CASE OF PALCHIK v. UKRAINE

1. The case originated in an application (no. 16980/06) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Ukrainian national, Mr Aleksandr Alekseyevich Palchik (“the applicant”), on 27 March 2006.
2. The applicant was represented by Mr S. Shpilyov, a lawyer practising in Kostyantynivka, the Donetsk Region. The Ukrainian Government (“the Government”) were represented by their Agent, most recently Mr I. Lishchyna.
3. On 11 January 2011 the application was communicated to the Government.
I. THE CIRCUMSTANCES OF THE CASE
4. The applicant was born in 19 5 4 and is currently residing in Kostyantynivka. Before his arrest the applicant was the managing director of a private company, A.
5. A. concluded a contract with E., a Russian company, undertaking to export a certain amount of ferromanganese to Russia.
6. During the period from March 2000 to April 2001 the applicant, in his capacity as the director of A., concluded contracts with four Ukrainian companies, F., T., M. and Sh. ( “the seller companies”) According to those contracts A. would buy the goods from the companies and pay them sums which included value added tax (VAT).
7. On a number of occasions between March 2000 and April 2001 A. exported ferromanganese to Russia, delivered it to E. and received payment for it. Subsequently, A. claimed and, in April 2002, received from the Ukrainian authorities a refund of the VAT mentioned in the contracts with the seller companies.
8. In 2002 criminal proceedings were instituted against the applicant. According to the investigating authorities, the contracts which A. had concluded with the four seller companies were fictitious and had been concluded for the sole purpose of obtaining export VAT refunds. In fact those companies had not sold ferromanganese to A. Instead, the applicant and his co-defendants had bought the ferromanganese from private persons, without concluding any contracts with them and without paying VAT on those transactions. The applicant had then forged certificates of quality and fraudulently obtained certificates of origin for the goods. Using all the above documents, A. had exported the goods to Russia. He had then obtained or applied for VAT refunds based on the fictitious documents.
9. The applicant stated that the contracts had not been fictitious and the certificates had not been forged. A. had legally bought ferromanganese from the private companies, exported it to Russia and received tax refunds.
10. During the pre-trial investigation, the investigating authorities questioned managers of the four seller companies and the owner of a lorry which had been used for transporting the goods. They made certain statements the domestic courts subsequently found to be incriminating. In particular, managers of the four seller companies said that the contracts had been either forged or fictitious and that no actual shipments of the goods had taken place. Some of the managers repeated those statements in the course of confrontations with the applicant conducted in the course of the pre-trial investigation. Detailed information about the statements of the witnesses and confrontations can be found in the Table set out in paragraph 17 below.
11. On an unspecified date the investigation was completed and the case was referred to the Kostyantynivka Court for trial.
12. On at least five occasions between 28 November 2003 and 27 August 2004 the court ordered the Donetsk regional police to bring the witnesses listed in the Table below to court hearings, but the police failed to do so for various reasons.
13. On 27 August 2004 the police informed the court, in response to its latest order to bring the witnesses to court, that S., K. and R. (see Elements 1-3 in the Table below) were away from Donetsk on holiday.
14. At the court hearing held on the same day the prosecutor, in the light of the above -mentioned information from the police, asked the court to read out the pre - trial statements of the witnesses who had failed to appear, including all those listed in the Table below. The defence did not object and the statements were read out. The court then proceeded to examine the documents in the file.
15. On 29 September 2004 the applicant ’ s lawyer requested the court to summon S., K. and R. again ( see Elements 1-3 in the Table below), because the examination of documents had revealed inconsistencies in their pre - trial statements and because the reasons for their failure to appear had not been established. The trial court refused the request on the grounds that the statements of those witnesses had already been read out at the trial.
