L3S06 - Conference Anglais non ibis idem (2017 ) PDF

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L3, Semestre 6, Conférence CM Anglais, Non Ibis Idem...

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CONFERENCE ANGLAIS 1 Principle of criminal law: non bis in idem / ne bis in idem It will be the general principle into financial law. Subject of last year: role of AMF and especially when this authority is exercising its functions to sanction markets. The French financial market authority is an independent public/administrative authority with separate legal personality. 2 distinct bodies: -

The board The enforcement committee : it is in charge of pronouncing administrative sanctions

The example of inside trading and that will be our subject. The inside trading: We have a big industrial company whose shares are listed on Paris stock exchange called euronex Paris. This industrial company is going to announce huge profits and these profits were not expected. So, they come as a good surprise for the German investors. The normal reaction of the markets when hearing these news: many people will be interested in buying the shares of the company and the prices of the shares will rise just because there will be more demand than supply. And so more people interested to sell the shares. If demand is higher than the offer, the price rises. M. X is an employee of this company and he knows that the news will be announced so he buys some shares ahead the announcement. And when the price is rising after the announcement, then M.X sells the shares and he will probably get profit. Now, this is an undue profit. M.X will be in trouble. What type of troubles? Just before getting there, the situation which will be described, does not applied to all violations of financial law. It is only valid for inside trading and market manipulation. In French law, market manipulation, which classification comes from European law, splits into 2 types of behaviors:  Price manipulation: when someone do something to influence the market price => the price does not reflect anymore the normal result of supply and demand being confronted. Instead, the price will be brought into an artificially low level.  Dissemination of false information: one person will disseminate wrong information on a company. It can be through rumors on a website and this information is material/important enough to influence the market price. Together they form up the market abuse = inside trading + market manipulation (price manipulation + dissemination of false information) Market abuse will lead to sanctions being pronounced against the person who committed these acts. What type of actions are included today? 1. Administrative sanctions a. Disciplinary sanctions (from a warning to a ban of conducting activities). They can be pronounced because of market abuse but pronounced only against professional of a financial market. (in our example, no disciplinary sanction will be pronounced against M.X) b. Pecuniary sanctions: they can be pronounced against any persons whether they are professionals or not. They get up until one hundred million euros or 10 times the amount of any profit made. Market abuses are in some cases also criminal offenses. So criminal sanctions can be pronounced.

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2. Criminal sanctions They will be pronounced by judicial courts and not by the enforcement committee. These courts ca pronounce a fine and also a jail sentence. What is provided by the French monetary and financial court? -

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Executives/directors of listed companies or individuals, who in the performance of their functions, obtain inside information concerning the prospects or the issuers of the company => they incur a penalty of 2 years imprisonment and also a fine of 1,500,000 euros. This figure can be increased up to 10 times the amount of profit. So we have a minimum sanction, the fine cannot be less than the amount of profit. The same sanctions apply to market manipulation. Whoever through the performance of his functions obtains inside information and discloses it to a third party, outside of the framework of his professional, shall incur 1 year of imprisonment and a fine of 150,000 euros. Same sanctions will apply for any individual who knowingly obtain inside information and may facilitate a transaction or allow the information to be disclosed to a third party. The amount of the fine may be increased 10 times of the amount of the profit.

Very few riches of financial law the administrative and criminal sanctions. Only administrative sanctions should be announced  non bis in idem. The question to be raised is whether administrative and criminal sanctions ca be pronounced both at the same time? So if someone is sanctioned by the enforcement committee of AMF, can he be prosecuted by the judicial courts? Non bis in idem: no one can be prosecuted or sanctioned twice for the same facts.

