BAROV v. BULGARIA

Communicated on 28 February 2019

FIFTH SECTION

Application no. 26221/12
Petar Milkov BAROV
against Bulgaria
lodged on 20 April 2012

STATEMENT OF FACTS

The applicant, Mr Petar Milkov Barov, is a Bulgarian national who was born in 1969 and lives in Gabrovo. He is represented before the Court by Mr Y. Yordanov, a lawyer practising in Veliko Tarnovo.

A. The circumstances of the case

The facts of the case, as submitted by the applicant, may be summarised as follows.

1. The offences committed by the applicant

In 1995 criminal proceedings were opened against the applicant upon a suspicion that, in complicity with several other persons, in 1994 and 1995 he had committed thefts and robberies, some of which resulting in injuries or even the death of the victims, and had unlawfully held a large quantity of firearms. In the ensuing criminal proceedings the applicant remained in pre‑trial detention from 1995 to 2001. Subsequently he entered into a plea agreement with the prosecution authorities, admitting that he had committed the offences at issue – under Article 195 § 1, Article 199 § 2, Article 200 and Article 339 of the Criminal Code – and accepting a term of imprisonment equalling the duration of his pre-trial detention. The agreement was approved on 6 October 2006 by the Lovech Regional Court, which noted in particular that any pecuniary damage stemming from the offences committed by the applicant had been repaid.

2. Forfeiture proceedings against the applicant

(a) Forfeiture application

Since the offences the applicant had been convicted of fell within the scope of the Forfeiture of Proceeds of Crime Act 2005 (hereinafter “the 2005 Act”, see “Relevant domestic law and practice” below), in April 2009 the Commission for Uncovering Proceeds of Crime (hereinafter “the Commission”) filed an application with the Gabrovo Regional Court seeking the forfeiture of several properties of his, namely: two plots of land, together with an industrial building and outbuildings constructed on them, all bought by the applicant in 2007; two other plots of land bought in 2008; a car and a motorcycle bought in 2006; and the sum received by the applicant from the sale of another car, bought by him in 2005 and sold to a third person in 2006.

The forfeiture application was the result of checks and verifications by the Commissions on the applicant’s income and expenses for the period between 10 May 1987 (when he had turned 18) and 1 January 2009.

(b) Judgment of the Gabrovo Regional Court

In a judgment of 9 April 2010 the Gabrovo Regional Court allowed the application and ordered the forfeiture of the properties described above, finding that the preconditions of the 2005 Act had been met. It noted, first, that the applicant had been convicted of offences enumerated in section 3(1) of the Act. Second, during the period under examination he had acquired assets of “significant value”. And third, a reasonable assumption could be made that those assets were the proceeds of crime. In this regard it was not necessary to establish a causal link between the assets at issue and the offences committed by the applicant, since this was not a requirement of the 2005 Act.

The Gabrovo Regional Court calculated that during the period under examination the applicant’s income of which a legal source had been shown to exist amounted to 60,801 Bulgarian levs (BGN), the equivalent of approximately 31,100 euros (EUR). These came from salaries, the sale of property and from loans from banks and other institutions. The applicant had not proven his claims that he had received further income, most notably a loan from a friend and remuneration under a commission contract.

As to the applicant’s expenses, for the period at issue they amounted to BGN 182,270 (the equivalent of EUR 92,230). That amount was reached after the Gabrovo Regional Court took most notably into account the market values of the properties bought by the applicant, calculated by experts, and not the values indicated in the notary deeds and sale contracts, which were considerably lower. It pointed out that the State, which had not been a party to the transactions the applicant had entered into, was not bound by the values indicated in those documents.

Since the total expenses exceeded significantly the applicant’s legal income for the period at issue, the forfeiture application had to be allowed.

(c) Judgment of the Veliko Tarnovo Court of Appeal and decision of the Supreme Court of Cassation.

The judgment above was upheld on 8 November 2010 by the Veliko Tarnovo Court of Appeal, with the only modification that the motorcycle bought by the applicant in 2006 was not to be forfeited, since it had been transferred to a third person, and the applicant remained liable to pay in the price he had received for it.

Despite upholding the lower court’s conclusion that the applicant’s expenses exceeded significantly his legal income, which justified the forfeiture of his properties, the Court of Appeal recalculated those income and expenses, accepting some of them as proven and others not (for instance, it added to the applicant’s revenues the bail which had been returned to him after his 2006 conviction and which had initially been paid by his sister, but removed from the list some bank loans he had received). It thus concluded that the applicant’s legal income for the period under examination totalled BGN 58,030 (the equivalent of EUR 30,000), and the expenses totalled 167,192 (the equivalent of EUR 85,520).

Lastly, the Veliko Tarnovo Court of Appeal confirmed that it was not necessary to establish a causal link between the offences committed by the applicant and the assets for which forfeiture was being sought.

The applicant filed an appeal on points of law. In a final decision of 24 October 2011 the Supreme Court of Cassation refused to accept it for cassation review.

B. Relevant domestic law and practice

1. The 2005 Act

The Forfeiture of Proceeds of Crime Act 2005 (Закон за отнемане в полза на държавата на имущество придобито от престъпна дейност, “the 2005 Act”) was enacted by Parliament in February 2005. In 2012 it was superseded by other legislation, with the proviso that all pending proceedings would continue to be governed by it.

