Sunday, 1 August 2021

Is the ECJ revisiting the European ‘fifth amendment’? The CJEU rules on the right to silence

 



                                   

Inês Pereira de Sousa, Lecturer and PhD candidate at Porto Faculty of Law, Universidade Católica Portuguesa; Researcher at CEID – Católica Research Centre for the Future of Law; Member of ANESC – Academic Network on the European Social Charter and Social Rights; Member of EUCRIM –European Criminal Law Associations’ Forum - isousa@porto.ucp.pt

 

On 2 February 2021, the Court of Justice had the opportunity to reanalyse the right to remain silent and the right to avoid self-incrimination in a preliminary ruling from the Italian Constitutional Court.

In Case C-481/19,  DB v Commissione Nazionale per le Società e la Borsa (Consob), Consob had imposed (in 2012) on DB, a natural person, financial penalties for two administrative offences of insider trading in 2009, plus another financial penalty for the fact that DB had asked several times for the postponement of his hearing and, when finally heard, had declined to cooperate and to answer the questions of the national authority, an administrative offence which is contained in Article 187 of the Italian Decreto legislativo n. 58 (Legislative Decree No. 58). In addition, Consob also imposed the ancillary penalty of temporary loss of fit and proper person status for a period of 18 months and ordered confiscation of assets of equivalent value to the profit or the means employed to obtain it under Articles 187quater(1) and 187sexies of the such national law.

The Italian law in question, the Decreto Legislative n. 58, consolidates all provisions in the field of financial intermediation and includes the transposition of the Directive 2003/6/EC on insider dealing and market manipulation, which was repealed by Regulation (EU) No 596/2014 on market abuse.

DB brought an appeal against those penalties before the Corte d’appello di Roma (Court of Appeal of Rome), which was dismissed. Faced with this decision, he lodged an appeal before the Corte Suprema di Cassazione (Supreme Court of Cassation), which referred two interlocutory questions of constitutionality to the Corte Costituzionale (Constitutional Court). The Corte Costituzionale then decided to stay the proceedings and to ask the Court of Justice whether Article 14(3) of Directive 2003/6, in so far as it continues to apply ratione temporis, and Article 30(1)(b) of Regulation No 596/2014, in the light of Articles 47 and 48 of the Charter of Fundamental Rights of the European Union (Charter) and the European Court of Human Rights (ECtHR) case-law, should be interpreted as permitting Member States to refrain from penalising individuals who refuse to answer questions by the competent authorities and which might establish their liability for an offence punishable by administrative sanctions of a ‘punitive’ nature.

In fact, Articles 47 and 48 of the Charter enshrine the right to a fair trial and the presumption of innocence, which are also guaranteed in Article 6 of the European Convention of Human Rights (ECHR). Although the European Union has not acceded to the ECHR yet, it should be recalled that Article 6(3) TEU confirms that fundamental rights recognized by the ECHR constitute general principles of EU law, and Article 52(3) of the Charter provides that the rights contained in the Charter which correspond to rights guaranteed by the ECHR are to have the same meaning and scope as those laid down by the ECHR ((the so-called homogeneity clause).

Both the right to remain silent and to avoid self-incrimination, whose ponderation was at the heart of the questions referred for a preliminary ruling in the DB v Consob case, arise from Article 6 (right to a fair trial) ECHR and Articles 47 (right to an effective remedy and to a fair trial) and 48 (presumption of innocence and right of defence) of the Charter.   

Historically, the protection against self-incrimination is linked to human dignity. It was developed as a protection for individuals to avoid torture aimed at extracting a criminal confession, and to prevent the cruelty of being faced with only three options (the ‘trilemma’): (1)  to be sanctioned for refusing to cooperate; (2) to provide the authorities with incriminating information; (3) or to lie and risk prosecution for perjury. However, this privilege is not exclusively for natural persons, nor is it limited to criminal offences.

In fact, such right has been developed thanks to both CJEU and ECtHR case-law. In the Engel and others v Netherlands judgment, the ECtHR extended the scope of this right to administrative decisions which could imply sanctions. According to the ECtHR, the right not to be obliged to produce evidence against oneself includes the right to remain silent and not to answer any question, even factual ones. In other words, the ECtHR has excluded the admissibility of answers obtained from the accused through compulsory questioning during a non-judicial investigation as evidence, including answers to purely factual questions (see, e.g., ECtHR, Funke v France; ECtHR, John Murray v United Kingdom; and ECtHR, Saunders v United Kingdom).

In the EU legal context, one of the areas that involves these administrative decisions is competition law. In this field, the undertakings must cooperate by answering questions and providing documents; yet they cannot be forced to confess their participation in the infringements.

The first significant case in this matter, in the EU, was Orkem (judgment of 18 October 1989, Case C-374/87), in which the ECJ recognized that the duty to provide information related to the subject of the inquiry was not absolute and undertakings could refuse to answer certain questions that could involve the provision of self-incriminating information. In this case, the undertaking was a legal person, and the Court excluded the answers to purely factual questions from the protection against self-incrimination.

In DB v Consob, on the one hand, the ECJ was faced with a right to remain silent by an individual, and, on the other hand, it was necessary to establish the conditions under which such right must be respected in the case of proceedings potentially leading to administrative sanctions of a criminal nature.

 Regarding the fact that the person who did not cooperate with the national authority was an individual, the Italian Government argued that the case-law on the legal person’s right to avoid self-incrimination could be applied by analogy when establishing the scope of the right of natural persons to remain silent in administrative procedures for detecting market abuse. From the Opinion of Advocate-General Pikamäe, delivered on 27 October 2020, it results that the scope of natural persons’ right to remain silent does not seem to have been considered by the Court until that moment. In the judgment, the ECJ considered that it was not possible to apply the Orkem formula by analogy when determining the scope of individuals’ right to silence because that jurisprudence concerns procedures against undertakings and associations of undertakings.

As for the second issue, the jurisprudence has been stating that if the administrative procedure in question is likely to lead to a penalty falling within the ‘criminal sphere’, the full range of guarantees under the criminal head of Article 6 ECHR applies, including the right to silence. CJEU case-law highlights three criteria for verifying a sanction’s criminal nature: the legal classification of the offence under national law; the intrinsic nature of the offence; and the degree of severity of the penalty that the person concerned is likely to incur in (Case C-537/16, Garlsson Real Estate and Others).

In DB v Consob, another important question was presented to the ECJ. Once again, in the Advocate-General’s words, until that moment, neither the Court, nor EU legislature had addressed the question of whether, regarding the case-law of the ECtHR concerning Article 6 ECHR, and Articles 47 and 48 of the Charter, required such right to be recognized in administrative proceedings which could lead to the imposition of ‘punitive’ penalties. Consequently, it was necessary to clarify whether those provisions allowed not sanctioning persons refusing to answer questions which might establish their liability for an offence punishable by criminal penalties, or by administrative penalties of a punitive nature.

