Proposed Regulation on the European Public Prosecutor – Thinking Federal?

On 17 July 2013 the European Commission launched its proposal on the European Public Prosecutor’s Office (‘Proposed EPPO Regulation’). With this proposal, the Commission aims at improving the enforcement of offences affecting the EU’s financial interests and thereby at increasing the deterrent effect of law enforcement. At present, those offences are investigated and prosecuted by national prosecution authorities, to be brought to trial before national courts. This approach is however deemed inadequate. Offences affecting the EU budget are usually complex cases with a cross-border dimension and ‘of secondary importance’ for national prosecutors.[1] Moreover, statistics used by the Commission show substantial differences in enforcement between the various Member States.[2] With the establishment of an EPPO, this should change significantly.[3] Most notable is the shift from administrative investigations, as they are now conducted by OLAF (i.e., the EU’s antifraud office), to criminal investigations by the EPPO, a new EU judicial body.

The idea of an EPPO is far from new. The first concrete proposals in that direction saw the light in the Corpus Juris (1997, finalised in 2000). This research project proposed an extensive harmonisation of national criminal procedure, which was politically unacceptable at the time. In 2001, the European Commission presented a Green Paper, which took an entirely different approach based on the principle of mutual recognition. The EPPO would apply national criminal procedure rules when investigating, prosecuting and bringing to trial offences against the Union’s financial interests. After a very critical public consultation, which revealed numerous pitfalls,[4] the EPPO ‘dream’ was shelved for a few years, until it resurfaced in the Lisbon Treaty. Article 86 Treaty on the Functioning of the European Union (‘TFEU’) now provides an explicit formal basis for the creation of an EPPO. It determines the applicable legislative procedure and instrument, as well as the scope and competence of the future EPPO. Other aspects are left to the wisdom and discretion of the EU legislator.[5] The current Commission proposal is based on Article 86 TFEU, and draws inspiration from the Draft Model Rules, which resulted from a triple EPPO research project funded by the Commission.

Moreover, the Proposed EPPO Regulation is not a stand-alone proposal; it should be read against the background of other pending legislative initiatives. First, a proposal of directive on the fight against fraud to the Union’s financial interests by means of criminal law (‘Proposed Directive Financial Interests’) harmonises the definition of offences against the Union’s financial interests as well as the sanctions for those offences, and thereby constitutes the substantive basis for the offences within the EPPO’s competence (infra).[6] Next, the Proposed EPPO Regulation is linked with a proposal of regulation modernising the legal framework of Eurojust in accordance with Article 85 TFEU. Finally, earlier this year, the European Parliament and the Council both approved a revision of the OLAF Regulation, which strengthens the agency’s governance, reinforces procedural rights and improves the exchange of information with EU institutions and national authorities.[7] Even though this Regulation has not yet entered into force, the Commission has already announced plans for further adjustments related to the creation of the EPPO.[8] In particular, OLAF’s future role needs to be limited to administrative investigations regarding conduct which does not fall under the competence of the EPPO, in order to avoid a duplication of administrative and criminal investigations at EU level.[9]

The European Commission claims that the EPPO will provide federal protection for the federal EU budget.[10] This vocabulary is remarkable, not just from a political perspective (who would dare to say that the EU is a federal state?), but also in terms of substance. While the Commission’s proposal is far-reaching in certain respects, one may question whether it really follows a ‘federal’ logic all the way through. What is more, it is doubtful whether this proposal effectively addresses the main concerns raised in the past (e.g. with respect to procedural safeguards). Besides, the criminal law logic applied to the protection of the EU’s financial interests is surprising when compared to the Commission’s marked preference for administrative enforcement in EU competition law. Let me clarify these arguments with a closer analysis of the Commission’s proposal.

