DASSA FOUNDATION AND OTHERS v. LIECHTENSTEIN
Inadmissible
Peer Lorenzen
The first applicant, the Dassa Foundation, and the second applicant, the Lafleur Foundation, are legal entities incorporated under Liechtenstein law in 1996 which have their registered offices in Vaduz. The third applicant, Mr Attilio Pacifico, is an Italian national who was born in 1933 and lives in Monaco. According to the statutes of the first and the second applicant, the third applicant is the sole beneficiary of their assets. The applicants were represented before the Court by Ms Luca Lentini and Mr Giampiero Placidi of Lentini, Placidi & Partners, a law firm practising in Rome. On 6 June 2001 the Regional Court of the Principality of Liechtenstein (Fürstliches Landgericht) in Vaduz, in investigation proceedings on suspicion of money laundering against Z. and unknown further perpetrators committed in the 1990s (file no. 14 UR 2001.0030), ordered the seizure for a duration of two years of all assets which the first and second applicants had deposited with the Neue Bank company and prohibited the latter to dispose of these assets pursuant to section 97a of the Code of Criminal Procedure (see ‘Relevant domestic and international law’ below). It found that the investigations against Z., the former legal representative of the first and second applicants, had revealed that the third applicant had probably bribed several judges in Rome together with another person. The third applicant was suspected of having transferred the proceeds of these offences to the applicant foundations, which were attributable to him, in order to conceal that the money had originated from criminal acts. Therefore, the accounts of the foundations had to be blocked in order to safeguard the subsequent absorption of the profits (Abschöpfung der Bereicherung) or the forfeiture of the assets in accordance with section 97a of the Code of Criminal Procedure. On 12 May 2003 the Public Prosecutor’s Office of the Principality of Liechtenstein requested the Regional Court to extend the seizure of the foundations’ assets for at least one year. On 15 May 2003 the Regional Court, acting in the course of independent objective forfeiture proceedings (objektives Verfallsverfahren) under section 356 of the Code of Criminal Procedure (see ‘Relevant domestic and international law’ below) against the applicant foundations (file no. 14 UR 2002.384), prolonged the seizure of the foundations’ assets ordered by it on 6 June 2001 for one year pursuant to section 97a § 4 of the Code of Criminal Procedure. The Regional Court noted that the third applicant, being the beneficiary of the foundations, had been sentenced by the Milan Criminal Court to eleven years’ imprisonment on 29 April 2003 with respect to the assets at issue in the present forfeiture proceedings. This judgment was not final yet. As the present proceedings were complex and involved inter-State relations, it had not yet been possible to terminate the investigations. On 20 May 2003 the Court of Appeal of the Principality of Liechtenstein (Fürstliches Obergericht), in the course of the objective forfeiture proceedings concerning the assets of the applicant foundations, endorsed the Regional Court’s decision of 15 May 2003, confirming that court’s reasoning (section 97a § 4 of the Code of Criminal Procedure). On 6 June 2003 the first and the second applicant, represented by counsel, lodged an appeal against the decision of the Regional Court of 15 May 2003 with the Court of Appeal. They argued that the initial seizure of its assets on 6 June 2001 had been ordered by the Regional Court for a period of two years in criminal investigation proceedings on suspicion of money laundering against Z. In its decision of 15 May 2003 the Regional Court had then ordered a prolongation of this seizure. However, this prolongation had been made in different proceedings, namely in the course of objective forfeiture proceedings concerning the foundations’ assets, in which there had never been an initial blocking of accounts. Therefore, the prolongation order was unlawful. The criminal proceedings against Z. were terminated by a final judgment so that a continued blocking of accounts in these proceedings was no longer possible. Moreover, as the Regional Court’s order was made in objective forfeiture proceedings it could only be based on section 20b § 2 of the Criminal Code (see ‘Relevant domestic and international law’ below). However, this provision had entered into force only on 19 December 2000; before that date, there was no legal basis for ordering the forfeiture of the assets in question. The third applicant and others were suspected of having received money for offences committed in the 1990s and of having transferred 18 and 11 million Swiss francs respectively to the account of the applicant foundations in 1996, that is, long before the year 2000. Therefore, applying section 20b § 2 of the Criminal Code in order