FIFTH SECTION
DECISION
Application no. 22637/16
TORGOVYY DIM KAMPUS KOTTON KLAB, TOV
against Ukraine
The European Court of Human Rights (Fifth Section), sitting on 19 September 2024 as a Committee composed of:
Kateřina Šimáčková, President,
Mykola Gnatovskyy,
Úna Ní Raifeartaigh, judges,
and Martina Keller, Deputy Section Registrar,
Having regard to:
the application (no. 22637/16) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 12 April 2016 by Torgovyy Dim Kampus Kotton Klab, TOV, a limited liability company registered in Ukraine (“the applicant company”), represented by Mr S. Podze, a lawyer practising in Kyiv;
the decision to give notice of the complaint under Article 1 of Protocol No. 1 to the Convention to the Ukrainian Government (“the Government”), represented by their Agent, Ms M. Sokorenko, of the Ministry of Justice, and to declare inadmissible the remainder of the application;
the parties’ observations;
Having deliberated, decides as follows:
SUBJECT MATTER OF THE CASE
1. The case concerns the applicant company’s complaint about the retroactive application of anti-dumping duties following the reinstatement of a previously suspended regulation. It relied on Article 1 of Protocol No. 1 to the Convention.
2. On 29 September 2009, with a view to protecting local manufacturers of medical syringes in Ukraine, the Interagency Commission on International Trade[1] adopted a Regulation on the application of definitive anti-dumping measures concerning the importation into Ukraine of syringes from the Kingdom of Spain, the United Kingdom of Great Britain and Northern Ireland, the Federal Republic of Germany, and the People’s Republic of China («Рішення про Застосування Остаточних Антидемпінгових Заходів щодо Імпорту в Україну Шприців Походженням з Королівства Іспанія, Сполученого Королівства Великобританії та Північної Ірландії, Федеративної Республіки Німеччина і Китайської Народної Республіки») (“the Regulation”), by which certain types of syringes imported into the country were subject to anti-dumping duties.
3. From 2009 various private parties challenged the Regulation’s validity before the domestic courts in unrelated proceedings. During these proceedings, the domestic courts twice suspended the Regulation as an interim measure, pending resolution of the dispute. In November 2010 the Kyiv Administrative Court of Appeal invalidated the Regulation, but in March 2011 the Higher Administrative Court of Ukraine restored its validity.
4. From April 2010 until February 2011, during the period in which the Regulation was suspended and subsequently invalidated, the applicant company imported medical syringes from Spain without those imports being subject to anti-dumping duties.
5. On 21 January 2013, following an audit carried out on the basis of Article 351 § 2 of the Customs Code of Ukraine (see paragraph 11 below), the customs authorities imposed an anti-dumping duty of 1,069,960.65 Ukrainian hryvnias (UAH; the equivalent of approximately 98,000 euros (EUR) at the time) on syringes imported by the company during the abovementioned period.
6. Relying on the principles of legal certainty and good governance, the applicant company challenged that decision before the domestic courts. It claimed that the imposition of the anti-dumping duties had been unforeseeable and unlawful, and that it had hindered the applicant company’s ability to adjust syringe prices to offset the imposed duties. Referring to two judgments of the Supreme Court of Ukraine (see paragraph 12 below), it also argued that the authorities were not authorised to recalculate the amount of customs duty payable after customs clearance had been completed.
7. During the first round of judicial review, the domestic courts at three levels of jurisdiction, including the Higher Administrative Court ruled in the applicant company’s favour. On 20 January 2015, however, the Supreme Court of Ukraine quashed the findings of the Higher Administrative Court, in view of a divergence in the case-law. Consequently, the case was sent back to the court of first instance for fresh examination.
8. During re-examination of the applicant company’s case, the domestic courts cancelled the duties imposed for the period during which the Regulation was invalid but upheld the duties for the period when it had been suspended. Referring to a similar case decided by the Higher Administrative Court of Ukraine on 7 November 2013 (see paragraph 13 below), the courts concluded that the fact that the regulation had been suspended did not imply that it would be repealed, and that its subsequent reinstatement justified the retroactive collection of duties for the earlier imports. Citing Article 345 of the Customs Code (see paragraph 11 below), they also dismissed the applicant company’s argument about the authorities not having power to reassess the amount of customs duty payable after customs clearance had been completed.
9. The final judgment was adopted on 1 December 2015 by the Higher Administrative Court of Ukraine. The applicant company was required to pay UAH 1,012,756.01 (the equivalent of approximately EUR 34,000 at the relevant time) in anti-dumping duties.
Relevant legal framework and practice
10. Article 69 of the Customs Code of Ukraine of 11 July 2002, as in force during the import operations in question, stipulated that in cases of suspected breaches of customs regulations the relevant authorities were authorised to implement customs verification measures in relation to imported goods, irrespective of whether customs clearance had been completed.
11. Articles 345 and 351 § 2 of the Customs Code of Ukraine of 13 March 2012, as in force at the time of the audit carried out by the customs authorities (see paragraph 5 above), provided that fiscal authorities were authorised to carry out audits within the applicable statute of limitations period (1,095 days), including with respect to goods that had already undergone the customs clearance process.
12. The Supreme Court of Ukraine in its rulings of 7 November 2011 and 21 February 2012 held that once the customs authorities had determined the customs value or classification code of imported goods, they were not permitted to levy additional customs duties at a later stage, unless there was evidence of collusion between the importer and the customs authorities.
13. On 7 November 2013, in a similar case concerning the importation of medical syringes during the period that the Regulation had been suspended, the Higher Administrative Court of Ukraine upheld the decision to impose anti-dumping duties in respect of past imports by the import company concerned. It held that the Regulation’s suspension did not exempt legal entities from complying with the obligations in the Regulation once the suspension had been lifted.