16. On 24 December 2004 the court found the applicant guilty of smuggling (export of ferromanganese based on forged documents), misappropriation accompanied by abuse of office (receipt of tax refunds on the basis of fictitious and forged documents), abuse of office, and forgery of documents. For the charge of misappropriation accompanied by abuse of office the applicant was sentenced under the Criminal Code of 2001 to seven years and six months ’ imprisonment with a ban on holding managerial positions for two years. He was also sentenced to various other more lenient punishments under the Criminal Code of 2001, but the court held that the most severe of the applicant ’ s punishments absorbed the more lenient ones. The final sentence was thus seven years and six months of imprisonment with a ban on holding managerial positions for two years.
17. In convicting the applicant the court relied, in particular, on the statements of a number of witnesses given during the pre-trial investigation, as shown in the below Table :
Element of the applicant company ’ s operations to which witness evidence related
Witnesses, their status and the tenor of their evidence
Corroborating evidence, if any, in respect of the relevant element of the applicant ’ s operations
Was a confrontation conducted during the investigation? Did the applicant insist that the witness be called and examined (paragraphs 14 and 15 above)
Element 1. Operations with company Sh.
S., director : contract was forged
None since company Sh. had been wound up and its documentation destroyed
Element 2. Operations with company T.
K., director : contract was fictitious
The company which was supposed to supply the goods to company T. was deemed by the tax authorities to be fictitious
Element 3. Operations with company М.
R., director : contract was fictitious
The modus operandi used with company M. was the same as that for other companies. No other corroboration since company M. had been wound up
Element 4. Operations with company F.
N., deputy director : contract was fictitious
The company which was supposed to supply the goods to company F. was deemed by the tax authorities to be fictitious
P., director: confirmed N. ’ s statement
Element 5. Transportation of the goods
Zh., owner of a lorry – the lorry was lent to one of the applicant ’ s co-defendants
18. The trial court also relied on certain inconsistencies between the official records of the applicant ’ s company and the shadow accounting records discovered by the authorities.
19. The applicant and his lawyer appealed. They stated, inter alia, that the trial court had relied on the evidence of witnesses who had not been examined at the trial and that he should have been tried for smuggling under the Criminal Code of 1960.
20. On 4 March 2005 the Donetsk Regional Court of Appeal held that the applicant should be deemed to have been convicted for smuggling under the Criminal Code of 1960 instead of the Criminal Code of 2001. Otherwise, the Court of Appeal upheld the findings of the first-instance court and the applicant ’ s sentence.
21. According to the applicant, the appellate court did not give him a copy of the decision of 4 March 2005, despite his numerous requests.
22. In March 2005 the applicant ’ s lawyer appealed on points of law to the Supreme Court against the decisions of 24 December 2004 and 4 March 2005 and enclosed copies of those decisions with her appeal. In May, June and August 2005 the applicant lodged his own appeals with the Supreme Court, stating, inter alia, that the trial court had relied on evidence of witnesses who had not been examined at the trial. The applicant also stated that he should have been tried for misappropriation, abuse of office and forgery under the Criminal Code of 196 0, rather than the Code of 2001, but did not provide any details.
23. On 6 September 2005 the Supreme Court heard the case in the presence of the prosecutor but in the absence of the applicant and his lawyer, who were not informed of the date and time of the hearing. The Supreme Court dismissed the appeals lodged by the applicant and his lawyer, stating that the lower courts ’ findings had been based on a substantial amount of evidence, in particular the statements of the directors of the seller companies made at the investigation stage.
24. On 15 May 2009 the applicant was released from detention following a presidential pardon.
25. The relevant provisions of the Code of Criminal Procedure of 1960 governing the review of criminal cases in proceedings before the Supreme Court and the summoning of witnesses at the material time can be found in Zhuk v. Ukraine (no. 45783/05, §§ 18-20, 21 October 2010), and Karpyuk and Others v. Ukraine (nos. 30582/04 and 32152/04, §§ 77-80, 6 October 2015 ) respectively.
The relevant provisions of domestic law governing the reopening of criminal proceedings can be found in Zakshevskiy v. Ukraine, no. 7193/04, §§ 50 and 51, 1 7 March 2016 ).
