Summaries of judgments made in collaboration with the Portuguese judge and référendaire of the CJEU (Nuno Piçarra and Sophie Perez)

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Judgment of the Court (Grand Chamber) of 2 February 2021, DB v Commissione Nazionale per le Società e la Borsa (Consob), Case C-481/19, EU:C:2021:84

Reference for a preliminary ruling – Approximation of laws – Directive 2003/6/EC – Article 14(3) – Regulation (EU) No 596/2014 – Article 30(1)(b) – Market abuse – Administrative sanctions of a criminal nature – Failure to cooperate with the competent authorities – Articles 47 and 48 of the Charter of Fundamental Rights of the European Union – Right to remain silent and to avoid self-incrimination

1. Facts

The request for a preliminary ruling was made in proceedings between DB and the Commissione Nazionale per le Società e la Borsa (Consob) (National Companies and Stock Exchange Commission, Italy) concerning the lawfulness of two financial penalties imposed on DB for an administrative offence of insider trading and for failure to cooperate in the context of an investigation conducted by Consob. Regarding the latter, after applying on several occasions for postponement of the date of the hearing to which he had been summoned in his capacity as a person aware of the facts, DB had declined to answer the questions put to him when he appeared at that hearing.

Following the dismissal of his appeal against those penalties, DB brought an appeal before the Corte suprema di cassazione (Supreme Court of Cassation, Italy). This court, in turn, referred an interlocutory question of constitutionality to the Corte costituzionale (Constitutional Court, Italy) concerning the provision of Italian law on the basis of which the penalty for failure to cooperate was imposed. That provision penalises anyone who fails to comply with Consob’s requests in a timely manner or delays the performance of that body’s supervisory functions, including with regard to the person in respect of whom Consob alleges an offence of insider dealing.

The Corte costituzionale pointed out that, under Italian law, insider dealing constitutes both an administrative offence and a criminal offence. It then noted that the national provision concerned was adopted in performance of a specific obligation under Directive 2003/6^[1] and now implements a provision of Regulation No 596/2014^[2]. Therefore, a declaration that the national provision in question is unconstitutional would be likely to conflict with EU law, if those provisions of secondary EU legislation were to be understood as requiring Member States to penalise the silence, at a hearing before the competent authority, of a person suspected of insider dealing. Therefore, the Corte costituzionale asked the ECJ whether those measures are compatible with Articles 47 and 48 CFREU and, in particular, the right to remain silent and to avoid self-incrimination.

2. Decision

Taking into account, under Article 52(3) CFREU, the case-law of the European Court of Human Rights on the right to a fair trial, the ECJ held that the safeguards afforded by the Articles 47(2) and 48 CFREU, include, inter alia, the right to silence of natural persons who are ‘charged’ within the meaning of the second of those provisions. That right precludes, inter alia, penalties being imposed on such persons for refusing to provide the competent authority under Directive 2003/6 or Regulation No 596/2014 with answers which might establish their liability for an offence that is punishable by administrative sanctions of a criminal nature, or their criminal liability. The ECJ stated, in that regard, that the case-law relating to the obligation on undertakings to provide, in proceedings that may lead to the imposition of penalties for anticompetitive conduct, information which may subsequently be used to establish their liability for such conduct cannot apply by analogy to establish the scope of the right to silence of natural persons charged with insider dealing. The ECJ added, however, that the right to silence cannot justify every failure to cooperate on the part of the person concerned with the competent authorities, such as refusing to appear at a hearing planned by those authorities or using delaying tactics designed to postpone it.

Finally, the ECJ held that both Directive 2003/6 and Regulation No 596/2014 lend themselves to an interpretation which is consistent with Articles 47 and 48 CFREU, in that they do not require penalties to be imposed on natural persons for refusing to provide the competent authority with answers which might establish their liability for an offence that is punishable by administrative sanctions of a criminal nature, or their criminal liability. Therefore, the validity of those provisions of secondary EU legislation cannot be undermined, having regard to Articles 47 and 48 CFREU, on the ground that they do not explicitly rule out the imposition of a penalty for such a refusal. In that context, the ECJ recalled that Member States must use the discretion afforded to them by an instrument of secondary EU legislation in a manner that is consistent with fundamental rights. In the context of the implementation of obligations stemming from Directive 2003/6 or Regulation No 596/2014, it is therefore for them to ensure that, in accordance with the right to silence guaranteed by Articles 47 and 48 CFREU, the competent authority cannot impose penalties on natural persons for refusing to provide that authority with answers which might establish their liability for an offence that is punishable by administrative sanctions of a criminal nature, or their criminal liability.

