Bad Timing for the Civil Asset Forfeiture Law

As the Law on Civil Asset Forfeiture was urgently adopted under quarantine, the State will find it much easier to apply certain measures that restrict human rights with respect to those who have “gained riches illegally”. However, does this comply with the principles of a state based on justice and integrity and, if so, to what extent? Civil asset forfeiture does not belong in the universe of civil law. It serves to further reduce the standard of proof, when compared to the extended confiscation in criminal law, and allows to avoid the strict protection of human rights that are applicable in criminal procedure.

On March 31, 2020, while the media was focused on publishing any news related to the pandemic, having solved the most important quarantine-related issues, the Seimas took on a whole other matter, i.e. the adoption of the Law on Civil Asset Forfeiture (hereinafter referred to as the Law). The Law has been actively discussed, redacted and vetoed, going so far as gaining the ill repute of a poorly thought-out project. Despite the misgivings, the Law was passed at the most difficult of times.

Adopting laws restricting human rights and granting more power to state institutions is a quick process, especially during the pandemic. Sadly, it might not be as easy to change later, even if the Government came to realize its ill-proportioned nature. In terms of a state based on justice and integrity, the application of criminal measures using simplified civil proceedings to avoid the guarantees ensured the criminal procedure is pretty doubtful. Thus, we must be extra careful and responsible when adopting laws of a similar nature.

Measures as such may evidently weaken democracy and create the perfect conditions for the development of an authoritarian state, which in turn would be the true catastrophe of the pandemic, along with all the other laws restricting human rights.

“The Third Brother” in Asset Forfeiture?

It is no secret that financial sanctions and the real possibility of losing one’s personal assets are a much more feared result than public condemnation or another type of penalty to the majority of suspects and indictees. This is why, as of 2010, the criminal law has undergone several significant changes, such as the application of criminal liability for unjust enrichment and the possibility to employ extended confiscation.

Extended confiscation is defined as the seizure of all or part of the assets of the perpetrator, which is not proportionate to his/her legal income, provided thatthe assets are suspected of having been gained illegally, i.e. the assets of the perpetrator may be seized, even if it is not direct income from the criminal activity the person was convicted for. However, certain prerequisites do apply the criminal proceedings and the determination of facts and guilt of the person in question during the said proceedings, in line with the strict standard of proof.

Even though almost a decade has passed since the adoption of these provisions in the Criminal Code, their practical application by the law enforcement institutions could hardly be called successful as the majority of the cases of unjust enrichment ended in exculpation or termination of the proceedings. Meanwhile, it has been only several years since the extended confiscation has received the attention it deserved in court practice.

Nevertheless, today, one more step has been taken, and yet another restrictive measure has been adopted. Civil asset forfeiture differs from the previously described measures because it requires no proof of the person’s guilt in committing the crime, and it is not a type of criminal punishment. The applicationof civil forfeiture has elements of both civil and criminal proceedings.

Thus, the real question is whether this “competitor” to asset seizure in criminal law that has been adopted for the purpose of deliberately reducing the standard of proof and thus eliminating the obstacles of applying the previous measures is going to result in more possibilities or more issues and questions.

When and Which Assets Are Subject to Civil Forfeiture?

Please note that in the case of Arcuri v Italy (2001), the European Court of Human Rights (ECHR) analyzed the situation of civil asset forfeiture applied concerning Rocco Arcuri and his family. The Judge of the Province of Turin decided to seize assets of high value from Arcuri and his family members (spouse and children). The seized assets included eight cars, real estate (houses and land), shares of several companies and other valuables. The main grounds for asset seizure was the allegation that Arcuri had ties with the mafia and even though no criminal proceedings have been started with respect to Arcuri, the ECHR deemed such an application of civil asset forfeiture a reasonable one and a necessary preventive measure that did not breach the requirements of the Convention.

As evident from the example of Arcuri v Italy, civil asset forfeiture is not a punishment but rather a preventive measure geared towards preventing criminal activities via the reduction of their financial benefits. At first glance,this might seem rational and justifiable. Article 1 of the Law establishes the following goal: prevention of organized crime, corruption and selfish crimes.

According to the law, assets are deemed to be of illegal origins if:

i)             the assets are actually managed by a person, with respect to whom criminal proceedings were started or terminated or the person in question was released from liability; or

ii)            the assets are actually managed by a person who has been included in the list of organized crime groups prepared by the Police Department; or

iii)           the assets are actually managed by the spouse or partner of such a person.

All of these assumptions have the following in common: the assets cannot be justified using legal income of the respective person, when the value of the assets in question exceeds the minimum limit set by the Law (i.e. 100,000.00 euro).

Thus, “Civil asset forfeiture is applicable to assets of unclear origins, when the circumstances determined during asset analysis allows making a plausible conclusion that the assets in question are of illegal origins and the data on indirect connections of the respective person to criminal activities allow believing that the assets might presumably be gained via criminal activities” (Bikelis S, Mikšys S, Civilinio turto konfiskavimo perspektyvos Lietuvoje (2018).

The rules of the validity of this Law is yet another important matter. Back in 2017, the Constitutional Court set forth that the provisions of unjust enrichment and extended confiscation cannot be applied retrospectively, i.e. assets acquired before 2010 when the Law came to pass cannot be seized. Despite this, the legislators tried their luck once more and suggested that the Law on Civil Asset Forfeiture would be applicable retrospectively. The President vetoed the draft law, and the error was corrected in the adopted version of the Law. Based on the current version of the Law, civil asset forfeiture can be applied to assets acquired after December 11, 2010, and when the respective conditions to apply the Law occurred after the said date. Yet, does this solve the issue of the lawfulness of the Law?

The Issue of Standard of Proof and Protection of Rights

Before the Law comes to pass, the matter of assigning the institute of civil asset forfeiture either to civil or criminal law remains.

This issue is important because the text of the Law itself does not help to find the answer. The asset analysis managed by the Prosecutor and carried out by preliminary investigation institutions, such as the Police or Financial Crime Investigation Service, would allow assuming that the preliminary stage is carried out based on the rules of criminal procedure as set forth in the established procedure, regulations and the possibility to apply the procedural measure of temporary restriction of one’s rights.

However, the court hearing of this matter is assigned to the rules of civil proceedings. This brings us to a theoretical reply that it is a mixed procedure with elements of both criminal and civil procedure. However, in practice, the naming of the model does not provide any true answers, e.g. regarding the standard of proof to be applied in such proceedings. Another question which is still open is related to the set of rights that can be guaranteed to the person, whose assets have been seized.

All these questions are of utmost importance. One should never forget that in addition to achieving its primary goal, the Law also radically restricts one of the key rights of a human being to hold assets, established in Article 23 of the Constitution and Article 1 of Protocol 1 to the Convention for the Protection of Human Rights and Fundamental Freedoms. Thus, the rules regarding the lawfulness of restriction of rights and its proportions must be retained.

In its practice, the ECHR does not essentially question whether or not the confiscation of assets related to criminal activities is a necessary and effective tool in battling crime. However, as laid down in Article 1 of Protocol 1 to the Convention, such measures must be correctly balanced, i.e. they must be reasonably proportioned in terms of public interests and the protection of one’s entitlement to freely use their possessions so that the person in question does not have an individually targeted or too heavy of a burden. 

If one imagines the procedure of civil asset forfeiture as the State walking tightrope, public interest in one hand and the right to personal property and protection of this right in the other hand, it is evident that without the legislator clearly defining the principles of undertaking this procedure the balance remains unestablished by this Law. 

Failure to properly define and denote the principles to be employed in the civil asset forfeiture procedure brings forth the riskthat thestandard of proof in the institute carrying more elements of criminal proceedings will be based on automatic presumptions and assumptions, while the right to defend against this measure will remain just a formal declaration. 

One can expect that the said principles can be defined in practice professionally and quickly. However, whether or not one can trust the legal consciousness of the ones practicing the law, e.g. the judges, prosecutors and other officials, remains to be seen. In their book titled ‘How Democracies Die’, Steven Levitsky and Daniel Ziblatt tried warning the society that democracy is not something given and that one must always strive to maintain it alive. The authors believe that mutual tolerance and institutional moderation are the procedural principles that show the politicians how to act beyond the situations determined by laws so that our institutions can function properly. These procedural values comprise the core trust in democracy as it will not function without them.[1]

As usual, the legislator has left the situation to be resolved by “trial and error”. One would think this might be one of the possible ways to achieve it, yet, this time the price that our society and its trust in democracy will pay might be too high.

[1] ‘How Democracies Die’ by Steven Levitsky and Daniel Ziblatt, Baltos Lankos, 2018, p.255

Prof. Dr. Solveiga Palevičienė, Attorney-at-Law, Managing Partner

Dr. Dovilė Murauskienė, Attorney-at-Law & Senior Lawyer

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