The confiscation of all the undeclared cash of a passenger who failed to declare it violated property right.

JUDGMENT

Sadocha v. Ukraine 11.07.2019 (no. 77508/11)

see here 

SUMMARY 

Confiscation of the entire amount of foreign exchange, which came from a lawful cause, of the applicant-traveler from the customs office as a penalty for non-declaration of the cash.

The applicant, a Czech national, traveled from Ukraine to Poland and during the luggage check 31,000 Euros were found and seized, as he did not declare it. The domestic Courts did not take into account the legitimate reason for obtaining the money arising from a bank loan and the lack of intention to commit the offense.

The Court found in particular that that the confiscation of the entire undeclared amount of the
money, ordered by the domestic courts, had imposed an individual and excessive burden on the
applicant and was disproportionate to the offence committed.

PROVISION 

Article 1 of the First Additional Protocol

PRINCIPAL FACTS 

The applicant, Vasil Sadocha, is a Czech national who was born in 1972 and lives in Olomouc (the
Czech Republic).

In July 2011 Mr Sadocha was travelling from Ukraine to Poland carrying 41,000 euros (EUR). His hand
luggage was X-rayed and he was asked if he was carrying any cash, after which he showed the
money to the customs officer. He was charged with breaches of the customs code for failing to
declare the full amount of the cash and EUR 31,000 was seized on the spot.

A court heard the case in August of the same year. The applicant’s lawyer accepted that he had not
declared the money, however, he had not known that he had to declare it. He also submitted that
the 31,000 euros had come from a private loan and provided the loan agreement. The court
nevertheless issued a confiscation order, holding that the origin of the money had no relevance for
the scope of the applicant’s liability.

On appeal, the applicant’s lawyer argued that the lower court had imposed an unfair and
disproportionate punishment and had failed to properly examine grounds for a less severe
punishment, such as the lawful origin of the money and the lack of an intention to commit an
offence. The appeal court upheld the first-instance judgment.

THE DECISION OF THE COURT 

Article 1 of Protocol No. 1

The Court first held that the confiscation of the money had been based on law, particularly the
Customs Code and a National Bank Regulation on declaring sums above EUR 10,000. States also had
a legitimate interest in implementing measures to control flows of cash across borders in order to
combat money laundering, drug trafficking, the financing of terrorism and other crimes.

The question in Mr Sadocha’s case was whether the authorities had struck the requisite fair balance
between protecting property rights and the general interest, taking into account the State’s
discretion (“margin of appreciation”) in that area. In particular, the owner of the property could not
be made to bear “an individual and excessive burden”.

The Court noted that it was not illegal in Ukraine to take cash out of the country. At the time of the
events, there was no restriction on sums which could be legally transferred or physically carried
across the customs border, if declared.

The applicant had stated that he had obtained the cash through a private loan, but the courts had
not looked into whether the money had been obtained lawfully. The Government itself had not
raised any doubts about the validity of the loan agreement and the Court was thus not in a position
to call into question the lawful origin of the confiscated cash.

Nor was there any indication that he had deliberately sought to circumvent the customs regulations,
indeed, the authorities had not begun criminal proceedings, which showed that they did not see
intent on his part to deceive. The only illegal conduct therefore which was attributed to him, albeit
not criminal, was his failure to make a written declaration to the customs authorities about the cash.
An interference with property rights was proportionate if it corresponded to the severity of the
infringement and the penalty to the gravity of the offence it was designed to punish. For the
applicant, the amount was substantial, whereas for the State it was not. The Court thus held that the
confiscation was not intended as pecuniary compensation for damage, rather it had been 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, such as considerations on the lawful origin of the
money, the lack of intention or the absence of a record of other customs offences. Overall, the scope
of the courts’ review had been too narrow to satisfy the requirement of seeking a “fair balance”.
It had also been possible for the courts to fine the applicant and the Government had not shown
why such a measure could not have achieved the desired deterrent and punitive effect.

For the Court, the confiscation of the entire undeclared sum had imposed an individual and
excessive burden on the applicant and had been disproportionate to the offence committed. There
had therefore been a violation of Article 1 of Protocol No. 1.

Other articles

Having regard to its finding under Article 1 of Protocol No. 1, the Court did not find it necessary to
give a separate ruling on the admissibility and merits of the allegation of a breach of Article 6.

Just satisfaction (Article 41)

The Court observed that the grounds for finding a violation of Article 1 of Protocol No. 1 was the
disproportionate nature of the sanction imposed on the applicant, which did not imply that he did
not have to bear any responsibility for the breach of the domestic law he had committed. It noted,
however, that it was not the Court’s task to speculate on the amount of the fine which would have
been imposed in lieu of the confiscation of the entire undeclared sum of money, which was found to
be in breach of the Convention, and to substitute itself for the national authorities on that matter.

The Court therefore held that the question in respect of pecuniary damage was not yet ready for
decision and it reserved it to enable the parties to provide written observations and inform it of any
agreement. It held that the finding of a violation was in itself sufficient just satisfaction in respect of
non-pecuniary damage(echrcaselaw.com).