Confiscation of all the amount of the undeclared money at customs violates the principle of proportionality

JUDGMENT

Gyrlyan v. Russia 9.10.2018  (no. 35943/15)

see here

SUMMARY

Confiscation of $ 90,000 at an airport because they were not declared. The interference by the national authorities with the applicant’s right to property was not in accordance with the principle of proportionality, since the lawful origin of the confiscated cash was not disputed, the amount seized was undoubtedly important to him and the State suffered no loss because of the no declaration of the specific money. Unfair balance between the general interest and the protection of the right to property. Infringement of Article 1 of the First Additional Protocol.

PROVISION

Article 1 of the First Additional Protocol

PRINCIPAL FACTS

The applicant, Sergey Gyrlyan, is a Russian national who was born in 1972 and now lives in Odessa (Ukraine).

The case concerned the confiscation of 90,000 United States dollars (USD) from him after he had failed to declare to customs that he had been carrying a large amount of foreign currency. Mr Gyrlyan sold a property in 2014 and exchanged most of the Russian rouble proceeds for USD 100,000. In March of that year he travelled with the foreign currency from Moscow’s Domodedovo Airport to Odessa. After his hand luggage was X-rayed, he told security that he was carrying the money. He said that he thought customs controls, where he had to declare any sums over USD 10,000, were after the security checks.

The domestic courts eventually ordered the confiscation of USD 90,000, rejecting his appeals that the money had been obtained lawfully and that the penalty was out of proportion to the offence.

Relying on Article 1 of Protocol No. 1 (protection of property), Mr Gyrlyan complained that the confiscation had been excessive and disproportionate to the legitimate aim pursued.

THE DECISION OF THE COURT

Article 1 of the First Additional Protocol 

The applicant had been the lawful owner of USD 90,000 confiscated by the authorities. The decision to confiscate that amount had constituted an interference with his right to the peaceful enjoyment of his possessions and that interference had been provided for by law.

A confiscation measure, even though it involved a deprivation of possessions, fell within the scope of the second paragraph of Article 1 of Protocol No. 1, which allowed the Contracting States to control the use of property to secure the payment of penalties.

States had a legitimate interest and, by virtue of various international treaties, a duty to implement measures to detect and monitor the movement of cash across their borders, since large amounts of cash might be used for money laundering, drug trafficking, financing terrorism or organised crime, tax evasion or the commission of other serious financial offences. The general declaration requirement applicable to any individual crossing the State border prevented cash from entering or leaving the country undetected and the confiscation measure was part of the general regulatory scheme designed to combat those offences. The confiscation measure conformed to the general interest of the community.

The administrative offence of which the applicant had been found guilty had been his failure to declare the full amount of cash which he had been carrying to the customs authorities. His case could be distinguished from others, in which the confiscation measure had applied to either goods whose import had been prohibited or to vehicles used for transporting prohibited substances or trafficking human beings.

The lawful origin of the confiscated cash had not disputed. The applicant had presented documentary evidence showing that the money had originated from the sale of a property. There was no indication that the applicant had been deliberately seeking to circumvent customs regulations. When asked at the security check whether he had any cash, he had replied in the affirmative. There was nothing to suggest that the applicant had been suspected of or charged with any criminal offences in connection with the incident at issue or that by imposing the confiscation measure on him the authorities had been seeking to prevent any other illegal activities, such as money laundering, drug trafficking, financing terrorism or tax evasion. The money he was carrying had been lawfully acquired and he had been allowed to take it out of Russia so long as he had declared it to the customs authorities. It followed that the only prosecutable conduct which could be attributed to him was failure to make a written declaration to that effect to the customs authorities.

In order to be proportionate an interference had to correspond to the severity of the infringement, and the sanction to the gravity of the offence it was designed to punish – in the applicant’s case, a failure to comply with the declaration requirement.

The amount confiscated was undoubtedly substantial for the applicant, for it represented almost the entire proceeds of sale of his property in Russia. On the other hand, the harm that the applicant might have caused to the authorities had been minor. Had the amount gone undetected, the Russian authorities would have only been deprived of the information that the money had left Russia. Thus, the confiscation measure had not been intended as pecuniary compensation for damage – as the State had not suffered any loss as a result of the applicant’s failure to declare the money – but was deterrent and punitive in its purpose.

The Court was not convinced by the Government’s argument that an assessment of proportionality had been incorporated in the domestic decisions. The scope of the review carried out by the domestic courts had been too narrow to satisfy the requirement of seeking the “fair balance” inherent in the second paragraph of Article 1 of Protocol No. 1. Contrary to the Government’s claim that the court had opted for the most lenient penalty, the relevant provision did not appear to leave the sentencing court any discretion. Such a rigid system was incapable of ensuring the requisite fair balance between the requirements of the general interest and the protection of an individual’s right to property.

The confiscation measure had imposed an individual and excessive burden on the applicant and had been disproportionate to the offence committed.

Conclusion: violation (unanimously).

Article 41:  EUR 73,000 in respect of pecuniary damage and EUR 1,500 in respect of non-pecuniary damage(echrcaselaw.com editing). 


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