FIFTH SECTION
DECISION
Application no. 68475/10
Heinrich Josef BLEY
against Germany
The European Court of Human Rights (Fifth Section), sitting on 25 June 2019 as a Committee composed of:
André Potocki, President,
Angelika Nußberger,
Mārtiņš Mits, judges,
and Milan Blaško, Deputy Section Registrar,
Having regard to the above application lodged on 19 November 2010,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,
Having deliberated, decides as follows:
THE FACTS
1. The applicant, Mr Heinrich Josef Bley, is a German national who was born in 1959 and lives in Crawinkel. He was represented before the Court by Mr K. Rüther, a lawyer practising in Osnabrück. The German Government (“the Government”), to whom the application was communicated on 31 March 2014, were represented by their agents, Mrs K. Behr and Mr. H.-J.Behrens, of the Federal Ministry of Justice and Consumer Protection.
A. The circumstances of the case
2. The facts of the case, as submitted by the parties, may be summarised as follows.
3. In 1982 the Council of the European Communities introduced a levy payable by suppliers or purchasers of cows’ milk on any quantity of milk exceeding a certain quota. The purpose of this scheme was to reduce the imbalance between supply and demand in the milk and milk-products market and the resulting structural surpluses. Under Council Regulations as implemented in German law at the relevant time, a dairy producer was obliged to pay a levy of 115% on all quantities of milk marketed during a twelve-month period in excess of the individual quota set for the producer. Purchasers of dairy products were allowed to balance the accounts of milk suppliers who had not met their individual quota against those who had exceeded it. However, according to a special regulation adopted in the course of the German reunification, the accounts of milk suppliers situated on the territory of the former German Democratic Republic (GDR) could not be balanced against those of milk suppliers situated on the territory of the former Federal Republic of Germany (FRG).
4. The applicant was the manager and co-proprietor of a company that supplied milk, based in the Land of Thuringia (in the former GDR). From 1996 onwards the company marketed less milk than the individual quota set for it. At the same time, a number of milk suppliers from the Land of Hesse (in the former FRG), who delivered milk to the same dairy, exceeded their individual quotas and risked paying a levy on the surplus.
5. The applicant concluded contracts with twenty-six dairy producers situated in Hesse covering different time-spans between January 1997 and September 1999. Under those contracts, the dairy producers in Hesse leased all their cattle to the applicant. The cattle were to remain in Hesse and the dairy producer in Hesse was obliged to take care of the animals, milk the cows and deliver the milk to the dairy. The costs for the lease were set off against the money received from the dairy. As a result of this scheme, the milk supplier in Hesse was in a position to deliver milk which was counted against the applicant’s quota. The applicant received the purchase price from the dairy and transferred it to the milk supplier in Hesse after deducting 0.10 German marks per litre of milk, which he kept for himself.
6. On 14 June 2006 the Kassel District Court convicted the applicant of tax evasion and sentenced him to two years and three months’ imprisonment.
7. On 15 June 2006 the applicant lodged an appeal. He based the appeal, in particular, on the defence of an excusable error of law as to the wrongful nature of the acts in question (Verbotsirrtum). He submitted that he had shown the contract to his tax accountant, who had informed him that it was not problematic in terms of tax law.
8. On 22 February 2007 the Kassel Regional Court reduced the sentence to one year and six months’ imprisonment, suspended on probation, and rejected the remainder of the applicant’s appeal. The Regional Court noted that the applicant had acknowledged having known that it was impermissible to transfer the quotas of dairy producers in the former GDR to those in the former FRG. However, this was the exact result of the contractual scheme, which did not change anything in terms of the milk supply process itself. Both contractual partners had continued to manage their enterprises independently and had full ownership rights over their cattle, as well as over the milk they produced. The applicant had been paid 0.10 German marks per litre of milk as a reward for his involvement in the scheme, which had been aimed at circumventing the applicable regulations. As a result of the scheme, the farmers in Hesse had avoided paying more than 283,000 euros (EUR) of surplus levy.
