In the current judgment I. ÚS 2293/23, the Constitutional Court assessed whether the Supreme Administrative Court (“SAC”) acted in accordance with the Charter of Fundamental Rights and Freedoms when it referred the complainant, who was seeking interest on wrongly collected customs duties that were returned to him only after several years, to claim damages under the Act on State Responsibility for Damage. In the judgment, the Constitutional Court concluded that the reasoning of the SAC was not constitutionally compliant, thereby violating the complainant's fundamental right to judicial protection in conjunction with fundamental rights to property protection and the right to have the matter resolved without unnecessary delays.
Facts of the case
The complainant was subsequently assessed import duty and penalties by the customs office. The reason for the assessment was the finding that the complainant had classified the imported goods under the wrong item in the combined nomenclature with a lower customs rate. The complainant paid the assessed duty. The additional payment assessments from 2014 were later changed or some were canceled in 2018 and 2020, and the wrongly collected customs duties were returned to the complainant.
The complainant then sought payment of interest on the wrongly assessed duty from the customs office. As the administrative authorities did not comply, he turned to the courts. The Regional Court did not meet the complainant’s request, reasoning that interest cannot be claimed when erroneously assessed duty is returned under the Tax Code. The SAC dismissed the complainant’s cassation complaint, asserting that the Tax Code is not a national regulation that would impose an obligation on the Czech Republic to pay interest on returned customs duties beyond the EU Customs Code. If the complainant suffered damage due to unlawful actions of the customs office, the SAC referred him to file a civil lawsuit under the Act on State Responsibility for Damage. The complainant subsequently filed a constitutional complaint against the SAC judgment.
Assessment by the Constitutional Court
The Constitutional Court first determined that EU law establishes a general entitlement for individuals to receive interest for the period during which they were unjustly prevented from managing monetary amounts due to a violation of EU law. The obligation to pay interest aims to ensure individuals receive adequate compensation for losses incurred due to the inability to dispose of amounts (own property) unjustly collected in violation of EU law. The EU Customs Code provides an exception to the general rule only in situations where customs authorities return wrongly collected duties within three months. However, this exception did not apply in the complainant’s case. Therefore, the complainant had a legitimate expectation that his claim for interest on wrongly collected customs duties had arisen in accordance with the case law of the CJEU. The Constitutional Court concluded that the question of the existence of a right to interest is indisputable as it arises from EU law regardless of national law.
The Constitutional Court then addressed the issue of how the entitlement to interest should be granted and paid. If EU law does not contain compensation rules, it is up to the member state to establish its own rules. National rules, however, cannot practically prevent the complainant from claiming his entitlement. Two methods were available to the complainant to enforce his claim for interest: (a) requesting interest under the Tax Code or (b) filing for damages under the Act on State Responsibility for Damage. According to the Constitutional Court, the SAC did not constitutionally justify why the complainant should enforce his EU entitlement under the Act on State Responsibility for Damage instead of requesting interest under the Tax Code.
According to the Constitutional Court, the SAC should have carefully examined whether the complainant’s obligation to seek interest through proceedings under the Act on State Responsibility for Damage constituted an unreasonable barrier to fulfilling his legitimate expectations. When referring the complainant to the procedure under the Act on State Responsibility for Damage, the SAC should have also considered whether the chosen claim method would be so time-consuming that it would lead to the practical nullification of the complainant’s claim. The SAC should have taken into account existing legal conditions the complainant would have to meet as an applicant for state compensation to enforce his claim. The SAC did not examine whether proving the existence of damage and causality for the complainant would be unreasonably difficult.
Due to the violation of the complainant’s fundamental rights, the Constitutional Court annulled the SAC judgment. Thus, the SAC will reconsider the case and has to consider the findings of the Constitutional Court and evaluate the possible alternatives convincingly. Ultimately, the SAC will decide whether interest on wrongly collected customs duties is granted and paid under the Tax Code. We continue to monitor the case and will keep you informed of its outcome.
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