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FIFTH
SECTION
CASE OF LIIVIK v. ESTONIA
(Application
no. 12157/05)
JUDGMENT
STRASBOURG
25 June 2009
This judgment will become
final in the circumstances set out in Article 44 § 2
of the Convention. It may be subject to editorial revision.
In the case of Liivik v. Estonia,
The
European Court of Human Rights (Fifth Section), sitting as a Chamber
composed of:
Peer
Lorenzen,
President,
Rait
Maruste,
Karel
Jungwiert,
Renate
Jaeger,
Mark
Villiger,
Isabelle
Berro-Lefèvre,
Mirjana
Lazarova Trajkovska,
judges,
and Claudia
Westerdiek, Section
Registrar,
Having
deliberated in private on 2 June 2009,
Delivers
the following judgment, which was adopted on that date:
PROCEDURE
- The
case originated in an application (no. 12157/05) against the Republic
of Estonia lodged with the Court under Article 34 of the Convention
for the Protection of Human Rights and Fundamental Freedoms (“the
Convention”) by an Estonian national, Mr Jaak Liivik (“the
applicant”), on 10 March 2005.
- The
applicant was represented by Mr H. Vallikivi and Mr A. Suik, lawyers
practising in Tallinn. The Estonian Government (“the
Government”) were represented by their Agent, Ms M. Hion,
Director of the Human Rights Division, Legal Department, Ministry of
Foreign Affairs.
- The
applicant alleged that the law on the basis of which he had been
convicted was not clear and comprehensible and that he had not
received a fair trial.
- By
a decision of 12 February 2008 the Court declared the application
admissible.
- The
applicant and the Government each filed observations on the merits
(Rule 59 § 1).
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
- The
applicant was born in 1951 and lives in Saku, Harju County. He served
as the acting Director General of the Estonian Privatisation Agency
(erastamisagentuur) (“the Agency”) at the material
time.
A. Background of the case
1. Privatisation of the Estonian railways
- On
25 February 1999 the Estonian Parliament (Riigikogu) decided
that AS Eesti Raudtee (“ER”), a public limited company in
possession of the Estonian railways, was to be privatised in
accordance with the Privatisation Act (Erastamisseadus). The
privatisation process was accompanied by considerable political
debate as well as by pressure from various stakeholders on the
persons conducting the privatisation. The company was in a difficult
economic situation and in need of investment. Under the Privatisation
Act, it was the responsibility of the Agency to carry out the
privatisation of state assets.
- On
11 January 2000 the Government approved the plan for the
privatisation of certain state assets in 2000. According to the plan,
the Agency had to dispose of the majority shareholding in ER (51 to
66% of the shares) to a strategic investor. In order to increase its
capacity and competitiveness, investments in the railway
infrastructure were established as supplementary conditions. The
public call for tenders was to be announced by April 2000 so that the
privatisation could be carried out in the course of the year 2000.
- On
17 April 2000 the Agency announced an international two-stage tender
procedure with preliminary negotiations for the privatisation of 66%
of shares in ER.
- On
11 July 2000 the Government designated T. J., the Minister of
Transport and Communications, as the person responsible for
privatisation negotiations. T. J. was also a member of the Board of
the Privatisation Agency (“the Board”).
- By
resolution of the Board dated 16 August 2000, four bidders were
invited to participate in the second stage of the tender procedure.
The Board also established supplementary conditions with regard to
the second stage of the procedure, including the submission of a
business plan.
- By
20 November 2000 – the date on which the submission of final
bids was due – three bidders had submitted their bids.
According to the decision of the Board of 13 December 2000, the
bid of Rail Estonia ApS was deemed the best one. The bid submitted by
Baltic Rail Services OÜ (“BRS”) was deemed the
second-best bid.
- Since
Rail Estonia ApS refused to enter into the privatisation agreement
and to pay the purchase price for the shares of ER in accordance with
its bid by the due date prescribed by the Agency (end of February
2001), BRS was invited to sign the privatisation agreement.
- On
30 April 2001 the agreement for privatisation of 66% of the shares in
ER was signed between the Republic of Estonia, BRS and ER. According
to the agreement, BRS assumed the obligation to pay 1,000,000,000
Estonian kroons (EEK) (approximately corresponding to 64,000,000
euros (EUR)) for the shares as well as to invest at least
EEK 2,566,145,000 (EUR 164,000,000) in the next five years.
Simultaneously with the privatisation agreement a shareholders'
agreement of ER was signed between the Republic of Estonia and BRS.
The applicant, as the acting Director General of the Agency, signed
the privatisation agreement and T. J., as the Minister of Transport
and Communications, signed the shareholders' agreement on behalf of
the State.
- The
agreed transaction of the privatisation of 66% of shares in ER was
completed by 31 August 2001. By the same date BRS had furnished the
required warranties for performance of the privatisation agreement
and transferred to the State the agreed purchase price for the
shares.
- At
the time when the application to the Court was lodged (10 March
2005), ER was, in the applicant's submission, a successful company in
which the State earned ten times more for its 34% shareholding than
it had previously done with a 100% stake. Moreover, before the
conclusion of the agreement for the privatisation of ER, the company
had been in a pre-insolvency situation where short-term obligations
(such as the payment of salaries) had been financed by means of bank
loans. Failure to conclude the privatisation agreement could have had
extremely serious consequences for the Estonian economy as a whole
(in particular, the insolvency of the railway company and the loss of
large transit flows and of expected tax revenues).
2. The State's representations and warranties under the
privatisation agreement
- The
privatisation agreement contained a section concerning
representations and warranties, including “Representations and
Warranties of the State”. The criminal charges brought against
the applicant related to the confirmations given by the State in
respect of possible claims of AS Valga Külmvagunite Depoo,
an insolvent public limited company, and in connection with the
purchase of locomotives of Russian origin.
(a) Warranty relating to the claims of AS
Valga Külmvagunite Depoo
- According
to the applicant, the management of ER had failed to furnish
sufficient information to the representatives of BRS concerning
possible claims by the insolvent AS Valga Külmvagunite Depoo
against ER.
- Since
BRS had bid a certain amount of money for 66% of shares in ER and the
amount of the bid could not be changed subsequently in connection
with any possible obligations arising later, possible claims by AS
Valga Külmvagunite Depoo constituted a material risk for BRS.
Considering the possible claims which had not been disclosed on the
balance sheet of ER, the amount and validity of which were unclear,
the parties to the privatisation agreement agreed on certain
guarantees, formulated in section 9.1.1 (p) of the agreement.
Under this provision, the State undertook to provide BRS with the
opportunity to examine all circumstances concerning the claims and
court cases in relation to AS Valga Külmvagunite Depoo and its
insolvency proceedings. If BRS were to discover risks substantially
and actually affecting the value of ER that it could not have
evaluated at the time of the signing of the privatisation agreement,
the parties undertook to solve such questions at the latest by
29 June 2001 in good faith and by mutual agreement. For example,
it was possible that the State would give BRS by 29 June 2001 an
additional warranty whereby the State would take partial and limited
liability for the claims of AS Valga Külmvagunite Depoo against
ER under certain conditions. The State and BRS were also entitled at
their sole discretion to withdraw from the privatisation agreement
and to terminate it should they not reach mutual agreement concerning
the claims of AS Valga Külmvagunite Depoo.
- According
to a subsequent agreement the term of 29 June 2001 was extended to 21
August 2001. By that date, BRS was aware that the possible claims of
AS Valga Külmvagunite Depoo constituted risks that substantially
affected the value of ER. In view of that circumstance, on 21 August
2001 the State, represented by the Director General of the Agency
pursuant to Article 29 of the Statutes of the Privatisation Agency,
and BRS concluded a protocol concerning the possible claims under
which the State furnished to BRS an additional warranty. Subject to
certain conditions, the State undertook to indemnify ER 20% of any
sums exceeding EEK 1,000,000 (EUR 64,000) that it might actually
be required to pay to AS Valga Külmvagunite Depoo, up to
the amount of EEK 22,407,385 (EUR 1,432,000). Furthermore,
the State undertook to indemnify 100% of any sums exceeding EEK
22,407,385, up to the amount of EEK 114,261,140 (EUR 7,301,000).
