The CCU may tap into another disruption of the anti-corruption reform: we explain why special confiscation is constitutional

by Anton Marchuk, originally published on ZN.UA

As result of decision of the CCU, thousands of seizures of property and funds may be cancelled

In March this year, the Constitutional Court again reminded about itself, when it started to consider another constitutional appeal initiated mainly by pro-Russian Members of Parliament from the Opposition Platform For Life, which aims to undermine anti-corruption reforms. This is direct consequence of almost six months of inaction of the Verkhovna Rada to resolve crisis around the CCU, provoked by the decision on edeclaration. There is nothing to prevent the CCU to make another doubtful decision regarding the privsions on special confiscation.

What is the special confiscation?

Special confiscation appeared in Ukrainian legislation in 2013, and became truly effective tool only in 2016. At that time, Ukraine had to meet conditions to receive visa-free regime, which also included bringing this instrument into line with European standards. Such institution is mandatory for implementation among EU member countries.

Ordinary confiscation in criminal proceeding is applied only on the ground of court conviction as punishment for prepatrators and only to their property. Special confiscation may in some cases be applied in absence of court conviction against person, as well as to assets of not only the perpetrator but also third parties, if the criminal origin of such property is proved.

Following things may be subject to special confiscation. Namely: money, property, other assets, if they were received as result of criminal offense, were subject of such offense, were used as instrument or mean of committing the crime or should have persuaded another person to commit it, assets that were changed, converted, changed into other property, assets, cash.

Why Members of Parliament consider it unconstitutional: debunking of fantasies

Arguments presented in the appeal are untrue and manipulative. I will explain why.

  1. Members of Parliament state that special confiscation allegedly “by its legal nature completely duplicates confiscation and is another type of punishment along with confiscation”. According to authors of the appeal, this contradicts principles of proportionality and ratability of punishment for committed act.

This is not the case. Confiscation is aimed at punishment itself. The purpose of special confiscation is to ensure that all property and assets obtained as result of committing the crime or using for its commitment are withdrawn from circulation and disposal. The special confiscation is aimed at restoring the state that existed before crime was committed. Ukraine is not the only European country where confiscation as punishment for committing crimes and special confiscation still “coexist”. For instance, the same situation is in Latvia.

  • Due to the fact that special confiscation can be applied to assets of third parties, in respect of which there is no court conviction, Members of Parliament state that violation of principle of presumption of innocence and individual nature of legal responsibility.

In order to apply special confiscation to assets of third parties, the prosecution must prove according to standards of the criminal procedure that assets or property, which belong to the third party, were obtained from the commission of the crime or were used to commit the crime, and such third party knew whether she could and should have known about such circumstances. At the same time, special confiscation cannot be applied to property owned by persons who are bona fide purchasers, namely did not know and could not have known that it was obtained illegally.

  • The appeal also states that allegedly introduction of special confiscation narrows the scope of constitutional rights and freedoms of persons, which is unacceptable.

There has been no reduction of constitutional rights of citizens, as confiscation on the basis of court decision as the ground for compulsory confiscation of property has been provided by the Constitution since 1996, and grounds, scope and procedure for its application must be determined by the law. All these issues regarding special confiscation were regulated according to the law.

  • Another argument of Members of Parliament is that the Constitution defines only two cases when the person can be deprived of property rights against his will. These are forced alienation of property on grounds of public necessity and reimbursement of its value, as well as confiscation of property according to court decision.

It does not matter how this procedure is called in the law. Special confiscation is also confiscation allowed by the Constitution, “recognition of assets as unjustified and their collection to the state revenue” is also civil confiscation allowed by the Constitution. The Constitution allows to determine by the law grounds, scope, and procedure for confiscation according to the decision of the court. In fact, this is done in case of special confiscation.

  • Special confiscation allegedly contradicts the prohibition of retroactive effect of the law and because of this it is also unconstitutional.

The law itself does not provide for this. Even if there are exceptional violations of this prohibition in practice, this does not mean that whole institute should be declared unconstitutional. On the contrary, the CCU could emphasize in its decision how special confiscation should be applied in practice so not to violate prohibition of retroactive effect of the law.

What can be consequences of the CCU’s decision on unconstitutionality of special confiscation?

If special confiscation is declared unconstitutional, the possibility of its application to many assets, property and funds obtained from commission of crimes or used for this purpose will disappear. For instance, money and assets withdrawn from Privatbank, where first announcements of suspicion finally appeared in the case, could be subject to special confiscation.

Another example is possibility to apply special confiscation to money that were transferred to the NABU and the SAPO last year as the largest bribe in the history in the amount of 5 million USD. Expensive real estate in the center of Kyiv was arrested in the gas case of former Member of Parliament Onyschenko precisely in view of the fact that special confiscation may be applied to it.

The possibility of applying special confiscation is separate ground for seizing assets in criminal proceedings. As result of the decision of the CCU, thousands of seizures of property and funds will be cancelled, which subjects of the case cannot dispose while awaiting the decision. For instance, it was on the ground of possible further special confiscation that almost 111 million UAH were seized in the case of so-called king of smuggling Vadym Alperin.

Also, due to unconstitutionality, those court decisions that provided for application of special confiscation may be reconsidered. In 2020, special confiscation was applied to 565 people. There are already several decisions of the High Anti-Corruption Court, which provided for the use of special confiscation.

If special confiscation is declared unconstitutional, the question on grounds to suspend visa-free regime with the EU may arise again, as it was after the decision of the CCU regarding the declaration. The integration of Ukraine into the EU and the NATO, as well as our cooperation with Western partners, will be significantly damaged once again.

Risks of unreasonable and apparently manipulative decisions of the Constitutional Court will be saved until the reform of this court is conducted, the key element of which should be updated procedure for selecting judges. The Venice Commission strongly recommends new selection procedure to Ukraine for the second time. Until this happens, the possibility to unjustifiably declare anti-corruption institutions unconstitutional, such as special confiscation, will not be eliminated. Unfortunately, the Verkhovna Rada and its speaker Dmytro Razumkov are doing the opposite so far. They have recently appointed the CCU’s judge without following real competition principles according to old procedure and doing nothing to adopt necessary legislative changes.

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