MEROT D.O.O. AND STORITVE TIR D.O.O. v. CROATIA

FIRST SECTION

DECISION

Applications nos. 29426/08 and 29737/08
MEROT D.O.O. against Croatia
and STORITVE TIR D.O.O. against Croatia

The European Court of Human Rights (First Section), sitting on 10 December 2013 as a Chamber composed of:

Isabelle Berro-Lefèvre, President,
Khanlar Hajiyev,
Mirjana Lazarova Trajkovska,
Julia Laffranque,
Linos-Alexandre Sicilianos,
Ksenija Turković,
Dmitry Dedov, judges,
and Søren Nielsen, Section Registrar,

Having regard to the above applications lodged on 28 April 2008,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicants,

Having regard to the comments submitted by the Slovenian Government,

Having deliberated, decides as follows:

THE FACTS

1. The applicants Merot d.o.o. and Storitve Tir d.o.o. (hereafter: “the applicant companies”) are limited liability companies incorporated under Slovenian law and having their registered offices in Loče pri Poljčanah and Ljubljana respectively. They were both represented before the Court by Mr I. Milanović, an advocate practising in Umag, Croatia.

2. The Croatian Government (“the Government”) were represented by their Agent, Mrs Š. Stažnik.

A. The circumstances of the case

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

4. The first applicant company was the owner of a yacht called Maria 1, and the second applicant company of a yacht called ITT 2, both of which were registered in Slovenia. The value of the yachts was, according to the applicant companies, at least 130,000 euros (EUR) (the first yacht) and EUR 200,000 (the second yacht). It would appear that the applicant companies chartered the yachts to the company N.A. d.o.o. (“N.A.”), for EUR 2,000 and EUR 3,000 respectively. In July 2005 that company sub‑chartered the yachts to several Australian nationals for EUR 3,300 (the first yacht) and several Austrian nationals for EUR 1,836 (the second yacht).

1. Administrative offence proceedings

5. On 13 July 2005 the Maritime Inspectorate instituted administrative offence proceedings (prekršajni postupak) against the company N.A. and its director, A.M. before the Rijeka Port Authority, accusing them of three counts of unlawful transport of persons – a maritime (administrative) offence defined in Article 993 § 2 of the Maritime Code (see paragraph 19 below).

6. On 14 July 2005 the Rijeka Port Authority temporarily impounded three yachts in the possession of the company N.A., including those owned by the applicant companies.

7. The applicant companies were not informed of, and thus did not participate in the proceedings before the Port Authority.

8. On 31 August 2005 the Rijeka Port Authority found both the accused guilty as charged and fined the company N.A. 150,000 kunas (HRK) and its director, A.M., HRK 7,500. At the same time, the Ministry imposed a protective measure (zaštitna mjera) pursuant to Article 1008 § 2 of the Maritime Code (see paragraph 19 below), confiscating three yachts in the company N.A.’s possession, including the two owned by the applicant companies. This decision was served on the applicant companies by regular post (by registered mail and with acknowledgment of receipt) on 2 September 2005.

9. On 20 September 2005 the High Court for Administrative Offences (Visoki prekršajni sud Republike Hrvatske) dismissed an appeal lodged by the accused and upheld the Port Authority’s decision. That decision was served on the applicant companies by regular post (by registered mail and with acknowledgment of receipt) on 26 October 2005.

10. In December 2005 and January 2006 the applicant companies requested to be served with the copy of the Port Authority’s decision of 31 August 2005 by diplomatic post, that is, in the manner prescribed by the bilateral Agreement between the Republic of Croatia and the Republic of Slovenia on Legal Assistance in Civil and Criminal Matters. It would appear that the applicant companies’ representative received the Port Authority’s decision by regular post (by registered mail and with acknowledgment of receipt) on 24 March 2006, whereas the applicant companies received it by diplomatic post on 22 May and 22 June 2006 respectively.

11. On 24 March 2006 each applicant company, as an owner of confiscated property, lodged a separate appeal against the part of the Port Authority’s decision imposing the protective measure. The applicant companies argued that their yachts had been chartered to the company N.A. on the condition that all necessary documents and permits were obtained before their use in Croatian waters, and that they had not been aware that their yachts had been used in breach of the Maritime Code.

12. On 17 May 2006 in two separate decisions, the High Court for Administrative Offences dismissed the applicant companies’ appeals and upheld the Port Authority’s decision. It held that it was irrelevant whether the applicant companies had been aware that their yachts had been used in contravention of Article 9 § 4 of the Maritime Code because its Article 1008 § 2 provided for mandatory confiscation of a yacht used to commit a maritime offence defined in Article 993 § 2 of that Code.

13. Each applicant company then lodged a separate constitutional complaint, alleging a violation of its constitutionally protected rights to a fair hearing, equality and equality before the courts. At the same time, they asked the Constitutional Court to order an interim measure that would postpone the effects of the contested decision and the sale of their yachts until that court had decided on their constitutional complaints. In particular, in their constitutional complaints the applicant companies wrote as follows:

CONSTITUTIONAL COMPLAINT

and a motion for postponement of enforcement

“I. INFORMATION CONCERNING THE COMPLAINANT

...

II. INFORMATION ON THE CONTESTED DECISIONS

Decision of the High Court for Administrative Offences of 17 May 2006 ...

Decision of the Rijeka Port Authority of 31 August 2005 ...

III. CONSTITUTIONAL RIGHT DEEMED TO HAVE BEEN VIOLATED

The complainant considers that the following constitutional rights have been violated by the decision of the High Court for Administrative Offences of 17 May 2006 and the decision of the Rijeka Port Authority of 31 August 2005:

- equality of all Croatian citizens and foreigners before the courts and other State or public authorities, [which is] guaranteed by Article 26 taken in conjunction with Article 14 of the Croatian Constitution,

- the right of everyone that an independent and impartial court established by law decides fairly and within a reasonable time on his or her rights and obligations, [which right is] guaranteed by Article 29 paragraph 1 of the Croatian Constitution.

