Select Committee on European Scrutiny Second Report


EXECUTION OF ORDERS FREEZING ASSETS OR EVIDENCE


(a)
(21970)
13986/00

(b)
(22593)
10912/01
— 


Draft Council Framework Decision on the execution in the European Union of orders freezing assets or evidence.


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: (b) 26 July 2001
Deposited in Parliament: (b) 22 August 2001
Department: Home Office
Basis of consideration: (b) EM and Minister's letter of 17 September 2001
Previous Committee Report: (a) HC 28-x (2000-01), paragraph 4 (28 March 2001)
(b) None
To be discussed in Council: Justice and Home Affairs Council December 2001
Committee's assessment: Legally and politically important
Committee's decision: (a) Cleared
(b) Not cleared; further information requested



Background

5.1 This proposal is based on the principle of mutual recognition of pre-trial orders so as to enable competent authorities quickly to secure evidence and to seize assets which are easily movable. The previous Committee considered this draft Framework Decision on 28 March and raised the question of safeguards for the rights of defendants and third parties, and the admissibility of evidence secured by pre-trial orders. The previous Committee held the document under scrutiny pending the Minister's reply.

5.2 The Parliamentary Under-Secretary of State at the Home Office (Mr Bob Ainsworth) wrote to our sister Committee in the Lords on 17 September to explain a number of changes which had been made to the earlier proposal, but did not deal with the points raised by the previous Committee.

The document

5.3 Document (b) is a revised version of the document (document (a)) considered by the previous Committee on 28 March. As before, the draft Framework Decision sets out a mechanism for orders made in one Member State freezing assets or evidence to be recognised and enforced in another Member State with the minimum of formality. The revised version contains a number of detailed changes.

5.4 One significant change is made to Article 1 (Definitions), where a 'freezing order' is no longer defined as including an order made for the purposes of restitution of property to the true owner. (However, it would continue to apply to orders to secure evidence and property which may be the subject of confiscation). The definitions have also been expanded to allow enforcement of orders seizing items used in the commission of an offence.

5.5 As before, 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. The Presidency has asked all delegations to consider whether any further offences should be added.

5.6 Article 3 remains unchanged and provides for the notification of the freezing order directly to the competent judicial authority in the executing State.

5.7 Article 4 is a key provision, providing for recognition and enforcement of the freezing order in the enforcing State without any further formality being required. Limited grounds for refusing enforcement are set out in Article 6 (failure to produce a certificate, production of a certificate which is incomplete), to which a new ground has been added, namely where there is an absolute immunity or privilege under the law of the executing state making it impossible to execute the freezing order. A new Article 6a has been added to allow enforcement of an order to be postponed where this might damage an ongoing criminal investigation in the enforcing state, or where the assets or evidence concerned have already been the subject of a freezing order made in the context of another criminal investigation.

5.8 No substantial change has been made to Article 7 (standard form certificate accompanying the freezing order) or to Article 8 ( treatment of the frozen asset after notification of the freezing order).

5.9 Article 9 (appeals) has remained substantially unchanged. It allows for appeals, but without any suspensory effect, against a freezing order in either 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. Consideration is being given to the principle of ne bis in idem [4] as an additional ground of appeal, with a proposal that an appeal be available in the executing state where the freezing order seeks confiscation in circumstances where such confiscation could not be obtained as a final order under arrangements between Member States for mutual legal assistance.

5.10 As before, Article 10 provides for the liability of the 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 view

5.11 In his letter of 17 September to the Chairman of our sister Committee in the Lords, the Parliamentary Under-Secretary of State at the Home Office (Mr Bob Ainsworth) describes the amendments made in the following general terms:

    "There are a number of amendments (and, in our view, generally improvements) over the original text. These are fully described in the Explanatory Memorandum, but most significantly, it is no longer proposed that this instrument should at this stage at least be used for the purposes of restitution of stolen goods to their rightful owners or victims (which would have greatly complicated the procedures). The text is also improved in relation to the maximum duration of freezing orders and extends the grounds on which execution of a foreign order can be declined."

5.12 In his Explanatory Memorandum of 17 September the Minister comments on each Article of the proposal and on the amendments made. The Minister comments that he is content with the removal of orders for the purpose of restitution from the scope of the proposal, and with the inclusion of items used in the commission of an offence within its scope. The principal detailed comments of the Minister are the following.

5.13 On Article 2 (offences) the Minister comments as follows:

    "The UK is satisfied that, as a first measure applying the mutual recognition principle, the offences listed are generally appropriate. All listed crimes are subject to existing EU measures which means that there should be a commonly accepted definition of the offence concerned in all Member States. However, we are undertaking consultation on the possible addition of further offences to the list again based on existing measures with commonly accepted definitions of offences. Also with regards to Article 2(b) we can see no reason why the scope should not be extended to beyond just that which affects the Communities' interests. In the UK's view further consideration will need to be given to the technical implications of including the wide concept of 'money laundering' in the list. The Working Group will also need to consider whether there should be some specific mechanism for amending the list."

