30. PROTECTION BY PENAL SANCTIONS
AGAINST COUNTERFEITING IN CONNECTION WITH THE INTRODUCTION OF
THE EURO (12585/99—Droipen 18)
Letter from Lord Tordoff, Chairman of
the Committee, to Barbara Roche MP, Minister of State, Home Office
Droipen 18 was considered by Sub-Committee E
(Law and Institutions) at its meeting on 24 November. The Committee
also had before it Droipen 10, the draft framework decision on
combating fraud and counterfeiting of non-cash means of payment.
Both are important in relation to their subject matter and as
early examples of "framework decisions" under Title
VI TEU.
The Committee notes that the European Scrutiny
Committee of the House of Commons has requested further information
from you on the detail of Droipen 10 and has decided to retain
that document under scrutiny and will reconsider it when it has
seen your response to that Committee.
Droipen 18 raises a number of questions in relation
to which the Committee would be grateful for further information
and clarification. The first concerns the proposed legal base.
The Committee notes that Droipen 18 is brought forward under Article
34(2)(b), Title VI, TEU. It would be helpful if you could more
clearly describe the appropriateness of that provision as a legal
base for this proposal. To what extent is Article 34(2)(b) limited
by the scope of Title VI, and in particular by Articles 29 and
31(e)? If not so limited how extensive is the power in Article
34(2)(b) as regards the approximation of criminal laws and penalties?
As mentioned above, Droipen 10 and 18 are among
the first framework decisions to be examined by the Committee.
The Committee notes the difference in approach and drafting in
the definition of the "crimes" being approximated by
the two instruments. This difference may be explicable by reference
to their origins but it appears that the Government is more critical
of the language and terminology of Droipen 10 than that of Droipen
18. Is Droipen 10 more likely to set the pattern of how framework
decisions under Title VI TEU are to be drafted? It is, of course,
important that the extent of any proposed criminality be precisely
defined and the extent of the UK's obligations clearly set out.
The Committee would welcome the Government's assurance that it
is content with the use of the term "fraudulent" in
Article 3 and that it has a sufficiently clear and common meaning
in all the criminal jurisdictions of the Union.
In relation to Article 7, Jurisdiction, the
Committee has a number of questions. Firstly, the Committee notes
that the Government does not rule out the possibility of taking
jurisdiction on the grounds of nationality (Article 7(1) second
indent). You say: "The UK may wish to make use of this waiver".
But in the context of Droipen 10 (fraud and counterfeiting of
non-cash means of payment) you do not countenance any change to
UK law. In relation to the equivalent provisions in Article 4
of Droipen 10 you say: "The UK would need to make use of
this option because the UK does not take jurisdiction over its
nationals abroad". It would be helpful if you could explain
the reasons for this apparent difference of approach.
Your Explanatory Memorandum points to the limited
use of the universality principle in our criminal law. The Committee
is conscious of the sensitivities involved in the assertion of
any extraterritorial jurisdiction. I would be grateful if you
could provide the Committee with a comprehensive list of measures
which have been adopted under the Treaties and which contain obligations
on Member States to apply their criminal laws and procedures extraterritorially.
What is the Government's policy as regards the extraterritorial
application of criminal law in the context of the European Union?
Would it favour a wider use of the extraterritorial jurisdiction
on a more uniform basis? What are the implications for the application
and development of our domestic criminal laws and for our relations
with States outside the Union? Finally, while the Committee sees
no reason to exclude the application by agreement of the universality
principle as between Member States and within the territorial
boundaries of the EU, it would be grateful for your confirmation
that the application of the universality principle beyond those
boundaries in the present context is fully compatible with international
law.
Articles 8 and 9 deal with the liability of,
and sanctions for, legal persons. The Committee notes that you
take the view that the provisions in these Articles are "covered
in UK law through a combination of the Interpretation Act (1978),
the Forgery and Counterfeiting Act (1981) and common law".
That conclusion appears to be conditional on Article 9 not requiring
criminal penalties. Under Article 9 sanctions must include "criminal
or non-criminal fines". It would be helpful if you could
explain how "non-criminal fines" are imposed on legal
persons by virtue of the 1978 and 1981 Acts and the common law.
Finally, is the reference, in Article 9, to
"liable pursuant to Article 10" correct?
The Committee decided to clear Droipen 4 but
to retain Droipen 18 under scrutiny. I look forward to receiving
the information requested above.
