Proceedings brought by RR and JG (C-505/20)

Contents

Judgment of the Court (Eighth Chamber)12 May 2022^note(Reference for a preliminary ruling — Judicial cooperation in criminal matters — Freezing and confiscation of instrumentalities and proceeds of crime in the European Union — Directive 2014/42/EU — Article 4 — Confiscation — Article 7 — Freezing — Article 8 — Procedural safeguards — Freezing and confiscation of property belonging to a third party to the criminal proceedings — National law not providing a remedy for third parties during the judicial proceedings and not allowing the return of the property until the end of criminal proceedings)In Case C‑505/20,REQUEST for a preliminary ruling under Article 267 TFEU from the Spetsializiran nakazatelen sad (Specialised Criminal Court, Bulgaria), made by decision of 8 October 2020, received at the Court on the same day, in proceedings brought byTHE COURT (Eighth Chamber),composed of N. Jääskinen, President of the Chamber, M. Safjan (Rapporteur) and M. Gavalec, Judges,Advocate General: M. Campos Sánchez-Bordona,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:– the European Commission, by M. Wasmeier and I. Zaloguin, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following

Judgment

1This request for a preliminary ruling concerns the interpretation of Article 4(1), read in conjunction with Article 2(3) of Directive 2014/42/EU of the European Parliament and of the Council of 3 April 2014 on the freezing and confiscation of instrumentalities and proceeds of crime in the European Union (OJ 2014 L 127, p. 39), of Article 8 of that directive and of Article 17 of the Charter of Fundamental Rights of the European Union (‘the Charter’).

2The request has been made in the context of criminal proceedings in the course of which RR and JG, being third parties to those proceedings, applied to the referring court for the return of property which was seized during the pre-trial stage of those proceedings.

Legal context

European Union law

3Recitals 15, 31, 33, 34 and 38 of Directive 2014/42 state:(15) Subject to a final conviction for a criminal offence, it should be possible to confiscate instrumentalities and proceeds of crime, or property the value of which corresponds to such instrumentalities or proceeds. Such final conviction can also result from proceedings in absentia. When confiscation on the basis of a final conviction is not possible, it should nevertheless under certain circumstances still be possible to confiscate instrumentalities and proceeds, at least in the cases of illness or absconding of the suspected or accused person. However, in such cases of illness and absconding, the existence of proceedings in absentia in Member States would be sufficient to comply with this obligation. When the suspected or accused person has absconded, Member States should take all reasonable steps and may require that the person concerned be summoned to or made aware of the confiscation proceedings.…(31) Given the limitation of the right to property by freezing orders, such provisional measures should not be maintained longer than necessary to preserve the availability of the property with a view to possible subsequent confiscation. This may require a review by the court in order to ensure that the purpose of preventing the dissipation of property remains valid.…(33) This Directive substantially affects the rights of persons, not only of suspected or accused persons, but also of third parties who are not being prosecuted. It is therefore necessary to provide for specific safeguards and judicial remedies in order to guarantee the preservation of their fundamental rights in the implementation of this Directive. This includes the right to be heard for third parties who claim that they are the owner of the property concerned, or who claim that they have other property rights (“real rights”, “ius in re”), such as the right of usufruct. The freezing order should be communicated to the affected person as soon as possible after its execution. Nevertheless, the competent authorities may postpone communicating such orders to the affected person due to the needs of the investigation.(34) The purpose of communicating the freezing order is, inter alia, to allow the affected person to challenge the order. Therefore, such communication should indicate, at least briefly, the reason or reasons for the order concerned, it being understood that such indication can be very succinct.…(38) This Directive respects the fundamental rights and observes the principles recognised by the [Charter] and the European Convention for the Protection of Human Rights and Fundamental Freedoms [signed in Rome on 4 November 1950] (“the ECHR”), as interpreted in the case-law of the European Court of Human Rights. This Directive should be implemented in accordance with those rights and principles. This Directive should be without prejudice to national law in relation to legal aid and does not create any obligations for Member States’ legal aid systems, which should apply in accordance with the Charter and the ECHR.’

