I incorrectly predicted that there's no violation of human rights in BOLJEVIĆ v. CROATIA.

Information

  • Judgment date: 2017-01-31
  • Communication date: 2014-09-08
  • Application number(s): 43492/11
  • Country:   HRV
  • Relevant ECHR article(s): P1-1
  • Conclusion:
    Violation of Article 1 of Protocol No. 1 - Protection of property (Article 1 para. 2 of Protocol No. 1 - Control of the use of property)
  • Result: Violation
    • SEE FINAL JUDGMENT

JURI Prediction

  • Probability: 0.792281
  • Prediction: No violation

  • Inconsistent


Legend

 In line with the court's judgment
 In opposition to the court's judgment
Darker color: higher probability
: In line with the court's judgment  
: In opposition to the court's judgment

Communication text used for prediction

The applicant, Mr Isat Boljević, is a Montenegrin national, who was born in 1967 and lives in Bar (Montenegro).
He is represented before the Court by Mr M. Umićević, an advocate practising in Zagreb.
A.
The circumstances of the case The facts of the case, as submitted by the applicant, may be summarised as follows.
On 6 February and 4 March 2009 the applicant was, while crossing the border between Montenegro and Croatia, caught by the customs authorities carrying on each occasion the sums of 90,000 euros (EUR) which he failed to declare, contrary to the law.
Since the money was not immediately forfeited, on the same dates the applicant deposited the above amounts with a bank in Dubrovnik.
On 2 June 2009 the Financial Inspectorate of the Ministry of Finance (Ministarstvo financija, Financijski inspektorat – “the Ministry”) instituted administrative offences proceedings (prekršajni postupak) against the applicant for failing to declare the sum of 180,000 euros, an administrative offence defined in section 40(1) of the Foreign Currency Act and section 74 of the Prevention of Money Laundering and Financing of Terrorism Act.
In his defence the applicant explained that the money he had been carrying corresponded to the sale price of a flat in Podgorica (Montenegro) he had bought from a Croatian national, a certain S.K., who had insisted that the money be paid to him from an account in a Croatian bank.
By a decision of 19 October 2009 the Ministry found the applicant guilty of having committed the administrative offence in question and fined him 10,000 Croatian kunas (HRK).
At the same time, the Ministry imposed a protective measure (zaštitna mjera) confiscating EUR 180,000 pursuant to section 69(2) of the Foreign Currency Act.
The Ministry held that the evidence presented did not corroborate the applicant’s defence.
In particular, while the applicant had indeed submitted a preliminary sale-purchase agreement for a flat in Podgorica between him and S.K., that agreement had been concluded two weeks after the commission of the offence and the sale price (EUR 125,000) indicated in it did not correspond to the amount he had brought into Croatia.
The Ministry also held that the applicant was unable to provide sufficient evidence to justify his earlier money transfers to S.K.
and his wife to their account in Tunisia and Jordan totalling EUR 882,900 in the period between 2005 and 2008.
The relevant part of the Ministry’s decision reads as follows: “In this type of administrative offence what is important for the purposes of ordering a protective measure is whether the statements of the accused can be supported by relevant documents.
If, in terms of amounts and dates, there is no link between the transfers by which the accused acquired financial means and the business transactions for which those means were intended, or if [those transfers] do not have basis in lawful transaction, the Ministry cannot apply section 69(4) of the Foreign Currency Act which allows that, in particularly justified situations where special mitigating circumstances exist, the authority deciding on the administrative offence may decide not to confiscate or confiscate only in part the cash that was the object of the offence.