I. ALLEGED VIOLATIONS OF ARTICLE 6 OF THE CONVENTION
26. The applicant complained of a number of violations of Article 6 of the Convention, which reads, in so far as relevant, as follows:
“1. In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law...
3. Everyone charged with a criminal offence has the following minimum rights:
(d) to examine or have examined witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him;
27. The applicant submitted that there had been a violation of Article 6 of the Convention in that the Supreme Court had examined his appeal on points of law in his and his lawyers ’ absence, having failed to summon them to the hearing.
28. The applicant further submitted that there had been a violation of Article 6 § 3 (d) of the Convention in that witnesses listed in the Table above, whose statements had been used for the applicant ’ s conviction, had not been examined at the trial and that five others witnesses had not been called.
29. The Government submitted that the higher courts had upheld the lower courts ’ decisions in the applicant ’ s case and that there had been no violation of Article 6 §§ 1 and 3 of the Convention.
1. Alleged violation of Article 6 of the Convention in the proceedings before the Supreme Court
30. 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.
31. The Court has previously found violations in similar cases against Ukraine ( see Zhuk, cited above, §§ 29-35; Korobov v. Ukraine, no. 39598/03, § 92, 21 July 2011; and Kuzmina v. Ukraine, no. 11984/06, §§ 14-16, 16 June 2016 ). It considered that the prosecutor had had the advantage of being present at the hearings before the Supreme Court and, unlike the defendant, had been able to make oral submissions, which were intended to influence the court ’ s opinion. The Court concluded that procedural fairness required that the applicants should also have been given an opportunity to make oral submissions in reply.
32. Having regard to the circumstances of the present case, the Court sees no reason to reach a different conclusion and finds that the principle of equality of arms has not been respected in the present case.
33. Accordingly, there has been a violation of Article 6 § 1 of the Convention on account of the breach of the principle of equality of arms in the proceedings before the Supreme Court of Ukraine.
2. Alleged violation of Article 6 § 3 (d)
34. The Court reiterates that the guarantees in paragraph 3 (d) of Article 6 are specific aspects of the right to a fair hearing set forth in paragraph 1 of this provision ( see Al-Khawaja and Tahery v. the United Kingdom ([GC], nos. 26766/05 and 22228/06, § 118, ECHR 2011 ); it will therefore consider the applicant ’ s complaint under both provisions taken together ( see Windisch v. Austria, 27 September 1990, § 23, Series A no. 186, and Lüdi v. Switzerland, 15 June 1992, § 43, Series A no. 238).
35. The Court formulated the general principles to be applied in cases where a prosecution witness did not attend the trial and statements previously made by him or her were admitted as evidence in Al-Khawaja and Tahery, cited above, and Schatschaschwili v. Germany ( [GC], no. 9154/10, ECHR 2015 ), and applied them recently in Paić v. Croatia ( no. 47082/12, §§ 27-31, 29 March 2016 ).
36. As to witnesses N., P. and Zh. ( see Elements 4 and 5 in the Table above), neither the applicant nor his lawyer objected to their statements being read out at the trial ( see paragraph 14 above). Thereafter, unlike for witnesses S., K. and R. ( see Elements 1-3 in the Table above) the defence did not reiterate their request that N., P. and Zh. be summoned (see paragraph 15 above). As to the proceedings on appeal, there is no indication that the applicant specifically requested the Court of Appeal to summon those witnesses at the appeal stage ( contrast Gabrielyan v. Armenia, no. 8088/05, § 85, 10 April 2012 ), even though the Court of Appeal had the power to do so ( see Karpyuk and Others v. Ukraine, nos. 30582/04 and 32152/04, § 139, 6 October 2015 ). The applicant, therefore, must be deemed to have waived his right to examine N., P. and Zh. at the trial (compare Poletan and Azirovik v. the former Yugoslav Republic of Macedonia, no. 267 11/07, 32786/10 and 34278/10, § 87, 12 May 2016).