4Article 1 of that directive, entitled ‘Subject matter’, provides, in paragraph 1:‘This Directive establishes minimum rules on the freezing of property with a view to possible subsequent confiscation and on the confiscation of property in criminal matters.’

5Article 2 of that directive, entitled ‘Definitions’, provides:‘For the purpose of this Directive, the following definitions apply:…(3) “instrumentalities” means any property used or intended to be used, in any manner, wholly or in part, to commit a criminal offence or criminal offences;(4) “confiscation” means a final deprivation of property ordered by a court in relation to a criminal offence;(5) “freezing” means the temporary prohibition of the transfer, destruction, conversion, disposal or movement of property or temporarily assuming custody or control of property;…’

6Article 3 of the same directive, entitled ‘Scope’, is worded as follows:‘This Directive shall apply to criminal offences covered by:…(g) Council Framework Decision 2004/757/JHA of 25 October 2004 laying down minimum provisions on the constituent elements of criminal acts and penalties in the field of illicit drug trafficking [(OJ 2004 L 335, p. 8)];(h) Council Framework Decision 2008/841/JHA of 24 October 2008 on the fight against organised crime [(OJ 2008 L 300, p. 42)];…’

7Article 4 of Directive 2014/42, entitled ‘Confiscation’, states, in paragraph 1:‘Member States shall take the necessary measures to enable the confiscation, either in whole or in part, of instrumentalities and proceeds or property the value of which corresponds to such instrumentalities or proceeds, subject to a final conviction for a criminal offence, which may also result from proceedings in absentia.’

8Under Article 5(1) of that directive, ‘Member States shall adopt the necessary measures to enable the confiscation, either in whole or in part, of property belonging to a person convicted of a criminal offence which is liable to give rise, directly or indirectly, to economic benefit, where a court, on the basis of the circumstances of the case, including the specific facts and available evidence, such as that the value of the property is disproportionate to the lawful income of the convicted person, is satisfied that the property in question is derived from criminal conduct’.

9Article 6 of that directive, entitled ‘Confiscation from a third party’, provides:1. Member States shall take the necessary measures to enable the confiscation of proceeds, or other property the value of which corresponds to proceeds, which, directly or indirectly, were transferred by a suspected or accused person to third parties, or which were acquired by third parties from a suspected or accused person, at least if those third parties knew or ought to have known that the purpose of the transfer or acquisition was to avoid confiscation, on the basis of concrete facts and circumstances, including that the transfer or acquisition was carried out free of charge or in exchange for an amount significantly lower than the market value.2. Paragraph 1 shall not prejudice the rights of bona fide third parties.’

10Article 7 of the same directive, entitled ‘Freezing’, provides:1. Member States shall take the necessary measures to enable the freezing of property with a view to possible subsequent confiscation. Those measures, which shall be ordered by a competent authority, shall include urgent action to be taken when necessary in order to preserve property.2. Property in the possession of a third party, as referred to under Article 6, can be subject to freezing measures for the purposes of possible subsequent confiscation.’

11Article 8 of Directive 2014/42, entitled ‘Safeguards’, is worded as follows:1. Member States shall take the necessary measures to ensure that the persons affected by the measures provided for under this Directive have the right to an effective remedy and a fair trial in order to uphold their rights.2. Member States shall take the necessary measures to ensure that the freezing order is communicated to the affected person as soon as possible after its execution. Such communication shall indicate, at least briefly, the reason or reasons for the order concerned. When it is necessary to avoid jeopardising a criminal investigation, the competent authorities may postpone communicating the freezing order to the affected person.3. The freezing order shall remain in force only for as long as it is necessary to preserve the property with a view to possible subsequent confiscation.4. Member States shall provide for the effective possibility for the person whose property is affected to challenge the freezing order before a court, in accordance with procedures provided for in national law. Such procedures may provide that when the initial freezing order has been taken by a competent authority other than a judicial authority, such order shall first be submitted for validation or review to a judicial authority before it can be challenged before a court.5. Frozen property which is not subsequently confiscated shall be returned immediately. The conditions or procedural rules under which such property is returned shall be determined by national law.6. Member States shall take the necessary measures to ensure that reasons are given for any confiscation order and that the order is communicated to the person affected. Member States shall provide for the effective possibility for a person in respect of whom confiscation is ordered to challenge the order before a court.…9. Third parties shall be entitled to claim title of ownership or other property rights, including in the cases referred to in Article 6.…’

