EU to adopt arbitrary powers to freeze assets and seize evidence

- freezing of evidence: "will not depend on there being any particular suspect, indeed the investigation maybe be at an early stage with no particular offence established" (UK Home Office Minister)


Introduction

On 28 February the EU Justice and Home Affairs Council reached a provisional agreement on the content of an EU Framework Decision on the freezing of assets and evidence (full-text of Framework Decision) , subject to scrutiny reservations from six of the 15 national parliaments, Denmark, Ireland, Italy, the Netherlands, Sweden and the UK.

Based on the "mutual recognition" principle, the measure aims to allow investigating authorities to quickly secure evidence and seize assets in other member states. Effectively, a warrant issued in one member state authorising the freezing of property in relation to criminal investigations into an any of a list of 32 agreed offences (see below) and carrying a maximum custodial sentence of three years or more will be enforceable throughout the EU. Bob Ainsworth, UK Home Office minister has stated just how wide-ranging and intrusive these orders may be:

"The Framework Decision, as far as the freezing of evidence is concerned, … will not depend on there being any particular suspect; indeed the investigation maybe at an early stage with no particular offence established. Property will be seized and detained by the police, often from third parties, pending the receipt of a formal request for its transmission to the issuing state."

Negotiations began in November 2000 and have taken much longer than the controversial Framework Decisions on terrorism and the European Arrest Warrant. Of 26 identifiable EU documents relating to the "freezing" measure, only nine have been released in full to the public (11 have been kept secret, and six are subject to the partial access rule to hide negotiating positions).

Ben Hayes of Statewatch comments:

"Under this proposal one EU state will be able to order another to seize an individual's property or freeze their assets without providing a shred of evidence. The failure to include detailed standards on how affected individuals should be able to challenge these orders is incredible and it is now doubtful if implementation of the legislation will comply with the European Convention on Human Rights."

Issuing authorities

Each EU member state (MS) will designate a "judicial authority" which will be responsible for "validating or in anyway confirming" (article 2(a)) a "freezing order":

"any measure taken by a competent judicial authority in the issuing State in order provisionally to prevent the destruction, transformation, moving, transfer or disposal of property that could be subject to confiscation or evidence (art. 2(c))"

"Property" can be "of any description and include the suspected proceeds of crime; evidence covers anything which could be produced in criminal proceedings.

The text does not specify that the "judicial authority" must be a judge or magistrate, nor does it require that the freezing orders be equivalent to court decisions under national law. This leaves open the possibility for the MS to designate a police authority if they so wish. The UK House of Commons select committee on European scrutiny is so concerned that it suggests:

"Without the minimum safeguard of judicial involvement in and oversight of the making of orders in the issuing State, we do not consider there is any proper basis for their recognition and enforcement in this country"

Scope of the Framework Decision

The Framework Decision covers "securing evidence" (art. 3.1(i)) and "subsequent confiscation of property" (art. 3.1(ii)); it was originally also intended to include the seizure of property with a view to restitution to the rightful owner, but this is now to follow in a separate instrument. Orders concerning the agreed list of offences, as long as they carry a maximum custodial sentence of at least three years - in the issuing state only - will not be subject to the dual criminality test (where the offence must be punishable to a minimum degree in both states). The list in full:

- participation in a criminal organisation,
- terrorism,
- trafficking in human beings,
- sexual exploitation of children and child pornography,
- illicit trafficking in narcotic drugs and psychotropic substances,
- illicit trafficking in weapons, munitions and explosives,
- corruption,
- fraud, including that affecting the financial interests of the European Communities within the meaning of the Convention of 26 July 1995 on the protection of the European Communities' financial interests,
- laundering of the proceeds of crime,
- counterfeiting of the euro,
- computer-related crime,
- environmental crime, including illicit trafficking in endangered animal species and in endangered plant species and varieties,
- facilitation of unauthorised entry and residence,
- murder, grievous bodily injury,
- illicit trade in human organs and tissue,
- kidnapping, illegal restraint and hostage-taking,
- racism and xenophobia,
- organised or armed robbery,
- illicit trafficking in cultural goods, including antiques and works of art,
- swindling,
- racketeering and extortion,
- counterfeiting and product piracy,
- forgery of administrative documents and trafficking therein,
- forgery of means of payment,
- illicit trafficking in hormonal substances and other growth promoters,
- illicit trafficking in nuclear or radioactive materials,
- motor vehicle crime,
- rape,
- arson,
- crimes within the jurisdiction of the International Criminal Tribunal,
- unlawful seizure of aircraft/ships,
- sabotage (art. 3.2).

