FOURTH SECTION
DECISION
Application no. 23996/06
by John Eljon LIEBKIND
against Finland
The European Court of Human Rights (Fourth Section), sitting on 6 October 2009 as a Chamber composed of:
Nicolas Bratza, President,
Giovanni Bonello,
David Thór Björgvinsson,
Ján Šikuta,
Päivi Hirvelä,
Ledi Bianku,
Nebojša Vučinić, judges,
and Fatoş Aracı, Deputy Section Registrar,
Having regard to the above application lodged on 14 July 2006,
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
The applicant, Mr John Eljon Liebkind, is a Finnish national who was born in 1945 and lives in Helsinki. He was represented before the Court by Mr Juhani Kortteinen, a lawyer practising in Helsinki. The Finnish Government (“the Government”) were represented by their Agent, Mr Arto Kosonen of the Ministry for Foreign Affairs.
A. The circumstances of the case
The facts of the case, as submitted by the parties, may be summarised as follows.
In 1989 and 1990 company F., of which the applicant was the managing director, acquired about 10% of the shares in one of the biggest industrial companies in Finland. In 1990 it sold the shares at a profit of about 64 million Finnish marks (FIM) (approximately 14 million euros (EUR)). In the tax year 1991 the company’s taxable income was about FIM 179 million (EUR 40 million) and its assets around FIM 659 million (EUR 147 million). The tax levied for that year was about FIM 75 million (EUR 16 million) which included tax surcharges as the company had failed to pay any taxes in advance. In order to avoid paying the taxes, company F. started to search for a buyer for the company. The intention was to arrange a so-called “balance company deal” in which the buying company would receive tax relief (yhtiöveron hyvitys, gottgörelsen för bolagsskatt), equivalent to the taxes to be paid by the selling company.
On 1 July 1991 company F. was sold to company S. for FIM 629 million (approximately EUR 140 million). The tax inspection conducted in company S. in 1993 revealed that this purchase price had been paid with company F.’s own assets to which company S. had had access already on 1 July 1991. Later on, company F. was completely emptied of all assets by company S. Company F. could thus not pay the imposed taxes and the attempts to seize assets on 3 August and 16 November 1993 were unsuccessful. Moreover, as the purchase price had been paid illegally with company F.’s own assets, the taxation authorities refused to grant any tax relief to company S.
The police investigation of the matter apparently started in 1995. On 22 February 1995 the Helsinki District Court (käräjäoikeus, tingsrätten) ordered the applicant to be detained in absentia. On 12 July 1995 he was apprehended in Jerusalem but was apparently first questioned only in March 1996. The public prosecutor brought charges against the applicant as well as the sole shareholder of company S., claiming that they had transferred the assets of company F. to company S. and consequently had made the former unable to pay the taxes levied.
The District Court proceedings were adjourned between June 1996 and October 2000 a total of seven times on account of requests made by the applicant. He also accepted seven requests for adjournment made by the public prosecutor.
On 7 September 2001 the Helsinki District Court found, inter alia, that the applicant had known that the sale in question was not going to be funded by a bank loan but by company F.’s own assets. When he gave access to company F.’s account, enabling company S. to use those assets to buy the shares of company F., he had become criminally liable since he must have understood that the taxes of company F. could no longer be paid. The District Court convicted the applicant of debtor’s dishonesty and sentenced him to imprisonment for one year and eight months.
On 5 November 2001 the applicant appealed to the Appeal Court (hovioikeus, hovrätten) requesting, inter alia, that an oral hearing be held as he allegedly had had no opportunity to question the sole shareholder of company S. as a witness.
On 31 January 2005 the Appeal Court rejected the request, finding that an oral hearing was unnecessary since it could not add anything new to the case file. The hearing in the District Court had been very extensive, lasting for 18 days, and the applicant had had the opportunity to question any witnesses, including the sole shareholder of company S. As to the merits, the Appeal Court upheld the District Court’s judgment.
On 31 March 2005 the applicant appealed to the Supreme Court (korkein oikeus, högsta domstolen), reiterating the grounds for appeal relied on before the Appeal Court. Moreover, he claimed that the principles of legality, presumption of innocence and prohibition of retroactive criminal law had been violated and that the proceedings lacked objective impartiality as the lower courts allegedly had taken into account certain anti-Semitic statements when assessing the reliability of a witness.
On 19 December 2005 the Supreme Court refused leave to appeal.
