SECOND SECTION
CASE OF RADELIĆ v. CROATIA
(Application no. 12432/22)
 
 
JUDGMENT
 
Art 1 P1 • Peaceful enjoyment of possessions • Proceeds of crime acquired by a company, which went bankrupt and ceased to exist, confiscated from its director and sole shareholder found guilty of the criminal offence of business fraud with the intent of acquiring illegal gain for the company’s benefit • Penal Code did not provide for confiscation of proceeds of crime from the perpetrator if acquired for the benefit of another person (natural or legal) • Imposition of the confiscation measure not foreseeable under domestic law and inconsistent with the nature of the offence he was convicted of • Interference not “provided for by law”
 
Prepared by the Registry. Does not bind the Court. STRASBOURG
13 May 2025
 
FINAL
 
15/09/2025
 
This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Radelić v. Croatia,
The European Court of Human Rights (Second Section), sitting as a Chamber composed of:
 Arnfinn Bårdsen, President,
 Saadet Yüksel,
 Jovan Ilievski,
 Anja Seibert-Fohr,
 Davor Derenčinović,
 Stéphane Pisani,
 Juha Lavapuro, judges,
and Hasan Bakırcı, Section Registrar,
Having regard to:
the application (no. 12432/22) 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”) by a Croatian national, Mr Dražen Radelić (“the applicant”), on 24 February 2022;
the decision to give notice to the Croatian Government (“the Government”) of the complaint concerning the confiscation of proceeds of crime and to declare inadmissible the remainder of the application;
the parties’ observations;
Having deliberated in private on 4 March and 1 April 2025,
Delivers the following judgment, which was adopted on that date:
INTRODUCTION
1. The application concerns a situation where proceeds of crime had been acquired by a company but were ordered to be confiscated from the individual perpetrator of the criminal offence – the sole shareholder and director – because the company had gone bankrupt and ceased to exist. THE FACTS
2. The applicant was born in 1973 and lives in Split. He was represented by Mr T. Vukičević, a lawyer practising in Split. 3. The Government were represented by their Agent, Ms Š. Stažnik. 4. The facts of the case may be summarised as follows. 5. The applicant was the sole shareholder and director of a limited liability company, Radelić d.o.o. (hereinafter “the company”). 6. On 12 November 2010 the Split Commercial Court (Trgovački sud u Splitu) opened bankruptcy proceedings against the company, which were concluded on 12 December 2010. On 4 March 2011 the company was struck off (removed from) the register of commercial companies and thereby ceased to exist. Criminal proceedings
7. On 4 March 2011 the Split Municipal State Attorney’s Office (Općinsko državno odvjetništvo u Splitu) indicted the applicant before the Split Municipal Court (Općinski sud u Splitu) for the criminal offences of business fraud and forgery of documents (see paragraph 22 above). The indictment alleged that between 27 August 2003 and 26 February 2004 he had – intending to obtain significant pecuniary gain for the company – presented thirty-six cheques from foreign banks to a bank to be cashed, falsely claiming that they had been issued as payment for services rendered by it abroad. 8. By a judgment of 1 April 2014 the Split Municipal Court found the applicant guilty of forgery of documents and sentenced him to one and a half years’ imprisonment. The court suspended the sentence (uvjetna osuda) for four years on condition that he committed no further offences during that period. It acquitted him of the charge of business fraud. 9. Following appeals by both parties, the Split County Court (Županijski sud u Splitu), by a judgment of 7 October 2014, dismissed the applicant’s appeal and upheld the first-instance judgment in the part concerning his conviction for forgery of documents. It allowed the appeal by the Municipal State Attorney’s Office, quashed the first-instance judgment in the part concerning the applicant’s acquittal for business fraud and remitted the case to the Split Municipal Court for a retrial. 10. By a judgment of 13 April 2017 the Split Municipal Court found the applicant guilty of business fraud and sentenced him to one year’s imprisonment, suspended for four years on condition that he committed no further offences during that period. In addition, the court ordered that 854,743.39 Croatian kunas (HRK – equivalent to 113,440 euros (EUR)) be confiscated from him as proceeds of crime and paid into the State budget within six months of the judgment becoming final. If he failed to do so, his suspended sentence would be revoked and replaced with imprisonment. The relevant part of the judgment reads as follows:
“Article 77 of the 2011 Penal Code prescribes that no one may retain the proceeds of crime, so the proceeds must be confiscated. Bearing in mind that the company Radelić d.o.o. has in the meantime been struck off the register of commercial companies and has no legal successor, the said proceeds must be confiscated from the accused, who was the sole founder and shareholder of the company and also the person authorised to represent the company individually and independently and thus to dispose of the funds from the company’s account. Therefore ... the court imposes on the accused the obligation to pay the proceeds of the crime into the State budget ... as a particular condition, for which the suspended sentence may be revoked if he fails to comply with this obligation without good reason.”
