Last Updated on April 24, 2019 by LawEuro
Information Note on the Court’s case-law 227
Uzan and Others v. Turkey – 19620/05, 41487/05, 17613/08 et al.
Judgment 5.3.2019 [Section II]
Article 1 of Protocol No. 1
Article 1 para. 2 of Protocol No. 1
Control of the use of property
Preventive attachment of assets belonging to managers or relatives of executives of an insolvent bank, even after they were not found personally implicated: violation
Facts – In 2003 the banking regulator transferred the management of an insolvent bank to the savings deposits insurance fund (Tasarruf Mevduatı Sigorta Fonu – TMSF), a public institution. The TMSF paid compensation to the bank’s account-holders for a total of more than 4 billion euros. Criminal proceedings were brought against the majority shareholders of the bank and some managers or auditors. Having been slowed down by the absconding of certain defendants, the trial of the company’s executives in the Assize Court has not yet been concluded to date.
In August 2003 the Police Court decided to order the preventive attachment of the assets of, on the one hand, the company’s executives and some managers or auditors, and on the other, their spouses and children. The applicants belonged to either of those two groups. The criminal proceedings were initially extended to them, but resulted in discontinuance for all of them in 2004; the managers and auditors were acquitted on fresh charges in 2008. Most of the provisional measures were nevertheless maintained, pending the main trial and the intended collection of public debts.
Law – Article 1 of Protocol No. 1
(a) Whether there was a possession – Article 1 of Protocol No. 1 was applicable, including in the case of the two applicants (born in 1999 and 2003) who were been minors and who had no actual possession at the material time. The courts had acknowledged their capacity to acquire certain rights by inheritance and donation. The young applicants had thus had a legitimate expectation falling within the concept of “possession”, having regard, moreover, to the automatic, general and inflexible nature of the provisional measures, and to their uncertain duration.
(b) Nature of the interference – The provisional measures had to be examined under the head of the control of the use of property.
(c) Lawfulness – In a context of uncertainty as to the outcome of the criminal proceedings against those presumed responsible for the losses – given the defendants’ failure to appear –, the applicable legislation left the courts with the possibility of deciding to maintain the provisional measures for as long as all the sums sought by the TMSF had not been recovered. In view of its findings on proportionality below, the Court nevertheless saw fit to put aside the question whether such broad discretion satisfied the criterion of lawfulness.
(d) Whether there was a legitimate aim – The impugned measures had been in the general interest: to prevent the use of property suspected of having been acquired with the proceeds of crime.
(e) Proportionality – The Court acknowledged the importance and complexity of this case for the Turkish financial, administrative and judicial authorities: it had been necessary to take measures in order to protect the rights of the very many individuals who were affected by the situation, to reduce any losses and to prevent any fraud, to recover public funds and trace those responsible for the losses. With the intention of stopping fraudulent transfers of public money, the provisional measures could constitute an efficient and necessary weapon to combat fraud in financial circles. The initial implementation of those measures did not therefore, in itself, run counter to the proportionality principle.
However, while the provisional measures could be justified by the general interest when their intention was to prevent fraud, in order to guarantee satisfaction for the creditors, they had to be discontinued as soon as they were no longer necessary, as their impact increased with their duration. In actual fact, the problem had arisen especially from the date when the proceedings were discontinued to the benefit of the applicants.
The seriousness of the burden imposed on the applicants could be seen from the following:
(i) The duration of the restrictions: ten years for some applicants; up to fifteen years for others.
(ii) The extent of the restrictions: the two young applicants had been deprived of the possibility of acquiring various types of property; the three others were prevented from having access, respectively, to their salary as university lecturer, savings, or home (and for each of them, to their car).
(iii) The automatic, general and inflexible nature of the restrictions, without any regular individual scrutiny. Not only had the applicants not been found guilty in a criminal court, the payment orders issued against them had been annulled by the competent courts, which had thus established that they could not be held responsible for the pecuniary damage sustained by the TMSF.
(iv) The absence from the file of evidence to suggest that the applicants could have been involved in any fraud. The domestic authorities only envisaged alternative measures very belatedly, if at all. Moreover there was nothing in the file to show that the collection of the public debts warranted better protection than the applicants’ property.
(v) At the level of the procedural safeguards, the attribution by the Assize Court to some of the applicants of a “status other than that of parties to the proceedings” had prevented them, and still prevented them, from taking part in the main proceedings, on which their rights nevertheless depended.
Without having any justification other than the fact that they were related to the bank’s executives or that they had had responsibilities in the bank at a given time, the imposition of the preventive attachment against the applicants’ possessions and their automatic continuance in spite of the decisions of discontinuance or acquittal did not sit well with the principles enshrined by the Court’s case-law: it was, by contrast, necessary for a court to assess which instruments were the best adapted to the circumstances, and, more generally, to weigh in the balance the underlying legitimate aim and the rights of those concerned. Moreover, the applicants had not had the benefit of any of the relevant procedural safeguards. In short, no fair balance had been struck.
Conclusion: violation (unanimously for the adult applicants; six votes to one for the two young applicants).
Article 41 : reserved.