SHOPOV AND OTHERS v. BULGARIA - 38398/11 (Judgment : Article 1 of Protocol No. 1 - Protection of property : Third Section Committee) [2023] ECHR 122 (09 February 2023)

JUDGMENT STRASBOURG 9 February 2023 This judgment is final but it may be subject to editorial revision. In the case of Shopov and Others v. Bulgaria, The European Court of Human Rights (Third Section), sitting as a Committee composed of: Darian Pavli , President , Ioannis Ktistakis, Andreas Zünd , judges , and Viktoriya Maradudina, Deputy Section Registrar, Having deliberated in private on 19 January 2023, Delivers the following judgment, which was adopted on that date: PROCEDURE 1. The case originated in applications against Bulgaria lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on the various dates indicated in the appended table. 2. The Bulgarian Government (“the Government”) were given notice of the applications. THE FACTS 3. The list of applicants and the relevant factual details of the case are set out in the appended table. 4. The applicant s complained of the forfeiture of their assets alleged to be the proceeds of crime . THE LAW I. JOINDER OF THE APPLICATIONS 5. Having regard to the similar subject matter of the applications, the Court finds it appropriate to examine them jointly in a single judgment. II. ALLEGED VIOLATION OF ARTICLE 1 of Protocol No. 1 6. The applicants complained of the forfeiture of their assets alleged to be the proceeds of crime. They relied, expressly or in substance, on Article 1 of Protocol No. 1. 7. The Government, without providing any further details, invited the Court to decide the cases on the basis of the leading judgment Todorov and Others v. Bulgaria (nos. 50705/11 and 6 others, 13 July 2021). 8. That judgment concerned the forfeiture of alleged proceeds of crime under the same legislation as applied in the case at hand, namely the Forfeiture of Proceeds of Crime Act 2005 (hereinafter “the 2005 Act”). 9. In Todorov and Others (cited above, §§ 200-09) the Court identified some potential flaws in the 2005 Act and in the manner in which it had been applied. It highlighted in this respect the combined effect of the wide scope of its application - as to predicate crimes and as to the periods for which the defendants’ revenues and expenses were being checked, the difficulties for defendants to prove what the courts considered “lawful” income during such a period, marked, moreover, by inflation and economic changes, and the presumption that any asset not shown to have had a “lawful” provenance was the proceed of crime. The Court’s position was that, while these potential flaws were not sufficient to render each forfeiture under the 2005 Act contrary to Article 1 of Protocol No. 1, they certainly placed a considerable burden on defendants in forfeiture proceedings and could tilt the balance in favour of the State. Thus, as a counterbalance and a guarantee of the applicants’ rights, it was crucial that the national courts established a causal link between the assets for which forfeiture was being sought and the criminal conduct of the defendants. The Court was prepared to defer to the national courts’ assessment as to the existence of such a link, in so far as it was not arbitrary or manifestly unreasonable (ibid., §§ 210-16). 10. Applying these requirements to the specific cases examined in the leading judgment, the Court found a violation of Article 1 of Protocol No. 1 in those of them where the national courts had failed to justify the existence of the causal link defined above, and had ordered forfeiture relying merely on the presumption contained in the 2005 Act and on discrepancies between the applicants’ expenses and their “lawful” income during the relevant periods (see §§ 217-50 of the judgment). 11. The applications under examination are similar. In particular, in ordering the forfeiture of the applicants’ assets the national courts did not attempt to justify the causal link required by the Court, adopting instead of that the same flawed approach that was criticised by it in the cases examined in Todorov and Others . The Court thus sees no reason to reach a conclusion different than the one in these cases. 12. These complaints are therefore admissible and disclose a breach of Article 1 of Protocol No. 1. III. APPLICATION OF ARTICLE 41 OF THE CONVENTION 13. Article 41 of the Convention provides: “If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.” 14. In respect of pecuniary damage, all applicants claimed the value of their forfeited assets. They submitted different documents in support of these claims, including property valuations. 15. The applicants in application no. 38398/11 submitted that, in the alternative, the Court could indicate to the parties that the national authorities were to reopen the domestic proceedings and re-examine the forfeiture claims in compliance with the requirements of Article 1 of Protocol No. 1. The applicants in application no. 59983/12 , on the other hand, urged the Court not to take that approach. They argued that such a procedural path would be ineffective, in particular because the re-examination of the case at the domestic level would be lengthy and costly. 16. The Government urged the Court to reject the claims for pecuniary damage. 17. The Court is not in a position to speculate on whether the applicants’ forfeited assets were or were not the proceeds of crime, namely whether the forfeiture was or was not justified, and otherwise on the possible outcome of the forfeiture proceedings, had the requirements of Article 1 of Protocol No. 1 been met. The Court cannot thus determine any pecuniary damage which the applicants might have suffered as a result of unjustified forfeiture. Accordingly, it dismisses the applicants’ claims in respect of pecuniary damage and reiterates, as in Todorov and Others (cited above, §§ 320‑22), that the most appropriate means to remedy the violation is the reopening of the domestic proceedings and the re-examination of the matter by the domestic courts, in compliance with the requirements of Article 1 of Protocol No. 1. 18. As to non-pecuniary damage, the applicants claimed compensation ranging between 5,000 and 40,000 euros (EUR). The Court, taking note of the circumstances of the case, awards them the amounts indicated in the appended table. 