11. The applicant lodged three appeals against that judgment. In his appeal of 29 May 2017 he complained, inter alia, about the imposition of the confiscation order in the following terms:
“... the contested judgment is also unlawful in the part concerning confiscation of the proceeds of crime from the accused and the imposition of an obligation on him to pay HRK 854,743.39 into the State budget. It is undisputed that that amount was paid into the account of the commercial company Radelić and not for the benefit of the accused as a natural person. The company paid all taxes and duties on that amount and used it for [its] day-to-day operations. The accused did not benefit from that amount. Therefore, there is no basis to return that ‘benefit’, that is, to pay it into the State budget.”
12. In its response, the Municipal State Attorney’s Office opposed the applicant’s appeals and argued that the first-instance judgment should be upheld. 13. On 28 September 2017 the applicant’s appeals and the response of the Municipal State Attorney’s Office were examined by a panel of the Split County Court. At the hearing, a representative of the Split County State Attorney’s Office (Županijsko državno odvjetništvo u Splitu) argued that the applicant’s appeals should be allowed and the first-instance judgment quashed for serious breaches of the rules of criminal procedure. 14. By a judgment adopted the same day, the Split County Court dismissed the applicant’s appeals and upheld the first-instance judgment. It held as follows:
“... the decision on the confiscation of the proceeds of crime and the decision [that the suspended sentence would be revoked if the accused did not pay the amount subject to confiscation into the State budget] ... are correct and lawful and based on correctly established facts and on the undisputable fact that the accused, based on the cashed forged cheques, kept for his company Radelić d.o.o. ... the total amount of HRK 854,743.39, thus damaging the unidentified holders of the right to collect the amounts of the cheques in question. The accused incorrectly points out in the appeal that the court should not have decided to confiscate this amount from him personally because he had never cashed the cheques for his own benefit, and that this was instead done by the company Radelić d.o.o., and that the illegal pecuniary gain should thus only be confiscated from that company and not from him personally. At the same time, the accused points out that, according to the charges, everything had been done through the company’s account and for the benefit of the company Radelić d.o.o. Contrary to the accused’s appeal arguments, the first-instance court correctly relied on the fact that the company Radelić d.o.o. had been struck off the register of commercial companies in 2011 or 2012 after which, in 2008, as he states, the accused founded a new company, which he still uses today for business purposes and which also founded another new company. In such circumstances, from which it follows that the company Radelić d.o.o. has been struck off the register of commercial companies and has no legal successor, the first‑instance court correctly decided that the pecuniary gain illegally obtained by the company Radelić d.o.o. through the criminal actions of the accused should be confiscated from the accused, as the sole founder and shareholder of that company. In particular, this type of obligation of the accused is derived, mutatis mutandis, from section 252(5) of the Commercial Companies Act ... according to which a member of a company’s management board who grossly violates the duty of care and diligence of a prudent businessman is held liable to the creditors of that company for the damage if they cannot satisfy their claims against the company, a provision which was in force at the time of the commission of the criminal offence and has not been substantially changed by subsequent amendments ... Since the accused’s obligation to compensate the injured parties is prescribed by law in such instances, the first-instance court’s decision to confiscate from the accused the proceeds obtained for his company through the criminal offence committed by the accused ... is justified by analogy.”