(b) Warranty relating to the purchase of
locomotives of Russian origin
- The
business plan and technical and financial plan of BRS, as accepted by
the resolution of the Board on 13 December 2000, prescribed the
transition to the use of locomotives of American origin and absolute
termination of the use of locomotives of Soviet/Russian origin that
ER had been using until then. However, the management of ER –
not subordinate to the Agency – entered into an agreement with
AS Hansa Liising and Intergate Company Ltd on 27 December 2000 for
the acquisition of five additional locomotives of Russian origin for
ER for an – allegedly unreasonably high – price of
7,000,000 United States dollars (USD) (then corresponding to
approximately EUR 7,500,000). The acquisition of the new
locomotives was at variance with the privatisation bid of BRS as
accepted by the State and it gave rise to the danger that BRS would
not be able to abide by its privatisation bid.
- Due
to the above circumstances, the parties – the State,
represented by the acting Director General of the Agency, and BRS –
agreed on section 9.1.1 (s) in the privatisation agreement,
containing a warranty given by the State to BRS. The State undertook
to reimburse BRS for any direct damage that it might bear should ER
actually acquire the five locomotives before BRS obtained control
over the company. Several additional conditions were agreed upon,
including an obligation on BRS to minimise the possible damage. For
the fulfilment of potential obligations arising from the warranty,
the Agency was obliged to maintain in the State's bank account the
sum of EEK 50,000,000 (EUR 3,195,000) until the grounds for
claims regarding the warranty had ceased to exist, but in any case
not for longer than seven years. The maximum potential State
liability under this warranty was EEK 100,000,000
(EUR 6,390,000). The parties considered the possible direct
damage covered by this warranty to be debts relating to the
privatised property outside the scope of privatisation, as described
in section 10(5) of the Privatisation Act. The State was entitled at
its sole discretion and upon notice to BRS but at the latest by 29
June 2001 to withdraw this warranty, to withdraw from the
privatisation agreement and to terminate it.
B. Charges against the applicant
- The
applicant was appointed acting Director General of the Agency by its
Board on 27 October 1999. According to the Privatisation Act, the
Director General was not a member of the Board. As the acting
Director General, the applicant was responsible for execution of the
principal decisions of the Government and the Board. He was entitled
and obliged to manage the everyday activities of the Agency,
including entering into privatisation agreements.
- In
July 2001 the State Audit Office (Riigikontroll) gave its
opinion concerning the lawfulness of the privatisation of the shares
in ER to the Public Prosecutor's Office for information and for a
decision on whether criminal proceedings needed to be initiated. It
was found that the applicant and the Minister of Transport and
Communications had acted beyond their authority in assuming financial
obligations for the State. The State Audit Office was of the view
that they had done so without any legal grounds.
- On
26 July 2001 the Public Prosecutor's Office (prokuratuur)
informed the Auditor General (riigikontrolör) that
criminal proceedings had not been initiated. According to the Public
Prosecutor's Office, the agreements had not yet materialised;
moreover, they had been concluded in accordance with the decisions of
Parliament and the Government and there existed legal grounds for
covering debts and obligations relating to privatised assets from the
privatisation proceeds. There had been no misuse of official position
or significant damage (either material or moral) to national
interests within the meaning of Article 161 of the Criminal Code
(Kriminaalkoodeks).
- In
a press release from the Public Prosecutor's Office, dated 14 August
2001, the Prosecutor General (peaprokurör) confirmed that
it had not been unlawful to take certain conditional risks in the
agreements concerned. According to the applicable legislation,
payments could be made from privatisation proceeds without assuming
any liability for the State budget. He stated that the refusal to
initiate criminal proceedings against the applicant and T. J. had
been well-founded and lawful.
- By
a letter of 31 August 2001 to the Prosecutor General the Auditor
General again requested that initiation of criminal proceedings in
respect of the applicant be considered. He referred to the conclusion
on 21 August 2001 of a protocol concerning possible claims by AS
Valga Külmvagunite Depoo as a new circumstance.
- On
10 September 2001 the head of the Prosecution Department of the
Public Prosecutor's Office initiated criminal proceedings against the
applicant.
- The applicant was charged with misuse of his official
position in giving the representations and warranties in the
privatisation agreement described above. According to the charges, he
had created a situation whereby the preservation of the State's
assets might have been jeopardised. This could be considered to have
caused significant damage to national interests. Moreover, by
repeatedly assuming unlawful obligations for the State, the applicant
had cast doubt on the legitimacy and reliability of the activity of
the Agency as a state institution, thus materially impairing the
authority of the State in society, and had also damaged the
reputation of the Republic of Estonia as a contractual partner at
international level; those acts, in aggregate, had to be considered
to have caused significant damage to the State. Accordingly, he had
committed an offence under Article 161 of the Criminal Code.
- On
17 April 2002 Parliament set up an investigation committee in order
to investigate the circumstances relating to the privatisation of the
railways. It was headed by a member of the Board of the Agency who
had opposed the privatisation of ER. The final report of the
committee was approved in February 2003. The results of the
committee's investigation, condemning the privatisation, were
published by the media during the criminal investigation.
- On
24 March 2003 the Public Prosecutor's Office approved the bill of
indictment. The applicant was then committed for trial before the
Tallinn City Court (linnakohus).
- The
applicant was also charged with – and subsequently convicted of
– misuse of his official position in connection with the
privatisation of RAS Tallinna Farmaatsiatehas (the
state-owned public limited company Tallinn Pharmaceutical Factory).
However, he did not make any complaints before the Court in this
respect.
C. The court proceedings
1. The proceedings in the Tallinn City Court
- On
2 June and 9 September 2003 the applicant requested the Tallinn City
Court to return the case for additional preliminary investigation
because of the one-sidedness of the investigation. The court
dismissed the requests, finding that the defence had in substance
challenged the evidence and submitted additional evidence which the
court would assess while deciding on the merits of the case. It
considered that there were no obstacles to proceeding with the case
before the court, the applicant having a right to make further
requests in the course of the proceedings.
- At
the hearing on 11 September 2003, after the court had had the bill of
indictment read out, the applicant confirmed that he understood the
charges brought against him but did not plead guilty. At the hearing
V. S. (former Director General of the Agency) gave statements as a
witness in respect of the charge concerning the privatisation of RAS
Tallinna Farmaatsiatehas.
- On
25 September 2003 the applicant's lawyer requested that T. J.,
Minister of Transport and Communication and member of the Board, be
questioned as a witness. T. J. had been the person in charge of the
negotiations for the privatisation of ER and was aware of the facts
essential to the criminal case.
- On
6 October and 25 November 2003 the applicant's lawyer submitted
additional requests for admission of evidence. The latter request
included a post scriptum remark asking the court to ensure
that the summonses were indeed delivered to the witnesses. According
to the defence counsel, several important witnesses, for example, M.
P., V. S., G. S. and others, had not received the summonses.
- At
the hearing on 16 December 2003 the court granted the defence
counsel's requests to admit supplementary evidence and to summon
witness T. J. Witnesses K. (an official of the Agency) and V. S. were
examined at the hearing. Subsequently, the court adjourned the
hearing in order to summon witness T. J. and other witnesses on whom
it had not been possible to serve summonses.
- At
the hearing on 22 December 2003 G. S. (deputy chairperson of the
management board of BRS at the material time) was heard as a witness.
The defence counsel withdrew its request to examine T. J. The
prosecutor asked for disclosure of the statements of all the
witnesses who had submitted in writing that they would maintain their
statements given earlier, during the preliminary investigation. It
does not appear from the record of the court hearing that the defence
disagreed with the disclosure of the written materials from the case
file. As the parties did not object to closing the examination of
evidence, they proceeded to legal argument.
- On
30 January 2004 the court heard the closing statement by the
applicant. The parties made no requests. On the same day, the court
delivered the operative part of the judgment, by which the applicant
was convicted as charged and sentenced to two years' imprisonment;
eighteen months of the sentence were suspended.
- The
City Court in its judgment referred to the statements from witnesses
V. S., K. (erroneously described as a member of the Board) and G. S.,
who had been heard at the hearings. It also relied on statements from
witnesses P. J. (chairperson of the management board of ER at the
material time), G. (a member of Parliament whose company had at the
material time given legal advice to ER) and H. P. (bankruptcy trustee
of AS Valga Külmvagunite Depoo), given during the preliminary
investigation, and on several items of documentary evidence. The
court found that the obligations undertaken by the applicant on the
State's behalf to reimburse BRS the possible costs relating to the
Russian locomotives and the claim of AS Valga Külmvagunite
Depoo had no basis in law. These obligations had not been excluded
from the privatisation and they had been known to the parties before
the privatisation agreement had been concluded. The court noted that
although on 13 December 2000 the Board had accepted the business plan
of BRS, it had not made a decision to give warranties on behalf of
the State.
