Select Committee on European Scrutiny Tenth Report


EXECUTION OF ORDERS FREEZING ASSETS OR EVIDENCE

(21970)
13986/00
Draft Council Framework Decision on the execution in the European Union of orders freezing assets or evidence.
Legal base: Article 34 (2)(b) EU; consultation; unanimity
Document originated: 30 November 2000
Deposited in Parliament: 11 January 2001
Department: Home Office
Basis of consideration: EM of 31 January 2001
Previous Committee Report: None
To be discussed in Council: No date set
Committee's assessment: Legally and politically important
Committee's decision: Not cleared; further information requested

Background

  4.1  The principle that the courts of each EU Member State should recognise the validity of, and enforce, certain orders made by courts in other Member States in criminal proceedings was referred to in the Conclusions of the Tampere European Council in October 1999 as the principle of mutual recognition. These Conclusions also stated that the principle of mutual recognition should apply to pre-trial orders, in particular to those which would enable competent authorities quickly to secure evidence and to seize assets which are easily movable.

The document

  4.2  This initiative by France, Sweden and Belgium proposes the adoption of a Framework Decision on the execution within the European Union of orders freezing assets or evidence. The mechanism set out in the draft Framework Decision is based on that used in the Council Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters,[3] in other words, on the recognition and enforcement of the foreign order with the minimum of formality in the enforcing State.

  4.3  The scope of the Framework Decision is dealt with in Articles 1 and 2, and the procedure for executing orders is set out in Articles 3 to 10. Articles 11 and 12 contain the usual final provisions for a measure of this kind.

  4.4  Article 1 defines the terms "issuing State" and "executing State", and together with the definition of "freezing order" makes clear that the orders which it is sought to enforce must have been made by a judicial authority. A "freezing order"is defined as any measure taken by a competent judicial authority in the issuing State in order provisionally to prevent the destruction, transformation, moving, transfer or disposal of property that could be subject to confiscation in the issuing State, or which could constitute evidence. "Asset" is defined as movable or immovable property, and documents evidencing title to or interest in such property which the judicial authority in the issuing State considers to be the proceeds of a relevant offence, or an asset equivalent in value to the full or part value of such proceeds.

  4.5  Article 2 limits the scope of freezing orders to a list of matters which, under the law of the issuing State, constitute one of the offences of illicit trafficking in narcotic drugs, fraud affecting the European Communities' financial interests, laundering of the proceeds of crime, counterfeiting of the euro, corruption, or trafficking in human beings.

  4.6  Article 3 provides for the notification of the freezing order directly to the competent judicial authority in the executing State. The order is to be accompanied by a form of certificate provided for in Article 7. A standard form of certificate is set out in Annex I. The certificate will identify the court or judicial authority making the order, the offences being prosecuted, the purpose of the order, a description of the assets or evidence covered by the order, and the action to be taken by the executing State. The contents of the certificate are to be certified as accurate by the issuing judicial authority. The certificate is to be translated into the official language or languages of the executing State.

  4.7  Article 4 is a key provision. It provides that a freezing order is to be recognised and enforced by the competent authority in the enforcing State without any further formality being required, and is to be enforced forthwith in that State in the same way as a national freezing order, unless that authority invokes one of the limited grounds for refusing enforcement set out in Article 6 (failure to produce a certificate, production of a certificate which is incomplete). Article 5 provides that property in the executing State is to remain frozen until the issuing State has made a request under Article 8 in respect of the subsequent treatment of the asset.

  4.8  Article 8 deals with the question of the treatment of the frozen asset after notification of the freezing order under Article 3. This notification must set out, or be followed within no more than four days by, a request for the property to be transferred, or an order that the asset remain in the executing State pending a request from the issuing State for a confiscation order. A request for transfer may be made for the purpose of using the asset as evidence, or for the purposes of confiscation or restitution to the victim of an offence referred to in Article 2, provided that such transfer for the purposes of confiscation or restitution is lawful between the Member States concerned.

  4.9  Appeals are provided for in Article 9. This allows for appeals, but without any suspensory effect, against a freezing order either in the issuing or the executing State. The appeal may be made by the defendant, "the victim or any natural or legal person claiming to be a bona fide third party", but it is only in the issuing State that an appeal may be made as to the substance of the freezing order. Article 9(3) provides for the issuing State to be informed of any appeal in the executing State, and of the grounds pleaded, "so that it can submit the arguments that it deems necessary".

  4.10  Article 10 provides for the liability of issuing State in cases where information on the certificate is inaccurate at the time of transmission and has resulted in the enforcement of a freezing order which has caused "injury" to one of the persons referred to in Article 9. In cases where the executing State has paid damages in satisfaction of proceedings brought against it, the issuing State is to reimburse such sums in full.

The Government's views

  4.11  In her Explanatory Memorandum of 31 January 2001, the Minister of State at the Home Office (Mrs Barbara Roche) describes the overall purpose and effect of the proposal as follows:

"The provisions represent the first proposals for the practical application of the principle of mutual recognition following the agreement to a programme of measures in this area under the French Presidency. The aim of mutual recognition (a UK initiative at the Special European Council at Tampere) is to develop a system whereby each EU Member State recognises as valid certain pre and post conviction decisions of other Member States' judicial authorities with the minimum of formality.

