Select Committee on European Union Forty-Ninth Report

CONFISCATION ORDERS (9955/02; 15884/02; 14852/02)

Letter from the Chairman of the Committee to Bob Ainsworth MP, Parliamentary Under-Secretary of State, Home Office

  Sub-Committee E (Law and Institutions) examined this document at its meeting on 9 October 2002.

  We note that the proposal is modelled on earlier "mutual recognition" proposals, such as the Framework Decisions on the European Arrest Warrant, and the execution of freezing orders. The Committee's concerns relating to the application of the mutual recognition principle in criminal matters are well known to you and therefore need not be restated at length. However, in relation to the current proposal, we have particular concerns regarding the abolition of dual criminality in Article 5(1). In view of the significant impact that a confiscation order may have on human rights, it may be dangerous to allow for the automatic confiscation of assets (including land) arising from conduct that is not considered to be criminal in the executing State. The Committee's concerns are exacerbated by the uncertainty surrounding the definition of some of the offences in Article 5(1) (such as racism and xenophobia—as you are aware the relevant Framework Decision is currently held under scrutiny by the Committee) and by the possibility, given by Article 5(3) of the present proposal, of further relaxation of the principle except when Member States object. Do you share these concerns? What is the Government's position as regards Article 5(3)? Does it intend to invoke the dual criminality rule?

  The Committee decided to retain the document under scrutiny.

10 October 2002

Letter from Bob Ainsworth MP, Parliamentary Under-Secretary of State, to the Chairman

  I am replying to your letter of 10 October regarding the outcome of Sub-Committee E's consideration of this draft Framework Decision. Your concerns focus on the scope of application of this instrument as defined in Article 5 of document 9955/02.

  As you acknowledge the approach proposed in the Framework Decision follows the model first established by the Framework Decision establishing the European Arrest Warrant. This provides that an order shall be executed in the absence of a dual criminality requirement where it relates to conduct listed in the Framework Decision. However, a test of dual criminality, and indeed in this case dual confiscability, may be applied as regards orders relating to conduct not on the list. Although the Government has not yet reached a final view on whether to apply the discretionary dual criminality requirement for confiscation orders issued in relation to conduct not listed in Article 5(1), the current expectation is that such a requirement would be imposed.

  The Government does not however share your concerns as regards the approach proposed in Article 5, which we supported in the context of the European Arrest Warrant. We take the view that the retention of a general dual criminality requirement is inconsistent with the successful application of the mutual application principle. We also believe that the draft Framework Decision contains a number of safeguards to ensure that a balance will be struck between such coercive measures which are necessary to tackle serious and organised crime and the need to respect and protect fundamental human rights.

  In particular, Article 1 makes clear that the Framework Decision shall not have the effect of amending Member States' obligations to respect fundamental rights and principles. This is of course language we have successfully sought for inclusion in other mutual recognition measures. Article 7(2)(f) also provides that we can refuse to execute a confiscation order issued against a person for conduct committed in the UK: "a territoriality clause". And Article 7(2)(e) provides a right to refuse execution in specific circumstances where an order has been made in absentia. I would also emphasise that, as defined in Article 2(c), confiscation can be (and in fact often is) a penalty arising from a conviction, by a court, of a criminal offence.

  You mention the Committee's specific concerns about the definitions of the offences in the list of conduct for which dual criminality is not required and in particular the case of racism and xenophobia. The Government takes the view that the conduct listed in Article 5(1) should rightly be defined by the Member State issuing the confiscation order, subject to the safeguards which I have already outlined. This is of course subject to an additional requirement that the conduct attracts a maximum penalty of three years' imprisonment in that State. We are not therefore dealing with trivial conduct. I plan to write separately regarding the ongoing negotiations regarding the draft Framework Decision on racism and xenophobia.

