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The Supreme Court: appealing of tax audits within criminal proceeding

16 March, 2018 Newsletters

1.

On February 15, 2018 the Supreme Court represented by panel of judges of the Second Chamber of the Cassation Criminal Court including: presiding judge Matiek T.V., judges Bilyk N.V., Mohylnyi O.P., Ostapuk V.I., Nastavnyi V.V., Kravchenko S.I., Yakovleva C.V., has delivered the Resolution as of February 15, 2018 in case No. 757/2200/17-к (hereinafter – the “Supreme Court Resolution“), by which the Ruling of the Appeal Court of the city of Kyiv as of August 30, 2017 on denial in opening of the appeal proceedings under the appeal claim on the Ruling of Pechersk district court of the city of Kyiv as of January 16,2017 regarding appointment of the tax audit within criminal proceedings has considered to be legal, and cassation claim of attorney has been left without satisfaction.

This Supreme Court Resolution canNOT be considered to be reasonable, motivated and corresponding to the provisions of the Constitution of Ukraine, laws, the Convention for the Protection of Human Rights and Fundamental Freedoms, case-law of the European Court of Human Rights. And these particular aspects are subject to be reviewed in this newsletter.

2.

Therewith, while we were preparing this review, the panel of judges of the First Chamber of the Cassation Criminal Court of Supreme Court including: presiding judge Bushchenko A.P., judges Hryhorieva I.V., Holubytskyi S.S. has delivered the Court Ruling as of March 06, 2018 No. 51-499км17, by which the decision on reffering the case upon the cassation claim on Ruling of the Appeal Court of Donetsk region as of August 30,2017 on denial in opening of the appeal proceedings under the claim on the investigating judge’s ruling on appointment of the tax audit within criminal proceedings was adopted for consideration by the Grand Chamber of the Supreme Court as such that contains the exclusive legal problem. This transfer is considered to be necessary for ensuring the development of law and the formation of a single law enforcement practice.

We are immensely grateful to the First Chamber of the Cassation Criminal Court of the Supreme Court for such wise, balanced, well-grounded decision, as well as true legal approach, understanding of the problem, its detailed review, application of rule of law principle and transfer of legal analysis of the issue on the right of appointment of the tax audits within criminal proceedings by investigating judges, right of challenging such rulings by the Grand Chamber of the Supreme Court. We consider it to be the example of decision which we were waiting for and are still waiting from the part of the  renewed Supreme Court.

3.

Herewith from our part we provide a certain analysis of some points of previous negative decision, which is being described in section 1 hereof. We are publishing this newsletter in the wording as it was at the time of delivering the decision as of March 6, which is being described in the section 2 hereof. It provides better illustrations of many aspects than we can do.

Along with that, we hope that the foregoing information may also be useful while considering this issue by the Grand Chamber.

Thus, as regard to the negative decision as of February 15 we would like to note the following:

What the attorney has referred to in the cassation claim? The Supreme Court Resolution states the following (quote):

Taking into consideration that the denial in opening of the appeal proceedings by the court of appeal was erroneous and premature, INDIVIDUAL_4 asserts in the cassation claim that due to the fact that the effective Criminal Procedural Code of Ukraine does not contain the provision, which directly allows for the application of investigator or prosecutor and consideration of the petitions on appointment of unscheduled tax audit by the investigating judge, and the provision, which allows for challenging of such a decision to the court of appeal by the party of criminal proceedings, the court of appeal should have been guided by provisions of the Constitution of Ukraine, general principles of the Criminal Procedural Code of Ukraine and case-law of the European Court of Human Rights and considered the appeal claim of  attorney Kurchin O.G. thus providing a right of INDIVIDUAL_4 of access to the courts”.

Meaning that in support of illegality of denial in opening of the appeal proceedings under the appeal claim on the Ruling regarding appointment of the tax audit within criminal proceedings delivered by investigating judge, the attention of the court was drawn to the following:

  • right on challenging the decision in the court of appeal provided by the Constitution of Ukraine;
  • general principles of the Criminal Procedural Code of Ukraine;
  • case-law of the European Court of Human Right (hereinafter – the “ECHR”);
  • obvious illegality of the investigating judge decision due to the fact that the Criminal Procedural Code of Ukraine does not provide with the right to consider petitions and deliver court rulings on appointment of tax audit within criminal proceedings.

