CEDH · CASELAW;DECISIONS;ADMISSIBILITY;ENG — 10 septembre 2013

.s800EAC49 { font-size:12pt } .s2EF17D91 { margin-top:0pt; margin-bottom:0pt; text-align:center; font-size:2pt } .sBB9EE52A { font-family:Arial } .s5E1364CA { margin-top:0pt; margin-bottom:12pt; text-align:center; page-break-inside:avoid; page-break-after:avoid; font-size:14pt } .s8229ABDD { margin-top:0pt; margin-bottom:12pt; text-align:center } .s9793A85B { margin-top:0pt; margin-bottom:0pt; text-indent:14.2pt } .sCB9E0544 { margin-top:0pt; margin-bottom:0pt; text-align:left } .sB9D5CABB { width:28.35pt; display:inline-block } .sA36B60A1 { font-family:Arial; font-style:italic } .sD3B63DAD { margin-top:36pt; margin-bottom:12pt; page-break-inside:avoid; page-break-after:avoid; font-size:14pt } .sA8776625 { margin-top:18pt; margin-left:29.2pt; margin-bottom:12pt; text-indent:-17.6pt; page-break-inside:avoid; page-break-after:avoid } .s29100277 { font-family:Arial; font-weight:bold } .s72C8F48C { margin-top:12pt; margin-left:36.6pt; margin-bottom:6pt; text-indent:-15.05pt; page-break-inside:avoid; page-break-after:avoid } .sA20670C4 { margin-top:12pt; margin-left:48.75pt; margin-bottom:6pt; text-indent:-17pt; page-break-inside:avoid; page-break-after:avoid; font-size:10pt } .s59DEA84 { margin-top:12pt; margin-left:59.5pt; margin-bottom:6pt; text-indent:-17.85pt; page-break-inside:avoid; page-break-after:avoid; font-size:10pt } .s7ED160F0 { text-decoration:none } .s33165EBA { font-family:Arial; font-size:8pt; vertical-align:super; color:#0069d6 } .sF7A86111 { margin-top:6pt; margin-left:21.25pt; margin-bottom:6pt; text-indent:7.1pt; font-size:10pt } .sD858A76D { margin-top:6pt; margin-left:21.25pt; margin-bottom:6pt; text-indent:7.1pt; page-break-inside:avoid; font-size:10pt } .sAB0FFF87 { margin-top:0pt; margin-bottom:0pt; text-indent:14.2pt; page-break-after:avoid } .s34D46E87 { margin-top:12pt; margin-bottom:6pt; text-align:center; page-break-inside:avoid; page-break-after:avoid; font-size:10pt } .s3710E110 { margin-top:12pt; margin-bottom:0pt; text-indent:14.2pt; widows:0; orphans:0 } .s393990F0 { margin-top:12pt; margin-left:14.2pt; margin-bottom:0pt; widows:0; orphans:0 } .sA5C4F8A9 { margin-top:36pt; margin-bottom:0pt; text-align:left; page-break-inside:avoid; page-break-after:avoid } .sC8702D41 { width:154.61pt; display:inline-block } .s8EFC8F8 { width:32.36pt; display:inline-block } .s5A070004 { width:213.96pt; display:inline-block } .sF6A12959 { width:33%; height:1px; text-align:left } .s2EB42ED2 { margin-top:0pt; margin-bottom:0pt; font-size:10pt } .sC36A6361 { font-family:Arial; color:#000000 }   FOURTH SECTION DECISION Application no. 663/11 Krasimir Aleksandrov Nedyalkov and Others against Bulgaria The European Court of Human Rights (Fourth Section), sitting on 10   September 2013 as a Chamber composed of:   Ineta Ziemele, President ,   Päivi Hirvelä,   George Nicolaou,   Ledi Bianku,   Zdravka Kalaydjieva,   Krzysztof Wojtyczek,   Faris Vehabović, judges , and Françoise Elens-Passos, Section Registrar , Having regard to the above application lodged on 6 December 2010, Having regard to the decision to grant priority to the application under Rule 41 of the Rules of Court, Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicants, Having deliberated, decides as follows: THE FACTS 1 .     The first applicant, Mr Krasimir Aleksandrov Nedyalkov, is a Bulgarian national born in 1969 and living in Varna. The second and the third applicants, Ms Anna Krasimirova Nedyalkova and Ms Aleksandrina Krasimirova Nedyalkova, are also Bulgarian nationals born respectively in 1993 and 2002 and living in Varna. They are Mr Nedyalkov’s daughters. The fourth applicant, Kadans EOOD, is a single-member limited-liability company having its registered office in Varna. It is wholly owned and managed by Mr Nedyalkov. A.     The circumstances of the case 2.     The facts of the case, as submitted by the parties, may be summarised as follows. 3.     At the relevant time the first applicant was a sole trader. He married in 1992 but divorced his wife in 2001. Two daughters were born out of the marriage; they are the second and the third applicants. 1.     The criminal proceedings against the first applicant 4 .     On 25 April 2001 the police raided the first applicant’s office, conducting a search and seizing a number of documents. In 2002 criminal proceedings were opened against him on suspicion of tax evasion. He was interviewed as a witness on 10 September 2002. During the following years the authorities interviewed a number of witnesses and obtained expert reports. 5 .     On 30 June 2009 the first applicant was formally charged with filing, on a number of occasions between 2 November 1999 and 15 January 2001, false tax returns relating to transactions which had not in fact taken place, in order unduly to obtain tax credit and thus avoid the payment of large amounts of value-added tax. 6 .     On 23 November 2009 the Varna Regional Prosecutor’s Office filed an indictment against the first applicant with the Varna Regional Court. The court held two hearings, on 23 February and 14 June 2010, during which it heard witnesses and admitted in evidence expert reports. However, having heard the parties, at the close of the hearing on 14 June 2010 the court observed that the charges against the applicant had not been properly formulated and that an expert report obtained during the preliminary investigation suffered from a number of shortcomings. It held that those issues amounted to breaches of the first applicant’s defence rights which needed to be made good, and decided to refer the case back to the prosecuting authorities. 7 .     The first applicant was indicted again on an unspecified date. Following a trial which took place on unspecified dates, on 6 December 2011 the Varna Regional Court acquitted him. 8 .     The prosecution appealed. On 5 April 2012 the Varna Court of Appeal upheld the acquittal. 9 .     