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 - email@example.com
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and includes the transposition of the Directive 2003/6/EC on insider dealing and market manipulation, which was repealed by Regulation (EU) No 596/2014 on market abuse.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 case‑law 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 C‑217/05 Confederación Española de Empresarios de Estaciones de Servicio and Case T‑325/01, 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
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