February 25
2021
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4th February 2021
Human Rights Internal Market Justice & Litigation

Op-Ed: “Consob – The Court of Justice on the right to remain silent in criminal matters (and beyond…)” by Giulia Lasagni

In what could already be considered a landmark case, the Grand Chamber has ruled for the first time on the scope of the privilege against self-incrimination with regard to criminal (punitive) matters in Consob (C-481/19).

Matching the expectations of fundamental rights lawyers, the Court built upon Strasbourg jurisprudence, establishing a high level of protection for one of the most crucial safeguards in punitive proceedings.

 

  1. Specifics of the case

The decision stems from sanction-proceedings before the Italian Financial Market Supervisory Authority (Consob) for insider trading conduct.

The subject matter, formally administrative, had however been addressed in the recent past by several decisions of European and national courts which, in many instances, recognised there was a substantial criminal nature to several of the sanctions Consob was able to impose (fn 1).

On these bases, a preliminary reference was raised by the Italian Constitutional Court, on whether the power to sanction the accused for the refusal to cooperate with the proceeding authority is legitimate.

In the domestic proceedings indeed, the accused – a natural person – repeatedly refused first to show up at the hearing before Consob, and, when finally present, to answer the questions posed by the authority, invoking the right not to incriminate himself. Hence, he was fined not only for having insider trading conduct, but also for his uncooperative behaviour.

The latter penalty was found by the referring court to be critical with regard to several legislative provisions: first, against national constitutional provisions (mainly, Article 24 of the Italian Constitution), which confer a high level of protection to the right to remain silent in criminal proceedings. Secondly, with Articles 47 and 48 of the Charter, which recognise the privilege (as explicitly clarified by Directive 2016/343) and certainly apply to the case by virtue of harmonisation, and what is more relevant here, by Market Abuse Directive 2003/6 and then by Regulation 596/2014. This consideration holds true also with specific regard to the national sanctioning provision at stake (Article 187-quinquiesdecies TUF), which (partially – fn 2) has its roots in Article 14(3) of the Directive (today Article 30(1)(b) of the Regulation). The situation therefore integrated a clear example of doppia pregiudizialità, that is a potential double violation both of domestic constitutional norms and of primary EU legal bases.

If EU market abuse legislation clearly imposes the duty to also sanction the accused for his or her refusal to cooperate with the supervisory authority – a caveat which, as shown hereafter, will play a pivotal role in the solution of the case – the Italian Constitutional Court was before an impasse: declaring the unconstitutionality of the Italian norm providing for such powers would have resulted in Italy breaching the obligation to comply with EU law; not doing so, in violating the Italian constitution.

Lastly, imposing a penalty for the refusal to cooperate appeared problematic also against the jurisprudence of the European Court of Human Rights. Imposing or threatening to impose a sanction, at this juncture, is indeed one of the few cases of ‘improper compulsion’ where the Court – otherwise rather lax in protecting the right to silence – usually recognises a violation of Article 6 of the European Convention on Human Rights (ECHR) (Ibrahim and o. v. the United Kingdom, paragraph 267).

 

  1. The scope of the privilege against self-incrimination

Against this background, the decision of the Grand Chamber of the Court of Justice sets at least two milestones in defining the right to remain silent in criminal matters.

Firstly, the Court explicitly affirmed how the privilege against self-incrimination shall apply also in proceedings which may lead to the imposition of administrative sanctions of a criminal nature (paragraph 42). The application of the Engel doctrine (de facto, if not explicitly named) already adopted recently in the three 2018 cases on ne bis in idem (Menci, C‑524/15; Garlsson, C-537/16; Di Puma and Zecca, C-596/16 and C-597/16), finds therefore a further confirmation in the present decision.

This conclusion, however, was not to be entirely taken for granted. In line with the objections raised at the time in A and B v. Norway, there were indeed several instances asking for a limited application of the right to remain silent outside the ‘hard core criminal law’, mostly in name of the efficiency of administrative enforcement (fn 3), but also due to the worrying side effects of ‘pan-penalisation’ phenomena.