26 November 2002

Letter from the Chairman to Bob Ainsworth MP, Parliamentary Under-Secretary of State, Home Office

  Sub-Committee E (Law and Institutions) considered the proposal, along with your letter of 26 November, at its meeting on 15 January. We would reiterate our concerns regarding the abolition of dual criminality in this sensitive area, but understand that this is unlikely to change.

  The Committee notes that the new text includes a number of improvements regarding safeguards. These involve most notably the clarification of the scope of the proposal, which now covers only final court orders (Article 2). This serves to enhance legal certainty and to safeguard defence rights. The same can be said with regard to Article 7(2)(g). The amendments to Article 11(2) and (5) are also welcome.

  However, there is still room for clarification on a number of issues:


  It would be useful to confirm what is meant by a "final" order. Is this intended to cover decisions against which there is no appeal under national law?

  It is also not clear whether there must be a conviction by a criminal court before a confiscation order can be made. There appears to be an inconsistency in this context between paragraph 20 of your Explanatory Memorandum and your letter of 26 November, where you state that "confiscation can be (and in fact often is) a penalty arising from a conviction, by a court, of a criminal offence".


  It is not clear what the "consultation" between the competent authorities of the issuing and executing States under Article 11(2) will entail. Does the executing State have the final say as to whether confiscation, totally or in part, has already occurred? Clarification would be welcome.


  We note that Article 8(1) provides that "action shall be brought before a court in the issuing State or in the executing State in accordance with the national law of each State". We would be grateful for your assurance that the Government, when implementing this provision, will enable third parties to exercise legal remedies in the UK when it is the executing State.


  An issue that remains untouched by your Explanatory Memorandum is the sharing of confiscated assets under Article 14. We understand that there has been a first exchange of views on this provision at the December Justice and Home Affairs Council, where various options of asset allocation were discussed. It would be useful if you could provide us with an update on negotiations in this respect.

  We would welcome your comments on these points. The Committee decided to retain document 13772/02 Copen 53 under scrutiny. Document 9955/02 Copen 35 has been cleared.

16 January 2003

Letter from Bob Ainsworth MP, Parliamentary Under-Secretary of State, Home Office, to the Chairman

  I am replying to your letter of 16 January on the draft Framework Decision.

  The Committee raises a number of points about the instrument.

  I note the Committee's continuing concerns about dual criminality. However, as I said in my letter of 26 November, we take the view that the retention of a general dual criminality requirement in this instrument is inconsistent with the successful application of the mutual recognition principle. We therefore support its abolition for the offences listed in Article 5.

  I agree with the Committee that the definition of "final" in Article 2(c) of the instrument would benefit from being clarified. We believe that a decision should generally be deemed to be final when normal appeal rights have been exhausted. We would not wish enforcement to be prevented in cases where it is possible (as it is under our legislation) to apply at any time to vary a confiscation order, even after normal appeal rights have been exhausted. Otherwise, there is a danger that some confiscation orders could never be enforced.

  I am sorry for any confusion that may have arisen from the apparent difference between my letter of 26 November, and my EM of 4 December on the question of whether the defendant must have been convicted of an offence. I will clarify the Government's view here.

  Article 2(c) defines a confiscation order as "a final penalty or measure imposed by a court following proceedings in relation to a criminal offence or offences, resulting in the definitive deprivation of property." It is difficult to see how an order that was not imposed after conviction would fit into this definition. Article 11(1) refers to the "sentenced" person, and paragraph 4.2 of the draft certificate refers to the "provisions infringed". Both of these support the view that the defendant must have been convicted. We therefore think the text is clear enough on this point, but will consider whether it needs to be made still clearer. We certainly believe that orders to be enforced under this instrument should only be made following conviction.

  The Committee asks about the duty on the executing state to consult the issuing state when the sentenced person provides evidence that confiscation has already taken place, in whole or in part, in another State. On our reading of the text, it would be for the executing state to make the final decision on whether confiscation had indeed taken place. The issuing state should be consulted as it may well have access to information that could verify or refute the defendant's claims.