IV. FACTS AND ARGUMENTS IN SUPPORT OF THE ALLEGATION THAT THERE HAS BEEN A VIOLATION OF A CONSTITUTIONAL RIGHT

By a decision of 17 May 2006 the High Court for Administrative Offences dismissed an appeal by the complainant against the decision of the Rijeka Port Authority of 31 August 2005 as unfounded. By that [first-instance] decision [the Port Authority] found ... the accused, the company N.A. and [its director] A.M., guilty of the administrative offence specified in Article 993 § 2 of the Maritime Code. In addition to the sanction ... in the form of a fine, [the Port Authority] also imposed the protective measure of confiscation of the yacht owned [by the complainant] ...

By the aforementioned decision the High Court for Administrative Offences, as already mentioned above, dismissed an appeal by the complainant as unfounded and upheld the aforementioned decision of the Rijeka Port Authority of 31 August 2005 even though the complainant had not been given an opportunity to protect its rights and interests in the first-instance proceedings as it had not been informed of the [those] proceedings. Even though the complainant has under section 204(5) of the Administrative Offences Act the right to lodge an appeal because its yacht, that is, its property, was confiscated by the first-instance decision ... [that decision] was not served on it. That decision was served on the complainant only at its insistence and following its request and so [only] after the High Court for Administrative Offences ... had [already] decided on the appeals by the company N.A. and [its director] A.M.

Having regard to the fact that the High Court for Administrative Offences had already adopted the second-instance decision, it could not have been expected that following an appeal by the complainant ... [that court] could reach a decision different from its earlier decision. The foregoing is corroborated by the view of the High Court for Administrative Offences expressed in its decision ... of 17 May 2006, according to which the decisive fact for the imposition of the protective measure [of confiscation of a vessel] is the fact that the vessel had been used to commit an administrative offence rather than the fact that its owner knew or not that the vessel had been used for illegal transportation. That view is absolutely incorrect because it would mean that the High Court for Administrative Offences would have reached the same conclusion and confiscated the complainant’s vessel even in the case where that vessel had been stolen from the complainant and later on used to commit the administrative offence [in question] by a person who stole it. As already noted above, the complainant was not given an opportunity to [present its case] in the first-instance proceedings. [T]he failure to notify the complainant about the [first]-instance proceedings prevented it from demonstrating and proving that the owner of the vessel absolutely did not know that [its] yacht was being used without having obtained all the necessary documentation for the use of that vessel beforehand. Therefore, the complainant’s right [to a fair hearing] guaranteed by Article 29 paragraph 1 of the Croatian Constitution had been breached in the present case. In particular, its right to a fair hearing was violated because [the complainant] was not at all informed of the proceedings, and [was] thereby prevented from protecting its rights. As regards the [right to] a hearing within a reasonable time, the present case was dealt with faster than the reasonable-time requirement necessitates. Namely, the complainant was not at all served with the first-instance decision even though under section 204(5) of the Administrative Offences Act it has the right to lodge an appeal [against that decision]. That decision was served on the complainant only at its insistence. [Moreover,] the High Court for Administrative Offences adopted the second-instance decision before the first-instance decision had even been served on the complainant, and thus breached the complainant’s right to a fair hearing. In addition, the right under Article 26 taken in conjunction with Article 14 of the Croatian Constitution, that is, the right to equality of all Croatian citizens and foreigners before the courts and other State or public authorities, was also breached to the detriment of the complainant. In particular, the complainant is a foreign legal entity having its registered office in Slovenia. Even though in the [bilateral] Agreement between the Republic of Croatia and the Republic of Slovenia on Legal Assistance in Civil and Criminal Matters it was agreed how the service of process is to be made between these States, the complainant had to indicate that [the domestic authorities] in order to be served in accordance with that Agreement. [However,] as already pointed out, at the time of service of the first-instance decision the High Court for Administrative Offences had already adopted the second-instance decision in the case.

The complainant proposes that [the Constitutional Court] finds that its rights under Article 26 and Article 29 paragraph 1 of the Croatian Constitution were breached by the contested decisions and, at the same time, proposes that [the Constitutional Court] quashes the decision of the High Court for Administrative Offences of 17 May 2006 and the decision of the Rijeka Port Authority of 31 August 2005.

The complainant would suffer a serious damage which would be difficult to repair if the enforcement of [the above decisions] by the sale of the seized vessel were to be carried out. [That is so] because the possibility of subsequently obtaining compensation from the accused is dubious in view of the fines they have to pay ..., and [because] the Ministry of Finance – Tax Administration had advertised the sale of the vessel, that is, the [complainant’s] yacht even before the High Court for Administrative Offences adopted the second-instance decision. Even though the complainant warned the Ministry of Finance – Tax Administration of that by asking for postponement of enforcement on that ground, [the Tax Administration] ignored the complainant’s warnings by continuing to advertise the sale of the yacht. Therefore, the possibility of obtaining compensation in the event the [Constitutional Court] finds the constitutional complaint well-founded is uncertain. The complainant therefore proposes, on the basis of section 67 of the Constitutional Court Act, to postpone the enforcement by the sale of the vessel, that is, its yacht until [the Constitutional Court] decides on this constitutional complaint.”

14. On 14 November 2007 in two separate decisions, the Constitutional Court (Ustavni sud Republike Hrvatske) dismissed the applicant companies’ constitutional complaints, finding no violation of any of the constitutional rights relied on. On the same date in a separate decision, the Constitutional Court also dismissed a constitutional complaint lodged by the company N.A. and its director against the decision of the High Court for Administrative Offences given on 20 September 2005. The relevant part of those decisions reads as follows:

“The constitutional complaint is dismissed.

1. The constitutional complaint was lodged against the decision of the High Court for Administrative Offences of 17 May 2006 whereby [that court] dismissed the complainant’s appeal and upheld the decision of the Rijeka Port Authority of 31 August 2005.

