The case concerns confiscation of cash and cheques in euros (EUR) which the applicant, an Italian national, failed to declare when entering Croatia.
CASE OF PASCALE v. CROATIA
(Application no. 69278/16)
22 September 2022
This judgment is final but it may be subject to editorial revision.
In the case of Pascale v. Croatia,
The European Court of Human Rights (First Section), sitting as a Committee composed of:
Péter Paczolay, President,
Davor Derenčinović, Judges,
and Liv Tigerstedt, Deputy Section Registrar,
Having regard to:
the application (no. 69278/16) against the Republic of Croatia lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 18 November 2016 by an Italian national, Mr Libero Pascale, born in 1952 and living in Campobasso, Italy (“the applicant”) who was represented by Mr M. Macan, a lawyer practising in Pula;
the decision to give notice of the application to the Croatian Government (“the Government”), represented by their Agent, Ms Š. Stažnik;
the parties’ observations;
the decision of the Italian Government not to make use of their right to intervene in the proceedings (Article 36 § 1 of the Convention);
Having deliberated in private on 30 August 2022,
Delivers the following judgment, which was adopted on that date:
SUBJECT MATTER OF THE CASE
1. The case concerns confiscation of cash and cheques in euros (EUR) which the applicant, an Italian national, failed to declare when entering Croatia.
2. On 19 September 2008 the applicant attempted to cross the Croatian border carrying EUR 20,000 in cash and EUR 111,495 in cheques drawn on various Italian banks, which he failed to declare to the customs authorities. The cash and cheques were temporarily seized.
3. Minor-offence proceedings ensued against the applicant as the failure to declare cash and/or cheques exceeding 40,000 Croatian kunas (HRK) – i.e. some EUR 5,620 at the time – was a minor offence under the domestic legislation regulating foreign currency operations and prevention of money laundering.
4. In his defence, the applicant referred to the Court’s case-law, in particular to the case of Gabrić v. Croatia, no. 9702/04, 5 February 2009.
5. By a decision of 29 June 2011, the Ministry of Finance found the applicant guilty as charged. He was fined HRK 5,000 (approximately EUR 665 at the time). At the same time, the Ministry imposed a protective measure, confiscating EUR 20,000 in cash and EUR 98,495 in cheques. Two cheques of EUR 13,000 were returned to the applicant.
6. The applicant appealed challenging the confiscation measure but on 9 May 2012 the High Court for Minor Offences dismissed the appeal and upheld the Ministry’s decision.
7. The applicant then lodged a constitutional complaint alleging, inter alia, a violation of his constitutionally protected right of ownership.
8. By a decision of 15 September 2016, the Constitutional Court dismissed the applicant’s constitutional complaint, finding that, unlike in Gabrić, the applicant had not proved the lawful origin of the cash and cheques confiscated from him.
9. Before the Court the applicant complained, under Article 1 of Protocol No. 1 to the Convention, that the confiscation measure had been disproportionate, in that it imposed an excessive burden on him, thus violating his property rights.
THE COURT’S ASSESSMENT
10. The Government submitted that, in so far as the application concerned the confiscation of the cheques, Article 1 of Protocol No. 1 to the Convention was not applicable because the cheques lacked essential elements under domestic law and relevant international standards. In particular, on six out of seven confiscated cheques the payee’s name was omitted or was not fully specified. Moreover, only one of the confiscated cheques was dated. Lastly, none of the confiscated cheques specified the place at which they were drawn. For these reasons the confiscated cheques were non-collectable and thus did not have any economic value.
11. In the alternative, the Government argued that the applicant could not claim to be a victim of the violation complained of in relation to six confiscated cheques on which he was not specified as the payee.
12. The applicant replied that it was unclear why the Croatian authorities had seized the cheques if they had been worthless, as the Government claimed. Because the cheques had been drawn on Italian banks, they had indeed been worthless in Croatia but not in Italy.
13. The Court considers that, since the cheques were drawn on Italian banks, for the Government’s objection to be accepted, they should have demonstrated that the cheques were non-collectable under Italian law, which they did not do.
14. In this respect the Court further notes that Italy ratified the Geneva Convention Providing a Uniform Law for Cheques of 19 March 1931 and in 1933 adopted the relevant legislation on cheques (R.D. no 1736/1933). The Convention and the legislation both entered into force on 1 January 1934.
15. Articles 2 of that Convention and of the legislation provide that a cheque which does not specify the place at which it was drawn is deemed to have been drawn in the place specified beside the name of the drawer (the person who draws the cheque).