PART 1: UNDE UNDERS RS RSTTANDING NON BI BISS IIN N IDEM This Latin saying is believed to be the right for a procedural law in Roman law. This rule is bis de eadem re, ne sit action = there are not 2 claims for the same thing. Then this rule will only claim when a first final decision had been handed out/delivered. So this principle was in the immediate vicinity of res judicata. It will be probably accurate to analyze non bis in idem like a procedural rule. Generally speaking, it is nowadays seen as a fundamental human right, a right for each individual. A protection form the arbitral authorities, he cannot be prosecuted anymore for the same fact. He can be sanctioned once and he cannot be sanctioned for a second time for the same fact. This principle is very well known in many various countries and it is written in several texts. In Europe, it can be found especially in the chatter of fundamental rights in article 50, also in the European Convention of Human Rights (protocol 7, article 4). We should not confuse those 2 texts.  The provisions contained into the EU Chatter are being addressed to the institutions and bodies of the EU and to the national authorities when they are implementing EU law. So the 28 member states. For example, the chatter is applied when the authorities apply an EU regulation directly. The chatter was initially proclaim at the Nice treaty of 2000 but it didn’t have any legal effect. On December 2009 with the entering of force of Lisbon, the chatter became legally binding. It is the ECJ who can interpret this text.

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 The European Convention of Human Rights (ECHR) was opened for signature in Rome in 1950. It came into force in 1953. It was the first instrument to give effect to certain of the rights stated into the International Declaration of Human Rights (IDHR). To examine violations committed by the states, the European Court of Human Rights was set up in Strasbourg in 1959. The ECHR was signed by all states members of the Council of Europe (intergovernmental organization comprising 47 states). However, fortunately the chatter is meant to be consistent with the ECHR. So, when the chatter contains rights that stem from the ECHR, their meaning and scope should be the same. In practice, the extend which this principle is strictly applied, could be debated. Anyway, an analysis of the international instruments incorporating the non bis in idem principle reveals a certain variety of terms in which it is capped. Protocol n.7 article 4: provides its first intend “no one shall be liable to be trieed or punished again in criminal proceedings under the jurisdiction of the same state for an offense for which he has already been finally equated or convicted in a court with the law and (…) Procedure of that State”. As reminding by the ECHR in the case “Butnaru” June the 23rd of 2015, this cover 3 district guaranties: The right not be prosecuted, tried or punished twice for the same fact. Analysis of the text: It has to be decided whether if the first sanction pronounced has a criminal nature. The court establish state law, sends out 3 criteria according to the ECJ. The Engel criteria in 1976 were decided:  the legal classification of the offence under the national law  the variant of the offense  the degree of the severity of penalty The second and third criteria are not necessarily cumulative but that does not exclude the cumulative when a necessary analysis made a clear conclusion. The legal classification under national law is not sufficient. There is no doubt that AMF sanctions are the criminal sanctions within the meaning of ECHR. The sanctions pronounced of the AMF from the point of view of national analysis, are administrative sanctions. But the meaning of what is or not criminal charge could be different of the point of view of ECHR and national analysis. So, if we apply the criteria 6 by the European Court of HR to define what is a criminal charge in the ECHR, the AMF sanctions, although they are administrative in the point of national view, the ECHR considers them as criminal charges. So criminal or administrative?! Secondly, it has to be decide whether the offenses for which the applicant was persecuted were the same (main part of non bis in idem). Several approaches use to exist in order to decide whether the offenses were the same. The European Court of HR decided to put an end to this diversity by the decision of Zolotoukhine. The protocol must be understood as prohibit for prosecution trial for the second decision. From identical facts or at least facts which are substantially the same. Idem = identical facts or at least facts which are substantially the same. Lastly, a discussion was formed whether there is a duplication of proceedings (bis) and in the decision as mentioned above, the Court indicates that the aim of article 4 of the protocol 7 is to prohibit the repetition of criminal proceedings that have been concluded by a final decision. A decision is set to be final if it has

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the quire, force of res judicata. This is the case when it is irrevocable. When no further ordinary proceedings are available.