9. The Chamber of the Regional Court considered that the applicant could easily have recognised that his actions had been unlawful. The court noted that the applicant was an experienced farmer who had, furthermore, had various opportunities to make further enquiries. The tax accountant, when heard as a witness, had stated that he had only advised the applicant in respect of general taxation law, but not with regard to the specific regulations governing the distribution of quotas. The tax accountant had not been aware of the fact that it was unlawful to balance quotas between producers situated in the former GDR and those in the former FRG. This problem had never been an issue in his conversations with the applicant. The court held that, conversely, the applicant would have been under an obligation either to duly inform the tax accountant about the problematic situation or to consult a lawyer. Alternatively, he could have made enquiries with the tax office or with the Chamber of Agriculture.
10. The Regional Court concluded that the applicant was criminally liable for tax evasion under section 370(1)(1) of the Revenue Act (see paragraph 21 below) in conjunction with sections 8(2) and 12 of the Law on the Implementation of the Common Market Organisation (Marktordnungsgesetz – “the MOG”) and the Regulation on Milk Quotas (Milch-Garantiemengen Verordnung – “the MGV”) (see paragraph 19 below).
11. On 23 October 2007 the Frankfurt Court of Appeal rejected an appeal on points of law lodged by the applicant as unfounded. In the appeal, the applicant had argued, inter alia, that the prohibition on balancing milk quotas between the territory of the former GDR and that of the former FRG violated his constitutional rights under the Basic Law.
12. The applicant lodged a constitutional complaint, additionally alleging that the surplus levy of 115% had a “choking effect” (“erdrosselnde Wirkung”), because the levy to be paid exceeded the market price of the milk, and thus violated dairy farmers’ constitutional rights as guaranteed, in particular, by Article 14 of the Basic Law.
13. On 29 April 2010 the Federal Constitutional Court, sitting as a panel of three judges, refused to admit the applicant’s complaint for adjudication. The Constitutional Court considered that the applicable provisions, insofar as they were subject to review by that court, were compatible with the Basic Law. The Constitutional Court did not exercise its competence to review the question whether the surplus levy violated the applicant’s property rights or other basic rights, as the amount of surplus levy to be charged for excess milk production was established in Council Regulation (EEC) No. 3950/92. This left no discretion to the domestic authorities.
14. The Federal Constitutional Court further considered that the provisions relied on by the criminal courts adequately set out the prerequisites for criminal liability. This also applied insofar as criminal liability for tax evasion in respect of the levy set by Council Regulation (EEC) No. 3950/92 was concerned. The conditions of criminal liability were, in particular, sufficiently foreseeable to those persons to whom the relevant provisions were addressed, namely dairy farmers and other persons professionally involved with the dairy industry. A person who did not have at least a basic knowledge of the milk-quota system did not run the risk, from the outset, of criminal liability for unlawful actions in this field.
B. Relevant domestic and EU law and practice
15. Article 234 of the Treaty establishing the European Community (former Article 177 and, since 1 December 2009, Article 267 of the Treaty on the Functioning of the European Union) provides for preliminary rulings of the Court of Justice of the European Communities (CJEU) as follows:
“The Court of Justice shall have jurisdiction to give preliminary rulings concerning:
(a) the interpretation of this Treaty;
(b) the validity and interpretation of acts of the institutions of the Community ...;
...
Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court of Justice to give a ruling thereon.
Where any such question is raised in a case pending before a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court of Justice.”
16. Article 17 of the European Charter of Fundamental Rights of the European Union and Article 14 of the Basic Law both provide for the protection of the right to property.
17. Under its established case-law, the German Federal Constitutional Court refrains from exercising judicial review over EU law which is applied at the domestic level, as long and insofar as the European Union generally provides effective protection of human rights, which is broadly comparable to the human-rights protection afforded under the German Basic Law (see the so-called “Solange” case-law, published in the official collection of the Federal Constitutional Court no. 73, p. 339; no. 102, p. 147 and no. 123, p. 267).