By the first-instance decision [the company] N.A. and [its director] A.M. were found guilty of the administrative offence under Article 993 § 2 taken in conjunction with § 3 of the Maritime Code and fined ...

Beside the fine, the protective measure of confiscation of the [three] yachts used to commit the offence was also imposed on the basis of section 41 paragraphs 1 and 2 of the Administrative Offences Act and Article 1008 § 2 of the Maritime Code.

The complainant is the owner [of one of the yachts] used to commit the administrative offence [in question].

2. Complainant considers that its rights guaranteed by Articles 14, 26 and 29 1 were violated by the contested decisions.

In explaining why it considers that its constitutional rights were violated the complainant fully repeats the arguments raised in the appeal and complains of incorrect and incomplete findings of fact, misapplication of substantive law and procedural errors.

In substance [the complainant] complains that, [even though it w]as the owner of the yacht confiscated in the administrative offence proceedings, the first-instance decision was not served on it, which in its opinion constitutes a violation of its right to a fair hearing guaranteed by Article 29 paragraph 1 of the Constitution. It complains that it did not know that its yacht was used for illegal transport, and considers incorrect the view of the High Court for Administrative Offences that this fact is not decisive in examining whether the imposition of the protective measure of confiscation of a vessel used to commit the administrative offence is justified.

In the light of the foregoing, [the complainant] suggests to allow the constitutional complaint and quash the contested decisions.

On the basis of section 67(2) of the Constitutional Court Act [the complainant also] asks [the Constitutional Court] to postpone the enforcement of the contested decision.

The constitutional complaint is unfounded.

3. Section 62 paragraph 1 of the Constitutional Court Act provides that anyone may lodge a constitutional complaint with the Constitutional Court if he or she deems that the decision of a State authority, local or regional government, or a legal person invested with public authority, on his or her rights or obligations, or as regards a suspicion or accusation of a criminal offence, has violated his or her human rights or fundamental freedoms, or the right to local or regional government, guaranteed by the Constitution.

The Constitutional Court in the proceedings for affording constitutional protection, in principle, within the limits of what was sought by the constitutional complaint, examines whether in the proceedings decisive of rights or obligations of an individual there was an unjustified interference with human rights and fundamental freedoms.

4. [The relevant] provisions of the Maritime Code read as follows:

...

5. ...

Against the first-instance decision ... imposing the protective measure of confiscation of the vessel used to commit the administrative offence, the complainant, as the owner of one of the confiscated yachts, lodged an appeal to the High Court for Administrative Offences on the basis of section 204(5) of the Administrative Offences Act.

In examining the complainant’s appeal the High Court for Administrative Offences found that the Rijeka Port Authority had conducted the proceedings in accordance with the relevant provisions of procedural law, correctly and completely established the facts, and correctly applied substantive law on those facts. Therefore, [that court] dismissed the complainant’s appeal and upheld the first-instance decision [while] giving valid reasons for its findings and views and addressing all appellate arguments of the complainant.

6. In its constitutional complaint the complainant complained of a violation of Article 14 of the Constitution.

Article 14 paragraph 1 of the Constitution enshrines the constitutional guarantee of non-discrimination, that is, the prohibition of discrimination in the exercise of a particular right on any ground. Having examined the entire case-file the Constitutional Court ... did not find any ... indication that the complainant was in the proceedings that preceded those before the Constitutional Court discriminated in the exercise of some constitutional right on any ground (sex, religion, political or other belief, national or social origin, property, birth, education, social status or any other characteristic). The Constitutional Court therefore considers the complainant’s complaint concerning the alleged violation of the constitutional guarantee of non-discrimination unfounded.

In examining the arguments presented in the constitutional complaint from the viewpoint of Article 14 paragraph 2 of the Constitution, the following has to be noted:

Having regard to the facts established in the administrative offence proceedings, and the relevant provisions of the Maritime Code, the Constitutional Court considers that the legal views expressed in the contested decisions are based on a constitutionally acceptable interpretation and application of the relevant substantive law. The competent administrative authority and the court which conducted the proceedings and which delivered the contested decisions gave reasons for their views expressed in [those] decisions, which undoubtedly are not the consequence of an arbitrary interpretation and application of the relevant substantive law.

For these reasons the Constitutional Court did not accept the complainant’s arguments that in the present case it was not equal before the law, as required by Article 14 paragraph 2 of the Constitution.

7. Article 26 of the Constitution enshrines constitutional guarantee of equality of Croatian nationals and foreigners in the proceedings before competent Croatian authorities. That constitutionally-guaranteed procedural safeguard obliges the competent authorities to treat equally parties in judicial or administrative proceedings or proceedings before other public authorities regardless of their nationality.

Having regard to the legal status accorded by the Administrative Offences Act to the owner of an object confiscated in the administrative offence proceedings (the right to lodge an appeal against the decision imposing the protective measure of confiscation of the object used to commit an administrative offence), as well as the fact that the complainant availed itself of that right and that the competent court decided on the complainant’s appeal on the merits in accordance with relevant legislation, the Constitutional Court finds that the complainant’s constitutional right guaranteed by Article 26 of the Constitution was not violated [in the present case].

8. Article 29 paragraph 1 of the Constitution provides as follows:

In the determination of his rights and obligations or of any criminal charge against him, everyone is entitled to a fair hearing within a reasonable time by an independent and impartial court established by law.

The content of the constitutional right to a fair hearing is limited to procedural guarantees of a fair hearing. Therefore, the Constitutional Court, in examining constitutional complaints in the light of that constitutional right determines whether there were any procedural errors in the proceedings before courts and on that basis finds whether the proceedings were conducted [fairly].

The present case was decided by an administrative authority established by law and by a court within its jurisdiction determined by law. The case-file suggests that the first-instance administrative authority took evidence in accordance with the relevant provisions of the Administrative Offences Act and that the High Court for Administrative Offences addressed [the complainant’s] appellate arguments completely and on the merits.