Proceedings under the 2005 Act could be opened when it was established that a person charged with a relevant criminal offence had acquired assets of “considerable value” in respect of which a reasonable assumption could be made that they were the proceeds of crime (section 3(1)). “Considerable value” was defined as more than BGN 60,000 (approximately EUR 30,700). In practice, for the purpose of cross-time comparisons, that amount was also presented as the equivalent of 400 minimum monthly salaries. According to the Supreme Court of Cassation, that had to be the aggregate value of the assets, determined on the basis of their fair market value at the time of their acquisition (see реш. № 89 от 29 януари 2010 г. по гр. д. № 717/2009 г., ВКС, III г. о.).

The offences that could trigger the opening of proceedings under the 2005 Act were enumerated in section 3(1).

Assets that could be forfeited under the 2005 Act were those that had been acquired by persons convicted of a criminal offence and in respect of which it could reasonably be assumed that they were the proceeds of crime, in as much as no legal source had been established (section 4(1)).

The State’s right to forfeit an asset expired twenty-five years after it had been acquired (section 11).

The authority in charge of initiating and pursuing proceedings under the 2005 Act was the Commission for Uncovering Proceeds of Crime (“the Commission”). The forfeiture itself was to be ordered by the courts.

The remaining relevant provisions of the 2005 Act have been summarised in Nedyalkov and Others v. Bulgaria (dec.), no. 663/11, §§ 33‑61, 10 September 2013).

2. Case law of the domestic courts and Interpretative Decision No. 7 of 30 June 2014

Until 2014 the national courts were taking diverging views on the necessity under the 2005 Act to establish a causal link between the specific criminal activity for which the target had been convicted and the assets to be forfeited. Thus, in some cases the courts held that no causal link had to be proven, in as much as section 4(1) the 2005 Act established a presumption that all assets for which no legal source had been shown represented proceeds of crime (Решение № 671 от 9.11.2010 г. на ВКС по гр. д. № 875/2010 г., IV г. о.; Решение № 156 от 29.05.2013 г. на ВКС по гр. д. № 890/2012 г., IV г. о.). In other cases the courts required the establishment of a causal link, considering that, even where no lawful source of income had been shown to exist, this did not automatically mean that the assets at issue had been proceeds of crime (Решение № 607 от 29.10.2010 г. на ВКС по гр. д. № 1116/2009 г., IV г. о.; Решение № 209 от 26.07.2011 г. на ВКС по гр. д. № 1462/2010 г., III г. о.).

The matter was settled in a binding Interpretative Decision No. 7, given by the Supreme Court of Cassation on 30 June 2014 (Тълкувателно решение № 7/2014 г. на ВКС по т. д. № 7/2013 г., ОСГК), which endorsed the latter view. The Supreme Court of Cassation stated that the acquirement of assets by a person having committed an offence among those enumerated in section 3(1) of the 2005 Act could be directly or indirectly linked to proceeds of crime,

“but in all cases that link has to be established, or its existence must be presumable.”

The presumption at issue had to be “logically justified” and “based on the facts and circumstances”. The Supreme Court of Cassation held further that

“[t]he failure to establish a lawful source for an asset does not replace the justified presumption that it is linked to criminal activity, but merely absolves the Commission from the burden to prove such a link beyond doubt.”

Lastly, the Supreme Court of Cassation was of the view that the forfeiture of assets unlinked to proven criminal activity would amount to the imposition of a “penalty” without a conviction.

Subsequently, relying on this Interpretative Decision, the national courts dismissed forfeiture applications under the 2005 Act lodged by the Commission, holding that no causal link had been established between the assets for which forfeiture had been sought and the target’s criminal activity, notwithstanding the fact that no lawful source had been shown to exist for some of the latter’s revenues (Решение № 256 от 14.10.2014 г. на ОС Ловеч по гр. д. № 603/2011 г.; Решение № 79 от 22.05.2015 г. на АС Варна по в. гр. д. № 154/2015 г.; Решение № 194 от 5.11.2015 г. на АС Пловдив по в. гр. д. № 442/2015 г.).

C. Relevant international and European Union law

The relevant international and European Union law has been summarised in G.I.E.M. S.R.L. and Others v. Italy (merits) ([GC], nos. 1828/06 and 2 others, §§ 139-53, 28 June 2018).

COMPLAINTS

The applicant complains under Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 of the forfeiture of his property. He points out in particular that no causal link was established between the forfeited assets, acquired in 2006-08, and the offences he had committed in 1994-95. He complains also of the national courts’ decision to take into account the market values of the properties he had bought, and of their rejecting his claims to have received further legal income.

QUESTIONS TO THE PARTIES

1. Was the forfeiture of the applicant’s assets, in proceedings under the Forfeiture of Proceeds of Crime Act 2005, in compliance with the requirements of Article 1 of Protocol No. 1? In particular, has it been established that those assets had been the proceeds of crime?

In that regard, the parties are invited to comment on the manners in which the domestic authorities calculated the respective persons’ revenues and expenses, having regard to the lengthy periods of time to be verified and the resulting risk of imprecision and uncertainty (see, for example, Dimitrovi v. Bulgaria, no. 12655/09, §§ 47‑49, 3 March 2015.

2. Could the forfeiture proceedings be considered fair for the purposes of Article 6 § 1 of the Convention?

Full & Egal Universal Law Academy