Earlier transfers from [the applicant’s] account and the motives for which he opened that non-residential account also influenced the decision to impose the protective measure ...” The applicant appealed by arguing, inter alia, that the imposition of the protective measure of confiscation was disproportionate in the circumstances and therefore contrary to Article 1 of Protocol No.
1 to the Convention.
In so arguing he referred to the Court’s case-law, in particular to the case of Gabrić v. Croatia (no.
9702/04, 5 February 2009).
By a decision of 23 December 2009 the High Court for Administrative Offences (Visoki prekršajni sud Republike Hrvatske) dismissed the applicant’s appeal and upheld the Ministry’s decision, endorsing the reasons given therein.
The applicant then lodged a constitutional complaint, alleging, inter alia, a violation of his constitutionally protected right of ownership.
By a decision of 9 December 2010 the Constitutional Court (Ustavni sud Republike Hrvatske) declared the applicant’s constitutional complaint inadmissible and served its decision on his representative on 3 January 2011.
It found that even though the applicant relied in his constitutional complaint on the relevant Articles of the Constitution he had not substantiated his complaint by any constitutional law arguments but had merely repeated the arguments raised in the proceedings before the Ministry and the High Court for Administrative Offences.
Therefore, the Constitutional Court had been unable to examine the merits of his constitutional complaint.
B.
Relevant domestic law 1.
Foreign Currency Act The relevant part of the Foreign Currency Act (Zakon o deviznom poslovanju, Official Gazette no.
96/03 with subsequent amendments), in force at the material time, in so far as relevant, read as follows: Movement of foreign or domestic currency cash and cheques Section 36(1) “Foreign currency cash and cheques in foreign currency may be freely brought into the Republic of Croatia, subject to a reporting obligation pursuant to section 40 of this Act.” Prevention of money laundering and of counterfeiting of foreign currency Section 40(1) “Residents and non-residents crossing the State border are required to declare to a customs official ... cash in foreign or domestic currency or cheques of the value prescribed by the legislation regulating prevention of money laundering.” Section 69 (1) A fine from HRK 5,000.00 to HRK 50,000.00 for an administrative offence shall be imposed on domestic or foreign natural person ... who attempts to take or takes across the State border cash or cheques of the value prescribed by the legislation regulating prevention of money laundering, without declaring them to a customs official.
(2) Cash and cheques which are the objects of the offence referred to in paragraph 1 of this section shall be confiscated to the benefit of the State budget.
(3) ... (4) Exceptionally, in particularly justified situations where special mitigating circumstances exist, the authority deciding on the administrative offence may decide that the cash and cheques which are the objects of the administrative offence referred to in paragraph 1 of this section shall not be confiscated or shall be confiscated only in part.” 2.
Prevention of Money Laundering and Financing of Terrorism Act Section 74(1) of the Prevention of Money Laundering and Financing of Terrorism Act (Zakon o sprječavanju pranja novca i financiranja terorizma, Official Gazette no.
87/08 with the subsequent amendments) reads as follows: “Customs [authorities]... shall inform the Office [for the Prevention of Money Laundering] of any declared transfer across the State border of cash or cheques in domestic or foreign currency of the value, in HRK equivalent, of EUR 10,000 or more, immediately or the latest within three days of the transfer ...” COMPLAINT The applicant complains that the decision of the domestic authorities in the administrative offences proceedings to both fine him and confiscate EUR 180,000 from him for having failed to declare that sum at the customs was excessive and thus violated his right of property.