37. The applicant also submits that the domestic court failed to examine five other witnesses (Ko., N.A., N.E., Sho. and V.). However, he has failed to specify why it could have been important for the courts to examine them and what questions he wished to put to them. There is nothing in the material before it to allow the Court to elucidate that question.
(iii) Conclusion as to admissibility
38. It follows that the applicant ’ s complaint concerning the failure to examine witnesses N., P. and Zh. and Ko., N.A., N.E., Sho., V. at the trial is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
39. At the same time, the Court considers that the applicant ’ s complaint under Article 6 §§ 1 and 3 (d) in respect of witnesses S., K. and R. (see Elements 1-3 in the Table above) 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.
(i) Whether there was a good reason for the non-attendance of the witnesses
40. The case file shows that the trial court went to considerable lengths to summon S., K. and R. (hereinafter “the witnesses”). They attempted to summon them and ordered the police to bring them to the hearings on at least five occasions between November 2003 and August 2004 ( see paragraph 12 above), but were unsuccessful in their efforts. However, the Court is struck by the reasons given by the police for their failure to comply with the trial court ’ s latest order, on 27 August 2004. The police reported to the court that at the time the witnesses were on holiday outside the region covered by the relevant police department ( see paragraph 13 above).
41. The fact that the police were able to obtain such information not only demonstrated that the witnesses ’ actual addresses were known to the authorities but also implied that they would be absent for a short time only. Moreover, the contents of the police report give the impression that the relevant police department limited its search for the witnesses merely to the finding that they were, for a short period of time, outside of that particular department ’ s territorial jurisdiction. In such circumstances, it is unclear why the trial court failed to follow up the matter. It is true that at the hearing of 27 August 2004 the defence did not object to those witnesses ’ statements being read out. However, at the hearing of 29 September 2004, in the light of the documentary evidence examined, the defence pointed out that the reason for their absence had not been established and asked that they be called again. In rejecting that request, the domestic court limited itself to stating that their statements had already been read out ( see paragraph 15 above and compare Kostecki v. Poland, no. 14932/09, § 65, 4 June 2013). It does not appear, therefore, that the trial court subjected the reasons given for the non-appearance of the witnesses to careful scrutiny ( see Schatschaschwili, cited above, § 122).
42. In those circumstances, the Court finds that no good reason was convincingly shown for the non-attendance of the witnesses.
43. However, the absence of a good reason is not the end of the matter. This is a consideration which is not of itself conclusive of the lack of fairness of a criminal trial, although it constitutes a very important factor to be weighed in the overall balance together with the other relevant considerations ( see Schatschaschwili, cited above, § 113, and Constantinides v. Greece, no. 76438/12, §§ 40 and 52, 6 October 2016, not yet final as of the time of writing ).
(ii) Whether the evidence of the witnesses was the sole or a decisive basis for the conviction
44. The three witnesses (S., K. and R.) were managing directors of the three out four of the seller companies the applicant dealt with in purchasing, according to the domestic findings fictitiously, the goods for subsequent export.
45. The crux of the domestic courts ’ findings was that the nature of the relationship between the applicant ’ s company and those of the witnesses had been fictitious. In reaching that finding they relied heavily on the witnesses ’ statements. It is revealing that in affirming the applicant ’ s conviction and briefly summarising the evidence against him, the Supreme Court first named the statements of the directors of the seller companies ( see paragraph 23 above).
46. Therefore, the Court is satisfied that witnesses ’ statements were “decisive” for the applicant ’ s conviction in respect of his company ’ s operations with the companies of which the witnesses were directors.
(iii) Whether there were sufficient counterbalancing factors to compensate for the handicap under which the defence laboured
47. The Court first notes that it perceives only three potential counterbalancing factors in the proceedings ( see ibid., §§ 126-30, for a discussion of possible counterbalancing factors) :
(i) the opportunity, which the applicant enjoyed in the course of the domestic proceedings, to give his own version of the events and to cast doubt on the credibility of the absent witnesses and point out any incoherence in their statements;
(ii) the availability of further corroborative evidence;
(iii) the fact that the applicant participated in confrontations with S. and K. in the course of the pre-trial investigation. This could provide another counterbalancing factor in respect of those witnesses.