For offences not covered by the list, requested states may subject orders to the dual criminality requirement (art. 3.4). The list of offences, and scope for abolition of dual criminality, is the same as the list as in the European Arrest Warrant (see art. 2.2); the Council may decide unanimously to extend the list in the future (art 3.3). Just over half of these crimes have been "harmonised" under EU and international law, with the member states agreeing on common definitions and minimum criminal sanctions. However, a number of the crimes have only been commonly defined for the purposes of Europol's competence and not in order to harmonise national criminal law. Furthermore, several of the harmonising instruments are themselves problematic as they contains an option as regards criminalisation (1) or more so where national parliaments refuse to implement them (2).

How the orders will work

The freezing order, together with a signed certificate setting the details of what is to be seized (see standard form in the Annex to the text) is sent directly from the issuing judicial authority in one state to the authority competent to carry out the order - police, customs etc - in another MS (art. 4.1) The UK and Ireland may specify that requests must be sent a via central authority (in the UK the Mutual Legal Assistance (MLA) unit) until the Schengen provisions on MLA, to which both countries have recently opted in, come into effect (4.2). The EU Judicial Network is to assist in identifying the competent authorities in each MS (art. 4.3).

When a law enforcement agency receives a freezing order from another MS it must execute the request "immediately" (art. 5.1) unless any of the limited grounds for refusal apply (see below). Execution of a freezing order may be "postponed" by the requested state if it would affect an ongoing criminal investigation (art. 8.1(a)) or if the assets or evidence sought are already the subject of a freezing order (art. 8.1(b,c)).

Requests for the seized evidence to be transferred to another MS, or for the frozen assets for to be confiscated, can either accompany the initial freezing order or be sent later (art. 10.1). Property will remain frozen in the executing state until it responds finally to such requests, although it "may" insist on appropriate conditions or time limit for where these requests have not yet been submitted (art. 6.2). There is no definite obligation to impose a time-limit, so if some MS decide against this in implementing the legislation there is a very real risk a person's property could remain frozen for lengthy periods until subsequent requests and decisions on how to proceed are taken.

The requests for the transfer or evidence or confiscation of assets from the issuing MS will be subject to international MLA rules, but with derogation from the principle dual criminality requirement (art. 10.3). There is thus further concern that EU Framework Decisions may instead function as minimum standards and that MS might impose extraterritorial jurisdiction, or at least a wide view of what constitutes an act 'partly' committed on its territory.

Grounds for refusal

Grounds for refusing to enforce orders from another member state are limited to:

- if the certificate is incomplete or "manifestly does not correspond to the freezing order";
- if it involves someone with immunity in the requested state;
- if it is "instantly clear" that double jeopardy is infringed;
- if the dual criminality requirement applies (except on tax and customs offences) and is not satisfied (art 7.1).

It is alarming that the text fails to allow for refusal to execute the orders, or subsequent transfer of property, where it can be shown later that the double jeopardy principle is infringed (there are already several cases on this issue pending at the European Court of Justice); or if the executing state makes a mistake as to the identity of the suspect; or where there are grounds in a particular case to show - that contrary to the presumptions that the EU likes to make - there has been a breach of human rights in the issuing state (such as in the Krombach judgment of the European Court).

Rights of appeal

In implementing the Framework Decision the MS are to ensure that any interested party has legal remedy "without suspensive effect" to a freezing order enforced on behalf of another state (art. 10.1). The action must be brought before a court in either the issuing or executing state in accordance with national law, but the substantive grounds may only be challenged in the issuing state (art. 10.2). The only other stipulations as regards access to the courts for those affected are that if the appeal takes place in the executing state, the state that issued the order shall be informed so it can make representations (art. 10.3) and that both states shall take necessary measures to allow for an effective legal remedy "in particular by providing adequate information" (art. 10.4) and by ensuring that any time limits guarantee such a possibility (art. 10.5). Criminal lawyers may be astonished at the lack of detailed standards for appealing these orders.

The UK delegation tried to introduce certain minimum standards for the defence, but failed to convince the other MS. Their omission from the text is all the more surprising when compared to the proposed European enforcement mechanism for uncontested civil judgments - a vastly less sensitive subject - for which the Commission proposes the MS should not be able to participate in the system of expedited recognition of orders unless they have minimum procedural standards above simply the minimum level of the European Convention on Human Rights (ECHR).

