26 February, 2013

Case C-617/10 Åkerberg Fransson (the principle of ne bis in idem in taxation cases)

The Court of Justice (the Court) has finally delivered its' judgement in the preliminary ruling procedure, upon request from the Haparanda District Court (the District Court) in Sweden, concerning the principle of ne bis in dem (prohibition of double jeopardy) in cases regarding administrative and criminal sanctions for tax evasion. 

Background

The case arose stemmed from an administrative procedure before the Swedish tax authorities ('Skatteverket') in which Mr. Åkerberg Fransson was ordered to pay a surcharge for his alleged provision of false information for the purposes of VAT and income taxation in 2004-2005. In addition, Mr. Åkerberg Fransson was criminally prosecuted for failing to declare employers' contributions for the same period. Both the administrative sanction and the criminal prosecution, the latter which brought Mr. Åkerberg Fransson before the District Court, were based upon the same acts of providing false information. Mr. Åkerberg Fransson challenged the prosecution, claiming that he had already been sanctioned by the Skatterverket in the first place.

In summary, the case revolved around two legal aspects:
  1. Whether the case fell within the scope of EU law (the 'jurisdictional question').
  2. Does the principle of ne bis in idem prevent the imposition of criminal sanctions for tax evasion if administrative sanctions has been levied for the same act in the first place (the 'substantive question')? 

The jurisdictional question

The jurisdictional question is perhaps the most interesting part of the case. Sweden, and several intervening governments argued that the case did not fall within the scope of the principle of ne bis in idem within the meaning of the Charter of Fundamental Rights of the EU (the Charter), because neither the administrative nor the criminal sanctions were adopted in pursuit of national implementation of any EU legislation and accordingly: the Charter was not applicable (para. 16). Thus, the outcome of the case would determine the applicability of the Charter. The Court, relying on its case law, ruled that Article 51(1) of the Charter, which determines its' applicability, is to be interpreted in the following manner:

"The requirement to respect fundamental rights defined in the context of the Union is only binding on the Member States when they act in the scope of Union law" (para. 21).

I.e., it was not strictly necessary for the national legislation to have been adopted for the implementation of EU law, it was sufficient that the situation fell within the scope of EU law. This is a very broad interpretation of the Charter, which I personally welcome, but which I also believe that several jurists will disagree with. 

In either case, the Court went on to explain that since the case partially concerned administrative sanctions for providing false information with relation to VAT, the case fell within the scope of EU, since VAT is regulated on a European level. Accordingly, I welcome that the Court made a bold statement when it confirmed that the case at hand fell within the scope of EU law, as the prosecution was also brought for providing false information with relation to VAT. In this case, I believe that there is no doubt that the situation fell within the scope of EU law and that the jurisdictional decision by the Court was fully accurate.

The substantive question

The substantive question was dealt with the rather swiftly by the Court. It confirmed that the principle of ne bis in idem prevents the levying of two subsequent criminal sanctions for the same act, whilst the same principle permits a administrative sanction followed by a criminal sanction (para. 34). Rather discouraging is the fact that the Court was not as bold in this part of the judgement, as in relation to the jurisdictional issue. The Court confirmed that sanctions that are administrative by name may in fact be criminal, depending on their legal classification, nature of the offence and the degree of severity of a potential penalty. However, instead of providing clear guidance as to whether or not the administrative sanction was criminal, the Court left it to the national court to decide, thereby still leaving the door open as to the applicability of the the principle of ne bis in idem in taxation cases (para. 36).

Other interesting aspects

There are two additional aspects that were interesting albeit minor in relation to the two former. The first relates to the interpretation of the ECHR and its' relation to EU fundamental rights and national law. The Court was, somewhat surprisingly, relucant to give guidance on the interpretation of the ECHR in the present case:

"... as Article 6(3) TEU confirms, fundamental rights recognised by the ECHR constitute general principles of the European Union’s law and whilst Article 52(3) of the Charter requires rights contained in the Charter which correspond to rights guaranteed by the ECHR to be given the same meaning and scope as those laid down by the ECHR, the latter does not constitute, as long as the European Union has not acceded to it, a legal instrument which has been formally incorporated into European Union law. Consequently, European Union law does not govern the relations between the ECHR and the legal systems of the Member States, nor does it determine the conclusions to be drawn by a national court in the event of conflict between the rights guaranteed by that convention and a rule of national law."

The Court is more decisive when it lectures the Haparanda District Court on the general applicability of EU fundamental rights and in a very affirmative manner dismisses any notion that it must be clear from the Court's case law or the provisions in the Charter whether or not they should apply. The Court points out that national courts may, or sometimes must, refer questions to the Court for preliminary ruling in case of doubt (paras. 45-48).

Conclusion

Åkerberg Fransson won't go down in the history books as one of the classics of EU law but it is nonetheless an important piece in the puzzle as to the applicability of the Charter. Personally I believe that the Court makes the right choice when it states that the Charter applies to situations falling within the scope of EU law, as opposed to strictly limiting it to situations concerning national legislation implementing EU law. However, the case unfortunately leaves a slightly sour aftertaste since the Court could have graced us with more precise guidelines as to the applicability of the principle of ne bis in idem, in particular in the light of the case law of the European Court of Human Rights

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