As regards the complainant’s allegation that it was prevented from participating in the administrative offence proceedings which resulted in the imposition of the protective measure of confiscation of the vessel in its ownership, the [Constitutional] Court notes the following:

According to the Administrative Offences Act, the owner of the confiscated object used to commit an administrative offence is not a party to administrative offence proceedings. Its participation in the proceedings is limited to the right to appeal against the decision imposing the protective measure of confiscation of an object used to commit an administrative offence (section 204 paragraph 5 of the Administrative Offences Act).

Having regard to the aforementioned as well as to the fact that the complainant lodged an appeal against the decision imposing the protective measure of confiscation of the complainant’s vessel, on which [appeal] the competent court decided on the merits and gave valid reasons for its decision, the Constitutional Court finds unfounded the complainant’s allegation that it was unable to participate in the proceedings which resulted in the confiscation of its vessel.

The [Constitutional] Court therefore considers that the complainant’s right to a fair hearing was not violated by the contested decisions.

9. Having regard to the above, on the basis of sections 73 and 75 of the Constitutional Court Act, it was decided as stated in the operative provisions.

10. Given that the [Constitutional] Court decided on the constitutional complaint on the merits, it did not decide on the complainant’s motion for postponement of enforcement.”

15. The Constitutional Court served its decisions on the applicant companies’ representative on 30 November 2007.

2. Bankruptcy proceedings against the company N.A.

16. On 26 June 2008 the Pazin Commercial Court (Trgovački sud u Pazinu) opened (summary) bankruptcy proceedings against the company N.A. and on 15 December 2008 closed them, finding that the company’s assets were not sufficient to even cover the costs of the bankruptcy proceedings. On 23 December 2008 the same court deleted the company N.A. from the register of commercial companies.

B. Relevant domestic law and practice

1. The Constitution

17. The relevant Articles of the Constitution of the Republic of Croatia (Ustav Republike Hrvatske, Official Gazette nos. 56/1990, 135/1997, 8/1998 (consolidated text), 113/2000, 124/2000 (consolidated text), 28/2001 and 41/2001 (consolidated text), 55/2001 (corrigendum)), 76/10 and 85/10 read as follows:

Article 14

“Everyone in the Republic of Croatia shall enjoy rights and freedoms regardless of their race, colour, sex, language, religion, political or other beliefs, national or social origin, property, birth, education, social status or other characteristics.

All shall be equal before the law.”

Article 16

“(1) Rights and freedoms may be restricted only by law in order to protect the rights and freedoms of others, legal order, public morals or health.

(2) Every restriction of the rights and freedoms should be proportional to the nature of the necessity for the restriction in each individual case.”

Article 26

“All citizens of the Republic of Croatia and foreigners shall be equal before the courts and other State or public authorities.”

Article 29 § 1

“In the determination of his rights and obligations or of any criminal charge against him, everyone is entitled to a fair hearing within a reasonable time by an independent and impartial court established by law.”

Article 48

“1. The right of ownership shall be guaranteed.

2. Ownership implies duties. Owners and users of property shall contribute to the general welfare.”

2. Relevant legislation

(a) The Constitutional Court Act

18. The relevant part of the 1999 Constitutional Act on the Constitutional Court of the Republic of Croatia (Ustavni zakon o Ustavnom sudu Republike Hrvatske, Official Gazette no. 99/99 of 29 September 1999 – “the Constitutional Court Act”), as amended by the 2002 Amendments (Ustavni zakon o izmjenama i dopunama Ustavnog zakona o Ustavnom sudu Republike Hrvatske, Official Gazette no. 29/2002 of 22 March 2002), which entered into force on 15 March 2002, reads as follows:

Section 62

“1. Anyone may lodge a constitutional complaint with the Constitutional Court if he or she deems that the decision of a State authority, local or regional government, or a legal person invested with public authority, on his or her rights or obligations, or as regards a suspicion or accusation of a criminal offence, has violated his or her human rights or fundamental freedoms, or the right to local or regional government, guaranteed by the Constitution (“constitutional right”)...

2. If another legal remedy is available in respect of the violation of the constitutional rights [complained of], the constitutional complaint may be lodged only after this remedy has been exhausted.

3. In matters in which an administrative action or, in civil and non-contentious proceedings, an appeal on points of law [revizija] is available, remedies shall be considered exhausted only after the decision on these legal remedies has been given.”

Section 65(1)

“A constitutional complaint shall contain ... an indication of the constitutional right alleged to have been violated [together] with an indication of the relevant provision of the Constitution guaranteeing that right...”

Section 67

“(1) The constitutional complaint, as a rule, does not prevent the application of the contested decision.

(2) The Constitutional Court may, at the request of the complainant, postpone the enforcement [of the contested decision] until it decided on the constitutional complaint, if the enforcement would cause the complainant a harm that would be difficult to repair, and the postponement is not contrary to the public interest nor would cause greater harm to anyone.”

Section 71(1)

“ ... [t]he Constitutional Court shall examine only the violations of constitutional rights alleged in the constitutional complaint.”

(b) The Maritime Code

19. The relevant provisions of the Maritime Code (Pomorski zakonik, Official Gazette nos. 181/04, 76/07, 146/2008, 61/11 and 56/13), which have been in force since 29 December 2004, read as follows:

Article 9 § 4

“The transport of persons by a yacht or boat in the internal waters or territorial sea of the Republic of Croatia that is not free of charge may be performed exclusively by a Croatian yacht or boat owned by a domestic natural or legal person who satisfies the conditions set forth in [subordinate] legislation passed by the Minister [for maritime affairs].”

Article 993 §§ 2 and 3

“(2) A fine of between HRK 10,000 and HRK 500,000 shall be imposed on the owner or shipmaster of a yacht or boat performing the transport of persons by a yacht or boat that is not free of charge in contravention of Article 9 § 4 of this Code.

(3) A fine of between HRK 3,000 and HRK 15,000 shall [also] be imposed on the [director] of a legal person for the maritime offence defined in § 2 of this Article.”