The Court addressed the question objectively, recognizing that, even if the penalties imposed on DB were not criminal in nature, 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 to establish that a criminal offence was committed. Accordingly, in judgment DB v Consob, it was established that authorities should respect the privilege against self-incrimination in two different cases: in administrative proceedings that may lead to the imposition of administrative sanctions of a criminal nature; and in administrative proceedings that may not lead to the imposition of sanctions of a criminal nature, if the evidence produced in this proceeding may be used in criminal proceedings against that person in order to establish that a criminal offence was committed.

Finally, the Court concluded that Article 14(3) of Directive 2003/6, and Article 30(1)(b) of Regulation No 596/2014, read in the light of Articles 47 and 48 of the Charter, must be interpreted as allowing Member States not to penalise natural persons who refuse to provide the competent authority with answers capable of establishing either their liability for an offence that is punishable by administrative sanctions of a criminal nature, or their criminal liability.

It is thus clear that the ECJ refused to transfer to individuals its more restrictive position towards legal entities developed in the field of competition law, which leads us to the distinctive treatment of natural and legal persons in what concerns the right to avoid self-incrimination. Furthermore, could the DB v Consob judgment be understood as a broader interpretation of punitive proceedings against legal entities?

Regarding the distinctive treatment, it should be recalled that the extension of fundamental rights to legal persons follows a general criterion based on the nature of the right. For this reason, most arguments of legal scholars in favour of the exclusion of legal persons from the scope of the right to avoid self-incrimination or to justify a different protection in terms of such privilege, are related to its nature as a purely personal privilege, based on human dignity and autonomy. Moreover, Directive 2016/343, on the strengthening of certain aspects of the presumption of innocence and of the right to be present at trial in criminal proceedings, excludes legal persons from its scope (in its Recitals 13 to 15), making it clear that the protection that results from the presumption of innocence is not applicable to legal persons in the same way as it is to natural persons.

Nevertheless, some arguments could justify the extension of this protection to legal persons, such as the close link to the right to a fair trial, the need to limit the Commission and national authorities’ powers of investigation, and to harmonize ECtHR and CJEU’s application of the right to a fair trial.

Undoubtedly, it is necessary to balance the right of defence and the public interest and, while recognizing that human dignity justifies a different treatment of individuals, it can be observed that, in recent years, the application of fundamental rights, ‘whose nature is more individual, to legal persons has expanded. Therefore, the question remains – should legal entities have the right to remain silent against the provision of any evidence that may constitute an admission of guilt?

CJEU case-law has been confirming that the scope of legal persons’ privilege against self-incrimination is restricted to questions that require the provision of self-incriminatory information, and it does not cover answers to questions relating to facts, unless their purpose is to obtain an admission from the undertaking concerned. This position has been confirmed in more recent cases such as Buzzi Unicem v Commission (Case C-267/14 P), HeidelbergCement v. Commission (Case C-247/14 P) and Qualcomm and Qualcomm Europe v Commission (Case C‑466/19 P).

As a matter of fact, this interpretation obliges undertakings to answer purely factual questions and to comply with requests for the production of documents already in existence, and CJEU has already declared that these obligations do not breach the rights of the defence and the right to fair trial (see Case T‑446/05, Amann & Söhne and Cousin Filterie v Commission).

This understanding leads to a (very) slight distinction between factual and non-factual questions. Answers to factual questions can also encompass self-incriminating information, and the characterization of a question as factual or non-factual can be the result of an incorrect assessment on the part of national courts or the CJEU, which clearly happened in many CJEU judgments, such as Buzzi Unicem.

In this particular case, one of the Commission’s questions required the undertakings to comment on the level of its profit margins. Although the answer to that question was equivalent to an infringement admission, the General Court did not censured the Commission’s questionnaire and dismissed the action, arguing that “the applicant was entitled, at a later stage of the administrative procedure or in the course of an appeal against the Commission’s final decision, to put forward an alternative interpretation of its answer to that question” (Case T-297/11, Buzzi Unicem). This justification caused perplexity: the undertakings’ possibility to challenge the self-incriminatory nature of question, if and when the Commission adopted a decision imposing a fine upon it, does not mean that the Court cannot censure the violation of rights. Accordingly, the Advocate-General Wahl considered that the General Court made an incorrect interpretation and breached the undertaking’s privilege against self-incrimination. However, the ECJ did not address the incorrect classification of the question as purely factual and avoided to take a stance about scope of the right to avoid self-incrimination (Case C-267/14 P, Buzzi Unicem).

It appears from CJEU case-law that this delimitation between factual and non-factual questions is constant, and that the recognition of an absolute right to silence to legal persons, covering each and every question, would constitute an unjustified obstacle to ensuring compliance with competition rules.

The different protection for individuals and legal persons was once again confirmed in DB v Consob. It is worth recalling that this differentiation is not always as unequivocal as EU jurisprudence states. Under EU competition law, the concept of undertaking covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed (see, e.g., Case C-41/90, Klaus Höfner and Fritz Elser v Macrotron GmbH). Thus, single traders and professionals exercising their profession alone and unincorporated can be considered undertakings. EU caselaw has also specified that the concept of undertaking must be understood as designating an economic unit, even if it consists of several persons, whether natural or legal (see Case C217/05 Confederación Española de Empresarios de Estaciones de Servicio and Case T325/01, Daimler Chrysler v Commission). In this situation, the undertaking is an individual and it seems that the different treatment is not justified.

Notwithstanding this strict interpretation of the Court regarding the protection of legal persons and its refusal to apply this position in DB v Consob, I believe the intention of the Court was not to change its point of view regarding legal persons, but to clarify that individuals are entitled to a different treatment, a more protective treatment that allows them not to provide any self-incriminatory information and to be silent in any proceedings that could result in a sanction of criminal nature or evidence of criminal responsibility.

The judgment in DB v Consob established decisive aspect of the scope of individuals’ right to silence, and concluded that Articles 47 and 48 of the Charter require such right to be recognized in administrative proceedings that may lead to the imposition of administrative sanctions of a criminal nature, as well as in other administrative proceedings where the evidence produced may be used against that person in criminal proceedings to establish criminal liability.

This case has (involuntarily) left a small window open for relaunching the debate on the protection of individuals and legal entities to avoid self-incrimination in punitive proceedings. However, contrary to some legal scholars’ expectations, I dare to state that no room for manoeuvre has been created in this judgment for revisiting legal persons’ privilege against self-incrimination.