to prolong the blocking of the foundations’ accounts violated the prohibition of retroactive punishment guaranteed by section 61 read in conjunction with section 1 § 2 of the Criminal Code (see ‘Relevant domestic and international law’ below) and Article 7 of the Convention. The Court of Appeal transmitted the appeal to the Supreme Court of Liechtenstein (Fürstlicher Oberster Gerichtshof). On 4 September 2003 the Supreme Court of Liechtenstein dismissed the applicant foundations’ appeal. Referring to its previous case-law, it found that it had jurisdiction to deal with the appeal. As an exception from the rule laid down in section 238 § 1 of the Code of Criminal Procedure (see ‘Relevant domestic and international law’ below), which was authorised by that provision, no appeal lay to the Court of Appeal against the Regional Court’s decision on the prolongation of the seizure of the assets. Otherwise the Court of Appeal would have to decide twice on the same subject matter following its necessary consent to the prolongation of the seizure. Contrary to the wording of section 97a § 6 of the Code of Criminal Procedure, an appeal lay, however, with the Supreme Court itself instead. The Supreme Court found that measures pursuant to section 97a of the Code of Criminal Procedure were aimed at preventing persons suspected of a criminal offence from frustrating the absorption of the profits or the forfeiture of the assets obtained as a result thereof while the investigations into the offence were pending. As rightly found by the Regional Court and the Court of Appeal, there was a reasonable suspicion of money laundering. The third applicant, being the sole beneficiary of the foundations, had been convicted at first instance by the Milan Criminal Court of having received the money later transferred to the foundations as commissions for criminal acts. There were, therefore, reasonable grounds for the assumption that the assets seized would later be declared forfeited. The Supreme Court conceded that the seizure of the foundations’ assets had initially been ordered in the criminal proceedings against Z. However, it was lawful to prolong the seizure in the present objective forfeiture proceedings as these were the logical continuation of the said criminal proceedings and as the seizure had been made in the criminal proceedings to make the forfeiture possible. A declaration of forfeiture at a later date pursuant to section 20b of the Criminal Code, which authorised the forfeiture of assets and entered into force on 19 December 2000, was not excluded by the prohibition of retroactivity. The forfeiture of assets was not an additional punishment, but an independent pecuniary consequence of the fact that a perpetrator, his legal successor or other beneficiaries, including legal entities, had obtained assets resulting from an unlawful act. It did not require that the perpetrator had acted with criminal responsibility. In case of a refusal of payment, an order of forfeiture was therefore enforced with the ordinary instruments of execution of payment, not by ordering imprisonment for failure to pay a fine. As the forfeiture of assets pursuant to section 20b of the Criminal Code was thus not an (additional) penalty for an offence, such a measure did not have to be examined in the light of the prohibition of retroactive punishment enshrined in sections 1 and 61 of the Criminal Code. The new provisions on forfeiture of assets were applicable to all assets which were found to be in Liechtenstein at the time the provisions entered into force. They had not therefore become effective retroactively and had not changed retroactively the consequences of a perpetrator’s past conduct, but concerned a persistent state of affairs, namely assets being situated within the country. The Supreme Court further found that sections 1 and 61 of the Criminal Code only played a role in so far as the criminal offence as a result of which the assets in question were obtained was concerned. Proceeds of offences which had not been punishable before the entry into force of section 20b of the Criminal Code were not liable to forfeiture. However, in the present case the offences which were suspected to have generated the assets at issue had been punishable both in Italy and in Liechtenstein at the time they had been committed. The seizure of the assets was proportionate because the disadvantages suffered by the applicant foundations as a result of the blocking of their accounts were less important than the damage possibly incurred by the victims of the offences if the seizure was not ordered. On 23 September 2003 the first and second applicants lodged a complaint with the Constitutional Court of the Principality of Liechtenstein (Staatsgerichtshof des Fürstentums Liechtenstein). They claimed that the principle of nulla poena sine lege as guaranteed by Article 33 § 2 of the Constitution of Liechtenstein (see ‘Relevant domestic and