25 November 1999
Letter from Barbara Roche MP, Minister
of State, Home Office, to Lord Tordoff, Chairman of the Committee
Thank you for your letter of 25 November regarding
the Committee's view on the draft "Framework Decision on
increasing protection by penal sanctions against counterfeiting
in connection with the introduction of the Euro". Since receiving
your letter, the draft Framework Decision was agreed in substance
at the Justice and Home Affairs Council on 2-3 December. However,
given that the instrument remains under scrutiny in both Houses,
the Government maintained a parliamentary scrutiny reservation.
We are now waiting to receive a revised text, as agreed at the
Council, which I will submit to the Committee.
In your letter, you ask for my views on eight
issues. I shall respond to each in the order in which they are
raised.
First, you ask whether Article 34(2)(b) of the
Treaty on European Union is an appropriate legal base for Droipen
18. As well as citing Article 34(2)(b) as a legal base, the draft
Framework Decision also cites Article 31(e). Article 31(e) envisages
measures establishing minimum rules relating to the constituent
elements of criminal acts and to penalties in the field of, inter
alia, organised crime. Although counterfeiting is sometimes
done by individuals acting alone, it is more likely to be the
work of an organised criminal group. Therefore, in my view the
draft framework decision is appropriately based on Articles 31(e)
and 34(2)(b). You also asked to what extent Article 34(2)(b) is
limited by the scope of Title VI, and in particular by Articles
29 and 31(e). The measures which can be taken under Article 34(2)
must contribute to the "pursuit of the objectives of the
Union". In my view, this should be read with Article 29 which
defines the Union's objective of creating an area of freedom,
security and justice, and states how this should be achieved.
Measures to approximate rules on criminal matters would therefore
be limited by Articles 29 and 31(e).
Second, you note the different approaches to
drafting in Droipen 10 and Droipen 18, and ask which will set
the pattern for future Framework Decisions. Due to the need for
it to be agreed quickly (given that it affects the introduction
of the Euro), Droipen 18 was deliberately drafted as a limited
instrument which does not attempt to regulate any aspect of the
criminal law on counterfeiting. Droipen 10 is intended to be more
comprehensive. Since the negotiations on Droipen 10 are not very
advanced, it is too soon to say whether it will establish a norm
for future proposals. Because Member States and the Commission
have a right to propose legislation under Title VI of the Treaty
on European Union, it is likely that slight variations between
the drafting style of Framework Decisions will continue.
Third, I can clarify that the Government is
content with the use of the term "fraudulent" in Article
3. The term is taken from the definition of the offences in Article
3 of the 1929 Geneva Convention on the counterfeiting of currency,
which the UK ratified in 1959. Given that all Member States have
either ratified the Geneva Convention or intend to do so (as a
requirement of the Framework Decision), I am also content that
the term will have a clear and common meaning throughout the EU.
Fourth, you ask whether the Government's approach
to jurisdiction in Droipen 18 is consistent with its approach
in Droipen 10. As the Committee has noted, Article 4(1) of Droipen
10 requires Member States to take jurisdiction for offences committed
in whole or in part within their territory or by one of their
nationals, although Member States may declare that they will not
apply the second alternative. The same provision is contained
in Article 7(1) of Droipen 18. The UK does not, in general, take
jurisdiction for offences committed by UK nationals abroad, but
there are some exceptions (for example, homicide) which are decided
on a case-by-case basis. The Government proposes to keep its options
open as regards rules of jurisdiction for counterfeiting offences,
in view of the possibility that the UK may in future adopt the
Euro. (This particular provision was, in any case, amended before
it was submitted to Council).
Fifth, you request a list of other EU measures
that contain obligations on Member States to apply their criminal
laws and procedures extra-territorially. I understand that, to
date, four such measures exist:
— Convention on the protection of the
European Communities financial interests (the Fraud Convention)
(26 July 1995);
— Protocol to the Convention on the
protection of the European Communities financial interests (27
September 1996);
— Convention on the fight against corruption
involving officials of the European Communities or officials of
Member States of the European Union (26 May 1997);
— Joint Action on corruption in the
private sector (22 December 1998).
In addition, although not requiring Member States
to apply their laws and criminal procedures extra-territorially,
the "Joint Action concerning action to combat trafficking
in human beings and sexual exploitation of children" requires
Member States to review existing law and practice with a view
to providing extra-territorial jurisdiction for certain offences.