Barnard & Peers: chapter 10, chapter 24

Photo credit: Jastrow, via Wikimedia Commons

Does A Third State Have Legal Standing To Challenge EU Restrictive Measures? The Court Of Justice Says ‘Yes’


 


 

Francesca Finelli, PhD student, University of Luxembourg

 

In case C-872/19 P, Venezuela v Council, the Court of Justice sets aside the judgment under appeal of the General Court and holds that Venezuela has standing to bring proceedings against EU acts which introduce restrictive measures (namely economic sanctions) against it. This judgement represents an unprecedented ruling of the CJEU. In fact, for the first time, the Court has decided to expand the category of potential applicants as to include any third State in respect of which the Union decides (as a matter of Common Foreign and Security Policy) to interrupt or reduce economic and financial relations. Those States, even if non-EU countries, are now empowered to challenge the validity of EU restrictive measures before EU Courts.

 

Background to the dispute

 

Since November 2017, the EU has imposed restrictive measures in view of the situation in Venezuela, more precisely, in view of the continuing deterioration of democracy, the rule of law and human rights in Venezuela. First, the EU sanctioning regime against Venezuela imposes export bans on the sale, supply, transfer or export of equipment which might be used for internal repression (mainly military and surveillance equipment, technology and software, as listed in Annex I and II of the Council Regulation). Second, the regime also provides for individualized asset-freezing measures against natural or legal persons, entities and bodies (i) responsible for serious human rights violations or abuses or the repression of civil society and democratic opposition; (ii) whose actions, policies or activities otherwise undermine democracy or the rule of law in Venezuela; and (iii) natural or legal persons, entities and bodies associated with them (see Article 8 of the Council Regulation).

 

In the past four years, no individual application has been submitted to EU Courts by any (of the more than 120) targeted individuals, seeking to challenge the validity of their listing decisions. Nevertheless, in February 2018, the Bolivarian Republic of Venezuela brought an action for annulment before the General Court, asking to annul several EU acts which impose restrictive measures in that State.

 

The question of admissibility

 

The central legal question in the Venezuela v Council case is whether the application made by Venezuela may be considered admissible before EU Courts. Accordingly, the central legal provision to take into consideration is Article 263(4) TFEU, which lays down the conditions for natural and legal persons (the so-called ‘non-privileged applicants’) to bring action before the Court. Article 263 provides for standing for legal or natural persons to challenge EU measures directly in the EU Courts, provided either that the EU measure is addressed to them, or that they have direct and individual concern, or that they are challenging a non-regulatory act, have direct concern, and that act does not entail implementing measures. This case turned on the interpretation of the last of these three possibilities.  

 

In the case at hand, the preconditions of admissibility of the action are as follows: Venezuela must prove its ‘direct concern’, which requires the fulfilment of two cumulative criteria, namely that (1) the contested EU acts directly affect its legal situation and (2) the same acts leave no discretion to the addresses who are responsible for their implementation, making the implementation of those acts automatic, and without the involvement of intermediate (domestic) rules. Moreover, the Council also claimed two additional grounds for inadmissibility: it added that Venezuela has no legal interest in bringing proceedings; and it is not even a ‘natural or legal person’ within the meaning of Article 263(4) TFEU (see § 23 of the judgement under appeal).

 

On 20 September 2019, the General Court (GC) firstly ruled on the Venezuela v Council case (see Case T65/18). In line with the Council’s claims, the GC held that EU restrictive measures do not directly affect Venezuela. ‘At most, the contested provisions are likely to have indirect effects’ on the third State (§ 33). The Court stressed the fact that Venezuela is not ‘explicitly and specifically referred to’ in the restrictive measures (§ 36). Those measures (taken ‘in view of the situation in Venezuela’ and not ‘against Venezuela’) simply have the effect of limiting the availability of the certain goods and services in that State, but the applicant cannot be considered as ‘directly concerned’ - since it is not directly targeted. It follows that, according to the Court of first instance, Venezuela lacked the necessary locus standi (as provided for in the fourth paragraph of Article 263 TFEU) and the proceedings were considered inadmissible on that basis.

 

Nonetheless, on 22 June 2021 (see Case C-872/19 P), the Court of Justice, before which Venezuela lodged an appeal, overturned the previous judgement and ruled that the General Court erred in law in dismissing the action.

 

Firstly, the Court of Justice analysed (as preliminary observations) the concept of ‘legal person’ – which was not addressed by the GC. The Court affirmed that Article 263(4) TFEU ‘cannot be interpreted restrictively’ (§ 44). On the contrary, it shall be read in the light of the principles of effective judicial review and the rule of law, which represent EU founding values (see Article 2 TEU) and shall guide the European Union’s external action (see Article 21 TEU and the relevant case-law, inter alia Rosneft and Bank Refah Kargaran, discussed here and here). Such a broad interpretation of the fourth paragraph of Article 263 TFEU (in light of the above-mentioned EU founding values) ‘militates in favour of finding that a third State should have standing to bring proceedings’ (§ 50). Accordingly, the Court ruled that Venezuela, although it is a third State and a legal person governed by public international law, ‘is equally likely as any another person or entity to have its rights or interests adversely affected by an act of the European Union and must therefore be able, in compliance with those conditions, to seek the annulment of that act’ (§ 50).

 

Following AG Hogan's Opinion, the Court held that Article 263(4) TFEU does not strictly apply to private actors or individuals. On the contrary, the obligation to ensure compliance with the principles of effective judicial review and the rule of law requires the EU to allow Venezuela to challenge the restrictive measures adopted by the Council that are prejudicial to that State. This is an expression of the ubi ius ibi remedium principle, which is a general principle of EU law, and is enshrined in Article 47 of the EU Charter of Fundamental Rights (see § 32 AG Opinion).

 

Secondly, the Court evaluated the notion of ‘direct concern’. Once again, it followed AG Hogan’s reasoning and considered the EU restrictive measures to directly concern Venezuela. Contrary to the GC, the final decision of the Court of Justice advocates ‘a holistic and pragmatic approach’ when assessing the effects of EU restrictive measures, and ‘favours substance over form’ (see § 105 AG Opinion). Thus, even if the regime does not refer to Venezuela as an explicit target, the Court reached the conclusion that EU restrictive measures directly affect the legal situation of the State, since those provisions prevent Venezuela from obtaining numerous goods and services (§ 69 and § 117 AG Opinion). 

 

Thirdly, the Court examined the alleged absence of an interest in bringing proceedings (claimed by the Council as a ground for inadmissibility for the action). The Court clarified that the EU restrictive measures are liable to harm the interests, in particular the economic interests, of Venezuela (§ 83). It follows that the action for annulment is capable of procuring an advantage for the State. Such advantage presupposes Venezuela’s interests in in bringing proceedings before the Court.  