THE COURT’S ASSESSMENT
14. The applicant company complained that the imposition of anti-dumping duties on the goods imported during the period of the Regulation’s suspension (see paragraph 4 above) had been unforeseeable and contrary to the principles of legal certainty and good governance under Article 1 of Protocol No. 1. It argued that during the import operations there had been no indication in primary or secondary legislation, instructions or case-law that anti-dumping duties could be applied retroactively. There were no warnings from the State authorities that such a possibility existed. It also asserted that it had not been a party to the proceedings in which the Regulation had been suspended.
15. The Government disagreed, claiming that the interference in question had been lawful, pursued a legitimate aim, and had been proportional.
16. It is not in dispute between the parties that there has been an interference with the applicant company’s property rights within the meaning of Article 1 of Protocol No. 1. The Court will examine the case under the second paragraph of that provision (see Gasus Dosier- und Fördertechnik GmbH v. the Netherlands, 23 February 1995, § 59, Series A no. 306-B).
17. The Court reiterates that any interference with the rights protected by Article 1 of Protocol No. 1 must meet the requirement of lawfulness, which presupposes that the applicable provisions of domestic law are sufficiently accessible, precise and foreseeable in their application (see Lekić v. Slovenia [GC], no. 36480/07, § 95, 11 December 2018).
18. In the present case, the Court notes that the disputed anti-dumping duties were based on the Regulation and on Article 345 of the Customs Code of Ukraine 2012 (see paragraph 11 above). The applicant company did not question these legal provisions in terms of their accessibility, clarity, and foreseeability. Rather, it complained about the way in which the national courts assessed the question of whether goods imported during the period of suspension of the Regulation were subject to the anti-dumping duty imposed on the basis of the Regulation once its validity had been restored.
19. The domestic courts which reviewed the duties imposed on the applicant company, thoroughly assessed the latter’s situation. They drew a distinction between the notions of “invalidation” and “suspension” of a regulatory legal act, finding that suspension merely halted the application of the regulatory legal act temporarily, pending a final decision on its validity. The Court finds no reason to question the domestic courts’ interpretation and application of the aforesaid legal provisions, considering that it is primarily for the national authorities, notably the courts, to interpret and apply domestic law. Furthermore, in so far as the tax sphere is concerned, the Court’s well‑established position is that the States may be afforded some degree of additional deference and latitude in the exercise of their fiscal duties under the lawfulness test (see Maroslavac v. Croatia, no. 64806/16, § 38 with further references, 13 February 2024). While it would have been desirable for the domestic courts to provide a clear response to the applicant company’s arguments about whether their interpretation of domestic law was compatible with the principles of legal certainty and good governance, their key findings in the present case cannot, in the Court’s view, be considered arbitrary or manifestly unreasonable.
20. The Court also observes that the applicant company did not point to any decision or judgment given by domestic courts in which the suspension of a regulatory act had been interpreted in the way proposed by the applicant company. The domestic courts, for their part, referred to the judgment of the Higher Administrative Court of Ukraine of 7 November 2013 (see paragraph 13 above). Although that ruling post-dated the applicant company’s import operations, it nevertheless demonstrates that the domestic law could reasonably have been interpreted in the particular manner in question (see Bežanić and Baškarad v. Croatia, nos. 16140/15 and 13322/16, § 71, 19 May 2022).
21. As to the applicant company’s claims that the anti-dumping duties have been applied retroactively, the Court notes that even assuming that the imposition of anti-dumping duties in the instant case had indeed retroactive effects, the retrospective application of tax legislation is not per se incompatible with Article 1 of Protocol No. 1 (see M.A. and 34 Others v. Finland (dec.), 27793/95, 10 June 2003 and P. Plaisier B.V. and Others v. The Netherlands (dec.), nos. 46184/16, 47789/16 and 19958/17, § 84, 14 November 2017). In the Court’s view, the applicant company, as a business entity engaged in commercial activities, should have assessed – if necessary with appropriate legal advice – the consequences of importing goods during the period of the Regulation’s suspension. It was thus expected to proceed with a high degree of caution, with no expectation that the authorities would allow it to enjoy the benefits of a windfall and capitalise on a sudden gap in the Regulation’s application (see National & Provincial Building Society, Leeds Permanent Building Society and Yorkshire Building Society v. the United Kingdom, 23 October 1997, § 81, Reports of Judgments and Decisions 1997-VII).
22. In the light of the above considerations, the Court concludes that the interference complained of had a sufficient legal basis in Ukrainian law to comply with the requirements of the second paragraph of Article 1 of the Protocol No. 1.
23. Finally, the applicant company did not argue, either at the domestic level or before the Court, that the interference in question was disproportionate or that it constituted an excessive burden. Its argument about the alleged inability to adjust syringe prices to offset the imposed anti‑dumping duties has not been supported by any documentary evidence. Furthermore, the company’s fiscal obligations were limited strictly to the anti-dumping duties calculated as of the day of the transactions, with no additional penalties or interest for delayed payment. In the absence of any argument to that effect and having regard to the wide margin of appreciation enjoyed by the States in tax matters (see, for example, Arnaud and Others v. France, nos. 36918/11 and 5 others, §§ 25‑27, 15 January 2015), the Court does not find anything to suggest that the domestic authorities’ decision in the present case imposed an excessive individual burden on the applicant company and was thus at odds with the principle of proportionality inherent in Article 1 of Protocol No. 1.
24. It follows that the applicant’s complaint under Article 1 of Protocol No. 1 is manifestly ill‑founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Done in English and notified in writing on 10 October 2024.
Martina Keller Kateřina Šimáčková
Deputy Registrar President
[1] A State authority operating under the auspices of the Ukrainian Ministry of the Economy.