Case of East/West Alliance Limited vs Ukraine. Key decisions of the European Court of Human Rights. Blog 4

We continue to analyze important decisions of the European Court of Human Rights on the protection of property rights. The case of East/West Alliance Limited vs Ukraine (application no. 19336/04) is a clear example of the State’s persecution of the applicant.

As a result of the unjustified arrest and seizure of tax documents, a number of open criminal proceedings, the forced sale of property and legal proceedings, the applicant lost 14 aircraft. The amount of compensation in the ECtHR has reached a record 5,000,000 euros!

The circumstances of the case:

In 2001 the applicant company was searched and documents for aircraft were seized. The tax police subsequently confiscated the applicant’s 14 aircraft, found them to be material evidence and handed them over to the airport for safekeeping.

In 2003 the court ordered the applicant to return 6 aircraft. The tax inspectorate refused and stated that it had recognized the planes as ownerless property and put them up for sale. For more than 5 years, the applicant proved his ownership of the aircraft in the courts and eventually won them. However, at that time there was nothing to return, as the tax sold the aircraft at auction.

A separate lawsuit was pending against eight planes, that were arrested. Finally, the applicant obtained a decision from the prosecutor’s office and the court to return the aircraft. However, in practice the enforcement proceedings were delayed for years. It was later established that out of 8 aircraft, only 3 remained – and rather not aircraft, but their components, because “the detected units can no longer be considered aircraft.” As it turned out, the remaining aircraft were sold a long time ago.

As a result, even after winning the courts, the applicant was unable to regain his property.

Legal assessment of the ECtHR:

The ECtHR found a violation of Art. 1 of the First Protocol to the Convention guaranteeing the right to peaceful possession of property. The following key conclusions are highlighted:

There were no grounds to seize the title deeds to the aircraft during the search: the grounds for their seizure were not specified, and the documents were never used by the investigation as evidence. Authorities then declared the aircraft ownerless, although in fact they had evidence to refute it. Such behavior is unscrupulous.
The planes were confiscated in violation of the procedure: without the preparation of a proper protocol and in the absence of the property owner. The ECtHR stated that such a seizure was illegal.
After the courts recognized the applicant’s ownership of the aircraft, their detention continued without any legal grounds or logical explanation. The applicant could not return them, despite all the measures taken to restrict the right of ownership.
During storage, the aircraft were damaged so much that they could not be considered aircraft. The responsibility for the physical damage of material evidence lies with the state that was supposed to keep it.

In general, the ECtHR concluded that the applicant had been deprived of his aircraft in an extremely arbitrary manner, contrary to the rule of law.

Conclusions:

Any action by public authorities must be reasonably explained and carried out in strict accordance with legal procedures. Seizure of property, search, temporary access and other actions in criminal proceedings must be objectively necessary. At the same time, the state is responsible for the preservation of material evidence in criminal proceedings and, accordingly, must bear the costs of their preservation.

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Author: Victoria Khilinichenko, attorney

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02/02/2021