The prosecution appealed on points of law. The Supreme Court of Cassation heard the appeal on 27 September 2012, and in a final judgment of 25 January 2013 (реш. № 395 от 25 януари 2013 г. по н. д. №   1286/2012 г., ВКС, ІІІ н. о.) likewise upheld the acquittal. 2.     The proceedings under the Forfeiture of Proceeds of Crime Act 2005 (a)     The preliminary inquiry and the opening of the forfeiture proceedings 10.     Having been apprised of the criminal charges against the first applicant, on 17 March 2010 the Commission for Uncovering Proceeds of Crime (see paragraph 35 below) started an inquiry. In the course of that inquiry it gathered information from a number of State authorities and banks about the first applicant and his family, and companies controlled by them, as well as about their declared income and their present and past assets. The applicants were not informed of the inquiry. 11.     Based on the results of the inquiry, on 14 April 2010 the Commission decided to open forfeiture proceedings against the first applicant. It reasoned that all the prerequisites for that were in place. Criminal proceedings had been opened against him, he had acquired assets whose value came to 1,714.76 minimum monthly salaries, and it could reasonably be assumed that those assets were the proceeds of crime, in as much as no legitimate source could be established for their acquisition. The Commission went on to specify that the period covered by the proceedings would be twenty-five years prior to the filing of the prospective forfeiture claim. 12.     The decision was not notified to the applicants and was not amenable to legal challenge, in line with section 15(3) of the Forfeiture of Proceeds of Crime Act 2005 (see paragraph 45 below). (b)     The freezing orders against the applicants (i)     The freezing order issued by the Varna Regional Court 13 .     Referring to information about a number of assets acquired and disposed of by the first applicant, members of his family (including the second and the third applicants), and companies wholly or partly owned by him (including the fourth applicant), and about the first applicant’s, his family members’, and his companies’ income declared before the tax and the social security authorities between 1999 and 2009, on 21 July 2010 the Commission for Uncovering Proceeds of Crime applied to the Varna Regional Court for an order freezing a number of assets, including real properties, motor vehicles and bank accounts, that were held by the applicants and that could be subjected to a prospective forfeiture claim in the amount of 840,264 Bulgarian levs (BGN). 14 .     The Commission argued that the first applicant’s and his former wife’s legitimate income during the relevant period had been 1,688 minimum monthly salaries, and their expenditures during the same period 3,388 minimum monthly salaries, resulting in a shortfall of 1,700 minimum monthly salaries, whereas during the same period the first applicant had acquired assets whose value was 2,915 minimum monthly salaries. The first applicant’s company, the fourth applicant, had for its part acquired assets whose value was 538 minimum monthly salaries, bringing the total value of the acquired assets to 3,458 minimum monthly salaries. [1] In view of that, it could reasonably be assumed, in line with section 4(1) of the 2005 Act (see paragraph 40 below), that those assets were the proceeds of crime. Their current monetary value was said to amount to BGN 325,559. The application satisfied both requirements of Article 391 §§ 1 and 3 of the Code of Civil Procedure 2007 (see paragraph 47 below). Firstly, it was supported by written evidence showing that the first applicant had engaged in criminal conduct and that he and persons associated with him had acquired assets without a legitimate source of income, which made a prospective forfeiture claim arguably well-founded. Secondly, there was a risk that the applicants might dissipate their assets and thus prevent the satisfaction of a future forfeiture order. 15 .     On 22 July 2010 the Varna Regional Court examined the application ex parte and on the papers, and allowed it. It froze all assets covered by the Commission’s application: two real properties owned by the first applicant; two real properties owned by the fourth applicant; two cars owned by the first applicant; one half-share of two cars and seven mopeds owned by a partnership in which the first applicant was partner; one car owned by the fourth applicant; six bank accounts held by the first applicant; one bank safe held by the first applicant; two bank accounts held by the second applicant; one bank account held by the third applicant; two bank accounts held by the fourth applicant; and the first applicant’s shareholding in the fourth applicant. 16 .     The court held that it could not assess whether the indictment against the first applicant was lawful, and that in itself it constituted formal grounds for opening forfeiture proceedings. The fact that the trial court had referred the criminal case against the first applicant back to the preliminary investigation stage due to breaches of his defence rights (see paragraph 6 above) did not alter the conclusion that criminal proceedings were pending against him. As for the arguable well-foundedness of the prospective forfeiture claim, it was incumbent on the Commission to prove a link between the alleged but yet unproven criminal conduct by the first applicant and the transactions described in the Commission’s application. However, although it had presented a number of documents, the Commission had in effect not led evidence on that point. In those circumstances, and seeing that the formal prerequisites for allowing the Commission’s application were nonetheless in place, a freezing order could be issued only if the Commission agreed to provide a guarantee securing a future claim for damages by the applicants in relation to the loss that they might suffer as a result of the order. That guarantee was to be set at ten per cent of the Commission’s prospective forfeiture claim, and thus amount to BGN   84,026.40. In the court’s view, that was the estimated amount of the direct and proximate damage that the applicants would sustain if the freezing later turned out to have been unjustified. That would be the case if the criminal proceedings against the first applicant were discontinued or result in his acquittal, or if the prospective forfeiture claim against the applicants were dismissed as unfounded. Naturally, that did not mean that the Commission had to pay that money into court, because State authorities were exempt from providing such guarantee (see paragraph 47 in fine below). 