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European Court of Justice: The Grand Chamber presided by K. Lenaerts, President, addressed the reference question concerning interpretation of Articles 47 and 48 of the Charter of Fundamental Rights of the European Union to determine lawfulness of penalties imposed on one DB for offences of insider dealing and failure to cooperate in the context of an investigation conducted by Consob (National Companies and Stock Exchange Commission, Italy).

The Dispute in the Main Proceedings

By decision dated 02-05-2012, Consob, imposed two financial penalties of EUR 200 000 and EUR 100 000 respectively on DB, for an administrative offence of insider trading committed, under two heads, namely insider dealing and the unlawful disclosure of inside information. It had also imposed on him a financial penalty of EUR 50 000 on the ground that the person concerned had declined to answer questions put to him when he appeared at hearing.

In that court’s view, right to remain silent and to avoid self-incrimination, based on the provisions of the Constitution, of European Union (EU) law and of international law, could not justify a refusal by the person concerned to appear at hearing ordered by Consob nor to delay the hearing.

Questions Referred for Opinion

Constitutional Court of Italy had pointed out that, although Article 30(1) of Regulation No 596/2014 had required Member States to ensure that the competent authorities had  power to take appropriate sanctions and other measures, Article 30(1)(b) had prescribed that Member States should not apply such sanctions or measures to natural persons who, in an investigation concerning an offence that was punishable by administrative sanctions of a criminal nature, refuse to provide the competent authority with answers which might establish their liability for such an offence, or their criminal liability.

In the above circumstances, the Constitutional Court decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

(1) Whether Article 14(3) of Directive 2003/6, and Article 30(1)(b) of Regulation No 596/2014 were to be interpreted as permitting Member States to refrain from penalising individuals who had refused  to answer questions put to them by the competent authorities and which might establish their liability for an offence that was punishable by administrative sanctions of a “punitive” nature?

(2) If the answer to the first question was to be in the negative, whether Article 14(3) of Directive 2003/6, and Article 30(1)(b) of Regulation No 596/2014 compatible with Articles 47 and 48 of the [Charter] – including in the light of the case-law of the European Court of Human Rights on Article 6 of the ECHR?

Considerations on the Questions Referred

 The Court of Justice observed that Articles 47 and 48 of the Charter enshrine right to a fair trial and presumption of innocence. The Bench noticed,

“Second paragraph of Article 47 corresponds to Article 6(1) of the ECHR (European Convention on Human Rights) and Article 48 of the Charter is ‘the same’ as Article 6(2) and (3) of the ECHR.”

In that regard, the Court relied on European Court of Human Rights’ observation that, even though Article 6 of the ECHR did not explicitly mention right to silence, that right was a generally recognised international standard which lie at the heart of the notion of a fair trial. By providing the accused with protection against improper coercion by the authorities, that right contribute to avoiding miscarriages of justice.

On Article 30(1)(a) and 30(1)(b) of Regulation No 596/2014 the Court reached to the findings that while the wording of those two provisions did not explicitly rule out the possibility that the Member States’ obligation to determine the penalties to be applied in such a case also applies to the situation where a person so heard had refused to provide the said authority with answers that were capable of establishing that person’s liability for an offence that would be  punishable by administrative sanctions of a criminal nature, or that person’s criminal liability, neither was there anything in the wording of Article 14(3) of Directive 2003/6 that would preclude an interpretation of that provision to the effect that that obligation would not apply in such a case.

Reliance was placed on Saunders v. United Kingdom, (1996) 23 EHRR 313, wherein it had been emphasised that,

“The right to silence cannot reasonably be confined to statements of admission of wrongdoing or to remarks which directly incriminate the person questioned, but rather also covers information on questions of fact which may subsequently be used in support of the prosecution and may thus have a bearing on the conviction or the penalty imposed on that person.”

Furthermore, even if, in the present case, the penalties imposed on DB by the supervisory authority at issue in the main proceedings were not to be criminal in nature, the need to respect the right to silence in an investigation procedure conducted by that authority could also stem from the fact, noted by the referring court, that, in accordance with national legislation, the evidence obtained in those proceedings may be used in criminal proceedings against that person in order to establish that a criminal offence was committed.

Hence, it must be held that the safeguards afforded by the second paragraph of Article 47 and Article 48 of the Charter, with which European Union (EU) institutions, as well as Member States, must comply when they implement EU law, include, inter alia, right to silence of natural persons. That right preclude, penalties being imposed on such persons for refusing to provide the competent authority under Directive 2003/6 or Regulation No 596/2014 with answers which might establish their liability for an offence that would be punishable by administrative sanctions of criminal nature, or their criminal liability.

In the light of Articles 47 and 48 of the Charter of Fundamental Rights of the European Union, must be interpreted as allowing Member States not to penalise natural persons who, in an investigation carried out in respect of them by the competent authority under that directive or that regulation, refuse to provide that authority with answers that were capable of establishing their liability for an offence that would be punishable by administrative sanctions of a criminal nature, or their criminal liability.[DB v. Consob, C‑481/19, decided on 02-02-2021]


Kamini Sharma, Editorial Assistant has put this story together.