Case C-537/16, Garlsson Real Estate – ne bis in idem

Seemingly irrespective of whether Italy’s criminal courts convict or acquit someone of insider share dealing, Italy’s stock exchange regulator will also issue a fine using administrative law. Is this not contrary to the legal principle of ‘ne bis in idem’?

One Italy’s media giants is the RCS MediaGroup. It runs radio stations, satellite TV, and Italian newspapers such as the ‘Corriere della Sera’. It is not a national but an international firm. Over time, it has acquired various foreign publications and publishing houses, including the Spanish newspaper ‘El Mundo’. And like media empires the world over, its shareholdings and commercial relations extend well into the banking sector. In turn, it is also owned by shareholders from around the world.

More than a decade ago, something odd happened. Share-trading in RCS became ‘abnormal’. The culprits included the Garlsson Real Estate company, another company, plus a person in the middle who was thought to be using privileged knowledge improperly.

Italy’s stock exchange regulator, Consob, swooped down and fined them 10 million euro for the administrative law offence of market manipulation (an amount later halved by Rome’s court of appeal). The person was sentenced to a prison sentence for the equivalent criminal law offence.

In effect twice punished, was this not an affront to ‘ne bis in idem’? This legal principle is a feature of the Italian Penal Code, and a principle of Italian constitutional law by dint of both EU law and ECHR law.

That is to say, Article 50 of the EU Charter enshrines the right not to be tried or punished twice in criminal proceedings for the same criminal offence. And under the ECHR, Article 4 of Protocol number 7 prohibits re-prosecutions. In that context, the Strasbourg court has already found Italian law’s coupling of administrative and criminal sanctions for insider dealing to contravene the ECHR (Grande Stevens, EctHR, judgment date 4 March 2014).

President Chindemi of the Italian Court of Cassation has decided to make a preliminary reference, and to ask two questions of the CJEU.

Questions Referred
The gist of his first question is whether Article 50 of the Charter precludes the initiation of an administrative law procedure for the criminal law offence of market manipulation against someone who has already been sentenced for this. The gist of the second question is whether a national court can apply the principle of ne bis in idem directly.

After this Garlsson reference was made, two further ne bis in idem preliminary references winged their way to the CJEU.

In Case C-597/16, Consob, a person accused in criminal law of insider share trading was later acquitted by an Italian criminal court for lack of evidence. However, this person was subsequently fined 100 000 euro by Consob for the administrative law offence of insider dealing. Consob also banned them from taking some jobs in listed companies.

There are two questions in Case C-597/16, Consob. The gist of the first is whether an acquittal in criminal law precludes the imposition of administrative sanctions whose nature and gravity is akin to criminal law. The essence of the second question is whether the national court must take into account the criminal sanctions outlined in Directive 2014/57/EU when determining whether sanctions are effective, proportionate and dissuasive, and whether there has been any infringement of Article 50 of the EU Charter.

For completeness, it should be noted that the questions in Case C-597/16, Consob link to a second preliminary reference which is on the same facts but concerns a different person, Case C-596/16.

EU Law Radar readers who are interested in Article 50 EU Charter law and administrative sanctions may already be aware that the CJEU’s judgment in Åklagaren v Hans Åkerberg Fransson, ECLI:EU:C:2013:105 was discussed last week by Advocate General Wathelet in Berlioz (for the background to Berlioz see, Case C-682/15, Berlioz Investment Fund – tax information exchanges not fishing expeditions).

With an eye to the potential future development of the law in this area, readers interested in administrative law sanctions akin to criminal punishment, and the right of an accused to documents that could help prove his innocence, could look at Case C-358/16, UBS – stopping a lawyer accessing innocence-establishing documents.

EU Law Radar readers who are interested in IP law might also watch these Italian financial preliminary references. Individuals accused of infringing IP rights can also find themselves being accused of multiple overlapping infringements even though there may only have been one act committed, and in one historical factual context.

Finally, EU Law Radar readers who like Italian media law might also note that in 2016 the RCS MediaGroup was the object of a hostile take over by, among others, Cairo Communications. This is a company involved in the access to Italian broadcasting frequencies dispute, Case C-560/15, Europa Way.

Update – 22 January 2017
The issues of ne bis in idem, administrative sanctions, and the CJEU’s judgment in Åklagaren v Hans Åkerberg Fransson, ECLI:EU:C:2013:105 were in the background to Pfleger.