EU law allows MS to provide for civil confiscation proceedings irrespective of a finding to a criminal offence
On 19 March 2020, the ECJ rendered its judgment in the case «AGRO IN 2001» (C-234/18). In essence, the Court was asked to interpret Directive 2014/42 on the freezing and confiscation of instrumentalities and proceeds of crime in the EU, and its compatibility with national legislation providing for civil law proceedings on asset confiscation that are not based on a previous conviction. The case gave the Court the opportunity to interpret for the first time, Directive 2014/42 and Framework Decision 2005/2012/JHA – both EU instruments intended to harmonise Member State rules on confiscation of criminal assets.
Facts of the case and the request for preliminary ruling
The case has been brought before the Court through a request for a preliminary ruling submitted by the Sofia City Court (Bulgaria). As for the facts of the case, BP, chairman of the supervisory board of a bank, was being investigated for allegedly inciting others to embezzle funds from the bank. The Public Prosecutor Office in Sofia informed the Commission for combating corruption – a specialised national authority entrusted with fighting corruption – about the preliminary investigation; the Commission, in turn, launched its own enquiry.
Against this backdrop, civil law proceedings were initiated in March 2016 by the Commission for combating corruption, requesting the freeze of the illegally obtained assets of BP and others. At a later stage, separate criminal proceedings – which are still pending – were brought against BP.
The Sofia City Court asked the Court, in essence, whether Directive 2014/42 permits the confiscation of assets without a previous conviction, and if so, under what conditions.
Under article 4(1) of the Directive 2014/42, confiscation of assets is subject to a final conviction of a criminal offence. Under article 2 of the Bulgarian confiscation of illegally obtained assets law, however, provides for a civil procedure for confiscation of assets which is independent from the outcome of criminal proceedings that can be brought against the suspected person; the mere existence of criminal charges suffices to initiate civil proceedings for confiscation of illegally obtained assets.
The ECJ assessment
In its analysis, the Court, following AG Sharpston’s Opinion, noted that the Directive is not applicable ratione materiae. The criminal offence of embezzlement falls outside the scope of the legal instruments listed under article 3 thereof (point 47). Instead, the Court founded its assessment on Framework Decision 2005/212/JHA on Confiscation of Crime-Related Proceeds, Instrumentalities and Property. The reasoning of the Court rests on the fact that Directive 2014/42 only amended certain provisions of the Framework Decision and hence, the other parts are still applicable. In the light of article 2(1) thereof, confiscation of assets is subject to criminal offences punishable by deprivation of liberty for more than one year. Since, under Bulgarian law, embezzlement is punished with 10 to 20 years of deprivation of liberty, the offence in question falls under the scope of the Framework Decision (Point 49).
The Court went on to assess the objectives and context of the Framework Decision, and it remarked that, on the one hand, the Framework Decision aims at Member states having effective rules on the confiscation of assets relating to a criminal offence. On the other hand, the Framework Decision was adopted with the purpose of establishing minimum harmonisation standards for the confiscation of crime-related instrumentalities, proceeds and property, with the intention of facilitating the mutual recognition of judicial decisions relating to confiscation in the framework of criminal proceedings (Point 56).
Further, the Court noted that under Bulgarian national law, civil confiscation proceedings focus on the illegally obtained assets; they are independent from any potential criminal proceedings conducted against the perpetrator of the offences regardless of the result of those proceedings.
For that reason, the Court arrived to the conclusion that the Framework Decision does not regulate the confiscation of instrumentalities and proceeds from illegal activities ordered by a court of a Member State during or as a result of proceedings not aimed at the finding of a criminal offence (Point 61).
On that basis, the Court resolved that EU law does not preclude national legislation to provide for civil law proceedings on confiscation which are not subject to the determination of a criminal offence or to a previous conviction (Point 62).
Some remarks
Although it is for the referring court to determine, the judgment falls short of an analysis on the nature of the confiscation proceedings established under Bulgarian law. The Court limited itself to state that the confiscation proceedings before the referring court were of civil nature and they coexist at domestic level, with a confiscation regime under criminal law (Point 60).
Despite agreeing with the Court’s final conclusion, the nature of the confiscation proceedings is decisive in establishing whether EU Law on asset confiscation affects the proceedings at hand. In that respect, when it comes to determine the substance of asset confiscation, one should bear in mind the different schemes that are encompassed. Traditional confiscation or “ordinary” confiscation entails a criminal element and it is an in personam proceeding, meaning that the assets to be confiscated are linked to a criminal offence following the conviction of the defendant. In contrast, civil confiscation involves a civil procedure – in rem procedure – addressed against the unlawfully obtained assets. The need of a final conviction is therefore, not per se required. To put it simply, a confiscation order of civil nature is not conceived as a criminal sanction.
It should be remarked that these forms of confiscation are designed to fight organized crime and its purpose is to facilitate the recovery of illicitly obtained assets.[1] Member States foresee this sort of forfeiture mechanisms in their national legal systems, although the confiscation models and its essential content diverge among them. In the case of Ireland, Italy or Bulgaria, civil confiscation proceedings can be pursued separately, irrespective of criminal proceedings.[2]
Further, the Court could have looked into the well-established case-law of the ECtHR concerning non-conviction based confiscation. In that respect, the ECtHR had the opportunity to deal with the nature of confiscation proceedings in multiple occasions.[3] Furthermore, notwithstanding the frequent interferences with fundamental rights arising from these regimes, the ECtHR had found that non-conviction based confiscation proceedings are in conformity with the European Convention on Human Rights.
Overall, the Court has taken a rather technical approach to exclude civil confiscation proceedings from the scope of the current EU Law arena. Moreover, the judgment evidences the complications arising from the disparity of confiscation models adopted by Member States striving to make more efficient the fight against organised crime. While the existing EU legal framework might not oppose to non-conviction based confiscation regimes, it remains to be seen how these can be accommodated in the field of mutual recognition of freezing and confiscation orders, and in what way, if any, they limit EU fundamental rights recognized under the Charter.
With regards to the latter, it is interesting to note that, the ECJ has been seized with the question to interpret the Charter of Fundamental Rights of the European Union (Article 17(1) and 47), in connection with a Bulgarian asset confiscation regime, which allows for the confiscation of the means of transport of smuggled goods even if is not the property of the perpetrator. The request for a preliminary ruling was submitted by the Plovdiv Court of Appeal, in the context of proceedings concerning the confiscation of a third-party legal person’s property – a truck used as the means to commit the crime – who was not involved in the criminal offence committed by the perpetrator. The case (C-393/19) is still at a very early stage but the preliminary reference can be found here.
[1] Alagna, F. Non-conviction Based Confiscation: Why the EU Directive is a Missed Opportunity. Eur J Crim Policy Res 21, 447–461 (2015). https://doi.org/10.1007/s10610-014-9252-8.
[2] Weyer, V. “Mutual recognition of confiscation orders and national differences”, Improving confiscation proceedings in the European Union p. 87(2019).
[3] See for example, G.I.E.M and others v. Italy, Nº 1828/06, Varvara v. Italy, Nº 17475/09 and Butler v. UK, N°41661/98.