18. Council Regulation (EEC) No. 3950/92, as applicable from 1 April 1993, provides:
Article 1
“For seven new consecutive periods of twelve months commencing on 1 April 1993, an additional levy shall be payable by producers of cow’s milk on quantities of milk or milk equivalent delivered to a purchaser or sold directly for consumption during the 12-month period in question in excess of a quantity to be determined.
The levy shall be 115 % of the target price for milk.”
Article 2
“1. The levy shall be payable on all quantities of milk or milk equivalent marketed during the 12-month period in question in excess of the relevant quantity referred to in Article 3. It shall be shared between the producers who contributed to the overrun ...”
19. Under section 7(b)(1) of the MGV as applicable at the relevant time, issued on the basis of sections 8(1) and 12(2) of the MOG, a purchaser was entitled to transfer quotas which had not been utilised within a twelve-month period to other dairy producers whose deliveries had exceeded their individual quotas. However, unused quotas belonging to enterprises which were situated on the territory of the former GDR could only be transferred to dairy producers who were also situated in the same part of the country.
20. Section 12(1) of the MOG provides that the provisions of the Revenue Act apply to levies aimed at regulating the common market.
21. Section 370(1) of the Revenue Act provides:
Tax evasion
“(1) A penalty of up to five years’ imprisonment or a monetary fine shall be imposed on whoever ... furnishes the revenue authorities or other authorities with incorrect or incomplete particulars concerning matters of substantial significance for taxation, ... and as a result understates [their] tax liability or derives unwarranted tax advantages for himself or for another person.”
COMPLAINTS
22. The applicant complained under Article 6 § 1 of the Convention that the Federal Constitutional Court had failed to refer questions to the CJEU for a preliminary ruling on the lawfulness of the surplus levy imposed under EU law, and had failed to provide adequate reasoning for its refusal to do so.
23. The applicant further complained under Article 7 § 1 of the Convention that the provisions relied upon by the domestic courts were insufficiently precise to justify his criminal conviction.
THE LAW
A. As regards the complaint of a violation of Article 6 § 1 of the Convention
24. Article 6 § 1 of the Convention, in so far as relevant, provides as follows:
“In the determination of ... any criminal charge against him, everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”
1. Exhaustion of domestic remedies
25. The Government were of the opinion that the applicant had failed to exhaust domestic remedies. They emphasised that he had neither expressly applied for the initiation of preliminary ruling proceedings before the District Court, the Regional Court and the Court of Appeal, nor had he substantially claimed before them that the surplus levy of 115% was in breach of human rights as protected by the European Union.
26. The applicant argued that he had complied with the exhaustion requirement, even though he had indeed not expressly applied for a referral of questions to the CJEU. He relied on the fact that throughout the domestic proceedings, he had claimed that the provisions applied against him were unconstitutional and violated EU law. For example, in the reasons for his appeal on points of law, he had indeed discussed the compatibility of section 7b of the MGV with Council Regulation (EEC) No. 3950/92.
27. The Court notes that throughout the domestic proceedings the applicant indeed challenged the constitutionality of some of the provisions applied to him, as well as their conformity with EU law. He also expressly complained before the Federal Constitutional Court that the levy as such violated his property rights under the Basic Law. However, the Court must also note that before the District Court, the Regional Court and the Court of Appeal, the applicant only challenged the constitutionality and the conformity with EU law of the provisions that prohibited the transfer of quotas between enterprises situated on the territory of the former GDR and those situated in the former FRG. Moreover, before the Federal Constitutional Court he only complained that the levy as such violated his right to property under domestic law, thereby omitting any reference to respective EU protection. It is therefore doubtful whether the applicant exhausted domestic remedies, in compliance with the formal requirements under domestic law.
