A. The circumstances of the case
1. Circumstances common to both applications
The applicant companies are Spanish commercial companies whose registered offices are in Palma de Mallorca (Spain). They are represented before the Court by Mr A. Salva Martín of the Palma de Mallorca Bar.
The facts of the case, as presented by the applicant companies, may be summarised as follows.
The applicant companies operate gaming concerns equipped, in particular, with fruit machines. They are consequently required to pay duty – known as “gaming duty” – in the form of an annual lump sum on each fruit machine. The amount is reviewed each year in Spain’s annual budget.
In the present case, the amount of duty payable on each fruit machine for 1990 was set at 141,750 pesetas (ESP) by Article 39 § 2 of the Legislative Decree of 24 December 1989. However, an additional increase for 1990, raising the annual duty for each fruit machine to ESP 283,250, was imposed by section 38(2)(2) of Law no. 5/90 of 29 June 1990 on the adoption of urgent budgetary measures.
The first applicant company paid the Treasury ESP 19,359,750 in duty for 1990, and the second ESP 12,608,000.
The applicant companies, who did not accept the additional increase and had unsuccessfully attempted to obtain its reimbursement by the Treasury, brought applications for judicial review in the Balearic Isles Higher Court of Justice maintaining, inter alia, that there had been a violation of the principle that increased penalties should not be applied with retrospective effect, a failure to ensure legal certainty and a breach of the principle that rates of duty should be consistent with those imposed on other gaming activities. To that end, they invited the court to refer the issue whether section 38(2)(2) of Law no. 5/90 was compatible with Articles 9 § 3, 14 and 31 of the Constitution to the Constitutional Court before deciding their application for judicial review.
2. Circumstances peculiar to application no. 41601/98
In a judgment of 17 December 1993 the Balearic Isles Higher Court of Justice refused to refer the constitutionality issue to the Constitutional Court and dismissed the application on the merits. As regards its refusal to make a referral, it cited a decision of 16 July 1987 in which the Constitutional Court had held that a statute of 29 June 1983 imposing an additional increase in duty on fruit machines was not unconstitutional; it observed, too, that the Constitutional Court had decided that the Constitution did not preclude retrospective effect being given to tax legislation.
The applicant company lodged an amparo appeal against that judgment with the Constitutional Court. It contended that the refusal of the Balearic Isles Higher Court of Justice to make a constitutionality referral regarding section 38(2)(2) of Law no. 5/90 infringed its right to the protection of the courts and to a fair hearing (Article 24 of the Constitution). It complained, too, that it had been the victim of discriminatory treatment when compared to other firms engaged in the gaming sector (Article 14 of the Constitution). It also argued that another Spanish court, the Catalonia Higher Court of Justice, had decided to refer to the Constitutional Court the issue of the constitutionality of section 38(2)(2) of Law no. 5/90 in the context of an application for judicial review lodged by another gaming company. In the light of that referral, the Constitutional Court decided to adjourn consideration of the applicant company’s appeal until it had decided the issue that had been referred to it by the Catalonia Higher Court of Justice. In the latter proceedings the Constitutional Court declared section 38(2)(2) of Law no. 5/90 unconstitutional and therefore null and void as its effect was to cause an unforeseeable and insufficiently justified increase in tax liability that amounted to a violation of the principle of legal certainty.
Notwithstanding that decision, the Constitutional Court, sitting as a full court, decided on 2 October 1997, by seven votes to four, to dismiss the applicant company’s amparo appeal.
The complaint regarding the failure to observe the non-discrimination principle was rejected by the Constitutional Court, inter alia, on the ground that a finding that section 38(2)(2) of Law no. 5/90 was unconstitutional could not be founded on the basis of the principle of equality stated in Article 14 of the Constitution but on objectively established factors showing inequality contrary to Article 31 § 1 of the Constitution. While any such inequality could be remedied by other constitutional procedures – such as an appeal or a referral of a constitutionality issue – it could not be remedied through an amparo appeal.
As to the complaint under Article 24 of the Constitution, the Constitutional Court reiterated that under its settled case-law it was solely for trial courts to decide whether to make a constitutionality referral and their decision was final. Consequently, a refusal to make a referral did not in principle entail a violation of any fundamental right, even if other courts had decided to make a referral regarding the constitutionality of the same provision of Law no. 5/90. In the instant case, the Constitutional Court observed that the applicant company had been in a position to put to the Balearic Isles Higher Court of Justice all the arguments it considered appropriate in support of its case that the relevant provisions of Law no. 5/90 were unconstitutional and that that court had carried out a reasoned analysis of the merits of those arguments before rejecting them. As regards the argument that the Constitutional Court itself had in the meantime declared section 38(2)(2) of Law no. 5/90 unconstitutional, it held that the fact that a specific provision had been declared unconstitutional could not be used by itself in amparo appeals since the scope of such appeals was restricted by the Constitution to certain fundamental rights and freedoms. It added that where a decision on an amparo appeal came after another decision, in proceedings regarding constitutionality, the Constitutional Court was not always able to refer to the earlier decision in deciding the amparo appeal even where both sets of proceedings concerned the same statutory provision; that applied especially where, as in the instant case, the decision on the constitutionality issue was based on Article 9 § 3 of the Constitution (principles of legal certainty and of the rule of law), since that provision was not included in the rights and freedoms that were covered by amparo appeals. The Constitutional Court added that, as no reduction of a sentence or penalty was at stake, a subsequent declaration that a statutory provision was unconstitutional could not have any effect on proceedings that had ended in a final judgment. It concluded by saying that the Balearic Isles Higher Court of Justice had applied the impuned provision of Law no. 5/90 after finding that it was consistent with the Constitution and, accordingly, that there was no point in making a constitutionality referral to the Constitutional Court.
The applicant company submitted that, unlike other firms in the gaming sector, it had been prevented by that decision from claiming reimbursement of the increases in duty it had paid on its fruit machines pursuant to section 38(2)(2) of Law no. 5/90.
3. Circumstances peculiar to application no. 41775/98
In a judgment of 16 September 1996 the Balearic Isles Higher Court of Justice refused to refer the constitutionality issue to the Constitutional Court and dismissed the second applicant company’s application on the same grounds as those set out in its judgment of 17 December 1993 in the first applicant company’s case.
The second applicant company lodged an amparo appeal against that judgment with the Constitutional Court. It contended that the refusal of the Balearic Isles Higher Court of Justice to make a referral regarding the constitutionality of section 38(2)(2) of Law no. 5/90 had infringed its rights to the protection of the courts and to a fair hearing (Article 24 of the Constitution). It complained, too, that it had been the victim of discriminatory treatment when compared to firms engaged in other areas of the gaming sector (Article 14 of the Constitution).
In a decision (auto) of 16 December 1997 the Constitutional Court decided to dismiss the second applicant company’s appeal and in so doing referred to the grounds set out in its decision of 2 October 1997 on the first applicant company’s appeal.
The second applicant company submitted that, unlike other firms in the gaming sector, it had been prevented by that decision from claiming reimbursement of the increases in duty it had paid on its fruit machines pursuant to section 38(2)(2) of Law no. 5/90.
B. Relevant domestic law
1. The Constitution
The relevant Articles of the 1978 Constitution provide:
Article 9 § 3
“The Constitution guarantees the rule of law, the application of norms according to rank, their publication, the non-retrospective nature of provisions laying down increased penalties or restricting individual rights, legal certainty, the accountability of public authorities and the prohibition of any arbitrary act on their part.”
“Spanish nationals shall be equal before the law and may not be discriminated against in any way on account of birth, race, sex, religion, opinion or any other condition or personal or social circumstance.”
“1. Everyone has the right to effective protection by the judges and courts in the exercise of his rights and his legitimate interests; in no circumstances may there be any denial of defence rights.
2. Likewise, everyone has the right to [be heard by] an ordinary judge determined beforehand by law; everyone has the right to defend himself and to be assisted by a lawyer, to be informed of the charge against him, to have a trial in public without unreasonable delay and attended by all the safeguards, to adduce the evidence relevant to his defence, not to incriminate himself or to admit guilt and to be presumed innocent.
Article 31 § 1
“Everyone shall contribute towards the financing of public expenditure according to their financial means through a fair tax system based on the principles of equality and graduation and which, under no circumstances, shall incorporate a power to confiscate.”
The jurisdiction of the Constitutional Court is defined as follows:
Article 161 § 1
“The Constitutional Court shall have jurisdiction for the whole of Spanish territory and is competent to hear:
(a) appeals against the alleged unconstitutionality of laws and regulations having the force of law ...;
(b) individual appeals for protection (recurso de amparo) against infringements of the rights and liberties referred to in Article 53 § 2 of the Constitution, in the circumstances and manner laid down by law;
(c) disputes between the State and an autonomous community or between different autonomous communities over the scope of their powers.
Amparo appeals lie only in respect of the rights guaranteed under Articles 14 to 29 of the Constitution; the principles of the rule of law and legal certainty guaranteed by Article 9 § 3 are therefore beyond the scope of such appeals.
“If in the course of proceedings a judicial body considers that a provision which has the status of law and is applicable in the proceedings and upon whose validity its decision depends might be contrary to the Constitution, it shall refer the issue to the Constitutional Court in the circumstances and manner and with the effects – which shall under no circumstances include suspensive effect – to be laid down by law.”
“1. Judgments of the Constitutional Court shall be published in the Official State Gazette together with any dissenting opinions. They shall be final with effect from the day after their publication and no appeal shall lie against them. Judgments declaring a law or a rule having the force of law unconstitutional and all judgments that are not merely in personam shall be binding on everyone.
2. Unless stated otherwise in the judgment, parts of the law not declared unconstitutional shall remain in force.”
2. Institutional Law no. 2/1979 on the Constitutional Court
Chapter III of Title II of the Institutional Law on the Constitutional Court is entitled “Questions of constitutionality referred by judges and courts” and is worded as follows:
“1. When a judge or court, of his or its own motion or at the request of a party, considers that a provision which has the status of law and is applicable in the proceedings and upon whose validity its decision depends might be contrary to the Constitution, he or it shall refer the matter to the Constitutional Court, in accordance with the provisions of the present Law.
2. The judge or court concerned shall make the referral only when the case is ready for trial and within the time allowed for giving judgment. It shall identify the laws or provisions having the status of law in issue and the articles of the Constitution that are considered to have been violated and shall indicate and explain why the outcome of the proceedings depends on the validity of the provisions concerned. Before taking a final decision on whether to refer an issue to the Constitutional Court, the judge or court shall first hear any representations the parties and a representative of State Counsel’s Office may wish to make regarding the relevance of the issue within a ten-day non-extendable time-limit that shall apply to each of them. The judge shall give his decision within three days thereafter, no further action being required. No appeal shall lie against that decision. However, the constitutionality issue may be raised again in subsequent proceedings until such time as the judgment shall have become final.”
“A judge or court shall refer constitutionality issues to the Constitutional Court by sending a certified copy of the main case file and any representations made under the preceding Article.”
“1. On receipt of the case file the Constitutional Court shall follow the procedure laid down in paragraph 2 of this Article. However, it may in a reasoned decision declare the referral inadmissible after hearing representations by the Attorney General alone if the procedural requirements have not been complied with or the referral is manifestly ill-founded.
2. The Constitutional Court shall inform the Chamber of Deputies and the Senate (through their respective speakers), the Attorney General and the Government (through the Ministry of Justice) of the referral. If it concerns a law or a provision having the status of law adopted by an Autonomous Community, the legislative and executive authorities shall also be informed. Each of these bodies shall be entitled to appear before the Constitutional Court and to make representations on the constitutionality issue within a non-extendable fifteen-day time-limit that shall apply to each of them. Once that period has expired, the court shall give judgment within fifteen days, unless it gives a reasoned decision explaining why it considers a longer period – not exceeding thirty days – to be necessary.”
The applicant companies complained that the refusal of the Balearic Isles Higher Court of Justice to refer the issue of the constitutionality of section 38(2)(2) of Law no. 5/90 increasing fiscal duties on fruit machines combined with the dismissal of their amparo appeal infringed their right to a fair hearing as guaranteed by Article 6 § 1 of the Convention. They pointed to inconsistencies in the reasoning of the Constitutional Court, which, having stayed the hearing of the amparo appeal until it had decided the constitutionality issue referred to it by the Catalonia Higher Court of Justice, went on to dismiss it despite having declared the impugned provision unconstitutional. The applicant companies also complained that other businesses operating in the same sector had been able to obtain reimbursement of the increased duty after the Constitutional Court’s annulment of section 38(2)(2) of Law no. 5/90 following the constitutionality referral by the Catalonia Higher Court of Justice. As a result, they considered that they had been discriminated against, contrary to Article 14 of the Convention.
By virtue of Article 5 § 2 of Protocol No. 11 to the Convention and as from 1 November 1998, when that Protocol came into force, applications are examined by the Court in accordance with the provisions of the Protocol.
1. The applicant companies complained that the refusal of the Balearic Isles Higher Court of Justice to refer the issue of the constitutionality of section 38(2)(2) of Law no. 5/90 of 29 June 1990 increasing fiscal duties, combined with the Constitutional Court’s dismissal of their amparo appeal, infringed their right to a fair hearing as guaranteed by Article 6 § 1 of the Convention, the relevant part of which reads:
“In the determination of his civil rights and obligations ..., everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”
However, the Court reiterates that under the settled case-law of the Convention institutions, Article 6 § 1 of the Convention does not apply to “disputes” (contestations) relating to public law and, in particular, tax proceedings as such since they do not concern disputes over rights and obligations that are “civil” in character (see, among other authorities, Company S. and T. v. Sweden, application no. 11189/84, decision of the Commission of 11 December 1986, Decisions and Reports (DR) 50, pp. 121, 140; Kustannus Oy Vapaa Ajattelija AB, Vapaa-Ajattelijain Liitto – Fritänkarnas Förbund r.y. and Kimmo Sundström v. Finland, application no. 20471/92, decision of the Commission of 15 April 1996, DR 85-A, pp. 29, 44). Nor is it sufficient to show that a dispute is “pecuniary” in nature for it to be covered by the notion of “civil rights and obligations”. Apart from fines imposed by way of “criminal penalty”, this will be the case, in particular, where an obligation which is pecuniary in nature derives from tax legislation (see the Schouten and Meldrum v. the Netherlands judgment of 9 December 1994, Series A no. 304, pp. 20-21, § 50; and, mutatis mutandis, the Maillard v. France judgment of 9 June 1998, Reports of Judgments and Decisions 1998-III, p. 1304, § 41). It follows that this part of the applications must be dismissed in accordance with Article 35 § 3 as being incompatible ratione materiae with the Convention.
2. The applicant companies complained that other firms operating in the same sector had been able to obtain reimbursement of the increased duty after the Constitutional Court annulled section 38(2)(2) of Law no. 5/90 following the referral of a constitutional issue by the Catalonia Higher Court of Justice. As a result they considered that they had been discriminated against, contrary to Article 14 of the Convention, which provides:
“The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”
The Court points out, however, that this provision prohibits discrimination only in so far as the enjoyment of the rights and freedoms set forth in the Convention are concerned. As it has held above that the complaints under Article 6 § 1 of the Convention are not within the scope of the Convention, it follows that this part of the applications must also be dismissed as being incompatible ratione materiae with the provisions of the Convention, within the meaning of Article 35 § 3.
For these reasons, the Court, by a majority,
Decides to join applications nos. 41601/98 and 41775/98; and
Declares the applications inadmissible.
VIDACAR S.A. AND OPERGRUP S.L. v. SPAIN DECISION
VIDACAR S.A. AND OPERGRUP S.L. v. SPAIN DECISION