CASE OF SOCIEDADE DE CONSTRUCOES MARTINS AND VIEIRA, LDA v. PORTUGAL

1. The case originated in five applications (nos. 56637/10, 59856/10, 72525/10, 7646/11 and 12592/11, see Annex ) against the Portuguese Republic lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Portuguese company, Sociedade de Construções Martins & Vieira, Lda (“the applicant company ”), and two Portuguese nationals, Mrs M. Costa Vieira (“the second applicant”) and Mr J. Martins Gonçalves Costa (“the third applicant”).
2. The applicants were represented by Mr J. J. Ferreira Alves, a lawyer practising in Matosinhos. The Government were represented by their Agent, Mrs M. F. Graça Carvalho, Deputy Attorney - General.
3. On 4 June 2012 the applications were communicated to the Government.
I. THE CIRCUMSTANCES OF THE CASE
4. The applicant company is a Portuguese limited liability company. The second and third applicants are the applicant company ’ s managing partners (see Annex for details ).
5. On 17 September 1999 the Porto Criminal Department for Investigation and Prosecution ( Departamento de Acção e Investigação Penal ) started an investigation into the applicant company ’ s fiscal activity between 1994 and 1997.
6. Following the investigation, two sets of fiscal criminal proceedings were instituted before the Porto and Barcelos Criminal Courts.
7. On 20 December 1999 the applicants were made defendants ( arguidos ) in both sets of proceedings.
1. Proceedings no. 132/99.6IDPRT before the Porto Criminal Court
8. On 5 November 2003 the public prosecutor brought charges ( acusação ) against the applicant company and third applicant in the Porto Criminal Court for tax fraud in relation to activities dating back to 1997, when the applicant company was registered in Porto.
9. On 27 September 2005 the trial began. The hearing was adjourned to October and then to 27 March 2006 due to the absence of some of the defence witnesses.
10. On the day of the hearing, the applicant company ’ s and third applicant ’ s representative resigned. The hearing was adjourned pending his replacement.
11. In June 2006 the applicant company and third applicant gave power of attorney to the same lawyer.
12. On 14 November 2006 the applicants informed the Porto Criminal Court that they had sought a judicial review before the Porto Administrative and Fiscal Court of a tax adjustment applied to them regarding the applicant company ’ s fiscal activity between 1994 and 1997.
13. On 29 November 2006 the Porto Criminal Court suspended the fiscal criminal proceedings in accordance with Article 50 § 1 of the Legal Framework for Non- Customs Tax Offences ( Regime Jurídico das Infracções Fiscais não Aduaneiras – “ RJIFNA” ).
14. On 19 December 2008 the applicants applied to the High Council of Magistrates ( Conselho Superior de Magistratura ) for an order to have the criminal proceedings expedited ( pedido de aceleração processual ).
15. On 5 May 2009 the High Council of Magistrates dismissed their application on the grounds that the delay in the proceedings, under the law, was attributable to the Porto Administrative and Fiscal Court rather than the Porto Criminal Court. The Council pointed out that the applicants should have therefore lodged their expedition application with the High Council of the Administrative and Fiscal Courts.
16. The proceedings are still pending before the Porto Criminal Court.
2. Proceedings no. 496/03.9TABCL before the Barcelos Criminal Court
17. On 28 April 2003 the public prosecutor of the Barcelos Criminal Court brought charges against the three applicants for tax fraud and abuse ( fraude fiscal e abuso de confiança fiscal ) in relation to activities that had taken place between 1994 and 1996, when the applicant company was registered in Barcelos.
18. On 1 October 2003 the applicants contested the proceedings. On the same date they applied for them to be suspended until a final decision was adopted in relation to the judicial review pending before the Porto Administrative and Fiscal Court (see paragraph 13 above).
19. On 17 November 2003 the Barcelos Criminal Court ordered that the proceedings be suspended in accordance with Article 50 § 1 of the RJIFNA and requested information from the Porto Administrative and Fiscal Court regarding the progress of the judicial review.
20. On 14 December 2006 the Porto Administrative and Fiscal Court informed the Barcelos Criminal Court that the proceedings brought by the applicants against the tax adjustment were still pending.