48. As to the first factor, the Court has held in some cases that such an opportunity to challenge and rebut the absent witnesses ’ statements could not, of itself, be regarded a sufficient counterbalancing factor to compensate for the handicap under which the defence laboured (compare Trampevski v. the former Yugoslav Republic of Macedonia, no. 4570/07, § 49, 10 July 2012, and Riahi v. Belgium, no. 65400/10, § 41, 14 June 2016 ). The Court finds that this was also the case here and the impact of this factor on the overall fairness of proceedings depends on whether other factors sufficiently complemented it.
49. As to the second factor, the Court observes that a general corroboration that the applicant ’ s operations were fictitious came from contradictions between the official and the shadow accounting kept by the defendants ( see paragraph 18 above). They appeared to corroborate, at least indirectly, the statements of all three of the witnesses.
As to S. and R., the only other element of corroboration of their statements came from the fact that the applicant and his co-defendants used the same modus operandi with all four companies with which they dealt. In its case-law the Court has recognised that where there are strong similarities between the absent witness ’ s description of the alleged offence and the description given by another witness with whom there was no evidence of collusion, of a comparable offence by the same defendant, this constitutes an important corroborative factor. However, such corroboration is necessarily less weighty where that other witness himself did not testify at the trial ( see Schatschaschwili, cited above, § 128).
As to K., his pre-trial statement was further corroborated by the fact that the company which was supposed, according to the contract, to supply the goods to K. ’ s company for further sale to the applicant was itself considered by the tax authorities to be a fictitious business ( see Element 2 in the Table above).
50. As to the third factor, which concerns witnesses S. and K. only, that is the confrontations between them and the applicant in the course of the pre-trial investigation, the Court has held that the ability to confront a witness for the prosecution at the investigation stage is an important procedural safeguard which can compensate for the handicaps faced by the defence on account of absence of such a witness from the trial ( see Schatschaschwili, cited above, § 130; Chmura v. Poland, no. 18475/05, §§ 56 and 57, 3 April 2012; Aigner v. Austria, no. 28328/03, §§ 41-46, 10 May 2012; and Gani v. Spain, no. 61800/08, §§ 48-50, 19 February 2013 ). The applicant did not allege that, in the course of those confrontations, defence did not have an opportunity to put questions to those witnesses or that his rights had been restricted in other ways (contrast, for example, Nechto v. Russia, no. 24893/05, § 123, 24 January 2012 ). In such circumstances the Court must conclude that the applicant had an opportunity to confront S. and K. in the course of the investigation.
(iv) Overall fairness assessment
51. Assessing the proceedings overall, the Court considers that the opportunity the applicant had to put questions to S. and K. in the course of the investigation, combined with the availability of some corroborating evidence, and the possibility he had to challenge and rebut the absent witnesses ’ statements in adversarial proceedings before domestic courts at three levels of jurisdiction, provided adequate counterbalancing factors which compensated for the handicap under which the defence laboured on account of S. and K. ’ s absence from the trial. Those factors, in particular the pre-trial confrontations, persuade the Court that the fairness of proceedings was not undermined despite the absence of a convincingly established good reason for those two witnesses ’ absence.
However, as far as R. is concerned, the applicant did not have an opportunity to put questions to him at any stage in the proceedings and the Court considers that the other factors examined above did not compensate for the handicap under which the defence laboured on account of R. ’ s absence from the trial. This undermined the fairness of the proceedings against the applicant as far as they concerned the operations between his company and R, ’ s company.
52. The Court finds, therefore, that :
(i) there has been no violation of Article 6 §§ 1 and 3 (d) of the Convention on account of the admission of the statements of S. and K. as evidence;
(ii) there has been a violation of Article 6 §§ 1 and 3 (d) of the Convention on account of the admission of the untested statement of R. as evidence.