PART 2: IMPL MPLEME EME EMENTI NTI NTING NG NON BIS IN ID IDE EM With the Zolotoukhine case, the situation seems to be clear. Back to our example: the facts that can imply criminal or administrative charges are the same. This person cannot be sanctioned twice. If administrative sanctions are pronounced first and are final, no criminal procedures can go on. Because it will be considered as being criminal charge for the purpose of ECHR and not the French legal classifications. Actually, this is where the difficulty of implementing non bis in idem lies. France did not want that the protocol 7 prevents them to provide that administrative and criminal sanctions being cumulative. France wanted to be able to provide both sanctions cumulatively. It wanted that M.X will be able to be sanctioned by the AMF and criminal courts for his behavior. So, it made a declaration to the effect that article 4 of protocol 7 would apply only to offenses which be tried by criminal courts under the French law (AMF enforcement committee is not a criminal court in the French law). In other words, non bis in idem would only play for criminal offenses within the meaning of French law. Administrative sanctions are not part of French criminal law. Distinction between French classifications and European classifications. Without the declaration, the protocol would have been applied to France. Because of the declaration, France wanted to reach the scope of non bis in idem. There was actually no problem in France, the criminal sanctions could be added to the administrative sanctions. One limit was set by the Conseil Constitutionnel in 1989. This limit was that the total amount of the 2 sanctions which were pronounced could not be higher than the higher of the 2 sanctions incurred. Supposing that the maximum penalty incurred before the AMF is 8, and the maximum fine you can have in criminal courts is 3, if the actually sanction pronounced by AMF is 6, the fine actually pronounced by the criminal court cannot be higher than 2. Otherwise, it would exceed the highest sanction incurred. Case of actual application of administrative and criminal sanctions for the same facts were in practice extremely rare. Indeed, the public prosecutor may decide not to open criminal proceedings. He can decide that administrative sanctions are enough. The limit provided by the CC was no longer effective with the increase of administrative sanctions. Even adding the 2 sanctions, sanctions pronounced are far to be one hundred million euros. The Cour de Cassation had decided several times that the French system did not reach the ECHR because of the French reservation with respect of article 4 of the protocol 7. The position of the ECJ was not the worst. In a case called AKERBERG in 2013, the ECJ decided that the principle non bis in idem as provided by the article 50 of the chatter did not prevent a member state to provide administrative sanctions and criminal sanctions providing that the administrative sanction was not of a criminal nature. Non bis in idem, would only apply if the remaining penalties are effective, proportionate and dissuasive. The general opinion of that case is that it is not very clear as to the position of the ECJ on this matter. Besides, it has been recently a European reform on market abuse in 2014. It contains a directive for criminal sanctions and a regulation for administrative sanctions. The articulation of these 2 texts is complex. The European regulation provides that member states may have the 2 sanctions but the may provide for criminal sanctions only. The European directive provides that member states should ensure Page 4 of 5

that the imposition of the 2 types of sanctions does not violate the principle of non bis in idem. The real threat comes from the position of European Court of HR. There was a reserve made by France but in 2014 in a case called Grande Stevens, the ECHR declares that a similar reservation made by Italy was invalid. In 1995 a reservation made by Austria was the object of another decision on the court but no important echo has been produced. In the Italian reserve, it is about matter of time before French reservation would be declared invalid too. The conseil constitutionnel without taking the same motivation as the ECHR came to a very close result with its famous decision of March 2015. This decision is a priority rule (question prioritaire de constitutionnalite) of unconstitutionality after a question provided by cour de cassation. It brings an end to the doubts. -

It does not refer to non bis in idem. The principle does not has a constitutional value. The law must prescribe only the punishment that has strictly and evidently necessary. The only limit, the same as said in 1989, it is the principle of proportionality (do not exceed the highest sanction incurred) About market abuse provisions, the CC reach a similar result as the ECHR in grande stevens case:  The administrative bridge and the criminal offense of inside trading were defined in the same way. It is not exactly true, for the criminal offense we need intent.  The social aims protected are the same  The 2 types of sanctions provided are of the same nature (among the criminal sanctions we have jail sentence which does not exist in the administrative sanctions)  For administrative and criminal offense, the same courts have jurisdiction. Exception for professionals of financial markets: the DC does not apply to those people.  the 2 types of sanctions cannot lead to a double sanction.

We are not sure whether the exception made for the professionals will be accepted by the ECHR. So the CC decided to repeal various articles of the monetary and financial code. There is no doubt that it is extended to all market abuses. This abrogation came into force in September 2015. Meanwhile, the articles are still in force. The Cour de cassation concluded under this case in May 2015 and it cancelled the decision of the court of appeal on the criminal offense part because for the same fact the individual has already been sanctioned by the AMF. What about now? We have to distinguish the coexistence of the 2 systems and the commutativity of the two sanctions. We cannot cumulative the 2 sanctions for market abuses. We have to decide at the beginning the nature of the procedure.

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