Friday, 2 December 2022

EU foreign policy sanctions: extending and using EU criminal law powers to enforce them

 




Professor Steve Peers, University of Essex

Photo credit: Pierre Blaché, via Wikicommons

*This blog post draws upon research for the forthcoming 5th edition of EU Justice and Home Affairs Law (OUP, 2023)

On Monday this week, the EU Council adopted a decision to extend EU criminal law competence to cover EU foreign policy sanctions. Today, the EU Commission proposed a Directive that, if agreed, would use that competence to harmonize the criminal law of Member States on this issue. The following blog post analyses in turn the decision and the proposed Directive, in order to assess the potential impact.

The Decision extending competence

The legal context: criminal law

The context of the Decision is the Treaty framework on the EU’s power to harmonize substantive criminal law. That power is set out firstly in Article 83 of the Treaty on the Functioning of the European Union (TFEU), in particular Article 83(1), which reads as follows:

1. The European Parliament and the Council may, by means of directives adopted in accordance with the ordinary legislative procedure, establish minimum rules concerning the definition of criminal offences and sanctions in the areas of particularly serious crime with a cross-border dimension resulting from the nature or impact of such offences or from a special need to combat them on a common basis.

These areas of crime are the following: terrorism, trafficking in human beings and sexual exploitation of women and children, illicit drug trafficking, illicit arms trafficking, money laundering, corruption, counterfeiting of means of payment, computer crime and organised crime.

On the basis of developments in crime, the Council may adopt a decision identifying other areas of crime that meet the criteria specified in this paragraph. It shall act unanimously after obtaining the consent of the European Parliament.

As can be seen, the second sub-paragraph lists ten crimes (commonly referred to as ‘Eurocrimes’) which the EU has competence to harmonize. That competence involves not only the ‘definition of criminal offences’ but also ‘sanctions’, ie the length of jail terms and/or other sanctions that can be imposed as part of the criminal law. However, these are ‘minimum rules’ – meaning that Member States can add to them as part of their criminal law.

Since the Treaty of Lisbon entered into force in 2009, the EU has adopted Directives regarding most of the ten Eurocrimes, in most cases replacing older forms of EU law adopted before the Treaty of Lisbon entered into force. The exceptions are arms trafficking, corruption, and organized crime – although there are pre-Lisbon EU laws concerning the latter two crimes, and other EU legislation concerning firearms that falls short of adopting criminal sanctions for arms trafficking. In any event, as we shall see, some arms trafficking will fall within the scope of the new EU competence regarding criminal law and EU foreign policy sanctions.

Opt-outs apply to the new Decision: Denmark is entirely opted out of EU criminal law adopted after the Treaty of Lisbon, while Ireland chose to opt in. We can only speculate whether the UK would have chosen to opt in or not.

Since the Treaty of Lisbon, ordinary CJEU jurisdiction applies in this area – meaning that national courts can ask the CJEU questions about the validity and interpretation of EU Directives on substantive criminal law. (There have only been a few such references to the CJEU by national courts). The EU Commission can also bring infringement proceedings against Member States for late or inaccurate transposition of the Directives which the EU adopts.

Finally, the context of EU criminal law includes the other related competences of the EU. Article 83(2) provides for the EU to adopt criminal law harmonization Directives also in other areas of criminal law, where this ‘proves essential to ensure the effective implementation of a Union policy in an area which has been subject to harmonisation measures’. This has, for instance, been used to adopt a Directive on fraud against the EU’s financial interests. (It might be argued that foreign policy sanctions already fell within the scope of Article 83(2), so the recent decision extending the list of ‘Eurocrimes’ was unnecessary, but the EU thought otherwise)

Furthermore, Article 82(1) gives competence to adopt measures on mutual recognition in criminal matters, along with other forms of cooperation between criminal law authorities, while Article 82(2) gives competence to adopt harmonization measures on national criminal procedure – listing evidence, victims’ rights, and fair trials as areas where the EU can act. Article 84 gives limited powers regarding crime prevention; Article 85 gives powers relating to Eurojust, the EU agency on cooperation between prosecutors; and Article 86 provides for a European Public Prosecutor’s Office (EPPO) to be set up.