Bulgarian law

The Criminal Code

12Article 53 of the Nakazatelen kodeks (Criminal Code) states:(1)Irrespective of criminal liability, the following shall be confiscated in favour of the State:(a) property belonging to the offender which was intended or served for the purpose of committing a deliberate criminal offence; where such property no longer exists or has been disposed of, its equivalent value shall be determined;(b) property belonging to the offender which has been the subject matter of a deliberate criminal offence, in the cases expressly provided for in the Special Part of the present code.(2)The following shall also be confiscated in favour of the State:(a) property which has been the subject matter or instrument of a criminal offence and the possession of which is prohibited, and(b) the direct and indirect proceeds of a criminal offence, where these are not subject to return or recovery; where such proceeds no longer exist or have been disposed of, their equivalent value shall be determined.(3)For the purposes of paragraph 2(b):1. “direct proceeds” shall mean any economic advantage arising as an immediate consequence of an offence;2. “indirect proceeds” shall mean any economic advantage arising from the disposal of direct proceeds, as well as any property resulting from the subsequent conversion, in whole or in part, of direct proceeds, including where the latter have been intermingled with property acquired from a legitimate source; property up to the value of the direct proceeds incorporated shall be liable to confiscation, as well as any increase in the property directly linked to the disposal or conversion of the direct proceeds or to the incorporation of the direct proceeds in the property.’

The Code of Criminal Procedure

13Article 111 of the Nakazatelno-protsesualen kodeks (Code of Criminal Procedure), entitled ‘Preservation of evidence’, provides:(1) Evidence shall be preserved until the criminal proceedings have been completed.(2) Objects seized by way of evidence may be returned to the persons from whom they were confiscated by permission of the public prosecutor before completion of the criminal proceedings only when that does not impede ascertainment of the objective truth and when they are not the subject of administrative offences.(3) The public prosecutor shall decide on applications for the return of property within three days. The owner may appeal before the competent court of first instance against a refusal by the public prosecutor pursuant to paragraph (2). That court shall rule on the appeal within three days of receipt thereof, in a closed session, and its decision shall be final.(4) Perishable objects seized by way of evidence which have been taken from their owners but which cannot be returned to them shall be submitted to the relevant institutions and judicial bodies by permission of the public prosecutor to be used in accordance with their designation or else must be sold, in which case the sale proceeds shall be deposited in a commercial bank and be put towards the national budget.(5) Narcotic substances, drug precursors and psychotropic plants, and goods subject to excise, may be destroyed before completion of the criminal proceedings subject to the conditions and procedures laid down by law. In that situation, only the representative samples seized shall be preserved until the end of the proceedings.…’

The dispute in the main proceedings and the questions referred for a preliminary ruling

14On 15 January 2019, narcotic substances were discovered during a police check of a vehicle driven by WE, in which RR, who was his cohabitee and the owner of the vehicle, was also present. WE and RR were formally charged but, having found on the conclusion of the investigation that RR had been unaware of the presence of the narcotic substances, the public prosecutor terminated the criminal proceedings against her. However, the vehicle, which the investigation had shown to be available to WE for his permanent use, continued to be held as evidence, pursuant to Article 111 of the Code of Criminal Procedure, in the proceedings against WE.

15On 7 August 2019, as part of criminal proceedings against an organised narcotics trafficking gang, a search was carried out at JG’s home, during which two mobile telephones and a quantity of cash were seized. JG was not, however, charged, since the public prosecutor considered that he had no involvement in the offence. The two mobile telephones and the cash continued to be held as evidence, pursuant to Article 111 of the Code of Criminal Procedure, in the proceedings against the organised gang.

16RR and JG applied to the Spetsializiran nakazatelen sad (Specialised Criminal Court, Bulgaria), the referring court, for the return of their respective property.