Article 1008 § 2

“In addition to the fine prescribed for the maritime offence defined in Article 993 § 2 of this Code, a protective measure of confiscation of [the yacht or boat] shall be imposed irrespective of [its] ownership.”

(c) Administrative Offences Act

20. The relevant provision of the Administrative Offences Act (Zakon o prekršajima, Official Gazette nos. 88/2002, 122/02, 187/2003, 105/2004 and 127/2004 (corrigendum)), which was in force between 1 October 2002 and 1 January 2008, reads as follows:

Confiscation

Section 41

“(1) The protective measure of confiscation of objects may be applied in respect of an object which was designed or used for the commission of an administrative offence, or was the product of an administrative offence, where there is a risk that this object will be again used for the commission of [such] an offence or where the confiscation appears strictly necessary for the protection of public safety or for moral reasons.

(2) In certain cases, the law may provide for mandatory confiscation.

(3) Objects referred to in paragraph 1 of this section may be confiscated even if they are not owned by the perpetrator, if that is necessary for the protection of public safety or for moral reasons ... or in other cases provided by law. This does not affect the right of third parties to seek compensation for the damage from the perpetrator of the administrative offence.”

21. The Administrative Offences Act also provided that the accused (including his defence counsel, legal guardian, spouse or certain relatives), the injured party (the victim) and the person whose property was confiscated by the first-instance decision delivered in the administrative offence proceedings, either by an administrative authority or by the first‑instance court for administrative offences, had a right to appeal against the first-instance decision to the High Court for Administrative Offences (sections 91 and 204). The appeal could be lodged for procedural errors, incorrect or incomplete factual findings, misapplication of substantive law or against the sanction imposed (section 208). New facts and evidence were allowed in the appeal (section 207(4)). That court would decide on the appeal in a session, without holding a hearing (section 215(1)). It could declare the appeal inadmissible, dismiss it as ill-founded and uphold the first-instance decision, quash the first-instance decision and remit the case for a fresh decision, or reverse the first-instance decision (section 219(1)).

3. The Constitutional Court’s practice

22. In decision no. U-III-59/2006 of 22 November 2006, the Constitutional Court dismissed, by seven votes to six, a constitutional complaint lodged by the owner of a yacht who had been found guilty of the maritime offence defined in Article 993 § 2 of the Maritime Code and whose yacht had been confiscated on the basis of Article 1008 § 2 of the same Code. In his constitutional complaint the owner relied, inter alia, on his constitutional right of ownership, guaranteed by Article 48 of the Croatian Constitution. In particular, the Constitutional Court held as follows:

“Article 48 paragraph 1 of the Constitution guarantees the right of ownership. However, in this case the confiscation [measure] is provided by Article 1008 § 2 of the Maritime Code which reads as follows:

In addition to the fine prescribed for the maritime offence defined in Article 993 § 2 of this Code, a protective measure of confiscation of [the yacht or boat] shall be imposed irrespective of [its] ownership.

It follows that the complainant’s constitutional rights on which he relied on in his constitutional complaint were not breached ...”

This reasoning in fact represented the so-called minority opinion as it was shared by only five out of thirteen judges of the Constitutional Court. Of six remaining judges five dissented and one expressed a concurring opinion. Those six judges who did not agree with the above reasoning all shared the view that the Constitutional Court should have examined the proportionality of the confiscation measure in light of Article 16 paragraph 2 of the Croatian Constitution (see paragraph 17 above). Five of them who expressed a joint dissenting opinion and considered that the court should have found a violation of the complainant’s constitutional right of ownership guaranteed by Article 48 of the Constitution, whereas the judge who expressed concurring opinion thought that there had been no violation of that Article and agreed with the majority only as regards the outcome.

23. In decision nos. U-III-5096/2005 and U-III-1589/2006 of 19 March 2008, the Constitutional Court allowed constitutional complaints lodged by the shipmaster of a yacht who had been found guilty of the maritime offence defined in Article 993 § 2 of the Maritime Code and by the owner of the same yacht, which had been confiscated on the basis of Article 1008 § 2 of the same Code. The Constitutional Court quashed the lower-instance decisions because it found violations of the shipmaster’s constitutional right to a fair hearing and the owner’s constitutional right to appeal. In the light of those findings, it did not consider it necessary to examine the alleged violation of the owner’s constitutional right of ownership. The court held, obiter dictum, that even though Article 1008 § 2 of the Maritime Code provided for mandatory confiscation of a vessel used to commit the maritime offence in question, the decision to confiscate the vessel not owned by the perpetrator of the offence must, in order to be justified, be based on one of the grounds envisaged in section 41(3) of the Administrative Offences Act (see paragraph 20 above).

COMPLAINTS

24. The applicant companies complained about the confiscation of their yachts.

25. The applicant companies also complained under Article 6 § 1 of the Convention of the unfairness of the above-mentioned administrative offence proceedings. In particular, they complained that they had been unable to participate in the first-instance proceedings before the Rijeka Port Authority.

26. Lastly, the applicant companies complained under Article 13 of the Convention that they had not had an effective remedy because the first‑instance decision of 31 August 2005 was only served on them at their own request and only after the High Court for Administrative Offences had already dismissed the appeal of the accused against that decision.

THE LAW

A. Joinder of the applications

27. Given that the two applications at hand concern the same facts and complaints and raise identical issues under the Convention, the Court decides to join them, pursuant to Rule 42 § 1 of the Rules of the Court.

B. Alleged violation of Article 1 of Protocol No. 1 to the Convention

28. The applicant companies, without relying on any Article of the Convention or its Protocols, complained about the confiscation of their yachts. The Court considers that this complaint falls to be examined under Article 1 of Protocol No. 1 to the Convention, which reads as follows:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

29. The Government disputed the admissibility of this complaint on two grounds. They argued that the applicant companies had failed to exhaust domestic remedies or, alternatively, that they had not observed the six‑month rule.

