On July 24, 2023, the ECJ issued its judgement in the case C-107/23 (PPU).
Context: Reference for a preliminary ruling – Protection of the Union’s financial interests – VAT fraud – Article 325(1) TFEU – SFI Convention – Directive (EU) 2017/1371 – Obligation to combat fraud affecting the Union’s financial interests by means of dissuasive and effective Measures – Decision 2006/928/EC – Mechanisms for cooperation and verification of the progress made by Romania in meeting certain benchmarks in the areas of judicial reform and the fight against corruption – Statute of limitations in criminal matters – Judgment amending national rules on the suspension of the statute of limitations on criminal liability be declared unconstitutional – systemic risk of impunity – protection of fundamental rights – Art. 49 para.1 last sentence of the Charter – Principle of the retrospective application of the more lenient criminal law (lex mitior) – National standard of protection of fundamental rights – Obligation of national judges to give full effect to judgments of the Curtea Constituțională (Constitutional Court) – Disciplinary liability of judges in case of non-compliance of those decisions – power to disapply decisions of the Curtea Constituțională (Constitutional Court) which are incompatible with EU law – principle of the primacy of EU law’to give full effect to the judgments of the Curtea Constituțională (Constitutional Court) – Disciplinary liability of judges in case of non-compliance with those decisions – Power to disapply decisions of the Curtea Constituțională (Constitutional Court) which are incompatible with EU law – Principle of the primacy of Union law”to give full effect to the judgments of the Curtea Constituțională (Constitutional Court) – Disciplinary liability of judges in case of non-compliance with those decisions – Power to disapply decisions of the Curtea Constituțională (Constitutional Court) which are incompatible with EU law – Principle of the primacy of Union law
Article in the EU VAT Directive
N/A
Facts
- By final judgment No. 285/AP of 30 June 2020 ( 15 ), the Curtea de Apel Brașov (Court of Appeal, Brașov, Romania) convicted several individuals (C.O., C.I., L.N., K.A. and S.P.) of tax evasion and the formation of an organized criminal Union.
- As regards the criminal offense of tax evasion, the court found it proven that in 2010 the convicts had failed, wholly or in part, to register in their accounts transactions carried out and income from the sale of diesel to national customers who were subject to the scheme of excise duty suspension. This resulted in tax damage, also with regard to value added tax and excise duty on diesel.
- The judgment imposed prison terms and damages totaling RON 13 964 482 (approximately EUR 3 240 000) including VAT.
- Two of the convicts (K.A. and S.P.) are currently serving the prison sentences imposed by the judgment of June 30, 2020.
- The convicts lodged an appeal (Article 426(b) of the Code of Criminal Procedure) with the referring court against the judgment of 30 June 2020.
- They request that the judgment be set aside because they were convicted despite the fact that the limitation period for criminal liability had expired. They refer to the judgments of the Curtea Constituțională (Constitutional Court) No. 297/2018 and No. 358/2022.
- The applicants submit that:
- The principle of the milder criminal law applies to them. In relation to the offenses for which they were convicted, the more lenient criminal law provided for a shorter statute of limitations on criminal liability, which expired before the final decision in the case. The statute of limitations on criminal liability only became apparent after that criminal judgment had entered into force, following the promulgation of judgment n Criminal provisions in the period following the publication of Judgment No. 297/2018 did not contain any grounds for interrupting the statute of limitations on criminal liability.
- The absence of grounds for interrupting criminal liability in the period between the two judgments of the Constitutional Court, which was established by judgment no. 358/2022, in itself constitutes a more lenient criminal law. This should be applied in favor of the accused, had committed the offenses for which no final judgment had been issued by the time Judgment No. 297/2018 was published. In those circumstances, the 10-year limitation period provided for in Article 154(1)(b) of the 2009 Criminal Code expired before the judgment pronouncing the conviction became final, leaving aside the facts of the interruption .
- As part of the application for annulment, the Ministerul Public – Direcția Națională Anticorupție (Public Prosecutor’s Office – National Anti-Corruption Directorate [hereinafter: DNA], Romania) requested that the Court of Justice be referred for a preliminary ruling to determine whether Article 325 TFEU, Decision 2006/928 and Art. 49 of the Charter are to be interpreted as making it possible to disregard judgment No. 358/2022 of the Constitutional Court. In her view, the implementation of this judgment carries a systemic risk of impunity in cases where EU law is applicable.
- The complainants, on the other hand, argue that the EU rules are not relevant in the present case and that the reference for a preliminary ruling is therefore inadmissible. Moreover, the principle of applying the more lenient criminal law has constitutional status and takes precedence over any relevant Union provision.
- The referring court points out that if the applicants’ claims were to be granted, it would have to set aside the final conviction and order the criminal proceedings to be dismissed, which would make it impossible to continue serving the sentence. In the light of that premise, it puts forward essentially various reasons for ignoring in the present case the principle of the less severe criminal law guaranteed by the Romanian Constitution, the application of which is contrary to EU law.
