European Union: CJEU To Rule On Extradition Of EU Citizens In Criminal Antitrust Proceedings

Summary

Two cases pending before the Court of Justice of the European Union (CJEU) raise the question of whether extradition of EU Member State citizens may in certain circumstances violate fundamental EU law principles, including the principle of non-discrimination. The CJEU's rulings will have significant ramifications for EU citizens who have been indicted or carved out of plea agreements in the United States.

In Depth

The first European citizen to be extradited from Europe to the United States for criminal antitrust conduct recently succeeded in having a Berlin court refer the matter of his extradition to the Court of Justice of the European Union (CJEU) in the context of his damages action with regard to his extradition, after a series of multiple setbacks and a 24-month period of imprisonment.

Background

In March 2010, marine hose manufacturer Parker ITR, headquartered in Italy, pleaded guilty to fixing prices, rigging bids and allocating market shares for marine hose products. From 1999 to 2006, Mr. Pisciotti was Parker ITR's oil and gas business unit manager. Before US antitrust authorities uncovered the alleged marine hose cartel, Mr. Pisciotti moved to Orlean Invest, a logistics support company for the oil and gas industry, with offices in Nigeria. Mr. Pisciotti was carved out of the release in his former company's plea agreement and was not given non-prosecution protection.

Because Mr. Pisciotti did not agree to plead guilty, a grand jury in the US District Court for the Southern District of Florida indicted him in August 2010. The indictment charged Mr. Pisciotti with rigging bids, fixing prices and allocating market shares for sales of marine hoses. There was no allegation of obstruction of justice. The US Department of Justice (DOJ) filed the indictment "under seal", meaning that the court kept it secret and the fact of the indictment was not communicated to Mr. Pisciotti. Mr. Pisciotti was most likely aware of his possible indictment, however, since this is the usual consequence of plea bargain negotiations breaking down.

Mr. Pisciotti was placed on an Interpol Red Notice after being indicted. In June 2013, almost three years after the indictment, German authorities arrested Mr. Pisciotti at the Frankfurt airport as he was returning to Italy (where he resided) from a business trip in Nigeria. In August 2013, a US court unsealed Mr. Pisciotti's indictment, rendering it public, and the US government requested that Germany extradite Mr. Pisciotti.

In January 2014, the Higher Regional Court of Frankfurt authorised Mr. Pisciotti's extradition to the United States. His extradition was considered permissible because it fulfilled the rule of "dual criminality" required by the bilateral extradition treaty between Germany and the United States, and because Mr. Pisciotti could not benefit from the protection against extradition that is available to German nationals under the German Constitution. Regarding the latter issue, the Higher Regional Court of Frankfurt held that EU law does not require Germany to extend such protection to nationals of other EU Member States.

Mr. Pisciotti appealed to the German Federal Constitutional Court, arguing that – inter alia – his extradition would violate EU law prohibiting discrimination based on Member State nationality. A German citizen in the same situation would not have been extradited because of the protection granted to German nationals under Article 16 of the German Constitution, which holds that Germany shall not extradite its own citizens to non-EU countries. Mr. Pisciotti contended that in conformity with Article 18 of the Treaty on the Functioning of the EU (TFEU), which prohibits discrimination, he should have received the same treatment as a German national. In February 2014, the German Federal Constitutional Court rejected Mr. Pisciotti's appeal. As a consequence, Mr. Piscotti could be extradited.

Mr. Pisciotti also filed a complaint on similar grounds to the European Commission, requesting the initiation of infringement proceedings against Germany under Article 258 TFEU, for alleged breach of the non-discrimination principle (Article 18 TFEU) and the freedom to provide services within the EU (Article 56 TFEU). On 11 April 2014, the Commission rejected Mr. Pisciotti's complaint on procedural grounds, and that decision was confirmed by the General Court on 2 July 2014, and by the CJEU on 28 January 2015.

In the meantime, the US DOJ successfully extradited Mr. Pisciotti from Germany to the United States in April 2014. In the same month, Mr. Pisciotti pleaded guilty and was sentenced to a 24-month imprisonment and a $50,000 fine, with credit for the time he spent in German custody (approximately nine months). He was released in April 2015.

Request for Preliminary Ruling by Berlin Court

After this series of setbacks, Mr. Pisciotti may finally have embarked on the road to victory. After his release, Mr. Pisciotti initiated a damages action in Germany, once again complaining that his extradition was in breach of fundamental EU law principles that prohibit discrimination between a country's own nationals and citizens from other EU Member States.

On 18 March 2016, the District Court of Berlin referred four questions to the CJEU concerning the applicability of the non-discrimination principle on grounds of nationality under Article 18 TFEU and Mr. Pisciotti's claim for damages against the German state. In particular, the District Court's questions deal with the issue of whether the preferential treatment in extradition matters might be explained by the EU Member States' right to preserve their national identities under Article 4 of the (TFEU), and whether this might be sufficient to justify a limitation of the fundamental principle of non-discrimination in extradition matters. Additionally, while acknowledging exceptions necessary to safeguard rights recognized by national constitutions under the Extradition Agreement between the EU and the United States of 25 June 2003, the District Court indicated that it was inclined to consider that such exceptions under an international treaty do not justify a violation of the EU fundamental principle of non-discrimination based on nationality.

The District Court of Berlin further indicated that it was inclined to consider Mr. Pisciotti's extradition an unjustified violation of his right to non-discrimination on the grounds of nationality and of free movement. The District Court thus took a substantially different view from the one taken by the Higher Regional Court of Frankfurt and the German Federal Constitutional Court. In the District Court's view, however, the relevant EU rules were not sufficiently clear, and a referral to the CJEU therefore could not be avoided.

Request for Preliminary Ruling by Austrian Court

In September 2015, an Austrian court made a similar request to the CJEU for preliminary ruling on issues related to discrimination in extradition matters, and that matter is also currently pending. One of the Austrian court's questions is whether the principle of non-discrimination laid down in Article 18 TFEU should be interpreted to mean that, where a Member State has laid down a provision in its legal system (such as Article 16 of the German Constitution, which prohibits the extradition of German citizens to non-Member States), that provision also applies to citizens of other Member States residing in the Member State at issue.

Comment

The CJEU's preliminary rulings in these two cases will be crucial for EU citizens who have been indicted or carved out of plea agreements in the United States, and for would-be violators. The regulatory context applicable to extradition matters features highly diversified and non-harmonised rules (e.g., bilateral and international agreements, and different national rules for assessment of the dual criminality requirement) that make it extremely difficult to anticipate when and where the risk of extradition might materialise, especially when an individual is outside of his or her country, whether for business or personal reasons, and even long after the employment relationship with the company investigated for antitrust violations has ceased. The CJEU judgments will hopefully provide guidance on the specific issues outlined above and help determine the actual risks faced by executives of companies involved in international cartel cases. These judgments might also have a strong impact on the DOJ's enforcement efforts and the limitations to its potential extraterritorial reach, and more generally on the ever-increasing internationalisation of cartel enforcement around the world.

CJEU To Rule On Extradition Of EU Citizens In Criminal Antitrust Proceedings

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