15. In a letter dated 6 November 2017 the Split County State Attorney’s Office proposed to the Principal State Attorney that a request for the protection of legality (zahtjev za zaštitu zakonitosti) be lodged with the Supreme Court (Vrhovni sud Republike Hrvatske) for the benefit of the applicant because the first-instance and appellate courts had misapplied the law to his detriment. It argued that he should not have been convicted of either of the two offences of which he had been found guilty (see paragraphs 8-10 and 14 above) and that, in any event, the confiscation order was contrary to the law. The relevant part of the letter concerning the confiscation of the proceeds of crime reads as follows:
“... if in the indictment the accused was charged with obtaining an illegal pecuniary gain for his commercial company through business fraud, then it was against the law to order that the proceeds of crime be confiscated from him as a natural person because he was not put on trial for having obtained the gain for himself, and no evidence was presented in support of the conclusion that this gain was transferred to him directly. In a situation where the company Radelić d.o.o. was in the meantime liquidated, [which means] that confiscating the proceeds of crime from the company [itself] is out of the question, the court should have ordered the perpetrator of the criminal offence to compensate the victims for the damage [sustained] ... However, the court could not have ordered the accused to pay damages because in the present case it never had an injured party, and no one made a civil claim ... This is precisely why the court, because there was no civil claim of the injured party ... unjustifiably sought to confiscate the proceeds of crime from the accused ... even though the proceeds were obtained for the ... company, which is a clear contradiction. The County Court’s arguments that the accused, as the founder of the company, had been paid the company’s profits and thus benefited from the criminal offence are legally wrong because [he] was not accused of transferring any of the proceeds of crime to himself, either through the company’s profits or in any other way. If the accused’s company paid corporate income tax from those proceeds, is the State also unjustly enriched in the relevant part, and should it return that part to the ‘unidentified’ injured party? In addition, appellate courts do not have the right to establish facts beyond what was determined by the trial court and thereby save the first-instance judgments [from being quashed], as has happened here.
... Had the accused been convicted of damaging his ... [own] company, which has since been liquidated and thus could not make a civil claim, or if he was convicted of ordinary fraud ... with the argument that he used the company only as a cover for transferring illegal gains from [the company as] the injured party/victim to himself, then it would have been possible to order the confiscation of the proceeds of crime from the accused personally, but [in that case] ... he would have been tried for another criminal offence, such as embezzlement or abuse of trust in business operations ... to the detriment of the company, or for ordinary fraud ... to the detriment of banks or cheque drawers ... The essential difference between business and ordinary fraud lies not only in the capacity of the perpetrator ... but also in for whom the proceeds of crime are being acquired. [Therefore,] the rules on the confiscation of proceeds of crime cannot be applied arbitrarily to the detriment of the accused.”
16. The Principal State Attorney never lodged the proposed request for the protection of legality. 17. On 28 November 2017 the applicant lodged a constitutional complaint against the Split County Court’s judgment of 28 September 2017. As regards the confiscation order, he repeated, verbatim, the arguments advanced in his appeal of 29 May 2017, and relied on Article 48 of the Constitution guaranteeing the right of ownership (see paragraphs 11 above and 21 below). 18. By a decision of 6 October 2021 the Constitutional Court (Ustavni sud Republike Hrvatske) dismissed the applicant’s constitutional complaint, finding, inter alia, that the confiscation of the proceeds of crime from him personally was not in breach of his right of ownership. The applicant’s representative was notified of that decision on 25 October 2021. Enforcement proceedings
19. By letters of 26 October 2017 and 18 June 2021 the Split Municipal Court invited the applicant to pay the amount subject to confiscation into the State budget. On 21 November 2022 the Municipal Court informed the Split Municipal State Attorney’s Office that he had failed to do so. 20. On 17 January 2023 the Split Municipal State Attorney’s Office applied for enforcement of the confiscation order to the domestic payments agency FINA, asking it to collect an amount equivalent to the proceeds of crime (see paragraph 10 above) from the applicant’s bank accounts and transfer into the State budget. It would appear that the confiscation order has remained unenforced owing to insufficient funds in his bank accounts. RELEVANT LEGAL FRAMEWORK AND PRACTICE
THE CONSTITUTION
21. The relevant provisions of the Constitution (Ustav Republike Hrvatske, Official Gazette no. 56/90, with subsequent amendments) read as follows:
Article 48
“The right of ownership shall be guaranteed. Ownership implies duties. Owners and users of property shall contribute to the general welfare.”