In practice regarding those other powers, since the Treaty of Lisbon, the EU has adopted a few mutual recognition measures, a law on victims’ rights, six Directives on fair trials, and Regulations on Eurojust and the EPPO. Most of these laws update pre-Lisbon legislation (except the fair trials Directives and the EPPO Regulation); and there is still an important batch of pre-Lisbon law on mutual recognition (most significantly, the European Arrest Warrant law). Some of this legislation generates CJEU case law – mostly regarding the European Arrest Warrant, but also there are judgments on most of the fair trials directives and most of the other mutual recognition measures.

The legal context: EU foreign policy sanctions

Unlike the other Eurocrimes listed in Article 83(1), there is a body of EU law already in this field. This has been built up on the basis of two related powers to act: first the EU’s powers to adopt Decisions on foreign policy sanctions (along with other foreign policy issues) on the basis of Article 29 of the Treaty of European Union (TEU). Secondly, Article 215 TFEU, which provides for most of those foreign policy sanctions to be paralleled in the form of ordinary EU law (in practice, Regulations):

1. Where a decision, adopted in accordance with Chapter 2 of Title V of the Treaty on European Union, provides for the interruption or reduction, in part or completely, of economic and financial relations with one or more third countries, the Council, acting by a qualified majority on a joint proposal from the High Representative of the Union for Foreign Affairs and Security Policy and the Commission, shall adopt the necessary measures. It shall inform the European Parliament thereof.

2. Where a decision adopted in accordance with Chapter 2 of Title V of the Treaty on European Union so provides, the Council may adopt restrictive measures under the procedure referred to in paragraph 1 against natural or legal persons and groups or non-State entities.

3. The acts referred to in this Article shall include necessary provisions on legal safeguards.

Although Article 215 provides for qualified majority voting of Member States in the Council, the effective rule is actually unanimity, for that is the rule which applies (with marginal exceptions) to the adoption of the EU foreign policy measures which the Article 215 legislation gives effect to.  The Commission proposed a few years ago to drop unanimity here, but Member States didn’t bite. (They would have to agree unanimously to change the voting rule).

Over the years, there have been a lot of EU foreign policy sanctions and a lot of litigation – mostly direct challenges to the validity of the sanctions measures by the persons or companies (or even the States) concerned by them in the EU General Court. That Court’s judgments can be appealed to the CJEU; and national courts have occasionally asked the CJEU about the interpretation or validity of sanctions decisions too. (Although in general the CJEU has no jurisdiction over EU foreign policy measures – an exception which the Court has been slowly nibbling away at for awhile – as an exception to the exception, the CJEU has its normal jurisdiction over foreign policy sanctions: see Article 275 TFEU).

Given that the new Eurocrime refers back to a body of EU law, it is thematically very similar to the areas covered by the EU’s separate powers to harmonize criminal law to give effect to EU policies, as set out in Article 83(2) TFEU – for instance, see the proposed new Directive on environmental crime, which refers back to specific EU legislation. 

The details of the Decision

The main text of the Decision simply adds the breach of EU foreign policy sanctions to the list of Eurocrimes. Note that this is a breach of EU sanctions: the Decision does not give the EU power to harmonize criminal law as regards the breach of purely national foreign policy sanctions. (How much power Member States have to adopt national sanctions is an interesting question, but need not concern us further here, because of this distinction).  

On the other hand, the new competence is not limited to breach of EU foreign policy sanctions relating to the Russian invasion of Ukraine. Even though that event is obviously what led the EU to extend its competence, as acknowledged in the preamble to the Decision, there is nothing in the wording of the Decision to say that it only applies to sanctions against Russia. Indeed, the Commission proposal for the Decision noted that the EU has forty sanctions regimes, applying not only to countries but also ‘targeting proliferation and use of chemical weapons, cyberattacks, human rights violations and terrorism’. (For more details, see the Council website, especially its sanctions map). The anti-terrorism sanctions have been around for awhile, attracting high profile litigation such as cases involving Mr Kadi or Hamas; the human rights sanctions are fairly new, but will sometimes cross over with other sanctions – see, for instance, the sanctions against Putin’s alleged allies, the Wagner Group, for human rights breaches (along with links to other EU sanction measures).