- The
City Court found, on the basis of the minutes of the Board's
meetings, that the Board had become aware of the obligations assumed
by the applicant in the privatisation agreement only retrospectively
and through the media. Moreover, the court noted that even if the
Board had been aware of the applicant's acts, it was the applicant
and not the Board who had committed the offence. The court observed
that a bid could not be conditional. If BRS had discovered, after
making the bid, circumstances reducing substantially the value of
shares in ER, it could have refused to conclude the agreement without
any penalty. In such a case, neither of the parties could have
brought any claims against the other.
- The City Court concluded that the applicant, assuming
obligations in the sum of EEK 196,135,232 (EUR 12,533,000) on behalf
of the State, had created a situation where the preservation of the
State's assets had been at stake. This was to be considered to have
caused substantial damage to the interests of the State. The court
considered it irrelevant that the threat to the preservation of the
property of the State had not materialised and that the State had not
sustained any real damage; the existence of the threat itself was
sufficient for it to find that the offence had been committed.
Furthermore, the court noted that the applicant, as a high-ranking
public servant, had also caused non-pecuniary damage to the State. By
disregarding the laws, he had put in doubt the lawfulness and
reliability of the Agency as a State institution, thereby causing
substantial damage to the authority of the State within society and
also damaging the reputation of the Republic of Estonia as a
contractual partner internationally.
2. The proceedings in the Tallinn Court of Appeal
(a) The applicant's appeal to the Court of
Appeal
- The
applicant lodged an appeal with the Tallinn Court of Appeal
(ringkonnakohus). He alleged that in considering whether the
Board had been aware of the disputed warranties in the privatisation
agreement the City Court had not heard the relevant witnesses. Only a
limited number of minutes of the Board's meetings had been examined
by the court.
- Moreover,
the applicant referred to the statements made by witnesses T. J.
(Minister of Transport and Communications and a member of the Board
at the material time) and V. S. (former Director General of the
Agency), according to whom the privatisation of ER had been carried
out in a manner similar to the earlier privatisation of several other
enterprises and no criminal proceedings had been initiated before.
The applicant referred to numerous items of evidence which the court
had failed to take into account or even to analyse.
- The
applicant complained that all but three of the witnesses had not been
heard by the City Court. Nevertheless, the court had to a significant
extent relied on the statements of witnesses P. J., G. and H. P. By
disclosing the statements of these and other witnesses at the hearing
without the defence having had an opportunity to put questions to
them, the City Court had violated Article 6 §§ 1 and 3 (d)
of the Convention. Moreover, the court had failed to summon M. P.,
Chairperson of the Board, a very important witness for the defence.
The defence had also requested the court to summon T. J. and had
informed the court of his whereabouts; however, he had not been
summoned. These facts also amounted to a violation of the procedural
rules by the City Court.
- Furthermore,
the applicant argued that the City Court's judgment had been poorly
reasoned, basing his conviction on the reproduction of a list of
documents and a reference to “other material in the case file”
without having properly analysed the evidence and having completely
disregarded most of it. For example, the applicant submitted that the
City Court's conclusion that the Board had become aware of the
obligations assumed by the applicant in the privatisation agreement
only retrospectively and through the media was based only on a
statement from L. as reflected in the minutes of the Board's meeting.
However, L. had not been heard by the court.
- The
applicant alleged that the City Court had been wrong in concluding
that the Board had made no decision concerning the obligations taken
by the applicant. He argued that, after the Board had accepted the
business plan on 13 December 2000, he had been obliged to conclude
the privatisation agreement in accordance with it. The disputed
provisions had been included in the privatisation agreement precisely
because the Board had accepted the bid of BRS. Furthermore, the
applicant argued that there had been no causal link between his acts
and the legal consequences which had ensued, as required by the
case-law relating to Article 161 of the Criminal Code. Not only had
the Board been aware of the content of the privatisation agreement,
both before its conclusion and thereafter, but the agreement had been
approved in substance by the Board.
- The
applicant disputed the City Court's conclusion that the obligations
relating to the Russian locomotives and the claim of AS Valga
Külmvagunite Depoo had not been excluded from the privatisation
agreement. He insisted that the notion “excluded from the
privatisation agreement” had to be interpreted as meaning that
the exclusion was specifically contained in the agreement itself. He
also maintained that the exact amount and nature of these obligations
had not been known to the Agency and BRS at the time of the
conclusion of the privatisation agreement. In fact, these obligations
had never materialised; accordingly, they could not possibly have
existed before the privatisation agreement had been signed and even
less so in any defined nature or exact amount.
- The
applicant argued that he had not assumed obligations on behalf of the
State, he had, rather, agreed on certain representations and
warranties. In the situation where the Privatisation Act did not
clearly regulate privatisation agreements and the Soviet Civil Code
of 1964 could not be applied in the privatisation process, the State
undoubtedly had to follow internationally recognised norms and
practices. In the case of an international tender procedure it was
not conceivable that an agreement would be concluded without any
representations or warranties from the seller. The applicant argued
that he had acted lawfully and in accordance with section 10(5)
of the Privatisation Act, section 2(2) of the Use of Privatisation
Proceeds Act (Erastamisest laekuva raha kasutamise seadus) and
points 6 and 7 of the Government regulation concerning the Procedure
for Covering Debts Relating to Privatised Assets and Expenses
Relating to Privatisation of Assets (Erastatud varaga seotud
võlgade ja vara erastamisega seotud kulude katmise kord).
- The
applicant insisted that he had neither caused any damage to the State
nor created a situation where the preservation of the State's assets
had been jeopardised. Moreover, no claims had been made against the
State under the disputed warranties in the privatisation agreement.
He also challenged the City Court's conclusion concerning the damage
to the reputation of the State, arguing that the court had not paid
attention to the excerpts from numerous international and Estonian
newspapers indicating that the conclusion of the privatisation
agreement and the subsequent successful performance of ER had
received positive media coverage. These showed that the privatisation
had had a positive impact on the reputation of the Republic of
Estonia. Moreover, the City Court had failed to analyse what would
have been the financial effects if the privatisation agreement had
not been concluded, taking into account the fact that ER had been in
a pre-insolvency situation and that its insolvency could have had
serious effects on the economy of the whole country.
- Finally,
the applicant alleged that the charges against him had been
politically motivated. The privatisation of 66% of shares in ER had
been decided by Parliament, the Government and the Board, whose
decisions the applicant had been bound to follow. However, charges
had been brought only against the applicant. Moreover, the Public
Prosecutor's Office had repeatedly refused to initiate criminal
proceedings against the applicant, finding that his acts had been
lawful. Nevertheless, the Public Prosecutor's Office had initiated,
only a few days later and under strong political and public pressure,
a criminal case against him, whereas no charges had been brought
against T. J. or other participants in the privatisation process. In
a whole series of analogous privatisation agreements, the agreement
concerning the privatisation of ER had been the only one in respect
of which a criminal investigation had been initiated.
- The
applicant requested that the Court of Appeal re-examine all the
evidence in the case.
(b) The Court of Appeal's judgment
- The
Tallinn Court of Appeal heard the case on 13 April 2004. In the
course of legal argument, after the prosecutor had dealt with the
issue of the disclosure of witness statements, the applicant's
counsel noted that the issue of witnesses was not of primary
importance. On the same date the Court of Appeal delivered the
operative part of its judgment.
- By
the judgment of 13 April 2004 the Court of Appeal upheld the City
Court's judgment. It found that the witnesses who had not appeared
before the City Court had informed the court that they were unable to
attend the hearing. In accordance with the law of criminal procedure,
their statements made during the pre-trial investigation had been
read out in the City Court. Moreover, the Court of Appeal noted that
the statements of witness M. P. had not been used by the City Court
against the applicant. He had changed his place of residence during
the proceedings and the summons previously sent to him had been
returned to the court. The applicant's lawyer had agreed to terminate
the judicial examination without making any requests to the court. In
respect of witness T. J., whose attendance the applicant's lawyer had
requested, the Court of Appeal noted that, according to the record of
the City Court hearing, the defence lawyer had withdrawn his request.