Non-exhaustion of domestic remedies

(a) The parties’ submissions

30. The Government argued that neither in their appeals of 24 March 2006 to the High Court for Administrative Offences nor in their constitutional complaints, had the applicant companies (explicitly) relied on Article 48 of the Constitution (see paragraph 17 above) or Article 1 of Protocol No. 1 to the Convention, or otherwise (implicitly) complained of a violation of their right of property (see paragraphs 11 and 13 above). Relying on section 41(3) of the Administrative Offences Act (see paragraph 20 above), the Government further argued that the applicant companies could have brought an action for damages against the company N.A. but that they had failed to do so.

31. The applicant companies replied that, even though they had not relied on Article 48 of the Constitution in their constitutional complaints, from the content of those constitutional complaints it was evident that the confiscation of their yachts had also entailed a violation of their right of property. Furthermore, they had not brought a civil action for damages against the company N.A. because they had considered the State and not that company liable for the confiscation of their yachts.

32. The Slovenian Government submitted that the applicant companies had properly exhausted domestic remedies. In particular, even though in their constitutional complaints the applicant companies had not expressly referred to their right of property, they had done so implicitly by asking the Constitutional Court to order an interim measure that would postpone the sale of their yachts until that court had decided on their constitutional complaints (see paragraph 13 above). By so doing the applicant companies had in substance raised before the Constitutional Court the same issue they were raising before the Court.

(b) The Court’s assessment

33. As regards the Government’s suggestion that the applicant companies should have brought an action for damages against the company N.A., the Court notes that the company in question went bankrupt on 26 June 2008 (see paragraph 16 above) and that therefore bringing a civil action against it to obtain compensation for the damage sustained by the commission of the administrative offence in question would have been futile.

34. As regards the Government’s argument that the applicant companies in their constitutional complaints had not relied on the provision of the Constitution guaranteeing the right of ownership or on Article 1 of Protocol No. 1 to the Convention, the Court reiterates that in order to comply with the requirements of Article 35 § 1 of the Convention it is not necessary for the Convention right to be explicitly raised at the domestic level as long as the same complaint, which is later submitted to the Court, was raised in domestic proceedings at least “in substance” (see, for example, Castells v. Spain, 23 April 1992, § 32, Series A no. 236; Ahmet Sadık v. Greece, 15 November 1996, § 33, Reports of Judgments and Decisions 1996‑V; and Glasenapp v. Germany, 28 August 1986, § 45, Series A no. 104).

35. In this connection, the Court first notes that the applicant companies in their constitutional complaints indeed did not rely on Article 48 of the Constitution, which is the provision that arguably corresponds to Article 1 of Protocol No. 1 to the Convention. Nor did they rely on Article 1 of Protocol No. 1 directly. Instead, they referred principally to Articles 14, 26 and 29 § 1 of the Constitution, which are the provisions that correspond to Articles 6 and 14 of the Convention and Article 1 of Protocol No. 12 thereto (see paragraphs 13 and 17 above).

36. More importantly, in the present case the applicant companies did not complain about the violation of their right to property in their constitutional complaints even in substance. In this connection the Court notes that it was possible for them to claim a violation of their right to property under Article 48 of the Constitution or under Article 1 of Protocol No. 1 since the Convention is directly applicable in Croatia. The Court also notes that the Constitutional Court did not address the applicant companies’ property rights on its own motion, nor it is required to do so under Croatian law. In their constitutional complaints the applicant companies complained of various procedural errors rather than about the confiscation of their yachts (see paragraph 13 above). What is more, in reply to the Government’s non-exhaustion objection, the applicant companies did not attempt to argue that in their constitutional complaints they complained about the violation of their right to property in substance. Instead, they confined themselves to stating that from the content of those constitutional complaints it was evident that the confiscation of their yachts had also entailed a violation of their right of property (see paragraph 31 above). However, as the Court’s case-law bears out (see paragraph 34 above), the mere fact that an applicant has submitted his or her case to the various competent courts does not itself constitute compliance with the requirements of Article 35 § 1 of the Convention as even in those jurisdictions where the domestic courts are able, or even obliged to examine the case of their own motion applicants are not dispensed from raising before them the complaint subsequently made to the Court (see, for example, Van Oosterwijck v. Belgium, 6 November 1980, § 39, Series A no. 40; Dalipi v. Greece (dec.), no. 51588/08, § 20, 26 June 2012; and Trūps v. Latvia (dec.), no. 58497/08, 20 November 2012). Therefore, in order to properly exhaust domestic remedies it is not sufficient that a violation of the Convention is “evident” from the facts of the case or applicants’ submissions. Rather, they must actually complain (expressly or in substance) about it in a manner which leaves no doubt that the same complaint that was subsequently submitted to the Court had indeed been raised at the domestic level. For the same reason the Court cannot – in the absence of the actual complaint by the applicant companies about the confiscation of their yachts – accept the Slovenian’s Government’s argument that the applicant companies had exhausted domestic remedies in substance by asking the Constitutional Court to order an interim measure that would postpone the sale of their yachts.

37. Furthermore, the applicant companies did not argue that a complaint before the Constitutional Court related to the confiscation of their yachts would have been devoid of any prospect of success. Indeed, the case-law of the Constitutional Court suggests that that court examines the proportionality of the confiscation measure when requested to do so (see paragraph 22 and 23 above).

38. In these circumstances, the Court considers that the applicant companies did not properly exhaust domestic remedies and thus did not provide the national authorities with the opportunity, which is in principle intended to be afforded to Contracting States by Article 35 § 1 of the Convention, of addressing, and thereby preventing or putting right, the particular Convention violation alleged against them (see, for example, l’Association Les Témoins de Jéhovah (dec.), no. 8916/05, 21 September 2010 and, by converse implication, Paulić v. Croatia, no. 3572/06, § 26, 22 October 2009 and Orlić v. Croatia, no. 48833/07, § 41, 21 June 2011).

39. It follows that this complaint is inadmissible under Article 35 § 1 of the Convention for non-exhaustion of domestic remedies and must therefore be rejected pursuant to Article 35 § 4 thereof.