B. Relevant domestic law
Chapter 26, section 7 (Act no. 661/1978) of the Code of Judicial Procedure (oikeudenkäymiskaari, rättegångsbalken), as in force at the relevant time, required the Appeal Court to hold an oral hearing when it was necessary. An oral hearing could be limited to only a part of the appeal. Section 8 provided that the Appeal Court could not, on the basis of a reassessment of evidence, change the District Court’s judgment in respect of a charge without holding an oral hearing unless the sentence was only a fine or the oral hearing was, particularly in view of the legal protection of the defendant, manifestly unnecessary.
According to the terms of the reservation made by Finland in accordance with (former) Article 64 of the Convention, as in force at the relevant time, Finland could not guarantee a right to an oral hearing insofar as Finnish laws at the time of the events in issue did not provide such a right. This applied, inter alia, to proceedings which were held before the Appeal Court.
Following the amendment of the Code of Judicial Procedure in 1998 (Act no. 165/1998), Finland withdrew its reservation except for the cases that had been pending on 1 October 1997 before a District Court and in which the court had not applied the amended provisions.
COMPLAINTS
1. The applicant complained under Article 6 of the Convention that the total length of his criminal proceedings had been incompatible with the reasonable time requirement.
2. He complained under the same Article that he had not had a fair hearing as the Appeal Court had not held an oral hearing and, as a consequence, he had not had an opportunity to question the sole shareholder of company S. as a witness. As he had not been able to challenge this evidence, the proceedings had not been adversarial.
3. The applicant further complained under Article 6 that the principle of legality had been violated as, at the time of the events, it had not been clearly established that a business deal of the type concluded in his case was illegal.
4. Moreover, he complained under the same Article that the proceedings had lacked objective impartiality as the courts had taken into account certain anti-Semitic statements when assessing the reliability of a witness and as, in general, the facts and the witnesses’ testimonies had not been interpreted in dubio pro reo.
5. The applicant also complained under Article 6 that he had not been presumed innocent as he had been convicted of a crime without clear and full evidence of his guilt. Moreover, the judgments of the national courts, especially that of the District Court, had not been properly reasoned.
6. Finally, the applicant complained under Article 1 of Protocol No. 1 to the Convention that his right to property had been violated as he had been ordered to pay a considerable amount of compensation to the tax authorities as a result of the unfair proceedings.
THE LAW
A. Length of the proceedings
The applicant complained about the length of the criminal proceedings. He relied on Article 6 § 1 of the Convention which, inter alia, provides as follows:
“In the determination of ... any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by [a] ... tribunal ...”
By a letter dated 2 April 2009 the Government informed the Court of their unilateral declaration, signed on the same date, with a view to resolving the issue raised by this complaint.
The declaration provided as follows:
“1. Whereas the efforts with a view to securing a friendly settlement of the case have been unsuccessful, the Government wishes to express – by way of a unilateral declaration – its acknowledgement that, in the special circumstances of the present case, the length of the criminal proceedings has failed to fulfil the requirement of ”reasonable” referred to in Article 6 § 1 of the Convention.
2. Consequently, the Government are prepared to pay the applicant in compensation a total sum of EUR 6,000 (six thousand euros). This sum includes EUR 5,600 for non-pecuniary damage and EUR 400 for costs and expenses (inclusive of VAT). In the Government’s view, the aforementioned total sum would constitute adequate redress and sufficient compensation for the impugned length of the said proceedings, and thus constitute an acceptable sum as to quantum in the present case.
3. The total sum will be payable within three months from the date of notification of the decision pursuant to Article 37 § 1 (c) of the Convention. In the event of a failure to pay this sum within the said three-month period, the Government undertake to pay simple interest on it, from the expiry of that period until settlement, at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points.
4. In the light of above, the Government would suggest that the circumstances of the present case allow the Court to reach the conclusion that there exists ‘any other reason’, as referred to in Article 37 § 1 (c) of the Convention, justifying the Court to discontinue the examination of this part of the application, and that, moreover, there are no reasons of a general character, as defined in Article 37 § 1 in fine, which would require the further examination of this part of the case by virtue of that provision. Accordingly, the Government invites the Court to strike this part of the application out of its list of cases.”
In a letter of 1 June 2009 the applicant considered that the compensation indicated by the Government in its unilateral declaration was not sufficient. He maintained that the case needed to be decided by the Court as it reflected a wider problem in the judicial system.
The Court notes that both parties filed submissions with the Registry in the context of friendly settlement negotiations (Article 38 § 1 (b) of the Convention and Rule 62 of the Rules of Court). No settlement was reached.
Article 37 of the Convention provides that the Court may, at any stage of the proceedings, decide to strike an application out of its list of cases where the circumstances lead to one of the conclusions specified under (a), (b) or (c) of paragraph 1 of that Article. Article 37 § 1 (c) enables the Court in particular to strike a case out of its list if:
“for any other reason established by the Court, it is no longer justified to continue the examination of the application”.
