JARVI-ERISTYS OY v. FINLAND
Inadmissible
Nicolas Bratza
The applicant, Järvi-Eristys Oy, is a Finnish limited liability company. Before the Court it was represented by Jouko Kauppila, a lawyer practising in Pori. The respondent Government were represented by their Agent, Arto Kosonen, Director in the Ministry for Foreign Affairs. The facts of the case, as submitted by the parties and as they appear from the documents, may be summarised as follows. In October 1993 the applicant bought 38 tons of copper in Russia and paid for it in cash with US dollars. During the customs clearance the Finnish customs authorities found that the information noted in a bill of consignment was false insofar as the identity of the seller company and the buyer company were concerned. Furthermore, a certain other company was mentioned in the false documents as a forwarding company. The signature of M.M., operational manager of that company, had been forged in those documents. None of these companies had anything to do with the freight. It also appeared that the seller did not have a licence to sell the copper even though such a licence was obligatory when exporting copper from Russia. The Finnish customs issued a prohibition of transfer of the copper and reported the case to the police. It appears that in December 1993 the Russian authorities announced that the copper had been stolen in Russia. The owner of the applicant company was suspected of aggravated concealment of illegally obtained goods and of having forged the bill of consignment. On 7 June 1994 the Russian customs authorities informed the Finnish police that the Russian company which purported to sell the copper to the applicant did not exist. The Russian managing director who had supposedly signed the contract and the company from which the Russian seller had purported to buy the copper did not exist, either. As the copper had not been sold legally in Russia and as it had been illegally exported to Finland, the Russian authorities claimed that the Russian Federation was its legal owner and that it had to be returned to Russia. By a letter of 29 July 1994, Inspector K. from the Police District of Kotka informed the Finnish customs that according to the pre-trial investigation carried out into the matter, and on the basis of reports obtained from Russia concerning the identification of the copper, the Russian Federation was the legal owner of the copper. He stated that there were no obstacles on the part of the police to returning the copper to its legal owner. The applicant argued that the letter had the character of a decision. The Government argued that the purpose of the letter was to communicate information to the custom authorities. On 13 October 1994, after the pre-trial investigation had been completed, the matter was transferred to a public prosecutor for consideration of charges. On 30 January 1995 the public prosecutor decided not to prosecute the owner of the applicant company as there was no evidence supporting the allegations that the copper had been stolen or that he had known that the bill of consignment had been forged. Meanwhile, in May and October 1994 the applicant company instituted civil proceedings before the Kotka District Court (käräjäoikeus, tingsrätten) against the State of Finland and the Russian Federation, respectively, requesting that the prohibition of transfer be revoked and that the District Court confirm that the applicant company was the legal owner of the copper. In its decision of 20 October 1995 the District Court found that it was not competent to examine the request that the prohibition of transfer be revoked. As to the ownership issue the District Court considered, taking into account that no one had ever claimed that the State of Finland was the legal owner of the copper, that it could not be considered a party to the proceedings. Thus, the claims made against the State of Finland could not be examined. Insofar as the Russian Federation had claimed the ownership of the copper but had not made any submissions to the District Court, the court found that it had no competence to examine an issue concerning a foreign State's ownership rights, being prevented by the international principles concerning the foreign sovereign states' immunities. It appears that the applicant company appealed and that on 27 June 1996 the Kouvola Court of Appeal (hovioikeus, hovrätten) upheld the decision. Meanwhile on 23 October 1995, the applicant company requested that the customs authorities hand over the copper. The same day the forwarding agency informed the applicant company that the copper had been sold on to a Finnish company by the Russian Federation in co-operation with the Finnish customs. On 5 December 1995, the applicant company instituted civil proceedings for public-sector liability for damages under the Tort Liability Act (vahingonkorvauslaki; skadeståndslagen; 412/1974) against the State of Finland, claiming the amount of 463,000 Finnish marks (equivalent to EUR 77,871) as compensation for the lost copper. It argued that the State was liable for the damage as a police officer, K., when acting as public authority, had overstepped his powers in ordering that the copper be returned to Russia even though there was no proof that it had been stolen. On 24 May 1996 the Pori District Court rejected the applicant's claims, finding that the police officer in question had been entitled to agree with the findings of the Russian authorities that the copper had been stolen, having regard to the fact that the bill of consignment was forged, that the purchase price amounted to only about one fourth of the copper's real value and was paid in cash, that the company's representative did not know the identity of the seller's representatives, that the driver had been instructed to visit the customs authorities at a precise time and that the applicant company's representatives had not contacted the seller to sort things out following the prohibition of transfer. These circumstances warranted the conclusion that there was something shady and secret about the purchase. The wording of the police officer's communication to the customs indicating that there was no obstacle to returning the copper to Russia did not, however, decide the question of the ownership of the copper. As the copper had most probably been stolen in Russia, the applicant company had, in accordance with section 11 of the Decree Implementing the Penal Code (rikoslain voimaanpanemisesta annettu asetus, förordningen om införande av strafflagen), been obliged to return the copper to its legal owner without compensation. In accordance with the said provision, the applicant was entitled to seek compensation from the seller of the copper or from the person who had stolen it. Insofar as the State had argued that the applicant company, prior to commencing an action for compensation, should have appealed against the customs' decision with a view to minimising any possible damage, the District Court noted that the applicant had no interest in demanding a written decision as to the refusal to customs clear the copper delivery and to appeal against such a decision, as the company had considered that the customs' actions so far had been justified. On 4 February 1997 the Turku Court of Appeal upheld the District Court's judgment. On 5 September 1997 the Supreme Court refused the applicant leave to appeal. Section 11 (515/1948) of the Decree Implementing the Penal Code reads, in so far as relevant, as follows: “If a dispute arises concerning an item that has been stolen, ... from its previous holder, and if the one who has become the holder of the item proves that he received it in good faith, the holder of the item in dispute shall be obliged to hand it over without compensation and may seek compensation from the person he received the item from or from the person through whose offence he received it.” According to the amended section 48 (1165/1987; as in force at the relevant time) of the Customs Act (tullilaki, tullagen), a decision of the district customs office could be appealed against to the National Board of Customs. According to section 50 of the Customs Act, unless otherwise provided, a decision of the National Board of Customs may be appealed against to the Supreme Administrative Court in accordance with the provisions of the Act on Appeals in Administrative Matters (muutoksenhausta hallintoasioissa annettu laki, lagen om ändringssökande i förvaltningsärenden; 154/50), as in force at the relevant time. According to section 8 (f) of the Customs Act (573/1978), as in force at the time, a person had the right of possession of goods if he was their importer, exporter or owner or otherwise had possession or control over the goods. According to section 9 (2) of the Customs Decree (574/1978; tulliasetus, tullförordningen), as in force at the time, the customs authorities had to ensure, to the extent possible, that the goods were delivered to the person who has a lawful right of possession in respect of them. According to chapter 3, section 4 of the Tort Liability Act a person, who has suffered injury or damage owing to an erroneous decision by a state or municipal authority and without an acceptable reason has failed to appeal against the said decision, shall not be entitled to damages from the state or the municipality for injury or damage that could have been avoided by appealing.