C. Alleged violations of Article 6 § 1 of the Convention

40. The applicant companies complained that the above administrative offence proceedings had been unfair because they had been unable to participate in the first-instance proceedings before the Rijeka Port Authority. They relied on Article 6 § 1 of the Convention, which in its relevant part reads as follows:

“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”

41. The applicant companies further complained that they had not had an effective remedy because the first-instance decision of 31 August 2005 had only been served on them at their own request and only after the High Court for Administrative Offences had already dismissed the appeal of the accused against that decision. Even though the applicant companies in raising this complaint relied on Article 13 of the Convention, the Court considers that it falls to be examined also under Article 6 § 1 of the Convention, as an access-to-court complaint.

42. The Government disputed the admissibility of these complaints by arguing that they were manifestly ill-founded.

1. The arguments of the parties

(a) The Government

43. Relying on the Court’s judgment in the case of Silickienė v. Lithuania, no. 20496/02, 10 April 2012), the Government submitted that even though the applicant companies had not formally been the parties to the above administrative offence proceedings, their rights in those proceedings had been adequately protected. In particular, the Government explained that the applicant companies had not participated in the first-instance administrative offence proceedings because they had not had a legal interest to do so given that they had not been the accused of any administrative offence. However, as soon as the first-instance decision, ordering, inter alia, the confiscation of their yachts, had started to produce legal effects affecting the applicant companies, their legal interest had been recognised and they had been granted an effective opportunity to participate in those proceedings by lodging appeals against that decision and, later, constitutional complaints. They were thereby able to point to any unlawfulness or arbitrariness of the measure to confiscate their yachts, an opportunity of which they had availed themselves. That meant that the applicant companies had been able to present their arguments before two judicial instances, namely the High Court for Administrative Offences and the Constitutional Court, which decided on the applicant companies’ remedies by reasoned decisions which could not be qualified as unlawful or arbitrary.

44. As regards the alleged irregularities in the service of the first-instance decision on the applicant companies, the Government argued the moment of service of that decision ordering the confiscation of their yachts could not have had any impact on the fairness of the administrative offence proceedings in question, in particular on the applicant companies’ right to participate in those proceedings by lodging their appeals to the High Court for Administrative Offences. That was so because the statutory time-limit for lodging an appeal was not calculated from the date of the adoption of the contested decision, but from the date of its service on those who were entitled to appeal against it. More importantly, the Government averred that the High Court for Administrative Offences had rendered its decision on the applicant companies’ appeals independently of its previous decision adopted upon the appeal by the accused. Therefore, the applicant companies’ argument that the High Court for Administrative Offences had already taken its position, deciding on the appeal by the accused, was incorrect. The Government explained that any appellate court in Croatia decided on an appeal within the limits of the arguments raised in it, and was thus not bound by its previous decisions on appeals or by other pending appeals lodged against the same first-instance decision. Rather, it decided independently on each appeal separately. The applicant companies’ argument that High Court for Administrative Offences should have decided on all the appeals with a single decision and in the same time, was thus misconceived, as that kind of obligation on the appellate courts could not be derived from any procedural legislation applicable to the proceedings in question.

(b) The applicant

45. The applicant companies maintained their arguments that they had been unable to participate in the first-instance proceedings before the Rijeka Port Authority, and that the High Court for Administrative Offences had on 20 September 2005 decided on the appeal by the accused, that is, before the first-instance decision of 31 August 2005 had been properly served on the applicant companies. For the applicant companies it was logical that the High Court for Administrative Offences should have decided on all the appeals with one decision. Otherwise, deciding on one of the appeals before the others would have inevitably prejudiced the outcome of the decision on the remaining appeals, and that was precisely what had happened in the applicant companies’ case.

(c) The Slovenian Government

46. The Slovenian Government argued that while it was true that the applicant companies had had a right to appeal against the decision on confiscation of their yachts, their appeal had not had any chance of success. This was so firstly because the protective measure of confiscation had been an automatic consequence of the commission of the maritime offence in question where the liability or participation of the owner of the yacht in the offence had been of no relevance for the imposition of that measure. Secondly, since the applicant companies had not participated in the first‑instance proceedings they had been unable to put forward any arguments in favour of the accused. Thirdly, on 20 September 2005, that is, before the applicant companies had even been given the opportunity to appeal, the decision finding the accused guilty of the offence in question had become final, which had been followed by the automatic confiscation of the yachts. Therefore, the applicant companies had been unable to influence that decision and the ensuing confiscation of the yachts at the appellate level either. For the Slovenian Government, all this suggested that where the owner of the vessel was not the perpetrator of the maritime offence at issue, as in the present case, the owner actually had no effective remedy to contest the protective measure of confiscation of the vessel as an automatic consequence of the offence.

2. The Court’s assessment

47. The Court observes that the applicant companies’ main argument lay in the fact that they had no benefit of fair proceedings, given that they did not participate in the first-instance proceedings before the Rijeka Port Authority. In this connection, the Court first notes that the Rijeka Port Authority is an administrative authority which cannot be considered a tribunal within the meaning of Article 6 § 1 of the Convention. It reiterates in this connection that, while entrusting the prosecution and punishment of administrative offences to administrative authorities is not inconsistent with the Convention, the person concerned must have an opportunity to challenge any decision made against him or her before a tribunal that offers the guarantees of Article 6 (see Lauko v. Slovakia, 2 September 1998, § 64, Reports 1998‑VI).

48. However, it is important to note that the Court has consistently held that confiscation measures resulting in deprivation of property of third persons, different from the accused, entail determination of those persons’ “civil rights and obligations” rather than determination of “a criminal charge” against them (see AGOSI v. the United Kingdom, 24 October 1986, §§ 64-66, Series A no. 108; Air Canada v. the United Kingdom, 5 May 1995, §§ 52-56, Series A no. 316‑A; Arcuri v. Italy (dec.), no. 52024/99, ECHR 2001‑VII; and Silickienė, cited above, §§ 45-46). It follows that Article 6 § 1 under its “civil head” is applicable in the present case.

