The ECHR judgment of March 5, 2019 in the case of Uzan and Others v. Turkey (аpplication No. 19620/05 and other аpplications).
In 2005, the applicants were assisted in preparing аpplications. Subsequently, the аpplications were consolidated and communicated by Turkey.
In the case, аpplications about the freezing of assets of a bank on the verge of bankruptcy, even after the termination of the criminal prosecution against the applicants, were successfully considered. The case has violated the requirements of Article 1 of Protocol No. 1 to the Convention for the Protection of Human Rights and Fundamental Freedoms.
Circumstances of the case
In 2003, the banking regulatory authority transferred the management of the bank, which was on the verge of bankruptcy, to the Savings Deposit Insurance Fund of Turkey (hereinafter - SPSV), to a state institution. SPSV paid depositors losses in excess of 4 billion euros. At the same time, criminal proceedings were instituted against the majority shareholders of the bank, some managers or auditors. Proceedings in the case of bank executives considered by jury have slowed down due to the flight of some of the accused from the country and have not yet been completed.
In August 2003, the criminal court ruled to elect as a preliminary measure the freezing of assets, on the one hand, of managers and some managers, and, on the other, of spouses and children of these individuals. The applicants belonged to these two groups of persons. Initially, they were also affected by the criminal prosecution, but it was terminated in respect of all applicants in January 2004, the bank managers were acquitted of new charges in 2008. However, the preliminary measures chosen in respect of the applicants were not canceled in anticipation of the main proceedings and possible reimbursement of the debt to the state.
QUESTIONS OF LAW
Regarding compliance with Article 1 of Protocol No. 1 to the Convention. (a) Availability of property. Article 1 of Protocol No. 1 to the Convention was applicable to the circumstances of the present case, including to the two applicants (born in 1999 and 2003) who were minors and did not own property in the period relevant to the circumstances of the present case. Turkish courts recognized their ability to acquire certain rights through inheritance and gift. Thus, minor applicants could have legitimate expectations arising from the concept of “property”, given the automatic, generalized and inflexible nature of the preliminary measures, as well as their indefinite duration.
(b) The nature of the intervention. Preliminary measures should be considered as regulating the use of property.
(c) Legality of the interference. In the context of the uncertainty about the outcome of the criminal proceedings brought against those allegedly guilty of financial damage, given the defendants' failure to appear in court, the applicable Turkish law provided the courts with a choice when deciding whether to preserve preliminary measures until reimbursed all amounts required by the PPSF. Having regard to the conclusions reached by the Court below in its consideration of the proportionality of the interference, it may defer consideration of whether such a wide margin of appreciation meets the criterion of legality.
(d) The legitimacy of the aim pursued. The controversial measures were in line with the general interest, which consisted in obstructing the use of property that could be acquired by criminal means.
(e) Proportionality of intervention. The Court has recognized the importance and complexity of the present case for the financial, administrative and judicial authorities of Turkey: measures had to be taken to protect the rights of a large number of people affected by this situation, minimize possible losses, prevent any fraudulent activities, return public funds and search for persons who are allegedly were responsible for causing financial damage. Preliminary measures designed to prevent fraudulent transfer of public funds can be an effective and necessary means in the fight against fraudulent activities in financial circles. Accordingly, the application of preliminary measures initially did not in itself contradict the principle of proportionality.
Nevertheless, if the application of preliminary measures can be recognized as justified by the general interest, when they are aimed at preventing fraudulent actions in order to ensure satisfaction of the creditor's requirements, these measures should be canceled as soon as they are no longer necessary, since their influence only increases over time. In the present case, the problem arose mainly from the moment when the applicants were ordered to terminate the proceedings in their case.
The severity of the encumbrances imposed on the applicants follows from the following:
(i) the period during which the restrictions remain: 10 years for some applicants, for others - up to 15 years.
(ii) Scope of restrictions: two minor applicants were deprived of the opportunity to purchase some property, the other three cannot manage the teacher’s salary, savings and housing respectively (and each of them cannot dispose of his own vehicle).
(iii) The automatic, general, and inflexible nature of restrictions, without regular, individual control. Accordingly, not only the applicants were not prosecuted, but the competent Turkish courts invalidated the payment orders prepared in the name of the applicants. The same courts established that the applicants could not be held liable for causing material damage to the FSBR.
(iv) The absence of evidence in the case file that would suggest that the applicants could have been involved in any form of fraud. Accordingly, the Turkish authorities considered, if they did at all, the possibility of applying alternative measures only at the very latest stage of the proceedings. Furthermore, there is no evidence in the case file that in order to recover debts owed to the state, better protection was required than the transfer of the applicants' property.
(v) From the point of view of procedural guarantees, the granting by the jury to some applicants of a “status different from the status of the persons participating in the case” has prevented them and still prevents them from participating in the proceedings in the main criminal case, on which the resolution of the issue of their rights.
Without providing any other justification, apart from kinship with the bank’s leaders or fulfillment of official duties at the bank at the considered time, the application of preliminary measures to the applicants ’property and the automatic maintenance of these measures, despite decisions to terminate criminal cases or to justify the applicants, are poorly consistent with the principles enshrined in the Court's case-law: on the contrary, judges should evaluate which measures could best be applied in the light of the circumstances of the case, and , more generally, to strike a balance between the main legal objective and the rights of stakeholders. Furthermore, the applicants were not provided with procedural guarantees. Consequently, a fair balance was upset.
There was a violation of the requirements of Article 1 of Protocol No. 1 to the Convention (adopted unanimously in respect of adult applicants, by six votes in favor and one against in relation to minors).
In application of Article 41 of the Convention. The issue of fair compensation is not ready for consideration.