We continue to review the significant decisions of the European Court of Human Rights on the protection of property rights.

The focus is on the judgment in case of Polimerkonteyner vs. Ukraine (application no. 23620/05), which concerned the long-standing illegal actions of customs authorities to assign an incorrect code to imported goods.

Read the first issue in the case of Intersplav vs. Ukraine at the link.

The circumstances of the case:

The applicant manufactures containers and packaging items, for which he regularly imports into Ukraine the material necessary for economic activity.

Each time, in order to increase budget revenues, the customs authorities did not assign the product its classification code, which required the payment of 5% duty. Each time the applicant appealed against such decisions to the court and proved the duty rate at 1%. 8 court decisions were made in his favor, which annulled 14 customs decisions.

The applicant complained to the ECHR that the customs authorities assigned the product a “more expensive code” and forced it to pay a higher duty on the regular basis, ignoring the numerous court decisions that found such actions to be unlawful.

Although, as a matter of fact all court decisions were enforced, customs ignored the court’s findings in identical situations – when processing subsequent consignments of goods. While the cases were pending, the applicant could not dispose of the goods because they had been seized. In addition, he could not use his funds, which paid the inflated duty.

Legal assessment of the ECHR:

The ECtHR found a violation of Art. 1 of the First Protocol to the Convention guaranteeing the right to peaceful enjoyment of property, for the following reasons:

  1. Any interference of public authorities with the right to peaceful enjoyment of property must be lawful, including the rule of law and the prohibition of arbitrariness.
  2. The applicant was forced to constantly apply to the court with identical statements of claim. Although the courts ruled in favor of the applicant, this did not prevent the customs from continuing to assign the wrong product code. Therefore, the court decisions were deprived of any procedural effect.
  3. Such actions called into question the finality of court decisions and the authority of the courts. The customs authorities acted arbitrarily, and there was no framework to stop this practice.
  4. The applicant had to constantly defend his rights in court and at the time of the trial could not dispose his property, and therefore there was an illegal interference in the right to peaceful enjoyment of property.

Conclusions: public authorities are obliged to take into consideration the legal assessments of the courts in disputes where they were defendants. Authorities should eliminate actions that have been declared illegal by the courts from their activity and not repeat them in identical situations. Otherwise, the injured party has the right to demand compensation.

Author: Victoria Khilinichenko, lawyer of VB PARTNERS