Article 50
“Ownership may be restricted or taken in accordance with the law, and in the interest of the Republic of Croatia, subject to payment of compensation equal to its market value. The exercise ... of the right of ownership may, on an exceptional basis, be restricted by law for the protection of the interests and security of the Republic of Croatia, nature, the environment or public health.”
Article 31 § 1
“No one shall be punished for an act which, before it was committed, was not defined as a criminal offence by [national] law or international law, nor may a penalty be imposed which was not prescribed by law. If, subsequent to the commission of the offence, the law prescribes a more lenient penalty, such a penalty shall be imposed.”
Penal CodeRelevant provisions

22. The relevant provisions of the Penal Code (Kazneni zakon, Official Gazette no. 125/11, with subsequent amendments), which was applied in the applicant’s case, read as follows:
CHAPTER I
BASIC PROVISIONS
Principle of legality
Article 2
“No one shall be punished for an act which, before it was committed, was not defined as a criminal offence by [national] law or international law, nor can a penalty or other criminal sanction be imposed which was not prescribed by law.”
Principle of the confiscation of proceeds of crime
Article 5
“No one shall be permitted to retain the pecuniary gain acquired through an unlawful act [proceeds of crime].”
CHAPTER IV
PENALTIES
Types of penalties
Article 40 § 1
“Penalties are fines, imprisonment and long-term imprisonment.”
CHAPTER VI
CONFISCATION OF PROCEEDS OF CRIME, CONFISCATION OF THE OBJECTS OF THE OFFENCE AND PUBLICATION OF JUDGMENTS
Conditions and means of the confiscation of proceeds of crime
Article 77
“(1) Proceeds of crime shall be confiscated by a court decision establishing that an unlawful act has been committed. Proceeds of crime shall also be confiscated from the person to whom they were transferred, if they were not acquired in good faith. (2) If the injured party has been awarded a civil claim which, by its nature and substance, corresponds to the acquired proceeds of crime, the part of the proceeds of crime exceeding the awarded civil claim shall be confiscated. (3) The court shall confiscate the proceeds of crime even if it has instructed the injured party to pursue his or her civil claim in civil proceedings. (4) Where it has been established that full or partial confiscation of objects or rights acquired as proceeds of crime is impossible, the court shall order the perpetrator to pay an amount equivalent to their value. It may order payment in instalments. (5) The confiscated proceeds of crime shall not be reduced by the amount of funds invested in the criminal activity. (6) The court may decide not to confiscate the proceeds of crime if they are negligible.”
Statute of limitations for the execution of security measures, confiscation of proceeds of crime and confiscation of objects [of the offence]
Article 85 § 4
“The enforcement of ... [a decision on] the confiscation of proceeds of crime is not subject to the statute of limitations.”
Business fraud
Article 247
“(1) Whoever, in business transactions, with the intent of acquiring an unlawful pecuniary gain for a legal entity he or she is representing or for another legal entity, misleads another by misrepresenting or concealing facts, or keeps another in error and thereby makes him or her do or refrain from doing something to the detriment of his or her property or another’s property, shall be punished by imprisonment from six months to five years. (2) If the criminal offence referred to in paragraph 1 of this Article resulted in considerable loss, the perpetrator shall be punished by imprisonment from one to ten years.”