"The UK considers that the freezing of assets or other material to prevent their dissipation before they can be confiscated, be used as evidence in a criminal investigation or be returned to their rightful owners is an essential tool for law enforcement. Moreover there are clear operational reasons why the enforcement of such orders across national boundaries should be made as swift as possible. The Government therefore supports the central principle of this initiative. It is also clear that the arrangements must include adequate protection for individual rights. The UK will therefore propose some amendments — as outlined below — during working group discussions commencing in March."

  4.12  The Minister considers the list of offences in Article 2 to be appropriate and comments that the range of offences is limited in order to minimise difficulties relating to dual criminality.[4] Nevertheless, the Minister sees no reason why the list should not also refer to all fraud, rather than being limited to fraud which affects the Communities' financial interests. On Article 3, the Minister comments that the UK generally favours a single contact point for the notification of foreign orders, and that this matter will need further consideration in the Working Group.

  4.13  The Minister describes Article 4 as "pivotal article" of the draft instrument and comments as follows:

"The UK considers that such an approach is central to the mutual recognition principle, which was endorsed so clearly by EU Heads of State and Government at Tampere. However, it also recognises that, in accordance with the Tampere conclusions, mutual recognition must where appropriate be accompanied by safeguards in the form for instance of common minimum standards. In this instance, in view of the serious effects which freezing orders can have on unconvicted persons, the Government is developing a number of additional provisions, which we would wish to see incorporated in the text. These have still to be finalised but are likely to relate to the need for some independent scrutiny in the country of origin of the decision to make the original freezing order, clear and adequate rights of appeal in that country, the level of suspicion which must have been established before the order was made and the duration of the order in the executing state."

  4.14  With regard to Article 5, the Minister considers that the duration of the freezing order is likely to be a central issue, and that the Government is likely to press for a short finite life for all orders executed under these special provisions, both to emphasise their urgent, but temporary, nature and to encourage the making of a formal freezing request as soon as possible.

  4.15  The Minister notes that in Article 8 the three purposes for which property can be frozen, namely for use as evidence, for the purposes of confiscation and for restitution to a victim, do not appear to be consistent with the definition of a freezing order in Article 1 (which does not expressly refer to restitution). The Minister makes the following further comment:

"A notification must be followed within 4 days by either a request for the assets to be transferred to the issuing State, or that they remain frozen pending a request for the execution of a confiscation order provided that such an order is already made or 'is due to be issued at a future date'. The Government considers that the three purposes of restraint are very different and that the provisions should reflect that fact. The Government also sees difficulties in the use of the mutual recognition procedure for the indefinite freezing of assets, implied by the last provision, and will seek to have certain safeguards included."

  4.16  On the question of appeals under Article 9, the Minister comments as follows:

"We will need to consider a number of issues both domestically and in working group discussions such as where an appeal would lie, what considerations should apply with regards to the procedures and time limits for appeals in the issuing states, the provision of legal aid, and details of compensation measures. The Government's objective is to ensure that all defendants have a right of appeal, wherever it may lie, against any decision which affects them and which is fair, easily accessible and understandable."

Conclusion

  4.17  We thank the Minister for her helpful and thorough Explanatory Memorandum, which provides a useful introduction to a complex subject.

  4.18  We share the Minister's support for the central principle of mutual recognition and enforcement in this area, provided this is coupled with appropriate protection for individual rights.

  4.19  We note that the proposal appears to be modelled on the mechanism provided for mutual recognition of judgments in civil and commercial matters, but recall that under such arrangements the judgments and orders it is sought to enforce are normally ones which are final, following an adversarial procedure. The orders covered by the present proposal will include those which are essentially provisional and made before the issues have been finally determined. We accept that to confine the proposal to final orders would tend to defeat its main object, and that it may be necessary in the interests of justice to recognise and enforce provisional orders, even when made without notice being given to the defendant. Nevertheless, we ask the Minister for her views as to what safeguards might be introduced to reconcile the need for the swift enforcement of orders across frontiers with the rights of defendants and third parties.

  4.20  We shall look forward to further information from the Minister as negotiations progress, but in the meantime we have a number of questions of detail.

  4.21  We ask the Minister if she is content that the concept of 'evidence' in Article 1 requires no further definition. It seems to us that the admissibility of evidence is likely to vary from one Member State to another, and that some attention should be paid to the case where evidence is admissible in the issuing State, but not in the executing State.

  4.22  We agree with the Minister that more work is needed on the provisions relating to appeals in Article 9, and we shall look forward to hearing further from her as negotiations progress. In the meantime, we ask the Minister if she considers that Article 9(3) of the proposal is intended to give the issuing State a right to intervene in the proceedings on an appeal in the executing State and, if so, if she considers this appropriate.

  4.23  We note that under Article 10 the issuing State does not appear to be bound to reimburse the executing State, unless the injured party has instituted proceedings and recovered damages from the executing State. This appears to us to make it more likely that the injured party will have to commence proceedings, and to incur their attendant costs, and we ask the Minister if it would be more appropriate for reimbursement to be conditional on any reasonable decision by an executing authority to pay compensation to an injured party.

  4.24  We shall keep the document under scrutiny pending the Minister's reply.


3  (21778) - ; see HC 23-xxix (1999-2000), paragraph 25 (15 November 2000). Back

4   The principle that the same conduct should be criminal in both the issuing and the executing State.  Back


 
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