Communicated on 8 September 2014
FIRST SECTION
Application no. 43492/11
Isat BOLJEVIĆ
against Croatia
lodged on 24 June 2011
STATEMENT OF FACTS
The applicant, Mr Isat Boljević, is a Montenegrin national, who was born in 1967 and lives in Bar (Montenegro). He is represented before the Court by Mr M. Umićević, an advocate practising in Zagreb.
A. The circumstances of the case
The facts of the case, as submitted by the applicant, may be summarised as follows.
On 6 February and 4 March 2009 the applicant was, while crossing the border between Montenegro and Croatia, caught by the customs authorities carrying on each occasion the sums of 90,000 euros (EUR) which he failed to declare, contrary to the law. Since the money was not immediately forfeited, on the same dates the applicant deposited the above amounts with a bank in Dubrovnik.
On 2 June 2009 the Financial Inspectorate of the Ministry of Finance (Ministarstvo financija, Financijski inspektorat – “the Ministry”) instituted administrative offences proceedings (prekršajni postupak) against the applicant for failing to declare the sum of 180,000 euros, an administrative offence defined in section 40(1) of the Foreign Currency Act and section 74 of the Prevention of Money Laundering and Financing of Terrorism Act.
In his defence the applicant explained that the money he had been carrying corresponded to the sale price of a flat in Podgorica (Montenegro) he had bought from a Croatian national, a certain S.K., who had insisted that the money be paid to him from an account in a Croatian bank.
By a decision of 19 October 2009 the Ministry found the applicant guilty of having committed the administrative offence in question and fined him 10,000 Croatian kunas (HRK). At the same time, the Ministry imposed a protective measure (zaštitna mjera) confiscating EUR 180,000 pursuant to section 69(2) of the Foreign Currency Act. The Ministry held that the evidence presented did not corroborate the applicant’s defence. In particular, while the applicant had indeed submitted a preliminary sale-purchase agreement for a flat in Podgorica between him and S.K., that agreement had been concluded two weeks after the commission of the offence and the sale price (EUR 125,000) indicated in it did not correspond to the amount he had brought into Croatia. The Ministry also held that the applicant was unable to provide sufficient evidence to justify his earlier money transfers to S.K. and his wife to their account in Tunisia and Jordan totalling EUR 882,900 in the period between 2005 and 2008. The relevant part of the Ministry’s decision reads as follows:
“In this type of administrative offence what is important for the purposes of ordering a protective measure is whether the statements of the accused can be supported by relevant documents. If, in terms of amounts and dates, there is no link between the transfers by which the accused acquired financial means and the business transactions for which those means were intended, or if [those transfers] do not have basis in lawful transaction, the Ministry cannot apply section 69(4) of the Foreign Currency Act which allows that, in particularly justified situations where special mitigating circumstances exist, the authority deciding on the administrative offence may decide not to confiscate or confiscate only in part the cash that was the object of the offence.
Earlier transfers from [the applicant’s] account and the motives for which he opened that non-residential account also influenced the decision to impose the protective measure ...”
The applicant appealed by arguing, inter alia, that the imposition of the protective measure of confiscation was disproportionate in the circumstances and therefore contrary to Article 1 of Protocol No. 1 to the Convention. In so arguing he referred to the Court’s case-law, in particular to the case of Gabrić v. Croatia (no. 9702/04, 5 February 2009).
By a decision of 23 December 2009 the High Court for Administrative Offences (Visoki prekršajni sud Republike Hrvatske) dismissed the applicant’s appeal and upheld the Ministry’s decision, endorsing the reasons given therein.
The applicant then lodged a constitutional complaint, alleging, inter alia, a violation of his constitutionally protected right of ownership.
By a decision of 9 December 2010 the Constitutional Court (Ustavni sud Republike Hrvatske) declared the applicant’s constitutional complaint inadmissible and served its decision on his representative on 3 January 2011. It found that even though the applicant relied in his constitutional complaint on the relevant Articles of the Constitution he had not substantiated his complaint by any constitutional law arguments but had merely repeated the arguments raised in the proceedings before the Ministry and the High Court for Administrative Offences. Therefore, the Constitutional Court had been unable to examine the merits of his constitutional complaint.
B. Relevant domestic law
1. Foreign Currency Act
The relevant part of the Foreign Currency Act (Zakon o deviznom poslovanju, Official Gazette no. 96/03 with subsequent amendments), in force at the material time, in so far as relevant, read as follows:
Movement of foreign or domestic currency cash and cheques
Section 36(1)
“Foreign currency cash and cheques in foreign currency may be freely brought into the Republic of Croatia, subject to a reporting obligation pursuant to section 40 of this Act.”
Prevention of money laundering and of counterfeiting of foreign currency
Section 40(1)
“Residents and non-residents crossing the State border are required to declare to a customs official ... cash in foreign or domestic currency or cheques of the value prescribed by the legislation regulating prevention of money laundering.”
Section 69
(1) A fine from HRK 5,000.00 to HRK 50,000.00 for an administrative offence shall be imposed on domestic or foreign natural person ... who attempts to take or takes across the State border cash or cheques of the value prescribed by the legislation regulating prevention of money laundering, without declaring them to a customs official.
(2) Cash and cheques which are the objects of the offence referred to in paragraph 1 of this section shall be confiscated to the benefit of the State budget.
(3) ...
(4) Exceptionally, in particularly justified situations where special mitigating circumstances exist, the authority deciding on the administrative offence may decide that the cash and cheques which are the objects of the administrative offence referred to in paragraph 1 of this section shall not be confiscated or shall be confiscated only in part.”
2. Prevention of Money Laundering and Financing of Terrorism Act
Section 74(1) of the Prevention of Money Laundering and Financing of Terrorism Act (Zakon o sprječavanju pranja novca i financiranja terorizma, Official Gazette no. 87/08 with the subsequent amendments) reads as follows:
“Customs [authorities]... shall inform the Office [for the Prevention of Money Laundering] of any declared transfer across the State border of cash or cheques in domestic or foreign currency of the value, in HRK equivalent, of EUR 10,000 or more, immediately or the latest within three days of the transfer ...”
COMPLAINT
The applicant complains that the decision of the domestic authorities in the administrative offences proceedings to both fine him and confiscate EUR 180,000 from him for having failed to declare that sum at the customs was excessive and thus violated his right of property.
QUESTIONS TO THE PARTIES
Was the confiscation of the entire amount which the applicant did not declare to the Croatian customs authorities necessary to control the use of property in accordance with the general interest, within the meaning of Article 1 of Protocol No. 1 to the Convention? In particular, in the circumstances of the present case did that measure strike the requisite fair balance between the demands of the general interest and the requirements of the protection of the applicant’s right of property, and did it impose a disproportionate and excessive burden on him, regard being had in particular to the severity of the sanction (see, for example, Gabrić v. Croatia, no. 9702/04, 5 February 2009)?
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