Judgment

SECOND SECTION

CASE OF BOLJEVIĆ v. CROATIA

(Application no. 43492/11)

JUDGMENT

STRASBOURG

31 January 2017

FINAL

30/04/2017

This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Boljević v. Croatia,
The European Court of Human Rights (Second Section), sitting as a Chamber composed of:
Işıl Karakaş, President,Julia Laffranque,Nebojša Vučinić,Paul Lemmens,Ksenija Turković,Jon Fridrik Kjølbro,Stéphanie Mourou-Vikström, judges,and Hasan Bakırcı, Deputy Section Registrar,
Having deliberated in private on 10 January 2017,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 43492/11) against the Republic of Croatia lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Montenegrin national, Mr Isat Boljević (“the applicant”), on 24 June 2011. 2. The applicant was represented by Mr M. Umićević, a lawyer practising in Zagreb. The Croatian Government (“the Government”) were represented by their Agent, Ms Š. Stažnik. 3. The applicant alleged, in particular, that the confiscation of 180,000 euros (EUR) from him had violated his right of property. 4. On 8 September 2014 the complaint concerning the right to the peaceful enjoyment of one’s possessions was communicated to the Government, and the remainder of the application was declared inadmissible pursuant to Rule 54 § 3 of the Rules of Court. 5. The Government of Montenegro, having been informed of their right to intervene (Article 36 § 1 of the Convention and Rule 44 § 2 (a) of the Rules), did not avail themselves of this right. THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
6. The applicant was born in 1967 and lives in Bar (Montenegro). 7. On 6 February and 4 March 2009 the applicant entered Croatia from Montenegro and deposited – on each occasion – the sum of EUR 90,000 with a commercial bank in Dubrovnik, without declaring these amounts to the custom authorities. 8. On 2 June 2009 the Money Laundering Prevention Office (Ured za sprječavanje pranja novca) informed the Financial Inspectorate of the Ministry of Finance (Ministarstvo financija, Financijski inspektorat, hereinafter “the Ministry”) that on 30 March 2009 the applicant had ordered a transfer of EUR 95,000 from his bank account to the account of a certain Mr S.K. in a bank in the United Arab Emirates. The Money Laundering Prevention Office stated that the funds had originated from the two above-mentioned cash deposits of EUR 90,000 each. 9. On the same day, 2 June 2009, administrative offence proceedings (prekršajni postupak) were instituted against the applicant before the Administrative Offences Council (Vijeće za prekršajni postupak) of the Ministry for his failure to declare the sum of EUR 180,000 while entering Croatia, an administrative offence as defined in section 40(1) of the Foreign Currency Act and section 74 of the Prevention of Money Laundering and Financing of Terrorism Act (see paragraphs 16-17 below). On the same day the Administrative Offences Council ordered the bank to transfer EUR 180,000 from the applicant’s account to the Ministry’s account, to be kept there until the conclusion of the administrative offence proceedings. 10. On 1 July, 17 August and 17 September 2009 hearings were held before the Administrative Offences Council. In his defence, the applicant explained that he had sold business premises in Montenegro, and that he had intended to use the money gained from that sale to purchase a flat in Podgorica (Montenegro) from a Croatian national, S.K., who had insisted that the money be paid to him from a Croatian bank account. The applicant provided a written copy of the contract of sale in respect of his business premises dated 25 December 2007, and a preliminary agreement relating to the purchase of the flat in Podgorica dated 18 March 2009. 11. By a decision of 19 October 2009 the Administrative Offences Council found the applicant guilty of the administrative offence in question and fined him 10,000 Croatian kunas (HRK). At the same time, the Administrative Offences Council imposed a protective measure (zaštitna mjera), confiscating the EUR 180,000 pursuant to section 69(2) of the Foreign Currency Act (see paragraph 16 below). The Administrative Offences Council held that the evidence presented did not corroborate the applicant’s defence. In particular, while the applicant had indeed submitted a preliminary agreement relating to the purchase of a flat in Podgorica which had been concluded between himself and S.K., that agreement had been concluded two weeks after the commission of the offence, and the sale price indicated in it (EUR 125,000) did not correspond to the amount he had brought into Croatia. The Administrative Offences Council also held that its decision to apply the protective measure was influenced by the fact that the applicant had been unable to provide sufficient evidence to justify his earlier money transfers to accounts in Tunisia and Jordan belonging to S.K. and S.K.’s wife, totalling EUR 882,900 in the period between 2005 and 2008, and the fact that he had stated that he had opened a non-resident’s account in his name in order to do a favour to S.K., namely in order to transfer money from the sale of S.K.’s wife’s house, deposited on his account, to S.K.’s wife’s accounts. With respect to the scope of the confiscation and the amount of the fine, the Administrative Offences Council held as follows:
“With this type of administrative offence, what is important for the purposes of ordering a protective measure is whether the statements of the accused can be supported by relevant documents. If, in terms of amounts and dates, there is no link between the transfers whereby the accused acquired the funds and the business transactions for which those funds were intended, or if [those transfers] do not have a basis in lawful transactions, the Administrative Offences Council cannot apply section 69(4) of the Foreign Currency Act, which allows that, in particularly justified situations where special mitigating circumstances exist, the authority adjudicating on the administrative offence may decide not to confiscate or confiscate only in part the cash that was the object of the offence. Earlier transfers from [the applicant’s] account and the motives for opening that non-resident’s account also influenced the decision to impose the protective measure ... In determining the amount of the fine the [Administrative Offences] Council took into account [the applicant’s] admission of guilt and the absence of a criminal record as mitigating circumstances, and the value of the object of the administrative offence as an aggravating circumstance. [Therefore] it imposed a fine which corresponds to the gravity of the offence.”
12. The applicant appealed by arguing, inter alia, that the imposition of the protective measure of confiscation was disproportionate in the circumstances and therefore contrary to Article 1 of Protocol No. 1 to the Convention. In so arguing, he referred to the Court’s case-law, in particular to the case of Gabrić v. Croatia (no. 9702/04, 5 February 2009). 13. By a decision of 23 December 2009 the High Court for Administrative Offences (Visoki prekršajni sud Republike Hrvatske) dismissed the applicant’s appeal and upheld the Administrative Offences Council’s decision, endorsing the reasons given therein. 14. The applicant then lodged a constitutional complaint, alleging, inter alia, a violation of his constitutionally protected right of ownership. 15. By a decision of 9 December 2010 the Constitutional Court (Ustavni sud Republike Hrvatske) declared the applicant’s constitutional complaint inadmissible on the grounds that the case did not raise a constitutional issue. II. RELEVANT DOMESTIC AND INTERNATIONAL LAW AND PRACTICE
A. Relevant domestic law
1. Foreign Currency Act
16. The relevant part of the Foreign Currency Act (Zakon o deviznom poslovanju, Official Gazette no. 96/03 with subsequent amendments), in force at the material time, read:
Movement of foreign or domestic currency in cash and cheques
Section 36(1)
“Foreign currency in cash and cheques may be freely brought into the Republic of Croatia, subject to a reporting obligation pursuant to section 40 of this Act.”
Prevention of money laundering and counterfeiting of foreign currency
Section 40(1)
“Residents and non-residents crossing the State border are required to declare to a customs official ... foreign or domestic currency in cash or cheques of the value prescribed by the legislation regulating the prevention of money laundering.”
Section 69
“(1) A fine of HRK 5,000 to HRK 50,000 for an administrative offence shall be imposed on a domestic or foreign natural person ... who attempts to take or takes across the State border cash or cheques of the value prescribed by the legislation regulating the prevention of money laundering without declaring them to a customs official. (2) Cash and cheques which are the objects of the offence referred to in paragraph 1 of this section shall be confiscated for the benefit of the State budget. ...
(4) Exceptionally, in particularly justified situations where special mitigating circumstances exist, the authority adjudicating on the administrative offence may decide that the cash and cheques which are the objects of the administrative offence referred to in paragraph 1 of this section shall not be confiscated or shall be confiscated only in part.”
Section 70
“In accordance with the legislation governing administrative offence proceedings, the Financial Inspectorate or the customs authority shall, in exercising control over foreign exchange operations, temporarily seize foreign or domestic currency in cash as well as documents and other objects which are instruments or proceeds of the administrative offence, or which may serve as evidence in administrative offence proceedings, and shall issue a certificate confirming the seizure. Foreign or domestic currency in cash shall be paid without delay into special accounts of the Financial Inspectorate of the Ministry of Finance.”
2. Prevention of Money Laundering and Financing of Terrorism Act
17. Section 74(1) of the Prevention of Money Laundering and Financing of Terrorism Act (Zakon o sprječavanju pranja novca i financiranja terorizma, Official Gazette no. 87/08 with subsequent amendments) reads:
“Customs [authorities]... shall immediately, or within three days of the transfer at the latest, inform the Office [for the Prevention of Money Laundering] of any declared transfer across the State border of cash or cheques in domestic or foreign currency of a value, in HRK equivalent, of EUR 10,000 or more ...”
B. Relevant international law and practice
1. Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism
18. The relevant part of the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism, which was signed in Warsaw on 16 May 2005 and entered into force in respect of Croatia on 1 February 2009, reads as follows:
Chapter III – Measures to be taken at national level
Section 1 – General provisions
Article 3 – Confiscation measures
“(1) Each Party shall adopt such legislative and other measures as may be necessary to enable it to confiscate instrumentalities and proceeds or property the value of which corresponds to such proceeds and laundered property. (2) Provided that paragraph 1 of this article applies to money laundering and to the categories of offences in the appendix to the Convention, each Party may, at the time of signature or when depositing its instrument of ratification, acceptance, approval or accession, by a declaration addressed to the Secretary General of the Council of Europe, declare that paragraph 1 of this article applies:
(a) only in so far as the offence is punishable by deprivation of liberty or a detention order for a maximum of more than one year. However, each Party may make a declaration on this provision in respect of the confiscation of the proceeds from tax offences for the sole purpose of being able to confiscate such proceeds, both nationally and through international cooperation, under national and international tax-debt recovery legislation; and/or
(b) only to a list of specified offences. (3) Parties may provide for mandatory confiscation in respect of offences which are subject to the confiscation regime. Parties may in particular include in this provision the offences of money laundering, drug trafficking, trafficking in human beings and any other serious offence. (4) Each Party shall adopt such legislative or other measures as may be necessary to require that, in respect of a serious offence or offences as defined by national law, an offender demonstrates the origin of alleged proceeds or other property liable to confiscation to the extent that such a requirement is consistent with the principles of its domestic law.”
19. The relevant part of the Explanatory Report to that Convention reads as follows:
“70. Paragraph 3 of Article 3 deals with the question of mandatory confiscation. It should be noted from the outset that this provision is not mandatory for Parties, which are therefore free to decide whether to implement it or not. The drafters of this Convention however intended to send a signal that mandatory confiscation for offences which are subject to the confiscation regime, may be advisable for particularly serious offences and for offences where there is no victim claiming to be compensated (such as drug trafficking), but also frauds with a large number of unknown victims. 71. Paragraph 4 of Article 3 requires Parties to provide the possibility for the burden of proof to be reversed regarding the lawful origin of alleged proceeds or other property liable to confiscation in serious offences. The definition of the notion of serious offence for the purpose of the implementation of this provision is left to the internal law of the Parties. ...”
2. Regulation (EC) No. 1889/2005 of the European Parliament and of the Council of 26 October 2005 on controls of cash entering or leaving the Community
20. The relevant parts of Regulation (EC) No. 1889/2005 of the European Parliament and of the Council of 26 October 2005 on controls of cash entering or leaving the Community, read as follows:
Article 3
Obligation to declare
“(1) Any natural person entering or leaving the Community and carrying cash of a value of EUR 10 000 or more shall declare that sum to the competent authorities of the Member State through which he is entering or leaving the Community in accordance with this Regulation. The obligation to declare shall not have been fulfilled if the information provided is incorrect or incomplete. ...”
Article 4
Powers of the competent authorities
“(1) In order to check compliance with the obligation to declare laid down in Article 3, officials of the competent authorities shall be empowered, in accordance with the conditions laid down under national legislation, to carry out controls on natural persons, their baggage and their means of transport. (2) In the event of failure to comply with the obligation to declare laid down in Article 3, cash may be detained by administrative decision in accordance with the conditions laid down under national legislation.”
Article 9
Penalties
“(1) Each Member State shall introduce penalties to apply in the event of failure to comply with the obligation to declare laid down in Article 3. Such penalties shall be effective, proportionate and dissuasive. (...)”

