Return, after a court decision with a delay, of confiscated drinks, when they became unsuitable for consumption. Violation of property rights
Avendi OOD v. Bulgaria 04.06.2020 (no. 48786/09)
Seizure of goods in criminal proceedings. Irrevocable decision on their return. Delay in their return. Right to property.
The applicant company is active in the trade of alcoholic beverages. After search 26,748 liqueur bottles of Baileys was confiscated
because they did not bear the required customs stamps since the consumption tax had not been paid. The criminal courts acquitted the company’s representatives and an irrevocable decision of 07.12.2005 ordered the return of the confiscated drinks.
The authorities were slow to comply with the court ruling and returned the drinks in March 2007, when the permitted consumption date had expired and they had become unsuitable for use by consumers.
The ECtHR found that the State had unlawfully not returned the goods, despite the existence of an irrevocable court order ordering their return.
Violation of property rights (Article 1 of the First Additional Protocol to the ECHR).
Article 1 of the First Additional Protocol
The applicant company, Avendi OOD, is a Bulgarian limited liability company based in Sofia which
trades in alcoholic beverages.
The case concerned the applicant company’s complaint that the authorities had failed to comply
with a final domestic court decision ordering the return of its merchandise, which had been seized as
evidence in criminal proceedings.
In January 2005 the Varna regional police carried out a search-and-seizure operation at a warehouse
where merchandise belonging to the applicant company was stored. The police seized 26,748
bottles of Baileys cream liqueur belonging to the applicant company as evidence in ongoing criminal
proceedings against a certain M.M. and S.S. who were suspected of storing merchandise subject to
excise duty without the mandatory stamps. M.M. and S.S. were subsequently acquitted and the
Varna District Court ordered the return of the seized bottles to the applicant company. The court’s
decision became final in December 2005.
However, the investigative and tax authorities continued to retain the bottles pending parallel
proceedings against the applicant company for storing merchandise without the mandatory excise
duty stamps and against an importing company and its representative for selling the beverages to
the applicant company without the mandatory excise duty stamps.
The bottles were eventually returned to the applicant company in March 2007, by which time the
shelf life of the bottles of liqueur had expired.
The applicant company filed a claim for damages against the State, requesting that the tax
authorities’ decisions refusing to return the bottles be declared null and void and that it be awarded
compensation for damage and lost profits, but the claim was unsuccessful.
Relying in particular on Article 1 of Protocol No. 1 (protection of property) to the European
Convention on Human Rights, the applicant company complained that it had been deprived of its
property and had suffered pecuniary losses because of the failure to enforce a final domestic court
decision in its favour, after a series of unlawful actions by the tax and prosecuting authorities.
THE DECISION OF THE COURT…
The first and most important requirement of Article 1 of Protocol No. 1 is that any interference by a public authority with the peaceful enjoyment of possessions should be lawful. The requirement of lawfulness, within the meaning of the Convention, demands compliance with the relevant provisions of domestic law and compatibility with the rule of law, which includes freedom from arbitrariness.
Concerning the lawfulness of the interference, the Court observes that it has only limited power to deal with alleged errors of law made by the national authorities.. In the present case, the Court notes that the seizure of the applicant company’s merchandise on 6-7 January 2005 was decided for the purposes of a criminal investigation that was being carried out against third parties . The applicant company had the opportunity to request the return of the merchandise, which it did successfully by obtaining a final judicial decision in its favour which became enforceable on 7 December 2005. The Court notes that the applicant company contests the lawfulness of the retention of its property after that moment. The Government argued, however, that even after that date, the merchandise was still retained on various lawful grounds by the authorities. The Court must establish therefore whether there were lawful grounds for retention after 7 December 2005 and, if such grounds existed initially but were later removed, from which point it could be considered that the merchandise was no longer lawfully seized or otherwise retained by the authorities.
Furthermore, the decision of 23 December 2005, by which the Varna regional tax office ordered the forfeiture of the bottles, referred to them as having been seized by the police on 6 and 7 January 2005 in the criminal proceedings against the first group of third parties, not in the framework of the administrative proceedings instituted on 11 August 2005.
The Court observes that section 42 of the Administrative Offences and Penalties Act 1969 provides specifically that an administrative decision establishing an offence should include an inventory of any goods that have been seized, as well as information about the person or institution responsible for storing those goods. The obligation to describe the evidence adduced to the proceedings existed also in the case of forfeiture. However, the decision of 23 December 2005 made no mention of the applicant company’s merchandise being used as evidence, but referred only to the search‑and‑seizure report of 6 and 7 January 2005 in order to identify it. As required by domestic law, when a case file is transferred from one body to another, custody of the physical evidence adduced to it is also transferred. The Court notes that no document showing that merchandise belonging to the applicant company was transferred to the tax authorities as part of the evidence in the administrative proceedings has been presented.
In fact, reference to the merchandise as being part of the evidence examined in the course of the administrative proceedings against the applicant company was made for the first time on 31 May 2006, when the Varna tax authority dismissed a request for its return
The Court finds it difficult to see how that inconsistency would not have been cleared up, had the bottles indeed been considered as physical evidence in the course of the administrative proceedings against the applicant company. Moreover, in their observations the Government did not address in any way the inconsistency in the number of bottles between the different sets of proceedings.
As regards the Government’s argument that the bottles were later retained as evidence in the criminal proceedings against the second group of third parties the Court notes that the search‑and‑seizure report of 6 and 7 January 2005 on which that contention is based concerned the seizure carried out in the criminal proceedings against the first group of third parties. Those proceedings were terminated on 5 May 2006 whereas the criminal proceedings against the second group of third parties were terminated on 20 June 2006 and the file was sent to the prosecutor’s office. There is nothing to indicate that those two sets of proceedings were merged, or that the physical evidence seized in the course of the first set was adduced to the file in the second set.
Noting all the above elements, the Court finds it difficult to accept that the authorities were entitled to retain the applicant company’s merchandise automatically, after 7 December 2005, in the course of pending parallel proceedings against the applicant company and third parties, without any decision or even a procedural document on the matter, as provided for by domestic law, despite the existence of a final judicial decision ordering its return.
A last argument, which the Court needs to address is the one put forward by the Bulgarian Government, namely that the applicant company failed to properly request the return of the bottles from, respectively, the Varna tax authority in the administrative proceedings . Taking into account the lack of clear legal ground on the basis of which the bottles were retained after 7 December 2005, the Court does not find the steps undertaken by the applicant company in that respect deficient. As to the criminal proceedings against the second set of third parties, the Court refers to its finding that no decision with respect to the beverages was taken in these proceedings and thus sees no reason for the applicant company to have used that procedural route for recovering its merchandise.
The foregoing considerations are sufficient to enable the Court to conclude that the delayed return of the impugned merchandise after the final court decision of 7 December 2005 constituted an unlawful interference with the applicant company’s rights under Article 1 of Protocol No. 1.
Accordingly, there has been a violation of Article 1 of Protocol No. 1 of the Convention.