21. On 23 April 2007 the Barcelos Criminal Court suspended the proceedings until a final decision was adopted by the Porto Administrative and Fiscal Court.
22. On 20 October 2008 the Porto Administrative and Fiscal Court informed the Barcelos Criminal Court that the judicial review was still pending.
23. On 19 December 2008 the applicants applied to the High Council of Magistrates to have the proceedings expedited.
24. On 13 January 2009 the High Council dismissed their application on the grounds that the fiscal criminal proceedings had been suspended in accordance with the law. It also considered that their request should have been made to the High Council of the Administrative and Fiscal Courts.
25. The proceedings are still pending before the Barcelos Criminal Court.
B. Proceedings in tort against the State
26. On 10 October and 27 October 2006 the applicants instituted proceedings in tort ( ação de responsabilidade civil extracontratual ) against the State in the Porto and Braga Administrative and Fiscal Courts ( case nos. 2533/06.6BEPRT and 1789/06.6BEBRG respectively ), claiming damages for the excessive length of the above-mentioned criminal proceedings.
27. According to the latest information received by the Court on 14 February 2014, the proceedings are still pending.
A. Legal frameworks for tax offences
28. Article 50 § 1 of the RJIFNA, adopted by Decree- Law 20-A/90 of 15 January 1990 and as amended by Decree-Law 51-A/96 of 9 December 1996, in force at the material time, provides:
“In the event of a judicial review [ regarding a tax adjustment ] ... fiscal criminal proceedings shall be suspended until the respective judgments have [acquired] the force of res judicata .”
29. This provision is now established by Article 47 § 1 of the General Framework for Tax Offences ( Regime Geral das Infracções Tributárias ­ – “RGIT ” ), adopted by Law 15/2001 of 5 June 2001, which replaced the RJIFNA.
30. Article 7 § 2 of the Code of Criminal Procedure provides that the criminal courts can order a suspension of criminal proceedings whenever a non-criminal issue arises and needs to be resolved by the competent court; however, contrary to Article 50 § 1 of the RJIFNA (and Article 47 § 1 of the RGIT, currently in force ), Article 7 § 4 of the Code of Criminal Procedure sets a time-limit for the suspension of criminal proceedings. Under this provision, the time-limit must be fixed by the criminal courts and can be extended by up to a year. If the non-criminal issue cannot be resolved within this time, it should be analysed within the criminal proceedings. Article 7 § 4 of the Code of Criminal Procedure is not applicable to fiscal criminal proceedings.
C. Case-law of the Supreme Court of Justice and the Constitutional Court
31. In judgment no. 3/2007 of 12 October 2006, the Supreme Court of Justice ’ s stand on the suspension established in Article 50 § 1 of the RJIFNA was that a “fiscal judicial review determines, regardless of a [judicial] order, the suspension of fiscal criminal proceedings and during the suspension, prosecution of the crime is also suspended”.
32. In judgment no. 321/2006 of 17 May 2006 the Constitutional Court assessed the compatibility of Article 47 § 1 of the RGIT with the right to a hearing within a reasonable time. It stated, inter alia, that it was not possible to assume from the absence of a time-limit for the suspension of fiscal criminal proceedings, when Article 47 § 1 was applicable, that the right to a hearing in a reasonable time had been violated.
33. Given that the present applications concern the same facts and complaints and raise related issues under the Convention, the Court decides to join them pursuant to Rule 42 § 1 of the Rules of the Court.
II. ALLEGED VIOLATION OF ARTICLES 6 § 1 AND 13 OF THE CONVENTION
34. The applicants complained that the length of the criminal proceedings had been incompatible with the “reasonable time” requirement. They also complained that they had not had an effective remedy in this respect. They relied on Article 6 § 1 and Articles 13, 14, 17, 34, 41 and 46 of the Convention, and Article 1 of Protocol 1 to the Convention. Being master of the characterisation to be given in law to the facts of the case ( see Phillips v. the United Kingdom, no. 41087/98, § 38, ECHR 2001 ‑ VII, and Scoppola v. Italy (no. 2) [GC], no. 10249/03, § 54, 17 September 2009 ), the Court considers that in the light of its case-law, the applicants ’ complaints concerning the length of proceedings should be examined from the standpoint of Articles 6 § 1 and 13 of the Convention only. The relevant parts read as follows :
“ In the determination of ... any criminal charge against him everyone is entitled to a ... hearing within a reasonable time by a... tribunal... ”
“Everyone whose rights and freedoms as set forth in this Convention are violated shall have an effective remedy before a national authority ... ”
A. Alleged violation of Article 6 § 1 of the Convention
35. The Government argued that the complaint was incompatible ratione materiae with the provisions of the Convention because the length of the proceedings at issue had been the result of delays occurring in a judicial review of a tax adjustment, to which Article 6 of the Convention was not applicable.
