Article by Anand Doobay, Partner in the Fraud and Regulatory Department, Peters & Peters Solicitors.

1. Are EU Instruments Necessary?

  • Economic crime can occur, and cause loss, in one Member State but may require evidence from other EU Member States to prove dishonesty. A good example is fraud that exploits the EU tax system, such as the missing trader intra-community (MTIC) fraud. The fraud involves goods imported VAT-free from other EU Member States being sold through contrived business-to-business transaction chains in the UK, and subsequently exported to the EU or elsewhere. The tax loss occurs when the VAT charged on the initial sale of the goods in the UK is not paid to HMRC because the seller disappears. The purchaser can still reclaim the VAT, so the loss crystallises when the trader who exports the goods from the UK makes a repayment claim.
  • Certain economic crimes can involve most or all of the criminal conduct taking place in one Member State but with losses sustained in another. For example, in an advance fee fraud a UK based offender may solicit sums of money from individuals in different EU Member States in return for non-existent prize winnings. In such cases both the UK and the State where the victims were defrauded are likely to have jurisdiction over the offender as well as relevant evidence.
  • Other crimes can involve both the criminal conduct and the economic effects in multiple jurisdictions. A typical international cartel may involve criminal cartel conduct, dishonest agreements to price-fix etc., in more than one territory which would carry adverse consequences for consumer markets in several Member States. All the affected States that criminalise cartel conduct are likely to have jurisdiction in relation to effectively the same conduct.
  • The upshot of the increased criminalisation of corporate conduct and the aggressive use of criminal jurisdiction, is the potential for the prosecution of offenders in more than one country. Criminalisation of corruption, and particularly of foreign public officials, is a good example. A company registered in State A and bribing officials in State B may violate anti-corruption legislation in both States. Again, concurrent jurisdiction may arise.
  • Where there is concurrent jurisdiction, the States may either agree to bring criminal proceedings in one State, or run concurrent proceedings. However they need to ensure the factual overlap between the offences is not so considerable as to engage the double jeopardy bar to any subsequent extradition request. Both cases will require cooperation between the States as regards evidence.

2. Criminal Proceedings In One Member State.

  1. Council Framework Decision 2009/948/JHA on prevention and settlement of conflicts of exercise of jurisdiction in criminal proceedings (30 Nov 2009)
    • "promote a closer cooperation between the competent authorities of two or more Member States conducting criminal proceedings, with a view to improving the efficient and proper administration of justice":
      1. prevent situations where the same person is subject to parallel criminal proceedings in different Member States in respect of the same facts, which might lead to the final disposal of the proceedings in two or more Member States thereby constituting an infringement of the principle of 'ne bis in idem'; and
      2. reach consensus on any effective solution aimed at avoiding the adverse consequences arising from such parallel proceedings.
    • Obligation to contact the competent authority in another Member State where there are reasonable grounds to believe that parallel proceedings are being conducted in that Member State (Article 5).
    • Obligation to reply to within any reasonable deadline indicated by the contacting authority, or, if no deadline has been indicated, without undue delay, and inform the contacting authority whether parallel proceedings are taking place in its Member State (Article 6).
    • Obligation to enter into direct consultations in order to reach consensus on any effective solution aimed at avoiding the adverse consequences arising from such parallel proceedings, which may, where appropriate, lead to the concentration of the criminal proceedings in one Member State (Article 10).
    • Where it has not been possible to reach consensus in accordance with Article 10, the matter shall, where appropriate, be referred to Eurojust by any competent authority of the Member States involved, if Eurojust is competent to act under Article 4(1) of the Eurojust Decision (Article 12).
    • To reach consensus in accordance with Article 10, the competent authorities shall consider the facts and merits of the case and all the factors which they consider to be relevant (Article 11).
    • The competent authorities should take into account that each case is specific and give consideration to all its facts and merits. In order to reach consensus, the competent authorities should consider relevant criteria, which may include those set out in the Guidelines for Deciding Which Jurisdiction Should Prosecute?(Eurojust Annual Report 2003) and take into account for example the place where the major part of the criminality occurred, the place where the majority of the loss was sustained, the location of the suspected or accused person and possibilities for securing their surrender or extradition to other jurisdictions, the nationality or residence of the suspected or accused person, significant interests of the suspected or accused person, significant interests of victims and witnesses, the admissibility of evidence or any delays that may occur (Recital 9).
    • Concerns:
      1. Criteria for allocating jurisdiction is not binding – Article 15 of the original proposal was not adopted;
      2. Article 3 defines 'competent authority' as a judicial authority or another authority (i.e. prosecutors);
      3. Framework Decision is limited to establishing provisions on the exchange of information and direct consultations between the competent authorities of the Member States and therefore "does not affect any right of individuals to argue that they should be prosecuted in their own or in another jurisdiction, if such right exists under national law" (Recital 17);
      4. Allows prosecution to "forum shop";
      5. Allocation of jurisdiction to a State other than where an accused is located can be challenged in extradition proceedings under Article 8 ECHR BUT:

        - limited scope for HR arguments under Part 1 EA 2003 pursuant to the EAW;