 

Lastly, the Court had to analyse whether the contested EU provisions entail implementing measures or apply without leaving any discretion to its addressees. The Court clarified that the contested act (namely Council Regulation (EU) 2017/2063) constitutes a ‘regulatory act’ (see § 92), adopted in accordance with Article 215 TFEU, under the non-legislative procedure. Hence, its provisions do not entail further implementing measures.

 

The Court concluded that all the conditions laid down in the third limb of the fourth paragraph of Article 263 TFEU are fulfilled. As a result, the action for annulment brought by Venezuela before the General Court is admissible. Finally, it referred back the dispute to the General Court which is now responsible for giving its judgment on the merits (§ 95).

 

Critical assessment

 

Ruling in favour of admissibility of the action brought by Venezuela is quite striking and leaves us puzzling. Is it a dangerous move for the CJEU? Now it is hard to predict. Nonetheless, it is worth noticing that the Venezuela v Council ruling leads to a strong expansion of potential applicants before the Luxembourg judges, meaning a potentially dangerous proliferation of judicial challenges against EU restrictive measures (by affected third countries, such as Russia, Belarus, Turkey). This aspect was emphasised by the Council in the dispute at stake. In fact, the Council was concerned that empowering third States to bring actions for annulment against EU restrictive measures could put the EU at a disadvantage (§ 32 of the appeal), particularly because the Union does not enjoy an equivalent right to judicial review before foreign courts as to challenge third countries’ foreign policy (sanctioning) decisions. This lack of reciprocity leaves the EU without any judicial guarantee before non-EU courts.

 

Moreover, EU restrictive measures already represent a topic of abundant litigation, and consequent vulnerability for the Union, before the EU Courts. That is why I was expecting a more cautious approach from the Court of Justice (with the view of protecting its autonomous legal order).

 

Lastly, will this generous interpretation of the Court of Justice bring to a shift from geographic to thematic restrictive measures (such as the new EU human rights sanctions regime)? Surely the Union (and the Council) has now to rethink about third-countries sanctions regimes. A possible solution to avoid the proliferation of judicial challenges before the CJEU by non-EU countries could be to rapidly shift to EU thematic sanctions regimes.

 

Barnard & Peers: chapter 24

Photo credit: Wiflredor, via Wikicommons

Saturday, 31 July 2021

Central Bank Digital Currency: The Legal Obstacles of the Digital Euro

 



Dr. (Annelieke) Anne Marieke Mooij, Tilburg University

The ECB has decided to launch the preparation phase for the digital euro. The digital euro is a digital currency (euro) issued by the ECB, a so called ‘Central Bank Digital Currency’ (CBDC). The ECB has currently evaluated different design options for the digital euro in its report. The designs vary from a limited form, only accessible to financial institutions. It could, however, also be designed to be accessible to all consumers via their national central banks. The ECB has not yet settled on a single design but the launch statement makes it unlikely that the ECB will opt for a digital euro only accessible by financial institutions. The different designs carry different legal obstacles. This blog will consider the main legal hurdles.

The power for the ECB to issue legal tender is founded in Article 128 TFEU, which provides the ECB with the exclusive power to issue banknotes. These are the only banknotes to carry legal tender. Secondary law refers to physical money such as banknotes and coins as carrying the status of legal tender. However, Grunewald et. al. consider that a purposive reading of Article 128 TFEU allows for a broader interpretation of this provision. The most convincing argument here is the change of financial systems. The possibility of digital legal tender was not expressly provided for because it was not yet a viable option when the Lisbon Treaty was adopted. Moreover, the Treaties do not provide any grounds for prohibiting the creation of digital legal tender. Therefore, it does not seem impossible that the ECB could issue digital banknotes based upon Article 128 TFEU.

Article 128 TFEU further raises a question of design, more specically can the digital euro accumulate interest? Grunewald et. al. conclude that digital notes should resemble cash, in the sense that no interest should be accumulated. The recent judgment of the CJEU in Dietrich & Häring v. Rundfunk, however, indicates that digital money under EU law may not have to resemble cash. Dietrich & Häring v. Rundfunk concerned the status of the cash money as legal tender. The CJEU considered that the “concept of ‘monetary policy’ is not limited to its operational implementation […] but also entails a regulatory dimension intended to guarantee the status of the euro as the single currency […]” (para 38). The Court furthermore argued that legal tender carries three criteria: mandatory acceptance, acceptance at full face value and the power to discharge debts (paras 48-49). Interestingly, the criterion on whether or not a currency accumulates interest – called ‘storage of value’ – is neither clarified by secondary legislation nor in the case law of the CJEU. Additionally, as the CJEU stated, the ECB’s authority is not limited to executing monetary policy but also includes a regulatory dimension (para 38). This regulatory dimension should be interpreted to include the design of legal tender, without violating the three primary criteria. Following the Court’s judgment in Dietrich & Häring v. Rundfunk, it seems likely that the ECB could introduce the digital euro as legal tender and include the use of interest rates.

The question of interest rates is particularly important when considering the potential use of the monetary policy. The first concern described by the ECB in their report is that of potential foreign currencies, i.e. other CBDCs and cryptocurrencies (see p. 9). If these currencies took hold in the Eurozone they could limit the transmission channels of the ECB. The ECB’s transmission of monetary policy depends on the euro as the dominant currency. If foreign CBDCs or commercial currencies such as Bitcoin became more prominent than the euro the ECB would not be able to influence monetary policy. A digital euro, however, could safeguard the status of the euro and the singleness of monetary policy in the Eurozone. Furthermore, economists doubt whether cryptocurrencies, as opposed to CBDCS, can provide price stability. As per Article 127(1) TFEU price stability is the primary objective of the ECB. To use a digital euro to prevent cryptocurrencies takingover would prevent the instability of cryptocurrencies. Such an objective is within the ECB’s monetary aim. Furthermore, the digital euro could provide a more direct transmission of monetary impulses. Currently the ECB influences interest rates in the real economy through the rates it charges commercial banks when they borrow from the ECB. Through a digital euro the ECB could directly change interest on the consumer accounts. To ensure the transmission of monetary impulses, the digital euro should be account-based and carry interest. Meaning that consumers would have access individual digital euro accounts with the ECB. Such accounts can be accessible through the commercial sector but consumers would have a claim upon the ECB or their national central bank. A design whereby the digital euro is only available to financial institutions carries limited legal questions. The account-based design, however, becomes more legally challenging. In such a system the digital euro might compete with commercial bank accounts.