However, panel of judges have considered such arguments to be unreasonable specifying in the reasons for judgment of the Supreme Court Resolution the following:

(1) In the Supreme Court Resolution the court reached a conclusion that the court of appeal actually could not accept the attorney’s appeal claim on the investigating judge’s ruling on appointment of tax audit within criminal proceedings for consideration, since right of challenging such rulings is not directly provided by Article 309 of the Criminal Procedural Code of Ukraine. Accordingly, being obliged to act solely under authorities, within the powers and in the manner prescribed by the law, the court of appeal had no other choice but to deny in opening proceedings, otherwise provisions of the Criminal Procedural Code of Ukraine were violated.

Thus, the court assumed a position that the court (including the court of appeal) may act solely according to letter of the law and by no means contrary to that. However, in this case, the court had to be consistent and share a common vision in disagreement with illegal actions of all courts and illegality of all court decisions. However the court has not applied such an approach to the decision of investigating judge and while spelling out the absence in the Criminal Procedural Code of Ukraine of right of challenging the investigating judge’s decisions on appointment of the tax audit within criminal proceedings to the appeal courts, the court turns a blind eye to the fact that the Criminal Procedural Code of Ukraine does not provide the right and procedure of delivering the court rulings on appointment of tax audits within criminal proceedings.

Particularly, the Supreme Court Resolution states the following (quote):

“According to part 2 of Article 19 of the Constitution of Ukraine state and local authorities as well as its officials are obliged to act solely under authorities, within the powers and in the manner prescribed by the Constitution of Ukraine and laws of Ukraine.

According to part 1 of Article 1 of the Criminal Procedural Code of Ukraine the procedure for criminal proceedings on the territory of Ukraine is determined only by the criminal procedural law, analysis of which shows that standardization of criminal procedural relations is executed by means of clear and imperative definition of procedures, as well as regulation of rights of its members in order to prevent the optional application of authorities by the governmental bodies and provision the conditions for a fair trial.

The mentioned imperative principle corresponds to the legislative technique, which is used in the Criminal Procedural Code of Ukraine, in particular in part 1 of Article 309. This Article provides the exhaustive list of the investigating judge’s decisions, which may be challenged in appeal court during the pre-trial investigation and this list is not subject to expanded interpretation“.

The abovementioned confirms the legitimacy of the appeal’s court finding that due to the fact, that the exhaustive list mentioned in part 1 of Article 309 of the Criminal Procedural Code of Ukraine does not contain the investigating judge’s decision on satisfaction of investigator’s or prosecutor’s petition on appointment of unscheduled tax audit, the possibility to challenge this decision in the court of appeal is absent. Therefore, with reference to part 4 of Article 399 of the Criminal Procedural Code of Ukraine the court of appeal reasonably denied in the opening of appeal proceedings under the claim of attorney Kurchin O.G”.

Although

Coming up with an argument that state authorities are to be comply with Article 19 of the Constitution of Ukraine, the question that has to be answered is why the Supreme Court as judicial authority is still ignoring the provisions of para. 8 of part 2 of Article 129 of the Constitution of Ukraine (quote from recent edition of the Constitution of Ukraine after conducted Constitutional reform)

“The basic principles of court procedure are:

8) provision of right to review the court case in the appeal court and challenge the court case in the court of cassation in cases determined by law”.

Thereby, according to the mentioned provision the right to review the court case in the appeal court is unconditional, and exceptions cannot be determined by the law and the Criminal Procedural Code of Ukraine as well.

Thus, the Supreme Court has not applied the specified provision of Constitution of Ukraine and even has not mentioned it in the Supreme Court Resolution, despite this provision is directly applicable according to part 3 of Article 8 of the Constitution of Ukraine, and application to the court is directly guaranteed under the Constitution of Ukraine.

