Application no. 31223/03 
by Viktor KETKO and Piotr MROZ 
against Ukraine

The European Court of Human Rights (Fifth Section), sitting on 3 April 2006 as a Chamber composed of:

Mr P. Lorenzen, President
 Mrs S. Botoucharova, 
 Mr K. Jungwiert
 Mr V. Butkevych
 Mrs M. Tsatsa-Nikolovska
 Mr J. Borrego Borrego
 Mrs R. Jaeger, judges
and Mrs C. Westerdiek, Section Registrar,

Having regard to the above application lodged on 29 August 2003,

Having deliberated, decides as follows:


The applicants, Mr Viktor Ketko (the first applicant) and Mr Piotr Mroz (the second applicant), are Ukrainian and Polish nationals respectively. They own 50% and 49% shares respectively of AB Imeks Ltd, a joint company (hereinafter “the Company”). The first applicant was born in 1942 and lives in Kyiv. The first applicant is represented before the Court by Ms Kudelia, a lawyer practicing in Kyiv.

A.  The circumstances of the case

The facts of the case, as submitted by the first applicant, may be summarised as follows.

1. General background

The Company, co-owned by the applicants, was at all relevant times a joint Ukrainian-Polish enterprise with a 49% share belonging to the Polish counterpart. The Company also fell into the category of “enterprises with foreign investments”, within the meaning of the Foreign Investments Act 1992 (the 1992 Act), until its repeal in 2000.

The 1992 Act was adopted with a view to encouraging foreign investments and was applied to companies of any type or form if a foreign participant had at least a 20% share. This Act established preferential treatment for such companies, including, inter alia, 10 years’ immunity from changes in the law governing foreign investments (Article 9). This immunity was to be provided on the request of the relevant company and calculated from the day of its establishment.

On 17 February 2000 the Parliament passed the Termination of Discrimination against Companies established using National Property and Assets Act 2000 (the 2000 Act), which (Article 2) provided that the companies with a foreign share were subject to general tax, customs and currency regulations, and repealed (Article 4) the 1992 Act. Article 5 envisaged that the 2000 Act was applicable to all joint companies irrespective of when the foreign investment was made.

In its judgment of 29 January 2002, the Constitutional Court gave a binding interpretation of Article 5 of the 2000 Act, holding that it provided a valid ground for refusing new and withdrawing previously granted taxation privileges.

2.  Particular circumstances of the case

a.  The immunity litigation

AB Imeks Ltd was formed on 17 September 1992 as a joint company with a 49% share owned by the Export-Import Mchyslav Buzhynski Company. (In 1994 this share was sold to the second applicant, Mr Mroz.)

In November 1998 the Company applied to the Lutsk City Court for immunity under Article 9 of the 1992 Act. On 18 January 1999 the court granted this application and declared that, until 17 September 2002, the Company was exempted from any new taxes, duties, changes in the method of calculation or payment of taxes introduced after 17 September 1992.

On 4 March 1999 the Volyn Regional Court, following the appeal of the tax authorities, quashed this decision and remitted the case. On 15 June 1999 the Company’s application was declared inadmissible.

However, on 3 November 1999 the Supreme Court, on the supervisory protest of its Deputy President, quashed the decisions of 4 March 1999 and 15 June 1999, and upheld the judgment of 18 January 1999, thus reinstating the Company’s immunity from any changes in the tax and customs law.

On 1 December 2000 the Lutsk City Court clarified its judgment of 18 January 1999 on the Company’s request. The court specified that the Company and its subsidiaries were immune from any changes in fiscal legislation, including that introduced by the 2000 Act. This ruling was upheld by the Volyn Regional Court on 25 June 2001 and by the Supreme Court on 12 October 2001. On 28 October 2002 the Supreme Court rejected the request of the Head of Volyn Customs to reopen the proceedings due to the new circumstances.

b.  The gas litigation

On 17 June 2002 the Central Energy Customs (hereafter “the CEC”) refused to allow the Company the free transit of a certain amount of gas across the Ukrainian border. The applicants and the Company challenged this decision before the courts.

On 25 July 2002 the Podilsky District Court of Kyiv found in favour of the applicants and ordered the CEC to allow the gas to be imported, referring in this respect to the January 1999 judgment.

On 7 February 2003 the Kyiv City Court of Appeal granted the CEC’s appeal, quashed the judgment of 25 July 2002 and rejected the applicants’ complaint. The court indicated that the 2000 Act, as interpreted by the Constitutional Court, furnished sufficient grounds for annulling the Company’s taxation privileges.

On 6 May 2003 the Supreme Court rejected the applicants’ cassation appeal against the judgment of the Kyiv City Court of Appeal.

B.  Relevant domestic law and practice

1.  The Foreign Investments Act 1992

Article 2 of that the Act was applicable to companies of any type or form if a foreign investor owned at least 20% of the enterprise.

An “enterprise with foreign investments” established under this Act could be granted, on its request, 10 years’ immunity from changes in the fiscal legislation regulating foreign investments (Article 9).

2.  The Termination of Discrimination against Companies established using National Property and Assets Act 2000

The Preamble specified that the Act’s aim was to put companies with foreign shares in an equal position with those without foreign investments, thus protecting free competition and domestic industry.

Article 1 of the Act declared that companies with foreign shares were subject to general tax, customs and currency regulations.

Article 4 of the Act repealed the 1992 Act.

According to Article 5, this Act applied to all joint companies irrespective of when the foreign investment was made.

3.  The decision of the Constitutional Court of 29 January 2002

Following the request of the Cabinet of Ministers, the Constitutional Court gave an official interpretation of Article 5 of the 2000 Act. The court explained that this provision constituted a valid ground for refusing new and withdrawing previously granted applications for those privileges regarding taxes, customs duties and currency controls.


The applicants complain under Article 6 of the Convention that, by adopting the 2000 Act, the legislative body interfered with the administration of justice, securing a favourable outcome for the State in the litigation.

The applicants further complain that the abolition through legislation of a court granted immunity, protecting their company from changes in the law, was contrary to their property rights guaranteed by Article 1 of Protocol No. 1.


A.  The second applicant

The Court notes that, out of two applicants indicated in the application, only the first, Viktor Ketko, was represented before the Court. Ms Kudelia, the lawyer who signed the application form, has failed to present the Court with any document empowering her to represent Mr Mroz, or any other evidence that he wished to be an applicant in the present case. The Court considers that this warrants the conclusion that Mr Mroz did not intend to pursue an application. The Court discerns no public policy reason for continuing the proceedings in the name of the second applicant, whose complaints, if any, would have been similar to those of the first applicant (Pressos Compania Naviera S.A. and Others v. Belgium, judgment of 20 November 1995, Series A no. 332, § 24).

Accordingly, the complaints purportedly lodged in the name of Mr Mroz should be severed from those of the first applicant and struck out of the case.

B.  The alleged violation of Article 6 § 1 of the Convention

The first applicant challenges the parliamentary interference in the court litigation in favour of the State. He refers to Article 6 § 1 of the Convention, which insofar as relevant provides as follows:

Article 6

“In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. ....”

The Court reiterates that the concept of “civil rights and obligations” cannot be interpreted solely by reference to the domestic law of the respondent State concerned. The Court has on several occasions affirmed the principle that this concept is “autonomous”, within the meaning of Article 6 § 1. Pecuniary interests are certainly at stake in proceedings concerning a dispute on whether customs duties or charges are to be paid on imported goods. However, merely showing that a dispute is “pecuniary” in nature is not in itself sufficient to attract the applicability of Article 6 § 1 under its “civil” head. As customs duties or charges for imported goods must be regarded as falling within the realm of taxation, and as tax matters still form part of the hard core of public-authority prerogatives, with the public nature of the relationship between the taxpayer and the community remaining predominant, the Court considers that tax disputes, including disputes about the determination of import duties or charges, fall outside the scope of civil rights and obligations, despite the pecuniary effects which they necessarily produce for the taxpayer (Emesa Sugar N.V., v. the Netherlands (dec.), no. 62023/00, 13 January 2005, and, mutatis mutandis, Ferrazzini v. Italy [GC], no. 44759/98, §§ 24-31, ECHR 2001-VII).

It follows that this part of the application must be rejected as being incompatible ratione materiae with the provisions of the Convention, pursuant to Article 35 §§ 3 and 4.

C.  The alleged violation of Article 1 of Protocol No. 1

The first applicant claimed to be a victim of a breach of Article 1 of Protocol No. 1, which provides as follows:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

The Court considers that it cannot, on the basis of the case file, determine the admissibility of this complaint, and that it is therefore necessary, in accordance with Rule 54 § 2 (b) of the Rules of Court, to give notice of this part of the application to the respondent Government.

For these reasons, the Court unanimously

Decides to strike out of the list the case in so far as it concerns the second applicant’s purported complaints;

Decides to adjourn the examination of the first applicant’s complaints concerning Article 1 of Protocol No. 1;

Declares the remainder of the application inadmissible.

 Registrar President