17 .     On 30 July 2010 a bailiff at the Varna District Court wrote to the banks holding the applicants’ accounts, advising them to freeze the funds in those accounts up to BGN 840,264 (the value of the prospective forfeiture claim). 18 .     The applicants, represented by a lawyer, appealed to the Varna Court of Appeal. They argued that the Commission had failed to carry out a proper inquiry into the first applicant’s legitimate income, ignoring possible sources of information, such as movements on his bank accounts, making vague and opaque calculations, and failing to take into account income earned in 1997 and 2010. Secondly, they asserted that during the relevant period the first applicant, his company (the fourth applicant), and a partnership in which he was partner had had a combined legitimate income of BGN 1,237,235, well above the alleged proceeds of crime. It could not therefore reasonably be assumed that the frozen assets had been acquired through such proceeds. Thirdly, they contested the Commission’s valuation method, whose deficiencies were in their view apparent. Fourthly, they argued that the freezing order was overbroad and covering more assets than necessary for the satisfaction of a prospective forfeiture order; that was especially true of the bank accounts used by the first and the fourth applicants for their daily business. Fifthly, they pointed to the already significant duration of the criminal proceedings against the first applicant and the uncertainty regarding their future progress. Sixthly, they pointed out that the frozen assets had been acquired either before or after the offence with which the first applicant had been charged. They requested the appellate court either to set aside the freezing order in its entirety or to reduce its scope by excluding from it the bank accounts used by the first and the fourth applicants for their daily business. 19 .     In an additional memorial the applicants further argued, inter alia , that the Commission had failed properly to specify the period covered by the forfeiture proceedings, that it had failed to explain why the assumption that the assets were the proceeds of crime was reasonable or why assets held by persons other than the first applicant were also the proceeds of crime, and had sought the freezing of assets shielded from enforcement, in breach of the prohibition laid down in section 23(7) of the 2005 Act (see paragraph   48 below). 20 .     It does not appear that the applicants asked the Varna Court of Appeal to hold a public hearing. 21 .     On 31 August 2010 the Varna Court of Appeal, examining the appeal on the papers, dismissed it in the following terms: “The Court finds the prospective [forfeiture] claim admissible and, in view of the numerous pieces of written evidence, arguably well-founded. Proceedings under the [2005 Act] may be opened if it is established that a person has acquired assets of considerable value, in respect of which it may reasonably be assumed that they are the proceeds of crime, and criminal proceedings have been opened against that person for an offence. The written evidence shows that [the first applicant] has been indicted for a [tax evasion] offence... During an inquiry it was found that considerable assets have been acquired, some of which were later disposed of. Apart from immovable property, during the period covered by the inquiry the [first applicant] acquired considerable movable property. It is described in detail in the application and the evidence shows its acquisition. On the other hand, the written evidence shows that before the dissolution of their marriage the [first applicant] and [his former wife] declared income amounting to 1,688 minimum monthly salaries, whereas the expenditures of the [first applicant] and his family were 3,388 minimum monthly salaries, which yields a shortfall of 1,700 minimum monthly salaries. In as much as no legitimate source has been established for the acquired assets, under section 4 of the [2005 Act] it is to be presumed to be the proceeds of crime. The court finds that without the requested freezing the satisfaction of a prospective forfeiture order would be hindered or prevented. This interim measure is admissible and appropriate. Evidence has been led that the assets sought to be frozen are owned by the [applicants].” 22 .     The applicants tried to appeal on points of law. In a decision of 19   October 2010 (опр. № 503 от 19 октомври 2010 г. по ч. гр. д. №   499/2012 г., ВКС, ІІІ г. о.) the Supreme Court of Cassation refused to give them leave to do so. (ii)     The freezing order issued by the Smolyan Regional Court 23 .     At the same time the Commission for Uncovering Proceeds of Crime made a similar application to the Smolyan Regional Court. It sought the freezing of twelve plots of land in the Smolyan region acquired by the first applicant in 2004. 24 .     On 26 July 2010 the Smolyan Regional Court examined the application ex parte and on the papers, and allowed it. It froze the twelve plots. It held that the application had been duly lodged, and that the prospective forfeiture claim was admissible and arguably well-founded. It noted that relevant criminal proceedings had been opened against the first applicant, that he had acquired assets of considerable value, and that his declared income was lower than that value, which meant that it could be presumed that the assets were the proceeds of crime. Both prerequisites under Article 391 of the Code of Civil Procedure 2007 (see paragraph 47 below) were in place: the application was supported by enough written evidence, and there existed a risk that the assets might be dissipated. 