In terms of the type of sanctions covered, the preamble also makes clear that this is broad, applying not only to economic sanctions such as restrictions on trade or financial relations, but to bans on entry into the territory (which are also already given effect to by listing the sanctioned people in the Schengen Information System) and to arms embargoes. 

Much of the preamble to the Decision justifies this new extension of EU competence on the basis of the criteria set out in Article 83(1) TFEU, which any extension of competence has to satisfy: ‘particularly serious crime with a cross-border dimension resulting from the nature or impact of such offences or from a special need to combat them on a common basis’. For instance, the preamble refers to the threats to international peace and security dealt with by sanctions as being ‘particularly serious’, as well as the cross-border scale of the offences.

The proposed Directive

Content of the proposal

The proposed Directive has similarities to other Directives in this area – see, for instance, the Directive on harmonization of criminal law as regards terrorism. But there are also some new elements compared to other Directives; and in any event, it is the EU’s first foray into adopting criminal law relating to EU foreign policy sanctions.

It should be stressed that (as the preamble to the Decision confirms) the Directive would not make breaches of EU foreign policy sanctions criminal for the first time in most Member States. Just as with issues like terrorism and drug trafficking, these were already crimes in most national laws before EU law came along. But the details of the national laws probably differed more before the EU got involved; the point of the EU’s involvement is to harmonize the national laws somewhat.  

Today’s proposal would require Member States to criminalize nine types of breach of EU sanctions, such as trading in goods or services covered by EU sanctions, providing financial services despite an EU law sanction, or even enabling the entry or transit of a person covered by an entry ban deriving from EU sanctions (in effect, an immigration law offence that might overlap with the pre-existing EU law on facilitation of illegal entry and residence in general – although the EU criminal law in that area is less detailed than today’s proposal). In every case, an intentional breach would have to be criminalized; and in most cases, ‘serious negligence’ resulting in the breach would have to be criminalized too. As with the Decision on competence, the Directive would not be limited just to sanctions against Russia, but would apply to EU foreign policy sanctions across the board.

There is a novel clause on the position of lawyers advising those accused of sanctions breaches:

Nothing in paragraph 2 [the list of crimes] shall be understood as imposing an obligation on legal professionals to report information which is obtained in strict connection with judicial, administrative or arbitral proceedings, whether before, during or after judicial proceedings, or in the course of ascertaining the legal position of a client. Legal advice in those circumstances shall be protected by professional secrecy, except where the legal professional is taking part in the violation of Union restrictive measures, the legal advice is provided for the purposes of violating Union restrictive measures, or the legal professional knows that the client is seeking legal advice for the purposes of violating Union restrictive measures.

There is also a specific guarantee for the right to silence, and exemptions for goods or services provided for daily use, failure to report, or humanitarian aid for those in need. Inchoate offences of incitement and (in most cases) attempts are also criminalized, as is aiding and abetting. As for penalties, Member States must provide for a maximum possible penalty of at least five years for most offences, and one year for the rest – subject to a threshold of €100,000 being involved (which can be satisfied by a linked series of offences). Otherwise, Member States are obliged to provide at least for the possibility of some imprisonment (for instance for sanctions with a lower value, or breach of an entry ban), and in all cases to provide for additional penalties, such as fines.

Legal persons are subject to liability, too, and must be subject to penalties such as shutting down the business or withdrawal of its licences. This is a longer list than usually provided for in EU criminal law Directives. Criminal liability must be aggravated in certain cases (such as organized crime, or breach of duty by a public official or a professional), and mitigated in others (where the offender ‘flips’ on his or her criminal associates).

Criminal jurisdiction would apply more widely than under most EU criminal law Directives, where it usually applies to acts committed on the territory (sometimes with further elaboration) or by nationals. Here it would apply also to habitual residents, and the territory is further defined as including a Member State’s airspace or any aircraft or vessel under its jurisdiction.