Article 37 § 1 in fine includes the following proviso:
“However, the Court shall continue the examination of the application if respect for human rights as defined in the Convention and the Protocols thereto so requires.”
The Court points out that, under certain circumstances, it may be appropriate to strike out an application, or part thereof, under Article 37 § 1 (c) of the Convention on the basis of a unilateral declaration filed by the respondent Government even if the applicant wishes the examination of the case to be continued. In deciding whether or not it should strike the length of proceedings complaint out of its list, the Court will examine carefully the terms of the declaration made by the Government in the light of the principles emerging from its case-law, in particular its judgments in cases such as Tahsin Acar v. Turkey [GC] (no. 26307/95, §§ 75-77, ECHR 2003-VI); Meriakri v. Moldova ((striking out), no. 53487/99, 1 March 2005); Swedish Transport Workers Union v. Sweden ((striking out), no. 53507/99, 18 July 2006); Van Houten v. the Netherlands ((striking out), no. 25149/03, ECHR 2005‑IX), Kalanyos and Others v. Romania ((no. 57884/00, § 25, 26 April 2007)), and K.K. v. Finland ((striking out), no. 7779/04, 27 November 2007).
The Court observes that the criminal proceedings lasted some nine years and nine months at three levels of jurisdiction. It notes that the Government’s declaration contains a clear acknowledgment that the “reasonable time” requirement has not been respected within the meaning of Article 6 § 1 of the Convention. The Court is satisfied that the total amount offered to the applicant by the Government in compensation for non-pecuniary damage and costs and expenses, that is 6,000 euros, constitutes adequate redress for the excessive length of the proceedings having regard to all the circumstances of the case, and that this amount is consistent with the amounts awarded in other similar cases.
The Court has established in a number of cases its practice concerning complaints about the violation of one’s right to a hearing within a reasonable time (see, for example, Frydlender v. France [GC], no. 30979/96, § 43, ECHR 2000-VII and Cocchiarella v. Italy [GC], no. 64886/01, §§ 69-98, ECHR 2006-). Furthermore, it has already had occasion to address complaints related to alleged breach of one’s right to a hearing within a reasonable time in cases against Finland (see, for example, Riihikallio and Others v. Finland, no. 25072/02, §§ 22-27, 31 May 2007; Ekholm v. Finland, no. 68050/01, §§ 62-66, 24 July 2007; and Rafael Ahlskog v. Finland, no. 23667/06, §§ 18-24, 13 November 2008).
Against this background, the Court considers that it is no longer justified, within the meaning of Article 37 § 1 (c) of the Convention, to continue the examination of this part of the application, and finds no reasons which would require the further examination of this part of the case (Article 37 § 1 in fine).
Accordingly, it should be struck out of the list.
B. Lack of an oral hearing
Under Article 6 § 1 of the Convention, the applicant also complained about the lack of an oral hearing in the Appeal Court.
The Government pointed out that the proceedings in question had been conducted, on the basis of the transitional provisions, in accordance with the former provisions of the Code of Judicial Procedure according to which the procedure before the Appeal Court had been written. These provisions had also been the reason for the reservation made by Finland in accordance with Article 64 of the Convention. Following the amendment of the Code of Judicial Procedure in 1998, Finland had withdrawn its reservation except for cases that had been pending on 1 October 1997 before a District Court and in which the court had not applied the amended provisions. The present case fell within that exception. The Appeal Court had not been obliged to hold an oral hearing in the present case either on the basis of the domestic law or of the Convention.
The applicant claimed that the transitional provisions should have been interpreted in his favour. Even under the former provisions, the Appeal Court could have held an oral hearing if needed and the applicant had presented weighty reasons in favour of a hearing.
The Court notes that the reservation made by the Finnish Government in accordance with Article 64 (after the entry into force of Protocol No. 11 on 1 November 1998, Article 57) of the Convention, in respect of the right to a public hearing guaranteed by Article 6 § 1 of the Convention, read at the relevant time as follows:
“For the time being, Finland cannot guarantee a right to an oral hearing insofar as the current Finnish laws do not provide such a right. This applies to:
1. proceedings before the Court of Appeal ... in accordance with Chapter 26, Section 7, ... of the Code of Judicial Procedure...”
The Court points out that when the Convention refers back to domestic law, compliance with such law is an integral part of the obligations of the Contracting States and the Court is accordingly competent to satisfy itself of such compliance where relevant. The scope of its task in this connection, however, is subject to limits inherent in the logic of the European system of protection, since it is in the first place for the national authorities, notably the courts, to interpret and apply domestic law (see Lukanov v. Bulgaria, 20 March 1997, § 41, Reports of Judgments and Decisions 1997‑II). Similar considerations apply mutatis mutandis to the interpretation of the Finnish reservation, the scope of which is defined in part by a reference to domestic law.