28. The Court can, however, leave open whether the applicant exhausted domestic remedies as required by Article 35 § 1 of the Convention, because the present application is, in any event, inadmissible as it is manifestly ill‑founded within the meaning of Article 35 § 3 (a) of the Convention for the reasons set out below.
2. Manifestly ill-founded
29. The Government were of the opinion that, in any event, the complaint under Article 6 § 1 of the Convention was ill-founded. They referred to their own submissions regarding exhaustion of remedies, and concluded that the Federal Constitutional Court had obviously not had reason to seek a preliminary ruling, since the applicant had poorly substantiated his allegations that the levy as such was incompatible with the right to property as protected under EU law. Nor had he convinced that court that such a conclusion would be of any significance for the criminal proceedings. Both elements would, however, have been a prerequisite for seeking a preliminary ruling by the CJEU. This was all the more true as the CJEU had already established the compatibility of the levy with fundamental rights in the case of Irish Farmers Association and others v. Minister for Agriculture, Food and Forestry, Ireland and the Attorney General (C-22/94, judgment of 15 April 1997, §§ 26-29). Against that background the Federal Constitutional Court could not, in the opinion of the Government, be considered to have acted arbitrarily in not seeking a preliminary ruling; for the same reasons, the Federal Constitutional Court had not been obliged to provide reasons for not seeking a preliminary ruling. They referred to the cases of John v. Germany ((dec.), no. 15073/03, 13 February 2007) and Matheis v. Germany ((dec.), no. 73711/01, 1 February 2005).
30. The applicant complained that the Federal Constitutional Court had failed to seek a preliminary ruling by the CJEU as to whether the introduction of a surplus levy of 115% was in accordance with his property rights, in breach of his rights under Article 6 § 1 of the Convention. The validity of the levy was a prerequisite for the imposition of the penalty, since it had been imposed for actions essentially directed at circumventing that levy. The levy obviously violated his property rights, as it had a choking effect. It had hence been arbitrary not to seek a preliminary ruling from the CJEU. Given that the Federal Constitutional Court had not examined the lawfulness of the levy and that the domestic courts had not sought a preliminary ruling from the CJEU, the applicant asserted that he had been deprived of a judicial review of this issue. This was all the more problematic as criminal proceedings, unlike civil proceedings, were governed by the ex officio principle. For the same reasons, the Federal Constitutional Court had violated its obligation to provide reasons.
31. The Court reiterates in this regard that it is for the national courts to interpret and apply domestic law, if applicable in conformity with EU law, and to decide whether it is necessary to seek a preliminary ruling from the CJEU to enable them to give judgment. It further reiterates that the Convention does not guarantee, as such, any right to have a case referred to the CJEU for a preliminary ruling under Article 234 of the EC Treaty (which has become Article 267 of the Treaty on the Functioning of the EU since 1 December 2009). Nevertheless, refusal of a request for such a referral may infringe the fairness of proceedings if it appears to be arbitrary, that is to say, where there has been a refusal even though the applicable rules allow no exception to the principle of preliminary reference or no alternative thereto, where the refusal is based on reasons other than those provided by the rules, and where the refusal has not been duly reasoned in accordance with these rules (see, for instance, Somorjai v. Hungary, no. 60934/13, § 56, 28 August 2018; Baydar v. the Netherlands, no. 55385/14, §§ 39-44, 24 April 2018; and Herma v. Germany (dec.), no. 54193/07, 8 December 2009).
32. In the present case, the Court observes that the Federal Constitutional Court, in line with its cited case-law (compare paragraph 17 above), refrained from exercising its competence of review in respect of the milk levy, for that levy was based fully on EU law and therefore subject to review by the CJEU and not to its own review. The Court also observes that the applicant had indeed never applied to the domestic courts for a preliminary ruling by the CJEU in his case. Also, in his constitutional complaint, the applicant merely complained that the surplus levy had violated his right to property under the German Basic Law, but did not raise the issue of whether it was also in breach of EU law.