The same indignation is caused by reference to part 1 of Article 1 of the Criminal Procedural Code of Ukraine, according to which the criminal procedure on the territory of Ukraine is determined only by the criminal procedural law for the purpose of prevention of optional application of authorities by the governmental bodies and provision conditions for a fair trial. However, precisely this optional application of authorities by investigating judge and violation of fair trial conditions has occurred while delivering the court ruling on appointment of tax audit within criminal proceedings by investigating judge, despite the fact that the Criminal Procedural Code of Ukraine does not provide the right and procedure of delivering such a court ruling.

Besides, there is one, but impressive conclusion in the Supreme Court Resolution (quote):

“With regard to arguments of the cassation claim concerning illegality of the investigating judge ruling, they are not based on the requirements of the criminal procedural law, since according to part 3 of Article 309 of the Criminal Procedural Code of Ukraine the decision delivered by the investigating judge is not subject to specific challenge, and this decision is not subject to review in the court of cassation according to provisions of Article 424 of the Criminal Procedural Code of Ukraine“.

However, what the court has referred to? Has the court meant that arguments regarding illegality of the investigating judge ruling on appointment of tax audit within criminal proceedings are illegal, since such decision is not subject for challenge according to provisions of the Criminal Procedural Code of Ukraine? It seems like a certain surrealism of legal opinion.

(2) In order to continuing argumentation of the position, that the court is obliged to act solely according to the provisions of law, i.e. the Criminal Procedural Code of Ukraine, the court drew attention to inability to apply “similar procedure” of the appeal claim consideration, pointing in the Supreme Court Resolution to the following (quote):

“As for the references made by INDIVIDUAL_4 in the cassation claim regarding the fact, that having denied in the opening of appeal proceedings for such reasons, the court of appeal  left aside the general principles of criminal proceedings, which provide the right for appeal challenge of such court decisions, which are not directly provided by provisions of the Criminal Procedural Code of Ukraine, and these references are not based on the law.

The criminal procedural law provides, that general principles of criminal proceedings are intended at assurance of legality of the criminal procedural activity and observance of rights of individuals, who participates in such proceedings, as well as legal interests that do not contradict the imperative requirement. At the same time, overcoming gaps in the procedure that is not provided by the Criminal Procedural Code of Ukraine by means of applying a similar procedure, is inadmissible, since it will neglect certain rights and freedoms equally guaranteed by the state”.

Although 

Besides, the court is inconsistent in its approaches, since it deliberately ignores the fact, that application of “similar” procedure has been conducted while delivering the court ruling on appointment of tax audit within criminal proceedings by the investigating judge. Thus, provisions of the Criminal Procedural Code of Ukraine (Articles 131, 223 of Chapter 20) provide the investigating judge with the right to deliver the court rulings on:

  • application of criminal proceedings security measures;
  • conduction of investigative (detective) actions; and
  • conduction of covert investigative (detective) actions.

Therefore, appointment of tax audit within criminal proceedings concerns neither investigative / covert investigative actions, nor criminal proceedings security measures, consequently the Criminal Procedural Code of Ukraine does not provide the investigating judges with the procedure of consideration of petitions on appointment of tax audits within criminal proceedings, as well as delivering the court rulings on appointment of tax audits within criminal proceedings respectively.

In that case, which procedure was applied by the investigating judge while delivering the court ruling on appointment of tax audit? The “similar” one?

It means that the Supreme Court turns a blind eye to the fact that the investigating judge applies the non-existent procedure of delivering the court rulings on appointment of tax audit within criminal proceedings, but shouts at the top of voice about inadmissibility of application of similar procedure while challenging such illegal court rulings in the court of appeal. And therefore, protection of which rights and freedoms is mentioned in the Supreme Court Resolution?

And this when the right on appeal challenge is provided by direct provisions of Article 129 of the Constitution of Ukraine.

It seems like Lady Justice is blind indeed, but only in one scale.