First of all, how will the EPPO be organised? The EPPO will be an indivisible,[11] supranational judicial body, headed by the European Public Prosecutor (‘EPP’), who will be assisted by his/her Deputies and staff. Furthermore, the EPPO will consist of at least one European Delegated Prosecutor (‘EDP’) per Member State. The EDPs are national prosecutors who will wear a double hat: in EPPO cases they will act under the exclusive authority of the EPP, but they can continue to exercise their function as national prosecutors in other cases. The EPPO will function independently from both national authorities and EU institutions, bodies, offices or agencies (Article 5)[12]. Yet, at the same time, the EPPO will rely heavily on their knowledge (for instance, of national criminal procedure), assistance and support (Article 11(7)). In particular, the EPPO will depend on information provided by Eurojust[13] (Article 57(2)) and Europol (Article 58(2)). What is more, national and EU authorities will have the obligation to inform the EPPO of any suspicion of an offence within its competence (Article 15(1)). In short, the EPPO will be characterised by a decentralised and integrated structure. It is certainly not the first time that the Commission opts for an enforcement structure which is both centralised and decentralised. Consider for instance EU competition law. The integration of national magistrates into an EU body is not novel either (compare for instance with Eurojust), but the degree of integration and, most importantly, the fact that the EPPO will directly act as prosecuting authority before national courts without depending on a decision of national authorities, are unprecedented.

Second, in accordance with Article 86(2) TFEU, the EPPO will have exclusive competence to investigate, prosecute and bring to judgment criminal offences affecting the EU’s financial interests (Article 11(4)). Within its scope of competence, the EPPO will thus exercise the same functions as a national prosecutor (including the decision to indict a suspect and the choice of jurisdiction; Articles 4(3) and 27), except the supervision of the execution of sentences. In this respect, the EPPO certainly resembles a federal prosecutor. The offences within its competence include fraud (Article 3 Proposed Directive Financial Interests), but also money laundering, corruption and misappropriation (Article 4 Proposed Directive Financial Interests). These offences will often, though not necessarily encompass a cross-border element; they can in principle be confined to one single Member State provided that they prejudice the Union’s financial interests (e.g. fraud with EU subsidies; Article 14).[14] What is more, the EPPO’s competence may also include other offences which are ‘inextricably linked’ with the aforementioned criminal offences against the Union’s financial interests (Article 13(1)). Therefore, the scope of the EPPO’s competence is potentially much wider than one might expect on the sole basis of Article 86 TFEU.

The Proposed EPPO Regulation will, however, not create a fully-fledged ‘federal’ criminal procedure. Indeed, the Commission’s proposal strongly relies on national criminal procedure and automatic mutual recognition, combined with some harmonising principles. One of these principles is European territoriality. This means that the EPPO can conduct investigations and prosecutions in all (participating) Member States (Article 25(1)), without having to use any of the existing ‘cumbersome and time-consuming intergovernmental instruments of legal assistance.’[15] In particular, the proposal sets out which investigative powers the EPPO will have, but does not regulate these powers in a detailed manner (Article 26). The Regulation will thus have to be supplemented with the national procedural rules of the Member State where the measure is to be carried out (Article 26(2)). The Regulation only harmonises national criminal procedure to the extent that it encompasses an EU-wide requirement of a prior judicial authorisation for the EPPO’s most intrusive investigative measures (Article 26(4)). While the authorisation must take the form of a written, reasoned decision and must be delivered within the time-frame set by the Regulation, the decision as such will be taken by the national competent judicial authority in accordance with national law (Article 26(6)). Furthermore, the evidence ‘presented’ by the EPPO (potentially including evidence collected in pre-existing administrative or criminal investigations) to the national trial court is deemed admissible, even if the evidence is not gathered in accordance with the procedural rules of that MEMBER STATE. In other words, national courts will have to accept evidence gathered in another Member State, as long as the fairness of the procedure or the rights of defence enshrined in Articles 47-48 Charter of Fundamental Rights of the European Union (‘EU Charter’) are not adversely affected (Article 30(1)). Finally, with regard to fundamental rights’ protection, the Proposed EPPO Regulation should offer an ‘unprecedented level of legal protection’ for individuals and companies.[16] Upon a closer look, however, the chapter on procedural safeguards (Articles 32-35) simply confirms the application of the safeguards offered by the EU Charter and some specific EU legal instruments. In addition, the proposal explicitly mentions the right to legal aid (Article 34) and the right to present evidence, appoint experts and hear witnesses (Article 35), but these rights are also covered by Article 6 ECHR. Moreover, after the indictment, the procedural rights of the accused will be determined by national law (Article 32(3)). In sum, the EPPO will simply have to meet the same minimum level as other EU institutions and the Member States in ‘all situations governed by European Union law.’[17]

Fourth, the Commission does not intend to install a federal court system. During the investigation, the acts of the EPPO may be submitted to judicial review by the competent national court, in the same way as the investigative acts of national prosecutors (Article 36 (1)). Moreover, as noted above, the EPPO will bring its cases to judgment before national courts. The Court of Justice will have no jurisdiction in EPPO cases (contrary to what was suggested by the Draft Model Rules), except of course when a national court would ask the EU Court for a preliminary ruling.