25 .     The applicants, represented by a lawyer, appealed to the Plovdiv Court of Appeal. They relied on the same arguments as those raised by them before the Varna Court of Appeal (see paragraphs 18 and 19 above). 26 .     It does not appear that the applicants asked the Plovdiv Court of Appeal to hold a public hearing. 27 .     On 1 September 2010 the Plovdiv Court of Appeal examined the appeal on the papers and dismissed it. It held that the lower court’s decision was correct, because the Commission had opened proceedings under the 2005 Act, criminal proceedings had been instituted against the first applicant, and the assets owned by the first applicant and his former wife had a considerable value. In the court’s view, that was enough to allow the application for a freezing order. All arguments raised in the appeal in relation to the legality of the sources of income used to acquire the assets were irrelevant at that stage. Those were issues touching on the merits of the prospective forfeiture claim. They had to be reviewed carefully, both by the Commission before it sought forfeiture, and by the court dealing with the prospective forfeiture claim, but could not be examined in proceedings relating to freezing orders. The court went on to say, without further detail, that the well-foundedness of the application for a freezing order was “established on the basis of the written evidence”. 28 .     The applicants did not try to appeal to the Supreme Court of Cassation. (c)     The discharge of the freezing orders against the applicants 29 .     Following the first applicant’s final acquittal on 25 January 2013 (see paragraph 9 above), on 26 February 2013 the applicants asked the Varna Regional Court to discharge the freezing order that it had made on 22   July 2010 (see paragraph 15 above). On 15 March 2013 the court allowed the application. It found that the first applicant’s final acquittal had rendered the further freezing of the applicants’ assets groundless. 30 .     On 21 March 2013 the Smolyan Regional Court, acting of its own motion and noting that the first applicant’s acquittal had become final, decided to discharge the freezing order that it had made on 26 July 2010 (see paragraph 24 above). (d)     The discontinuance of the forfeiture proceedings against the applicants 31 .     After the first applicant’s acquittal became final on 25 January 2013 (see paragraph 9 above), the head of the regional office of the Commission for Uncovering Proceeds of Crime proposed that the forfeiture proceedings against the applicants be discontinued. On 29 March 2013 the Commission, noting that no relevant criminal proceedings were pending against the first applicant, decided to discontinue the proceedings. 3.     The first applicant’s application for compensation under sections   60a et seq. of the Judiciary Act 2007 32 .     On 25 February 2013 the first applicant applied to the Inspectorate attached to the Supreme Judicial Council under the newly enacted sections   60a et seq. of the Judiciary Act 2007 (see paragraph 70 below). He sought compensation for the allegedly unreasonable length of the criminal proceedings against him (see paragraphs 4-9 above). On 2 August 2013 the Minister of Justice informed the first applicant that the Inspectorate had examined his application and, noting that the criminal proceedings against him had lasted eleven years and nine months, had found it well-founded. Based on that, the Minister fixed the amount of compensation to be paid to the first applicant at BGN 4,700 and offered him to enter into a settlement. The Minister pointed out that the proposed sum was not subject to negotiation, and had been fixed in line with this Court’s case-law. If the first applicant did not wish to conclude a settlement, he was free to bring a claim under section 2b of the State and Municipalities Liability for Damage Act 1988 (see paragraph 70 below). On 9 August 2013 the first applicant replied that he could not accept that the sum offered to him was consistent with this Court’s case-law. In his view, the sum was inadequate, and he therefore rejected the offer. B.     Relevant domestic law 1.     The Forfeiture of Proceeds of Crime Act 2005 (a)     Introduction 33 .     The Forfeiture of Proceeds of Crime Act 2005 ( Закон за отнемане в полза на държавата на имущество придобито от престъпна дейност ) was enacted by Parliament in February 2005 and came into force in March 2005. On 19 November 2012 it was superseded by the Forfeiture of Unlawfully Acquired Assets Act 2012 ( Закон за отнемане в полза на държавата на незаконно придобито имущество ), but with the proviso that all pending proceedings would continue to be governed by the 2005 Act (paragraph 5 of the transitional and concluding provisions of the 2012 Act) 34 .     The 2005 Act made provision for the freezing and forfeiture of the direct or indirect proceeds of crime (section 1(1)), with a view to preventing criminals from profiting from their activities (section 2). (b)     Authority in charge of administering the 2005 Act 35 .     The authority in charge of initiating and pursuing proceedings under the 2005 Act was the Commission for Uncovering Proceeds of Crime. It had five members: its president was appointed by the prime minister, its vice ‑ president and two of its regular members were elected by Parliament, and the third regular member was appointed by the President of the Republic (section 12(3)). Their terms of office were five years, renewable once (section 12(4)). They had to have a university degree in law or economics (section 12(5)). 36 .     The Commission had regional offices (section 12(9)), run by directors and staffed by inspectors (section 12(10)). (c)     Grounds for opening proceedings under the 2005 Act 37 .     