Select Committee on European Scrutiny Eighth Report


MUTUAL RECOGNITION OF FINANCIAL PENALTIES


(22622)

10710/01


Proposal from the French Republic, the Kingdom of Sweden and the United Kingdom for the adoption by the Council of a draft Framework Decision on the application of the principle of mutual recognition to financial penalties.
Legal base: Article 31(a) and 34(2)(b) EU; consultation; unanimity
Deposited in Parliament: 21 September 2001
Department: Home Office
Basis of consideration: EM of 24 October 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

  2.1  The conclusions of the Tampere European Council of 15 and 16 October 1999 endorsed the principle of mutual recognition as the basis for judicial co-operation in civil and criminal matters within the European Union. In relation to criminal matters, the Justice and Home Affairs Council of 30 November-1 December 2000 called for the preparation of an 'instrument enabling the State of residence to levy fines imposed by final decisions on a natural or legal person by another Member State'.

  2.2  Cross-border enforcement of financial penalties is already provided for in two European agreements, namely the 1991 Brussels Convention on the enforcement of foreign criminal sentences[6] and the 1970 Council of Europe Convention on the International Validity of Criminal Judgments. The 1991 Convention has not come into force and only 5 of 15 Member States have ratified the 1970 Convention. These conventions are based on the principle of mutual recognition of decisions imposing financial penalties, but provide for a wide variety of grounds on which the requested State may refuse to execute a decision of the requesting State. These include the requirement that the conduct in respect of which the decision is issued should be criminal in both the requesting and requested State,[7] and respect for time limits in both requesting and requested States. Both the 1970 and 1991 conventions provided for fines to be reduced to the maximum which might be imposed for the same offence under the law of the requested State.

The draft Framework Decision

  2.3  The draft Framework Decision follows the pattern of the conventions mentioned above by providing for the transmission of judgments from an issuing State for recognition and enforcement in the executing State. Similarly, the Framework Decision also provides for grounds on which enforcement of the judgment may be refused.

  2.4  The definition of 'judgment' in Article 1 includes final decisions requiring a financial penalty to be paid by a natural or legal person, whether made by a court in respect of a criminal offence or by an 'administrative authority' in respect of an 'administrative offence' or an 'offence against regulations, where the decision may give rise to proceedings before a court having jurisdiction in particular in criminal matters'. A list of such offences is to be set out in an Annex 1 to the Framework Decision. A 'financial penalty' does not include orders for the confiscation of proceeds or instrumentalities of crime, or orders which may be enforced under Council Regulation (EC) No.44/2001 (civil judgments which may be enforced under the 1968 Brussels Convention, now embodied in that Regulation).

  2.5  Article 2 provides for the transmission of judgments. They are to be accompanied by a certificate, in the form set out in Annex 2, which will set out details of the proceedings in which the judgment was made and will confirm that the decision is final and that its enforcement is not barred by any statutory time limitations.[8]

  2.6  Article 3 sets out the principle that a judgment transmitted in accordance with Article 2 is to be recognised without any further formality being required and enforced forthwith in same way as a penalty imposed in the executing State, unless one of the grounds for refusal under Article 4 is invoked.

  2.7  Article 4 provides that enforcement may be refused if the certificate provided for in Article 2 is not produced, or if the particulars are incomplete or manifestly incorrect. Enforcement may also be refused if the judgment exclusively relates to conduct which took place in the executing State or a third Member State and the conduct does not constitute an offence under the law of that State, or enforcement of the decision is barred by statutory time limits in that State.

  2.8  Article 5 provides for the conversion of the penalty into the currency of the executing State. In cases where the judgment exclusively relates to conduct within the executing State or within a third Member State, the executing State may reduce the penalty to the maximum which may be imposed under the law of the State where the conduct took place.

  2.9  By virtue of Article 6, the enforcement of the judgment is to be governed by the law of the executing State. Article 6(3) provides that the judgment is to be enforced even if the law of the executing State does not recognise the principle of criminal liability of legal persons.

  2.10  Article 7 provides for custodial sentences to be imposed in the executing State, where it is not possible to enforce the judgment. Such custodial sentence may not exceed any maximum provided for in the certificate sent by the issuing State. The length of the sentence is to be determined according to the law of the executing State.

  2.11  Article 8 provides that only the issuing State may grant an amnesty, pardon or commutation of a financial penalty, or determine any application for review of the judgment. By virtue of Article 8(2), the executing State may decide not to enforce all or part of the penalty if 'there is clearly no prospect of recovering it, due to the offender's lack of means, death or serious illness.'[9]

  2.12  Articles 9 to 11 are concerned with termination of enforcement once the judgment ceases to be enforceable in the issuing State, with the accrual of monies arising from enforcement and with information between issuing and enforcing authorities.

  2.13  Article 12 prevents double jeopardy by requiring the issuing State to desist from enforcement after it has been transmitted for enforcement to the executing State. The right of the issuing State to enforce the judgment shall revive when it is informed by the executing State of the total or partial non-enforcement of the judgment.

  2.14  The remaining Articles (13 to 17) are concerned with languages, costs, relationship with other agreements and implementation.