It is clear that for the ECB to introduce the digital euro as part of its monetary policy, the ECB would have to comply with its monetary mandate established in Article 127 TFEU. According to the ECB’s monetary mandate under Article 127 TFEU, a measure must have a monetary aim and comply with the principle of proportionality. In Gauweiler, the CJEU considered the aim of the policy as the primary indicator of whether a policy is monetary or economic (para 46). In Weiss, the CJEU furthermore placed very few limits on the indirect effects of the ECB’s adopted policy. According to the CJEU in Gauweiler, the aim of safeguarding the status of the euro complies with the monetary aim of the ECB (para 48). The account-based and interest carrying design of the digital euro aims to introduce new transmission channels. The ECB will be able to directly change interest rates on consumer accounts through the digital euro. Whilst not being the same as restoring the available transmission channels, it does not render the design of a digital euro unlawful. The CJEU stated in Gauweiler that the “[…] objective of safeguarding an appropriate transmission of monetary policy […]” falls within the scope of monetary policy (para 49). The CJEU speaks of “transmission of monetary policy” rather than individual channels (para 49). There is clear evidence that current monetary policy transmission of the ECB? is not as effective as previously thought. The digital euro could improve transmission and reduce the concerns about the lower bound. The introduction of a digital euro should be considered as pursuing a monetary rather than economic aim. Even if fulfilling the monetary aim, the digital euro would still comply with the principle of proportionality.

The CJEU in Gauweiler and Weiss reviews the proportionality of an ECB measure by examining the  suitability and necessity of said measure (para 72). Regarding the suitability criterion, it should be noted that, at present, cryptocurrencies have never been implemented as a large-scale payment mechanism. The technology is, however, capable of facilitating such mechanisms in the near future. Economists, therefore, argue that the introduction of a CBDC is a natural progression of monetary policy. Whilst the effect of CBDCs on the markets is still debated, the ECB has been given a wide margin of discretion by the CJEU in adopting suitable measures. It is clear that the CJEU will only review whether the ECB has not made ‘a manifest error in judgment’ (Gauweiler, para 74). It seems unlikely that the Court would find the latter for the introduction of a digital euro.

This leaves the question of necessity. To comply with this second criterion, the digital euro may not go beyond what is necessary. The evaluation of this criterion depends on the aim that is pursued by the ECB: (1) the promotion of the euro as a single currency in light of commercial and foreign currencies, or (2) a more direct transmission of monetary policy. The first aim by itself would not justify the introduction of account-based and interest-bearing accounts. Commercial currencies are attractive because of their cheap and fast payment option. The potential for quick settlement through a digital euro does not require interest rates. Nor do cryptocurrencies accumulate interest rates, hence commercial euro accounts will remain attractive. Regarding international payments a mechanism of exchange using the digital euro and cryptocurrency should be considered. It is unlikely one cryptocurrency will take over the eurozone’s physical market. Meaning there will still be demand for a single currency in shops and restaurants. International payments are likely to be conducted with cryptocurrencies. An exchange mechanism can bridge the gap between euro’s and cryptocurrencies. Safeguarding the importance of both.  If one includes the introduction of a more direct transmission channel, the account-based system with interest rates would be necessary. Without individual accounts consumers cannot gather individual interest rates. The interest rates are necessary to transmit monetary impulses. This, however, does not yet settle the interest rate level that can be charged. In particular, the impact of the potential interest rate of a digital euro on commercial banks should be considered.

Economists disagree on the impact of CBDC on the commercial sector. Some argue that the uptake of CBDC will be limited. The introduction of CBDC will thus not have a large effect on the commercial sector. Whilst others argue that the ECB will have a competitive advantage due to their (perceived) stability, and thus the possibility for competition from the private sector is significantly decreased. It would therefore seem unlikely that the CJEU would qualify a digital euro which diminishes the commercial sector as necessary. The design of the digital euro should therefore allow the commercial sector to compete. The potential for competition stimulates technological growth and allows for consumer choice. A digital euro that diminishes the banking industry would reduce consumer options. This would not be beneficial to either consumers or the open market.

Based on the analysis above, the introduction of a digital euro thus seems legally possible. However, some questions remain. The interests that could be charged on the digital euro are not yet certain. Additionally, this post only considered a digital euro in a tiered system whereby consumer access would be realized through market infrastructer. The second option is a form of CBDC that is directly accessible through the national central banks. This system is considered a solution to the unbanked, i.e. consumers without a bank account. However, the number of such unbanked consumers in the EU is low. The aim of providing an inclusive banking sector is thus a primarily socio-economic rather than a monetary goal.

The economic objective of creating a digital euro which is directly accessible through national central banks is also not unlawful under EU law. In addition to its primary price stability mandate under Article 127 TFEU, this same Article states that the ECB also “shall support the general economic policies in the Union”. The scope of this secondary, economic mandate is not yet clear as there is no caselaw on this topic. However, it seems that the aim of economic inclusion fits the objectives of the Union. Article 153(j) TFEU includes the aim of social inclusion, which includes socio-economic inclusion. The economic mandate of the ECB, however, speaks of “support”. At present, no law or policy provides the authority for the ECB to introduce CBDC. It is furthermore unlikely that such a measure will be introduced.

At present access to a bank account is provided through Directive 2014/92. This directive focusses on increased competition within the EU to promote access to bankaccounts. A centralized approach to reduce the number of unbanked, through CBDC would require a 180 degree turn. The Dutch Central Bank (DNB) furthermore discovered there would be significant consumer uptake of CBDC. The DNB report states that 49% of consumers would open a CBDC account and, with an equal level of interests, 54% of consumer would deposit more than zero euro. This research was conducted when the concept of CBDC is relatively unknown (April 2021). When a CBDC becomes available and more known, the uptake should increase even further. The viability of the commercial sector would be in danger with such levels of uptake. The commercial banks require deposits from consumers to function. The deposits are used to provide loans and investments. Without consumer deposits the commercial banks would cease to exist. It is therefore unlikely that a centralized CBDC would comply with competition law.

Whilst consumers could be using a digital euro in the near future, it is unlikely that we will be banking with our national central banks. More likely the ECB will opt for a tiered-system whereby access to the digital euro is provided through market solutions.

For an extended analysis by the author click here.

Barnard & Peers: chapter 18

Photo credit: DXR, via Wikicommons media

Friday, 30 July 2021

Using litigation to end statelessness – a new case law database

 



Chris Nash, Director of the European Network on Statelessness*

Since founding in 2014, strategic litigation has always been a priority for the European Network on Statelessness (ENS) and its members. As a former practising lawyer myself, I recognise that part of the fight to end statelessness must happen through the courts. Recently we added significant impetus to these efforts with the launch of our Statelessness Case Law Database.

Statelessness in Europe

Europe often likes to see itself as a model of democracy and human rights. But it’s actually home to a surprising number of stateless people – at least half a million in total - many born in Europe itself but also more recent arrivals. By any yardstick, the countries of Europe must do more to solve this solvable issue.

