Garlsson Real Estate and Others

On 20 March 2018, the Court (Grand Chamber) delivered its judgment in case C-537/16 on the interpretation of Article 50 of the Charter on the ne bis in idem principle in the context of a national legislation which provides for an administrative penalty and a criminal penalty for the same acts, relating to market manipulation.

The Italian National Companies and Stock Exchange Commission (Consob) imposed an administrative penalty on Mr Stefano Ricucci and two companies under his direction, for market manipulation. Mr Ricucci and the two companies appealed against the administrative penalty to the Corte di appello di Roma and subsequently lodged an appeal against that judgment with the Corte Suprema di Cassazione. In his appeal, Mr Ricucci relied on the fact that he had been convicted for the same acts in criminal proceedings by a final judgment given by the Tribunale di Roma.

The Italian Court of Cassation essentially asked the Court whether Article 50 of the Charter, read in the light of Article 4 of Protocol No 7 to the ECHR, must be interpreted as precluding national legislation which permits the possibility to bring administrative proceedings against a person in respect of unlawful conduct consisting in market manipulation for which the same person has already been finally convicted.

The Court first noted that under Article 14(1) of Directive 2003/6, read in conjunction with Article 5 thereof, Member States are to impose, without prejudice to their right to impose criminal penalties, effective, proportionate and dissuasive administrative measures or sanctions against the persons responsible for market manipulation. It therefore found that the administrative procedure and the administrative fine at issue in the main proceedings amount to an implementation of EU law and, as a result, they must inter alia respect the fundamental right not to be tried or punished twice in criminal proceedings for the same criminal offence, guaranteed by Article 50 thereof.

As regards the assessment as to whether proceedings and penalties, such as those at issue in the main proceedings, are criminal in nature, it then recalled that, according to the Court’s case-law, three criteria are relevant. The first criterion is the legal classification of the offence under national law, the second is the intrinsic nature of the offence, and the third is the degree of severity of the penalty that the person concerned is liable to incur

It found that, although it was apparent from the case file before the Court that national law classified the procedure giving rise to the imposition of that penalty as administrative proceedings, that penalty was not only intended to repair the harm caused by the offence, but that it also pursued a punitive purpose and that it had a high degree of severity which is liable to support the view that that penalty is criminal in nature for the purposes of Article 50 of the Charter, which it is, however, for the referring court to determine.

As it appeared that the national legislation at issue in the main proceedings permitted the possibility of bringing administrative proceedings of a criminal nature for the purposes of Article 50 of the Charter against a person, such as Mr Ricucci, in respect of unlawful conduct consisting in market manipulation for which the same person has already been finally convicted, such a duplication of proceedings and penalties constitutes a limitation of the right guaranteed by Article 50 of the Charter.

The Court held that concerning offences relating to market manipulation, it seemed legitimate that a Member State might wish, first, to dissuade and punish any infringement, whether intentional or not, of the prohibition of market manipulation by imposing administrative penalties set, as the case may be, on a flat-rate basis and, secondly, to dissuade and punish serious infringements of such a prohibition, which have particularly negative effects on society and which justify the adoption of the most severe criminal penalties.

It however seemed, in the Court’s view, that the act of bringing proceedings for an administrative fine of a criminal nature such as the one at issue in the main proceedings exceeds what is strictly necessary in order to achieve that objective, in so far as the final criminal conviction is, given the harm caused to the company by the offence committed, such as to punish that offence in an effective, proportionate and dissuasive manner, which it is for the referring court to determine.

The Court concluded that Article 50 of the Charter must be interpreted as precluding national legislation which permits the possibility of bringing administrative proceedings against a person in respect of unlawful conduct consisting in market manipulation for which the same person has already been finally convicted, in so far as that conviction is, given the harm caused to the company by the offence committed, such as to punish that offence in an effective, proportionate and dissuasive manner.

It also specified that the ne bis in idem principle guaranteed by Article 50 of the Charter confers on individuals a right which is directly applicable in the context of a dispute such as that at issue in the main proceedings.