Compliance with the ECHR

The inclusion of a statement to the effect that the issuing and enforcement of freezing orders must be in accordance with the ECHR has been a primary concern of the UK and other parliaments, but nothing was included until late in the negotiations, in February 2002. An amendment to the preamble to the text now makes various references - to Article 6 TEU (which in turn refers to the ECHR), to the principles "reflected" in the EU Charter of fundamental rights, to discrimination and to freedom of expression and association; while Article 1 states that the measure:

"shall not have the effect of amending the obligation to respect the fundamental rights and fundamental legal principles as enshrined in Article 6 of the Treaty on European Union"

For the UK House of Commons select committee this equivocal wording is unacceptable:

"The language now proposed is vague and ambiguous, containing no express reference to the ECHR… If human rights are to be preserved by this proposal, we do not understand why it should not be stated in clear and simple terms that the making, recognition and enforcement of a freezing order are to be subject to the ECHR"

Relationship with European Arrest Warrant proposal

A final issue concerning the proposal is its as yet unclear relationship with the Framework Decision on the European Arrest Warrant. Just prior to provisional agreement on the text of the latter in December 2001, a provision on the seizure of evidence and property during the enforcement of an arrest warrant was introduced (see art. 23(a)). The UK government argues that the two sets of rules "address very different sets of circumstances", while the UK Commons Select Committee suggests that:

"The two provisions appear to us to have the same material scope, but to have different rules for such matters as appeals. This is notably the case for third parties, who have no rights of appeal under Article 23a of the European Arrest Warrant where their property or rights may be affected. It may be that the problem has been caused by the last-minute insertion of Article 23a into the European Arrest Warrant, but we consider that the confusion which now arises should be resolved by the present proposal before it is formally adopted"

Implementation

The provisionally agreed text does not yet contain the deadline within which the MS must implement the Framework Decision (art. 14 1), though it may be expected to follow the European Arrest Warrant time-frame of the start of 2004. The text cannot be formally adopted by the Council until the national parliaments lift their scrutiny reservations and the European Parliament is re-"consulted" on the text - a procedural requirement rather than an objective process, given that the text has already been agreed and the Council can (and almost certainly will) ignore the EP's recommendations.

The shape of things to come?

An example of the effect that the mandatory recognition of orders from other states can have comes from Sweden (US adds Swedish citizens to UN list), where the UN Security Council (Taliban Sanctions Committee) list of terrorist organisations whose assets are to be frozen included three Swedish citizens. The three men, all of Somali origin, are members of Al Barakaat, a network of organisations providing support to refugees and assisting financial transactions between residents of Sweden and Somalia. After public reaction to the freezing of their assets, the Swedish authorities demanded evidence from the USA - which the USA said they did not need to show. When it eventually did so, the Swedish Security Police stated that there was no substance to the material sent over as "evidence". Marianne Eriksson, a Swedish MEP, said:

These men - and even the partner of one of them - have been left without any economic assets. It means they are without a salary or benefits. All this has been done with out any legal evidence or preliminary investigation. We want to draw attention to their plight and the whole process under which they have been condemned.

The three individuals have lodged a case against the Council and the Commission with the European Courts, arguing that the EC Regulations (full-text) implementing the UN Security Council Resolution are a breach of the EC Treaty and amount to a misuse of powers imposing upon them onerous sanctions while simultaneously denying them the "fundamental legal principle of the right to a fair and equitable hearing", as guaranteed by Article 6, ECHR.

Two other cases contesting inclusion on the Taliban sanctions list are pending. One brought by a Jordanian citizen, resident in the UK, whose claims include violation of Articles 3 and 8 ECHR (the prohibition against inhuman treatment and respect for family life respectively) and breach of the EC principles of 'proportionality' and 'subsidiarity'. The other is by a Saudi businessman claiming breach of the right to enjoy property and failure to ensure effective judicial control by providing a mechanism under which inclusion on the list could be challenged.

Sources: Draft Framework Decision on the execution in the European Union of orders freezing property or evidence, 6890/02, 13.3.02 & 6982/01, 13.3.02; Draft Framework Decision on a European Arrest Warrant, 5327/02, 14845/1/01, 7.12.01; House of Commons Select Committee on European Scrutiny, Twenty-third Report, Execution of Orders Freezing Assets or Evidence; Case T-315/01 - Yassin Abdullah Khadi v. Council and Commission, 5656/02, 21.2.02; Action brought on 10 December 2001 by Abdirisak Aden and Others against the Council of the European Union and the Commission of the European Communities (Case T-306/01), OJ C 44, 16.2.02, p27-28; Case T-318/01 - Omar Mohammed OTHMAN v. Council and Commission, 6763/02, 27.2.02.

Notes

(1) For example, the apparent outcome of the discussions on child pornography, where some member states will criminalise images of 'virtual' children and some will not.

(2) For example, Denmark where the parliament is refusing to implement the 1999 Joint Action on participation in a criminal organisation or Sweden, where a parliamentary majority is currently opposed to the Framework Decision on terrorism.



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