Sixth, you ask what the Government's policy
is as regards to the extraterritorial application of criminal
law in the EU. The Government is, in general, reluctant to agree
to measures that require the UK to take universal jurisdiction.
This is due especially to the practical problems, and costs, associated
with obtaining evidence from abroad in a form which is admissible
in our courts. As a result, the UK only takes universal jurisdiction
in special cases, for example for very serious and exceptional
offences, such as torture and crimes against the State. In most
cases, this has been in response to international agreements.
We apply these principles to negotiations in the European Union
in the same way as to negotiations in other fora. This means that
we examine the need for extra-territorial jurisdiction on a case-by-case
basis. Since the bringing into force of Part 1 of the Criminal
Justice Act this year, the UK is able to take jurisdiction for
certain crimes committed in whole or in part in the UK
(previously the UK only took jurisdiction for crimes wholly, or
where the last act was, committed on UK territory). I do
not consider that any of the provisions which the EU has adopted
regarding universal jurisdiction would have any direct implication
for the UK's relations with non-EU Member States, nor that there
is any risk of incompatibility with international law.
Seventh, you ask whether the requirements of
Article 9 are covered in UK law. As you note, Article 9 requires
Member States to ensure that legal persons can be punished by
"effective, proportionate and dissuasive sanctions",
which must include criminal or non-criminal fines. Whilst
UK law does not apply non-criminal fines, it does specify criminal
liability for legal persons, including fines, for the matters
referred to in Article 8(1).
Finally, you ask whether the reference in Article
9 to "pursuant to Article 10" is correct. The reference
is not correct, and should refer to Article 8(2). This was corrected
in the version of the text which was submitted to the Council.
21 December 1999
Letter from Lord Tordoff, Chairman of
the Committee, to Barbara Roche MP, Minister of Sate, Home Office
Thank you for your letter of 21 December. I
have delayed replying pending receipt of the revised text of the
proposal and your Explanatory Memorandum.
The documents were considered by Sub-Committee
E (Law and Institutions) at its meeting on 1 March. They were
grateful for the detailed answers given in your letter. The Committee
remains concerned at the adequacy of the proposed legal base.
You consider that the draft framework decision is appropriately
based on Articles 31(e) and 34(2)(b) of the Treaty on European
Union because "Although counterfeiting is sometimes done
by individuals acting alone, it is more likely to be the work
of an organised criminal group". The Committee does not find
this argumentation very compelling because of the width of Article
3 of the revised text. It therefore invites the Government to
consider the question further and to propose amendments to the
recitals which should make much clearer and firmer the nexus between
the proposal and the need to take common action within the terms
of Articles 29 and 31 TEU.
This letter clears the documents from scrutiny.
I would be grateful if you would let the Committee know the outcome
of the Council's consideration of the proposal at its meeting
at the end of March.
1 March 2000
Letter from Barbara Roche MP, Minister
of State, Home Office, to Lord Tordoff, Chairman of the Committee
Thank you for your letter of 1 March. I am sorry
for the delay in replying. I can now let you know that the draft
Framework Decision secured political agreement at the JHA Council
on 27 March, and is likely to be submitted for adoption to the
JHA Council at the end of May.
You mentioned the Committee's concern about
my explanation of the legal base chosen for this instrument. I
should explain that the Government strongly supports the objective
of this Framework Decision. It is important for the whole of Europe
that effective measures are taken against counterfeiting of currency,
including the euro as well as other national currencies. The Framework
Decision does this by extending and strengthening the criminal
law relating to counterfeiting.
Against that background, whilst there is room
for legal argument about the precise relationship between the
Framework Decision and particular articles of the Treaty, I do
not think it can be denied that it falls within the general objective
of providing "a high level of safety within an area of freedom,
security and justice" (Article 29). Article 29 goes on to
state that this objective "shall be achieved by preventing
and combating crime, organised or otherwise, in particular...
corruption and fraud". I am therefore satisfied that the
Council will be acting within its powers when it adopts the Framework
Decision. I do not believe that the wording of Article 31(e) should
be interpreted in a restrictive way, as this might make it more
difficult for the EU to take measures against other serious crimes
in future. (Another example is paedophile offences, which are
sometimes committed by organised groups and sometimes by individuals
acting alone).
6 April 2000
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