49. That being so, the Court reiterates that Article 6 § 1 requires that in the determination of civil rights and obligations, decisions taken by administrative or other authorities which do not themselves satisfy the requirements of that Article – as is the case in this instance with the Rijeka Port Authority – must be subject to subsequent control by a “judicial body that has full jurisdiction”, including the power to quash in all respects, on questions of fact and law, the challenged decision (see, for example, Bistrović v. Croatia, no. 25774/05, § 51, 31 May 2007). Furthermore, in cases concerning confiscation, the procedure in the domestic legal system must afford the applicant an adequate opportunity, in the light of the severity of the measure to which he or she was liable, to put his or her case to the courts, pleading, as the case might be, illegality or arbitrariness of that measure and that the courts had acted unreasonably (see Silickienė, § 47; and AGOSI, § 55, cited above). While, as a general principle, persons whose property is confiscated should be formally granted the status of parties to the proceedings in which the confiscation is ordered, de facto affording them a reasonable and sufficient opportunity to protect their interests adequately, may be sufficient to satisfy the requirements of Article 6 § 1 of the Convention (see Silickienė, cited above, § 50).

50. In this connection, the Court first observes that under the Administrative Offences Act, which was in force at the relevant time, the owner of a property which had been confiscated in the administrative offence proceedings was formally not a party to the administrative offence proceedings but could nevertheless lodge an appeal to the High Court for Administrative Offences against the first-instance decision regardless of whether the contested decision had been issued by an administrative authority or the first-instance court for administrative offences. Under that Act, the High Court for Administrative Offences had jurisdiction to examine on appeal all aspects of the case brought before it. Its examination was not restricted to points of law but also extended to factual issues, including the assessment of evidence. If the High Court for Administrative Offences disagreed with the findings of the first-instance administrative authority, it had the power to either quash the first-instance decision and remit the case for a new decision, or reverse the contested decision (see paragraph 21 above). The Court is therefore satisfied that the High Court of Administrative Offences was a court of “full jurisdiction” for the purposes of Article 6 § 1 of the Convention.

51. The only restriction concerning the examination of a case before the High Court for Administrative Offences was that it could not hold a hearing. However, the applicant companies in the present case did not complain of the lack of a hearing, nor does the Court, having regard to its case-law on the matter, consider that a hearing was necessary. The Court has accepted that a hearing may not be required where there are no issues of credibility or contested facts which necessitate a hearing (oral presentation of evidence or cross-examination of witnesses) and the courts may fairly and reasonably decide the case on the basis of the parties’ submissions and other written materials (see, notably and a fortiorti, Jussila v. Finland [GC], no. 73053/01, §§ 41 and 47, ECHR 2006-XIV). In particular, in the present case the issues pertinent to the confiscation of the applicant companies’ yachts were purely legal and did not require the hearing of witnesses or the taking of other oral evidence (see, for example, Saccoccia v. Austria, no. 69917/01, §§ 77-80, 18 December 2008 and, a fortiori, Suhadolc v. Slovenia (dec.), no. 57655/08, 17 May 2011).

52. As regards the Slovenian Government’s argument that the applicant companies did not have an effective access to court because their appeals lacked any prospects of success, given that the confiscation of the yachts was an automatic consequence of the offence in question (see paragraph 46 above), for the Court it is sufficient to note that those appeals were not the only remedies the applicant companies resorted to in order to contest the decision on confiscation of their yachts as they also lodged constitutional complaints. Had the applicant companies in their constitutional complaints complained of a violation of their right of property at least in substance, the Constitutional Court would have, in view of Article 16 of the Constitution, had to examine whether the confiscation measure complained of was lawful, pursued a legitimate aim and was proportional to that aim (see paragraph 17 above). However, as already noted above (see paragraph 36), the applicant companies did not do so and thus cannot complain that they did not have an effective access to court or that they, as the owners of the confiscated property, were not afforded a reasonable and sufficient opportunity to protect their interests, as required by Article 6 § 1 in the proceedings in which the confiscation was ordered (see paragraph 49 above).

53. As regards the further issue whether the applicant companies had an effective access to court, given that the first-instance decision on confiscation of 31 August 2005 had only been served on them at their own request and only after the High Court for Administrative Offences had already dismissed the appeal of the accused against that decision, the Court cannot ignore the fact that the decision in question was first served on the applicant companies by regular post (by registered mail and with acknowledgment of receipt) already on 2 September 2005, that is, before 20 September 2005 when the High Court for Administrative Offences had decided on the appeal of the accused, and only later by diplomatic post (see paragraphs 8 and 10 above). It follows that the applicant companies could have appealed earlier had they wanted to and avoided the situation complained of. In any event, the Court considers that the fact that the High Court for Administrative Offences had already dismissed the appeals by the accused by the time the applicant companies lodged their appeals does not mean that that court could not have reached a different decision on the appeals lodged by the applicant companies. Clearly, the issue whether the accused was guilty of an administrative offence is legally different from the issue whether the object used to commit that offence should be confiscated from its owner innocent of the offence.

54. Lastly, there is no evidence to suggest that either the High Court of Administrative Offences or the Constitutional Court in the above administrative offence proceedings lacked impartiality or that those proceedings were otherwise unfair. In the light of all the material in its possession, the Court considers that in the present case the applicant companies were able to submit their arguments before courts which offered the guarantees set forth in Article 6 § 1 of the Convention and which addressed those arguments. Their decisions were duly reasoned and cannot be labelled as arbitrary.

55. It follows that these complaints are inadmissible under Article 35 § 3 (a) of the Convention as manifestly ill-founded and must be rejected pursuant to Article 35 § 4 thereof.

For these reasons, the Court

Decides unanimously to join the applications;

Declares by a majority the applications inadmissible.

Søren NielsenIsabelle Berro-Lefèvre
RegistrarPresident

Full & Egal Universal Law Academy