Yet statelessness is not a new phenomenon. An international legal framework that guarantees protection to stateless people and sets clear rules for preventing statelessness has been in place for at least a generation. If all State signatories had translated this into effective national law, the problem would have been eradicated in the region by now. But identity politics, migration debates and questions about who does and doesn’t belong have got in the way of this. State sovereignty and national security have creeped in to take priority over collective responsibility for human rights.

The importance of strategic litigation

Advocacy and awareness-raising to hold governments to account in meeting their international obligations towards stateless people is essential. However, as an isolated strategy this is unlikely to bridge the current protection gap faced by stateless people across Europe. Strategic litigation looks at the bigger picture by pursuing cases that have the potential to set important precedents, influence policy, and ensure that governments are carrying out their responsibilities. Yet, despite its potential, strategic litigation can be challenging for relatively under-resourced organisations. High-risk and resource-intensive, strategic cases require specific legal expertise and often span many years, with no guarantee of securing a positive outcome. At ENS we have been giving careful thought about how best to garner greater momentum and impact with our strategic litigation efforts.

The Statelessness Case Law Database

The Statelessness Case Law Database is a key pillar of ENS’ strategy to increase the capacity and expertise of lawyers in order to help bring about real change to the lives of stateless people and contribute to the development of regional and national law and practice. It’s a free online resource containing jurisprudence from jurisdictions across the region as well as from the European Court of Human Rights, the Court of Justice of the European Union and UN human rights treaty bodies. It is searchable by country, legal instruments, key themes and keywords, and currently includes over 180 case summaries.

We set up the database in direct response to feedback from our members that this was the key tool they needed to be able to support their work. They told us that being able to access relevant case law from other countries or European and international bodies was vital to assist and help stimulate their litigation efforts.

Promoting partnership

ENS’s resources are in some ways limited – a relatively small Secretariat and limited funding – but in others significant: over 170 members who, together, have a full picture of the legal and social realities of statelessness across the continent. Yet without sustained resourcing, a closely coordinated strategy and effective exchange of information, litigation efforts risk becoming siloed and sporadic. The database provides a dynamic and evolving tool to support strategic litigation while ensuring effective and complementary use of available resources.

Another key function of the database is to promote effective partnership and to engage a new generation of lawyers motivated to work on statelessness. A key component of our litigation strategy is to develop pro bono partnerships to help us maintain and develop the database. We are excited to be working with several international law firms – including Akin Gump Strauss Heuer & Feld LLP, DAC Beachcroft, Freshfields Bruckhaus Deringer, Skadden, Hogan Lovells and DLA Piper, as well as our expert partner the AIRE Centre. Over time we intend to further develop these partnerships, and to connect with lawyers working on intersecting and nexus issues such as forced migration, child rights and anti-discrimination.

Building a Europe where everyone has a nationality

At our database launch event recently, we pulled together several prominent experts to debate how we can use strategic litigation to end statelessness in Europe.

As Professor Guy S. Goodwin-Gill pointed out during the debate, “providing for status is one thing, a good thing, but the main challenge is in eliminating and reducing statelessness”. As we celebrate the 60th anniversary of the 1961 Convention, attending to the causes of statelessness will undoubtedly be key to address the issue. With 95 States having acceded to the 1954 Convention and 76 to the 1961 Convention, considerable progress has been made in signing these treaties but “States’ record at the moment is still patchy, and a considerable amount of effort will be required among all of us to push them ahead”. After overviewing ECtHR jurisprudence on statelessness, judge Zalar similarly noted, “to put it simply, these judgments are relevant for judges because this is law, but the more relevant question is why these human rights violations happen so often, and why do we not learn from our mistakes?”. Hence it is crucial to continue increasing knowledge of international and human rights law in order to ensure the effective implementation of regional judgments at the national level, and the database is a tool that may assist in sustaining this progress.

As observed by Nuala Mole from the AIRE Centre, litigating statelessness requires a touch of creativity, and the Strasbourg court has shown that by introducing statelessness in the ECHR through the prism of the right to private life such as in the recent landmark ruling in Hoti v Croatia. Critical principles with regard to the right to private life are also at stake due to recent trends in States’ practices on deprivation of nationality, which considerably impact on children and stateless persons. Finally, as articulated by Laura Bingham from the Open Society Justice Initiative, if we ever needed a reminder of the importance of strategic litigation we need to look no further than the Human Rights Committee’s decision in Zhao v. Netherlands, both for Denny Zhao and for stateless children across Europe and globally. As Laura noted, “the database gives the legal community and the broader community a sense of identity and connectedness that is not there without a tool like this”.

Watch the recording of the online debate.

The way forward – our strategy

Ultimately, our approach is cognisant of the fact that statelessness in Europe is exacerbated by States’ failure to live up to commitments they have made at international and European levels to respect the rights of stateless people, as well as by a lack of clarity in how those commitments should be implemented in line with international and human rights law. These are gaps that the courts are well positioned to address. 

Any litigation strategy makes the assumption that the rule of law is strong enough to guarantee implementation of judgments. But the stateless are among the most marginalised in society. Hence, even where favourable court judgments are achieved, it is imperative to continue to fight alongside stateless people to make sure that their rights are respected in practice. There is a limit to what lawyers can do alone, and ENS is well set up for this further fight, as our membership also includes community activists, researchers, and communications specialists. 

We do not pretend that a few high-profile judgments will solve statelessness in Europe.  But we know that without litigation we will not meet our change objectives.  Armed with our database and a growing network of lawyers litigating on statelessness, we are determined to achieve further judicial landmarks over the coming years, around which we will build a future Europe where everyone has a nationality.

*Reblogged from the ENS website

Photo credit: Keiran Lynam, via Wikimedia Commons

Thursday, 29 July 2021

Strengthening Europol’s Mandate: An Appraisal of the Commission’s Proposal to Amend Regulation (EU) 2016/784 (Europol Regulation)


 


Niovi Vavoula and Valsamis Mitsilegas, Queen Mary University

 

Introduction

 

The European Union Agency for Law Enforcement Cooperation (Europol), the legal basis of which is Regulation (EU) 2016/794 (Europol Regulation), has a key role in supporting EU Member States on cross-border police cooperation. Europol is described as the EU’s ‘criminal information hub’, as it facilitates information exchange between Member States, Europol, other EU bodies, international organisations and third countries, and produces criminal intelligence on the basis of information acquired from various sources, including Member States and its partners. Amongst its many tasks, Europol also supports and coordinates cooperation on cross-border police work and produces regular assessments that offer comprehensive, forward-looking analyses of crime and terrorism in the EU.