(3) In support of legality of appeal court ruling on denial in opening proceedings, the court also relied on the practice of the European Court of Human Rights, pointing that access to the courts is not unconditional and can be limited. In particular, the Supreme Court Resolution states the following (quote):

The court ruling of the European Court of Human Rights as of January 08, 2008 on admissibility of application No. 32671/02 in case “Skoryk v. Ukraine” stated, that right to a trial, which aspect is, among others, the right of access to the courts, is not absolute, it may be subject to limitations, especially in view of admissibility of the claim. However, these limitations should not affect enjoyment of the right in such a way and to such an extent that its very essence will be violated. They should correspond to the legal aim and there should be a reasonable degree of proportionality between the tools applied and the purpose that they are trying to achieve.

In such circumstances, the existence of the requirements specified in the law for appeal to the court of a higher level in the event of disagreement with a court decision is not identical to limitation in access to the courts, therefore it does not mean limitation in the right to a fair trial”.

 Although

The Supreme Court while independently quoting the ECHR decision in case “Skoryk v. Ukraine” apparently turns a blind eye to the main idea – non-violation of the very essence of right on access to the courts, which in this particular case has been violated by the Supreme Court.

Along with this, the Supreme Court ignored the provision, which is well-known in the legal community and determined in para. 39 of the ECHR decision in case “Garcia Manibardo v. Spain”, which states, that:

“Article 6 of the Convention does not compel the Contracting States to set up courts of appeal or of cassation (see, among other authorities, the Delcourt v. Belgium judgment of 17 January 1970, Series A no. 11, pp. 13-15, §§ 25-26). Nevertheless, where such courts exist the guarantees contained in Article 6 must be complied with, inter alia by ensuring effective access to the courts so that litigants may obtain a decision relating to their “civil rights and obligations”.

Herewith, stated above provisions are mentioned in the decision of the Constitutional Court of Ukraine as of April 08, 2015 No. 3-рп/2015, in which the court denotes, that (para. 2.1 of the court decision):

“According to the European Court of Human Rights case-law, Article 6 of the Convention, which provides the right to a fair trial, does not determine the requirements to the states for setting up courts of appeal or of cassation. Thus, where such courts exist the guarantees contained in this article, must be complied with ensuring effective access to such courts (para. 25 of Decision in case “Delcourt v. Belgium” as of January 17, 1970 and para. 65 of Decision in case “Hoffmann v. Germany” as of October 11, 2001)”.

Thereby, the European Court of Human Rights and the Constitutional Court of Ukraine emphasize that if the courts of appeal are set up in the country, the individual should be granted with the guaranteed effective right to access to such a court in order to protect the violated rights.

Proceeding from determined European principles and values, the Constitutional reform has amended Article 129 of the Constitution of Ukraine. It is asserted in the explanatory note to the Draft Law “On amending the Constitution of Ukraine (in view of justice)”, which amended the Constitution of Ukraine, particularly:

The initiated new version of provision on ensuring the review of the court case in the appeal court and challenge of the court case in the court of cassation minimizes risks of expanded interpretation of exceptions to this rule at the level of law, which are present in the current version of para. 8 of part 3 of Article 129 of the Constitution of Ukraine, which result in limitation of the constitutional right of individual to challenge the court decision.

The new version of this provision will give a possibility to a person to guarantee the right to review the court case at least once, e.g. in the court of appeal”.

It means that the Supreme Court has applied the ECHR case-law differentially, wrenching certain phrases out of its context and does not even try to understand the situation. It is embarrassing, since provisions and principles aimed to protect violated rights and ensure access to the courts, which are plain to see and almost commonly known, the Supreme Court is not applying even in the new composition of judges.

All mentioned above vividly demonstrate that the Supreme Court Resolution does not comply with the requirements of legality, reasonableness and motivation of the court decision. And certainly it is not a worthy legal opinion of the newly created Supreme Court.