Moreover, in his appeal the applicant had not set out the names and
addresses of the persons whom he wished to have examined by the Court
of Appeal, as required by Article 8 § 3 of the Code of Criminal
Court Appeal and Cassation Procedure (Apellatsiooni ja
kassatsiooni kriminaalkohtumenetluse seadustik). Neither had such
a request been made at the appeal court's hearing. The Court of
Appeal also noted that it was undisputed that the applicant had
concluded the agreements concerned. The only issue at stake was the
legal status of the applicant's acts and in this context the
statements of witnesses were irrelevant.
- In
respect of the initial refusal of the Public Prosecutor's Office to
initiate criminal proceedings against the applicant, the Court of
Appeal noted that this had concerned only one of the two warranties,
as the other one had not yet been given at that time. Moreover,
according to Article 5 § 1 of the Code of
Criminal Procedure (Kriminaalmenetluse koodeks), the refusal
to initiate criminal proceedings did not preclude criminal
proceedings concerning the same facts being initiated later.
- The
Court of Appeal noted that it had been irrelevant whether the Board
had become aware of the obligations taken in the privatisation
agreement before or after it had been signed by the applicant, as
such awareness did not render his acts lawful. The Court of Appeal
found that by its decision of 13 December 2000 the Board had accepted
the business plan of BRS. However, this had not meant that the Agency
had to reimburse BRS the costs relating to the purchase of Russian
locomotives, but only that the Agency would not object to the use of
American locomotives.
- Furthermore,
the Court of Appeal held that the disputed obligations had not been
excluded from the privatisation agreement, as such an exclusion
should already have been made in the tender documents. The witnesses
G. S. and V. S. had submitted that no obligations or debts had been
excluded. The Court of Appeal found that the parties had been aware
of the possible obligations and that these obligations had been
sufficiently clearly established for the bidders to be able to assess
the probable risks and the scope of the obligations and make their
bids accordingly.
- The
appeal court found that no legal basis had existed for the assumption
of the obligations concerned. On the contrary, the City Court had
referred to several provisions of law which the applicant had
violated in assuming the obligations.
- The Court of Appeal noted that the danger to the
preservation of the State's assets had constituted independent
damage, and not merely a precondition for the occurrence of damage,
in the present case.
- The court considered that the statements by witness G.
S., the letters from ER and BRS, indicating that they had no claims
against the State, and the excerpts from newspapers could not be
taken into account when assessing the significance of the damage
caused to the interests of the State. A court had no obligation to
give its opinion on what had been published in the press. The Court
of Appeal observed that the applicant had been a high-ranking state
official who had been working in a field attracting great public
interest both nationally and internationally. It continued:
“It is understandable that the commission of the
acts of which [the applicant] was convicted by the judgment of the
City Court is not in compliance with the general sense of justice.
Thus [the applicant's] acts in his capacity as an acting Director
General of the Privatisation Agency, which disrespected the laws, put
in doubt the lawfulness and reliability of the activities of the
Privatisation Agency as a State institution, thus materially
impairing the authority of the State in society, and also damaged the
reputation of the Republic of Estonia as a contractual partner on the
international level, so that those acts, in aggregate, had to be
considered to have caused significant moral damage to the interests
of the State.”
- The
Court of Appeal did not agree with the argument that the failure to
conclude the privatisation agreement could have had extremely serious
consequences for the Estonian economy as a whole. It noted that, even
if the agreements could not have been concluded without the disputed
provisions, this did not exclude the unlawfulness of the applicant's
acts or his guilt. Although the State would not have received the
money for the privatisation of the shares in ER had the privatisation
agreement not been concluded, it would have retained shares of the
same value.
- Finally,
the Court of Appeal noted that the applicant had not been convicted
in respect of the privatisation as such but rather of assuming
certain obligations on behalf of the State. He had personally agreed
to such obligations and was personally responsible for them.
3. Appeal to the Supreme Court
- The
applicant appealed against the judgment of the Court of Appeal. In
addition to the arguments already raised in his appeal against the
City Court's judgment, he emphasised that the Court of Appeal had not
analysed several items of evidence in his favour and had limited its
analysis only to the inculpating evidence. He also argued that only
three witnesses had been heard before the City Court, whereas
witnesses P. J., G. and H. P. had not been heard, although the
applicant's conviction had been based to a considerable extent on the
statements of these witnesses. Moreover, witnesses M. P. and T. J.,
who had been important from the defence's perspective, had not been
heard. The sole reason why the defence had withdrawn the request to
have T. J. heard in the City Court had been to avoid prolonging the
proceedings. In fact, the City Court had adjourned a hearing in order
to summon T. J.; however, despite the fact that the defence had
provided the court with his address, the court had not sent summonses
to the witness.
- The
applicant called into question the Court of Appeal's argument that
the statements of the witnesses P. J., G. and H. P. had, in fact,
been irrelevant. He asked why it had been necessary to summon these
witnesses if their evidence had been irrelevant.
- The
applicant argued that not only had the State sustained no damage in
connection with the warranties concerning the claim of AS Valga
Külmvagunite Depoo, but in fact such a claim had never existed.
Thus, the Court of Appeal had wrongly considered that the claim had
been sufficiently clearly established. Neither had any claims been
made in connection with the warranty concerning the Russian
locomotives. Moreover, from 30 April 2004 the possibility of any
claims being made against the State in the future had been excluded,
since the liability of the State under the representations and
warranties expired three years after the date of signing the
agreement.
- The
applicant insisted that, as the Board had been aware of the
warranties and as it had not used its opportunity to withdraw from
the agreement, it had to be concluded that, in substance, the Board
had approved the warranties.
- In
respect of the non-pecuniary damage allegedly caused to the State,
the applicant noted that the Court of Appeal's reasoning had repeated
almost literally the wording of the bill of indictment. The court had
failed to consider the evidence submitted by the defence.
- The
applicant challenged his conviction on the basis of “the
general sense of justice”, arguing that such a ground for
conviction was incompatible with the principle of the rule of law.
- Moreover,
he argued that the appeal court had been wrong in finding that, had
the shares in the ER not been sold, the State would have retained
shares to the value of the sale price. He was of the opinion that
this finding was in conflict with economic logic, as the price of the
shares in an enterprise had no fixed value and the shares in an
insolvent company cost nothing. He concluded that the State had
sustained no damage and there had been no threat to the preservation
of the property of the State.
- The
applicant insisted that he had had a right to interpret the
legislation in the same manner as the Public Prosecutor's Office,
which had refused to initiate criminal proceedings against him since
there had been no breach of law. As the Public Prosecutor's Office
had considered the applicant's acts lawful before he had signed the
protocol concerning the possible claims of AS Valga Külmvagunite
Depoo, he had legitimately expected that he could rely on the
prosecution's interpretation according to which his acts, including
the conclusion of the protocol, were lawful. He was of the opinion
that his conviction had been based on laws that were not clear and
understandable, as even the highest officials in the Public
Prosecutor's Office, including the Prosecutor General, had considered
his acts lawful.
- On
15 September 2004 the Supreme Court (Riigikohus) refused the
applicant leave to lodge his appeal.
II. RELEVANT DOMESTIC LAW AND PRACTICE
A. Domestic law and practice at the material time
1. Relevant domestic law
- According
to Article 65(10) of the Constitution of the Republic of Estonia
(Eesti Vabariigi põhiseadus) Parliament decides, on the
proposal of the Government, on the assumption of financial
obligations by the State.
- Section
29 of the State Budget Act (Riigieelarve seadus), as in force
at the material time, provided for ministries and state agencies to
assume financial obligations only if resources had been allocated
thereto in the State budget or in a budget approved by a minister on
the basis thereof. Ministries and state agencies were prohibited from
providing security, including furnishing guarantees, unless otherwise
prescribed by law.
- The
Privatisation Act (Erastamisseadus), as in force at the
material time, established that the Agency was managed by its Board,
consisting of eleven members, of whom eight were appointed by the
Government and one by the President of the Bank of Estonia. The
Minister of Economic Affairs and the Minister of Finance were ex
officio members of the Board (section 8(1)).
According
to section 9(2) the exclusive competence of the Board included, inter
alia, the appointment and dismissal of the Director General of
the Agency, the submission of the privatisation plan to the
Government for approval, the establishment of supplementary
conditions of privatisation, and the identification of the best
bidder and (if necessary) the second-best bidder in tenders through
preliminary negotiations.
Pursuant
to section 10(5) the Agency may decide to cover debts relating to the
assets to be privatised from the privatisation proceeds (according to
section 2 of the Use of Privatisation Proceeds Act), if such debts
are not objects of sale.