17According to that court, while the national law allows a third party to apply for the return of seized property during the pre-trial stage of criminal proceedings, it is not possible to apply to have such property returned during the trial stage of the proceedings, a stage which can last several years.

18The referring court adds that Article 53 of the Criminal Code does not allow for the confiscation of the property of a bona fide third party in a situation such as that in the main proceedings, meaning that the property seized in the main proceedings should be returned to its owners at the end of the trial stage.

19The referring court therefore questions the compatibility of that legislation with Directive 2014/42, read in the light of Article 17 of the Charter.

20In those circumstances the Spetsializiran nakazatelen sad (Specialised Criminal Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:(1) Does Article 8 of Directive 2014/42 preclude a national law pursuant to which a person whose property has been seized as an alleged instrumentality or as alleged proceeds of a criminal offence and has been frozen is not entitled to apply to the court during the trial stage of the criminal proceedings for the return of that property?(2) Is a national law which does not permit the confiscation of an “instrumentality” which is the property of a third party who is not involved in the criminal offence but who has made that property available to the accused for the latter’s permanent use in such a way that, from the perspective of the relationship between them, it is the accused who exercises the rights of ownership, in line with Article 4(1) of Directive 2014/42 in conjunction with Article 2(3) thereof and Article 17 of the Charter?(3) If the [second] question is answered in the negative: Do the second sentence of Article 8(6) and Article 8(7) of Directive 2014/42 establish an obligation to interpret the national law as granting a third party whose property has been frozen and may be confiscated as an instrumentality the right to participate in the proceedings which may result in confiscation and to challenge the confiscation decision in court?’

Consideration of the questions referred

The first question

21By its first question, the referring court asks, in essence, whether Article 8(1) of Directive 2014/42 must be interpreted as precluding a national law pursuant to which a bona fide third party whose property is seized as an alleged instrumentality or as alleged proceeds of a criminal offence is not entitled to apply to the competent court during the trial stage of the criminal proceedings for the return of that property.

22As a preliminary point, it must be noted that offences linked to organised crime and drug trafficking, such as those at issue in the main proceedings, fall within the material scope of Directive 2014/42.

23Pursuant to Article 3(g) and (h) thereof, that directive applies to criminal offences covered by Framework Decisions 2004/757 and 2008/841, which relate respectively to criminal acts in the fields of drug trafficking and the fight against organised crime.

24Article 8 of that directive, entitled ‘Safeguards’, stipulates, in paragraph 1, that Member States must ensure that the persons affected by the measures provided for under the directive have the right to an effective remedy and a fair trial in order to uphold their rights. That provision therefore confirms, in the sphere of that directive, the fundamental rights referred to in Article 47 of the Charter, which states inter alia that everyone whose rights and freedoms guaranteed under EU law are violated has the right to an effective remedy before a tribunal in compliance with the conditions laid down in that article and, in particular, is entitled to a fair hearing (see, to that effect, judgment of 21 October 2021, Okrazhna prokuratura – Varna, C‑845/19 and C‑863/19, EU:C:2021:864, paragraph 75).

25In the first place, the measures laid down by Directive 2014/42 apply, inter alia, to the freezing of property, which is defined in Article 2(5) of that directive as ‘the temporary prohibition of the transfer, destruction, conversion, disposal or movement of property or temporarily assuming custody or control of property’.

26In the present case, it is clear from the order for reference that the property at issue in the main proceedings remained in the custody of the authorities involved in the criminal proceedings. Therefore, as the referring courts notes, the seizure in question in the main proceedings should be regarded as a ‘freezing’ within the meaning of that provision.

27In the second place, regarding the circumstances in which Directive 2014/42 allows property to be frozen, Article 7 provides that Member States are to take the necessary measures to enable the freezing of property with a view to possible subsequent confiscation.

28Within that context, it is necessary to examine whether the property at issue in the main proceedings was frozen with a view to its possible subsequent confiscation, within the meaning of Article 7.

29In that regard, at the time when the property at issue in the main proceedings was frozen, a subsequent confiscation of that property was a possibility.