Forgery of documents
Article 278
“(1) Whoever makes a false document or alters a genuine one with the aim of using it as genuine, or who obtains such a document for the purpose of using it or uses it as genuine, shall be punished by imprisonment of up to three years. (2) The penalty referred to in paragraph 1 of this Article shall be imposed on anyone who misleads another as to the content of a document and has the latter sign this document believing that they are signing another document or different content. (3) Whoever commits the criminal offence referred to in paragraph 1 or 2 of this Article with respect to a public document, testament, bill of exchange, cheque, payment card or public or official record required to be kept by law, shall be punished by imprisonment from six months to five years. (4) An attempt to commit the criminal offence referred to in paragraphs 1 and 2 of this Article shall also be punishable.”
Relevant case-law
23. In a number of cases, the Supreme Court held that proceeds of crime could not be confiscated from the perpetrator if the unlawful pecuniary gain had not been acquired for the benefit of the perpetrator, but, for example, for the benefit of a company (see, for example, decision Kž 420/13-6 of 4 February 2016 concerning abuse of office in business transactions, and judgments Kzz 14/14-4 of 11 February 2016, Kž 2/2016-9 of 30 June 2020 and Kr 36/2021-6 of 23 December 2021, all of which concerned business fraud). COMMERCIAL COMPANIES ACT
24. The relevant provisions of the Commercial Companies Act (Zakon o trgovačkim društvima, Official Gazette no. 111/93, with subsequent amendments), as in force at the material time, read as follows:
Liability of company members
Section 10
“(1) ... (2)  Members of a limited liability company ... are not liable for the company’s obligations unless otherwise provided by this Act. (3)  Whoever abuses the fact that, as a member of a company, he or she is not liable for the company’s obligations, may not rely on not being liable for those obligations under the law. (4)  The requirement for the liability of members of the company referred to in paragraph 3 is considered to have been met, particularly if:
1. they use the company to achieve a goal that is otherwise prohibited to them;
2. they use the company to damage creditors;
3. contrary to the law, they manage the assets of the company as if they were their own;
4. they reduce the company’s assets for their own benefit or for the benefit of another person, even though they knew or must have known that the company would not be able to meet its obligations.”
Duty of care and liability of management board members
Section 252
“(1)  Management board members shall run the company’s affairs with the care and diligence of a prudent businessman and keep the company’s business secrets. [They] shall not act contrary to [this] obligation ... if, when making a business decision, [they] can reasonably assume, on the basis of appropriate information, that [they are] acting for the benefit of the company. (2)  Management board members who breach their obligations shall be jointly and severally liable for the damage [caused] to the company. In the event of a dispute, [they] shall prove that they have acted with the care and diligence of a prudent businessman. (3)  Management board members shall, in particular, be liable for the damage if they, contrary to this Act:
1. return to the shareholders what they have invested in the company;
2. pay interest or dividends to shareholders;
3. register, acquire, pledge or withdraw the company’s own shares or those of another company;
4. issue shares before the amount for which they were issued is paid in full;
5. distribute the company’s assets;
6. make payments after the company becomes insolvent or overly indebted;
7. pay remuneration to members of the supervisory board;
8. give a loan;
9. in the case of a conditional capital increase, issue shares contrary to the purpose or before they are paid in full. (4)  ... (5)  A claim for compensation can also be made by the company’s creditors if they cannot satisfy their claims against the company. This applies in cases other than those referred to in paragraph 3 only if a management board member grossly violates the duty of care and diligence of a prudent businessman. With respect to the company’s creditors, the obligation to compensate the damage may not be removed by the company waiving the claim or by settlement of the claim, or by the fact that the action was based on a decision of the general meeting [of shareholders]. If bankruptcy proceedings have been opened against the company, the right of the company’s creditors against the management board members is, during the course of those proceedings, exercised by the bankruptcy administrator. (6)  The claims referred to in the previous paragraphs of this section shall become time-barred after five years.”