Questions
1. Are Art. 2 TEU, Art. 19 Para. 1 Subpara. 2 TEU and Art. 4 para. 3 TEU in conjunction with Art. 325 para. 1 TFEU, Art. 2 para /EC of the Council of 28 November 2006 on the common system of value added tax, with reference to the principle of effective and dissuasive penalties in cases of serious fraud affecting the financial interests of the European Union, all applying Commission Decision 2006/928/EC, in light of Article 49 (1) sentence 3 of the Charter of Fundamental Rights of the European Union to be interpreted as precluding a legal situation such as that in the main proceedings,
2. Are Art. 2 TEU on the values of the rule of law and respect for human rights in a society characterized by justice, and Art. 4(3) TEU on the principle of sincere cooperation between the Union and the Member States applying the decision 2006/928/EC of the Commission with regard to the obligation to ensure the efficiency of the Romanian judicial system and in the light of Art. 49 para. 1 sentence 3 of the Charter, which states the principle of the less severe criminal law, with regard to the national judicial system in its to be interpreted as a whole in such a way that they preclude a legal situation such as that in the main proceedings,in which the convicted applicants apply for an extraordinary appeal to have a final conviction set aside, invoking the application of the principle of the lesser criminal law which they consider would have been applicable in the proceedings on the merits and which would have provided for a shorter limitation period which had preceded the final decision on the matter, but only arose later from a decision of the national constitutional court declaring a legal text interrupting the statute of limitations on criminal liability to be unconstitutional (decision of 2022) because the legislator had failed to act and failed to send the wording of the law to anotherto adapt the decision of this constitutional court (from 2018), which was made four years before this decision – whereby in the meantime a case law of the ordinary courts had already been established in application of the first decision, according to which the wording in the form interpreted according to the first constitutional court decision persists, with the practical effect that the statute of limitations for all criminal offenses for which no final conviction had been issued prior to the first constitutional decision was reduced by half and the criminal proceedings against those accused in this case were consequently discontinued?reduced by half and the criminal proceedings against those accused in this case consequently dropped?reduced by half and the criminal proceedings against those accused in this case consequently dropped?according to which the wording continues to exist in the form interpreted after the first constitutional court decision, which had the practical effect that the limitation period for all criminal offenses for which there was no final conviction before the first constitutional court decision was reduced by half and the criminal proceedings against the in the accused in this matter was consequently dismissed?according to which the wording continues to exist in the form interpreted after the first constitutional court decision, which had the practical effect that the limitation period for all criminal offenses for which there was no final conviction before the first constitutional court decision was reduced by half and the criminal proceedings against the in the accused in this matter was consequently dismissed?
3. If the first two questions are answered in the affirmative, and if it is impossible to interpret it in conformity with Union law, is the principle of the primacy of Union law to be interpreted in such a way that it precludes a national rule or practice by virtue of which the ordinary national courts are bound by the decisions of the national constitutional court and are bound by the binding decisions of the national supreme court and for this reason cannot, of their own motion, ignore the case-law arising from those decisions without risking committing a disciplinary offence, even if, in the light of a judgment of the Court of Justice, they consider that this jurisprudence in particular against Art. 2 TEU, Art. 19 para. 1 subpara. 2 TEU and Art. 4 para. 3 TEU in connection with Art. 325 TFEU,
AG Opinion
1. National legislation and national case-law suspending the limitation of criminal liability, resulting in a significant number of acts constituting serious fraud affecting the financial interests of the Union from going unpunished, are in principle in breach of art 325(1) TFEU and Commission Decision 2006/928/EC of 13 December 2006 establishing a mechanism for cooperation and reviewing Romania’s progress in meeting certain targets in the areas of judicial reform and the fight against corruption.
The national court is not obliged to disapply this national regulation and this national case-law if they are violated by the application of the principle of retrospective application of the milder criminal law or justified by a higher standard of protection for that principle set out in national law.
2. Art. 2 TEU and Art. 19 para. 1 subpara. 2 TEU are to be interpreted as precluding any national rule or practice whereby a national judge may be subject to disciplinary action for any failure to comply with the decisions of the national constitutional court or the national supreme court. However, they do not preclude disciplinary liability in exceptional cases involving serious and totally inexcusable conduct on the part of judges, such as willful and malicious or particularly grossly negligent disregard of the provisions of national law and of Union law, compliance with which they are intended to ensure.
Art. 19 para. 1 subpara. 2 TEU in conjunction with Art. 2 TEU and Art. 4 para. 2 and 3 TEU, Art. 267 TFEU and the principle of the primacy of Union law is to be interpreted in such a way that it precludes a national regulation or practice according to which a national judge with the Disciplinary action can be taken on the grounds that, in the application of Union law as interpreted by the Court of Justice, he deviated from a case law of the Constitutional Court that is incompatible with the principle of the primacy of Union law.
Decision
1) Article 325, paragraph 1, TFEU and Article 2, paragraph 1, of the Convention drawn up on the basis of Article K.3 of the Treaty on European Union, on the protection of the financial interests of the European Communities, signed in Brussels on 26 July 1995 and annexed to the Council act of 26 July 1995,
should be interpreted as:
the courts of a Member State are not bound to disapply the judgments of the Constitutional Court of that Member State invalidating the national legislative provision which governs the causes of interruption of the limitation period in criminal matters, on the ground of an infringement of the principle of legality of offenses and penalties as protected in national law, in its requirements relating to the foreseeability and precision of criminal law, even if these judgments have the consequence that a considerable number of criminal cases, including cases relating to offenses of serious fraud affecting the financial interests of the European Union, will be terminated due to the prescription of criminal liability.
On the other hand, the said provisions of Union law must be interpreted as meaning that:
the courts of that Member State are required to leave unapplied a national standard of protection relating to the principle of the retroactive application of the more favorable criminal law (lex mitior) which makes it possible to challenge, including in the context of appeals against final judgments, the interruption of the limitation period for criminal liability in such cases by procedural acts which took place before such a finding of invalidity.
2) The principle of the primacy of Union law
should be interpreted as:
it precludes national legislation or practice by virtue of which the national courts of ordinary law of a Member State are bound by the decisions of the Constitutional Court as well as by those of the supreme court of that Member State and cannot, for this reason and at the risk of the disciplinary liability of the judges concerned being engaged, automatically disapply the case-law resulting from these decisions, even if they consider, in the light of a judgment of the Court, that this case-law is contrary to provisions of Union law having direct effect.
Source: Curia
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