international law’ below) and Article 7 of the Convention had been violated. They argued that the forfeiture of assets authorised by section 20b of the Criminal Code had to be qualified as an additional punishment. The courts had applied that new penal provision, which had entered into force on 19 December 2000, to assets purportedly obtained by criminal offences committed in the 1990s, that is, before that date, when the forfeiture of such assets had not yet been authorised by law. Moreover, the applicants claimed that their right to a fair trial and to be heard by the judge having jurisdiction over the case as protected by Article 33 § 1 of the Constitution (see ‘Relevant domestic and international law’ below) and Article 6 of the Convention had been breached. It had been unlawful and indeed arbitrary to order a prolongation of the seizure of its assets in objective forfeiture proceedings, in which there had not been a seizure yet, the initial seizure having been ordered in criminal proceedings against Z. The Regional Court had therefore not had jurisdiction to order the said prolongation in the objective forfeiture proceedings pending before it. Moreover, the decision on the applicants’ appeal against this decision should have been given by the Court of Appeal and not by the Supreme Court. On 29 June 2004 the Constitutional Court of the Principality of Liechtenstein rejected the foundations’ complaint. It found, firstly, that the prohibition of retroactive punishment laid down in Article 33 § 2 of the Liechtenstein Constitution and Article 7 § 1 of the Convention as well as in sections 1 and 61 of the Criminal Code did not apply to a forfeiture pursuant to section 20b § 2 of the Criminal Code. Referring to the criteria laid down by this Court notably in the case of Welch v. the United Kingdom (judgment of 9 February 1995, Series A no. 307, p. 13, § 28) it found that forfeiture pursuant to section 20b § 2 of the Criminal Code was not a “penalty” within the meaning of Article 7 § 1 of the Convention. It was not a precondition for an order of forfeiture pursuant to that section that the person concerned was convicted of a criminal offence or that criminal proceedings had been instituted against him at all. The assets concerned had to stem from an act punishable at the place of its commission to which Liechtenstein criminal law was not applicable. The purpose of the new provision on forfeiture was to comply with the obligations arising notably under the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (ETS no. 141; see ‘Relevant domestic and international law’ below) and to guarantee that crime did not pay off. Forfeiture was not an additional penalty for offences, the penal sanctions for offences, prison sentences and fines, being sufficient. It was only aimed at absorbing the profits made as a result of an offence. It was therefore not necessary that the person concerned acted with criminal responsibility and forfeiture could also be ordered against the legal successors of a perpetrator. Therefore, forfeiture had to be characterised as a civil law consequence of criminal acts. This was confirmed by the fact that in case of a refusal of payment, an order of forfeiture was enforced with the ordinary instruments of execution of payment orders whereas – other than, for example, in the Welch case – it was not authorised to order imprisonment for failure to pay a fine. The objective forfeiture proceedings were separate proceedings to which the procedural rules of the Code of Criminal Procedure applied, but which were independent of the guilt of the person or legal entity owning the assets in question. As to the severity of the measure in question, it had to be noted that the assets forfeited were often only part of the net proceeds of a criminal offence. Secondly, the Constitutional Court found that the applicants’ right to be heard by the judge having jurisdiction over the case under Article 33 § 1 of the Constitution had not been violated. It had been convincing and, in any event, not arbitrary for the Supreme Court to argue that the present objective forfeiture proceedings were the logical continuation of the criminal proceedings against Z. and that it had, therefore, been lawful to order the prolongation of the seizure in the objective forfeiture proceedings. Likewise, having regard to the Supreme Court’s reasoning, it had been reasonable and not arbitrary for that court to conclude that an appeal against the decision of the Regional Court to prolong the seizure of the applicants’ assets did not lie with the Court of Appeal, but with the Supreme Court itself. On 17 May 2004 the Regional Court of the Principality of Liechtenstein, in the course of the objective forfeiture proceedings against the applicant foundations, prolonged the seizure of the foundations’ assets for another year pursuant to section 97a § 4 of the Code of Criminal Procedure (file no. 14 UR 2002.384). Referring