Select Committee on European Communities Second Report


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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