Moreover, this conclusion contradicts the legal opinion given in the Resolution of the Supreme Court of Ukraine as of October 12, 2017 No. 5-142кс(15)17, according to which (quote):

“Conclusion:

In case the investigating judge delivers the court ruling, which is not provided by procedural provisions, and to which provisions of part 3 of Article 309 of the Criminal Procedural code of Ukraine refer, the court of appeal has no legal right to deny in revision of its legality giving reference to part 4 of Article 399 of the Criminal Procedural code of Ukraine. The right to challenge this court decision in the court of appeal is subject to be ensured due to provisions of para. 17 of part 1 of Article 7 and part 1 of Article 24 of the Criminal Procedural Code of Ukraine, which guarantee this right considering provisions of part 6 of Article 9 of the Criminal Procedural Code of Ukraine. The latter states, that in cases when provisions of the Criminal Procedural Code of Ukraine do not regulate or ambiguously regulate the issue of criminal proceedings, the general principles of criminal proceedings determined by part 1 of Article 7 of the Criminal Procedural Code of Ukraine shall be applied”.

Herewith, according to provisions of para. 7 § 3 of Transitional Provisions of the Law of Ukraine “On Amendments to the Commercial Procedural Code of Ukraine, the Civil Procedural Code of Ukraine, the Code of Administrative Procedure of Ukraine and other legislative acts” (quote):

The court which considers the case at the level of cassation and is represented by panel of judges of chamber (united chamber,) submits the case for consideration of the Grand Chamber of the Supreme Court, in case if such panel of judges of chamber (united chamber) considers it necessary to step back from the conclusion regarding application of law in similar legal relationships, which was stated in a previously adopted decision of the Supreme Court of Ukraine“.

This particular situation provided by the specified law provision has occurred in this case, since by delivering the Supreme Court Resolution the court stepped back from legal opinion regarding application of law in similar legal relationships, which was stated in a previously adopted decision of the Supreme Court of Ukraine.

However, contrary to the specified law provision, judges of the Second Chamber of the Cassation Criminal Court of the Supreme Court have not submitted this case for consideration of the Grand Chamber of Supreme Court. They have considered this case, delivered the decision on the merits and stepped back from previously adopted opinion of the Resolution of the Supreme Court of Ukraine as of October 12, 2017 No. 5-142кс(15)17 at its own discretion.

As follows, picking to pieces the Resolution of Cassation Criminal Court of the Supreme Court as of February 15, 2018 in case No. 757/2200/17-к, it appears, that the procedure of adopting such decisions was violated, and conclusions given in it do not comply with law provisions. It means, that there are reasons to suppose that while adopting such a decision the court was kind of biased and prejudiced, that directly affected the adoption of illegal decision.

Therefore, we presume, that a tool for fighting with such illegal decisions and termination of practice of delivering court rulings on appointment of tax audits within criminal proceedings by investigating judges is application to the Constitutional Court of Ukraine with constitutional claim about para. 78.1.11 of the Tax Code of Ukraine, which is the trigger for consideration of petitions on appointment of tax audits by investigating judges. This is the only provision of law, which is even not procedural, where court decisions of this kind are mentioned within the context of providing the controlling bodies with the right to appoint tax audits based on such court rulings. However, it cannot be procedural for investigating judges.

Besides, there is still a possibility to apply to the European Court of Human Rights for protection of violated rights in relation to adoption of illegal decisions, procedure violation, inability to challenge illegal decisions, that result in violation of several rights, enshrined in the Convention for the Protection of Human Rights and Fundamental Freedoms, as well as provisions of ECHR decisions, which are source of law in Ukraine.

Herewith, according to information from the Unified State Register of Court Decisions, other similar cassation claims upon appeal court rulings on denial in opening appeal proceedings on investigating judge court rulings on appointment of tax audits within criminal proceedings are still waiting to be considered by the Cassation Criminal Court of the Supreme Court. In view of these circumstances we expect the Cassation Criminal Court of the Supreme Court will come to a thorough consideration and deliver a reasonable decision in accordance with provisions of the Constitution of Ukraine, ECHR case-law and provisions of the Criminal Procedural Code of Ukraine.

Now we hope for a fair consideration of this issue by the Grand Chamber of the Supreme Court, submitted for consideration by the Court Ruling of the First Chamber of Cassation Criminal Court of the Supreme Court as of March 06, 2018 No. 51-499км17.

The above commentary present the general statement for information purposes only and as such may not be practically used in specific cases without professional advice.

Kind regards,

© WTS Consulting LLC, 2018

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