Unusually, there would be rules on limitation periods, ie when Member States would be out of time to bring a prosecution or enforce a sentence. In most cases the limitation period would be five years, with a possibility for derogation. Previously Member States have only agreed to regulate this issue via EU law as regards fraud against the EU budget (although the pending proposals on environmental crime and violence against women would also address it).

Finally, there would be links to other EU law (besides, obviously, the sanctions laws themselves). The proposal would link up with EU law on money laundering and confiscation, plus there is a novel link to the EU legislation on whistleblowers: that law must also apply to protect those in a company or organization who tip off the authorities about breaches of sanctions. Conversely, there is no proposed amendment of the law on the European Arrest Warrant – even though breach of EU foreign policy sanctions is not on the list of crimes where the dual criminality condition for extradition must be waived. However, prosecution or sentences for sanctions breaches will sometimes fall within areas where dual criminality has to be waived (like terrorism or organized crime); and the dual criminality condition is more likely to be met as a result of the harmonization Directive anyway (it may even be met already, simply by virtue of the foreign policy sanctions measures themselves). 

The legislative process

Opt-outs will apply to the proposed Directive: again, Denmark is entirely opted out of EU criminal law adopted after the Treaty of Lisbon, while Ireland can choose to opt in or not. Again, we can only speculate whether the UK would have chosen to opt in or out.

Other Member States have a form of protection for their interests too. Although the ‘ordinary legislative procedure’ applies to the adoption of laws in this area (see the text of Article 83(1) above), which means only a qualified majority of Member States in the Council is necessary to adopt a law (along with agreement of the European Parliament), Article 83(3) TFEU provides that if a Member State believes that a Directive ‘would affect fundamental aspects of its criminal justice system’, it can effectively pull an ‘emergency brake’ and ask EU leaders to discuss the issue. If there’s no agreement at that level, if at least nine Member States still want to participate in the proposed law, they can trigger ‘enhanced cooperation’ to go ahead – without the objecting Member State(s) – on a fast-track basis. To date, Article 83(3) has not been used, although its mere existence may have meant that any concerns Member States have raised about their criminal justice systems received particular attention during negotiations.

Comments

It’s difficult to see what impact the extension of competence, in conjunction with the proposal to harmonize the law (if adopted), would have in practice, without more detail on what changes would be made to national law as a consequence of its adoption. One issue with criminal law – just as with non-criminal forms of regulation of conduct – is of course the resources and expertise necessary to investigate and bring prosecutions. On this point, the prospect of extending competence to the European Public Prosecutor’s Office to include breaches of EU foreign policy sanctions has been raised by the German and French justice ministers. This would certainly be a big development if it happens (extensions of EPPO competence need unanimous agreement of Member States, although some Member States have opted out of the EPPO; the Commission’s proposal to extend its competence to terrorism has not been agreed so far).

Is this extension of EU competence an example of the endless EU power-grabs so feared by the EU’s critics? On this, it’s notable that the extension came on the eve of the thirteenth anniversary of the Lisbon Treaty entering into force – and yet it’s the first such extension of competence in that whole time. By contrast, Member States have not yet agreed an earlier proposal to extend the list of Eurocrimes to cover hate speech and hate crimes. Nor, as noted above, have they agreed the proposal to drop unanimous voting for some foreign policy measures – or to drop unanimity in a number of other areas which the Commission proposed years ago.  

The extension of competence is better understood as part of the EU’s response to the Russian invasion of Ukraine – which has also prompted developments in the use of EU defence powers, and the first-ever use of the long-dormant temporary protection Directive. By itself, the extension of EU competence and the use of those new powers will not end the invasion – and, as noted already, it applies to other EU sanctions too. Nor does it address the criticism that that those sanctions are too little and too late. But it may make some contribution to the effective implementation of those sanctions which have been established to oppose the invasion, and in any event it sends a political message that the EU is stepping up their enforcement.

 

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