Judgment of the Court (Grand Chamber) of 2 March 2021, A.B. and Others v Krajowa Rada Sądownictwa and Others, Case C-824/18, EU:C:2021:153

Reference for a preliminary ruling – Article 2 and the second subparagraph of Article 19(1) TEU – Rule of law – Effective judicial protection – Principle of judicial independence – Procedure for appointment to a position as judge at the Sąd Najwyższy (Supreme Court, Poland) – Appointment by the President of the Republic of Poland on the basis of a resolution emanating from the National Council of the Judiciary – Lack of independence of that council – Lack of effectiveness of the judicial remedy available against such a resolution – Judgment of the Trybunał Konstytucyjny (Constitutional Court, Poland) repealing the provision on which the referring court’s jurisdiction is based – Adoption of legislation declaring the discontinuance of pending cases by operation of law and precluding in the future any judicial remedy in such cases – Article 267 TFEU – Option and/or obligation for national courts to make a reference for a preliminary ruling and to maintain that reference – Article 4(3) TEU – Principle of sincere cooperation ‐ Primacy of EU law – Power to disapply national provisions which do not comply with EU law

1. Facts

By resolutions adopted in August 2018, the Krajowa Rada Sądownictwa (KRS) (National Council of the Judiciary, Poland) decided not to present to the President of the Republic of Poland proposals for the appointment of five persons (‘the appellants’) to positions as judges at the Sąd Najwyższy (Supreme Court, Poland) and to propose other candidates for those positions. The appellants lodged appeals against these resolutions before the Naczelny Sąd Administracyjny (Supreme Administrative Court, Poland), the referring court.

Such appeals were governed at that time by the Law on the National Council of the Judiciary (‘the Law on the KRS’), as amended by a law of July 2018. Under those rules, it was provided that unless all the participants in a procedure for appointment to a position as judge at the Sąd Najwyższy challenged the relevant resolution of the KRS, that resolution became final with respect to the candidate presented for that position, so that the latter could be appointed by the President of the Republic. Moreover, any annulment of such a resolution on appeal of a participant not proposed for appointment could not lead to a fresh assessment of that participant’s situation for the purposes of any assignment of the position concerned. In addition, under those rules, such an appeal could not be based on an allegation that there was an incorrect assessment of the candidates’ fulfilment of the criteria taken into account when a decision on the presentation of the proposal for appointment was made. In its initial request for a preliminary ruling, the Naczelny Sąd Administracyjny, taking the view that such rules preclude in practice any effectiveness of the appeal lodged by a participant who has not been proposed for appointment, decided to refer questions to the ECJ on whether those rules comply with EU law.

After the conclusion of the written part of the procedure, the Law on the KRS was once again amended, in 2019. Pursuant to that reform, it became impossible to lodge appeals against decisions of the KRS concerning the proposal or non-proposal of candidates for appointment to judicial positions of the Sąd Najwyższy. Moreover, that reform declared such still pending appeals to be discontinued by operation of law, de facto depriving the Naczelny Sąd Administracyjny of its jurisdiction to rule on that type of appeal and of the possibility of obtaining an answer to the questions that it had referred to the ECJ for a preliminary ruling. Accordingly, in its complementary request for a preliminary ruling, the referring court referred a question to the ECJ on whether those new rules are compatible with EU law.

2. Decision

Firstly, in relation to the legislative amendments that took place in 2019, the ECJ assessed the requirements arising from (i) Article 267 TFEU, read in conjunction with the third subparagraph of Article 4(3) TEU, (ii) of Article 19(1), second subparagraph, TEU and (iii) the principle of the primacy of EU law.

Following its settled case-law regarding to the preliminary ruling procedure provided for in Article 267 TFEU, the ECJ held that, “while it is in principle permissible for a Member State, for example, to amend its domestic rules conferring jurisdiction, with the possible consequence that the legislative basis on which the jurisdiction of a national court which has made a reference for a preliminary ruling has been established will disappear, or to adopt substantive rules that have the incidental consequence of rendering the case in which such a reference was made devoid of purpose, a Member State cannot, however, without infringing Article 267 TFEU, read in conjunction with the third subparagraph of Article 4(3) TEU, make amendments to its national legislation the specific effects of which are to prevent requests for a preliminary ruling addressed to the Court from being maintained after they have been made, and thus to prevent the latter from giving judgment on such requests, and to preclude any possibility of a national court repeating similar requests in the future.” The ECJ specified that it is for the referring court to assess, taking account of all the relevant factors and, in particular, the context in which the Polish legislature adopted those amendments, whether that is the case here.

