On Wednesday, 5 July 2023, at a plenary session, the Second Senate of the Constitutional Court of Ukraine adopted the Decision in the case upon constitutional complaints of Anatolii Dushenkevych, Andrii Franko, and Iryna Yarosh regarding the constitutionality of Article 483.1.2 of the Customs Code of Ukraine (hereinafter referred to as the Code), recognising the impugned provision as being inconsistent with the Constitution of Ukraine.
The Judge Rapporteurs in the case are Volodymyr Moisyk and Galyna Yurovska.
According to the sanction stipulated in Article 483.1 of the Code, “movement or actions aimed at moving goods across the customs border of Ukraine concealed from customs control, i.e. using specially manufactured caches and other means or methods that hinder the detection of such goods, or by making some goods look like other goods, or by submitting to the customs authority forged documents or documents obtained illegally as a basis for the movement of goods, or containing false information about the name of the goods, their weight (with allowable losses under proper storage and transportation conditions) or quantity, country of origin, sender and/or recipient, number of cargo places, their marking and numbers, false information necessary to determine the code of goods in accordance with the Commodity Nomenclature of Foreign Economic Activity and their customs value” shall entail the imposition of a fine of 100 per cent of the value of the goods – direct goods of customs rules violation with the confiscation of these goods, as well as goods, vehicles with specially manufactured storage facilities (caches) used to move goods – direct goods of customs rules violation across the customs border of Ukraine (paragraph two).
It should be emphasised that this case does not involve smuggling, i.e. actions for which a person is held criminally liable under Article 201 of the Criminal Code of Ukraine.
The authors of the constitutional complaints requested to declare unconstitutional the impugned provision of Article 483 of the Code, as they believed that it makes it impossible to implement the principle of individualisation of legal liability of customs rules of violators.
In its decisions, the Court repeatedly emphasised the importance of protecting customs interests and customs security of Ukraine.
The court, solving the issues raised in the constitutional complaints, assumed that the Verkhovna Rada of Ukraine, within the limits of its powers, defines actions that are administrative offenses and establishes administrative liability for their commission.
At the request of the Court, the Verkhovna Rada of Ukraine delivered its opinion in writing regarding the subject of constitutional complaints, noting that since the provisions of the Code contested in the constitutional complaints envisage non-alternative sanctions with a significant financial burden for the violator, the authors of the constitutional complaints have legitimately raised issues that require thorough constitutional review with the aim of unambiguous legal understanding of the justified expediency of imposing a fine in the amount of 100 percent of the value of the goods - the direct objects of the violation of customs rules with the confiscation of these goods. The reply also states that the final resolution of the raised issues should be made through further legislative regulation.
Evaluating the contested provision of Article 483 of the Code for compliance with the principle of individualisation of legal liability, the Court considers that the court must have discretion to achieve a legitimate purpose. However, when deliberating the case of violation of customs rules under Article 483.1 of the Code, the court cannot ensure the individualisation of liability, given the absence of other types of penalties in the said Article of the Code; the impossibility of changing the amount of interest by which the fine is determined and the mandatory application of confiscation. The impossibility of choosing the type and size of the administrative sanction taking into account the circumstances of the case, namely: the nature of the committed illegal act, the form of guilt, the characteristics of the person, the possibility of compensation for the damage caused, the presence of circumstances that mitigate or aggravate liability, makes it impossible for the court to fairly deliberate the case.
The court pointed out that, in addition to a fine in the amount of 100 percent of the value of goods that were moved across the customs border of Ukraine with concealment from customs control, the sanction of Article 483 of the Code provides for the mandatory confiscation of goods.
At the same time, the Code does not define procedural mechanisms that would provide the court with an opportunity to mitigate liability or allow it not to be assigned.
According to Article 41 of the Constitution of Ukraine, the right to private property is inviolable. The Constitutional Court of Ukraine has repeatedly emphasised that, in accordance with the principle of the rule of law, the legislator can limit human and citizen’s constitutional rights in compliance with the conditions specified by the Constitution of Ukraine. “The right to property is not absolute, it can be limited, but interference with this right can be carried out only on the basis of the law in compliance with the principle of legal certainty and the principle of proportionality, which requires achieving a reasonable balance between the interests of the individual and society”, stated in the Court's Decision. Limitation of human and citizen's rights is admissible only on the condition that it is reasonable (proportional) and socially necessary.
The provisions of Article 41 of the Constitution of Ukraine are correlated with the corresponding provisions of Article 1 of Protocol No. 1 to the European Convention on Human Rights. The European Court of Human Rights in the case “Krayeva v. Ukraine” dated January 13, 2022 (application No. 72858/13), stated that the amount of the fine imposed on the applicant for violation of customs rules (Article 483.1 of the Code) constituted excessive interference with her property rights contrary to the requirements of Article 1 of Protocol No. 1 to Convention "<…> in order to meet the requirement of proportionality, the severity of the sanctions must correspond to the gravity of the offenses for which they are imposed <…>”.
Taking into account the above, the Court concluded that such legislative regulation contradicts the principles in a democratic society guided by the rule of law.
The court recognised that Article 483.1.2 of the Code contradicts the provisions of Article 8.1, Article 41.1, Article 41.4, Article 61.2, and Article 64.1 of the Constitution of Ukraine and is unconstitutional.
The court has postponed the loss of effect of Article 483.1.2 of the Code, recognised as unconstitutional, for six months from the date of adoption of this Decision and set out that the Verkhovna Rada of Ukraine shall bring the normative regulation established by Article 485.2 of the Customs Code of Ukraine into compliance with the Constitution of Ukraine and this Decision.
