Insight: “AG Hogan’s Opinion in ECA v Pinxten: on the constitutional role of penalty powers over ECA Members and of their standard of conduct” by Dolores Utrilla
Today, Advocate General (AG) Hogan delivered his Opinion in Court of Auditors v Karel Pinxten (C-130/19), proposing that the Court of Justice, acting as Full Court, rule that a former member of the European Court of Auditors (ECA), Mr Pinxten, acted in serious breach of the obligations arising from his office and that he is deprived of two thirds of his pension rights and connected benefit as of the date of the judgment in the case.
This is the very first case brought before the Court of Justice concerning the alleged misuse of EU funds by one of the (former) ECA Members. In this must-read Opinion, AG Hogan tackles some fundamental questions regarding the standard of conduct required from Members of the ECA (and, in general, of EU institutions) and the scope of the Court of Justice’s penalty powers in this regard.
1. Background of the case
The legal intricacies of ECA v Pinxten are explained in this Insight. In essence, this pending case concerns an action brought by the ECA against one of its former members on the basis that he allegedly failed to meet his obligations under Articles 285 and 286 TFEU (and the rules adopted in application thereof), and in which the Court of Justice has been called upon to impose a penalty on Mr Pinxten pursuant to Article 286(6) TFEU. The Plenary of the Court of Justice held a hearing on the case on 29 September 2020.
To date, the Court of Justice has had only one occasion to rule on the legal basis and the scope of its own powers to impose penalties on those holding high office within the EU institutions, in the well-known case Commission v Cresson (C-432/04). The Pinxten case represents an opportunity to complement this case law, insofar as it focuses primarily on the problem of how to define the duties of the members of the EU institutions for the purposes of imposing sanctions in the event of misconduct. Indeed, the key legal problem that the Court of Justice is called on to solve in Pinxten is whether the vague provisions in Articles 285 and 286 TFEU, together with the duties enshrined in the ECA’s 2010 Rules of Procedure, are enough to establish that a (former) ECA Member violated the terms of his office, and whether the new standards approved by ECA at a later stage can in any way be of (retroactive) relevance to shape the boundaries of such terms.
2. The basic interpretative yardsticks
In his Opinion today, AG Hogan starts by stressing that ‘at a time when the legitimacy of the European Union, its institutions and the people who serve them is, at the very least, being called into question, the Court’s decision on this matter will doubtless be regarded as one of considerable importance’. Based on this, the Opinion suggests that the case be solved on the basis of two crucial interpretative elements, namely: (i) the intrinsic nature of the Article 286(6) TFEU procedure; and (ii) the scope of the ECA’s mission and of the duties of its Members.
According to AG Hogan, the procedure prescribed in Article 286(6) TFEU must be understood as being of extraordinary importance because it is designed to ensure that the EU’s legal order is based on democracy and on the rule of law. The Opinion suggests that this procedure is not disciplinary but constitutional in nature, since ‘the very characteristic of “disciplinary justice” is precisely that it generally amounts to a form of private contractually based sanction rather than the public justice discharged by judicial office-holders’. To support this conclusion, AG Hogan stresses the fact that this procedure is the only one in which the Statute of the Court of Justice requires the case to be judged by the full Court – along with Article 228(2) TFEU for cases involving the European Ombudsman and Articles 245 and 247 TFEU for cases involving Members of the Commission.
As for the duties of ECA Members, the Opinion proposes that they are interpreted in the light of the role of this institution, defined as the ‘financial conscience’ of the EU. According to AG Hogan, the key to the ECA’s legitimacy lies in ‘its independence and the importance of its role in fostering good government and promoting public confidence in the manner in which the Union’s taxation and other revenues are properly applied in a cost effective manner’. Recalling the judgment in Commission v Cresson, the Opinion states that the requirement to conduct in a manner which is beyond reproach applies to ECA Members, who therefore must behave with independence, integrity and discretion, but also with the highest standard of impartiality and disinterestedness, including full responsibility and a certain degree of transparency in how they spend public funds.
3. Procedural issues
An extensive part of the AG’s Opinion deals with the pleas raised by Mr Pinxten regarding procedural matters and the alleged infringement of his rights of defence in the course of the proceedings. The Opinion suggests that all these pleas are rejected, based fundamentally on the constitutional – and not disciplinary – nature of the procedure provided for in Article 286(6) TFEU. In this regard, AG Hogan stresses inter alia that it is not necessary to await the outcome of the national criminal proceedings against Mr Pinxten currently pending before the national courts of Luxembourg, because the contrary ‘would undermine the specific aim pursued by Article 286(6) TFEU as a key part of the separation of powers established by the Treaty’.