30As far as RR is concerned, it is clear from the order for reference that she was initially charged with the trafficking of narcotic substances and that it was only later that she was cleared of involvement in that offence by the public prosecutor and became a bona fide third party, which, according to the referring court, prevented the confiscation of her property under Bulgarian law.

31As for JG, it is clear from that order for reference that he was cleared of participation in the criminal activity in question only after the two mobile telephones seized had been examined, and therefore that those mobile telephones and the sum of cash were frozen with a view to their possible subsequent confiscation.

32Therefore, to the extent that the property belonging to RR and JG was, at the time it was frozen, subject to possible subsequent confiscation under Bulgarian law, the situation of both of those individuals falls within the scope of Article 7 of Directive 2014/42. Accordingly, they are affected by a measure provided for under that directive, within the meaning of Article 8(1) thereof.

33In the third place, as regards the fact that the owner of frozen property is not entitled to apply to the court for its return during the trial stage of the criminal proceedings, it should be recalled that Article 8(1) of Directive 2014/42 requires Member States to ensure that the persons affected have the right to an effective remedy and a fair trial in order to uphold their rights.

34In that regard, on account of the general nature of the wording of that provision, the persons for whom the Member States must guarantee effective remedies and a fair trial are not only those convicted of an offence but also third parties whose property is affected by the freezing order (see, by analogy, judgment of 21 October 2021, Okrazhna prokuratura – Varna, C‑845/19 and C‑863/19, EU:C:2021:864, paragraph 76 and the case-law cited).

35That interpretation also follows from recital 33 of Directive 2014/42, which states, in essence, that the directive substantially affects the rights of persons, not only of suspected or accused persons, but also of third parties who are not being prosecuted but are claiming that they are the owner of the property concerned. It is therefore necessary, according to that recital, to provide for specific safeguards and judicial remedies in order to ensure the preservation of their fundamental rights in the implementation of that directive (judgment of 21 October 2021, Okrazhna prokuratura – Varna, C‑845/19 and C‑863/19, EU:C:2021:864, paragraph 77).

36In addition, Article 8 of Directive 2014/42 must be read in the light of recital 31 thereof, according to which, given the limitation of the right to property by freezing orders, such provisional measures should not be maintained longer than necessary to preserve the availability of the property with a view to possible subsequent confiscation, which may require a review by the court in question to ensure that the purpose of the freezing order remains valid.

37Such an approach assumes that a bona fide third party owner of property that has been frozen may ask the competent court, even if judicial proceedings are still ongoing, to review whether the conditions for the freezing continue to be met. Consequently, a national law that does not provide for such a possibility is contrary to Article 8(1) of Directive 2014/42.

38In the light of the foregoing considerations, the answer to the first question is that Article 8(1) of Directive 2014/42 must be interpreted as precluding a national law pursuant to which a bona fide third party whose property is frozen as an alleged instrumentality or as alleged proceeds of a criminal offence is not entitled to apply to the competent court during the trial stage of the criminal proceedings for the return of that property.

The second question

39By its second question, the referring court asks, in essence, whether Article 4(1) of Directive 2014/42 must be interpreted as precluding a national law which does not permit the confiscation of property belonging to a bona fide third party and used as an instrumentality, including where that property has been made available by that third party to the accused for the latter’s permanent use.

40As a preliminary point, it must be noted that the European Commission maintains that that question is inadmissible as it bears no relation to the actual facts of the action or its purpose, since it is clear from the order for reference that no confiscation can be made, in any event, in the case in the main proceedings. It would be contrary to the national law to confiscate the instrumentality at issue in the main proceedings and so the public prosecutor’s office is no longer seeking or contemplating the possibility of the instrumentality being subsequently confiscated.

41It must be recalled in that regard that it is solely for the national court before which the dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted concern the interpretation of EU law, the Court is, in principle, bound to give a ruling (judgment of 13 November 2018, Levola Hengelo, C‑310/17, EU:C:2018:899, paragraph 27 and the case-law cited).

