On the 31 October 2019, the First Hall in its Constitutional Jurisdiction handed down judgement in Digisec Media Limited v Director General (Consumer Affairs) and Advocate General. It affirmed that public enforcement proceedings in relation to consumer law are criminal in nature and therefore are protected by the constitutional guarantee to a fair hearing as applicable to criminal offences.
On the 18th of May 2018, in line with the provisions of the Consumer Affairs Act ("the Act") and the Consumer Rights Regulations ("the Regulations"), the Director General (Consumer Affairs) issued an administrative decision imposing a fine of €30,000 on Digisec Media Limited ("Digisec").
Digisec felt aggrieved by the decision and lodged an appeal before the Competition and Consumer Appeals Tribunal. The said appeal was however suspended since the applicant company also instituted an action before the Civil Court, First Hall, in its Constitutional Jurisdiction, claiming that the Director General's decision breached its fundamental rights as protected by the Constitution.
Articles 14A, 106A, 110B and 110C of the Act as well as Regulation 27 of the Regulations authorise the Director General (Consumer Affairs) and the Competition and Consumer Affairs Tribunal ("the Tribunal") to hear and determine cases of an alleged breach of the Act or the Regulations, and to give orders and impose fines in the case of any infringement thereof.
Cases of an alleged breach of the Act are classified as administrative in nature by the same law. However, Digisec claimed that notwithstanding this classification, it is evident that cases of an alleged breach of the Act are actually of a criminal nature and, as such, in terms of Article 39(1) of the Constitution, can be heard and determined exclusively by a Court. Neither the Director General (Consumer Affairs) nor the Tribunal amount to a Court. Therefore, inasmuch as Articles 14A, 106A, 110B and 110C of the Act as well as Regulation 27 of the Regulations are of a criminal nature, the Decision and the fine imposed breach the fundamental rights of the applicant company under Article 39 of the Constitution and should be nullified.
Amongst others, one fundamental point of dispute between the parties was whether the autonomous interpretation given to 'criminal offence' under the jurisprudence of the European Court of Human Rights was applicable to Article 39(1) of the Constitution. The Court cited Federation of Estate Agents vs. DG (Kompetizzjoni) et 1 and asserted that the autonomous interpretation to a criminal offence was applicable even to the Constitution. Otherwise, the legislator would be given the opportunity to amend any law, replacing the term 'criminal' with 'administrative', and thereby circumventing the guarantees provided by Article 39 of the Constitution.
The Court cited Engel & others vs The Netherlands 2 and held that in order to determine whether the offence is of a criminal or administrative nature, the three Engel criteria must be assessed: (i) the legal classification of the offence under national law; (ii) the very nature of the offence; (iii) the degree of severity of the penalty the person concerned risks incurring.
The Court concluded that notwithstanding that the law classifies the fines as administrative fines, a deep analysis of the second and third criteria clearly demonstrates that the offence is of a criminal nature:
- (i)The aim of the Act is the protection of the public interest – the Criminal Code has the very same aim;
- (ii)The fine imposed did not serve as compensation for damages suffered but as a punishment which had a punitive purpose and a deterrent effect on the plaintiff company;
- (iii)The fine imposed was considerable and was closer to the maximum amount that could have been imposed by law than to the minimum amount.
In light of this, the safeguards laid down in Article 39(1) of the Constitution were deemed applicable. The Court asserted that neither the Director General (Consumer Affairs) nor the Tribunal constitute a Court in terms of said provision. Therefore, it concluded that the plaintiff company's right to a fair hearing was breached, and consequently declared the decisions taken by the Director General and the Office for Consumer Affairs against the plaintiff company as null and without effect. However, it did not proceed to award the plaintiff company damages. It explained that awarding compensation is at the discretion of the Court and that damages should be awarded if the court considers it appropriate to do so. In this particular case, it declared that finding a breach of the fundamental rights of the company and nullifying any decisions taken against it was an effective enough remedy.
It will be noted that the Consumer Affairs Act has since been amended, and the procedure to find a breach of consumer legislation by a trader has been rectified.
1 Rikors Numru 87/2013/1, Federation of Estate Agents vs DG (Kompetizzjoni), Constitutional Court, 3rd May 2016.
2 Engel and others vs The Netherlands (1976) Series A, No 22.
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