        - risk of divergent application across Member States' courts.
  2. Draft Council Framework Decision on the transfer of proceedings in criminal matters (30 June 2009)
    • Proposed Article 5: "For the purpose of applying this Framework Decision, any Member State shall have competence to prosecute, under its national law, any offence to which the law of another Member State is applicable". The competence conferred on a Member State exclusively by virtue of the Article may be exercised only pursuant to a request for transfer of proceedings.
    • Proposed Article 7: When a person is suspected of having committed an offence under the law of a Member State, the transferring authority of that Member State may request the receiving authority in another Member State to take the proceedings if that would improve the efficient and proper administration of justice, and if at least one of the following criteria is met:
      1. the offence has been committed wholly or partly in the territory of the other Member State, or most of the effects or a substantial part of the damage caused by the offence was sustained in the territory of the other Member State;
      2. the suspected person is ordinarily resident in the other Member State;
      3. substantial parts of the most important evidence are located in the other Member State;
      4. there are ongoing proceedings against the suspected person in the other Member State;
      5. there are ongoing proceedings in respect of the same or related facts involving other persons, in particular in respect of the same criminal organisation, in the other Member State;
      6. the suspected person is serving or is to serve a sentence involving deprivation of liberty in the other Member State;
      7. enforcement of the sentence in the other Member State is likely to improve the prospects for social rehabilitation of the person sentenced or there are other reasons for a more appropriate enforcement of the sentence in the other Member State; or
      8. the victim is ordinarily resident in the other Member State or the victim has another significant interest in having the proceedings transferred.
    • Proposed Article 12: The receiving authority of a Member State may refuse transfer only:
      1. if the act does not constitute an offence under the law of that Member State in accordance with Article 11(Double Criminality);
      2. if taking proceedings would be contrary to the ne bis in idem principle;
      3. if the suspect cannot be held criminally liable for the offence due to his or her age;
      4. if there is an immunity or privilege under the law of that Member State which makes it impossible to take action;
      5. where the criminal prosecution is statute-barred in accordance with the law of that Member State;
      6. if the offence is covered by amnesty in accordance with the law of that Member State;
      7. if the criteria on which the request is based under Art 7 (a) to (h) are not considered met.
    • Concerns:
      1. Article 5 weakens the normal assumption that a case being prosecuted has significant connections with the country prosecuting;
      2. Inadequate rights of the defence under Article 8: "Before a request for transfer is made, the transferring authority shall, where appropriate and in accordance with national law, inform the person suspected of the offence of the intended transfer. If the suspected person presents an opinion on the transfer, the transferring authority shall inform the receiving authority thereof."

3. Obtaining Evidence From A Member State For Proceedings In Another Member State.

  1. Framework Decision 2003/577/JHA on the execution in the European Union of orders freezing property or evidence (22 July 2003).
    • The competent judicial authorities of the executing State shall recognise a freezing order without any further formality being required and shall take the necessary measures for its immediate execution in the same way as for a freezing order made by an authority of the executing State (Article 5).
    • Article 7: The competent judicial authorities of the executing State may refuse to recognise or execute the freezing order only if:
      1. the certificate is not produced, is incomplete or manifestly does not correspond to the freezing order;
      2. there is an immunity or privilege under the law of the executing State which makes it impossible to execute the freezing order;
      3. rendering judicial assistance for the offence in respect of which the freezing order has been made, would infringe the ne bis in idem principle;
      4. where dual criminality applies (Article 3(2) lists offences excluded from dual criminality), the act on which the freezing order is based does not constitute an offence under the law of the executing State; however, in relation to taxes or duties, customs and exchange, execution of the freezing order may not be refused on the ground that the law of the executing State does not impose the same kind of tax or duty or does not contain a tax, duty, customs and exchange regulation of the same kind as the law of the issuing State.
    • The competent judicial authority of the executing State may postpone the execution of a freezing order transmitted in:
      1. where its execution might damage an ongoing criminal investigation, until such time as it deems reasonable;
      2. where the property or evidence concerned have already been subjected to a freezing order in criminal proceedings, and until that freezing order is lifted;
      3. where, in the case of an order freezing property in criminal proceedings with a view to its subsequent confiscation, that property is already subject to an order made in the course of other proceedings in the executing State and until that order is lifted. However, this point shall only apply where such an order would have priority over subsequent national freezing orders in criminal proceedings under national law.
    • Implemented in the UK by the Crime (International Co-operation) Act 2003.
    • European Judicial Network summary of Member States' replies to its questionnaire on the evaluation of the tools for judicial cooperation in criminal matters (5684/09):
      1. the Framework Decision is unanimously cited as the least used instrument of judicial cooperation;
      2. large majority of Member States have reported experiencing difficulties when applying the provisions on freezing of property or evidence;
      3. Member States indicated that in most instances prosecutors preferred to make requests for assistance, rather than rely on the FD.
  2. Framework Decision 2008/978/JHA on the European evidence warrant for the purpose of obtaining objects, documents and data for use in proceedings in criminal matters (18 December 2008).
    • Intended to 'fast-track' the mutual legal assistance processes relating to the taking of evidence by narrowing the grounds on which a State can refuse to execute a warrant, and by restricting the possibilities of individuals challenging a warrant in the courts of the executing State.
    • Article 3 limits the applicability of the EEW to a limited category of evidence, which is already in existence, and is easily available. It does it not include 'live' evidence taken by means of interviews or hearings, bodily material or biometric data (including DNA samples and fingerprints) or real-time information (such as intercepted communications or bank account monitoring). Nor does it include any analysis conducted on such evidence.
    • In the UK, the Home Office has explained in correspondence to the House of Lords that the defence would be able apply to the court for an EEW.
    • Commission's Green Paper on obtaining evidence in criminal matters from one Member State to another and securing its admissibility recommends:
      1. replacing the existing regime on obtaining evidence with a single piece of legislation, covering all types of evidence, including that which does not yet exist (such as witness statements and interception of communications) and existing evidence requiring further investigation (such as DNA samples);
      2. adopting common standards for gathering evidence in the context of admissibility of evidence.

4. Conclusion:

  • Sovereignty and domestic interests
  • Fairness
  • Efficiency of the system

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.