Proceedings under the 2005 Act could be opened when it was established that a person charged with a relevant criminal offence had acquired assets which had “considerable value” and in respect of which a reasonable assumption could be made that they were the proceeds of crime (section   3(1)). “Considerable value” was defined in paragraph 1(2) of the transitional and concluding provisions of the Act as more than BGN 60,000 (equivalent to 30,677.51 euros (EUR)). In the Commission’s and the courts’ practice, for the purpose of cross-time comparisons, that amount was also presented as the equivalent of 400 minimum monthly salaries. According to the Supreme Court of Cassation, that had to be the aggregate value of the assets, determined on the basis of their fair market value at the time of their acquisition (see реш. № 89 от 29 януари 2010 г. по гр. д. № 717/2009 г., ВКС, III г. о.). Proceedings could be opened in respect of assets acquired before the Act’s entry into force (paragraph 3 of the Act’s transitional and concluding provisions). 38 .     Proceedings could be opened even in the absence of criminal charges if such charges could not be brought or had been dropped because the alleged offender had died, had become mentally unfit for trial or had been amnestied, or if the criminal proceedings had been stayed because the alleged offender had become unfit to take part in them, was absent, or had immunity (section 3(2)). Proceedings could also be opened even if the alleged offences had been committed abroad and did not fall under Bulgaria’s criminal jurisdiction (section 3(3)). 39 .     The offences that could trigger the opening of proceedings under the 2005 Act were set out in section 3(1). They included various terrorism ‑ related offences; murder for gain or for hire; pimping; abduction with a view to prostitution; distribution of pornography; trafficking in human beings; vehicle theft or robbery; embezzlement; fraud; documentary fraud entailing misappropriation of European Union funds; insurance fraud; racketeering; handling large quantities of stolen goods; insolvency fraud; dealing in weapons or dual-use goods without licence; poaching; smuggling; counterfeiting of money; making illegal bank transfers; failing to declare money at the border; engaging in banking, insurance or another licensed financial activity without licence; money laundering or preparation for money laundering; misuse of European Union funds; tax evasion; misappropriation of budgetary funds; abuse of office in relation to narcotic drugs; all forms of bribery; unduly influencing sport events; aggravated document forgery; being a member of a criminal gang; running a racketeering gang; organising or taking part in illegal gambling; dealing in, acquiring, or possessing arms or explosives without licence; vehicle theft with a view to extracting ransom; producing, acquiring, holding or distributing narcotic drugs; systematically allowing the use of premises for drug-taking; illegally prescribing narcotic drugs; and growing opium poppy, coca or cannabis. (d)     Forfeitable assets 40 .     Assets that could be forfeited under the 2005 Act were those that had been acquired by persons charged with a criminal offence and in respect of which it could reasonably be assumed that they were the proceeds of crime, in as much as no legal source had been established (section 4(1)). If such assets had been transferred to bona fide third parties for consideration, and those third parties had paid the assets’ real value, only the proceeds received by the target of the proceedings could be forfeited (section 4(2)). Assets inherited by the heirs of the target were also subject to forfeiture (section 5), as were assets included in the capital of a legal person controlled by the target alone or jointly with others (section 6), and assets transferred by the target to spouses, lineal relatives of all degrees, and second-degree collateral relatives and in-laws, provided those persons knew that the assets were the proceeds of crime (section 8(1)). Such knowledge was presumed until proved otherwise (section 8(2)). Assets that were joint marital property, if not traced to a source of income of the spouse of the target, were also subject to forfeiture (section 10). Assets acquired by the target’s spouse or minor children from third parties were regarded as assets acquired on behalf of the target if they were of significant value, exceeded the spouse’s or children’s income during the relevant period and could not be traced to another source of income (section 9). 41 .     Transactions with third parties in respect of proceeds of crime were invalid vis-à-vis the State if they were not for consideration, or were for consideration but the third parties knew that the assets involved were the proceeds of crime, or acquired them with a view to concealing them or their criminal origin or the real rights pertaining to them (section 7). 42 .     The State’s right to forfeit an asset expired twenty-five years after it had been acquired (section 11). (e)     Manner of unfolding of proceedings under the 2005 Act (i)     Opening of the proceedings 43 .     If an individual had been charged with one of the offences set out in section 3(1), the prosecuting authorities had to immediately inform the Commission’s regional office, specifying the period of criminal activity and any assets of the accused of which they were aware (section 21(1)). The director of the regional office then drew up a report to the Commission. 44 .     