  On the question of legal remedies for third parties under Article 8(1), I can confirm that we will execute orders received from overseas under this instrument in the same way as domestic orders. This means that persons holding interests in property will have the right, under S53(8) of the Proceeds of Crime Act 2002, to be heard before the Court allows a receiver to sell or manage that property, or requires them to purchase the defendant's interest in it. Where the defendant makes a gift to a third party that is alleged to be a "tainted gift", as defined in Sections 77 and 78 of the Proceeds of Crime Act, the third party will have the right to challenge the allegation in the courts, before the gift is recovered to help satisfy the confiscation order.

  Finally, the Committee has asked for an update on the sharing of confiscated assets, as provided for in Article 14. An EM on the latest version of this instrument (15884/02) was deposited on 5 February 2003. This latest version contains radically different provisions on asset sharing to those in 13772/02. The new text of Article 14 provides that, where an amount above a certain threshold (to be determined) is confiscated, a fixed percentage (also to be determined) of the net assets will be returned to the issuing state. We are discussing this amendment with other Departments, in particular HM Treasury. The Article may undergo further amendment during negotiation.

10 February 2003

Letter from the Chairman to Bob Ainsworth MP, Parliamentary Under-Secretary of State, Home Office

  Sub-Committee E (Law and Institutions) considered the proposal at its meeting on 5 March. Your letter of 10 February has helped to clarify the meaning of a number of provisions, and we note that the latest draft (Copen 53) has been improved. There remain however two issues in need of further clarification.


  You note that, in view of the fact that the Proceeds of Crime Act 2002 defines property in a much broader manner than the draft Framework Decision, a great number of UK confiscation orders will not be executed by other Member States. You have therefore suggested a rewording of the text to include any property that the issuing State is required under its national law to assume derives from general criminal conduct.

  The Committee is concerned about the practical implications of your proposed amendment and notes that it may be problematic in view of the substantial differences in national approaches to confiscation across the EU—which were also highlighted in the negotiations of the Framework Decision on confiscation of crime related proceeds, instrumentalities and property. Not only is there an issue as to the compatibility of the "criminal lifestyle" provisions with the ECHR, but your proposed amendment of Article 2(d) may run contrary to Member States' national constitutional principles, which are protected by Article 1(2) of the instrument currently under scrutiny. Even if your amendment is accepted, how in the light of Article 1(2) is it likely to work in practice?


  Article 14 now attempts to establish a fixed rate of net confiscated assets to be returned to the issuing State, if the amount is above a certain threshold. We note however that neither the threshold nor the rate have been determined and that the provision is still under negotiation. We would be grateful if you could keep us informed on the progress of negotiations in Brussels and the outcome of your discussions with the Treasury.

  We would welcome your comments on these points. The Committee decided to retain document 15884/02 Copen 66 under scrutiny. Document 13772/02 Copen 53 has been cleared.

6 March 2003

Letter from the Chairman to Bob Ainsworth MP, Parliamentary Under-Secretary of State, Home Office

  Sub-Committee E (Law and Institutions) considered the latest draft (14852/02), along with your letter of 12 December, on 18 December. We note that this is a substantially improved version of the proposal. It limits extended confiscation powers to serious organised crime where there has been some EU harmonisation. It refrains from shifting the burden of proof to the defendant. It includes a series of human rights safeguards.

  There is still however an element of uncertainty regarding the "minimum standard" approach introduced by Article 3(2). It is not clear whether the wording "at least where a national court based on specific facts is fully convinced that the property in question has been derived from criminal activities of the convicted person" would enable Member States to shift the burden of proof to the defendant, or to confiscate property not emanating from an offence, or both. Clarification of this point would be welcome.

  We further note that the term "closest relations" remains undefined. In your letter, you say that this will be a matter of interpretation for Member States. We deduce from your reaction that this provision is not going to be implemented in the UK.

  The Committee decided to clear the documents from scrutiny.

19 December 2002

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