33. Even assuming that the applicant’s reliance on his right to property (as guaranteed under the Basic Law) could have triggered the domestic courts, in the event that they found the human-rights guarantees under the domestic law inapplicable, to assess the arguments in the light of EU law, there was nevertheless no reason for the Federal Constitutional Court to seek a preliminary ruling. The Court reiterates in this regard that under EU law, even if the initiative of a party is not necessary for a domestic court against whose decisions there is no judicial remedy under national law to be obliged to bring a question concerning the interpretation or the validity of EU law before the CJEU, it is solely for that court to determine, in the light of the particular circumstances of the case, the need for a preliminary ruling in order to be able to deliver judgment (see Somorjai, cited above, § 61, 28 August 2018). Against the background of this jurisprudence, the Court can adhere to the view of the Government that the levy in question had already been assessed in the light of the right to property, and the correct application of EU law was so obvious as to leave no scope for any reasonable doubt (see Somorjai, cited above, §§ 39-41). The applicant, in his submissions, has not substantiated facts which would allow for a different conclusion.
34. Against this background, the Federal Constitutional Court cannot be considered to have refused a request for a preliminary ruling. It can therefore not be regarded as arbitrary that the Federal Constitutional Court did not consider it necessary to refer the case for a preliminary ruling to the CJEU, nor can its decision be considered to be in breach of Article 6 § 1 of the Convention for failure to provide explicit reasons.
35. It follows that this complaint is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
B. As regards the complaint of a violation of Article 7 of the Convention
36. Article 7 of the Convention is worded as follows:
“1. No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed.
2. This article shall not prejudice the trial and punishment of any person for any act or omission which, at the time when it was committed, was criminal according to the general principles of law recognised by civilised nations.”
37. The Government claimed that criminal liability had been sufficiently foreseeable. The chain of provisions to look at was complex, but not impossible to comprehend. The applicant worked in a highly specialised profession, which – according to the case-law of the Court – entailed the obligation to seek expert advice. The fact that the applicant himself had intentionally developed the idea of circumventing both the levy and the prohibition on the transfer of quotas between producers in the territory of the former GDR and those in the territory of the former FRG by concluding and implementing leasing contracts, allowed for the conclusion that he had been well aware of his criminal responsibility.
38. The applicant argued that it had been impossible for him to foresee that the conclusion and implementation of the leasing contracts would subject him to criminal liability. He pointed out that his conviction had been based on section 370 of the Revenue Act, the criminal provision concerning tax evasion. That provision was only rendered applicable by section 12(1) of the MOG. Section 12(1) of the MOG, however, did not explicitly render section 370 of the Revenue Act applicable to the levy provided for by Council Regulation (EEC) No. 3950/92, but only made very general reference to both the Revenue Act and the levies collected on the basis of EU law, which aimed at regulating the common market. In a further step, section 370 of the Revenue Act had to be qualified as relevant and the levy provided for by Council Regulation (EEC) No. 3950/92 had to be qualified as a levy collected on the basis of EU law, aimed at regulating the common market. From there onwards, the national implementation measures, in particular section 8(1) of the MOG and section 7(b) of the MGV, had to be taken into account in order to be able to comprehend the illegality of his acts.
39. The applicant submitted that, under these circumstances, it had been impossible for him not only to have knowledge of all the provisions referred to which barred the leasing arrangement, but also to make the connection between those provisions and the provisions establishing criminal liability for his actions. He alleged that a specialised lawyer may have been able to discern the unlawfulness of what he had done. He, however, had not been able to do so. He pointed out that he had relied on the expert advice of his tax accountant, who had examined the leasing contracts from the point of view of taxation law.