The Commission carried out an inquiry with a view to ascertaining the source and the whereabouts of assets reasonably suspected of being the direct or indirect proceeds of crime (section 15(1)). In particular, the Commission checked the target’s assets, the manner of their acquisition and their value, the target’s income, the taxes paid by him or her, his or her usual and extraordinary expenses, tax returns, etc. (section 18(1)). The inquiry could not last longer than ten months, extendable once by three months (section 15(2)). In the course of the inquiry the Commission could obtain information from various authorities (section 16(1)), gather written, expert and other evidence and accounting records (section 18(2)(2), (2)(3), (2)(5) and (2)(6)), carry out searches and seizures (section 18(2)(7)), and seek the lifting of bank secrecy (section 19). The Commission could also request information from the target of the inquiry (section 18(2)(1)). In particular, it could require targets to file within fourteen days a declaration detailing their and their families’ assets, bank accounts, sources of income, transactions, and debts (if mentioned in the annual tax return). Third parties who had acquired property from targets could also be required to file such declarations (section 17(3)). If the person concerned did not file a declaration, filed an incomplete declaration, or refused to file a declaration, it was presumed that any undeclared assets were the proceeds of crime (section 17(5)). 45 .     On the basis of that inquiry, the Commission determined whether to open forfeiture proceedings; its decision to do so was not notified to the person concerned and was not subject to legal challenge (section 15(3)). (ii)     Freezing of assets with a view to their forfeiture 46 .     The Commission could apply to the regional court for an order freezing the target’s assets (section 22(1)). The application had to describe in detail the assets whose freezing was being sought (see опр. № 416 от   16   юни 2010 г. по ч. т. д. № 368/2010 г. ВКС, ІІ т. о.). The court had to rule the same day, and its decision to allow the application was immediately enforceable (section   23(1)). 47 .     The assets were to be frozen in the manner laid down in the Code of Civil Procedure 2007 (section 22(2) of the 2005 Act). That meant that the court had to examine the case in private and ex parte (Article 395 §§ 1 and 2 of the Code), and allow the application if it satisfied two conditions. First, there had to exist a risk that the prospective forfeiture claim could be frustrated or hindered. Secondly, either the application had to be supported by convincing written evidence or the applicant had to provide a guarantee to secure any future claim for damages by the person whose assets were to be frozen (Article 391 §§ 1 and 3 of the Code). The court could require the applicant to provide a guarantee even if the application was supported by convincing written evidence (Article 391 § 2 of the Code). However, the State and State bodies are exempt from providing such a guarantee (Article   391 § 4 of the Code). 48 .     Assets that were by statute shielded from enforcement could not be frozen (section 23(7) of the 2005 Act). 49 .     According to the Supreme Court of Cassation, the determination whether the prospective forfeiture claim was arguably well-founded was made solely on the basis of an ex facie examination of the written evidence submitted by the Commission (see опр. № 128 от 10 март 2011 г. по ч.   гр.   д. № 44/2011 г., ВКС, ІІІ г. о.). The court could not verify whether the facts described in the Commission’s evidence were true; such verification could be carried out upon the examination of the prospective forfeiture claim (see опр. № 398 от 29 юни 2010 г. по ч. гр. д. №   200/2010 г. ВКС, IV г. о.). At the asset-freezing stage the courts were not concerned with whether the assets whose freezing was being sought could reasonably be regarded as the proceeds of crime; that question was to be dealt with only when the prospective forfeiture claim came for determination (see опр. № 66 от 18 февруари 2009 г. по ч. гр. д. №   84/2009 г., ВКС, ІІІ г. о.). The question whether there was a link between criminal conduct and the assets sought to be forfeited could not be examined at the asset-freezing stage but only at the actual forfeiture stage (see опр. № 343 от 7 юли 2010 г. по ч. гр. д. № 333/2010 г. ВКС, III г. о.; опр. № 424 от 8 юли 2010 г. по ч. гр. д. № 363/2010 г. ВКС, IV г. о.; опр. № 734 от 23 декември 2010 г. по ч. пр. д. № 698/2010 г., ВКС, ІV   г.   о.; опр. № 79 от 14 февруари 2011 г. по ч. гр. д. № 7/2011 г., ВКС, ІV г. о.; опр. № 100 от 2 февруари 2012 г. по ч. гр. д. № 767/2011 г., ВКС, ІV г. о.; and опр. № 175 от 29 февруари 2012 г. по ч. гр. д. № 742/ 2011   г., ВКС, ІV г. о.). However, that meant only that the target of the proceedings could not seek to establish the lack of such link; if that lack was already apparent from the evidence presented by the Commission, the court could not overlook that and had to refuse to freeze the assets (see опр. №   118 от 2 март 2011 г. по ч. гр. д. № 90/2011 г., ВКС, ІV г. о.). 50 .     Nonetheless, in some instances, in particular cases concerning the freezing of third-party assets, the Supreme Court of Cassation refused to overturn lower courts’ findings that the assets whose freezing was being sought were not the proceeds of crime (see опр. № 541 от 25 септември 2009   г. по ч. гр. д. № 448/2009 г., ВКС, ІV г. о.; опр. № 576 от 30   октомври 2009 г. по ч. гр. д. № 545/2009 г., ВКС, III г. о.; and опр. №   112 от 1 март 2011 г. по ч. гр. д. № 49/2011 г., ВКС, ІV г. о.), or inquired whether the presumption that the assets were the proceeds of crime was clearly inapplicable (see опр. № 449 от 24 септември 2010 г. по ч.   гр.   д. № 408/2010 г. ВКС, ІІІ г. о.) 51 .     Intermediate steps in the unfolding of the criminal proceedings against the target – such as referrals of the case back to the preliminary investigation stage – had no incidence on the possibility to freeze his or her assets (see опр. № 609 от 12 ноември 2009 г. по ч. гр. д. № 496/2009 г. ВКС, III г.о.) (iii)     Appeals against freezing orders 52 .     