36. The applicants contested this objection.
37. The Court notes that the Government ’ s objection is closely linked to the applicants ’ complaint under Article 6. In these circumstances, it decides to join the objection to the merits of the complaint.
38. It further notes that the complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention, and that it is not inadmissible on any other grounds. It must therefore be declared admissible.
( a ) Period to be taken into consideration
39. The Court reiterates that in criminal matters, the period to be taken into consideration begins on the day on which a person is charged. “Charge”, for the purposes of Article 6 § 1, may be defined as “the official notification given to an individual by the competent authority of an allegation that the has committed a criminal offence”, a definition that also corresponds to the test whether “the situation of the [ suspect ] has been substantially affected” ( see Merit v. Ukraine, no. 66561/01, § 70, 30 March 2004 ). The Court also reiterates that in criminal matters, the period to which Article 6 is applicable covers the whole of the proceedings in question, including appeal proceedings ( ibid.). The period to be taken into account therefore ends on the day the proceedings are discontinued.
40. The period to be taken into consideration in the present case began on 20 December 1999 when the applicants were made defendants and has not yet ended, considering that both sets of proceedings are still pending. This indicates that the proceedings have already lasted fourteen years and nine months at one level of jurisdiction.
( b ) Reasonableness of the length of proceedings
( i ) Submissions before the Court
41. The applicants complained that the length of the fiscal criminal proceedings exceeded the reasonable time requirement within the meaning of Article 6 § 1 of the Convention.
42. The Government acknowledged that the fiscal criminal proceedings at issue had been subject to delays and that their length exceeded what would legitimately be expected; however, they denied that the criminal courts should be held responsible as, under Portuguese law (see paragraph 29 above), they had to suspend the proceedings until a final decision was adopted in the judicial review of the tax adjustment. In this connection, they contended that the proceedings did not fall within the scope of Article 6, the applicants ’ complaint thus being incompatible ratione materiae with the provisions of the Convention. They also submitted that the applicants had contributed to some of the delays in the proceedings.
43. The Court reiterates that in criminal matters, the aim of Article 6 § 1, by which everyone has the right to a hearing within a reasonable time, is to ensure that the accused do not have to lie under a charge for too long and that the charge is determined ( see Wemhoff v. Germany, 27 June 1968, § 18, Series A no. 7, and Kart v. Turkey [GC], no. 8917/05, § 68, ECHR 2009 ).
44. The Court also reiterates that the reasonableness of the length of proceedings is to be determined in the light of the circumstances of the case, which call for an overall assessment ( see Boddaert v. Belgium, 12 October 1992, § 36, Series A no. 235 ‑ D )
45. It further reiterates that Article 6 requires judicial proceedings to be expeditious, but also lays down the more general principle of the proper administration of justice. Thus, a fair balance has to be struck between the various aspects of this fundamental requirement ( ibid., § 39).
46. When determining whether the duration of criminal proceedings has been reasonable, the Court has had regard to factors such as the complexity of the case, the applicant ’ s conduct and the conduct of the relevant administrative and judicial authorities ( see König v. Germany, 28 June 1978, § 99, Series A no. 27, and Pélissier and Sassi v. France [GC], no. 25444/94, § 67, ECHR 1999-II).
47. Even though a case may be of some complexity, the Court cannot regard lengthy periods of unexplained inactivity as reasonable ( see Adiletta and Others v. Italy, 19 February 1991, § 17, Series A no. 197 ‑ E ).