The Opinion further rejects Mr Pinxten’s claim that the ECA infringed his right to a hearing within a reasonable time by calling into question the lawfulness of the requests he had made since 2006 even though this institution had had all the relevant information at its disposal to ascertain whether those requests were legitimate and, in any case, was able to seek clarification if required. On this point, the Advocate General notes: (i) the complexity of the procedure, made of several steps; (ii) the fact that most of the facts under examination occurred after October 2013; and (iii) the seriousness of the infringements likely to be assessed under Article 286(6) TFEU.
4. The existence of misconduct
Following a review of the essentially uncontested evidence in the file, AG Hogan concludes that ‘it seems difficult to avoid the conclusion that Mr Pinxten abused the system by presenting certain activities in an inadequate manner in order to benefit from the reimbursement’ allowed by the applicable legal provisions, among other irregularities. The Opinion notes that ample evidence misconduct is provided, inter alia, by: (i) Mr Pinxten’s stays in Crans Montana (Switzerland) and in Cuba and his participation in certain hunting events at Chambord (France) and Ciergnon (Belgium); (ii) invoices demonstrating ‘a manifest abuse in the use of the additional fuel cards’, including its passing to unauthorised third parties; (iii) the fact that Mr Pinxten acted as a manager of a commercial company since 2016, when he bought a property in Burgundy consisting of a house and a vineyard; and (iv) Mr Pinxten’s engagement in intense political activity within a political party while he was in office at the ECA, something ‘totally inconsistent with membership’ of the institution and which ‘simply cannot be excused’.
The Opinion stresses that such conduct constitute a circumvention of the applicable rules, namely, at the very least, Article 7 of Regulation 2290/77, Article 12 of Directive 2008/118, the Luxembourg regulation of 7 February 2013 on the allowances and exemptions granted to diplomatic missions, Article 4(1) of the Code of Conduct for ECA Members and Points 2.2., 3.2. and 3.3. of the Ethical Guidelines of the ECA. As a whole, these facts are ‘symptomatic of a basic attitude indicating that Mr Pinxten was willing, whilst in office as Member of the ECA, to use that office to extend his benefits at the expense of the Union budget’ (paragraph 187). The Opinion notes that the file establishes repeated and characterised misuse of the advantages and privileges linked to the functions of ECA Members.
Unsurprisingly, the Opinion further stresses that these breaches are ‘all the more unacceptable in the light of the role of the ECA’: ‘one might ask how credit can be given to an audit of the ECA if its author him or herself does not respect the rules in his or her use of public funds’ (paragraph 190).
The AG further rejects Mr Pinxten’s claim that the applicable rules were unclear and that he complied with the internal rules of the ECA as they were applicable at the time. On this point, the Opinion states that the authorisations provided by the ECA were based on information that was often incomplete or even incorrect, and that the failure to request further information in cases of doubt cannot be blamed on the ECA’s President, because his relationship with the Members of the ECA is not a hierarchical one but rather a relationship between equals, based on good faith and trust.
5. The applicable sanction
The last part of the Opinion focuses on the nature and size of the sanction to be imposed to Mr Pinxten. While the Court of Justice enjoys discretion in this regard, the ECA not having determined the extent of the sanction applied for, the proportionality principle is key as a limit to the Court of Justice’s penalty powers (Article 49(3) of the Charter).
The Opinion suggests that the principle of proportionality is applied following the ECtHR’s case law on the protection of property rights in the particular context of a reduction or a forfeiture of a retirement pension. This case law suggests that account must be taken of, inter alia, the conduct of the person concerned, the nature and the degree of seriousness of the infringement which the penalty seeks to sanction, the duration of the breach of the rules in question, but also the damage caused to the ECA as an institution. Moreover, the fact that the forfeiture of a retirement pension does not leave the person concerned without any means of subsistence, or, more generally, that it does not have a decisive impact on the person’s overall financial situation, can also be a relevant factor so far as the assessment of the proportionality of the sanction is concerned.
Taking into account the seriousness of the breaches, their duration, and the considerable damage to the institutional damage inflicted to the ECA, in the Opinion it is argued that is is necessary and appropriate to impose a severe penalty on Mr Pinxten, depriving him of the right to a significant part of his pension and to other connected benefits. Advocate General Hogan therefore proposes that the Court should deprive Mr Pinxten of two thirds of his pension entitlements.
The Opinion is available here.
Dolores Utrilla is Associate Professor at the University of Castilla-La Mancha and Assistant Editor at EU Law Live.