 

On 9 December 2020, the Commission presented a proposal for a Regulation amending the Europol Regulation, accompanied by a two-part Impact Assessment, aiming at enhancing the Agency’s mandate in numerous respects. From the outset, it must be emphasised that the timing of the proposal is dubious, as the Europol Regulation has not been subject to an evaluation yet and according to Article 68, such evaluation was due in May 2022. Instead, scarce information is included in the Impact Assessment accompanying the proposal and some EU documentation, which, however, cannot replace the lack of a proper evaluation. As a result, the effectiveness and impact of the agency cannot be fully and properly assessed.

The proposal encompasses widespread reforms to Europol’s tasks, which may be divided in nine themes, as follows:

 

(1) Enabling Europol to cooperate effectively with private parties;

(2) Enabling Europol to process large and complex datasets;

(3) Strengthening Europol’s role on research and innovation;

(4) Enabling Europol to enter data into the Schengen Information System (SIS);

(5) Strengthening Europol’s cooperation with third countries;

(6) Strengthening Europol’s cooperation with the European Public Prosecutor’s Office (EPPO);

(7) Enabling Europol to request the initiation of an investigation of a crime affecting a common interest covered by an EU policy;

(8) Strengthening the data protection framework applicable to Europol; and

(9) Other provisions, including enhancing political accountability and parliamentary scrutiny.

 

This blog post aims to provide a snapshot of the proposal and highlight key privacy and data protection concerns by looking in turn into the thematic blocks. It is based on a study commissioned by the LIBE Committee of the European Parliament published on 27th May 2021, which argues that the proposed Regulation, as it stands, will radically transform the nature and powers of Europol and its relationship with key stakeholders without introducing adequate safeguards.

 

Enabling Europol to cooperate effectively with private parties

 

A first set of revisions concerns the enhancement of cooperation between Europol and private parties in countering criminal offences committed in abuse of the cross-border services of private parties. Currently, Europol is allowed to exchange personal data with private parties, but Article 26 of the Europol Regulation provides a series of restrictions: the traditional way for the agency to receive personal data from private parties is indirectly via competent intermediaries and Europol is prohibited from transferring personal data directly to private parties, unless one of the three exceptions applies. The proposal aims to establish the agency as a central point of contact in cases of multi-jurisdictional or non-attributable datasets,. Europol will be enabled to: (a) receive personal data directly from private parties on a more regular basis; (b) inform such private parties of missing information; and (c) ask Member States to request private parties to share further information. Additionally, Europol will be able to provide its infrastructure for the exchange of data between national authorities and private parties and support Member States in preventing large scale dissemination of terrorist content or violent extremism, on which Regulation (EU) 2021/784 was recently published.

 

These changes constitute a considerable paradigm shift for the agency, which is line with the emergence of the trend in past years, exemplified by the e-evidence legislative package, to establish direct channels of communication between law enforcement and private parties and foster a public/private partnership. Questions about the ability of private parties to undertake the role of law enforcement authorities in scrutinising fully and effectively the fundamental rights implications of transfer of personal data held by them for the purposes of law enforcement emerge, as Europol will be enabled to forward requests on behalf of Member States and proactively request information. Private parties do not enjoy equality with public authorities in terms of cooperation and the same will also apply in the case of Europol.

 

Therefore, they may find themselves in a subordinate position, being ‘cornered’ by both Europol and Member States to hand over the personal data requested. Important safeguards, in particular obtaining prior judicial authorisation and scrutiny of compliance with fundamental rights, risk being bypassed. Applying this approach to the case of Europol requires detailed rules on the duties of Europol, Member States and the private sector, e.g. when the private parties may refuse to cooperate, as well as provisions on independent authorisation of transfers and remedies for individuals, which are missing from the proposal. Even the concept of ‘private parties’ is open-ended and there are no limitations as to their nature. Whereas certain safeguards are included, e.g. the requirement for ‘absolute’ or ‘strict’ necessity, there are additional safeguards that are mentioned in the Impact Assessment, but not explicitly stated in the proposal. It is further argued that the European Data Protection Supervisor (EDPS) could be involved before the agency makes such transfers. In addition, whereas the proposal proscribes systematic, massive or structural transfers in cases where the private party is outside the EU, this is not extended to those private parties within the EU. Finally, it must be ensured that Europol’s role in supporting Member States to prevent the dissemination of online content related to terrorism and violent extremism conforms with the Europol’s role as foreseen in Regulation (EU) 2021/784 on preventing the dissemination of terrorist content online.

 

(2) Enabling Europol to process large and complex datasets

 

This reform aims to address the so-called ‘big data challenge’ following the admonishment of the agency by the EDPS on 17 September 2020. The proposal aims to enable Europol to conduct ‘pre-analyses’ of large and complex datasets received and identify whether these concern individuals whose personal data may be processed by Europol in line with Annex II of the Europol Regulation. Another proposed provision aims to enable the pre-analysis in support of a criminal investigation following transmission of an investigative case file to Europol.

 

Overall, it is welcome that the prior processing is limited to a maximum period of one year, which can be extended following authorisation by the EDPS. One suggestion is to define the terms ‘large datasets’ and ‘digital forensics’ and explicitly delimit processing when there is an objective necessity, which is not mentioned, so as to ensure that the derogation of Article 18(5a) does not become the rule. Clear criteria to determine that it is justified to extend the maximum period of pre-analysis must be laid down and it could be useful to consider that prior to each pre-analysis the EDPS must be at least informed and that the Europol Data Protection Officer must provide authorisation. The relationship between the new rules and the existing derogation under Article 18(6) of the Europol Regulation must also be clarified, as well as the relationship between the two new provisions foreseen. As these rules constitute an exception, their application must be strict and the existence of a link to an on-going investigation is crucial. In addition, the Regulation should lay down certain conditions and/or thresholds, such as scale, complexity, type or importance of investigations. Finally, the involvement of the EDPS not only in cases where an investigative case file is submitted by a third country, but in general in supervising the processing of large and complex datasets should be maintained and enhanced.

 

(3) Strengthening Europol’s role on research and innovation

 

The proposal foresees a greater role for Europol as regards processing of personal data for research and innovation matters for the development of tools, including the use of AI for law enforcement. One must be mindful though that when developing new technologies extensive processing of large quantities of personal data may be required, for example to create and test algorithms or for encryption. Therefore, the potential impact of such processing for research and innovation purposes to the principle of non-discrimination and the rights to respect for private life and protection of personal data must be guaranteed. The processing of personal data for research and innovation should take place only if needed in order to reach the objectives of the project. Furthermore, the processing of synthetic, anonymised or pseudo-anonymised personal data, as opposed to real operational data must be preferred, where possible, and the processing of special categories of personal data must be explicitly excluded or accompanied by additional safeguards. Moreover, principles of data protection law—in particular the principles of data minimisation, data quality and privacy by design and by default—must be taken into account.