42Indeed, it is settled case-law that questions on the interpretation of EU law referred by a national court in the factual and legislative context which that court is responsible for defining, and the accuracy of which is not a matter for the Court to determine, enjoy a presumption of relevance. The Court may refuse to rule on a question referred by a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (judgment of 13 November 2018, Levola Hengelo, C‑310/17, EU:C:2018:899, paragraph 28 and the case-law cited).

43In the present case, it is apparent from the order for reference that the national law does not permit confiscation of the property of a bona fide third party in a situation such as that in the main proceedings. The referring court specifically seeks to ascertain whether, under Directive 2014/42, such confiscation is required in that situation. Therefore, it cannot be said that it is quite obvious that the second question bears no relation to the actual facts of the action or its purpose, with the result that that question is admissible.

44As to the substance, it must be recalled that Article 4(1) of Directive 2014/42 provides for the confiscation, inter alia, of ‘instrumentalities’, within the meaning of Article 2(3) of that directive, subject to a final conviction for a criminal offence.

45However, although that provision expressly refers to instrumentalities and a final conviction for a criminal offence, its wording does not specify whether the instrumentality subject to confiscation must necessarily belong to the person convicted.

46In interpreting a provision of EU law, the Court must, in accordance with settled case-law, consider not only its wording, but also, inter alia, the context in which it occurs (see, to that effect, judgment of 24 March 2021, MCP, C‑603/20 PPU, EU:C:2021:231, paragraph 37 and the case-law cited).

47In the present case, as regards the context in which Article 4(1) of Directive 2014/42 occurs, it should be noted that Article 5 of the same directive, concerning ‘extended confiscation’, provides, in paragraph 1, that that concept only relates to ‘property belonging to a person convicted of a criminal offence’, meaning that the property of third parties is excluded from the scope of that article.

48Meanwhile, although Article 6 of that directive, as indicated by its title, expressly relates to ‘confiscation from a third party’, it refers only to ‘proceeds’ and not to ‘instrumentalities’, meaning that it could not, in any event, serve as the basis for confiscating an instrumentality in a situation such as that in the main proceedings.

49As for recital 15 of Directive 2014/42, in the light of which Article 4 of that directive must be read, that sets out an obligation to make suspected or accused persons aware of the confiscation proceedings, but makes no mention of third parties.

50It follows from those various provisions that, as the confiscation of property belonging to third parties is only envisaged in the situations referred to in Article 6 of Directive 2014/42, the confiscation of property under Article 4(1) of that directive can only relate to the property of suspected or accused persons.

51The fact, raised by the referring court, that the accused person had permanent use of the property is not such as to allow that property to be confiscated pursuant to Article 4(1) of Directive 2014/42 when it belongs to a bona fide third party.

52In any case, to the extent that the national law does not allow the property of a bona fide third party to be confiscated in a situation such as that in the main proceedings, it is settled case-law of the Court that a directive cannot of itself impose obligations on an individual and cannot therefore be relied on as such against that individual before a national court (judgment of 24 June 2019, Popławski, C‑573/17, EU:C:2019:530, paragraph 65 and the case-law cited).

53In view of the foregoing, the answer to the second question is that Article 4(1) of Directive 2014/42 must be interpreted as not precluding a national law which does not permit the confiscation of property belonging to a bona fide third party and used as an instrumentality, including where that property has been made available by that third party to the accused for the latter’s permanent use.

The third question

54In view of the answer given to the second question, there is no need to answer the third question.

Costs

55Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (Eighth Chamber) hereby rules:

1.Article 8(1) of Directive 2014/42/EU of the European Parliament and of the Council of 3 April 2014 on the freezing and confiscation of instrumentalities and proceeds of crime in the European Union must be interpreted as precluding a national law pursuant to which a bona fide third party whose property is frozen as an alleged instrumentality or as alleged proceeds of a criminal offence is not entitled to apply to the competent court during the trial stage of the criminal proceedings for the return of that property.

2.Article 4(1) of Directive 2014/42 must be interpreted as not precluding a national law which does not permit the confiscation of property belonging to a bona fide third party and used as an instrumentality, including where that property has been made available by that third party to the accused for the latter’s permanent use.