Communicated on 6 January 2016
SECOND SECTION
Application no. 57239/13
Đorđe ZAKLAN
against Croatia
lodged on 29 July 2013
STATEMENT OF FACTS
The applicant, Mr Đorđe Zaklan, is a Croatian national who was born in 1944 and lives in Pakrac. He is represented before the Court by Ms I. Bilandžić Arbutina, an advocate practising in Garešnica.
A. The circumstances of the case
The facts of the case, as submitted by the applicant, may be summarised as follows.
1. Background to the case
On 28 January 1991 the customs authorities of the former Socialist Federal Republic of Yugoslavia (hereafter “the SFRY”) at the border crossing between what was then the SFRY (now Croatia) and Hungary temporarily confiscated the sums of 4,350 German marks and 100 US dollars (USD) from the applicant as he had, contrary to the law, failed to declare them before leaving the SFRY.
Shortly afterwards administrative offence proceedings (prekršajni postupak) against the applicant were instituted before the Zagreb Department of the Federal Foreign Exchange Operations Inspectorate (Savezni devizni inspektorat, Odjel u Zagrebu, hereafter “the Zagreb Department”) for failing to declare the above sums, an administrative offence defined in section 177(1) sub-paragraph 5 of the Foreign Exchange Operations Act.
At the request of the Zagreb Department, on 29 April 1991 the applicant and a witness were heard by the Pakrac magistrate (sudac za prekršaje u Pakracu).
On 8 October 1991 Croatia declared independence and severed all ties with the SFRY. The Croatian authorities took over all administrative offence proceedings pending before the Zagreb Department.
On 13 November 1992 the Government of Croatia adopted a decree, which entered into force on the same day, whereby it stayed all administrative offence proceedings pending before the Zagreb Department until the completion of the succession process following the dissolution of the SFRY.
On 3 December 1993 the decree was superseded by legislation having the same effect.
On 2 June 2004 the Agreement on Succession Issues between the successor States to the SFRY entered into force.
2. Civil proceedings
On 11 December 2007 the applicant, in an attempt to reach an out-of-court settlement, wrote to the Pakrac Municipal State Attorney’s Office (Općinsko Državno odvjetništvo u Pakracu) asking that the sums confiscated on 28 January 1991 be returned to him.
On 10 January 2008 the State Attorney’s Office replied that it was unable to meet the applicant’s request because the confiscated funds had been immediately deposited and remained in the account of the Federal Foreign Exchange Operations Inspectorate in Belgrade. It explained that the State had tried to retrieve such sums confiscated on the territory of Croatia before the declaration of independence but had not succeeded. It therefore suggested to the applicant that he either lodge his request with the Serbian Foreign Exchange Inspectorate or bring a civil action against Serbia in Belgrade.
On 15 May 2008 the applicant brought a civil action against the State in the Pakrac Municipal Court (Općinski sud u Pakracu) seeking payment of 2,218.50 euros (EUR) and USD 100, plus the accrued statutory default interest.
By a judgment of 1 July 2010 the Municipal Court dismissed the applicant’s action. It held that under the relevant legislation governing administrative offences the applicant’s action to retrieve the confiscated sums could arise only once the administrative offence proceedings had been concluded, and only in the event that the final decision did not order permanent confiscation of those sums. Given that the proceedings in the applicant’s case had been stayed pending the completion of the succession process (and given that the succession process had not yet been completed), those proceedings had not ended and his action against the State to retrieve the confiscated sums was therefore premature. The relevant part of the court’s judgment concerning the succession process reads as follows:
“As can be seen from the letter of the Croatian representative on the Committee for the Distribution of Financial Assets and Liabilities of the SFRY [envisaged in] Annex C to the Succession Agreement ... the confiscated funds cannot be regarded as financial assets within the meaning of Annex C to the Agreement because they constitute an “allocated debt”, which cannot be settled multilaterally.
In the view of this court, even though the Succession Agreement has been concluded ..., it [only] establishes general principles, whereas the issue of the confiscated funds [held] in an account in Belgrade has to be regulated separately.
... since [in respect of that issue] there has not yet been a resolution [under] which the defendant would be liable to return the money and the statutory five-year prescription period would begin to run, the defendant cannot be ordered to return the money in these proceedings ...”
On 14 April 2011 the Bjelovar County Court (Županijski sud u Bjelovaru) dismissed an appeal by the applicant and upheld the first-instance judgment, which thereby became final.