3. Other alleged violations of Article 6
53. The applicant complained that the proceedings against him had been unfair in that the domestic courts had refused his requests for forensic examinations and had not examined all the relevant documents.
54. The Court reiterates that it is not its task to act as a court of appeal or, as is sometimes said, as a court of fourth instance, in respect of the decisions taken by domestic courts. It is the role of the latter to interpret and apply the relevant rules of national procedural and substantive law. Furthermore, the domestic courts are best placed to assess the relevance of evidence to the issues in the case (see, amongst many authorities, Edwards v. the United Kingdom, 16 December 1992, § 34, Series A no. 247-B, and Dulskiy v. Ukraine, no. 61679/00, § 93, 1 June 2006 ).
55. The Court notes that there is no proof that the applicant lodged any requests for forensic examinations or that the courts did not examine any documents which were important for consideration of the case.
56. It follows that these complaints are manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
II. ALLEGED VIOLATION OF ARTICLE 34 OF THE CONVENTION
57. The applicant complained of a violation of Article 34 of the Convention, which reads:
“The Court may receive applications from any person, non-governmental organisation or group of individuals claiming to be the victim of a violation by one of the High Contracting Parties of the rights set forth in the Convention or the Protocols thereto. The High Contracting Parties undertake not to hinder in any way the effective exercise of this right.”
58. The applicant complained under Article 34 that for a considerable period of time he could not receive the appellate court ’ s decision of 4 March 2005. He admitted that his lawyer had been provided with a copy of that decision.
59. The Government stated that the applicant ’ s lawyer had been given a copy of the decision. Moreover, the applicant and his lawyer had had access to the case file.
60. The Court notes that it has not been disputed by the parties that the applicant ’ s lawyer was given a copy of the Court of Appeal ’ s decision of 4 March 2005 and that in April 2005 she enclosed it with her appeal on points of law to the Supreme Court. There is no reason to believe that the applicant could not have asked the lawyer to provide him with a copy of that decision.
61. In such circumstances, the Court cannot conclude that the State has failed to fulfil its obligation under Article 34 of the Convention.
III. OTHER ALLEGED VIOLATIONS OF THE CONVENTION
62. Under Article 7 of the Convention the applicant complained that his conviction for misappropriation, abuse of office and forgery had been based on the provisions of the Criminal Code of 2001, which entered into force after he had committed the actions for which he had been convicted. However, the applicant did not specify in his submissions either before the Supreme Court or before this Court under which provisions of the old Code he should have been sentenced and why he believed them to be applicable and more favourable to him. It is not for the Court to speculate as to which provisions should have been applied without the benefit of the applicant ’ s specific submissions on this point at any level and, as a consequence, without the benefit of the domestic courts ’ analysis on this issue. Accordingly, this complaint is manifestly ill-founded and should be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
63. Lastly, the applicant also complained of a violation of Article 1 of Protocol No. 1, stating that as a result of his criminal prosecution, his company had been ruined. He also referred to Article 17 of the Convention.
Having considered the applicant ’ s submissions in the light of all the material in its possession, the Court finds that, in so far as the matters complained of are within its competence, they do not disclose any appearance of a violation of the rights and freedoms set out in the Convention. It follows that these complaints are manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION
64. 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.”
65. The applicant claimed 300,000 Ukrainian hryvnias (UAH) in respect of pecuniary damage and 3,000,000 euros (EUR) in respect of non ‑ pecuniary damage.
66. The Government did not comment on the applicant ’ s claims.
67. The Court does not discern any causal link between the violation found and the pecuniary damage alleged; it therefore rejects this claim. On the other hand, ruling on an equitable basis, the Court awards the applicant EUR 1,000 in respect of non-pecuniary damage.
68. The applicant also claimed UAH 75,000 for legal fees incurred before the Court.
69. The Government did not comment on the applicant ’ s claims.
70. 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 considers it reasonable to award the sum of EUR 6 0 0 for the proceedings before the Court.
71. 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.