Information Note on the Court’s case-law 245
November 2020
Vegotex International S.A. v. Belgium - 49812/09
Judgment 10.11.2020 [Section III]
Article 6
Administrative proceedings
Article 6-1
Fair hearing
Tax debt time-barred by retroactive effect of judicial decision but subsequently reinstated, while dispute still pending and with aim of providing legal certainty, by retrospective but foreseeable legislation: no violation
[This case was referred to the Grand Chamber on 8 March 2021]
Facts – In 1995 the tax authorities corrected a tax return filed by the applicant company and applied a 10% penalty on the amount due. The company appealed. In October 2000 the tax authorities issued it with a summons to pay, expressly stating that the purpose of the summons was to interrupt the period before the tax debt became time-barred.
In a judgment of 10 October 2002 – while its case was pending at first instance – the Court of Cassation adopted new case-law to the effect that this type of summons did not interrupt the limitation period in such cases. As a result, the recovery of tax debt had been time-barred since 15 February 2001 (a date prior to the actual emergence of this case-law).
The applicant company first referred to this case-law in April 2004 before the Court of Appeal. However, in July 2004 the legislature intervened to reverse this development and to restore the previous administrative practice by means of a law that was immediately applicable to pending proceedings. This legislation was applied to the applicant’s case by the Court of Cassation, which consequently dismissed its appeal on points of law.
Law - Article 6 § 1: At the time when it had lodged its appeal, the applicant company had been in a position to legitimately expect that the recovery of its tax debt would be declared time-barred in accordance with the new case-law of the Court of Cassation. The legislature's intervention had, however, resulted in the resumption of that recovery process and the imposition of the related penalty in cases where, according to this new case-law, the limitation period had already expired, even though such expiry had not yet been established by a court decision. This had been the situation for the applicant company. It had therefore only been as a result of the retroactive application of the impugned legislation that the applicant’s tax debt had ultimately not been considered time-barred. The intervention of the legislature had therefore decisively influenced the judicial outcome of the dispute to which the State was a party.
Where tax-related proceedings could result in a penalty being imposed, they certainly fell within the notion of “criminal charge”, according to the autonomous meaning given to this term by the Court (Engel criteria). In various cases concerning questions of statutory limitation in criminal proceedings under Articles 6 or 7 of the Convention, the Court had previously found no violation of those provisions by pointing out that the charges against the applicants had not yet become time-barred at the time when the legislation in issue entered into force. In the present case, however, the limitation period applicable to the applicant’s tax debt had already expired when the new law entered into force. That being said, since tax penalties did not form part of the “hard core” of the criminal law, the Article 6 guarantees did not necessarily apply with their full stringency in such cases.
The following arguments persuaded the Court that the impugned retrospective application had unquestionably been justified. It had not simply been a matter of safeguarding the financial interests of the State.
As could be seen from the judgments handed down by the Constitutional Court and the Court of Cassation – which had found nothing spurious about the legislature’s intervention – legal certainty had been undermined by the Court of Cassation’s judgment of 10 October 2002. By confirming the legality of previous administrative practice, the legitimacy of which had not seriously been called into question, the retrospective provision at issue had sought to neutralise the effect of this case-law, which itself had been retrospective. The legislative intervention had therefore not been unforeseeable, since it sought to reassert the administrative authority’s original intention.
Moreover, the intervention had also sought to ensure that taxes were paid by those who were liable for them and thus to avoid arbitrary discrimination between different taxpayers.
These aims on the part of the legislature were to be understood in the light of the chronology of the present case. Before the Court of First Instance, the applicant company had not relied on the claim that the recovery of its debt was time-barred. Until the Court of Cassation’s judgment of 10 October 2002, the company itself – like other taxpayers – appeared to consider that the limitation period had been interrupted by the payment order. It was only after that judgment that the applicant company had, rather unexpectedly, hoped to benefit from the new case-law. Consequently, the applicant company could not have been surprised by the legislature’s response.
Therefore the impugned intervention had indeed been driven by a compelling reason of general interest: to restore the interruption of the limitation period by payment orders that had been served well before the Court of Cassation’s 2002 judgment, thus enabling the resolution of disputes pending before the courts and without affecting the rights of taxpayers.
Conclusion: no violation (unanimous).
(See also OGIS-Institut Stanislas, OGEC Saint-Pie X and Blanche de Castille and Others v. France, 42219/98 and 54563/00, 27 May 2004, Information Note 64, and National & Provincial Building Society, Leeds Permanent Building Society and Yorkshire Building Society v. the United Kingdom, 21319/93 et al., 23 October 1997, Information Note; contrast (violation): Maggio and Others v. Italy, 46286/09 et al., 31 May 2011, Information Note 141, SCM Scanner de l’Ouest Lyonnais and Others v. France, 12106/03, 21 June 2007, Information Note 98, and Arnolin and Others v. France, 20127/03 and 24 others, § 76, 9 January 2007, Information Note 93).
The Court found, unanimously, that there had been no violation of Article 6 § 1 on account of the substitution of grounds of appeal carried out by the Court of Cassation of its own motion. That court had not breached either the right to an adversarial procedure or the right of access to a court, since the applicant company had been afforded the opportunity to respond to the submissions of the public prosecutor who had called for that substitution.
The Court, however, found a violation of Article 6 § 1 on account of the length of the proceedings (calculated from the time when the applicant company had been informed of the tax authority’s intention to rectify its tax return and to impose a penalty).
Article 41: the finding of a violation was sufficient just satisfaction for the non-pecuniary damage; claim for pecuniary damage rejected.
© Council of Europe/European Court of Human Rights
This summary by the Registry does not bind the Court.
Click here for the Case-Law Information Notes
Full & Egal Universal Law Academy