Section
21(8) stipulates that the Agency, in assessing the final tenders,
determines the best bid, taking into account the established
supplementary conditions and the purchase price. It may also
determine the second-best bid.
Section
27(1) provides that privatisation agreements of purchase and sale are
drawn up in unattested written form.
- Article
4 of the Statutes of the Privatisation Agency (Eesti
Erastamisagentuuri põhimäärus) stipulates that
the Agency represents the State in performing its tasks.
Article
28 establishes that the Director General of the Agency manages the
everyday activities of the Agency.
Pursuant
to Article 29(2), the Director General has to ensure the performance
of the tasks arising from the Statutes and the execution of the
resolutions of the Board.
According
to Article 29(3) the Director General signs the privatisation
agreements of purchase and sale and, if necessary, makes amendments
to the agreements that have entered into force, pursuant to the
procedure established by the Board.
- Under
section 2(2) of the Use of Privatisation Proceeds Act (Erastamisest
laekuva raha kasutamise seadus) the Agency was entitled to use
privatisation proceeds to cover debts relating to privatised assets
in specified cases and pursuant to the procedure established by the
Government.
- The
regulation on the Procedure for Covering Debts Relating to Privatised
Assets and Expenses Relating to Privatisation of Assets (Erastatud
varaga seotud võlgade ja vara erastamisega seotud kulude
katmise kord), promulgated by the Government, provided:
Point 6
“Proceeds from the privatisation of assets ...
shall be used to cover the debts relating to privatised assets which
are specified in points 7-9 of this procedure. Taking into account
the conditions set forth in the points referred to, obligations
relating to such assets shall also be deemed debts relating to
privatised assets.”
Point 7
“Proceeds from the privatisation of shares shall
be used to cover such debts of the company being privatised which
have been excluded from the agreement of purchase and sale or which
occurred after the conclusion of the agreement of purchase and sale,
provided that the debt was not disclosed on the balance sheet of the
company ... and that the parties to the agreement were not aware of
the debt.”
- The Criminal Code (Kriminaalkoodeks), a legacy
of the Soviet era which was reformed in 1992 and amended on numerous
occasions, was applicable at the material time. It provided:
Article 161 – Misuse of official position
“Intentional misuse by an official of his or her
official position, if it causes significant damage to the rights or
interests of a person, enterprise, agency or organisation protected
by law or to national interests, shall be punished by a fine or up to
three years' imprisonment.”
- The
provisions of the Code of Criminal Procedure (Kriminaalmenetluse
koodeks) and the Code of Criminal Court Appeal and Cassation
Procedure (Apellatsiooni ja kassatsiooni kriminaalkohtumenetluse
seadustik) that are pertinent to the examination of witnesses
have been summarised in the Taal v. Estonia judgment
(no. 13249/02, §§ 19-27, 22 November 2005).
2. Case-law of the Supreme Court
- The Criminal Law Chamber of the Supreme Court held in
its judgment of 7 December 2000 (case no. 3-1-1-100-00):
“11.4. ... Significant damage, which is
an element of the offence under Article 161 of the [Criminal Code],
can be both pecuniary and non-pecuniary damage caused to the
interests of the State. ...
11.5. The Criminal Law Chamber of the Supreme
Court finds that, as criminal law also protects values that cannot be
measured in money, non-pecuniary damage inevitably has to be accepted
as an element of the offence and cannot be assessed on the basis of
the same criteria as pecuniary damage. The existence or absence of
non-pecuniary damage and also the quantitative dimension of
non-pecuniary damage (whether it is ordinary, significant or
large-scale non-pecuniary damage) has to be established by a court in
each individual case.
What has to be considered non-pecuniary damage of an
ordinary, significant or large extent is an issue of fact. In order
to resolve the issue of the extent of non-pecuniary damage in an
individual case, it is necessary to consider how dangerous the
committed act was in view of the general sense of justice and legal
awareness of society and to what extent it has damaged legally
protected interests... . The extent of the damage can also be
affected by factors such as the status of the official position ...
of the person who had committed the act, the duration of the corrupt
activity, whether it was a single instance or systematic, the number
of persons affected by the unjustified or unlawful acts or decisions
and their location at the local, national or international level, the
type of the damage caused – the level of the ... authorities
whose reputation was damaged, to what extent their credibility was
damaged, whether there was interference in the normal functioning of
the state authority and what that interference was, and so on. In
considering those questions, it has to be taken into account that
sometimes an act and its criminal consequence can be inseparable (for
example, the unlawful activities of a public official constitute at
the same time impairment of the reputation of a public authority).”
- The
Criminal Law Chamber of the Supreme Court has found, for example,
that significant damage to legally protected rights and interests of
other persons and to the national interests had been caused by a
police officer who had unlawfully released a person before he had
served his sentence (judgment of 7 May 1996, case no. 3-1-1-46-96).
- In a judgment of 6 June 2000 (case no. 3-1-1-65-00),
the Criminal Law Chamber of the Supreme Court dealt with a case where
a first-instance court had convicted the mayor of a town of misuse of
official position by endangering the preservation of the town
executive's assets and by damaging its reputation. On an appeal by
the prosecutor, the Supreme Court quashed the mayor's acquittal by
the Court of Appeal, finding that he had unlawfully invested the town
executive's money, creating a danger to its preservation and causing
damage to the executive's reputation. The Supreme Court considered
irrelevant the facts that the town executive and council had been
aware of the mayor's activities and that in the town executive's view
they had not been discredited. It noted that the establishment and
assessment of the elements of the offence was the task of the court
and not of the local government bodies connected with the matter.
B. Subsequent development of the legislation and
case-law
- On 1 September 2002 the Criminal Code was replaced by
the new Penal Code (Karistusseadustik), which provided:
Article 289 – Misuse of official position
“Intentional misuse by an official of his or her
official position with the intention to cause significant damage or
if thereby significant damage is caused to the legally protected
rights or interests of another person or to public interests, shall
be punished by a fine or up to three years' imprisonment.”
- By a legislative amendment concerning economic
offences that entered into force on 15 March 2007, Article 289 of the
Penal Code was repealed. In the explanatory memorandum prepared by
the Ministry of Justice, it was stated that the purpose of repealing
that Article was to limit the responsibility of an official for the
misuse of his or her official position to cases where significant
pecuniary damage had been caused to another person (a new offence of
breach of confidence was proposed to that effect). It was stated in
the memorandum that broad and vague definitions of the necessary
elements of offences were in conflict with the general principle of
legal certainty and the nulla poena sine lege principle laid
down in the Constitution (Articles 13 § 2 and 23, respectively).
It was reiterated that it had to be sufficiently clear to a person
what kind of (lawful) conduct was expected from him or her and which
circumstances determined his or her liability. Reference was also
made to the interpretation of Article 7 § 1 of the Convention by
the European Court of Human Rights, according to which the necessary
elements of a criminal offence had to be clearly defined in law (see
Veeber v. Estonia (no. 2), no. 45771/99,
§ 31, ECHR 2003 I).
Another
reason provided in the explanatory memorandum for repealing Article
289 of the Penal Code was that an assessment of the significance of
non-pecuniary damage caused by misuse of official position made by a
court retroactively constituted a discretionary decision.
Accordingly, it could be difficult for an official to predict at the
time of commission of the act whether the non-pecuniary damage caused
by him or her could, based on the general principles of law, be
regarded as “significant” for the purposes of the
definition of misuse of official position. Hence, at the time of
committing the act it might not be possible to predict with
sufficient certainty whether the particular misuse of official
position resulting in non-pecuniary damage was punishable as a
criminal offence or not. Thus, according to the memorandum, it could
be concluded that in the case of a vague definition of an offence,
there was a risk that damage might be deemed to be caused merely on
the ground that a breach of regulations had been committed, and this,
in principle, made it possible to bring charges against an official
for any kind of misuse of office. Also assessment of the extent of
damage in individual cases was considered to cause problems.
- In a decision of 28 June 2005 (case no. 3-1-1-24-05),
the Criminal Law Chamber of the Supreme Court raised several
important issues in connection with the application of the law in
cases of misuse of official position under Article 161 of the
Criminal Code. The criminal case concerned charges against a person
who held an official position in a public limited company. The
Criminal Law Chamber noted that in its earlier case-law it had
explicitly accepted that non-pecuniary damage could be caused to
legal persons in public law, first and foremost to the State
(including a specific government agency) and to local government
bodies. However, according to the case-law of the Civil Law Chamber
of the Supreme Court, a legal person could not claim compensation for
non-pecuniary damage. Accordingly, the Criminal Law Chamber referred
the case to the plenary Supreme Court to obtain an authoritative
ruling.