19. As to applicants’ claims for costs, the Court observes that, already when communicating applications to the Government, it drew the applicants’ attention to the fact that it might follow the approach taken in Todorov and Others (cited above). As mentioned, in that case it rejected the applicants’ claims for pecuniary damage and instructed the applicants to seek the re-examination of their cases at the domestic level. That being so, the Court finds that the costs incurred in applications nos. 38398/11 and 59983/12 for the valuation of the applicants’ forfeited assets were unnecessary. As to the remaining heads of cost and expenses, the Court, taking into account the circumstances of the case and in particular its repetitive character, finds it appropriate to award the sums indicated in the appended table. FOR THESE REASONS, THE COURT , UNANIMOUSLY, 1. Decides to join the applications; 2. Declares the applications admissible; 3. Holds that these applications disclose a breach of Article 1 of Protocol No. 1 concerning the forfeiture of alleged proceeds of crime; 4. Holds (a) that the respondent State is to pay the applicants, within three months, the amounts indicated in the appended table, to be converted into the currency of the respondent State at the rate applicable at the date of settlement; (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; 5. Dismisses the remainder of the applicants’ claims for just satisfaction. Done in English, and notified in writing on 9 February 2023, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Viktoriya Maradudina Darian Pavli Acting Deputy Registrar President APPENDIX List of applications raising complaints under Article 1 of Protocol No. 1 (forfeiture of alleged proceeds of crime) No. Application no. Date of introduction Applicant’s name Year of birth/ registration Representative’s name and place of practice Predicate offence Period for which the applicant’s income and expenses were checked Forfeited assets Reasons given by the courts Final decision in the forfeiture proceedings Amount awarded for non-pecuniary damage (in euros) [1] Amount awarded for costs and expenses (in euros) [2] 38398/11 06/06/2011 Dobrin Nikolov SHOPOV Mariyka Miteva SHOPOVA Emilia Nedeva Plovdiv Final judgment of 2 July 2007 Sliven Regional Court: the first applicant was convicted of pimping and coercion, offences committed between 2001 and 2005; he was sentenced to 11 months’ imprisonment and a fine. 1 January 1982 - 31 December 2006 One-half of a flat, a house with a plot of land in Sliven, bought in 1999; agricultural land in the area of Sliven, bought in 2006; a car; sums of money received from the sale of immoveable property and cars; money in bank accounts of the first applicant. According to the Commission for Uncovering Proceeds of Crime, the total value of the above assets was BGN 329,770 (EUR 167,000). The first applicant did not have any declared employment and revenues during the period; the second applicant had been employed for about 7 years in total. The first applicant had travelled often abroad. The applicants had incurred substantial expenses - daily expenses, for travel and for the acquisition of assets. The applicants claimed to have received loans from private persons; this was not however sufficiently proven, and in addition they had to establish that they had reimbursed the loans with lawful income; it was moreover difficult to accept that during the entire period the applicants had lived off loans. It was not necessary to establish a causal link between any criminal activity and the assets to be forfeited, seeing that the defendants had not proven the lawful provenance of these assets. 31 January 2011 - decision of the Supreme Court of Cassation 3,000 per applicant 2,000 59983/12 03/09/2012 (4 applicants) Stoyan Trayanov KRASTEV Svetoslav Stoyanov KRASTEV FLAMINGO-585 EOOD FLAMINGO - 1 EOOD Mihail Ekimdzhiev, Katina Boncheva, Snezhana Stefanova Plovdiv Final judgment of the Supreme Court of Cassation of 4 October 2006: the first applicant was convicted for illegal possession of large quantities of drugs with intent to sell. The offence had been committed in February 1999. 25 November 1984 - 16 May 2002 Several flats and houses in Pernik and Sofia, buildings with industrial and commercial use, plots of land, several cars, the first applicant’s shares in the applicant companies, sums of money from the sale of further immoveable properties, cars and shares in companies. According to the Commission for the Uncovering Proceeds of Crime, those assets’ total value was BGN 977,857 (EUR 500,180). During the period under examination the applicants had an income equalling 2,152 minimum monthly salaries, whereas their expenses, including for the acquisition of properties, equalled 18,244 minimum monthly salaries. The applicants claimed to have received loans and income from gambling, but that was not sufficiently proven. Moreover, loans were to be repaid, and the applicants had not had any lawful income to do that. Under section 4 of the 2005 Act, the failure to prove the lawful provenance of the assets for which forfeiture was being sought meant that these assets were the proceeds of crime. Final decision of Supreme Court of Cassation of 27 March 2012. 3,000 per applicant - physical person 2,000 16753/18 28/03/2018 Svetlana Andreeva NENKOVA Plea agreement approved by the Razgrad Regional Court on 21 January 2009 - the applicant’s ex-husband was convicted for drug trafficking committed in 2008. 1991-2010 (concerning the applicant’s ex-husband); he and the applicant married in 2002. A flat in Varna bought by the applicant and her ex-husband in 2003 for BGN 161,500 (EUR 82,600); according to the applicant, the down payment of BGN 68,000 was made with her own money, and the rest was ensured through a bank loan, which she alone was paying back. After the divorce in 2006 the applicant lived in the flat with her children. In 2016 she obtained a court judgment recognising her as the sole owner. In 2019 the flat was put up by the State for public sale. While the applicant’s ex-husband had proven sufficient income to acquire different assets in earlier periods, he and the applicant had not established such income between 2002 and 2010; they had thus not shown that they had had money to make the down payment in 2003 or to pay the subsequent instalments of the bank loan. It could thus be assumed that the flat had been bought with money accumulated through the ex-husband’s criminal activity. 6 October 2017 - decision of the Supreme Court of Cassation 3,000 - [1] Plus any tax that may be chargeable to the applicants. [2] Plus any tax that may be chargeable to the applicants. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII