EHRM, 03-11-2022, nr. 49812/09

In accordance with Article 145 of the Royal Decree of 27 August 1993 implementing the 1992 Income Tax Code, tax debts become time-barred five years after the date on which the taxes became due. The running of the limitation period may be interrupted in the manner provided for in Articles 2244 et seq. of the Civil Code or by a waiver of the part of the period that has already elapsed. Where the limitation period is interrupted, a fresh period starts to run which can be interrupted in the same way and which expires five years after the last action stopping the running of the preceding period if no legal proceedings are brought.

At the relevant time, under Article 2244 of the Civil Code, the limitation period was interrupted when the taxpayer concerned by the attempt to prevent its expiry was served with a court summons, a demand for payment or an attachment order.

Prior to the entry into force of the Miscellaneous Provisions Act of 22 December 2003 (see paragraph 42 below), the lodging of an objection did not interrupt the limitation period for recovery of the tax debt. In order to interrupt the limitation period, the administrative authorities had adopted a practice of issuing the taxpayers concerned with a demand for payment (as was done in the present case — see paragraph 16 above). In a judgment of 28 October 1993, the Court of Cassation held that the attachment of assets following such a demand was null and void in the absence of an ‘amount indisputably due’. However, the court left open the question whether the demand for payment preceding the attachment had the effect of interrupting the limitation period where there was no amount indisputably due (Pasicrisie, 1993, I, no. 433). The tax authorities subsequently clarified their practice in two circulars (CI.RH.884/458.433 of 25 August 1994, and CI.R14/469.194 of 29 February 1996). The circulars instructed tax offices to state clearly when issuing demands that these merely interrupted the limitation period and did not constitute a threat of enforcement (except in cases where an amount was indisputably due).

As the Court of Cassation did not address the issue whether the tax demands in question had the effect of stopping time running, the matter continued to be raised by taxpayers. Thus, it was noted subsequently that the relevant administrative practice had ‘for some considerable time now [sinds geruime tijd] given rise to numerous disputes as to the validity of such a demand served in respect of disputed tax debts where no portion of the debt [could] be regarded as certain and of a fixed amount’ (explanatory memorandum to the bill culminating in the Miscellaneous Provisions Act of 22 December 2003, Documents parlementaires, Chamber, 2003–2004, DOC 51-0473/001 and 51-0474/001, p. 147).

In judgment C.01.0157.F of 10 October 2002 (confirmed by judgments C.01.0287.N of 21 February 2003, C.02.0024.F of 27 February 2004 and C.02.0596.F of 12 March 2004), the Court of Cassation ruled against this practice. It found that a demand for payment was ‘a step in the judicial proceedings which require[d] an authority to execute and [was] the prelude to attachment’, with the result that, when served by the State in the absence of an amount of tax that was indisputably due, it could not ‘have the effect of stopping time running’. This position meant that a demand for payment could not interrupt the limitation period where the tax assessment was disputed.

This new line of case-law prompted a response from the legislature. It took the view that action was essential ‘in order to prevent a situation in which, owing to the administrative authorities’ inability to validly interrupt the limitation period for the recovery of disputed tax debts that [were] not certain and of a fixed amount, and immediately payable, many of them [would] be declared time-barred'. The legislature considered that the need for action was ‘particularly compelling in the light of the data concerning the income tax backlog, which show[ed] that disputed tax assessments account[ed] for more than 40% of that backlog’ (p. 148 of the above-mentioned explanatory memorandum). The document specified that ‘in accordance with the principles governing the application of the law over time, those provisions appl[ied] to ongoing proceedings’ (ibid.).

The legislature therefore introduced a mechanism for suspending the limitation period (see, in this connection, paragraph 52 below) and a mechanism for interrupting the limitation period. Accordingly, when enacting the Miscellaneous Provisions Act of 22 December 2003, it inserted new provisions in the 1992 Income Tax Code. The new Article 443 bis incorporated the provisions previously contained in Article 145 of the Royal Decree of 27 August 1993 implementing the 1992 Income Tax Code (see paragraph 36 above), with particular reference to the manner in which the limitation period was interrupted.

When asked by a member of parliament whether the legislation would create a legal vacuum between the delivery of the Court of Cassation judgment of 21 February 2003 (see paragraph 40 above) and the entry into force of the provisions referred to above, the Minister of Finance stated that a certain number of tax debts might become time-barred but that it was virtually impossible to quantify this in terms of loss of tax revenue. In his view, ‘a relatively small number of cases’ would be concerned. The Minister added that these provisions ‘[were] not applicable with retrospective effect because this [was] a major issue with regard to limitation periods with public-policy implications, a fact which could have very significant repercussions for taxpayers’ (Documents parlementaires, Chamber, 2003–2004, DOC 51-0473/027, p. 20).

In its opinion on draft Article 443 ter of the 1992 Income Tax Code, the Conseil d'État had expressed doubts as to the applicability of this provision to tax debts which had already become time-barred before the entry into force of the legislation, in accordance with the above-mentioned case-law of the Court of Cassation. The Conseil d'État emphasised in that connection that ‘if the authors of the preliminary draft wish[ed] to prevent the risk of taxpayers invoking the statute of limitations in such cases, an explicit transitional provision [would] be required’ (opinions of 7 and 12 November 2003, Documents parlementaires, Chamber, 2003–2004, DOC 51-0473/001 and 51-0474/001, p. 464).

On the basis of this observation among other considerations, the legislature subsequently included in the Miscellaneous Provisions Act of 9 July 2004 an ‘interpretative legal provision applicable to the cases referred to in the Court of Cassation judgments of 10 October 2002 and 21 February 2003’ (reasons for government amendment no. 7, Documents parlementaires, Chamber, 2003–2004, DOC 51-1138/015, p. 2). The provision in question was section 49 of the Act, which read as follows:

A number of taxpayers, including the applicants in the case of Optim and Industerre v. Belgium ((dec.), no. 23819/06, 11 September 2012), lodged applications with the Administrative Jurisdiction and Procedure Court (Cour d'arbitrage) (now the Constitutional Court) seeking the repeal of section 49 of the Miscellaneous Provisions Act of 9 July 2004.

In a judgment of 7 December 2005 (no. 177/2005; see also judgment no. 20/2006 of 1 February 2006), the Constitutional Court rejected the applications, finding as follows:

In two judgments of 17 January 2008 (F.06.0082.N and F.07.0057.N), the Court of Cassation confirmed that it was clear from section 49 of the Miscellaneous Provisions Act of 9 July 2004 that a demand for payment served in respect of a disputed tax debt constituted a valid act interrupting the limitation period even where no part of the debt was indisputably due. In the second of these judgments it also held that section 49 did not constitute an interpretative provision but that it should nevertheless be applied retrospectively, in accordance with the legislature's intentions.

In a judgment handed down on 21 November 2013 (F.11.0175.N), that is, after the judgment in the applicant company's case, the Court of Cassation held that section 49, ‘which [was] designed to prevent some taxpayers from securing an advantage not intended by the legislature, and which [was] in accordance with the general interest and necessary in order to secure the payment of taxes — the rules on the assessment of which [had] not been amended by the legislature — [was] compatible with Article 1 of Protocol No. 1 to the Convention for the Protection of Human Rights and Fundamental Freedoms’.

In an Act of 13 April 2019 which entered into force on 1 January 2020, a number of provisions concerning tax proceedings were harmonised and incorporated in a new Code on the Settlement and Forced Recovery of Tax-related and Other Debts (Code du recouvrement amiable et forcé des créances fiscales et non fiscales — ‘CRAF’). The provisions of Article 443 bis of the 1992 Income Tax Code concerning the interruption of the running of time by measures to recover taxes (see paragraph 41 above) are now contained in Article 24 of the CRAF (see also, as regards suspension, paragraph 53 below). In the context of that codification, section 49 of the Miscellaneous Provisions Act of 9 July 2004 was repealed.

Article 2251 of the Civil Code provides that ‘the limitation period shall run in respect of all persons save for those covered by one of the exceptions provided for by statute’.

When the Miscellaneous Provisions Act of 22 December 2003 was enacted (see paragraph 42 above), the legislature inserted a new provision, Article 443 ter, in the 1992 Income Tax Code. In accordance with that provision, any administrative or judicial appeal against the assessment or collection of taxes and withholding tax henceforth suspended the running of the limitation period.

Since the entry into force of the CRAF (see paragraph 50 above), the content of Article 443 ter of the 1992 Income Tax Code has been incorporated in Article 25 of the CRAF.

The Government submitted that the debt which the State had sought to recover in the instant case was a tax debt based on fiscal legislation that had been properly enacted. Hence, in their view, the dispute fell outside the sphere of ‘civil rights and obligations’.

Nevertheless, the Government acknowledged that Article 6 § 1 of the Convention was applicable in so far as the tax surcharge imposed on the applicant company implied the existence of a ‘criminal charge’. They took the view that the Engel criteria were met in the present case.

The applicant company submitted that the case concerned a dispute over ‘civil rights and obligations’ within the autonomous meaning of that concept in Article 6 § 1 of the Convention. It argued that the State's interference with its rights related solely to the time-barring of the claim for recovery of a disputed debt in the taxation sphere. The dispute did not concern the State's right to impose tax on a citizen. In the applicant company's submission, there were therefore no grounds to exclude the case from the scope of Article 6 under its civil head. It pointed out that in Belgium tax-related cases were assigned to the ordinary courts, where they followed the same procedure as any other civil case. It emphasised that the three complaints raised in its application were unrelated to the fiscal nature of the underlying proceedings and could have been presented in the same way in any other civil case.

The applicant company further noted that the Government did not dispute that the criminal limb of Article 6 of the Convention was applicable. It reiterated that the tax surcharge pursued a purpose that was both deterrent and punitive; this was sufficient to establish the criminal nature of the penalty. The applicant company also stressed the severity of the penalty it had been liable to incur, pointing out that under Article 444 of the 1992 Income Tax Code (see paragraph 35 above), tax surcharges were imposed in proportion to the amount of the unpaid taxes and could amount to 200% of that sum, there being no statutory ceiling.

In its judgment in the present case the Chamber held that the civil limb of Article 6 of the Convention was not applicable, basing its finding on the following reasoning:

The Grand Chamber sees no reason to depart from that finding. Tax matters 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, despite the pecuniary effects which tax disputes necessarily produce for the taxpayer (see Ferrazzini, cited above, § 29). It follows that Article 6 § 1 of the Convention is not applicable under its civil limb.

The applicant company alleged that the interference in the form of the retrospective application of section 49 of the Miscellaneous Provisions Act of 9 July 2004 had been aimed at influencing the outcome of proceedings to which the Belgian State was a party, in breach of the principle of legal certainty and the rule of law, and also of the right to a fair trial under Article 6 § 1 of the Convention. In its submission, there were no compelling general-interest grounds justifying that interference, the sole aim of which had been to enable the State to win a case that had been lost from the outset in the light of the domestic case-law.

The applicant company referred to the parliamentary drafting history in order to demonstrate, firstly, that the Miscellaneous Provisions Act of 22 December 2003, enacted to counteract the effects of the Court of Cassation judgments of 10 October 2002 and 21 February 2003 (see paragraphs 40–42 above), had been intended to apply only to future cases and, secondly, that the legislature's clear intention in passing the Miscellaneous Provisions Act of 9 July 2004 had been to interfere in the judicial process.

In the applicant company's view, it had not been a question of restoring legal certainty as the Government claimed. It maintained that legal certainty had not been undermined, as the Court of Cassation judgments of 10 October 2002 and 21 February 2003 did not constitute a change in the case-law but had simply followed logically from a judgment of 28 October 1993 (point B.19.3 of the reasoning of the Constitutional Court judgment — see paragraph 47 above). Moreover, the administrative authorities had been perfectly aware of this, since in the wake of those judgments they had established the ‘demand for payment interrupting the limitation period’ by means of a circular dated 25 August 1994 (see paragraph 38 above).

The fact that the legislature had sought to reassert the administrative authorities' original intention did not alter the fact that this intention did not ‘constitute positive law’. The legislation had merely confirmed a subjective and biased administrative position which had no statutory force since it was based only on a circular issued by the administrative authorities themselves.

The Government referred to Constitutional Court judgment no. 177/2005 (see paragraph 47 above). In their submission, the reasoning of that judgment demonstrated that the retrospective application of section 49 of the Miscellaneous Provisions Act of 9 July 2004 had been wholly justified on compelling general-interest grounds.

They stressed in particular that prior to the Court of Cassation judgments of 10 October 2002 and 21 February 2003 it had been a matter of settled case-law and administrative practice that a demand for payment interrupted the limitation period in a valid manner, even in relation to disputed tax debts. In the Government's view, the applicant company was mistaken in referring to the Court of Cassation judgment of 28 October 1993, which had related only to the lack of reasoning of a Court of Appeal judgment. The legislature had therefore had to take retrospective action to counteract the effect of the change in the case-law resulting from the judgment of 10 October 2002, which itself was retrospective. There were therefore no grounds to criticise the State's decision to restore legal certainty by reaffirming, by means of retrospective legislation, the previously predominant line of case-law.

The Government added that the State had acted swiftly, less than two years after the Court of Cassation judgment in question. Thus, the retrospective effect of the legislation had not restricted the applicant company's rights in a disproportionate manner; until the Court of Cassation judgments, the applicant company had believed that the demand for payment served on it had interrupted the running of the limitation period in a valid manner. Hence, the applicant company's initial expectations had not been frustrated.

The Government further argued that the retrospective effect of the Miscellaneous Provisions Act of 9 July 2004 had prevented arbitrary discrimination between those taxpayers who had signed a document waiving the part of the limitation period that had elapsed and those who had refused to sign such a waiver.

The Government emphasised that without retrospective legislation it would have been impossible for the Belgian State to stop the running of the limitation period in respect of taxpayers who contested a tax debt, who would have been released from their debt merely by dint of lodging an appeal, given the income-tax backlog. Moreover, some of the cases that stood to benefit from the position taken by the Court of Cassation in its judgments of 10 October 2002 and 21 February 2003 had concerned large-scale tax fraud.

Lastly, the Government maintained that since tax surcharges differed from the hard core of criminal law, the guarantees of Article 6 of the Convention should be applied in a more flexible manner.

In the context of civil disputes, the Court has repeatedly ruled that although, in principle, the legislature is not prevented from regulating, through new retrospective provisions, rights derived from the laws in force, the principle of the rule of law and the notion of fair trial enshrined in Article 6 preclude any interference by the legislature with the administration of justice designed to influence the judicial determination of a dispute, save on compelling grounds of the general interest (see Stran Greek Refineries and Stratis Andreadis v. Greece, 9 December 1994, § 49, Series A no. 301-B; Zielinski and Pradal and Gonzalez and Others v. France [GC], nos. 24846/94 and 9 others, § 57, ECHR 1999-VII; Scordino v. Italy (no. 1) [GC], no. 36813/97, § 126, ECHR 2006-V; and, more recently, Dimopulos v. Turkey, no. 37766/05, § 45, 2 April 2019, and Hussein and Others v. Belgium, no. 45187/12, § 60, 16 March 2021).

There are dangers inherent in the use of retrospective legislation which has the effect of influencing the judicial determination of a dispute to which the State is a party, including where the effect is to make pending litigation unwinnable (see National & Provincial Building Society, Leeds Permanent Building Society and Yorkshire Building Society v. the United Kingdom, 23 October 1997, § 112, Reports of Judgments and Decisions 1997-VII — hereafter ‘Building Societies’). Respect for the rule of law and the notion of a fair trial therefore require that any reasons adduced to justify such measures be treated with the greatest possible degree of circumspection (ibid., and see also Maggio and Others v. Italy, nos. 46286/09 and 4 others, § 45, 31 May 2011).

The Court has found that those principles, which are essential elements of the concepts of legal certainty and protection of litigants' legitimate trust, are also applicable to criminal proceedings (see Scoppola v. Italy (no. 2) [GC], no. 10249/03, § 132, 17 September 2009; see also, to similar effect, Biagioli v. San Marino (dec.), no. 8162/13, §§ 92–94, 8 July 2014, and Chim and Przywieczerski v. Poland, nos. 36661/07 and 38433/07, §§ 199–207, 12 April 2018). In the Court's view, this applies equally in a tax-related case such as the present one, in which only the part relating to the tax surcharge comes within the scope of the criminal limb of Article 6 of the Convention.

The question arises whether the legislature's intervention through section 49 of the Miscellaneous Provisions Act of 9 July 2004 undermined the fairness of the proceedings brought by the applicant company by influencing the outcome of the dispute between the applicant company and the State while the proceedings were ongoing.

The Court observes at the outset that it is not in dispute between the parties that when the applicant company was served with the demand for payment in October 2000 and when it brought proceedings in the Court of First Instance in December 2000, the limitation period had been interrupted in accordance with Belgian practice as it then applied. Before the Court of First Instance ruled in March 2004 the applicant company could have argued that the limitation period had expired, relying on the case-law of the Court of Cassation commencing with the judgment of 10 October 2002 (see paragraph 40 above), but it did not do so. It was only when it appealed against the first-instance judgment on 15 April 2004 that the applicant company raised the issue of the time-bar and relied on that Court of Cassation judgment. At that point the applicant company might indeed have expected that the Court of Appeal, in the light of this new case-law, would hold that the limitation period in respect of its tax debt had not been interrupted.

However, in 2003, before the ruling at first instance and the lodging of an appeal by the applicant company, the legislature had begun to examine how to temper the effects of the Court of Cassation's new case-law. Following the entry into force of the Miscellaneous Provisions Act of 22 December 2003 and the opinion of the Conseil d'État concerning the need for an explicit transitional provision (see paragraphs 42–44 above), section 49 of the Miscellaneous Provisions Act of 9 July 2004 was enacted. That provision entered into force while the applicant company's case was pending before the Court of Appeal, and settled the issue of interruption of the limitation period in ongoing tax proceedings, including those brought by the applicant company.

In that regard the Court notes that the provision in question regulated only the issue of the interruption of the limitation period and not that of its possible suspension. Indeed, in the instant case the Court of Appeal found that the limitation period had been suspended under Article 2251 of the Civil Code, as applicable at the material time (see paragraph 51 above), and that it had therefore not expired (see paragraph 21 above). However, the Court of Cassation replaced that ground with a different ground based on the interruption of the limitation period in accordance with section 49 of the Miscellaneous Provisions Act of 9 July 2004 (see paragraph 27 above).

It follows that, in the present case, the application by the Court of Cassation of section 49 of the Miscellaneous Provisions Act of 9 July 2004 requires the Grand Chamber to continue its reasoning on the basis of the sole premise that, had the case-law commencing with the Court of Cassation judgment of 10 October 2002 been applied to the applicant company's case, the tax debt in question, comprising the taxes payable by the applicant company and the corresponding surcharge, would have had to be considered time-barred.

Moreover, it is very clear from the parliamentary drafting history and from the Court of Cassation judgment in the applicant company's case that the legislature's aim had been ‘to protect the rights of the Treasury in the context of pending proceedings in which tax debts disputed on the basis of the position taken in the [Court of Cassation ruling of 10 October 2002] … had already become … time-barred’ (see paragraph 27 above). In its judgment of 7 December 2005 the Constitutional Court, for its part, noted that the 2002 and 2003 Court of Cassation judgments in issue had deprived of effect, retrospectively, the means of interrupting the limitation period that had been commonly used in relation to income tax. In the absence of any provision allowing an application to be made to the Court of Cassation to limit in time the effects of the positions of principle adopted in its judgments, the Constitutional Court explained that the legislature's aim in enacting a retrospective provision had been to counteract the retrospective effect of the case-law established by those judgments (see points B.19.7 and B.19.8 of the Constitutional Court's reasoning, set out at paragraph 47 above).

The Court must therefore ascertain whether, in the circumstances of the present case, the legislative intervention in question was based on compelling grounds of the general interest.

The Court reiterates that only compelling grounds of the general interest can justify interference by the legislature with the administration of justice designed to influence the judicial determination of a dispute (see paragraphs 92–94 above).

With regard, firstly, to the protection of the Treasury's rights, relied on by the Government, the Court has ruled repeatedly that the State's financial interests alone do not, in principle, justify the retrospective application of legislation (see, for instance, Zielinski and Pradal and Gonzalez and Others, cited above, § 59; Scordino, cited above, § 132; Lilly France v. France (no. 2), no. 20429/07, § 51, 25 November 2010; and Maggio and Others, cited above, § 47). Nor did the Government argue that the impact of the impugned case-law of the Court of Cassation would be so great as to threaten the financial stability of the State (compare Cabourdin v. France, no. 60796/00, § 37, 11 April 2006, and Arnolin and Others v. France, nos. 20127/03 and 24 others, § 76, 9 January 2007). On the contrary, it transpires from the parliamentary drafting history that the Minister of Justice stated that the limitation period had expired on the basis of the relevant case-law of the Court of Cassation only in ‘a relatively small number of cases’ (see paragraph 43 above).

Secondly, as regards efforts to combat large-scale tax fraud, another objective advanced by the Government, the Court considers that this constitutes a relevant general-interest ground (see, mutatis mutandis, with reference to combating tax fraud as a legitimate aim in the public interest, in the context of a case examined by the Court under Article 1 of Protocol No. 1, Hentrich v. France, 22 September 1994, § 39, Series A no. 296-A, and, to similar effect, S.C. Service Benz Com S.R.L. v. Romania, no. 58045/11, §§ 32–33, 4 July 2017). That remains true even though the Government did not allege that the present case concerned large-scale tax fraud and there is nothing in the case file to suggest that this was the case (see, in this connection, paragraphs 11 and 18 above). By their nature, legislative initiatives regulate situations in general and abstract terms, such that the reasons that motivated the legislature do not lose their legitimacy merely because they may not be relevant in respect of each of the persons potentially affected.

Furthermore, the Court also regards as relevant the objective referred to by the Government of not creating arbitrary discrimination between those taxpayers who had waived of their own accord the part of the limitation period that had elapsed by paying their tax debt, and those who had not done so (see, in this connection, point B.19.5 of the reasoning of the Constitutional Court judgment cited at paragraph 47 above).

Lastly, the Government maintained that the enactment of section 49 of the Miscellaneous Provisions Act of 9 July 2004 had been necessary to correct the Court of Cassation's case-law and thus ensure legal certainty.

The Court has indeed accepted that, in exceptional circumstances, retrospective legislation may be justified, especially in order to interpret or clarify an older legislative provision (see, for example, Hôpital local Saint-Pierre d'Oléron and Others v. France, nos. 18096/12 and 20 others, 8 November 2018), to fill a legal vacuum (see, for instance, OGIS-Institut Stanislas, OGEC Saint-Pie X and Blanche de Castille and Others v. France, nos. 42219/98 and 54563/00, 27 May 2004), or to offset the effects of a new line of case-law (see, for instance, Building Societies, cited above, in which the Court accepted the enactment of legislation with retrospective effect aimed at limiting the effects of a House of Lords ruling that had highlighted a defect in the legislation, which the legislature sought to remedy).

The Court will assess the compelling nature of the relevant grounds referred to above as a whole and in the light of the following elements: whether or not the line of case-law overturned by the legislative intervention complained of had been settled (see paragraphs 109–112 below); the manner and timing of the enactment of the legislation (see paragraphs 113–114 below); the foreseeability of the legislature's intervention (see paragraphs 115–119 below); and the scope of the legislation and its effects (see paragraphs 120–122 below).

The Court notes at the outset that prior to the Court of Cassation judgment of 10 October 2002, the administrative practice that was followed consisted in issuing the taxpayers concerned with a ‘demand for payment interrupting the limitation period’ (see paragraph 38 above). That practice was subsequently clarified in two circulars issued by the tax authorities in 1994 and 1996 (ibid.).

The parties disagreed as to whether there had been a settled line of domestic case-law concerning the interruption of the limitation period by such demands. It is not the Court's task to interpret domestic law or the way in which the domestic courts' case-law has developed in this regard. It suffices for the Court to note that it is clear from the Constitutional Court's judgment that the limitation period in respect of disputed tax debts had always been interrupted by the serving of a demand for payment and that the validity of such demands had always been recognised until the Court of Cassation judgments of 10 October 2002 and 21 February 2003. While there was some controversy as to the nature of the demand for payment, neither the provisions of the Judicial Code nor any judgment of the Court of Cassation ruled out the validity of a demand for payment as an act interrupting the limitation period. On the contrary, some decisions of the lower courts found demands for payment to interrupt the limitation period irrespective of their validity as enforcement measures (see point B.19.1. of the Constitutional Court's reasoning, cited in paragraph 47 above). This is also clear from the decisions of the lower courts provided by the parties.

Thus, the parties did not dispute that in its judgment of 10 October 2002 the Court of Cassation had ruled for the first time on the specific issue whether the demand for payment interrupted the limitation period in a valid manner where there was no amount indisputably due. The Court of Cassation judgment of 28 October 1993 to which the applicant company referred had not ruled on the validity of such demands for payment (see paragraph 84 above). Hence, the judgment of 10 October 2002 may have been in line with the role of a supreme court to resolve possible contradictions or uncertainties resulting from judgments containing divergent interpretations (see Lupeni Greek Catholic Parish and Others v. Romania [GC], no. 76943/11, § 123, 29 November 2016, and the case-law cited therein).

Nevertheless, the Court of Cassation's interpretation did not correspond to the administrative practice followed previously and therefore had a significant impact on cases, such as the one in issue here, in which the tax assessment had been disputed by the taxpayer in the competent courts. As pointed out by the Constitutional Court in point B.19.8. of its reasoning — see paragraph 47 above), unlike other supreme courts the Belgian Court of Cassation is not empowered to limit the temporal effects of its judgments by ruling exclusively with effect for the future; this was one of the reasons for enacting the legislation with retrospective effect (compare Petko Petkov v. Bulgaria, no. 2834/06, 19 February 2013, in which the supreme court had the power — of which it did not avail itself — not to apply a novel interpretation of a legislative provision to pending cases). Thus, it was because of the retrospective effect of the Court of Cassation judgment of 10 October 2002 on all pending proceedings concerning these matters that the legislature felt compelled to act.

In that connection the Court attaches importance to the fact that, shortly after the delivery of the Court of Cassation judgment of 10 October 2002, the legislature clearly signalled its intention not to allow the effects of that judgment to continue over time. Accordingly, it enacted, within a relatively short period for a parliament, first the Miscellaneous Provisions Act of 22 December 2003 (see paragraphs 41–42 above) and then, just over a year and a half after the Court of Cassation ruling in issue, the Miscellaneous Provisions Act of 9 July 2004 (see paragraph 45 above).

The Court is mindful of the fact that in taking this action the legislature expressly departed from the Court of Cassation's interpretation of the former Article 2244 of the Civil Code. Nevertheless, the judgment of 10 October 2002 and the subsequent rulings along similar lines could not have had binding force for the legislature. Indeed, in a State governed by the rule of law, the legislature may amend legislation in order to correct an interpretation of the law given by the judiciary, subject however to compliance with the legal rules and principles which are binding even on the legislature, including those set out above (see paragraphs 92–94) and elaborated upon in the paragraphs below.

As regards the principle of legal certainty invoked by both the applicant company and the Government in support of their opposing arguments (see paragraphs 82 and 88 above respectively), the Court reiterates that this principle, which is inherent in all the Articles of the Convention, manifests itself in different forms and contexts, such as requiring the law to be clearly defined and foreseeable in its application, or requiring that where the courts have finally determined an issue, their ruling should not be called into question (see Guðmundur Andri Ástráðsson v. Iceland [GC], no. 26374/18, § 238, 1 December 2020, and the case-law cited therein). The principle that the law, and in particular the criminal law, does not have retrospective effect is likewise intended to ensure legal certainty.

In this context it should be reiterated that limitation periods serve several important purposes, namely to ensure legal certainty by setting a time-limit on bringing judicial proceedings, protect potential defendants from stale claims which might be difficult to counter and prevent the injustice that might arise if courts were required to decide upon events which took place in the distant past on the basis of evidence which might have become unreliable and incomplete because of the passage of time (see Oleksandr Volkov v. Ukraine, no. 21722/11, § 137, ECHR 2013, and the Advisory opinion on the applicability of statutes of limitation to prosecution, conviction and punishment in respect of an offence constituting, in substance, an act of torture [GC], request no. P16-2021-001, Armenian Court of Cassation, § 72, 26 April 2022 ( ‘Advisory opinion P16-2021-001’)).

However, it cannot be said in the present case that legal certainty, and hence the protection of litigants' legitimate trust as relied on by the parties, was undermined by the legislature's intervention (compare Pressos Compania Naviera S.A. and Others v. Belgium, 20 November 1995, Series A no. 332, and the case-law of the Court of Justice of the European Union cited at paragraph 52 above). On the contrary, the legislature sought, in view of the unexpected development in the case-law of the Court of Cassation, to restore legal certainty by re-establishing the previous administrative practice, which had been followed at the time the applicant company brought proceedings in the domestic courts. This was a settled practice which had apparently not been challenged until shortly before the Court of Cassation judgment of 28 October 1993 (see paragraphs 38 and 47 above, citing point B.19.1 of the Constitutional Court judgment). Moreover, the examples provided by the parties appear to show that despite being challenged this practice continued to be upheld by most of the lower courts.

Thus, the applicant company could not have expected — or hoped — that its tax debt and the corresponding tax surcharge would be declared time-barred when it commenced proceedings on 14 December 2000. On the contrary, the applicant company did not raise the issue of the limitation period until the proceedings before the Court of Appeal, after the Court of Cassation judgment of 10 October 2002 (see paragraph 19 above).

Hence, it would appear that the applicant company hoped rather than expected to benefit from the ‘windfall’ resulting from the development in the Court of Cassation's case-law following the judgment of 10 October 2002 (see point B.19.11 of the Constitutional Court's reasoning, cited in paragraph 47 above). While the applicant company cannot be criticised for taking advantage, in the process of exhausting the remedies available to it under domestic law, of a new line of case-law that was favourable to it (compare Legrand v. France, no. 23228/08, §§ 36–40, 26 May 2011), the intervention by the legislature in the form of the Miscellaneous Provisions Act of 9 July 2004 cannot be said to have put an end to a legitimate expectation on the applicant company's part that had existed when it commenced proceedings.

As regards the effects of the impugned legislation, the Court notes that in the present case the legislature's intervention made it possible to continue with a ‘prosecution’ notwithstanding the fact that, following the Court of Cassation case-law originating in the judgment of 10 October 2002, the limitation period could have been considered to have expired (see paragraph 99 above). Such intervention undoubtedly requires stronger justification than in the case of the extension of a limitation period that is still running (compare, from the standpoint of Article 7 of the Convention, Coëme and Others v. Belgium, nos. 32492/96 and 4 others, § 149, ECHR 2000-VII; Previti v. Italy (dec.), no. 1845/08, § 80, 12 February 2013; and Borcea v. Romania (dec.), no. 55959/14, § 64, 22 September 2015). In this regard, and in a different context, the Court held recently that the revival of criminal responsibility after the expiry of a limitation period was incompatible with the overarching principles of legality and foreseeability enshrined in Article 7 of the Convention (see Advisory opinion P16-2021-001, § 77; see also, for a case in which the applicants had been convicted of an offence whose prosecution had become time-barred, Antia and Khupenia v. Georgia, no. 7523/10, 18 June 2020).

Nevertheless, the present case is to be distinguished from the situation described in Advisory opinion P16-2021-001. While the limitation period had not been interrupted and could therefore have been considered to have expired following the Court of Cassation ruling of 10 October 2002, that fact had not yet been established by a judicial decision, still less one with res judicata effect. Furthermore, unlike in Antia and Khupenia (cited above), the limitation period had not expired either when the tax surcharge was imposed on the applicant company in the context of the supplementary tax assessment, or when the applicant company challenged it in the Court of First Instance. It was only during the Court of Appeal proceedings, and especially as the result of an unexpected development in the case-law of the Court of Cassation, that the applicant company alleged that the limitation period had not been interrupted in a valid manner and that it had therefore expired (see paragraphs 118–119 above).

Lastly, the Court observes that the present case concerns Article 6 of the Convention and not Article 7, and that, as tax surcharges fall primarily within the sphere of tax law and differ from the hard core of criminal law, the guarantees of Article 6 will not necessarily apply with their full stringency (see paragraph 76 above).

Having regard to the specific circumstances of the present case, the Court finds that in seeking to combat large-scale tax fraud, avoid arbitrary discrimination between taxpayers and offset the effects of the Court of Cassation judgment of 10 October 2002 in order to restore legal certainty by re-establishing the settled administrative practice, reflected furthermore in the predominant case-law of the lower courts in the matter, the foreseeable intervention by the legislature was justified on compelling grounds of the general interest.

Accordingly, there has been no violation of Article 6 § 1 of the Convention on this account.

In the applicant company's view, the criteria for the substitution of grounds had not been met and the Court of Cassation could not validly address the issue of the interruption of the limitation period. In dismissing its appeal on points of law by applying an unforeseeable, artificial and unlawful barrier, the Court of Cassation had made it impossible for the applicant company to assert its complaints, and in particular to submit arguments in relation to the key issue determined by the Court of Cassation of its own motion, concerning the compatibility of section 49 of the Miscellaneous Provisions Act of 9 July 2004 with Article 6 § 1 of the Convention. The applicant company therefore alleged that it had been deprived of access to a court.

The applicant company further alleged a breach of the principle of equality of arms and the adversarial principle, as the ground of appeal raised by it concerning the Court of Appeal's application of Article 2251 of the Civil Code had not been examined by the Court of Cassation. It added that it had not received the advocate-general's written submissions until 5 March 2009, just a few days before the hearing of 13 March 2009, giving it very little time to respond to those submissions. In the applicant company's view, it would have been pointless and impossible, in that space of time, to present serious substantive arguments on a matter as complex as the effects of section 49 of the Miscellaneous Provisions Act of 9 July 2004. It had therefore concentrated in its reply on the procedural aspects, arguing that the Court of Cassation did not have jurisdiction to examine this issue, which fell within the discretion of the courts below, to which the case would be remitted if the contested judgment were quashed.

In the Government's view, the substitution of grounds by the Court of Cassation was not open to criticism. Firstly, there was nothing to suggest that the Court of Cassation had breached the procedural rules in force in Belgium regarding the circumstances in which the substitution of grounds was permitted. This was especially so given that in the present case the substitution of grounds by the Court of Cassation had not entailed any change to the Court of Appeal's finding that the limitation period had not expired.

Secondly, with regard to the right to adversarial proceedings, the Government asserted that the substitution of grounds had taken place after the applicant company had been given an opportunity to make known any evidence needed for its claims to succeed, and to have knowledge of and comment on all the evidence adduced or observations filed, in accordance with the Court's case-law. They added that the issue of the applicability of section 49 of the Miscellaneous Provisions Act of 9 July 2004 had constituted the subject matter of the State's appeal on points of law, that the advocategeneral at the Court of Cassation had made written submissions which had been sent to the applicant company and that, in its memorandum under Article 1107 of the Judicial Code, the applicant company had not referred to any difficulty regarding the length of time it had been given to reply to the advocate-general's submissions. Furthermore, under the third paragraph of Article 1107 of the Judicial Code, it had been open to the applicant company to request additional time in order to submit a memorandum in reply to the advocate-general's submissions.

Lastly, with regard to the right of access to a court, the Government did not dispute that the substitution of grounds constituted a limitation of that right. However, they maintained that this was not open to criticism since it pursued a legitimate aim — that of procedural economy and hence the proper administration of justice — and that it was proportionate in that the technique of substitution of grounds was tightly regulated and accompanied by procedural safeguards. Furthermore, in the Government's submission, compliance with Article 6 § 1 of the Convention should be assessed in a less stringent manner in the present case because tax surcharges differed from the hard core of criminal law. Hence, the very essence of the right to a court had not been impaired.

The right to a court enshrined in Article 6 of the Convention, of which the right of access is one aspect (see Golder v. the United Kingdom, 21 February 1975, § 36, Series A no. 18), is not absolute; it may be subject to limitations permitted by implication, particularly regarding the conditions of admissibility of an appeal. However, these limitations must not restrict exercise of the right in such a way or to such an extent that the very essence of the right is impaired. They must pursue a legitimate aim and there must be a reasonable proportionality between the means employed and the aim sought to be achieved (see Guérin v. France, 29 July 1998, § 37, Reports 1998-V; see also, in a civil context, Zubac v. Croatia [GC], no. 40160/12, §§ 76–78, 5 April 2018, and Nicolae Virgiliu Tănase v. Romania [GC], no. 41720/13, §§ 192 and 195, 25 June 2019).

The concept of a fair hearing in Article 6 of the Convention also includes the right to adversarial proceedings, according to which the parties must have the opportunity to make known any evidence needed for their claims to succeed, but also to have knowledge of, and comment on, all evidence adduced or observations filed, with a view to influencing the court's decision (see Lobo Machado v. Portugal, 20 February 1996, § 31, Reports 1996-I, and Vermeulen v. Belgium, 20 February 1996, § 33, Reports 1996-I).

The court itself must respect the adversarial principle, for example if it dismisses an appeal or decides a case on the basis of a ground which it has raised of its own motion (see Skondrianos v. Greece, nos. 63000/00 and 2 others, §§ 29–30, 18 December 2003; Clinique des Acacias and Others v. France, nos. 65399/01 and 3 others, § 38, 13 October 2005; Čepek v. the Czech Republic, no. 9815/10, § 45, 5 September 2013; Les Authentiks and Supras Auteuil 91 v. France, nos. 4696/11 and 4703/11, § 50, 27 October 2016; and Rivera Vazquez and Calleja Delsordo v. Switzerland, no. 65048/13, § 41, 22 January 2019). The decisive factor is therefore whether one of the parties was ‘taken by surprise’ by the fact that the court based its decision on a ground raised of its own motion (see Villnow v. Belgium (dec.), no. 16938/05, 29 January 2008; Clinique des Acacias and Others, cited above, § 43; Čepek, cited above, § 48; Les Authentiks and Supras Auteuil 91, cited above, § 50; and Rivera Vazquez and Calleja Delsordo, cited above, § 41).

Courts must exercise special diligence where the dispute takes an unexpected turn, especially where it concerns a matter that is left to the discretion of the court concerned. The principle of adversarial proceedings requires that courts should not base their decisions on elements of fact or law which have not been discussed during the proceedings and which give the dispute an outcome which not even a diligent party would have been able to anticipate (see Čepek, cited above, § 48; Les Authentiks and Supras Auteuil 91, cited above, § 50; and Rivera Vazquez and Calleja Delsordo, cited above, § 41).

The question to be addressed is whether the substitution of grounds by the Court of Cassation (see paragraph 27 above) was in breach of the right of access to a court, the principle of equality of arms and the adversarial principle.

In that connection the Court observes that the substitution of grounds is a judicial construct by means of which the Court of Cassation examines the ground of appeal submitted to it, compares it with the operative provisions of the allegedly unlawful decision under challenge, and replaces the contested grounds on which the lower court based those provisions with new grounds apt to demonstrate the lawfulness of the decision.

First of all, in the Court's view, no issue arises as regards the principle of equality of arms relied on by the applicant company. This principle requires each party to the proceedings to be given a reasonable opportunity to present his case under conditions that do not place him at a substantial disadvantage vis-à-vis his opponent (see, among other authorities, Nideröst-Huber v. Switzerland, 18 February 1997, § 23, Reports 1997-I, and Regner v. the Czech Republic [GC], no. 35289/11, § 146, 19 September 2017). There is nothing in the case file or in the parties' submissions to indicate that the applicant company and the Belgian State were placed in different situations with regard to the advocate-general's written submissions or the substitution of grounds by the Court of Cassation (see, to similar effect, Clinique des Acacias and Others, cited above, § 39). In fact, these procedural steps were performed in the same way in respect of both parties. Hence, the principle of equality of arms is not at stake in the present case.

Next, as regards the adversarial principle, the Chamber, in its judgment in the present case, took into account the following considerations:

The Grand Chamber agrees with this reasoning and sees nothing in the parties' submissions to the Grand Chamber that would cause it to depart from it. The Court therefore considers that the substitution of grounds by the Court of Cassation was not in breach of the right to adversarial proceedings.