48. As to the applicant ’ s conduct, the Court reiterates that Article 6 does not require a person charged with a criminal offence to cooperate actively with the judicial authorities (see, among other authorities, Corigliano v. Italy, 10 December 1982, § 42, Series A no. 57). It also considers that defendants cannot be blamed for taking full advantage of the resources and tools afforded by national law in the defence of their interests ( see Kolomiyets v. Russia, no. 76835/01, § 25-31, 22 February 2007). Nonetheless, the applicant ’ s conduct, in itself legitimate, constitutes an objective fact which cannot be attributed to the respondent State, and which must be taken into account for the purpose of determining whether or not the reasonable time referred to in Article 6 § 1 has been exceeded ( see Eckle v. Germany, 15 July 1982, § 82, Series A no. 51).
49. With respect to the conduct of the national authorities, the Court reiterates that a delay at some stage may be acceptable, if the overall duration of the proceedings cannot be deemed excessive (see, for example, Pretto and Others v. Italy, 8 December 1983, § 37, Series A no. 71).
50. Turning to the present case, the Court firstly notes that the fiscal criminal proceedings have already lasted fourteen years and nine months at one level of jurisdiction.
51. It considers that, irrespective of the fact that the suspension of the fiscal criminal proceedings was instigated due to their link to the judicial review of a tax adjustment, the impugned proceedings are of a criminal nature and should be analysed autonomously, given their effects at an individual level.
52. As to the proceedings, nothing before the Court suggests that the cases were of particular complexity. The fact that they involved three defendants is not in itself sufficient justification for making such an assumption. Nor did the Government argue that the cases were particularly difficult to determine.
53. With respect to the applicants ’ own conduct, the Court notes that they may be considered responsible for some of the minor delays in the proceedings, such as the period between March and June 2006, when their representative resigned and was again given power of attorney. However, the Court finds that this period had no impact on the criminal proceedings against the applicants. Furthermore, it appears from the case file that the applicants have not resorted to any other action likely to delay matters.
54. Turning to the conduct of the domestic courts, the Court firstly notes that the proceedings came to a standstill for almost four years between December 1999, when the applicants were made defendants, and April and November 2003, when charges were brought against them. A further delay of approximately two years occurred in the first set of proceedings between November 2003 and September 2005, when the Porto Criminal Court, after charging the applicants, set a date for the trial. This conduct showed that from the beginning the domestic courts did not show due diligence in dealing with the applicants ’ case.
55. Secondly, the Court notices that the Porto and Barcelos Criminal Courts suspended the proceedings on 29 November 2006 and 23 April 2007 respectively, to await the outcome of the final decision in the judicial review of the tax adjustment that had been applied to the applicants in accordance with Article 50 § 1 of the RJIFNA. It observes that the proceedings have since been suspended.
56. The Court considers that it may be reasonable for national courts to await, under certain circumstances, the outcome of parallel proceedings as a measure of procedural efficiency; however, this decision must be proportionate, having regard to the particular circumstances of the case ( see Herbst v. Germany, no. 20027/02, § 78, 11 January 2007 ) and the suspension should not be indefinite and thereby keep an accused person in a prolonged state of uncertainty about his fate, a situation that the Convention intends to protect under Article 6 ( see Stögmuller v. Austria, 10 November 1969, p. 40, § 5, Series A no.9).
57. In this connection, the Court reiterates that it has stated on many occasions that Article 6 § 1 imposes on the Contracting States a duty to organise their legal systems in such a way that their courts can meet each of the requirements of that provision, including the obligation to hear cases within a reasonable time (see, among other authorities, Süßmann v. Germany, 16 September 1996, § 55, Reports of Judgments and Decisions 1996 - IV; Bottazzi v. Italy [GC], no. 34884/97, § 22, ECHR 1999 ‑ V; and Scordino v. Italy (no. 1) [GC], no. 36813/97, § 183, ECHR 2006 ‑ V).
58. Thus, the Court considers that a legal provision establishing the suspension of criminal proceedings due to pending parallel proceedings should not be drafted in such a way that its applicability would prevent the domestic courts from meeting the requirements of Article 6 § 1 of the Convention. Nevertheless, if such a provision exists, like Article 50 § 1 of the RJIFNA and Article 47 § 1 of the RGIT, which established a general rule concerning the suspension of criminal proceedings due to tax assessment proceedings, it should not dispense the national courts from ensuring an expeditious trial as required by Article 6 § 1 of the Convention, and providing a reasonable time-limit for the suspension.
