Article 47 - Right to an effective remedy and to a fair trial
Key facts of the case:
Reference for a preliminary ruling – Article 47 of the Charter of Fundamental Rights of the European Union – Finality of decisions taken at the close of administrative procedures – Directive 2004/25/EC – Interpretation in conformity with EU law
Outcome of the case:
I propose that the Court answer the questions referred for a preliminary ruling by the Bundesverwaltungsgericht (Federal Administrative Court, Austria) as follows:
Articles 4 and 17 of Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids, read in conjunction with Article 47 of the Charter of Fundamental Rights of the European Union and the rights of the defence, must be interpreted as precluding the application of national procedural rules that have as their effect the prevention of the parties concerned from fully exercising their rights of the defence in the course of a subsequent administrative penalty proceeding establishing the subjective responsibility for an infringement arising from Directive 2004/25 or which fail to provide the parties access to an effective remedy before a tribunal under the first paragraph of Article 47 of the Charter.
2) It is in this context that the Bundesverwaltungsgericht (Federal Administrative Court, Austria), invoking Article 47 of the Charter of Fundamental Rights of the European Union (‘the Charter’) and Directive 2004/25/EC ( 2 ) (‘the Takeover Bids Directive’), essentially enquires about the procedural rights that EU law provides for persons who were not parties to the ‘first round’ of preliminary proceedings, but who may face, due to their respective positions within the corporate structures of the companies that were the parties in the first proceedings, sanctions imposed on them in the ‘second round’ of administrative proceedings.
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20) It is within this factual and legal context that the Bundesverwaltungsgericht (Federal Administrative Court) decided to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling:
(3) (If Question [1] is answered in the negative) Does Article 47 of the Charter of Fundamental Rights of the European Union preclude a national practice according to which a decision having the force of res judicata taken by the supervisory authority pursuant to Article 4 of Directive 2004/25/EC by means of which a natural person’s breach of national provisions adopted in implementation of Directive 2004/25/EC was established is given binding effect in the context of administrative-penalty proceedings subsequently conducted by that supervisory authority against that same person, with the result that that person is prevented from challenging, in law and fact, the breach of law already established with the force of res judicata?
(4) (If Question [2] is answered in the negative) Does Article 47 of the Charter of Fundamental Rights of the European Union preclude a national practice according to which a decision having the force of res judicata taken by the supervisory authority pursuant to Article 4 of Directive 2004/25/EC by means of which a legal person’s breach of national provisions adopted in implementation of Directive 2004/25/EC was established is given binding effect in the context of administrative-penalty proceedings subsequently conducted by that supervisory authority against the body authorised to represent that legal person, with the result that that person (the body) is prevented from challenging, in law and fact, the breach of law already established with the force of res judicata?’
25) In order to be able to do so, there are three elements that must be discussed at the outset. First, what exactly is the issue under national law? Second, how does the Charter and its Article 47 interact with the Takeover Bids Directive and fit into the picture of the present case? Third, both of these points compel me to reformulate and simplify the questions raised by the referring court, hopefully without losing sight of the problem.
35) The third and fourth questions approach the same issue from the perspective of the Charter. In essence, they ask whether Article 47 of the Charter would preclude national procedural rules which consider a decision of an administrative authority concerning breaches of the national rules on takeover bids, which has become final, to bind the same administrative authority in a later (administrative) criminal proceeding. The third question seeks guidance on that compatibility from the perspective that party identity between the two proceedings conducted by said administrative authority exists. The fourth question poses the same question from the perspective that there is a lack of party identity.
36) Read together, the four questions raised by the referring court thus appear to juxtapose giving ‘full effectiveness’ to the Takeover Bids Directive with the adherence of the procedural rights protected by, inter alia, the Charter. The referring court seems to suggest that a certain tension exists between those two aims. Indeed, the silent assumption appears to be that there can either be effectiveness of the sanctions, or protection of fundamental rights, but not both. There may even be a further silent assumption, namely that if a sanction is to be ‘effective’, it ought not to be disturbed too much by the rights of the parties.
37) I do not think that this is a good starting assumption.
38) Instead, it is uncontested that Austria’s rules on the supervision of takeover bids, as inter alia contained in the ÜbG, constitute implementation of the Takeover Bids Directive, and thus EU law, for the purposes of Article 51(1) of the Charter. Any national proceeding conducted pursuant to the framework of the Takeover Bids Directive must thus be compatible with Article 47 of the Charter and any rights guaranteed by EU law.
39) Thus, the real issue, in my view, is not that one must choose between ‘full effectiveness’ and ‘fundamental rights’. Rather, the genuine issue is whether the Austrian procedural rules, as applied and evidenced by the present case, are compatible with Articles 4 and 17 of the Takeover Bids Directive, read in conjunction with Article 47 of the Charter and the rights guaranteed by EU law.
40) Third, seen in this light, the four questions raised by the referring court become two, or rather one, with two sub-questions. Therefore, the questions referred can essentially be rephrased to enquire whether the application of the national procedural rules, as evidenced by the present case, is compatible with Articles 4 and 17 of the Takeover Bids Directive, if read in the light of the principle of respect for the rights of the defence and/or Article 47 of the Charter. That overarching question has two further sub-questions: a scenario where party identity across the procedures is present (Questions 1 and 3) and where such identity is missing (Questions 2 and 4).
