FIRST SECTION
DECISION
Application no. 1190/16
Frano ĆALUŠIĆ and Others
against Croatia
The European Court of Human Rights (First Section), sitting on 22 March 2022 as a Committee composed of:
Péter Paczolay, President,
Alena Poláčková,
Davor Derenčinović, judges,
and Liv Tigerstedt, Deputy Section Registrar,
Having regard to:
the application (no. 1190/16) against Croatia lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 26 December 2015 by the applicants listed in the appended table (“the applicants”) who were represented by Ms N. Owens and Ms A. Ćalušić, lawyers practising in Zagreb;
the decision to give notice of the complaint concerning the right to property to the Croatian Government (“the Government”), represented by their Agent, Ms Š. Stažnik, and to declare inadmissible the remainder of the application;
the parties’ observations;
Having deliberated, decides as follows:
SUBJECT MATTER OF THE CASE
1. The first and second applicants are husband and wife. The third applicant was a company that used to operate a foreign currency exchange office and whose only shareholder was the first applicant. The second applicant was the company’s director at the relevant time.
2. On 2 January 2013, in the context of investigation against the first and second applicants’ son on suspicion of counterfeiting money and concluding usurious contracts, an investigation judge ordered a search of their house as well as the business premises of the third applicant which were located in the same building. The order specified that the purpose of the search was to find counterfeit currency. The next day the police temporarily seized the cash, in domestic and foreign currency, found in two safes in the residential part of the house, as well as such cash found in a safe located on the business premises.
3. The applicants complained, under Article 1 of Protocol No. 1 to the Convention, that their entire life savings and all the necessary funds for the operation of the third applicant’s business had been seized and that the relevant domestic law had not provided for any procedural mechanisms whereby they could have challenged that interference with their property.
THE COURT’S ASSESSMENT
Scope of the case4. The Court notes that, following the seizure of the applicants’ money, the relevant financial authorities made inquiries and established that a large portion of cash seized from the safe on the third applicant’s business premises had not been registered in the certified computer software. Keeping unregistered cash on the business premises was a minor offence under the legislation governing foreign exchange operations. The second and third applicants were therefore fined in the ensuing minor-offence proceedings and the unregistered cash was permanently confiscated as the object of the offence. Those proceedings ended with a decision of the High Minor Offences Court of 2 December 2015 dismissing the second and third applicants’ appeal against the financial authorities’ decisions. The applicants did not lodge a constitutional complaint against that decision.
5. This part of the applicants’ complaint under Article 1 of Protocol No. 1 was declared inadmissible for non-exhaustion of domestic remedies by the President of the Section, acting as a single judge pursuant to Rule 54 § 3 of the Rules of Court, when on 21 April 2016 the Government were given notice of the remaining part of that complaint. Those minor-offence proceedings thus fall outside of scope of the present case.
Alleged violation of Article 1 of Protocol No. 1 to the Convention6. The case thus concerns the seizure of the cash from the residential part of the first and second applicant’s house, as well as the seizure of a smaller portion of the cash found in the safe on the third applicant’s business premises.
7. The Court first observes that the third applicant was, upon completion of summary bankruptcy proceedings against it, on 24 April 2017 struck off the register of commercial companies and thus ceased to exist as a legal entity. On 14 January 2022 the first applicant informed the Court that he wished to pursue the application in the third applicant’s stead.
8. The Government did not ask the Court to strike the case out of its list of cases in respect of the third applicant nor did they raise an objection as to the admissibility ratione personae. However, the Court considers that it must examine these matters of its own motion (see Buzadji v. the Republic of Moldova [GC], no. 23755/07, § 70, 5 July 2016).
9. The third applicant company was a family business whose sole shareholder was the first applicant and whose director was the second applicant (see paragraph 1 above). Given that the case concerns the alleged breach of Article 1 of Protocol No. 1 on account of the seizure of, inter alia, a smaller portion of cash found in the safe on the third applicant company’s business premises, it affects the first applicant’s pecuniary interests as the company’s sole shareholder. The Court therefore finds that the first applicant can pursue the application in the third applicant’s stead (see, mutatis mutandis, Euromak Metal Doo v. the former Yugoslav Republic of Macedonia, no. 68039/14, §§ 54-55, 14 June 2018).
10. The Court further notes that on 28 March 2013 the State Attorney Office indicted the first and second applicant’s son and that three separate sets of criminal proceedings ensued against him, specifically:
(i) criminal proceedings concerning charges of money counterfeiting which ended with a final judgment of 13 May 2014 finding him guilty as charged;
(ii) criminal proceedings concerning charges of threat and forgery of documents which ended with a final judgment of 12 May 2016 finding him guilty as charged; and
(iii) criminal proceedings concerning charges of fraud and usury which were discontinued on 21 August 2018 due to his death on 14 March 2018.