5.14 On the principle of mutual recognition set out in Article 4, the Minister repeats the point made by the then Minister of State at the Home Office that mutual recognition must be accompanied by common minimum standards. The Minister adds that action taken under the draft instrument in the UK will need to be in full compliance with the Human Rights Act, and points to the serious effects which freezing orders can have on unconvicted persons. In this regard, the Minister refers to a number of proposals being made by the UK, as follows:

    "We are proposing that there must be a clear indication in the certificate that where an order is to freeze with a view to later use as evidence that the specified material is likely to be of substantial value to the investigation, or where the order is with a view to eventual confiscation that there is a clear link satisfied that the issuing state has considered the need for the order and can provide a short summary of it. There would however be no question of the executing state coming to its own independent view in these cases, except in the most blatant cases of uncertainty where we would expect there to be full consultation between the states involved before a decision is taken on execution."

5.15 On Article 6 (grounds for non-recognition or non-execution) the Minister comments as follows:

    "The Article has been substantially amended from the earlier text to allow for non recognition where there is an absolute immunity or privilege - such as legal professional privilege in the UK - or in cases where it is practically impossible to execute the order; if it is not at the location specified or has been destroyed for example. In addition a new Article 6a allows for the postponement of an order under certain circumstances such as where execution would damage an ongoing criminal investigation in the executing state, or in cases where the assets in question have already been frozen by another order.

    "The UK has proposed and supported the need for additional grounds for refusal at the first working group meeting in June and as such considers that the new clauses represent a welcome addition to the instrument.

    "The Government also understands that the Committee have received a submission from JUSTICE which considers the principle of ne bis in idem as a significant ground for non-execution. This principle was discussed at the working group however it was considered that as these are provisional measures prior to any possible conviction (and that a judge in one country will have no knowledge of whether the subject of the order in another has been acquitted of a potential offence which has led to the order being made) then this would not be a practical ground for non execution. If execution occurred and the principle of ne bis in idem was then raised by an individual, this fact can be brought to the attention of the issuing state and considered by the issuing court in the usual way.

    "However, refusal remains discretionary and the order may still be enforced if an equivalent document is available or the information available is regarded by the executing state as adequate."

5.16 On the question of appeals under Article 9, the Minister explains that the UK has suggested a number of additions to make the appeal system as 'user friendly' as possible in all Member States so that defendants have a right of appeal against any decision which affects them and which is fair and easily accessible. Specifically, the Minister refers to the following safeguards proposed by the UK:

    "(i) When enforcing the order, and afterwards on request, the executing state must notify any person having custody of the material, or any other person who claims to have a material interest in the proceedings, of the rights of appeal against the order which exist in the issuing and executing states.

    "(ii) That notification shall be accompanied by adequate information in the language of the executing state, and shall be available in the main language of any Member States upon request, as to how such an appeal should be pursued. It shall be the responsibility of the issuing state to supply such information for onward transmission by the executing state.

    "(iii) Any time limit in the issuing state for the submission of such an appeal from the executing state must be of sufficient length as to reflect the special nature of the proceedings under mutual recognition, in particular the fact that parties affected may be located in another Member State.

    "(iv) The issuing state shall ensure that all documents relating to an appeal on its territory are available in the language of the executing state, and in the main language of any Member States upon request.

    "(v) The issuing state must ensure that adequate legal advice and assistance is available to those bringing, or contemplating an appeal against such an order. The issuing state should also provide and publicise a contact point in its administration from which anyone bringing or contemplating an appeal can obtain free information by telephone, fax or e-mail on the procedures for such an appeal. Such information shall be provided in the main language of any Member States upon request."

5.17 On Article 10 (which concerns the liability of the issuing state where inaccurate information has been submitted) the Minister explains that the UK has suggested that the provision should be extended to cover cases where the issuing state has "made some other mistake or has been tardy or negligent". The Minister further comments:

    "In Member States we assume that those adversely affected by such misconduct would be able to seek redress from those responsible and we would propose that the text should reflect this. The guiding principle should be that whichever state was in default should be liable. Where therefore under its national law in a purely domestic case the executing state would have been liable the aim should be to pass such liability to the issuing state, except where the executing state was in some way responsible."

Conclusion

5.18 We shall look forward to a reply by the Minister to the points raised by the previous Committee, notably on the question of what is meant by 'evidence' in Article 1, and whether it includes material which is admissible in evidence in the issuing state but not in the executing state, on the question of whether Article 9(3) gives the issuing state a right of intervention in appeal proceedings, and on whether under Article 10 it is necessary for an injured party to commence proceedings in order to recover compensation from the executing state.

5.19 We note that the scope of the proposal, since it is confined to a number of listed offences, is considerably narrower than that of the proposal for a Framework Decision for a European arrest warrant (which would apply to any offence carrying a sentence of imprisonment of twelve months or more). We ask the Minister for his views on the scope of Article 2, and on which additional offences he will propose in response to the invitation of the Presidency.

5.20 Whilst we welcome the Minister's efforts to secure fair and accessible rights of appeal for all defendants, we would be grateful if he would confirm that such rights will be made available also to all third parties acting in good faith.

5.21 We are content to clear document (a) from scrutiny, on the grounds that it has been superseded, but we shall hold document (b) under scrutiny pending a reply to all the points which we and the previous Committee have raised.



4  i.e. the avoidance of double jeopardy Back


 
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