Convictions at the administrative and criminal level for the same facts are in breach of the principle of the prohibition of double prosecution or conviction
JUDGMENT
Johannesson and others v. Iceland 18-05-2017 (no. 22007/11)
SUMMARY
Ne bis in idem. The procedure concerning fines is of a criminal nature. Criminal and administrative proceedings for the same facts. Initiation of two criminal and administrative proceedings against the applicants for the same facts (imposing fines for non-tax income declaration and for non-withholding of contributions to the public fund). These procedures, whatever they are called in national law, are ‘criminal’. The initiation of two identical criminal proceedings against the applicants violates the ne bis in idem principle, namely the principle of not being tried or punished twice for the same offense.
PROVISION
Article 4 of Protocol No.7.
PRINCIPAL FACTS
The application was lodged by two individuals and one company. Jón Ásgeir Jóhannesson and Tryggvi Jónsson are Icelandic nationals who were born in 1968 and 1955 and live in London and Reykjavík, respectively. Fjárfestingafélagið Gaumur was a private limited liability company registered in Iceland at the time the application was lodged.
Following an audit of the applicants’ tax affairs, the Directorate of Internal Revenue found that they had failed to declare a number of important matters in their tax returns for the years 1999 to 2002 (and, in the case of Mr Jóhannesson and the third applicant, also for the year of 1998). The undeclared information included payments that Mr Jóhannesson and Mr Jónsson had received, profits made by Mr Jóhannesson and the third applicant resulting from the sale of shares in the Baugur Group Company, and corporate benefits provided to Mr Jóhannesson and Mr Jónsson. The Directorate imposed a 25% surcharge on the applicants’ taxes for the relevant years; and, in the case of the third applicant, a further 10% surcharge due to its failure to withhold levies at source and pay them to the state treasury. Following an appeal, in August and September 2007 the Internal Revenue Board upheld the tax surcharges for the most part.
In December 2008 – about nine months after the tax appeal decisions had become final – the applicants were also indicted for aggravated tax offences. These proceedings also concerned the declarations that the applicants had made in tax returns for the years between 1999 and 2003. However, the Supreme Court ruled that the criminal proceedings were not an unlawful duplication of the tax surcharge proceedings. After considering the case, the Reykjavik District Court convicted all three of the applicants in respect of some of the charges against them, finding both Mr Jóhannesson and Mr Jónsson criminally liable for gross negligence. On appeal the Supreme Court, in February 2013 upheld their convictions for the most part and furthermore, convicted Mr Jóhannesson of two further charges. Respectively, they were given sentences of 12 and 18 months imprisonment (suspended for two years), as well as fines of 62,000,000 and 32,000,000 Icelandic krónur (around 360,000 and 186,000 euros at the relevant time).
THE DECISION OF THE COURT
Admissibility The Court noted that the third applicant, Fjárfestingafélagið Gaumur, had failed to show that it wished to pursue its application. The Court decided to strike out the company’s complaints.
Article 4 of Protocol No. 7 (right not to be tried or punished twice)
Applying the relevant case law, the Court found that both sets of proceedings had been “criminal” in nature. Furthermore, the facts underlying the two sets of proceedings had been the same or substantially the same: both the applicants’ conviction and the imposition of tax surcharges had been based on the same failure to declare income during the same period of time – and they also related to essentially the same amount of evaded taxes.
When the authorities respond to offending conduct with both criminal and administrative proceedings, Article 4 of Protocol No.7 does not exclude the carrying out of two such sets of proceedings, provided that certain conditions are fulfilled. In particular, in order for there to be no duplication of trial or punishment, the two sets of proceedings must be sufficiently closely connected in substance and in time. In other words, they should be combined in an integrated manner so as to form a coherent whole.
The Court found that there was not a sufficiently close connection in substance and in time between the two sets of proceedings for them to avoid duplication. This was for two reasons in particular. First, there had been only a limited overlap in the timing of the two sets of proceedings. Their combined overall length had been about nine years and three months – yet they had only been conducted in parallel for a little more than a year. Mr Jóhannesson and Mr Jónsson had been indicted in the criminal proceedings in December 2008, 15 and 16 months after the Internal Revenue Board had issued its decisions upon their tax appeals. Second, there had been a separate collection and assessment of the evidence in the two sets of proceedings, because the police had conducted their own independent investigation. The applicants’ liability had therefore been assessed by different authorities and courts in proceedings that were largely independent of each other.
In light of the above, the Court held that the two sets of proceedings had breached the applicants’ right not be tried or punished twice for the same crime, in violation of Article 4 of Protocol No.7.
Just satisfaction (Article 41)
The Court held that Iceland was to pay Mr Jóhannesson and Mr Jónsson 5,000 euros (EUR) each in respect of non-pecuniary damage. It was also held that Iceland was to pay them 10,000 EUR and 5,000 EUR respectively in regard to costs and expenses.