The
Criminal Law Chamber in the above case also raised the issue of
whether, if a commercial company were to be able to claim
compensation for non-pecuniary damage, Article 161 of the Criminal
Code was partially contrary to the Constitution. It noted that
Articles 13 § 2 and 23 § 2 of the Constitution and Article
7 § 1 of the Convention embodied the principle that only the law
can define a crime and prescribe a penalty (nullum crimen, nulla
poena sine lege certa). It referred to a judgment of the European
Court of Human Rights in which the Court had found that an offence
had to be clearly defined in law and that this requirement was
satisfied where the individual could know from the wording of the
relevant provision and, if need be, with the assistance of the
courts' interpretation of it, what acts and omissions would make him
criminally liable (see Veeber (no. 2), cited
above, § 31). The Criminal Law Chamber noted that criminal
liability for misuse of an official position under Article 161 of the
Criminal Code was dependent on whether the damage caused was
“significant”. While there existed criteria to assess
whether the pecuniary damage was “significant”, there
were no objective criteria to determine the extent of non-pecuniary
damage. The latter was expressed in the opinion of the court, for the
purposes of which the court would consider the general principles of
law, the level of society's general welfare and case-law.
Accordingly,
the Criminal Law Chamber observed, a court's retrospective assessment
of the significance of non-pecuniary damage caused by misuse of
official position was a discretionary decision. Therefore, it could
be difficult for an official to predict at the time of the commission
of an act whether on the basis of the general principles of law the
non-pecuniary damage caused by him or her would amount to
“significant” damage within the meaning of the offence of
misuse of official position. Thus, at least in cases not covered by
earlier case-law, it was not necessarily predictable with sufficient
certainty whether a particular act of misuse of official position
causing non-pecuniary damage would be punishable as a criminal
offence.
However,
by a judgment of 4 November 2005, the plenary Supreme Court acquitted
the defendant in the above case on the grounds that the act committed
by him had not corresponded to the elements of the offence under
Article 161 of the Criminal Code. Accordingly, the Supreme Court was
procedurally prevented from ruling on the constitutionality of
Article 161.
- In a judgment of 8 January 2007 (case no. 3-1-1-61-06)
the Criminal Law Chamber of the Supreme Court dealt with a charge
concerning a violation of the requirements of public procurement
under Article 300 of the Penal Code. Significant damage caused to the
rights or interests of another person or to public interests was a
constituent element of this offence, as in Article 161 of the
Criminal Code. The court held:
“13. ... [I]n order to guarantee [the
defendant] the right to defence, all the factual circumstances
serving as a basis for his or her criminal liability must be
presented in the text of the bill of indictment in a sufficiently
clear and precise manner. ...
14. The conclusion made in the bill of
indictment that [the defendant] “[had] damaged fair competition
as a basis of the market economy, and thus had damaged other persons'
rights and interests”, did not make it clear who were the
“other persons” referred to whose rights and interests
[the defendant] had damaged, what change was caused in the situation
of the legally protected interests of these persons by the alleged
damage and what was the extent of the damage. Charges of causing
significant damage, which do not specify the injured person or the
facts on the basis of which one could render a legal opinion on the
nature and extent of the alleged damage, are not specific enough and
the courts are not able to establish the existence of significant
damage as a necessary element of the criminal offence on the basis of
such charges.
...
16. ... [A]ccording to the bill of indictment
[the defendant] had breached the requirements applicable to public
procurement proceedings and had thereby caused significant damage by
casting doubt on the impartiality and integrity of the highest
official of an executive body. ...
...
19. It does not appear from the bill of
indictment ... in whose eyes and to what extent the trust in the
impartiality and integrity of the highest official of the executive
body had been undermined as a result of the act committed by the
defendant and what were the circumstances that had evidenced the
undermining of the trust. In other words, the charges did not point
to any facts which, if established, would have allowed the courts to
conclude that [the defendant's] act had actually undermined the
credibility of state officials or to render a legal opinion as to
whether such a consequence could be regarded as damage caused to a
person and whether this damage was “significant” within
the meaning of Article 300 of [the Penal Code]. Hence, the charges of
causation of significant damage brought against [the defendant] were
not specific enough in the part concerning the alleged casting of
doubt on the integrity and credibility of the highest state officials
either.
...
21. ... [Contrary to the requirements of the
criminal procedure law], the courts were not guided – in
establishing the consequence as a necessary element of the offence –
by evidence which would have proved that actual changes in the
reputation of state officials had occurred in the real world and that
these changes had been caused by the act [of the defendant] but,
instead, they were merely guided by the legal assessment of the
nature of the violation committed by [the defendant]. In other words,
the County Court and the Court of Appeal eliminated the boundary
between the act and the consequence, considering that the breach of a
law was automatically also a consequence.
22. ... [I]n criminal proceedings, none of
the facts required to be proved, including consequence as a necessary
element of an offence, can be established on the basis of a legal
opinion. This is because a legal opinion says nothing about the
changes that actually occurred or did not occur in the real world as
a result of the act. A normative understanding according to which an
unlawful act committed by the accused is of such a kind that it would
undermine the trust of an “average person” in the
integrity and impartiality of state officials cannot justify the
conclusion that, in a specific case, there actually is a sufficient
number of persons who are aware of this unlawful act and whose trust
in the integrity and credibility of state officials is undermined as
a result of this particular act.
...
27. In connection with the charge against
[the defendant] that he “created a situation where there was a
real danger to the purposeful and economical use of the funds from
the state budget in the amount of at least 17,661,017 kroons”,
the Criminal Chamber wishes to make it clear that creation of a
danger and causing damage are two different types of consequences
that constitute necessary elements of an offence. Creation of a
danger (emergence of a dangerous situation) can be regarded as an
increase in the possibility of actual damage being caused, and it
comprises a necessary element of an offence only in the case of a
specific danger-creating delict [ohudelikt], that is if the
definition of the offence mentions the creation of a danger as a
consequence being one of the necessary elements of the offence ... .
If the definition of an offence mentions the causation of some kind
of damage as a consequence being one of the necessary elements of the
offence ... it is a delict consisting in the causation of material
damage [materiaalne kahjustusdelikt]. The necessary elements
of this type of offence are present only if actual damage – and
not merely an increase in the possibility of damage being caused –
has been caused as a result of the act. ...”
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 7 OF THE CONVENTION
- The
applicant complained that his conviction on the basis of unclear and
incomprehensible charges and law violated Article 7 of the
Convention, which provides as follows:
“1. No one shall be held guilty of any
criminal offence on account of any act or omission which did not
constitute a criminal offence under national or international law at
the time when it was committed. Nor shall a heavier penalty be
imposed than the one that was applicable at the time the criminal
offence was committed.
2. This article shall not prejudice the trial
and punishment of any person for any act or omission which, at the
time when it was committed, was criminal according to the general
principles of law recognised by civilised nations.”
A. Arguments of the parties
1. The applicant
- The applicant argued that the law on the basis of
which he had been convicted was not clear and comprehensible. He
pointed out that even the most qualified lawyers like the Prosecutor
General and the Head of the Prosecution Department of the Public
Prosecutor's Office had found his activities lawful. His activities
had also been regarded as lawful by the Chairperson of the Board of
the Privatisation Agency (the Minister of Economic Affairs), the
Minister of Transport and Communications, the Minister of Finance and
the former Director General of the Privatisation Agency. While the
Public Prosecutor's Office was entitled to change its opinion, this
did not mean that a person could be convicted on the basis of such
changed opinion if he had acted in good faith in reliance on the
previous opinion of the Public Prosecutor's Office. The applicant
pointed out that no reasons had been given as to why the previous
opinion had been changed in just a couple of weeks. He concluded that
the rules on the basis of which he had been convicted were ambiguous
and he had been held criminally responsible in a random way and
within a vague framework. His prosecution for and conviction of
causing moral damage to the Republic of Estonia with a reference to
an abstract “general sense of justice” was totally
incomprehensible.