21. In Chmielewski (C-255/14, 16 July 2015), the Court of Justice of the European Union held that a fine equivalent to 60 % of the amount of undeclared cash did not seem to be proportionate (§ 30). In that regard, it noted that the penalty provided for in Article 9 of Regulation No. 1889/2005 did not seek to penalise possible fraudulent or unlawful activities, but solely a breach of the obligation to declare laid down in Article 3 of the Regulation (§ 31). The Court of Justice also noted that Article 4 (2) of the Regulation provided for the possibility to detain, by administrative decision, cash which had not been declared, in order, among other things, to allow the competent authorities to carry out the necessary controls and checks relating to the provenance of that cash and its intended use and destination (§ 33). In his opinion, Advocate General Wathelet explained that these controls and checks could lead to the finding that other offences had been committed, to which other fines and confiscation measures could then be applied (see in particular §§ 59-62 and 84 of the opinion). THE LAW
I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION
22. The applicant complained that the decision of the domestic authorities in the administrative offence proceedings to confiscate EUR 180,000 from him for having failed to declare that sum to customs had been excessive and thus in violation of his right of property. He relied on Article 1 of Protocol No. 1 to the Convention, which reads:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
23. The Government contested that argument. A. Admissibility
24. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible. B. Merits
1. The parties’ submissions
(a) The applicant
25. The applicant submitted that the confiscation of the money he had been carrying had constituted an interference with his right to the peaceful enjoyment of his possessions. 26. He further argued that the interference had not been lawful, had not pursued a legitimate aim, and had been disproportionate. 27. The applicant averred that the existing domestic legal framework was rigid and inflexible. It provided for the confiscation of an amount of undeclared foreign currency in its entirety as an absolute measure, thus leaving no room for the assessment of individual situations. In this connection, the applicant referred to the law of the European Union, in particular to Article 9 of Regulation (EC) No. 1889/2005 of 26 October 2005 on controls of cash entering or leaving the Community. That Article entitled each Member State to introduce penalties for failures to comply with the obligation to declare, penalties which had to be, inter alia, proportionate. 28. Furthermore, without disputing the fact that the undeclared money transfer in excess of EUR 10,000 had been an administrative offence under the Foreign Currency Act, and without denying the legitimate aim of punishing such practices with predetermined fines, the applicant raised the question of fairness and whether the confiscation of entire sums transferred across the State border from people who failed to comply with the declaration obligation pursued a legitimate aim. He emphasised that this aim could be achieved by imposing fines without necessarily confiscating entire amounts. The confiscation of entire amounts should be limited to situations where it had been proved that undeclared money had been acquired through criminal acts or intended for money laundering or financing terrorism. 29. According to the applicant, there was no specific mention anywhere in the law that perpetrators were obliged to prove that undeclared money had been legally acquired. Therefore, the actions and practice of the domestic authorities had not had a reasonable justification and had been arbitrary. Furthermore, drawing a parallel with criminal law, the applicant pointed out that, under the Criminal Code, a confiscation measure could only be imposed by a court judgment establishing that a criminal offence had been committed. However, he had never been suspected of or charged with any criminal offence, and had no criminal record. He had also explained that the money had originated from the sale of his business premises in Montenegro. 30. The applicant further referred to section 36 of the Foreign Currency Act, which had provided that foreign currency in cash and cheques could be freely brought into Croatia as long as it was declared, and that it had not been illegal to bring foreign currency into the country. He stated that his situation was the same as that of the applicant in the case of Gabrić v. Croatia (no. 9702/04, 5 February 2009), and that he could not see why the Court would take a different approach in his case. As in the Gabrić case, he had already been fined for the administrative offence of failing to declare money. 31. Lastly, the applicant highlighted that the Government had not demonstrated that a fine alone had been insufficient to achieve the desired deterrent or punitive effect and prevent future breaches of the obligation to declare foreign currency. In his case, the confiscation of the entire amount as an additional sanction had therefore been unwarranted and had imposed an excessive burden on him, violating his property rights under Article 1 of Protocol No. 1 to the Convention. (b) The Government
32. The Government admitted that the confiscation of EUR 180,000 from the applicant had amounted to an interference with his right of property. However, that interference had been lawful and had pursued a legitimate aim. In particular, the Government argued that the confiscation, as a sanction for the administrative offence in question, had been prescribed by section 69(2) of the Foreign Currency Act and section 74 of the Prevention of Money Laundering and Financing of Terrorism Act (see paragraphs 16-17 above), provisions which had been sufficiently clear, accessible and foreseeable. 