OTHER LEGISLATION
25. The Government’s Decree of 25 April 2013 on the criteria, standards and procedure for the deferral of payments, repayment of debt in instalments and the sale, write-off and partial write-off of claims (Uredba o kriterijima mjerilima i postupku za odgodu plaćanja, obročnu otplatu duga, te prodaju, otpis i djelomičan otpis potraživanja, Official Gazette no. 55/13) sets out the procedure and criteria under which the debts owed to the State or local authorities can be fully or partially written off, paid in instalments or have their payment deferred. THE LAW
26. In his application to the Court, the applicant complained that the domestic courts’ decision to confiscate the proceeds of crime from him personally had been unlawful and arbitrary because that decision had lacked any legal basis in domestic law. He relied on Article 6 § 1 of the Convention. 27. Being master of the characterisation to be given in law to the facts of the case (see Guerra and Others v. Italy, 19 February 1998, § 44, Reports of Judgments and Decisions 1998‑I, and Radomilja and Others v. Croatia [GC], nos. 37685/10 and 22768/12, § 124, 20 March 2018), and having regard to its case-law (see, for example, Imeri v. Croatia, no. 77668/14, 24 June 2021, and Yaylalı v. Serbia, no. 15887/15, 17 September 2024), the Court considers that the application should be examined under Article 1 of Protocol No. 1 to the Convention. That Article reads as follows:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1 TO THE CONVENTIONAdmissibility

28. The Government submitted that the applicant had not exhausted domestic remedies and that he was not the victim of a violation of Article 1 of Protocol No. 1. In the alternative, they argued that the applicant had suffered no significant disadvantage on account of a violation of that Article. Exhaustion of domestic remedies
(a)   The parties’ submissions
29. The Government argued that the applicant could have, under the Government Decree of 25 April 2013 (see paragraph 25 above), asked the relevant authorities to write off in full or in part the debt stemming from the confiscation order, or asked to pay it in instalments. However, he had not done so. 30. The applicant emphasised that in the criminal proceedings against him he had lodged appeals and a constitutional complaint against the confiscation order (see paragraphs 11 and 17 above), which were the only effective remedies he had been supposed to use. The “remedy” suggested by the Government was not a remedy at all, let alone an effective one, because it could have only alleviated the consequences of the violation complained of but would not have been capable of remedying the violation itself as it could not have set aside the confiscation order. (b)   The Court’s assessment
31. The Court reiterates that, if domestic law provides for several parallel remedies in different fields of law, an applicant who has sought to obtain redress for an alleged breach of the Convention through one of these remedies is not necessarily required to use others which have essentially the same objective (see, for example, Zustović v. Croatia, no. 27903/15, § 77, 22 April 2021). 32. In that regard, the Court notes that the applicant lodged appeals and a constitutional complaint against the confiscation order (see paragraphs 11 and 17 above). The Government did not argue that these remedies were ineffective. Therefore, even assuming the effectiveness of the remedies relied on by the Government, the applicant was not required to use them and pursue yet another avenue of potential redress (see the previous paragraph). 33. The Government’s objection regarding the exhaustion of domestic remedies must therefore be rejected. The applicant’s victim status and the alleged lack of significant disadvantage
(a)   The parties’ submissions
34. The Government emphasised that the applicant had never paid the amount he had been ordered to pay under the confiscation order (see paragraphs 19-20 above). Moreover, the relevant State authorities had never instituted proceedings to revoke his suspended sentence, even though his failure to pay the debt in question had constituted a breach of that sentence (see paragraph 10 above). In the circumstances, the Government argued, the applicant could not claim to be a victim of the violation alleged or, at least, could not claim to have suffered a significant disadvantage. 35. The applicant pointed out that enforcement proceedings to enforce the confiscation order had been instituted against him and that the order had remained unenforced only because he had not had enough funds as he was unemployed and did not own any property. The mere fact that the enforcement proceedings had not yet resulted in the confiscation of any funds from his bank accounts – which remained frozen – did not mean that he was not a victim of the violation complained of and that the resultant damage he had suffered had not been significant. (b)   The Court’s assessment