59. For these reasons, and considering the above observations ( see paragraph 55 above ), the Court finds that the period taken so far to deliver a decision fails to satisfy the reasonable time requirement. Accordingly, there has been a breach of Article 6 § 1 of the Convention and the objection of the Government as to the complaint ’ s incompatibility ratione materiae with the provisions of the Convention must be rejected.
B. Alleged violation of Article 13 of the Convention
60. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
61. The Government contested the allegation.
62. The Court reiterates that Article 13 guarantees an effective remedy before a national authority for an alleged breach of the requirement under Article 6 § 1 to hear a case within a reasonable time (see Kudła v. Poland [GC], no. 30210/96, § 156, ECHR 2000 ‑ XI ).
63. The Court has examined similar issues in previous applications and has found a violation of Article 13 of the Convention in respect of the lack of an effective remedy under Portuguese law where the applicant could have contested the length of the proceedings and obtained compensation.
64. Thus, as the Court has previously noted, proceedings in tort against the State cannot be regarded as “effective” within the meaning of Article 13 of the Convention ( see Martins Castro and Alves Correia de Castro v. Portugal, no. 33729/06, 10 June 2008 ).
65. There has therefore been a violation of Article 13 of the Convention.
III. APPLICATION OF ARTICLE 46 OF THE CONVENTION
66. Article 46 of the Convention provides:
“1. The High Contracting Parties undertake to abide by the final judgment of the Court in any case to which they are parties.
2. The final judgment of the Court shall be transmitted to the Committee of Ministers, which shall supervise its execution.”
67. Given these provisions, it follows, inter alia, that a judgment in which the Court finds a breach imposes on the respondent State a legal obligation not just to pay those concerned any sums awarded by way of just satisfaction, but also to choose, subject to supervision by the Committee of Ministers, the general and/or, if appropriate, individual measures to be adopted in their domestic legal order to put an end to the violation found by the Court and to redress, in so far as possible, the effects thereof (see Scozzari and Giunta v. Italy [GC], nos. 39221/98 and 41963/98, § 249, ECHR 2000 ‑ VIII). With a view, however, to helping the respondent State fulfil its obligations under Article 46, the Court may seek to indicate the type of individual and/or general measures that might be taken in order to put an end to the situation it has found to exist ( see Broniowski v. Poland ( dec. ) [GC], no. 31443/96, § 194, ECHR 2002 ‑ X; Scoppola (no. 2), cited above, § 148; and Stanev v. Bulgaria [GC], no. 36760/06, § 255, ECHR 2012).
68. The present case discloses a general problem which may give rise to similar applications. The nature of the violation found under Article 6 § 1 of the Convention suggests that for the proper execution of the present judgment, the respondent State would be required to review the suspension rules applicable to fiscal criminal proceedings in accordance with the conclusions herein (see paragraph 58 above ). The Court reiterates that such a review must secure the right to a trial within a reasonable time guaranteed by Article 6 § 1 of the Convention.
IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION
69. 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.”
70. The applicants claimed pecuniary damage, but stated that the amount should be determined by the Court. They also claimed 16,000 euros (EUR) in respect of non-pecuniary damage for each applicant.
71. The Government contested these claims.
72. The Court fails to see any causal link between the violation of Article 6 § 1 of the Convention and the alleged pecuniary damage. It accordingly dismisses the applicants ’ claim under this head.
73. The Court considers that the applicants must have sustained non ‑ pecuniary damage. Ruling on an equitable basis, it jointly awards them a total of EUR 15,600 under that head.
74. The applicants also claimed EUR 9,750 for the costs and expenses incurred before the Court.
75. The Government contested the claim.
76. According to the Court ’ s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. In the present case, regard being had to the documents in its possession and the above criteria, the Court rejects the claim for costs and expenses in the domestic proceedings and considers it reasonable to jointly award the sum of EUR 1,000 for the proceedings before the Court.
77. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1. Decides to join the applications;