- The
applicant also pointed out that the offence of misuse of official
position had been subsequently repealed by Parliament as it had been
in conflict with the Constitution and the Convention because of the
broadness and vagueness of the definition of the necessary elements
of the offence and the discretionary and retrospective judicial
assessment of what constituted significant non-pecuniary damage (see
paragraphs 78, 83 and 84 above). He also emphasised that for the same
reasons the interpretation of the creation of danger and causing
damage had been completely changed by the Supreme Court (see
paragraph 86 above). The fact that Parliament and the Supreme Court
had only in 2007 come to the conclusion that the provisions and
principles underlying the applicant's conviction had been contrary to
the Constitution and the Convention did not render his conviction in
2004 lawful – this had been at that time too contrary to the
principle of nullum crimen sine lege.
2. The Government
- The
Government were of the opinion that Article 161 of the Criminal Code
defined the misuse of official position precisely and specifically.
Although the description of offences related to official position was
inevitably characterised by a certain degree of abstraction, there
existed a body of settled case-law which was published and accessible
and the applicant had been able to foresee that his acts would
constitute a criminal offence. On the basis of the case-law it must
have been clear to the applicant that Article 161 was also applicable
in cases of moral damage, that the danger of causing damage was
sufficient to constitute an element of the offence and that the
knowledge of the authorities about the misuse of the official
position would not rule out the liability of an official. The
Government concluded that the law and the case-law relating to its
application had been sufficiently accessible and foreseeable.
- The
Government emphasised that Article 289 of the Penal Code –
which had replaced Article 161 of the Criminal Code – had been
repealed by an ordinary legislative amendment and it had not been
declared unconstitutional. In any event, replacement of Article 289
of the Penal Code with new provisions – including Article 217-2
providing for liability for abuse of trust – had not prejudiced
the legality of prior judgments.
B. The Court's assessment
- The
Court reiterates that the guarantee enshrined in Article 7, which is
an essential element of the rule of law, occupies a prominent place
in the Convention system of protection. It should be construed and
applied, as follows from its object and purpose, in such a way as to
provide effective safeguards against arbitrary prosecution,
conviction and punishment (see S.W. v. the United Kingdom, 22
November 1995, § 35, Series A no. 335 B, and C.R. v. the
United Kingdom, 22 November 1995, § 33, Series A no. 335 C).
Accordingly, it embodies, in general terms, the principle that only
the law can define a crime and prescribe a penalty (nullum crimen,
nulla poena sine lege) (see Kokkinakis v. Greece, 25 May
1993, § 52, Series A no. 260 A). While it prohibits in
particular extending the scope of existing offences to acts which
previously were not criminal offences, it also lays down the
principle that the criminal law must not be extensively construed to
an accused's detriment, for instance by analogy (see Coëme
and Others v. Belgium, nos. 32492/96, 32547/96, 32548/96,
33209/96 and 33210/96, § 145, ECHR 2000 VII; Achour
v. France [GC], no. 67335/01, § 41, ECHR 2006 ...;
and Kafkaris v. Cyprus [GC], no. 21906/04,
§§
137-138, ECHR 2008 ...).
- The
term “law” implies qualitative requirements, including
those of accessibility and foreseeability. An individual must know
from the wording of the relevant provision and, if need be, with the
assistance of the courts' interpretation of it, what acts and
omissions will make him criminally liable and what penalty will be
imposed for the act committed and/or omission. Furthermore, a law may
still satisfy the requirement of “foreseeability” where
the person concerned has to take appropriate legal advice to assess,
to a degree that is reasonable in the circumstances, the consequences
which a given action may entail (see Kafkaris, cited above, §§
139-140, with further references).
- The
Court has acknowledged in its case-law that however clearly drafted a
legal provision may be, in any system of law, including criminal law,
there is an inevitable element of judicial interpretation. There will
always be a need for elucidation of doubtful points and for
adaptation to changing circumstances. Again, whilst certainty is
highly desirable, it may bring in its train excessive rigidity and
the law must be able to keep pace with changing circumstances.
Accordingly, many laws are inevitably couched in terms which, to a
greater or lesser extent, are vague and whose interpretation and
application are questions of practice (see, mutatis mutandis,
Sunday Times v. the United Kingdom (no. 1), 26 April 1979,
§ 49, Series A no. 30, and Kokkinakis, cited above,
§ 40). The role of adjudication vested in the courts is
precisely to dissipate such interpretational doubts as remain (see,
mutatis mutandis, Cantoni v. France, 15 November 1996,
§ 32, Reports of Judgments and Decisions 1996 V). Article 7
of the Convention cannot be read as outlawing the gradual
clarification of the rules of criminal liability through judicial
interpretation from case to case, “provided that the resultant
development is consistent with the essence of the offence and could
reasonably be foreseen” (see S.W. v. the United
Kingdom, cited above, § 36, and Streletz, Kessler and
Krenz v. Germany [GC], nos. 34044/96, 35532/97 and 44801/98,
§ 50, ECHR 2001-II).
- Finally,
the Court reiterates that, in principle, it is not its task to
substitute itself for the domestic jurisdictions. It is primarily for
the national authorities, notably the courts, to resolve problems of
interpretation of domestic legislation. The Court's role is confined
to ascertaining whether the effects of such an interpretation are
compatible with the Convention (see, mutatis mutandis, Korbely
v. Hungary [GC], no. 9174/02, § 72, 19 September 2008).
- Turning
to the present case, the Court notes that there is no dispute between
the parties that the applicant was prosecuted and convicted under
Article 161 of the Criminal Code, which established liability for
misuse of official position. The legal basis for the applicant's
conviction was therefore the criminal law applicable at the material
time.
- The
Court notes, however, that this penal law provision and its
interpretation were inherited from the former Soviet legal system.
Thus, in the present case the domestic authorities were confronted
with the difficult task of applying these legal norms and notions in
the completely new context of a market economy. Indeed, the applicant
in the present case was involved in the process of large-scale
privatisation of State assets and, in particular, a major item of
infrastructure. It is against this background that it has to be
assessed whether the applicant's acts constituted an offence defined
with sufficient foreseeability.
- The
Court observes that the applicant was charged with and convicted of
creating a situation whereby the preservation of the State's assets
might have been jeopardised and that this was considered significant
damage despite the fact that the risks had not materialised.
Furthermore, he was found to have caused significant moral damage to
the interests of the State – as the Court of Appeal put it, the
applicant's acts had not been in compliance with “the general
sense of justice”; as a high-ranking state official he had cast
doubt on the lawfulness and reliability of the activities of the
Agency as a State institution, thus materially impairing the
authority of the State in society, and also damaged the reputation of
the Republic of Estonia as a contractual partner at international
level (see paragraphs 29, 42, 59 and 60 above).
- The
Court notes that according to the wording of Article 161 of the
Criminal Code “causing of significant damage” was a
necessary element of the offence of misuse of official position. The
text of this provision did not mention the mere creation of a risk as
comprising such damage. The Court is aware of the Supreme Court's
judgment of 6 June 2000 (see paragraph 82 above) in which the
Supreme Court attached importance to the creation of danger as
damage. However, it notes that no criteria had been developed for
assessing such a risk. Moreover, in the present case the applicant
actually acted under an obligation to conduct the privatisation of
ER, having to balance risks relating to proceeding with the
privatisation against those relating to withdrawal from the
agreement. The Court considers that the applicant could not
reasonably foresee that his acts would be deemed to amount to causing
significant damage – on account of the alleged creation of a
risk of damage – within the meaning of Article 161, as
interpreted and applied in the present case.
- In
respect of the alleged causing of significant moral damage to the
interests of the State, the Court considers that this assessment was
made by the courts retroactively on the basis of their discretionary
judgment and it was not susceptible of proof. Indeed, the applicant's
attempt to adduce evidence showing that the reputation of the State
had not been damaged was turned down by the courts. It appears that
the fact of an alleged violation of law by the applicant in itself
served as an irrebuttable presumption that he had caused moral damage
to the interests of the State. So broad an interpretation could, in
principle, render any breach of law a criminal offence within the
meaning of Article 161. Moreover, any such moral damage would have to
be qualified as “significant”. The Court takes note in
this context of the attempts in the Supreme Court's case-law to lay
down criteria for an assessment whether there existed in a given case
any non-pecuniary damage and whether this damage was “ordinary,
significant or large-scale” (see paragraph 80 and the
following, above). However, in the Court's view, the criteria used by
the domestic courts in the present case to establish that the
applicant had caused “significant” non-pecuniary damage –
that he had been a high-ranking state official who had been working
in a field attracting great public interest and that his acts had
been incompatible with “the general sense of justice” –
were too vague. The Court is not satisfied that the applicant could
reasonably have foreseen that he risked being charged with and
convicted of causing significant moral damage to the interests of the
State for his conduct.