The Government's views

  2.15  In his Explanatory Memorandum of 24 October, the Parliamentary Under Secretary of State at the Home Office (Mr Bob Ainsworth) explains that this is a proposal in which the UK has taken the initiative together with France and Sweden. The Minister comments on the policy implications of the proposal as follows:

"Article 1

"Owing to the difference in legal systems in the 15 EU Member States, the Government considers it useful for judgements by administrative authorities to be included in the scope of the instrument, so that it is as far reaching as possible and so that potential loopholes are minimised. The Government takes the view that compensation orders which are outside the scope of Council Regulation (EC No. 44/2001) should be included in the instrument.

"As drafted, the Framework Decision would also cover fines imposed for road traffic offences, thus replacing the earlier Schengen Agreement on this matter.

"Article 2

"The Government favours the principle of direct transmission of judgements between judicial authorities, to the extent that this is the most efficient way of securing their enforcement. Thus, the Government considers that a central authority should be used as a channel only where the competent authority for executing a request is not known.

"Articles 3 and 4

"These Articles embody the principle of direct recognition and enforcement, which is an essential element in mutual recognition. In order to ensure that mutual recognition is implemented as fully as possible, Article 4 allows very few grounds for refusal of enforcement. In particular, it does not allow refusal on grounds of the lack of dual criminality, except where a judgement is based on extraterritorial jurisdiction.

"Article 5

"In general, the Government considers that penalties imposed in other Member States should be enforced even when they exceed the maximum which could be imposed for the same offence in the Executing State. The only exception is where the judgement was based on extraterritorial jurisdiction, as in Article 5(2).

"Article 6

"Article 6(1) is consistent with the Article 3 provision that a judgment 'shall be enforced in the same way as a financial penalty imposed by a court or administrative authority of the Executing State.' The Government also considers that Article 6(3) is an important provision, to ensure that companies in Member States which do not recognise the criminal liability of legal persons do not escape having to pay financial penalties.

"Article 7

"This Article ensures that a person will not be punished more severely in the Executing State than would have been possible in the Issuing State.

"Article 8

"In keeping with the principle of mutual recognition, the Executing State is responsible only for enforcement of the original decision and should not have the power to grant amnesty or pardon. However, Article 8(2) allows full or partial non-enforcement of the penalty where there is no real prospect of recovering it. This is necessary to avoid wasting time and money, and is without prejudice to Article 7.

"Articles 10 and 14

"The provisions in Article 10 and 14 are based on the principle that both costs and revenue should lie where they fall, thus avoiding the need for a complex system of payments between Member States. It also acts as an incentive to enforcement for the Executing State to keep monies accrued from enforcement. However, the Government considers it right that money paid for compensation or court costs should be returned to the Issuing State."

Conclusion

  2.16  This appears to us to be a well-constructed proposal, which follows an established pattern for the mutual recognition and enforcement of judgments.

  2.17  Nevertheless, we do have concerns over the scope of the proposal and the narrowness of the grounds on which enforcement may be refused under Article 4.

  2.18  On the question of scope, we look to the Minister for a more detailed explanation of what is meant by an 'administrative authority' under Article 1, and to confirm whether or not any guarantees of procedural fairness will be required before its decisions can be enforced under the proposal.

  2.19  On the question of grounds for refusal under Article 4, we are concerned that there is not even a mention of procedural unfairness in the issuing State as a ground for refusal. It appears to us to be possible, even likely, that the kind of decision in question (such as a fine for a motoring offence) could be made in the issuing State without the defendant being made aware of the charge against him. We ask the Minister if he agrees that enforcement of decisions under the proposal should be made subject to satisfaction of minimum guarantees as to the fairness of proceedings in the issuing State.

  2.20  We shall hold the document under scrutiny pending the Minister's reply.

3. We consider that the following documents do not raise questions of sufficient legal or political importance to warrant a substantive report to the House :—

HOME OFFICE

(22829)

12411/1/01


Draft recommendation on the alignment of law enforcement drug and diverted precursors seizure statistics.

(22848)

13069/01


Irish application to participate in some of the provisions of the Schengen acquis.

(22889)

12420/01


Draft Decision amending the Decision 2000/C 106/01 of 27 March 2000 authorising the Director of Europol to enter into negotiations with third States and non-EU-related bodies.

(22897)

13923/01

—-


Decision amending the Decision of 27 March 2000 authorising the Director of Europol to enter into negotiations on agreements with third States and non-EU-related bodies.

(22901)

13622/01


Draft Decision amending the Decision 2000/C 106/01 of 27 March 2000 authorising the Director of Europol to enter into negotiations with third States and non-EU-related bodies.



6  Not to be confused with the 1968 Brussels Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, now embodied in Council Regulation (EC) No 44/2001 of 22 December 2000. Back

7  A requirement which is often referred to as dual or double criminality. Back

8  Presumably, these are time limits under the law of the issuing State. Back

9   Given the provisions of Article 7 it is presumably the case that where a sentence is imposed for non-payment of a fine, the executing State may release the offender before the full term is served.  Back


 
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