The Global Fight against Impunity and the European Court of Justice: A New Approach to Tax Fraud as a Crime against Human Rights

by Giuliana Ziccardi Capaldo

Introduction

This contribution is a comment to the blog posts of Maxime Lassalle on Taricco I and Michal Krajewski on Taricco II. In the following, I summarize some reflections developed in my article entitled “Lotta globale all’impunità e Corte di giustizia europea: un nuovo approccio alla frode fiscale come crimine contro i diritti umani”, that touch upon the core of the Taricco dispute between the European Court of Justice (ECJ) and the Italian Constitutional Court concerning the prosecution of value added tax (VAT) fraud.

Two very closely related issues are considered in this regard. One is that the ECJ’s view in Taricco I on the interpretation and application of the obligation to combat fraud, imposed on Member States by Article 325 TFUE, opens the way to a new approach to tax fraud as a crime against human rights. The second, logically connected, is that the alleged conflict between the interpretation of Article 325 TFEU given by the ECJ and Italian Constitutional law (the principle of legality in criminal matters as laid down by Article 25(2) Const.) is a false problem for which I present a solution. 

The European Court of Justice’s “Humanitarian” Approach to Financial Crimes

The idea that tax fraud ought to be regarded as a violation of human rights must be inscribed within the broader framework of the new global law and the evolution of the protection of human rights (see especially Human Rights Council Resolution, (UNGPs) A/HRC/RES/17/4, 6/07/2011; see also, A/HRC/RES/35/7, 14/07/2017). The ECJ could not remain indifferent to the global trend to widen the category of crimes that “should not go unpunished”, according to recent International Criminal Court (ICC) guidelines (see Policy Paper on Case Selection and Prioritisation of the Office of the Prosecutor, 15 September 2016), and therefore consider “serious” financial crimes as crimes against human rights, with the primary objective of ensuring “jointly with the relevant national jurisdictions, that the most serious crimes committed in each situation do not go unpunished” (ICC, Policy Paper, para. 1 (8)), through the implementation of “effective” measures. The imprescriptibility sanctioned by Article 29 of the Rome Statute is the logical legal corollary to the prohibition of impunity and essential in the implementation phase of measures “to be taken […] which shall act as a deterrent and be such as to afford effective protection in the Member States, and in all the Union’s institutions, bodies, offices and agencie” in accordance with Article 325 TFEU on which the EU sanctions system to counter fraud affecting the financial interests of the Union is based.

Consequently, in interpreting Article 325 TFEU in Taricco I, the ECJ imposed, in accordance with the principle of the precedence of EU law (Taricco I, para. 52) on national courts the obligation to disapply domestic rules that do not ensure the punishment of those guilty of “serious” fraud (namely, the non-applicability of statutory limitations such as Articles 160, last paragraph, and 161(2) of the Italian Criminal Code). The Court argued that the behaviours of the national courts would not be in breach of the legality principle enshrined in Article 49 of the Charter of Fundamental Rights. This way, the ECJ clearly aimed at achieving substantial imprescriptibility.

The “False” Conflict between EU law (Art. 325 TFUE) and Italian Constitutional Law

By the Order no. 24/2017, the Italian Constitutional Court has challenged the ECJ Grand Chamber judgment in Taricco I asserting the contrast with the fundamental principle of legality (also known as the nullum crimen sine lege principle), set forth in Article 25(2) of the Italian Constitution (under which the principle of legality in criminal matters also covers statutes of limitation periods), that affords to the accused person the right to be tried and punished only in accordance with an existing law.

In my opinion the ECJ’s decision in Taricco I that national courts must disapply the rules of statutes of limitations if they prevent Member States from fulfilling their obligations under Article 325 TFEU (in the present case, the relevant Italian legislation) leads to perceiving serious fraud as a crime against the rights and interests of citizens, i.e., against fundamental social human rights guaranteed under Articles 2 and 3 of the Italian Constitution, and hence calls for resolving the conflict within the Italian Constitution by balancing the rights under these articles and the accused’s individual rights guaranteed by the legality principle (Art. 25(2) Const.). In my view, the former ought to prevail in light of the constitutional orientation that favours social and public interests.

 A Key to Interpreting the Taricco I Ruling:  A Constructivist Approach to Global Governance

 Fully understanding the scope of the ECJ decision in Taricco I requires situating the tax fraud regulation in a global perspective. The Luxembourg Court, in adherence to the great shift in thoughts aimed at protecting “the rule of law at the national and international levels”, as the United Nations General Assembly urges (see UN GA Resolution A/RES/67/2012), and intended to repress the crime of serious VAT fraud, with established an effective measure (i.e., the disapplication of national rules incompatible with Article 325(1) TFEU, Article 2(1) of the 1995 PIF Convention as well as Directive 2006/112 on the EU’s common system of VAT, read in conjunction with Article 4(3) TEU) which, alongside the guilty, condemns States defaulting and disrespecting EU law and the founding principles of the world legal order. This is why, in my view, the Taricco I ruling is without any doubt innovative and deemed part of an evolving global trend, which aims at strengthening the paradigm of the non-impunity-imprescriptibility of the new criminal jurisdiction centered on the ICC . As announced in the Policy paper the ICC will now expand its focus  on prosecuting with national governments such serious crimes as “illegal exploitation of natural resources, arms trafficking, human trafficking, terrorism, financial crimes, land grabbing or the destruction of the environment.”(para. I(7)). The ICC is not formally extending its jurisdiction to serious tax fraud cases, but this process has begun – founding on the Rome Statute that recognizes that serious international crimes “threaten the peace, security and well-being of the world”. Cooperation with national courts is a tangible way to implement this objective and highlights the importance of the decision of the ECJ, which in so doing plays a significant role on a global level by supporting the ICC “in advancing the rule of law, thereby reducing impunity” (Rome Statute, Preamble).

Conclusion

In conclusion, one can state that the primacy of EU law, as interpreted by the ECJ inTaricco I ruling, does not conflict with national fundamental human rights; indeed, like Italy, even the other EU Member States, together with individual human rights, protect fundamental social rights. Notwithstanding some critical aspects to which the Court was supposed to remedy (the principle of legal certainty must be observed), the judgment would have been a contribution to the realization of a global project in line with a constructivist approach to global governance.

The “revirement” in the ECJ  Taricco II was thus particularly strong. In the decision reached recently (5 December 2017) the Court has renounced its leading role in the fight against serious financial crimes and to support the other European institutions, committed at world level in the fight to such crimes, like the Commission and Parliament. Subject to a more careful analysis of the Taricco II judgment, it seems to me that this rather sibylline ruling, to be made to fit a special situation and  to keep established European system in place, does not benefit either to global governance or to the certainty and advancement of the law.

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