- The
Court finds on the whole that the interpretation and application of
Article 161 in the present case involved the use of such broad
notions and such vague criteria that the criminal provision in
question was not of the quality required under the Convention in
terms of its clarity and the foreseeability of its effects.
- In
addition, the Court observes that the Public Prosecutor's Office on
several occasions expressed its opinion that the privatisation in
question had been lawful and refused to initiate criminal proceedings
against the applicant and the Minister of Transport and
Communications. While it is true that the prosecuting authorities'
reassessment of facts and reconsideration of their position in
respect of the lawfulness of a certain course of action is not in
itself at variance with the Convention, the Court notes that in the
present case the Public Prosecutor's Office radically changed its
position within the space of a few days without any substantial
change in the circumstances. Thus the Court finds force in the
applicant's argument that in proceeding with the process for the
privatisation of ER he could legitimately rely on the prosecuting
authorities' interpretation to the effect that his actions had been
lawful, that opinion having also been shared by the other
high-ranking participants in the privatisation proceedings. Even
though the Public Prosecutor's Office was not bound by its initial
position, the radical change in the interpretation of the applicable
law also demonstrates, in the circumstances, its insufficient clarity
and foreseeability.
- Lastly,
the Court takes note of the fact that the clarity and foreseeability
of the underlying principles of Article 161 of the Criminal Code have
been put in doubt both by Parliament and the Supreme Court. Albeit
only after the applicant's final conviction, they found that the
conformity of criminal liability for causing significant moral damage
with the principle of nullum crimen sine lege was
questionable. Doubts were also cast on the broad interpretation
according to which “causing significant damage” comprised
a mere danger that significant damage could be caused even though no
such damage had occurred.
- In
the light of the specific circumstances of the present case, the
Court concludes that it was not foreseeable that the applicant's acts
would constitute an offence under the criminal law applicable at the
material time. There has therefore been a violation of Article 7.
II. ALLEGED VIOLATION OF ARTICLES 6, 13 AND 17 OF THE
CONVENTION
- The
applicant complained that he had not had a fair trial, in violation
of Article 6 of the Convention. He further complained of a violation
of Article 13, arguing that the rules on the basis of which he had
been convicted had been ambiguous. Lastly, he considered that the
alleged violations also amounted to a violation of Article 17.
- The
Court observes, however, that it has examined essentially the same
issues under Article 7 of the Convention. In the light of its finding
of a violation of Article 7, it concludes that in the circumstances
of the present case it is unnecessary to examine the applicant's
complaints under Articles 6, 13 and 17 of the Convention.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
- 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.”
- The
Government pointed out that if the Court found a violation of the
applicant's rights, he could claim compensation for pecuniary and
non-pecuniary damage and the costs of legal assistance under the
domestic law. The Government therefore questioned the necessity of an
award made by the Court.
- The
Court has already held that if a victim, after exhausting the
domestic remedies in vain before complaining to the Convention
institutions of a violation of his rights, were obliged to do so a
second time before being able to obtain just satisfaction from the
Court, the total length of the procedure instituted by the Convention
would scarcely be in keeping with the idea of the effective
protection of human rights. Such a requirement would lead to a
situation incompatible with the aim and object of the Convention (see
Oğur v. Turkey [GC], no. 21594/93, § 98, ECHR
1999 III; and De Wilde, Ooms and Versyp v.
Belgium (Article 50), 10 March 1972, § 16, Series A no.
14).
- The
Court therefore considers that it is required to rule on the
applicant's claim for just satisfaction.
A. Damage
- The
applicant claimed EEK 320,848 (EUR 20,506) in respect of pecuniary
damage. This sum consisted of EEK 70,848 (EUR 4,528), a sum he lost
in salary because of his six months' prison sentence, and of
EEK 250,000 (EUR 15,978), the applicant's estimate as to his
reduced earnings in the future since he could no longer work in the
civil service and since no payments to a pension fund had been made
during the period of his imprisonment.
In
respect of non-pecuniary damage the applicant claimed EEK 3,000,000
(EUR 191,735). He asserted that he had suffered extreme distress and
discomfort during the pre-trial and trial proceedings and during the
imprisonment in poor conditions. His wrongful conviction and
imprisonment had caused serious damage to his reputation.
- The
Government considered that the applicant's claims for pecuniary
damage were unsubstantiated and that there was no causal link between
the alleged violation of the Convention and the damages claimed. They
pointed out that in addition to the conviction on account of the
circumstances related to the privatisation of ER, the subject to the
present case, the applicant had also been convicted by the same
domestic judgments in connection with the privatisation of RAS
Tallinna Farmaatsiatehas. However, he had made no complaints in the
latter respect before the Court.
In
respect of non-pecuniary damage the Government also emphasised that
the applicant had been convicted in connection with two episodes and
that the issues related to the privatisation of RAS Tallinna
Farmaatsiatehas had not been raised before the Court. Neither had the
applicant complained about the prison conditions. Therefore, the
claims, in so far as they were related to these circumstances, should
be dismissed.
Should
the Court nevertheless find that the applicant had sustained
non-pecuniary damage, the Government left the determination of an
appropriate sum to the Court.
- The
Court notes that the applicant's conviction and imprisonment were not
based solely on the grounds that gave rise to the present case. It
cannot speculate as to whether the applicant's sentence, had he been
only convicted in connection with the privatisation of RAS Tallinna
Farmaatsiatehas, would have been different from the actual sentence
imposed. Therefore, the Court considers that there is no direct
causal link between the violations found and the pecuniary damage
alleged and the applicant's claim under this head has to be
dismissed.
- The
Court finds, however, that the applicant must have suffered distress
and anxiety which cannot be compensated solely by its finding of a
violation. Having regard to the nature of the violation and making
its assessment on an equitable basis, the Court awards the applicant
EUR 5,000 in respect of non-pecuniary damage, plus any tax that may
be chargeable on that amount.
B. Costs and expenses
- The
applicant claimed EEK 273,170 (EUR 17,459) (including VAT) for the
legal costs incurred in the domestic proceedings and before the
Court. He presented a detailed time-sheet indicating 231.5 hours of
legal work at an hourly rate of EEK 1,000 (EUR 64). These costs
related only to the charges concerning the privatisation of ER and
not RAS Tallinna Farmaatsiatehas in connection with which the
applicant had been represented by another lawyer from a different law
firm.
- The
Government pointed out that the applicant had submitted an
acknowledgement of obligation concerning the costs of legal
assistance but no documents demonstrating that he had actually paid
for the legal fees. Moreover, the Government found that the amount
claimed was too large and the number of hours of work relating to the
proceedings before the Court excessively high considering the fact
that the applicant had been represented before the Court by the same
lawyer who had dealt with the case since the pre-trial investigation.
- According
to the Court's established case-law, costs and expenses will not be
awarded under Article 41 unless it is established that they were
actually incurred, were necessarily incurred and were also reasonable
as to quantum (see Iatridis v. Greece (just
satisfaction) [GC], no. 31107/96, § 54, ECHR 2000 XI; and
Beyeler v. Italy (just satisfaction) [GC], no. 33202/96, §
27, 28 May 2002).
- In
the present case, regard being had to all the material in its
possession, the Court considers it reasonable to award the sum of
EUR 9,000 for legal costs.
C. Default interest
- The
Court considers it appropriate that the default interest 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
- Holds that there has been a violation of Article
7 of the Convention;
- Holds that it is not necessary to examine the
applicant's complaints under Articles 6, 13 and 17 of the Convention;
- Holds
(a) that
the respondent State is to pay the applicant, within three months
from the date on which the judgment becomes final in accordance with
Article 44 § 2 of the Convention, the following
amounts, to be converted into Estonian kroons at the rate applicable
at the date of settlement:
(i) EUR
5,000 (five thousand euros) in respect of non-pecuniary damage;
(ii) EUR
9,000 (nine thousand euros) in respect of costs and expenses;
(iii) any
tax that may be chargeable to him on the above amounts;
(b) that
from the expiry of the above-mentioned three months until settlement
simple interest shall be payable on the above amount at a rate equal
to the marginal lending rate of the European Central Bank during the
default period plus three percentage points;
- Dismisses the remainder of the applicant's claim
for just satisfaction.
Done in English, and notified in writing on 25 June 2009, pursuant to
Rule 77 §§ 2 and 3 of the Rules of Court.
Claudia Westerdiek Peer Lorenzen
Registrar President