33. As regards the legitimate aim, the Government submitted that the confiscation had been a measure aimed at combating money laundering at national and international level. They emphasised that money laundering was a particularly dangerous form of crime, and that numerous international and European Union instruments were dedicated to fighting it. Moreover, physically carrying foreign currency in cash across the border was one of the main methods of moving illicit funds, laundering money and financing terrorism. Therefore, the State had a right and duty to control the carrying of large sums of foreign currency across its border and the subsequent use of such sums. 34. As to proportionality, the Government stated that the key element in deciding whether to confiscate the money in full or in part was whether statements by the accused concerning the legitimate source, destination and actual owner of the money were supported by relevant documents. If transactions for which the funds were destined could not be linked in time and in terms of amount to previous transactions whereby an accused had acquired the money, or if transfers had no basis in lawful transactions, the application of section 69(4) of the Foreign Currency Act could not be justified (see paragraph 11 above). Where the legitimate origin, intention and actual owner of the cash had not been determined, it could not be deemed that there were circumstances justifying the return of the relevant cash. The aforementioned criteria ensured that the specific circumstances of individual cases were considered in administrative offence proceedings, so as to avoid imposing a disproportionate and excessive burden and confiscating legally obtained currency intended for legitimate purposes. 35. In the applicant’s case, certain mitigating circumstances had been taken into account when imposing the sanction. However, they had not been of such character to justify the exception to the obligation to confiscate the entire undeclared amount of foreign currency, because the applicant had not proved that the source and destination of the money in issue had been legitimate. In particular, thorough analysis of the documentation and financial transactions linked to the applicant’s bank account had shown that the transactions had not corresponded to the statement he had given in the impugned proceedings. The applicant had not offered reliable evidence about the source, actual owner or destination of the money. More specifically, his claims that the money was to be used to purchase a flat were not convincing, given that the preliminary purchase agreement had been concluded after he had committed the administrative offence. Therefore, the applicant had failed to prove the lawful origin of the money, an element which distinguished the present case from the case of Gabrić, cited above, where the origin of the confiscated money had not been in dispute. 36. In conclusion, the Government stated that, in the circumstances, the decision to confiscate cash from the applicant had been lawful and had struck a fair balance between the general interest of the community and the applicant’s property rights. Therefore, no disproportionate and excessive burden had been imposed on him. 2. The Court’s assessment
37. It was not disputed between the parties that the decision to confiscate EUR 180,000 from the applicant constituted an interference with his right of property (see paragraphs 26 and 33 above), and that Article 1 of Protocol No. 1 was therefore applicable. Having regard to its case-law on the matter (see, for example, Ismayilov v. Russia, no. 30352/03, § 29, 6 November 2008; and Gabrić, cited above, § 32), the Court sees no reason to hold otherwise. 38. As regards the issue which of the rules of Article 1 of Protocol No. 1 applies, the Court reiterates its consistent approach that a confiscation measure, even though it does involve a deprivation of possessions, nevertheless constitutes control of the use of property within the meaning of the second paragraph of Article 1 of Protocol No. 1 to the Convention (see Ismayilov, cited above, § 30; Gabrić, cited above, § 33; Grifhorst v. France, no. 28336/02, §§ 85-86, 26 February 2009; and Moon v. France, no. 39973/03, § 45, 9 July 2009). 39. As to the lawfulness of the interference, the Court notes that the confiscation measure in the present case had a legal basis in domestic law, namely, section 69(2) of the Foreign Currency Act, taken in conjunction with section 74 of the Prevention of Money Laundering Act, which provided for the confiscation of undeclared foreign currency (see paragraphs 16-17 above; see, mutatis mutandis, Gabrić, cited above, § 34). The Court also considers that the legislation in question met the qualitative requirements of accessibility and foreseeability. The fact that the authorities can, under certain conditions, decide that the cash that is the object of the administrative offence shall not be confiscated or shall be confiscated only in part (section 69(4) of the Foreign Currency Act), does not alter that assessment. The Court is therefore satisfied that the interference with the applicant’s property rights was provided for by law, as required by Article 1 of Protocol No. 1 to the Convention. 40. Likewise, the Court considers that the interference pursued a legitimate aim in the general interest, namely, the fight against money laundering (see Gabrić, cited above, § 34; see also Grifhorst, cited above, § 92; and Moon, cited above, § 46). 41. Accordingly, the remaining question for the Court to determine is whether there was a reasonable relationship of proportionality between the means employed by the authorities to achieve that aim and the protection of the applicant’s right to the peaceful enjoyment of his possessions. The Court must examine in particular whether the interference struck the requisite fair balance between the demands of the general interest of the public and the requirements of the protection of the applicant’s right of property, having regard to the margin of appreciation left to the respondent State in this area (see Ismayilov, cited above, § 34; Gabrić, cited above, § 35; Grifhorst, cited above, § 94; and Moon, cited above, § 47). The requisite balance will not be achieved if the applicant has had to bear an individual and excessive burden (see, in general, Depalle v. France [GC], no. 34044/02, § 83, ECHR 2010; and Perdigão v. Portugal [GC], no. 24768/06, § 67, 16 November 2010; see also, more specifically, with respect to the confiscation of undeclared money, Ismayilov, cited above, § 34; and Gabrić, cited above, § 35). 42. The administrative offence of which the applicant was found guilty consisted of his failure to declare to the customs authorities the EUR 180,000 in cash which he was carrying. It is important to note that the act of bringing foreign currency in cash into Croatia was not illegal under Croatian law, as it was expressly allowed by section 36(1) of the Foreign Currency Act (see paragraph 16 above). Not only was it lawful to import foreign currency, but the sum which could be legally transferred, or, as in the present case, physically carried across the Croatian border, was not in principle restricted (see paragraph 16 above). This element distinguishes the instant case from certain other cases, in which the confiscation measure applied either to goods of which importation was prohibited or to vehicles used for transporting prohibited substances or trafficking in human beings (see the cases referred to in Ismayilov, cited above, § 35, Gabrić, cited above, § 36, and Grifhorst, cited above, § 99). 