to the conviction of the third applicant by the Milan Criminal Court on 29 April 2003, it argued that the assets were suspected of being the pay-back for bribing civil servants. However, the said judgment was not final yet and the investigation proceedings in Liechtenstein depended on the outcome of the proceedings in Italy. On 19 May 2004 the Court of Appeal of the Principality of Liechtenstein, referring to the Regional Court’s reasoning and to that of the Supreme Court of Liechtenstein in its decision of 4 September 2003, consented to the Regional Court’s decision (section 97a § 4 of the Code of Criminal Procedure). On 8 June 2004 the applicant foundations lodged an appeal with the Supreme Court. Disagreeing with the decision given by the Supreme Court of Liechtenstein on 4 September 2003, they reasoned their appeal along the same lines as their appeal of 6 June 2003. On 23 July 2004 the Supreme Court of Liechtenstein dismissed the foundations’ appeal as ill-founded. Referring to its decision given on 4 September 2003, which had meanwhile been confirmed by the Constitutional Court in its decision of 29 June 2004, it found that it had been lawful to order the prolongation of the seizure in the present objective forfeiture proceedings. Moreover, as had been confirmed by the Constitutional Court, the forfeiture of assets pursuant to section 20b of the Criminal Code was not an (additional) penalty for an offence and therefore did not have to be examined in the light of the prohibition of retroactive punishment. The Supreme Court reiterated that it had repeatedly considered it to be disproportionate to freeze assets of Liechtenstein citizens or legal entities for more than three years without the underlying criminal proceedings being terminated. However, the outcome of the criminal proceedings in Italy prejudged the outcome of the present case and it was likely that a final decision would be given shortly. Therefore, the prolongation of the blocking of the foundations’ accounts was still proportionate, even though the objective forfeiture proceedings should be terminated soon. On 12 August 2004 the foundations lodged a complaint with the Constitutional Court. They argued again that the application of section 20b of the Criminal Code had violated the principle of nulla poena sine lege as guaranteed by Article 33 § 2 of the Constitution of Liechtenstein and Article 7 of the Convention. Invoking Article 33 of the Liechtenstein Constitution and Article 6 of the Convention, they claimed that their right to a fair trial and to be heard by the judge having jurisdiction over the case had been breached. Moreover, the applicants complained that the Supreme Court of Liechtenstein had failed to give sufficient reasons for its view that it had been lawful to order the prolongation of the seizure in the present objective forfeiture proceedings. On 30 November 2004 the Constitutional Court dismissed the foundations’ complaint as ill-founded. It referred to the grounds given in its decision of 29 June 2004. As regards the foundations’ claim that the Supreme Court insufficiently reasoned its decision, the court found that the Supreme Court’s reference to the grounds given by the Constitutional Court in its decision of 29 June 2004 did not breach the duty to give sufficient reasons. The latter decision concerned the same questions raised by the same parties so that the reference was clear and comprehensible. On 13 March 2007 the applicants informed the Court that the seizure of their assets persisted, without a final judgment on the underlying offences having been given. Pursuant to Article 33 § 1 of the Constitution of the Principality of Liechtenstein, no one may be removed from the jurisdiction of his lawful judge and extraordinary courts shall not be established. Article 33 § 2 of the Constitution stipulates that the threat or imposition of penalties must be in accordance with the law. Article 34 § 1 of the Constitution guarantees the inviolability of private property. Section 1 of the Criminal Code prohibits punishment without law. Pursuant to section 1 § 1 of the Criminal Code, a penalty or a measure of prevention may only be imposed for an act which was punishable according to law at the time of its commission. Section 1 § 2 of that Code provides that no heavier penalty may be imposed than the one that was applicable at the time the criminal offence was committed. A measure of prevention may only be ordered if, at the time of the commission of the offence, this measure or a comparable penalty or measure of prevention had been provided for by law. Section 61 of the Criminal Code lays down rules on the temporal applicability of criminal provisions. Criminal laws apply to acts committed after the laws’ entry into force. They are applicable to acts committed prior to that date if the laws in force at the time when the offence was committed, having regard to their overall effects, were less favourable