Regarding the obligation, under Article 19(1) TEU, for the Member States to establish a system of legal remedies and procedures ensuring for individuals compliance with their right to effective judicial protection in the fields covered by EU law, the ECJ recalled its case-law that emphasizes the importance of the requirement that courts be independent, which forms part of the essence of the right to effective judicial protection and the fundamental right to a fair trial. Considering several elements of contextualization regarding the process of appointment to a position as judge of the Sąd Najwyższy, namely the decisive role of the KRS, in its new composition^[3], together with the legislative reform which took place in 2019, the ECJ interpreted that provision as “precluding such amendments where it is apparent – a matter which it is for the referring court to assess on the basis of all the relevant factors – that those amendments are capable of giving rise to legitimate doubts, in the minds of subjects of the law, as to the imperviousness of the judges appointed, by the President of the Republic, on the basis of those decisions of the KRS, to external factors, in particular, to the direct or indirect influence of the legislature and the executive, and as to their neutrality with respect to the interests before them and, thus, may lead to those judges not being seen to be independent or impartial with the consequence of prejudicing the trust which justice in a democratic society governed by the rule of law must inspire in subjects of the law.”

Lastly, the ECJ held that if the Naczelny Sąd Administracyjny reaches the conclusion that the 2019 legislative amendments were adopted in breach of Article 267 TFEU, read in conjunction with the third subparagraph of Article 4(3) TEU, or Article 19(1), second subparagraph, TEU, the principle of the primacy of EU law requires the referring court to disapply those amendments, whether they are of a legislative or constitutional origin, and to continue to assume the jurisdiction previously vested in it to hear disputes referred to it before those amendments were made.

Secondly, in relation to the legislative amendments that took place in 2018, the ECJ interpreted the second subparagraph of Article 19(1) TEU as “precluding provisions amending the state of national law in force under which: i) notwithstanding the fact that a candidate for a position as judge at a court such as the Sąd Najwyższy (Supreme Court) lodges an appeal against the decision of a body such as the Krajowa Rada Sądownictwa (National Council of the Judiciary) not to accept his or her application, but to put forward that of other candidates to the President of the Republic of Poland, that decision is final inasmuch as it puts forward those other candidates, with the result that that appeal does not preclude the appointment of those other candidates by the President of the Republic of Poland and that any annulment of that decision inasmuch as it did not put forward the appellant for appointment may not lead to a fresh assessment of the appellant’s situation for the purposes of any assignment of the position concerned, and ii) moreover, such an appeal may not be based on an allegation that there was an incorrect assessment of the candidates’ fulfilment of the criteria taken into account when a decision on the presentation of the proposal for appointment was made.” In this context, the ECJ reiterated that “where it is apparent – a matter which it is for the referring court to assess on the basis of all the relevant factors – that those provisions are capable of giving rise to legitimate doubts, in the minds of subjects of the law, as to the imperviousness of the judges thus appointed, by the President of the Republic of Poland, on the basis of the decisions of the Krajowa Rada Sądownictwa (National Council of the Judiciary), to external factors, in particular, to the direct or indirect influence of the legislature and the executive, and as to their neutrality with respect to the interests before them and, thus, may lead to those judges not being seen to be independent or impartial with the consequence of prejudicing the trust which justice in a democratic society governed by the rule of law must inspire in subjects of the law.”

Lastly, the ECJ held that if the Naczelny Sąd Administracyjny reaches the conclusion that the 2018 legislative amendments were adopted in breach of Article 19(1), second subparagraph, TEU, the principle of the primacy of EU law requires the referring court “to disapply those provisions and to apply instead the national provisions previously in force while itself exercising the judicial review envisaged by those latter provisions.”

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[1] Pursuant to Article 14(3) of Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation (market abuse) (OJ 2003 L 96, p. 16), Member States are to determine the sanctions to be applied for failure to cooperate in an investigation covered by Article 12 of that directive. The latter article states that, in that context, the competent authority must be able to demand information from any person and, if necessary, to summon and hear any such person.

[2] Article 30(1)(b) of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6 and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (OJ 2014 L 173, p. 1). This provision requires that administrative sanctions be determined for failure to cooperate or to comply with an investigation, with inspection or with a request as referred to in Article 23(2) of that regulation, subparagraph (b) of which specifies that this includes questioning a person with a view to obtaining information.

[3] V. judgments of 5 November 2019, Commission v Poland (Independence of the ordinary courts), C‑192/18, EU:C:2019:924, and of 19 November 2019, A. K. and Others (Independence of the Disciplinary Chamber of the Supreme Court), C‑585/18, C‑624/18 and C‑625/18, EU:C:2019:982.