Limiting procedural safeguards without a corresponding reduction in sanctioning prerogatives, however, could hardly be seen as a winning solution. In particular, it would just hide, but not solve, the premise that makes the ‘criministrative’ field such an effervescent source of European case law: the tendency to allocate (extensive) punitive powers to non-judicial authorities, before which only few (or limited) defence rights are recognised (fn 4).

Unlike other profiles such as the right to be heard, to a public hearing, or even the ne bis in idem, the possibility to apply a ‘diminished version’ of the nemo tenetur in punitive administrative proceedings (against ‘purely criminal ones’) seems much harder to support, considering that this right lies at the very ‘heart’ of the notion of a fair trial (fn 5).

The conclusion is confirmed also by a passage in the examined decision, where the Court seemed to echo categories developed in the field of competition law, affirming that the privilege covers ‘information on questions of fact’ (paragraph 40).

Eventually, however, the same Grand Chamber ruled out that its finding may be ‘called into question’ by competition case law: In punitive matters, the right to silence shall preclude ‘inter alia, penalties being imposed on such persons for refusing to provide the competent authority […] with answers which might establish’ their liability (paragraph 46).

This is so for essentially two reasons listed by the Court: First, even in antitrust cases undertakings cannot be compelled to provide answers which might involve an admission of an infringement; second, that jurisprudence is referred to legal entities. The level of protection cannot, therefore, ‘apply by analogy when determining the scope of the right to silence of natural persons’ (paragraphs 47-48). A third factor could also be added: competition law is a field in which the Court has always avoided applying the Engel criteria. Despite mounting and reasonable criticism for the underlying reasons (fn 6), the Court of Justice has thus retained some formal arguments to give limited recognition to fair trial rights in that matter.

Quite different is instead the market abuse domain, at stake in the examined decision.

Although parameters such as ‘factual questions’ are still far from having found a satisfactory interpretation (fn 7), the recognition of the privilege against self-incrimination by the Court in the punitive realm should be welcomed not only in light of the equivalence clause of Article 52(3) of the EU Charter, but also for its systemic coherence: The right to remain silent shall be guaranteed to those who are exposed to the risk of substantially criminal penalties, regardless of the formal labelling conferred to such enforcement mechanisms.

The Court of Justice actually went even further down the road, highlighting how the need to respect the right to silence could also stem from the fact that, ‘in accordance with national legislation, the evidence obtained in those proceedings may be used in criminal proceedings against that person’ (paragraph 44). Developing on the most advanced Strasbourg jurisprudence on the matter, the Court therefore embraced the argument that the privilege against self-incrimination shall be complied with also in purely administrative proceedings, when findings of the latter could become evidence in criminal trial.

Lastly, following the approach proposed by the Italian Constitutional Court, the Court of Justice affirmed that the right to silence cannot justify ‘every failure to cooperate with the competent authorities, such as a refusal to appear at a hearing planned by those authorities or delaying tactics designed to postpone it’ (paragraph 41). Nonetheless, the privilege does cover more than direct incriminatory statements by the accused, and also shields from requests of information (oral, but, reasonably, also of documentary nature) which may indirectly or subsequently be used as incriminatory evidence (paragraph 40).

 

  1. Way forward: A Charter-oriented interpretation of EU market abuse legislation 

In light of the above, the Court opted for a relatively safe solution, at least at the EU level (fn 8). Having affirmed that Articles 47 and 48 of the Charter shall be interpreted as recognising the privilege against self-incrimination in the terms previously illustrated, the Court proposed a ‘constitutionally-oriented’ reading of Directive 2003/6 and Regulation 596/2014.

Considering the wording of both provisions at stake ‘open to more than one interpretation’, the Court ruled that ‘preference should be given to the interpretation which renders the provision consistent with primary law’ (paragraphs 50-54).