to the perpetrator. Sections 18 to 31a of the Criminal Code, according to their heading, cover penalties, the absorption of profits, forfeiture and preventive measures. Section 18 of that Code regulates prison sentences, section 19 of the Code provides for fines and sections 20 and 20a of the Code contain rules on the absorption of profits. Sections 21 et seq. provide, in particular, for preventive measures such as the placement in an institution for mentally disturbed law breakers, in a detoxification facility or in an institution for dangerous recidivist offenders. According to section 20b § 2 of the Criminal Code, assets which were derived from an act liable to punishment shall be declared forfeited if the act from which they originate is punishable according to the laws of the place were it was committed, if Liechtenstein criminal law does not apply to that act and if the act did not constitute a fiscal offence. Pursuant to section 20c § 1 no. 1 of the Criminal Code, forfeiture is excluded in so far as third parties, who did not participate in the offences at issue, have legal claims in relation to the assets in question. Section 20b § 2 of the Criminal Code was introduced into that Code by the Act on Amendments to the Criminal Code of 25 October 2000, which entered into force on 19 December 2000 (see Liechtenstein Federal Gazette (LGBl) 2000, no. 256, issued on 19 December 2000). Money laundering, that is, in particular, hiding assets originating from a criminal offence or concealing the fact that the assets stem from an offence, is punishable pursuant to section 165 § 1 of the Criminal Code. However, a person who has been punished for having participated in the offence which generated such assets is not (also) liable to prosecution for money laundering (section 165 § 5 of the Criminal Code). Section 97a § 1 of the Code of Criminal Procedure provides that if there is a suspicion that assets originate from a punishable act and are likely to be declared forfeited (pursuant to section 20b of the Criminal Code) the court, on a motion of the Public Prosecutor’s Office, shall order measures aimed at safeguarding their forfeiture if the recovery of the assets is endangered or rendered considerably more difficult otherwise. Such safeguarding measures comprise, inter alia, the seizure of assets or a prohibition on their disposal. Section 97a § 4 of that Code stipulates that the court is obliged to fix a time-limit for the safeguarding measure ordered, which may be extended on request. If two years have passed following the first order without an indictment having been laid or a request for forfeiture having been lodged in separate objective proceedings, further extensions of the time-limit for one year respectively are only permitted with the consent of the Court of Appeal. The seizure order shall be quashed, in particular, if it can be assumed that the forfeiture will not be ordered or if the time-limit for the order has expired (section 97a § 5 of the Code of Criminal Procedure). Section 356 of the Code of Criminal Procedure regulates the forfeiture proceedings. If there are sufficient grounds for the assumption that the preconditions for forfeiture (section 20b of the Criminal Code) are met and if this cannot be determined in the course of criminal proceedings, the Public Prosecutor shall lodge a separate request for a declaration of forfeiture (§ 1 of section 356). It is the court which would have jurisdiction to adjudicate on the offence due to which the forfeiture order shall be made which shall decide on the request in separate proceedings by a judgment following a public hearing (§ 2 of section 356). Persons who argue to have a claim on the assets liable to forfeiture have the rights of an accused in the forfeiture proceedings (section 354 of the Code of Criminal Procedure). Pursuant to Section 97a § 6 of the Code of Criminal Procedure, the Public Prosecutor’s Office, the defendant or the persons otherwise affected have the right to lodge an appeal with the Court of Appeal against the order of safeguarding measures or its lifting. According to section 238 § 1 of the Code of Criminal Procedure all judicial decrees, decisions and orders which are not judgments are subject to appeal to the Court of Appeal on grounds of unlawfulness or disproportionality if there are no exceptions provided for by law. The Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime signed on 8 November 1990 (ETS no. 141) entered into force for Liechtenstein on 1 March 2001. According to its preamble, the objective of this Convention is to fight effectively against serious crime by depriving criminals of the proceeds from crime and to establish a well-functioning system of international co-operation to attain this aim. Parties undertake in particular to criminalise the laundering of the proceeds from crime and to confiscate such proceeds or property the value of which corresponds to such proceeds.