 

(4) Enabling Europol to enter data into the Schengen Information System (SIS)

 

One of the thorniest aspects of the Europol reform concerns the possibility of enabling the agency to enter alerts into SIS. Currently, Europol has ‘read-only’ access to all types of alerts stored in SIS, both immigration and law enforcement related. The proposal creates a new alert category that Europol can use to enter alerts into SIS following consultation with the Member States and after authorisation by its Executive Director. A detailed process for the issuance of so-called ‘information alerts’ is foreseen in a separate proposal amending Regulation (EU) 2018/1862.

 

However, whether this power, which to an extent equates Europol with Member States, fits within Europol’s mandate, as laid down in Article 88 TFEU, is doubtful.  It is also questionable whether Europol will be able to conduct a proper quality check before issuing alerts into SIS. Importantly, the operational value of such alerts is also questionable, as the alerts will provide significant discretion to national authorities to follow up and wide divergences may arise in practice. The impact on individuals whose personal data will be inserted in SIS is significant and potential liability issues may also arise if the quality of data contained in the alert is not high. In light of the concerns voiced by a number of Member States within the Council, the Portuguese Presidency proposed an alternative to delimit these alerts to those concerning terrorism. However, it is feared that merely opening up Europol to SIS will become the gateway through which in the future Europol may acquire further powers to enter other types of alerts into the system (e.g. on missing persons).

 

(5) Strengthening Europol’s cooperation with third countries

 

Another important reform of the proposal concerns cooperation with third countries. Under the current legal framework, as laid down in Article 25(1) of the Europol Regulation, the agency may receive personal data from third countries based on: a) adequacy decisions under Directive (EU) 2016/680; b) international agreements under the current Regulation concluded in accordance with Article 218 TFEU; and c) cooperation agreements concluded between Europol and third countries under the previous Europol Council Decision (for the agreements, see here). Finally, the Executive Director can authorise the transfer of personal data to third countries and international organisations on a case-by-case basis for certain exceptional––but arguably broadly worded––reasons. With no adequacy decisions adopted and the negotiations for eight international agreements stalled, the calls for a less cumbersome regime for the exchange of personal data with third countries have proliferated. To that end, the proposal foresees a (seemingly minor) change enabling the Executive Director to authorise not only transfers, but also categories of transfers of personal data to third countries or international organisations in specific situations and on a case-by-case basis. However, it is not clear what exactly is meant by ‘categories of transfers’ and this reform may broaden the remit of such transfers from criminal investigations on specific suspects to surveillance activities in general, thus changing Europol’s powers.

 

That said, within the Council Member States have expressed their wish to further expand Europol’s capabilities to exchange personal data with third countries by transplanting the wording of Directive (EU) 2016/680 (Law Enforcement Directive) and Regulation (EU) 2018/1727 (Eurojust Regulation) to the Europol legal framework, and creating a new legal ground for exchanges of personal data on the basis of appropriate safeguards outside the three already prescribed grounds. This reform poses significant legal challenges as it bypasses existing institutional safeguards and undermines the importance of an adequacy decision, the procedure for assessing the data protection framework of a third country as adequate in violation of the constitutional limits placed by the Court of Justice of the EU (CJEU) in Schrems, as well as the institutional framework for adopting international agreements. The possibility of using bilateral agreements as the legal basis for such exchanges may result in divergences and different standards applied.

 

(6) Strengthening Europol’s cooperation with the European Public Prosecutor’s Office (EPPO)

 

This reform concerns the reinforcement of Europol’s cooperation with the EPPO in the aftermath of the adoption of Regulation (EU) 2017/1939 (EPPO Regulation) on the establishment of the EPPO. However, the proposal is not fully aligned with the rules of the EPPO Regulation and minor modifications to the text are necessary.

 

(7) Enabling Europol to request the initiation of an investigation of a crime affecting a common interest covered by an EU policy

 

The proposal aims to enable Europol to request competent authorities of a Member State to initiate, conduct or coordinate an investigation of a crime which affects a common interest covered by an EU policy regardless of the cross-border nature of the crime, for example in high profile sensitive cases such as the murder of Daphne Caruana Galizia in Malta. However, the necessity of this reform has not been substantiated and effectively removes control from judicial authorities over the opening of their investigations in cases affecting one Member State only.

 

(8) Strengthening the data protection framework applicable to Europol

 

A positive development of the proposal is the enhancement of Europol’s data protection framework by extending the reach of Article 3 and Chapter IX of Regulation (EU) 2018/1725 concerning the data protection framework applicable to the processing of personal data by EU institutions, bodies and agencies, to the work of Europol and explicitly adding biometric data within special categories of personal data, which was not the case. Whereas this is a welcomed reform, further alignment is necessary, not least because the EDPS’s general powers are still not aligned with the prescriptions of Article 58 of Regulation (EU) 2018/1725.

 

(9) Other provisions, including enhancing political accountability and parliamentary scrutiny

 

In addition to other minor reforms further expanding and clarifying Europol’s tasks, the proposal aims to enhance political accountability and parliamentary scrutiny by enabling the Joint Parliamentary Scrutiny Group (JPSG) to receive information regarding the matters falling under themes (1)-(4), as discussed above. Whereas this is a welcome development the proposal is a missed opportunity to further enhance political accountability and parliamentary scrutiny. Despite the establishment of the JPSG and the proposed amendments, parliamentary scrutiny and oversight remain weak. Shortcomings concern the structure and work of the JPSG, including the weak powers of the Group in the participation to and appointment of Europol’s Management Board. With the addition of new tasks to Europol, the need to ensure a better framework for parliamentary oversight and political scrutiny must be emphasised and therefore there is significant scope for improving the proposal in that respect.

 

Concluding remarks

 

The analysis above aimed to highlight that the proposal entails widespread reforms to Europol’s mandate, which transform the nature of the agency and its relationship with the Member States. The large majority of these reforms that enhance the data processing capacities of the agency have been met positively by the Council, which refined some provisions when it agreed its position on the proposal in June 2021. This massive expansion of Europol’s powers is explained; Europol’s ability to bring about results is tightly related to Member States’ input and participation and research shows the reluctance of national authorities that were, and are, sometimes not very keen to share their data with the agency. As a result, the proposal wishes to bypass such reluctance, by enabling the agency to directly ‘deal the cards’ and centralise information processing. At the same time, certain operational reforms, particularly the SIS-related ones, have been met with greater scepticism, albeit without an outright dismissal. At the time of writing, the Council is still scrutinising the proposal but a significant amount of work has already been conducted. It remains to be seen whether the Parliament will success in adding further safeguards to circumscribe these additional powers and enhance its own role.

 

Barnard & Peers: chapter 25

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