The court’s freezing order was subject to appeal and then appeal on points of law (section 23(2) of the 2005 Act). Appeals against orders imposing interim measures are as a rule heard in private, but the appellate court may, if it considers it necessary, opt for a public hearing (Article 278 §   1 of the Code of Civil Procedure 2007). Until July 2010 it was unclear whether further appeal lay to the Supreme Court of Cassation in respect of appellate decisions upholding interim measures. The point was resolved in a binding interpretative decision of the General Meeting of the Civil and Commercial Chambers of that court of 21 July 2010 (see тълк. реш. № 1 от 21 юли 2010 г. по тълк. д. 1/2010 г., ВКС, ОСГТК). The court held that appellate court decisions determining appeals against orders imposing interim measures were not in turn subject to appeal on points of law. However, it appears that this general rule did not apply to freezing orders under the 2005 Act, in view of the clear language of its section 23(2). In a number of cases post-dating the interpretative decision the Supreme Court of Cassation held that appellate decisions upholding freezing orders under the 2005 Act were in principle subject to appeal on points of law, subject of course to the general admissibility requirements for such appeals (see опр. № 734 от 23 декември 2010 г. по ч. пр. д. № 698/2010 г., ВКС, ІV г. о.; опр. № 4 от 10 януари 2011 г. по ч. пр. д. № 513/2010 г., ВКС, ІІІ г. о.; опр. № 112 от 1 март 2011 г. по ч. гр. д. № 49/2011 г., ВКС, ІV г. о.; опр. № 128 от 10 март 2011 г. по ч. гр. д. № 44/2011 г., ВКС, ІІІ г. о.; опр. № 481 от 28 юли 2011 г. по ч. пр. д. № 338/2011 г., ВКС, ІV г. о.; опр. № 413 от 9 август 2011 г. по ч. пр. д. № 385/2011 г., ВКС, ІІІ г. о.; and опр. № 100 от 2 февруари 2012 г. по ч. гр. д. № 767/2011 г., ВКС, ІV г. о.). (iv)     Unfreezing of assets during the main forfeiture proceedings 53 .     If the Commission found that an asset that had been frozen had a legitimate source, the court could, at the request of the person concerned or of the Commission, unfreeze the asset (section 24(1)). According to the Supreme Court of Cassation, if the Commission failed to act in that respect, the person concerned could apply directly to a court for the unfreezing of asset (see опр. № 447 от 17 септември 2011 г. по ч. гр. д. № 491/2011 г., ВКС, ІІІ г. о.). However, in such proceedings the courts again refused to go into the substance of the case or examine the source of the asset, holding that the point could be judicially determined only in the main forfeiture proceedings, and that before that assets could be unfrozen only if the Commission reversed, in a decision under section 24(1), its earlier assessment that those assets were the proceeds of crime (see опр. № 409 от 7   юли 2011 г. по ч. гр. д. № 369/2011 г., ВАпС, г. о.). 54 .     Under Article 402 § 1 of the Code of Civil Procedure 2007, any affected party could seek the discharge of a freezing order. The court had to discharge the order either if it found that that the reason why the assets had been frozen no longer existed, or if the party provided a guarantee in money or securities (Article 402 § 2 of the Code). According to the Sofia Court of Appeal, that avenue could not be used to discharge a freezing order on grounds that it had frozen assets in excess of the potential forfeiture amount, and a guarantee could not be substituted for frozen bank accounts (see опр. №   143 от 24 януари 2012 г. по в. гр. д. № 3840/2011 г., САпС, г. о., 2   с ‑ в). 55 .     Third parties who claimed proprietary title to frozen assets could request their unfreezing, if their requests were supported by evidence as to the manner of acquisition of the assets and the sources of income used for that (section 24(2) and (3)). 56 .     The court could allow payments to be made out of frozen assets if this was necessary for medical treatment or other humanitarian needs, payment of alimony, taxes, salaries and social security contributions, or the costs of the proceedings (section 23(4)). Judicial permission was required for every individual expense; the court had to determine such applications within forty-eight hours (section 23(5)). 57 .     Of course, the freezing order had to be discharged if the criminal proceedings against the target were discontinued or resulted in an acquittal (see опр. № 649 от 14 ноември 2011 г. по ч. пр. д. № 499/2011 г., ВКС, ІV г. о.). (v)     Forfeiture claims 58 .     If the criminal proceedings against the target were concluded by means of a final conviction, the Commission had one month to file a forfeiture claim (section 27(2) of the 2005 Act, Article 390 § 2 of the Code of Civil Procedure 2007, and тълк. реш. № 1 от 14 септември 2009 по тълк. д. № 1/2008 г., ВКС, ОСГТК). The claim had to be based on a report drawn up by the Commission’s regional director that set out the assets suspected of being the proceeds of crime and the evidence in support of that conclusion (section 27(1)). After receiving the claim, the regional court published a notice in the State Gazette and set the case down for hearing. The hearing could not take place earlier than three months after publication of the notice (section 28(2)). All persons connected with the target (spouses, relatives, legal persons controlled by him or her, third parties, etc.) were also constituted as defendants (section 28(3)). All defendants had to put forward all their defences in those proceedings (section 28(4)). Third parties who asserted proprietary title to the assets had to bring their claims before the first-instance court (section 29). 59 .     The court heard the case at a public hearing, in the presence of a public prosecutor (section 30(1)). Its decision was subject to appeal (section   30(2)). If it dismissed the forfeiture claim, it had to unfreeze the assets (section 30(3)). 60 .     If the proceedings did not result in forfeiture, the Commission could refer the case to the tax authorities; in that case, the evidence gathered in the forfeiture proceedings could be used in the tax proceedings (section 31). (f)     Liability of the authorities 61 .     