In conclusion, it remains to be seen whether this proposal will obtain unanimity in the Council and consent of the European Parliament. The Commission seems quite optimistic.[18] However, as a consequence of the ‘cherry-picking’ possibilities under the Lisbon Treaty, Denmark and the UK will not participate in the EPPO, and the same may be true for Ireland, unless it decides to opt-in. In the absence of unanimity amongst the other Member States, the proposal could be sent to the European Council for a political compromise (Article 86(1), para. 2 TFEU). Should such compromise appear impossible, a smaller group of at least nine Member States could still go ahead with the EPPO under the form of an enhanced cooperation (Article 86(1), para. 3 TFEU). Whatever the outcome will be, the EPPO will probably not cover the entire EU territory, unlike a real federal prosecution office. Inevitably, that will reduce its ability to protect the EU budget effectively. Ironically, the Member States which will not participate could become new safe havens for criminals who wish to commit offences against the EU’s financial interests…

[1] European Commission, Executive summary of the impact assessment accompanying the Proposal for a Council Regulation on the establishment of the European Public Prosecutor’s Office, SWD(2013) 275 final, p. 2.

[4] See e.g. M. Zwiers, The European Public Prosecutor’s Office. Analysis of a Multilevel Criminal Justice System, Intersentia, Cambridge/Antwerp/Portland, 2011, 372-385.

[5] For a more extensive discussion, see e.g. K. Ligeti, “The European Public Prosecutor’s Office: How Should the Rules Applicable to its Procedure be Determined?”, EuCLR 123 (2011), 131-134; M. Zwiers, The European Public Prosecutor’s Office. Analysis of a Multilevel Criminal Justice System, Intersentia, Cambridge/Antwerp/Portland, 2011, 385 et seq.

[6] Cf. S. White, “A Decentralised European Public Prosecutor’s Office. Contradiction in Terms or Highly Workable Solution?”, 2 eucrim 67 (2012), 73.

[7] European Commission, Improving OLAF’s governance and reinforcing procedural safeguards in investigations: A step-by-step approach to accompany the establishment of the European Public Prosecutor’s Office, COM(2013) 533 final, 17 July 2013, p. 2.

[8] Ibid.

[10] V. Reding, Establishing a European Public Prosecutor’s Office. A federal budget needs federal protection, press conference, Brussels, 17 July 2013.

[11] Point 14 Preamble to the Proposed EPPO Regulation.

[12] Articles refer to the Proposed EPPO Regulation, unless specified otherwise.

[13] The relationship with Eurojust was ’predestined’ to be ‘special’ as Article 86(1) TFEU prescribes that the EPPO should be established ‘from Eurojust.’ Yet, apart from sharing a common accounting officer (Article 52), the two EU bodies will have no organic ties. The EPPO will simply rely on Eurojust for expertise, technical support and information (Article 57).

[14] Contrary to what the Commission’s FAQ-sheet seems to suggest, the EPPO’s competence will thus not be limited to ‘[c]omplex cases with a cross-border dimension,’ thereby solving ‘the difficulties arising from the limited powers of national authorities which end at the borders of their territory.’ European Commission, Every euro counts. Frequently Asked Questions on the European Public Prosecutor’s Office, memo, 17 July 2013, p. 3.

[15] European Commission, Every euro counts. Frequently Asked Questions on the European Public Prosecutor’s Office, memo, 17 July 2013, p. 3.

[16] European Commission, Better protection of the Union’s financial interests: Setting up the European Public Prosecutor’s Office and reforming Eurojust, COM(2013) 532 final, p. 6. See also European Commission, Every euro counts. Frequently Asked Questions on the European Public Prosecutor’s Office, memo, 17 July 2013, p. 5.

[17] Case C-617/10 Åkerberg Fransson, 26 February 2013, para. 19; Article 51(1) EU Charter.

[18] V. Reding, Establishing a European Public Prosecutor’s Office. A federal budget needs federal protection, press conference, Brussels, 17 July 2013,p. 2.