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Rozsudek

THIRD SECTION

CASE OF NIKOLAEV AND OTHERS v. BULGARIA

(Applications nos. 48806/11 and 11138/12)

JUDGMENT

STRASBOURG

12 January 2023

This judgment is final but it may be subject to editorial revision.


In the case of Nikolaev and Others v. Bulgaria,

The European Court of Human Rights (Third Section), sitting as a Committee composed of:

Darian Pavli, President,
Ioannis Ktistakis,
Andreas Zünd, judges,

and Viktoriya Maradudina, Acting Deputy Section Registrar,

Having deliberated in private on 8 December 2022,

Delivers the following judgment, which was adopted on that date:

PROCEDURE

1. The case originated in two applications against Bulgaria lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on the dates indicated in the appended table.

2. The Bulgarian Government (“the Government”) were given notice of the applications.

THE FACTS

3. A list of the applicants and the relevant factual details of the applications are set out in the appended table.

4. The applicants complained of the forfeiture of alleged proceeds of crime.

THE LAW

  1. JOINDER OF THE APPLICATIONS

5. Having regard to the similar subject matter of the applications, the Court finds it appropriate to examine them jointly in a single judgment.

  1. ALLEGED VIOLATION OF ARTICLE 1 of Protocol No. 1

6. The applicants complained of the forfeiture of the assets described in the appended table, alleged to have been the proceeds of crime. They relied, expressly or in substance, on Article 1 of Protocol No. 1, which reads as follows:

Article 1

“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.”

7. The Government, without providing any further details, invited the Court to decide the case on the basis of the leading judgment Todorov and Others v. Bulgaria (nos. 50705/11 and 6 others, 13 July 2021).

8. That judgment concerned the forfeiture of alleged proceeds of crime under the same legislation as applied in the case at hand, namely the Forfeiture of Proceeds of Crime Act 2005 (hereinafter “the 2005 Act”).

9. In Todorov and Others (cited above, §§ 200-09) the Court identified some potential flaws in the 2005 Act and in the manner in which it had been applied. It highlighted in this respect the combined effect of the wide scope of its application – as to predicate crimes and as to the periods for which the defendants’ revenues and expenses were being checked, the difficulties for defendants to prove what the courts considered “lawful” income during such a period, marked, moreover, by inflation and economic changes, and the presumption that any asset not shown to have had a “lawful” provenance was the proceed of crime. The Court’s position was that, while these potential flaws were not sufficient to render each forfeiture under the 2005 Act contrary to Article 1 of Protocol No. 1, they certainly placed a considerable burden on defendants in forfeiture proceedings and could tilt the balance in favour of the State. Thus, as a counterbalance and a guarantee of the applicants’ rights, it was crucial that the national courts established a causal link between the assets for which forfeiture was being sought and the criminal conduct of the defendants. The Court was prepared to defer to the national courts’ assessment as to the existence of such a link, in so far as it was not arbitrary or manifestly unreasonable (ibid., §§ 210-16).

10. Applying these requirements to the specific cases examined in the leading judgment, the Court found a violation of Article 1 of Protocol No. 1 in those cases where the national courts had failed to justify the existence of the causal link defined above, and had ordered forfeiture relying merely on the presumption contained in the 2005 Act and on discrepancies between the applicants’ expenses and their “lawful” income during the relevant periods (see §§ 217-50 of the judgment).

11. The applications under examination are similar. In particular, in ordering the forfeiture of the applicants’ assets the national courts did not attempt to justify the causal link required by the Court, adopting instead of that the same flawed approach that was criticised by it in the cases examined in Todorov and Others. The Court thus sees no reason to reach a conclusion different than the one in these cases.

12. The applications are therefore admissible and disclose a breach of Article 1 of Protocol No. 1.

  1. APPLICATION OF ARTICLE 41 OF THE CONVENTION

13. Article 41 of the Convention provides:

“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”

14. The applicants did not make claims for pecuniary damage, and the Court considers that there is no call to award them any sum on that account. It refers moreover to its statement in in Todorov and Others (cited above, §§ 320-22) that it could not speculate on whether the applicants’ forfeited assets were or were not the proceeds of crime, and that it considered relevant the possibility for the applicants to have their cases reopened and re-examined at the domestic level, with the national courts being obliged, in principle, to apply Article 1 of Protocol No. 1 as interpreted by it.

15. As to non-pecuniary damage and costs and expenses, regard being had to the circumstances of the case, the Court considers it reasonable to award the sums indicated in the appended table.