45) The first paragraph of Article 47 of the Charter provides for the right to an effective remedy before a tribunal. Key components of that right are the principle of equality of arms, including the principle of audi alteram partem, ( 12 ) and the principle of procedural equality. ( 13 ) By imposing the obligation to provide each party with a reasonable opportunity to present their case in conditions that do not place one of the parties in a clearly less advantageous position than the other, ( 14 ) Article 47 of the Charter also concerns itself with the protection of the rights of the defence. ( 15 )
46) It is true that the full range of guarantees flowing from Article 6(2) and (3) of the European Convention on Human Rights (‘ECHR’), to which Articles 47 and 48 of the Charter correspond, only arises in proceedings liable to lead to a penalty that is ‘criminal’ in nature. ( 16 ) However, it is also clear from the wording of Article 47 of the Charter that that provision is not limited to proceedings which lead to the imposition of ‘criminal’ penalties alone. Indeed, that provision establishes a nucleus of rights which must be protected in all judicial proceedings. ( 17 )
47) A review into whether said nucleus of rights has been observed must be available, both in law and in fact, by a ‘tribunal’ within the meaning of Article 47 of the Charter. ( 18 ) For the purposes of the case-law, such a body must be established by law; be permanent; have compulsory jurisdiction; feature a proceeding that is inter partes; apply rules of law; and be independent (internally and externally). ( 19 )
48) By default, in order for judicial review under the first paragraph of Article 47 of the Charter to be effective, that review requires full jurisdiction at least in one instance. ( 20 ) The scope of the review by such a ‘tribunal’ may be limited, for example, to questions of law only. ( 21 ) However, in that case, the administrative authority competent to render the decision at issue must itself satisfy all the criteria of a ‘tribunal’ for the purposes of Article 47 of the Charter. ( 22 ) Thus, in one way or another, there must be at least one fully independent instance, which will qualify as ‘tribunal’ for the purposes of the first paragraph of Article 47 of the Charter, and which is entitled to assess the case in full jurisdiction, that is to say involving elements of law as well as those elements of fact.
61)
GM, HL and Adler take the view that, in the present circumstances, Article 47 of the Charter precludes the recognition of the binding effect of the Preliminary Decision for the purposes of the administrative penalty proceeding. As regards the first paragraph of Article 47 of the Charter, those parties submit that, in the light of the limited judicial review available to the Supreme Court, recognising the binding effect of the Preliminary Decision, once it became definitive, in the context of the subsequent administrative penalty proceeding and for court proceedings before the Bundesverwaltungsgericht (Federal Administrative Court, Austria), undermines their right to effective judicial protection arising from the Charter.
62) The Takeover Commission opposes those views. It argues that the procedural guarantees underlying both the preliminary and administrative penalty proceedings are such that the resulting decisions are taken by an independent and impartial ‘tribunal’ within the meaning of Article 47 of the Charter. Given that the Takeover Commission thus, in both cases, acts as the ‘court of first instance’, limiting the standard of review of the Supreme Court to questions of law only, is compatible with Article 47 of the Charter.
63) The logic of the requirements of the first paragraph of Article 47 of the Charter requires a two-part assessment. ( 25 ) First, whether the Takeover Commission does in fact, like it claims, qualify as a ‘tribunal’ within the meaning of Article 47 of the Charter (1). Second, where that is not the case, whether its decisions are subject to review by a court with ‘full jurisdiction’ (2).
64) One of the cumulative conditions required for there to be a ‘tribunal’, within the meaning of Article 47 of the Charter, is whether the authority concerned is ‘independent’. ( 26 ) It ensures a level playing field for the parties to the proceedings and their respective interests in relation to the subject matter of those proceedings. ( 27 ) In other words, the body concerned may not act as a party in its own cause in breach of the principle of ‘nemo judex in sua causa’. ( 28 )
65) Without it being necessary to run through all that is required in order to satisfy the criteria of a ‘tribunal’, as required for Article 47 of the Charter, it appears that the Takeover Commission does not satisfy the criterion linked to ‘independence’.
69) Naturally, all those elements are for the referring court to decide on. However, in view of the answers provided to this Court, and for the reasons laid down in the preceding points of this Opinion, I am not convinced that the Takeover Commission satisfies the criteria of a ‘tribunal’ within the meaning of Article 47 of the Charter. I wish to stress that such a tentative conclusion, again solely for the referring court to verify, in no way questions the fact that certain national administrative authorities will be endowed with an advanced level of independence, and possess the highest level of expertise in their respective fields of activity.
70) However, that is not what defines an ‘independent’ tribunal. An independent tribunal under the first paragraph of Article 47 of the Charter is characterised by its complete independence, both ‘internal’ as well as ‘external’. It is an independent third with regard to both parties concerned. Within that logic, decision-making chambers that are part of an administrative authority, or even functionally very independent appellate chambers that are part of an administrative authority, still tend to fall on the side of public administration and not be part of the judiciary. ( 31 )
71) Since it would appear that the Takeover Commission is not a ‘tribunal’ within the meaning of the first paragraph of Article 47 of the Charter, the question thus becomes whether, in the present case, the competent national courts maintain ‘full jurisdiction’ to review the decisions of the Takeover Commission.
75) If that is indeed the case, such a situation is, in my view, at odds with Article 47 of the Charter and the requirement for effective judicial protection.
76) I would emphasise that that incompatibility arises for every participant in the ‘first’, preliminary procedure, because there appears to be no ‘tribunal’ with full jurisdiction, as required under the first paragraph of Article 47 of the Charter. To that initial problem, an additional one arises with regard to the specific situation of the parties that were not even participating in the first preliminary proceedings.
85) It is also clear that the Member States are not required to establish a system of administrative decisions, in which the administrative authority itself satisfies the criteria of a ‘tribunal’ within the meaning of Article 47 of the Charter. However, as a matter of EU law, when rights derived from EU law are concerned, the (judicial) control of that administration’s decisions then shifts one step ‘upstream’ to the competent national courts.
87) I propose that the Court answer the questions referred for a preliminary ruling by the Bundesverwaltungsgericht (Federal Administrative Court, Austria) as follows:
