012 Act, any establishment of a criminal activity was only the starting point enabling the Commission to initiate investigation, while the preconditions for the actual forfeiture were “detached” from the criminal proceedings and their outcome.

RELEVANT LEGAL FRAMEWORK AND PRACTICE

The Forfeiture of Proceeds of Crime Act ( Закон за отнемане в полза на държавата на имущество, придобито от престъпна дейност , hereinafter “the 2005 Act”) was adopted in 2005. It provided for the forfeiture of proceeds of crime and thus required a conviction, as well as, in accordance with the practice of the national courts, a causal link between the offence committed and the assets to be forfeited. The 2005 Act has been described in more detail in Todorov and Others v. Bulgaria (nos. 50705/11 and 6 others, §§ 90-110, 13 July 2021).

The 2005 Act was repealed in 2012 when the Forfeiture of Unlawfully Acquired Assets Act ( Закон за отнемане в полза на държавата на незаконно придобито имущество , “the 2012 Act”) was adopted. The explanatory note accompanying the Bill in Parliament stated that “a different legislative approach” ensuring greater efficiency was necessary. The main deficiency of the 2005 Act was identified as the need to await the conclusion of the criminal proceedings against the defendant in order to proceed with the forfeiture, which “very often rendered[ed] the State interference ineffective”.

The 2012 Act’s main novelty was that it provided for the forfeiture of “unlawful” assets and not necessarily proceeds of crime.

In a judgment of 13 October 2012, the Bulgarian Constitutional Court found that the 2012 Act’s general approach was in accordance with the provisions of the Constitution guaranteeing the right to property ( Решение № 13 от 13.10.2012 г. на КС по к. д. № 6/2012 г. ). It held in particular the following:

“What is subject to forfeiture are not assets acquired through lawful sources, but assets of unlawful origin ... The Act aims at countering the consequences of unjustified enrichment at the expense of other individuals or the society as a whole, enrichment resulting from activities which are forbidden.”

The Constitutional Court gave examples of such forbidden activities – tax evasion, smuggling, corruption, trafficking in human beings or drugs, large-scale thefts – pointing out however that the forfeiture proceedings under the 2012 Act did not aim to establish the details of such activities.

It considered the previous approach under the 2005 Act ineffective in some cases:

“for instance, where the evidence shows explicitly that certain assets are of unlawful origin, but is at the same time insufficient for a conviction for an offence proven beyond reasonable doubt, as well as where the criminal prosecution is temporarily or permanently barred by an obstacle such as the death of the perpetrator, amnesty, the expiry of a limitation period for criminal prosecution, an immunity, objective impossibility to find the perpetrator to ensure his participation in the criminal proceedings, mental disorder excluding criminal liability etc.”

The Constitutional Court pointed out that the 2012 Act’s approach did not breach the principle of legal certainty and that the Act guaranteed sufficiently the rights of third parties.

The 2012 Act remained in force until 2018 when it was repealed with the adoption of the Counteraction Against Corruption and Forfeiture of Unlawfully Acquired Assets Act ( Закон за противодействие на корупцията и отнемане на незаконно придобито имущество ).

The 2012 Act provided for the forfeiture of unlawfully acquired assets, defined as “assets for which no lawful origin is established” (section 1(2)). By section 3(2), the Act had to be applied while respecting the rights of the persons affected and avoiding “any risk of unfairness”.

Forfeiture could be sought where it could be reasonably assumed that an asset was unlawfully acquired (section 21 of the 2012 Act). There had to be a “significant discrepancy” between the defendant’s revenues and assets, namely in the amount of at least BGN 150,000 (EUR 76,700). Any asset was to be assessed in that regard taking into account its actual market value at the relevant time. The Constitutional Court noted in its judgment of 13 October 2012 (cited above) that what had to be established was the defendant’s assets at the beginning and at the end of the period under examination, any increase of these assets from lawful sources, as well as the expenses made.

Forfeiture proceedings could be opened once charges had been brought against the defendant, concerning offences enumerated in section 22(1) of the 2012 Act. The list is mostly the same as in section 3(1) of the 2005 Act (see, for more detail, Todorov and Others , cited above, § 95), with the addition of some corruption offences, offences against the tax and fiscal systems, and human trafficking.

Proceedings could also start after a final decision of the relevant authorities established an administrative offence having resulted in substantial profit – at least BGN 150,000 (EUR 76,700), amount lowered to BGN 100,000 (EUR 51,150) in 2016 – and where such profit could not be recovered by the State through other means.

The State’s right to forfeit an asset expired ten years after the asset had been acquired (section 73).

The body in charge of initiating and pursuing proceedings under the 2012 Act was the Commission for the Forfeiture of Unlawfully Acquired Assets (“the Commission”). It had five members, appointed by the Prime Minister, Parliament and the President of the Republic. The Commission had regional offices.

Once it was notified by the other competent bodies that a person had been charged with an offence among the ones enumerated in section 22(1) of the 2012 Act, or of an established serious administrative offence, the respective regional office opened an investigation, seeking to establish the assets, revenues and expenses of the defendant. On the basis of these findings, the Commission took decision to discontinue the proceedings or to bring a forfeiture application. Such application was examined by the courts, under the rules of civil procedure.

A forfeiture application could be introduced in court on the basis of the charges brought and did not necessarily require a final conviction. The forfeiture could be proceeded with even where the criminal proceedings against the defendant had been discontinued or the defendant had been acquitted.

COMPLAINTS

The applicant complains under Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 that the national courts decided wrongly when concluding that his assets were unlawfully acquired and ordered their forfeiture. He considered the forfeiture unfair and disproportionate.

QUESTIONS TO THE PARTIES

1. Did the applicant have a fair hearing in the determination of his civil rights and obligations, in accordance with Article 6 § 1 of the Convention? In particular, are the national courts’ conclusions that the applicant’s assets had been unlawfully acquired adequately and sufficiently reasoned?

2. Has there been a violation of Article 1 of Protocol No. 1? In particular, did the forfeiture of the applicant’s assets under the Forfeiture of Unlawfully Acquired Assets Act 2012 pursue a legitimate aim and was it proportionate to that aim?