16. As regards the payee, the Court notes that the cheques were confiscated from the applicant and that Articles 5 of both the Convention and the legislation in question provide that a cheque which does not specify the payee is deemed to be a cheque to bearer.
17. As regards the date of issue, the Court notes that, because cheques must be presented for payment within rather short time-limits, they are in practice often given undated with an understanding that the payees can fill in the date themselves.
18. Against this background, the Court finds it difficult to accept the Government’s argument that the cheques confiscated from the applicant were non-collectable and thus did not have any economic value. Likewise, it cannot be said that the applicant could not claim to be a victim in respect of those cheques on which he was not specified as the payee. It follows that the Government’s objections regarding the inapplicability of Article 1 of Protocol No. 1 and the lack of the applicant’s victim status must be rejected.
19. The Court further notes that the application is not manifestly ill‑founded within the meaning of Article 35 § 3 (a) of the Convention or inadmissible on any other grounds. It must therefore be declared admissible.
20. The Court has already found a violation of Article 1 of Protocol No. 1 to the Convention in cases raising similar issues to the present one (see Gabrić, cited above; Boljević v. Croatia, no. 43492/11, 31 January 2017; and Imeri v. Croatia, no. 77668/14, 24 June 2021). Having examined all the material submitted to it, the Court has not found any fact or argument capable of persuading it to reach a different conclusion on the merits of the present application.
21. In particular, the domestic authorities first temporarily seized the undeclared cash and cheques from the applicant, the purpose of which was to enable them to determine whether he committed only the minor offence of failure to declare, or also a criminal offence such as money laundering. Even though they established in the minor offence proceedings that the applicant had failed to prove that the source of the cash and cheques and their intended use had been legitimate, no criminal proceedings were instituted against him for money laundering. It thus follows that the confiscation sanction (in addition to the fine) had been imposed on the applicant solely for his failure to declare the cash and cheques to customs, which is considered a less serious offence (see, mutatis mutandis, Imeri, cited above, § 91).
22. The maximum fine for the minor offence in question was HRK 50,000 (which was approximately EUR 6,645 at the time) and the applicant was fined HRK 5,000 (which was approximately EUR 665 at the time), that is, the minimum fine. Comparing the gravity of the applicant’s offence to the confiscation of EUR 20,000 in cash and EUR 98,495 in cheques, the Court finds that the confiscation measure was substantially disproportionate to the offence (see, mutatis mutandis, Imeri, cited above, § 93).
23. There has accordingly been a breach of Article 1 of Protocol No. 1 to the Convention.
APPLICATION OF ARTICLE 41 OF THE CONVENTION
24. The applicant claimed 20,000 euros (EUR) in respect of pecuniary damage and asked that the confiscated cheques be returned to him in kind. He also claimed accrued statutory default interest running from the date of seizure until the date of payment. The applicant also sought EUR 10,454.16 for costs and expenses incurred before the domestic courts and before the Court.
25. The Government contested these claims.
26. The Court notes that under Croatian law the applicant can now lodge a request for reopening of the minor offence proceedings in respect of which the Court has found a violation of Article 1 of Protocol No. 1 to the Convention, and that the State Attorney must lodge a request for the protection of legality if a judicial decision adopted in minor offence proceedings has entailed a violation of human rights (see, mutatis mutandis, Imeri, cited above, § 98).
27. Since the applicant, inter alia, asked that the confiscated cheques be returned to him in kind, the Court considers that in the present case the most appropriate way of redressing the violation found would be to reopen the proceedings complained of. The Court therefore rejects the applicant’s claim for pecuniary damage.
28. In so far as the applicant’s claim concerns the costs and expenses incurred in the domestic proceedings, the Court considers it reasonable to award the sum of EUR 850 for the costs incurred in the proceedings before the Constitutional Court, plus any tax that may be chargeable to the applicant. As regards the remainder of his claim for costs and expenses incurred before the domestic authorities, the Court is of the opinion that this claim must be rejected, given that the applicant will be able to have those costs reimbursed should the proceedings complained of be reopened (see Stojanović v. Croatia, no. 23160/09, § 84, 19 September 2013).
29. Lastly, the Court considers it reasonable to award EUR 1,400 for the Strasbourg proceedings, plus any tax that may be chargeable to the applicant.
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1. Declares the application admissible;
2. Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention;
(a) that the respondent State is to pay the applicant, within three months, EUR 2,250 (two thousand two hundred and fifty euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
4. Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 22 September 2022, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Liv Tigerstedt Péter Paczolay
Deputy Registrar President