FIFTH SECTIONCASE OF DOVBYSHEV v. UKRAINE(Application no. 68447/12)      JUDGMENT STRASBOURG30 November 2023 This judgment is final but it may be subject to editorial revision.In the case of Dovbyshev v. Ukraine,The European Court of Human Rights (Fifth Section), sitting as a Committee composed of: Mārtiņš Mits, President, María Elósegui, Kateřina Šimáčková, judges,and Martina Keller, Deputy Section Registrar,Having regard to:the application (no. 68447/12) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 9 October 2012 by a Ukrainian national, Mr Dmytro Oleksandrovych Dovbyshev (“the applicant”), who was born in 1978 and lives in Odesa;the decision to give notice of the application to the Ukrainian Government (“the Government”), represented by their Agent, most recently Ms Marharyta Sokorenko;the parties’ observations;Having deliberated in private on 9 November 2023,Delivers the following judgment, which was adopted on that date:SUBJECT MATTER OF THE CASE1. The present case concerns the applicant’s complaint that an increase in the licence fees for his gambling business was in breach of Article 1 of Protocol No. 1.2. In 2003 the applicant started a gambling business and obtained the necessary licences (торгові патенти). The annual rates for the gambling licences were provided for in the Licensing of Certain Kinds of Entrepreneurial Activities Act (Про патентування деяких видів підприємницької діяльності – “the Licensing Act”). The rates were increased twice, on 27 November 2003 and 23 December 2004, by the State Budget Acts for 2004 and 2005 respectively. The applicant paid the difference. In 2006 he closed his gambling business and initiated court proceedings, arguing that the increase in the licence fees had been unlawful and unforeseeable and seeking a refund for the extra payments.3. On 24 July 2007 the Odesa Regional Commercial Court ordered the local authorities to return the difference which had resulted from the increased rates, as requested by the applicant. It referred to section 7(2) of the Taxation System Act, which provided that tax rates could not be changed by the State Budget Acts, and to Article 27 § 3 of the Budget Code, which provided that any law affecting income or expenses of the public budgets had to be published before 15 August of the preceding year, otherwise its effect had to be deferred for one year.4. On 27 May 2009 the Odesa Administrative Court of Appeal quashed the above-mentioned decision and dismissed the applicant’s claim as unfounded. It reasoned that the State Budget Acts for 2004 and 2005 had been valid, as they had not been declared unconstitutional. It held that the rules of the State Budget Acts prevailed over the rules cited by the first-instance court. Moreover, given that the applicant had not made a full payment in advance covering the entire period of validity of the gambling licences, he could not benefit from a special guarantee provided for in section 5(5) of the Licensing Act entitling certain licence holders to retain the original rate.5. On 19 April 2012 the Higher Administrative Court upheld the decision of the appellate court.THE COURT’S ASSESSMENTALLEGED VIOLATION OF ARTICLE 1 of Protocol No.1 TO THE CONVENTION6. The applicant complained that the increase in the gambling licence fees had been unforeseeable and contrary to the principle of legal certainty.7. The Court notes that this complaint 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.8. The general principles applicable to interference by a public authority with the peaceful enjoyment of possessions can be found in, for instance, Shchokin v. Ukraine (nos. 23759/03 and 37943/06, §§ 50-52, 14 October 2010) and Serkov v. Ukraine (no. 39766/05, §§ 33-36, 7 July 2011).9. The parties agreed that the requirement for the applicant to pay extra fees for the licences had amounted to an interference with his rights under Article 1 of Protocol No. 1 to the Convention, but disagreed as to whether that interference had been lawful and proportionate.10. The Court reiterates that the principle of lawfulness presupposes that the applicable provisions of domestic law are sufficiently accessible, precise and foreseeable in their application (see Beyeler v. Italy [GC], no. 33202/96, § 109, ECHR 2000-I).11. In the present case, the new licence fees were introduced in the State Budget Acts for 2004 and 2005, whereas section 7(2) of the Taxation System Act provided that tax rates could not be changed by the State Budget Acts. Moreover, the new rates were introduced later than 15 August of the preceding year, that is, after the time-limit provided for in Article 27 § 3 of the Budget Code.12. The Government subscribed to the appellate court’s finding that the State Budget Acts had been valid, as they had not been declared unconstitutional and that they had constituted a special law which prevailed over the Taxation System Act and the Budget Code. The Court, however, notes that neither the appellate court nor the court of cassation commented on section 7(2) of the Taxation System Act, which provided that tax rates could not be changed by the State Budget Acts. The Government did not comment on that issue either, despite citing section 7(2) of the Taxation System Act in their observations.13. It appears that the changes introduced by the State Budget Acts contradicted the legislation in force and created an inconsistency, offering the national courts the opportunity to interpret the relevant conflicting legal acts at their discretion. In this connection, the Court cannot overlook the requirement of section 4.4.1 of the Taxpayer Liability Act, which provided that if domestic legislation offered ambiguous or multiple interpretations of the rights and obligations of taxpayers, the domestic authorities were obliged to take the approach which was more favourable to the taxpayer (see Shchokin, § 57, and Serkov, § 43, both cited above), whereas the national courts applied the conflicting legal provisions to the applicant’s detriment. Lastly, the Court refers to the conclusion of the State Committee on Regulatory Policy and Entrepreneurship (letters nos. 250 and 2628 of 17 January 2004 and 11 April 2005 respectively) that the requirement of the State tax authorities for the entrepreneurs to pay extra fees for the licences in 2004 and 2005 had contradicted the legislation in force and that section 7 of the Taxation System Act had forbidden an increase in fees by way of the provisions of a State Budget Act.14. The Court concludes that the interference with the applicant’s property rights was not lawful and foreseeable.15. The applicant claimed 558,029.85 Ukrainian hryvnias (UAH) (equivalent to 81,689.18 euros (EUR)) in respect of pecuniary damage, corresponding to the extra amount he had paid for the gambling licences and which he had claimed before the national courts, and EUR 5,000 in respect of non-pecuniary damage. The applicant also claimed UAH 1,717 (approximately EUR 251.35) and UAH 1,734 (approximately EUR 162.99) as compensation for the court fees incurred before the first-instance court and the court of cassation and EUR 7.75 for postal expenses.17. The Government objected to those claims, submitting that they were unsubstantiated and reiterating their position that there had been no violation of the applicant’s rights. They left the claim for postal expenses to the Court’s discretion.18. The Court notes that the applicant claimed the same amount which he had claimed before the national courts and that the Government did not raise any objections as to its calculation. Given that the Court considers that the reparation of the violation found should entail the reimbursement of the extra fees, it awards the applicant EUR 81,689.18 in respect of pecuniary damage, plus any tax that may be chargeable. In addition, it awards the applicant EUR 750 in respect of non-pecuniary damage, plus any tax that may be chargeable.19. Having regard to the documents in its possession, the Court considers it reasonable to award EUR 422.09 for costs and expenses in the domestic proceedings and postal expenses, plus any tax that may be chargeable to the applicant.

Outcome for Article P1-1: violation