43. The Government argued that, while in the Gabrić case the lawful origin of the money had not been contested, in the present case the applicant had failed to prove the lawful source and destination of the money he had been carrying across the border. It is true that the Administrative Offences Council and the High Court for Administrative Offences found that the applicant had not proved the legitimate destination of the money he had been carrying across the border (see paragraphs 11 and 13 above). However, there is nothing to suggest that, by confiscating the amount of EUR 180,000 from the applicant, the authorities sought to forestall any criminal activities, such as money laundering. The only illegal (but not criminal) conduct which was attributed to him in respect of the money was his failure to declare it to the customs authorities. Moreover, the applicant did not have a criminal record, and neither before nor after the events of 6 February and 4 March 2009 was he charged with any criminal offence (see, mutatis mutandis, Ismayilov, cited above, § 37; Gabrić, cited above, § 38; Grifhorst, cited above, §§ 97-98; and Moon, cited above, § 49; see also Aboufadda v. France (dec.), no. 28457/10, § 33, 4 November 2014). 44. The Court reiterates that, in order to be proportionate, the interference should correspond to the severity of the infringement, and the sanction to the gravity of the offence it is designed to punish – in the instant case, the failure to comply with the declaration requirement – rather than to the gravity of any presumed infringement which has not actually been established, such as an offence of money laundering or tax evasion (see Ismayilov, cited above, § 38; Gabrić, cited above, § 39; and Grifhorst, cited above, § 102). 45. In the instant case, the confiscation measure in question was not intended to be pecuniary compensation for damage – as the State had not suffered any loss as a result of the applicant’s failure to declare the foreign currency – but was deterrent and punitive in its purpose. The applicant was fined for the administrative offence of failing to declare the money at customs. It has not been convincingly shown or indeed argued by the Government that the fine alone was not sufficient to achieve the desired deterrent and punitive effect and prevent future breaches of the declaration requirement. In these circumstances, the Court concludes that the confiscation of the entire amount of money that should have been declared, as an additional sanction to the fine was disproportionate, in that it imposed an excessive burden on the applicant (see Ismayilov, cited above, § 38; and Gabrić, cited above, § 39; see also the judgment of the Court of Justice of the European Union in Chmielewski, cited in paragraph 21 above). 46. Accordingly, there has been a violation of Article 1 of Protocol No. 1. II. OTHER ALLEGED VIOLATIONS OF THE CONVENTION
47. Without relying on any Article of the Convention, the applicant complained of a violation of his right to a fair trial. In particular, he contended that he had had to defend himself alone before the Administrative Offences Council and had not been informed of his right to be represented by counsel. 48. The Court notes that the final domestic decision complained of, namely the decision of the Constitutional Court of 9 December 2010, was served on the applicant’s representative on 3 January 2011 (see paragraph 15 above), and that this complaint was raised for the first time in the applicant’s reply of 5 March 2015 to the Government’s observations, that is more than four years later. 49. It follows that this complaint has been submitted out of time and must be rejected in accordance with Article 35 §§ 1 and 4 of the Convention. III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
50. 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.”
A. Damage
51. The applicant claimed EUR 180,000 in respect of pecuniary damage and accrued default interest running from the date of confiscation until the date of payment. He also claimed EUR 10,000 in respect of non-pecuniary damage. 52. The Government contested these claims. 53. The Court has found that an amount of EUR 180,000 was confiscated from the applicant in breach of Article 1 of Protocol No. 1. It therefore accepts the applicant’s claim in respect of pecuniary damage and awards him EUR 180,000 under this head, plus any tax that may be chargeable on that amount. As regards the statutory default interest, the Court notes that the applicant did not specify either the amount or the rate or the method of its calculation. It therefore does not award him any sum on that account. 54. As regards non-pecuniary damage, the Court considers that in the circumstances of the present case the finding of a violation of Article 1 of Protocol No. 1 to the Convention constitutes in itself sufficient just satisfaction (see in that sense Gabrić, cited above, § 49). B. Costs and expenses
55. The applicant also claimed 23,100 Croatian kunas (HRK) for costs and expenses incurred before the domestic courts and HRK 13,000 for those incurred before the Court. 56. The Government contested these claims. 57. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and were reasonable as to quantum. In the present case, regard being had to the information in its possession and the above criteria, the Court considers it reasonable to award the sum of EUR 1,650 for costs and expenses in the domestic proceedings and EUR 1,690 for the proceedings before the Court. C. Default interest
58. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points. FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1. Declares the complaint under Article 1 of Protocol No. 1 to the Convention admissible and the remainder of the application inadmissible;

2. Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention;

3. Holds that the finding of a violation constitutes in itself sufficient just satisfaction for the non-pecuniary damage sustained by the applicant;

4. 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 Croatian kunas at the rate applicable at the date of settlement:
(i) EUR 180,000 (one hundred and eighty thousand euros), plus any tax that may be chargeable, in respect of pecuniary damage;
(ii) EUR 3,340 (three thousand three hundred and forty euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;

5. Dismisses the remainder of the applicant’s claim for just satisfaction. Done in English, and notified in writing on 31 January 2017, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court. Hasan BakırcıIşıl KarakaşDeputy RegistrarPresident