Yordanov and Others v. Bulgaria

Last Updated on September 26, 2023 by LawEuro

Legal summary
September 2023

Yordanov and Others v. Bulgaria – 265/17 and 26473/18

Judgment 26.9.2023 [Section III]

Article 1 of Protocol No. 1
Article 1 para. 1 of Protocol No. 1
Peaceful enjoyment of possessions

Forfeiture of applicants’ assets as “unlawfully acquired” without specifying the prohibited conduct resulting in their acquisition or establishing any link between those assets and the conduct: violation

Facts – The applicants in both applications had assets forfeited under the Forfeiture of Unlawfully Acquired Assets Act of 2012 (“the 2012 Act”) which the domestic courts found to have been “unlawfully acquired”. That Act replaced the Forfeiture of Proceeds of Crime Act of 2005 (the 2005 Act), examined by the Court in Todorov and Others v. Bulgaria. It provided for the forfeiture of all “unlawful” assets and not necessarily proceeds of crime, as under the 2005 Act.

Law – Article 1 of Protocol No. 1:

(a) Existence of an interference, its lawfulness and legitimate aim – The forfeiture of the applicants’ assets had amounted to an interference with their rights under Article 1 of Protocol No. 1. As in Todorov and Others, the Court did not have to determine with finality whether that interference had fallen under the second paragraph of that provision (control of the use of property) or the second sentence of the first paragraph (deprivation of property). The interference had a basis in domestic law (the 2012 Act) which had pursued a legitimate aim in the public interest, namely to prevent the illicit acquisition of property through criminal or administrative offences.

(b) Proportionality – In Todorov and Others the Court had identified a number of deficiencies in the 2005 Act and the manner of its application which could, in many situations, impose an excessive burden on the defendants in forfeiture cases and that the balance in the proceedings had been tilted in favour of the State. The 2012 Act had retained a significant number of those deficiencies. Firstly, the list of predicate offences which could trigger forfeiture proceedings was still very wide and was comparable to that under the 2005 Act. Secondly, the scope of the 2012 Act was also wide as regards the periods it applied to. While it did not deal with assets acquired within twenty-five years as the 2005 Act, it provided for a period of ten years for the defendants to establish the lawfulness of their income and expenses which was still a significant duration. Moreover, the 2012 Act was applicable even where the predicate offences had been committed years before its entry into force. Indeed, that had been the case for the applicant in application no. 265/17.

As was the case with the 2005 Act, the Court found it reasonable to assume that the rather wide scope of the 2012 Act, coupled with its retroactive application, rendered the task of proving the lawful income source or origin of any assets difficult for the applicants. While every legal system recognised presumptions of fact or of law and the Convention did not prohibit such presumptions in principle, it could not be ignored that such a presumption in the instant case had operated in combination with difficulties for the applicants stemming from the Act’s wide scope.

Besides those deficiencies, the 2012 Act assumed that defendants in forfeiture proceedings had not only been implicated in unspecified criminal or unlawful activities, but that had been the case for many years. Indeed, it had removed the requirement contained in the 2005 Act to establish a link between the assets to be forfeited and the predicate offence which had been an important safeguard. Thus, forfeiture proceedings were detached from any criminal proceedings and their outcome. The Bulgarian Supreme Court, subsequent to the relevant facts of the present case, in its Interpretative Decision of 2018, had identified the need to maintain such a link, interpreting the 2012 Act as targeting property acquired through criminal behaviour and maintaining a link with the criminal proceedings. That finding, however, had been overturned by Parliament without any specific justification and engagement with that court’s reasoning. In particular, the new 2018 Act on Counteraction Against Corruption and Forfeiture of Unlawfully Acquired Assets that had repealed the 2012 Act, provided that the discontinuance of the criminal proceedings against defendants in forfeiture proceedings, including as a result of acquittal, would not preclude the forfeiture.

The Court therefore considered it appropriate to follow in the present case, in so far as possible, an approach similar to that established in in Todorov and Others which was based on its case-law on the forfeiture of proceeds of crime. Accordingly, for a forfeiture under the 2012 Act to comply with Article 1 of Protocol No. 1, it was essential, as a counterbalance to the potential deficiencies of that Act and the State’s advantage in the forfeiture proceedings, that the national courts ordering the forfeiture provided some particulars as to the offences, criminal or administrative, in which the assets subject to forfeiture were alleged to have originated and showed in a reasoned manner that there could be a link between such offences and the assets in question.

In the present case, in application no. 265/17, the national courts had found that the applicant had failed to prove the existence of any lawful income to justify the assets in question without discussing any criminal activity or an administrative offence which could have been the source of the assets or establishing a link between those assets and any such activity. Similarly, in application no. 26473/18, the national courts had concluded that the applicants had not proved sufficient lawful income to have acquired the assets subject to forfeiture without seeking to establish a link between them and the predicate offences, finding that that had not been a requirement of the 2012 Act.

Accordingly, even in the light of its readiness to defer to any national analysis, as far as it was not arbitrary or manifestly unreasonable, the required standard had not been met in the case at hand. A fair balance had not been struck and the interference with the applicants’ rights had been disproportionate.

Conclusion: violation (unanimously).

Article 41: Application no. 265/17: no claim made. Application no. 26473/18: EUR 3,000 in respect of non-pecuniary damage to each of the first two applicants; the remaining applicant’s claim under this head was dismissed. Claims for pecuniary damage dismissed.

(See also Todorov and Others v. Bulgaria, 50705/11 et al, 13 July 2021, Legal summary; Directive 2014/42/EU of the European Parliament and of the Council of 3 April 2014 on the freezing and confiscation of instrumentalities and proceeds of crime in the European Union)

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