36. The Court notes that enforcement proceedings were instituted against the applicant, and that the confiscation order has thus far remained unenforced only because of a lack of funds in his bank accounts (see paragraph 20 above). It further notes that, under Croatian law, the confiscation of proceeds of crime is not subject to any statute of limitations (see Article 85 § 4 of the Penal Code, referred to in paragraph 22 above). 37. In these circumstances, the Court finds it evident that the applicant may claim to be a victim of the violation complained of and that the disadvantage suffered cannot be considered insignificant. The Government’s objection in that regard must therefore be rejected. Conclusion as to admissibility
38. The Court further notes that the present application is neither manifestly ill‑founded nor inadmissible on any other grounds listed in Article 35 of the Convention. It must therefore be declared admissible. MeritsThe parties’ submissions

(a)   The applicant
39. In his application to the Court, the applicant repeated the same arguments as in his appeal of 29 May 2017 and his constitutional complaint (see paragraphs 11 and 17 above) as well as the points made by the Split County State Attorney’s Office in its letter of 6 November 2017 to the Principal State Attorney (see paragraph 15 above). 40. In his observations, he again relied on those arguments and stressed that the State Attorney’s Office rarely intervened in favour of the accused and only when there had been a serious breach of the law to the accused’s detriment. 41. The applicant added that Article 77 of the Penal Code, which had been applied in his case and which provided for the confiscation of proceeds of crime, was not a referencing provision, that is, a provision referring to a legal provision outside the scope of criminal law. Therefore, contrary to what the domestic criminal courts had done in his case (see paragraphs 10, 12 and 22‑24 above), that Article could not be read in conjunction with any provisions of the Commercial Companies Act. 42. Lastly, section 252(5) of the Commercial Companies Act, which had been applied in his case, and section 10(3), to which the Government had referred (see paragraphs 24 above and 45 below), were provisions governing civil (tort) liability towards company creditors and could not have been applied in criminal proceedings for the confiscation of proceeds of crime. (b)   The Government
43. The Government admitted that the domestic courts’ decision ordering the confiscation of the proceeds of crime from the applicant had interfered with his property rights. They argued, however, that the interference had been lawful, that it had been in accordance with the general interest of combating crime and acting as a deterrent to potential perpetrators of punishable offences, and that there had been a reasonable relationship of proportionality between the means employed and the aim sought to be achieved. 44. As regards, in particular, the lawfulness of the interference, the Government submitted that the domestic courts had based the confiscation measure on Article 77 of the Penal Code, read in conjunction with section 252(5) of the Commercial Companies Act (see paragraphs 10, 12 and 22-24 above), the provisions of which complemented each other. Those courts had done so in reasoned decisions in which they had explained in detail why the proceeds of crime had been ordered to be confiscated from the applicant himself. 45. The Government added that the confiscation order also had another legal basis in national law, namely section 10(3) of the Commercial Companies Act (see paragraph 24 above), which provided for the piercing of the corporate veil. They pointed out that the Court had held that in situations where a limited liability company had been used merely as a façade for fraudulent actions by its shareholders or managers, piercing the corporate veil might be an appropriate solution to defend the rights of its creditors, including the State (the Government cited Khodorkovskiy and Lebedev v. Russia, nos. 11082/06 and 13772/05, § 877, 25 July 2013). 46. The Government submitted that the above-mentioned provisions satisfied the qualitative criteria of accessibility and foreseeability. Therefore, it must have been foreseeable to the applicant, who had been represented by an advocate, that, as the sole shareholder and director of the company, the proceeds of crime would be confiscated from him after it had been struck off the register of commercial companies. 47. As regards proportionality, the Government argued that no measure other than confiscation could have been applied that would have interfered less with the applicant’s rights and still achieved the aim sought. Moreover, no excessive burden had been imposed on him: during the entire course of the criminal proceedings and even afterwards he had been free to dispose of the illegally obtained proceeds of crime as his property had never been frozen and because he had never complied with the confiscation order.

Outcome for Article 41: violation