The applicant then lodged a constitutional complaint alleging, inter alia, a violation of his constitutional right of ownership.
The Constitutional Court (Ustavni sud Republike Hrvatske) dismissed the applicant’s constitutional complaint on 15 May 2013 and served its decision on his representative on 29 May 2013.
B. Relevant domestic and international law
1. The Government Decree of 13 November 1992
The Government Decree staying administrative offence proceedings [instituted] under legislation taken over by Croatia governing foreign exchange operations (Uredba o stavljanju u prekid prekršajnog postupka u predmetima po propisima o deviznom poslovanju koje je preuzela Republika Hrvatska, Official Gazette no. 77/92), reads as follows:
Section 1
“Administrative offence proceedings [instituted] under legislation governing foreign exchange operations which were taken over by Croatia from the Zagreb Department of the Federal Foreign Exchange Operations Inspectorate [and] which have not been completed, or in respect of which enforcement has not been completed and [involving] temporarily confiscated cash not [held] in Croatia, shall be stayed.”
Section 2
“The administrative offence proceedings referred to in section 1 of this Decree shall remain stayed until the process of determining mutual rights and obligations between Croatia and other republics of the former SFRY, or [between Croatia and] the [SFRY], is completed.”
Section 3
“This Decree shall enter into force on the day of its publication in the Official Gazette.”
2. The Stay of Proceedings Act
Sections 1 and 2 of the Act Staying Administrative Offence Proceedings [instituted] under Legislation Taken Over by Croatia Governing Foreign Exchange Operations (Zakon o prekidu prekršajnog postupka u predmetima po propisima o deviznom poslovanju koje je preuzela Republika Hrvatska, Official Gazette no. 106/93), which entered into force on 3 December 1993, are identical to sections 1 and 2 of the Government decree of 13 November 1992. Section 3 provides that the decree in question shall be repealed upon the Act’s entry into force.
3. Administrative Offences Act
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:
Treatment of the seized items
Section 185(4)
“Upon the conclusion of [administrative offence] proceedings, temporarily confiscated objects shall be returned to the person from whom they were confiscated, unless the decision on the administrative offence [in question] orders their permanent confiscation.”
4. Foreign Exchange Act
Section 104(2) of the Act on the Basics of the Foreign Exchange System, Foreign Exchange Operations and Gold Trade (Zakon o osnovama deviznog sustava, deviznog poslovanja i prometu zlata, Official Gazette no. 91A/93), which was in force between 15 October 1993 and 18 June 2003, provided that administrative offences defined in that Act became time-barred six years after the commission of the offence.
5. Agreement on Succession Issues
The relevant Articles of Annex C to the Agreement on Succession Issues between the successor States to the SFRY read as follows:
ANNEX C. FINANCIAL ASSETS AND LIABILITIES
Article 1
“The SFRY’s financial assets comprised all financial assets of the SFRY (such as cash, gold and other precious metals, deposit accounts, and securities), including, in particular –
(a) accounts and other financial assets in the name of the SFRY Federal Government Departments and Agencies;
...;
(c) foreign currency assets ...
...”
Article 2
“(1) (a) The SFRY’s financial liabilities comprised (subject to paragraphs (2) and (3) of this Article) the debts of the SFRY, debts guaranteed by the SFRY and financial claims against the SFRY, and consisted principally of –
(i) the external debt of the SFRY to official creditors and the International Financial Institutions;
(ii) the external debt of the SFRY to commercial creditors;
...;
(iv) external debt of the SFRY to creditors other than those listed in (i)-(iii), above.
(b) External debt in (i) – (iv) above is described as allocated debt if the final beneficiary of the debt is located on the territory of a specific successor State or group of successor States. Allocated debt is not subject to succession and shall be accepted by the successor State on the territory the final beneficiary is located.”
COMPLAINT
The applicant complains under Article 1 of Protocol No. 1 to the Convention that he is unable to retrieve the sums temporarily confiscated from him on 28 January 1991.
QUESTIONS TO THE PARTIES
1. Did the administrative offence with which the applicant had been charged become time-barred despite the staying of the proceedings?
2. If so, was the refusal of the domestic courts to order the return of the sums temporarily confiscated from the applicant on 28 January 1991 by the authorities of the former Yugoslavia contrary to his right to the peaceful enjoyment of his possessions guaranteed by Article 1 of Protocol No. 1 to the Convention?
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