11. Meanwhile, on 18 March 2013 the first and second applicants requested the return of their money from the relevant State Attorney’s Office. In a letter of 16 September 2014, the State Attorney’s Office informed them that the money had been seized until it was established, in the criminal proceedings against their son, whether that money constituted proceeds of crime.
12. However, on 29 October 2014, at the request of the Ministry of Finance, the police authorities returned the money in question to the first applicant’s bank account. The Government submitted that the money had been returned after it had been established (presumably in the first set of the criminal proceedings against their son, see paragraph 10 above), that it was unrelated to the offences their son had been charged with.
13. The applicants submitted that the money had not been properly returned to them. Specifically, the funds had not been returned in foreign currency and in cash but had been converted into Croatian kunas, which caused them losses due to exchange rate fluctuations. Moreover, the money had been paid into the bank account of the first applicant even though the money belonged to all the applicants. Furthermore, the payment order had been made by an individual police officer and they had not been informed of it (they claimed to have learned of the payment for the first time from the Government’s observations). Lastly, the applicants argued that this had been done deliberately so that the tax authorities would be able to collect the outstanding tax debt owed by the applicants, which indeed the authorities eventually did.
14. In this regard the Court first notes that under Croatian law, property can for the purposes of criminal proceedings be temporarily seized during search as (a) objects, instruments or products of the offence, or (b) evidence. Property cannot during a search be immediately seized as proceeds of crime as this requires a separate court decision in the form of an interim measure.
15. Since no such decision was issued in the applicants’ case, and the search order specified that the purpose of the search was to find counterfeit currency (see paragraph 2 above), the Court considers it clear that the cash found during the search was seized both as a possible product of the criminal offence of money counterfeiting of which their son had been suspected, and as potential evidence of that offence.
16. At the relevant time the seizure of items seized by the police as objects, instruments or products of the offence could have been challenged on the basis of section 28 of the Confiscation of the Proceeds of Crime Act (Zakon o postupku oduzimanja imovinske koristi ostvarene kaznenim djelom i prekršajem) by lodging a complaint (prigovor) to the investigation judge (before the indictment) or the court conducting the criminal proceedings (after the indictment).
17. Consequently, if the applicants considered that the seizure of their money had been unlawful or that the money should have been returned to them earlier, they had at their disposal an effective domestic remedy. However, in the period before the money was returned to them, they had not availed themselves of that remedy (see paragraph 12 above). In this regard it must be noted that even though in the applicants’ case the cash in question was seized both as a possible product of the criminal offence of money counterfeiting and as potential evidence, using this remedy would have been enough. That is because, once it was established that the money was not counterfeit, it could not have been retained either as a product of the offence of money counterfeiting or as evidence thereof.
18. It therefore cannot be argued that the applicants did not have at their disposal any procedural mechanism whereby they could have challenged the seizure of their property. This part of their complaint is therefore inadmissible under Article 35 § 3 (a) of the Convention as manifestly ill-founded and must be rejected pursuant to Article 35 § 4 thereof.
19. The Court further notes that the money temporarily seized from the first and second applicants was returned to them shortly after the first set of criminal proceedings against their son, which lasted just over a year at two levels of jurisdiction, ended (see paragraphs 10 and 12 above). That delay cannot be considered excessive.
20. In so far as the applicants complained of alleged irregularities when the funds were eventually returned to them (see paragraph 13 above), they had at their disposal a civil action for compensation against the State. In this regard it is to be noted that on 25 March 2016 they instituted civil proceedings against the State seeking the return of the money in question or, alternatively, compensation. Those proceedings are still pending but have been stayed since 2019 because the third applicant had ceased to exist as a legal entity (see paragraph 7 above). On 16 April 2021 the first and second applicants requested that those civil proceedings be resumed.
21. Therefore, in so far as the applicants’ complaint concerns alleged irregularities in the manner the money was returned, it is premature and must be rejected pursuant to Article 35 §§ 1 and 4 of the Convention.
For these reasons, the Court, unanimously,
Holds that the first applicant has standing to pursue the application in the third applicant’s stead;
Declares the application inadmissible.
Done in English and notified in writing on 28 April 2022.
Liv Tigerstedt Péter Paczolay
Deputy Registrar President
APPENDIX
No.
Applicant’s Name
Year of birth/
registration
Nationality/
country of incorporation
Place of residence/
registered office
1.
Frano ĆALUŠIĆ
1947
Croatian
Zagreb
2.
Anđelija ĆALUŠIĆ
1953
Croatian
Zagreb
3.
FRAN-KUNA D.O.O.
1992
Croatian
Zagreb