40. The applicant further alleged that milk production was not a highly specialised profession. His case was to be contrasted with that of Cantoni v. France (15 November 1996, Reports of Judgments and Decisions 1996‑V), concerning the manager of a supermarket that also sold medical products, in which the Court had considered that a degree of specialisation allowed for more complex regulation.
41. The Court reiterates its case-law on Article 7, summarised in the cases of Kafkaris v. Cyprus ([GC], no. 21906/04, §§ 137-41, ECHR 2008) and Camilleri v. Malta (no. 42931/10, §§ 34-38, 22 January 2013). In particular, Article 7 requires a criminal law to be accessible and foreseeable. An individual must know from the wording of the relevant provision and, if need be, with the assistance of the courts’ interpretation of it, what acts and omissions will make him criminally liable and what penalty will be imposed for the act and/or omission committed (see Kafkaris, cited above, § 140). Foreseeability depends to a considerable degree on the content of the law concerned, the field it is designed to cover and the number and status of those to whom it is addressed. A law may still satisfy the requirement of “foreseeability” where the person concerned has to take appropriate legal advice to assess, to a degree that is reasonable in the circumstances, the consequences which a given action may entail. This is particularly true in relation to persons carrying on a professional activity, who are used to having to proceed with a high degree of caution when pursuing their occupation. They can on this account be expected to take special care in assessing the risks that such activity entails (see, for instance, Camilleri, cited above, § 38, and Cantoni, cited above, § 35).
42. Turning to the circumstances of the present case, the Court notes that the Federal Constitutional Court, when examining the applicant’s complaint, considered that the provisions under which he had been convicted by the criminal courts adequately set out the prerequisites for criminal liability. The conditions of criminal liability were, in particular, sufficiently foreseeable to those persons to whom the relevant provisions were addressed, namely dairy farmers and other persons professionally involved with the dairy industry (see paragraph 14 above). The Court agrees that the provisions were directed at those operating dairy farms. They governed the question of how much milk each farmer was allowed to produce, which appears to be a rather decisive question in a strictly regulated business such as the milk-production business at the time. Moreover, the provisions had entered into force a long time before (see Klein Poelhuis v. The Netherlands, no. 34970/97, Commission decision of 21 May 1997).
43. Even though criminal liability was indeed based on a complex chain of provisions referring to one another, given the aforementioned background, the Court accepts the domestic courts’ conclusion that the applicant must have been aware of the illegality of his acts. He had invented a leasing system, which required knowledge of the basic mechanisms of the system in place, including in particular the levy and the prohibition on transferring quotas between the territories of the former GDR and the former FRG. The Court concludes that the applicant, as a dairy farmer, could therefore have been expected to be aware of the rules governing the transfer of milk quotas, or could at least have sought and obtain appropriate advice (see Cantoni, cited above, § 35).
44. The Court cannot adhere to the applicant’s submissions that dairy farming was not sufficiently specialised to bring about the specific obligation to seek legal advice. The applicant’s business involved the keeping of cows, the production of milk in compliance with hygiene prerequisites, as well as active marketing measures. Hence, the applicant had a professional activity and as such should have been used to having to proceed with a high degree of caution when pursuing his occupation. With regard to his further submissions that he had sought advice from his tax accountant, the Court observes that the Regional Court, having heard the accountant as a witness, considered that he had only advised the applicant on general taxation law, but not on the specific regulations governing the distribution of quotas. Under these circumstances, the Court accepts the domestic courts’ assessment that the applicant would have been informed of the criminal implications of his actions had he sought appropriate advice, for example from a lawyer or the Chamber of Agriculture.
45. In view of these considerations, the Court considers that the criminal implications of the applicant’s actions were, as required by Article 7 of the Convention, sufficiently foreseeable for him as a dairy farmer working in a highly regulated market.
46. It follows that this complaint is also manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Done in English and notified in writing on 18 July 2019.
Milan BlaškoAndré Potocki
Deputy RegistrarPresident
Full & Egal Universal Law Academy