16. The Court further considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.

FOR THESE REASONS, THE COURT, UNANIMOUSLY,

  1. Decides to join the applications;
  2. Declares the applications admissible;
  3. Holds that these applications disclose a breach of Article 1 of Protocol No. 1 concerning the forfeiture of alleged proceeds of crime;
  4. Holds

(a) that the respondent State is to pay the applicants, within three months, the amounts indicated in the appended table, to be converted into the currency of the respondent State at the rate applicable at the date of settlement;

(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points.

Done in English, and notified in writing on 12 January 2023, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.

Viktoriya Maradudina Darian Pavli

Acting Deputy Registrar President


APPENDIX

List of applications raising complaints under Article 1 of Protocol No. 1

(forfeiture of alleged proceeds of crime)

No.

Application no.

Date of introduction

Applicant’s name

Year of birth

Representative’s name and place of practice

Predicate offence

Period for which the applicant’s income and expenses were checked

Forfeited assets

Reasons given by the courts

Final decision in the forfeiture proceedings

Amount awarded for non-pecuniary damage per applicant

(in euros)[1]

Amount awarded for costs and expenses

(in euros)[2]

48806/11

22/07/2011

Zlati Aleksiev NIKOLAEV

1961

Atanas Zlatev ALEKSIEV

1987

Bencheva Spaska Yosifova

Veliko Tarnovo

On 12 March 2001 the Dimitrovgrad District Court approved a plea agreement between the first applicant and the prosecution. In 2000 the applicant and an unknown person had committed fraud, causing damage amounting to BGN 3,476 (EUR 1,778); the money had subsequently been restituted to the victim. The first applicant was sentenced to 3 months’ imprisonment, suspended.

1 January 1990 – 22 May 2007

Two plots of land with houses in Gorna Oriahovitsa, one bought by the first applicant in 1990, the other by the first applicant and his partner for the second applicant (their son) in 1994. Both properties were substantially renovated and improved after the purchase. According to court-appointed experts, their global value in 2007 after the improvements was BGN 176,300 (approximately EUR 90,000).

After the end of the domestic proceedings, the two properties were put up for public sale and sold by the State to third parties.

During the period in question the applicants had no declared revenues. It was not proven that the first applicant had worked – he had presented in that regard declarations by other people, but they could not validly establish employment, nor was it clear for what remuneration the applicant had worked; no taxes had moreover ever been paid.

It was not proven that another person had given the first applicant a loan.

It could not be accepted that friends of the family had worked for the renovation of the two houses for free; in claiming that, the applicants tried to justify quite substantial construction works.

During the period at issue the applicants had acquired assets of substantial value, namely the two houses. Seeing the provision of section 4 of the 2005 Act, these assets could be presumed to be the proceeds of crime in so far as no lawful provenance could be established, thus the presumption had not been rebutted. It was not necessary to seek a causal link between the predicate offence and the assets at issue, as the predicate offence served only to trigger the forfeiture proceedings.

1 March 2011 - decision of the Supreme Court of Cassation

3,000

250

11138/12

09/02/2012

Petar Ivanov GLAVCHEV

1999

Neykov Milen Georgiev

Plovdiv

In a judgment of 5 November 2003 of the Plovdiv Regional Court, which became final on 24 January 2007, the applicant’s father was convicted for pimping, committed between 1999 and 2003.

1993-2007 (concerning the applicant’s father)

A house with a plot of land and outbuildings; the property was acquired in 2005 in exchange of a flat bought for the applicant by his mother in 2001.

According to the Commission for Uncovering Proceeds of Crime, its value was BGN 57,135 (EUR 29,200).

Further assets (not subject to the application) were forfeited from the applicant’s father.

The applicant claimed that the property acquired in 2001 (given in exchange of the forfeited property) had been bought with money gifted to him by his maternal grandparents; however, such a gift was not sufficiently proven. The applicant had not referred to any other circumstance to establish the lawful origin of his assets.

The applicant’s father had not otherwise established sufficient “lawful” income.

It was not necessary to prove a causal link between the criminal activity and the assets subject to forfeiture; it sufficed that the applicant (respectively his father) had not rebutted the presumption under section 4 of the 2005 Act; this meant that the assets to be forfeited were the proceeds of crime.

10 August 2011 – decision of the Supreme Court of Cassation

3,000

250


[1] Plus any tax that may be chargeable to the applicants.

[2] Plus any tax that may be chargeable to the applicants.