Lastly, as regards the right of access to a court, the Court accepts that, as asserted by the Government, the possible limitation of that right on account of the substitution of grounds pursued a legitimate aim, namely that of procedural economy and hence the proper administration of justice. It also considers that the use of this device did not impair the very essence of the right in question in the present case in that, as stated above (see paragraph 140), the applicant company was not deprived of the right to a hearing by a court since it had an opportunity to put forward its arguments regarding the ground raised by the Court of Cassation of its own motion.

Accordingly, there has been no violation of Article 6 § 1 of the Convention on this account.

According to the applicant company, the starting-point for the purposes of the reasonable-time requirement was the notice of rectification of its tax return for the 1993 fiscal year, dated 5 October 1995. It submitted that the administrative phase alone, before the regional director, had lasted for four years and seven months, well in excess of the ‘normal’ length of time allowed for giving an administrative decision. In the applicant company's submission, there were no circumstances capable of justifying such a delay, for which the State was entirely responsible. The subsequent judicial phase had lasted for almost nine years, across three levels of jurisdiction; this could not be regarded as reasonable either.

The applicant company submitted that, contrary to the Government's assertion (see paragraph 148 below), it had had to await the administrative decision before being allowed to start judicial proceedings. Under section 11 of the Act of 23 March 1999 on the organisation of the courts in tax matters, the possibility of bringing an action six months after the date of receipt of the administrative objection in the absence of a decision on the latter did not apply where, as in the instant case, the objection related to taxes payable in respect of the 1998 fiscal year or earlier (see paragraph 31 above).

The Government accepted that the period to be taken into consideration had begun on 5 October 1995 and ended on 13 March 2009. However, in their view, the period of one year and nine months between 6 April 1999 and 14 December 2000 should be deducted from this, as the applicant company could have applied to the domestic courts during that time under the Act of 23 March 1999 on the organisation of the courts in tax matters, without awaiting the outcome of the administrative proceedings, but had omitted to do so. Therefore, the period to be taken into consideration was eleven years and nine months. The Government considered this to be reasonable in view of the complexity of the case and what was at stake in the dispute. They added that compliance with Article 6 § 1 of the Convention should be assessed in a less stringent manner since tax surcharges differed from the hard core of criminal law.

In particular, the Government argued that the applicant company had submitted a large number of documents at the appeal stage, including a third set of additional observations and a summary of its position, running to fifty-four pages; in their view, this demonstrated the complexity of the dispute and the fact that the company was partly responsible for the length of time taken to prepare the case. The Court of Appeal judgment, which contained a detailed analysis of the legal theory and case-law on the interruption of limitation periods by demands for payment, also testified to the complexity of the case.

In criminal matters, the ‘reasonable time’ referred to in Article 6 § 1 begins to run as soon as a person is ‘charged’. A ‘criminal charge’ exists from the moment that an individual is officially notified by the competent authority of an allegation that he has committed a criminal offence, or from the point at which his situation has been substantially affected by actions taken by the authorities as a result of a suspicion against him (see Deweer v. Belgium, 27 February 1980, § 46, Series A no. 35; Eckle v. Germany, 15 July 1982, § 73, Series A no. 51; and Simeonovi v. Bulgaria [GC], no. 21980/04, § 110, 12 May 2017). This period covers the whole of the proceedings in question, including appeal proceedings (see König v. Germany, 28 June 1978, § 98, Series A no. 27).

The reasonableness of the length of proceedings is to be assessed in the light of the particular circumstances of the case, regard being had to the criteria laid down in the Court's case-law, in particular the complexity of the case, the applicant's conduct and the conduct of the competent authorities (see, among many other authorities, Pélissier and Sassi v. France [GC], no. 25444/94, § 67, ECHR 1999-II).

Only delays attributable to the State may justify a finding of failure to comply with the reasonable-time requirement (see Idalov v. Russia [GC], no. 5826/03, § 186, 22 May 2012).

It is not in dispute between the parties that the starting-point for calculating the ‘reasonable time’ is 5 October 1995, the date on which the applicant company was informed of the tax authorities' intention to rectify its tax return and impose a surcharge (see, to similar effect, Janosevic, cited above, § 92). The proceedings ended with the Court of Cassation judgment of 13 March 2009.

Contrary to the Government's assertion (see paragraph 148 above), it is clear from section 11 of the Act of 23 March 1999 on the organisation of the courts in tax matters that it was not open to the applicant company to apply to the Court of First Instance without awaiting the decision on its administrative objection (see paragraph 31 above). Hence, the period between 6 April 1999 and 14 December 2000 should not be deducted from the period to be taken into consideration.

The proceedings brought by the applicant company therefore lasted for over thirteen years and six months: the administrative phase lasted for four years and seven months at one level of decision-making, while the subsequent judicial phase lasted for almost nine years across three levels of jurisdiction.

The Government cited the complexity of the case and the importance of what was at stake in the dispute as explanations for the length of the proceedings. In particular, they criticised the conduct of the applicant company in the Court of Appeal proceedings. However, they offered no explanation for the length of the administrative proceedings (four years and seven months) or for the fact that over three years and three months had elapsed between the application to the ordinary courts and the first-instance judgment, despite the fact that the issue of the possible time-barring of the tax debt and the corresponding surcharge was not raised by the applicant company until the appeal stage. Thus, the complexity surrounding this issue did not concern either the administrative phase or the proceedings before the Court of First Instance. The Government offered no justification for their particularly lengthy nature, and indeed acknowledged that there had been a backlog of income-tax cases (see paragraph 90 above).

The Court accepts that the complexity of the present tax-related case may justify lengthier periods than in other types of cases, especially those which call for particular expedition owing to their subject matter. This is particularly so given that the State has a greater interest than the individual in prompt recovery of the tax. Nevertheless, even assuming that the reasonable-time guarantee should not apply with its full stringency (see paragraph 76 above), the Court considers that, taken overall and in the circumstances of the case, the proceedings brought by the applicant company exceeded a reasonable time.

There has therefore been a violation of Article 6 § 1 of the Convention on that account.