Under section 32 of the 2005 Act, the State was liable in respect of any damage caused by unlawful actions or omissions carried out under the Act. Claims for damages had to be brought under the State and Municipalities Liability for Damage Act 1988 (see paragraphs 62-68 below). There are no reported cases in which persons affected by measures under the 2005 Act have sought damages under that provision. However, in several cases the Supreme Court of Cassation said that compensation may be due under it in respect of damage resulting from the freezing of assets under that Act (see реш. № 87 от 29 януари 2010 г. по гр. д. №   369/2009   г., ВКС, III г. о.; опр. № 269 от 19 май 2011 г. по гр. д. №   272/2011   г., ВКС, III г. о.; and опр. № 478 от 1 август 2011 г. по ч. гр. д. №   378/2011 г., ВКС, IV г. о.). The reasons given by the Varna Regional Court in the applicants’ case (see paragraph 16 above) suggest that liability under that provision would arise if the criminal proceedings which had triggered the opening of forfeiture proceedings under the 2005 Act were discontinued or resulted in an acquittal, or if the forfeiture claim was dismissed as unfounded. 2.     The State and Municipalities Liability for Damage Act 1988 62 .     Article 7 of the 1991 Constitution provides that the State is liable for damage caused by the unlawful decisions or actions of its organs and servants. In an interpretative decision of 22 April 2005 (see тълк. реш. № 3 от 22 април 2005 г. по т. гр. д. № 3/2004 г., ВКС, ОСГК) the Supreme Court of Cassation, confirming the courts’ earlier case-law, held that that Article did not provide a direct avenue of redress, but merely laid down a general principle whose implementation was to be effected through a statute. As no such statute had been enacted after the Constitution came into force in 1991, that function was being served by the State and Municipalities Liability for Damage Act 1988. 63 .     Section 1 of that Act provides that the State is liable in respect of damage suffered by individuals (and since 1 January 2006 also legal persons) as a result of unlawful decisions, actions or omissions by civil servants, committed in the course of or in connection with administrative action. 64 .     Section 2(1) of the Act provides for liability of the investigating and prosecuting authorities or the courts in several situations: unlawful detention; bringing of charges, if the accused has been acquitted or the proceedings have been discontinued on certain grounds; conviction and sentencing, if the conviction has later been set aside; coercive medical treatment or coercive measures imposed by a court, if its decision has later been quashed as being unlawful; and serving of a sentence over and above its prescribed duration. In March 2009 the list was expanded to include the unlawful use of means of special surveillance, and in December 2012 expanded further to include deprivation of liberty in breach of Article 5 § 1 of the Convention and breaches of the rights enshrined in Article 5 §§ 2-4 of the Convention. 65 .     According to the above-mentioned interpretative decision of the Supreme Court of Cassation, persons who have been finally acquitted can obtain compensation under section 2(1) of the Act for the mere fact that criminal proceedings have been brought against them, on the basis that the charges against them are retrospectively considered to have been “unlawful”. According to the same decision, compensation is due in respect of the proceedings themselves and in respect of any incidental measures, such as pre-trial detention. 66 .     Section 4 of the Act provides that the State’s liability extends to all pecuniary and non-pecuniary damage which is a direct and proximate result of the impugned act, action or omission. In applying that provision the Supreme Court of Cassation and the Supreme Administrative Court have held that legal persons, such as commercial companies, cannot suffer non-pecuniary damage and are not entitled to compensation for such damage (see опр. № 271 от 19 март 2010 г. по гр. д. № 8/2010 г., ВКС, III г. о., and реш. № 7861 от 6 юни 2011 г. по адм. д. № 3689/2011 г., ВАС, III   о.). 67 .     In a judgment of 11 February 2008 (see реш. № 148 от   11   февруари 2008 г. по гр. д. № 1518/2007 г., ВКС, V г. о.) the Supreme Court of Cassation upheld an award of BGN 24,000 (the equivalent of 12,271 euros) made under section 2(1) of the Act to the manager of a commercial company who, following criminal proceedings which had lasted more than nine years, had been finally acquitted of serious criminal charges. In assessing the quantum of the non-pecuniary damage suffered by him, the court had regard the negative publicity attracted by the proceedings, the damage to his reputation and social and professional standing, and to the interim measures – including the freezing of his assets – incident to the proceedings. 68 .     The Forfeiture of Unlawfully Acquired Assets Act 2012 (see paragraph 33 above) added two new provisions to the 1988 Act: section   2(2) and section 2a. Section 2(2) provides that the State is liable in respect of damage flowing from judicial decisions under the 2012 Act, and section 2a provides that the State is liable in respect of damage flowing from unlawful actions, omissions or decisions of the administrative authorities and civil servants in charge of applying the 2012 Act. The two sections came into force on 19 December 2012. 3.     Provisions and case-law concerning the length of criminal proceedings 69 .     The constitutional and statutory provisions and case ‑ law concerning length of criminal proceedings have been set out in detail in paragraphs   33 ‑ 45 of the Court’s pilot judgment in the case of Dimitrov and Hamanov v. Bulgaria (nos. 48059/06 and 2708/09, 10 May 2011). 70 .     The ensuing legislative developments, in particular the enactment of new sections 60a et seq. of the Judiciary Act 2007 and new section 2b of the State and Municipalities Liability for Damage Act 1988, which allow persons who have become victim of unreasonably lengthy criminal proceedings to seek compensation, have been set out in detail in the Court’s decision in the case of Valcheva and Abrashev v. Bulgaria ((dec.), nos.   6194/11 and 34887/11, 18 June 2013). COMPLAINTS 71.     The applicants complained under Article 6 § 1 of the Convention that the law serving as a basis for the freezing of their assets with a view to their forfeiture was not sufficiently clear and fores