This conclusion entails a long-awaited substantial application of the Charter in the criminal matter, the significance of which cannot be diminished either by the restating of some recurring element of contrast in the State-EU interaction (fn 9), or by the persistence of the critical elements of the Engel doctrine.

Especially against recent decisions of the CJEU, which gave a narrow application to fair trial rights, or thoroughly ‘forgot’ about the role the Charter can play in the game, the Consob case seems indeed to finally represent a significant step forward in the right direction: That of a Union in which courts of last instance compete in a race to the top, that results in (some uncertainties but also) a higher level of protection for the fundamental rights of all its citizens.

 

Giulia Lasagni, PhD, is Junior Assistant Professor in Criminal Procedure at the University of Bologna. Author of several papers on defence rights, also in light of automated technological development, she published a monograph on the complex recognition of fair trial rights in ‘criministrative’ financial proceedings (Banking Supervision and Criminal Investigation. Comparing the EU and US Experiences, Springer/Giappichelli, 2019). 

 

(fn 1) Cf. CJEU, Garlsson Real Estate and o. (C-537/16), paragraphs 34-35; Di Puma and Zecca (C-596/16 and C-597/16), paragraph 38; ECtHR, Grande Stevens and o. v. Italy, paragraph 101; Italian Supreme Court, Cass., sez. II civile, no. 3831 of 24 January 2018, at 11.3.2.3 ff.; Cass., sez. V penale, no. 45829 of 21 June 2018, at 3.3.2 ff.

(fn 2) Actually, the power to sanction (also) the accused for the lack of cooperation could be found in the Italian legal system even before the implementation of the Market Abuse Directive, namely in the criminal offence of Article 2638 c.c. (as amended by Art. 1(1), Legislative Decree no. 61/2002); on which cf., if you wish, G. Lasagni, Prendendo sul serio il diritto al silenzio. Commento a Corte cost. ord. n. 117 del 10 maggio 2019, in Riv. Trim. Dir. pen. cont., 2, 2020, 135-163.

(fn 3) See, for all, third-party interventions in A and B v. Norway, paragraphs 87-93.

(fn 4) E. Rosenfeld, J. Veil, Sanctions administratives, sanctions pénale, in Pouvoirs, 128 – La pénalisation, 2019, 61-73

(fn 5) Cf., e.g., Ibrahim and o. v. the United Kingdom, paragraph 266; Gäfgen v Germany, paragraph 168; Bykov v Russia, paragraph 92;  Jalloh v Germany, paragraph 100; John Murray v UK, paragraph 45.

(fn 6) Both against the exclusion of legal persons from the privilege, and to the peculiar treatment reserved to competition law, issue raised by legal scholars, former members of the Court (cf. U. Everling, Die Mitgliedstaaten der Europäischen Union unter der Aufsicht von Kommission und Gerichtshof. In: Depenheuer O, Heintzen M, Jestaedt M (eds) Festschrift für Isensee. Müller, Heidelberg, 2007, 773–89; Id., Zur Gerichtsbarkeit der Europäischen Union. In: Ipsen J, Stüer B (eds) Festschrift für Rengeling. Carl Haymanns, Cologne, 2008, 527–31), and the same Commission.

(fn 7) On which see, recently, the clarifying attempt by AG Pikamäe Opinion, paragraphs 92-93.

(fn 8) More problematic issues may emerge once the Italian Constitutional Court will have to apply such principles in a systemic way in the Italian legal order, where questions similar to those addressed in C-481/19 may be observed also with regard to other provisions, also in the field of banking supervision.

(fn 9) In line with AG Pikamäe Opinion and with its own renowned precedents, this choice to interpret in a flexible way EU legislation was not justified by the margin of discretion granted to Member States in asserting higher levels of protection to fundamental rights at the national level, as suggested by the referring Court and, possibly, also by the wording of the European provisions (paragraph 57).

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