In the present case the Appeal Court did not hold an oral hearing. The Court notes that the Code of Judicial Procedure at the material time did not guarantee a right to an oral hearing in the circumstances of the applicant’s case. Having regard to the terms of Chapter 26, Articles 7 and 8, of the Code of Judicial Procedure, the Court cannot find that the Appeal Court’s interpretation and application of domestic law were arbitrary as such. The Court therefore accepts that the decision of the Appeal Court not to hold a hearing was in conformity with domestic law. In view of the above and having regard to the terms of Finland’s reservation, Finland was under no Convention obligation to ensure in respect of the applicant’s proceedings before the Appeal Court that an oral hearing was held. While it is true that the effect of the reservation was to deny the applicant a right to an oral hearing before the Appeal Court, this result must be considered compatible with the Convention as a consequence of the operation of a valid reservation (see Helle v. Finland, 19 December 1997, §§ 44 and 47, Reports of Judgments and Decisions 1997‑VIII).
It follows that the complaint concerning the lack of an oral hearing in the Appeal Court is incompatible ratione materiae with the provisions of the Convention, within the meaning of Article 35 § 3 of the Convention, and must be rejected pursuant to Article 35 § 4.
C. Other complaints under Article 6
The applicant also complained under Article 6 § 1 of the Convention that the presumption of innocence had been violated as he had been convicted of a crime without clear and full evidence of his guilt, and that the facts and the witness testimonies had not been interpreted in dubio pro reo. Moreover, the judgments of the national courts, especially that of the District Court, had not been properly reasoned, and the proceedings had lacked objective impartiality as the courts had apparently taken into account certain anti-Semitic statements when assessing the reliability of a witness.
Having regard to the case-file, the Court finds that the matters complained of do not disclose any appearance of a violation of the applicant’s rights under the Convention. Accordingly, this part of the application is manifestly ill-founded and must be rejected pursuant to Article 35 §§ 3 and 4 of the Convention.
D. Legality principle
The applicant further complained that the principle of legality had been violated as, at the time of the facts, it had not been clearly established that such a business deal as the one he had concluded would have been illegal.
The Court notes that the applicant was charged with and convicted of debtor’s dishonesty. This criminalisation, in Chapter 39 of the Penal Code, had entered into force only six months prior to the facts of this case. The applicant claimed that, at the time of the facts, the so-called “balance company deal” was prevailing business practice and thus commonly accepted. The Court notes that, in fact, this was acknowledged even in the District Court’s judgment in which it was stated that from 1990 to 1992 there was a lacuna in the taxation law which made it possible to avoid paying taxes. This manoeuvre, however, did not justify a transfer of property for free which had in fact happened in the present case since the sale of company F. to company S. was not funded by a bank loan but by company F.’s own assets.
The Court observes that, in the present case, the public prosecutor brought charges against the applicant only for having transferred the assets of company F. to company S. for free with the effect that the imposed taxes could not be paid. This manoeuvre was clearly illegal also on the basis of the Limited Liability Companies Act of 1978. It was this manoeuvre, and not the tax arrangement itself, which in fact had emptied company F. of all its assets. As the applicant was not even charged with debtor’s dishonesty which would have related to tax evasion, it becomes irrelevant whether any case-law existed or not at the time of the facts vis-à-vis the tax evasion problem. Therefore, the Court concludes that there is no indication of any violation in respect of the legality principle in the present case. Accordingly, this part of the application is manifestly ill-founded and must be rejected pursuant to Article 35 §§ 3 and 4 of the Convention.
E. Right to property
Finally, the applicant complained under Article 1 of Protocol No. 1 to the Convention that his right to property had been violated as he had been ordered to pay, as a result of the unfair proceedings, considerable compensation to the tax authorities.
The Court notes that the applicant has not complained about this issue before the national courts and has thus not exhausted the domestic remedies. Accordingly, this part of the application must be rejected, pursuant to Article 35 §§ 1 and 4 of the Convention, for non-exhaustion of domestic remedies.
For these reasons, the Court unanimously
Takes note of the terms of the respondent Government’s declaration in respect of the length of proceedings complaint under Article 6 § 1 of the Convention and of the modalities for ensuring compliance with the undertakings referred to therein;
Decides to strike the application out of its list of cases in so far as it relates to the above complaint in accordance with Article 37 § 1 (c) of the Convention;
Declares the remainder of the application inadmissible.
Fatoş AracıNicolas Bratza
Deputy RegistrarPresident
Full & Egal Universal Law Academy