delivered on 11 July 2024 (1) (i)

Cases C‑767/22, C‑49/23 and C‑161/23

1Dream OÜ,

DS,

DL,

VS,

JG (C‑767/22)

AZ,

1Dream OÜ,

Produktech Engineering AG,

BBP,

Polaris Consulting Ltd (C‑49/23)

VL,

ZS,

Lireva Investments Limited,

VI,

FORTRESS FINANCE Inc. (C‑161/23)

other party:

Latvijas Republikas Saeima

(Request for a preliminary ruling from the Latvijas Republikas Satversmes tiesa (Constitutional Court, Latvia))

(Reference for a preliminary ruling – Judicial cooperation in criminal matters – Directive 2014/42/EU – Freezing and confiscation of instrumentalities and proceeds of crime in the European Union – Scope – Confiscation of illegally obtained assets – National criminal proceedings for the confiscation of illegally obtained assets not based on a conviction – Article 4 – Access to the file by persons connected to the assets – Regime for proving the source of the assets – Effective remedy – Article 8 – Directive 2012/13/EU – Directive (EU) 2016/343 – Articles 17, 47 and 48 of the Charter of Fundamental Rights of the European Union)

In a report dated 2 June 2020 on the confiscation of criminal assets and based on data provided by Europol, the European Commission stated that the proceeds of organised crime within the European Union are estimated at about EUR 110 billion per year and that only about 2% of criminal proceeds are frozen and 1% confiscated. (2) It is in that context, which is worrying to say the least, that the present requests for a preliminary ruling have been brought, which give the Court the opportunity to rule for the first time on the applicability of Directive 2014/42/EU (3) to national legislation providing for criminal proceedings for the confiscation of illegally obtained assets which are not based on a conviction and initiated in parallel with proceedings to establish the guilt of the alleged offender. A positive answer from the Court as to its jurisdiction would mean that it will have to examine the compatibility of the national rules on access to the case file of the confiscation proceedings by persons connected to the assets, the rules on proving the source of the assets and the judicial review of the confiscation order.

Articles 2 to 4 and 8 of Directive 2014/42 and Articles 17, 47 and 48 of the Charter of Fundamental Rights of the European Union (‘the Charter’) are relevant to the present cases.

B. Latvian law

Article 626(1) of the Kriminālprocesa likums (Law on Criminal Procedure) of 21 April 2005 (Latvijas Vēstnesis, 2005, No 74), in the version in force from 1 September 2018 to 2 November 2022, provided:

‘1. The investigator, with the agreement of the public prosecutor leading the investigation, or the public prosecutor may, in the interests of the timely resolution of property issues raised during the preliminary stage of the criminal proceedings and in the interests of procedural economy, remove from the criminal file the materials relating to illegally obtained assets and institute proceedings if the following conditions are met:

(1) all of the evidence suggests that the assets removed or seized were illegally obtained or are linked to a criminal offence;

(2) bringing the criminal case before the courts in the foreseeable future (within a reasonable period) is, for objective reasons, impossible or may give rise to substantial unjustified costs.

3. The public prosecutor may, when terminating criminal proceedings for reasons other than the exoneration of a person, remove from the criminal file the materials relating to the classification of an asset as an illegally obtained asset, the rights to which are entered in the public register and have been amended as a result of the criminal offence, and institute proceedings.’

Article 627(1) to (5) of the Law on Criminal Procedure, in the version in force from 1 September 2018 to 2 November 2022, provided:

‘1. In the circumstances referred to in Article 626 of this law, the person directing the proceedings shall take a decision to institute proceedings for the illegal acquisition of assets and send to the court the materials concerning the illegally obtained assets.

(1) information on facts capable of establishing the link between the assets and the criminal offence or the illicit source of the assets, and on the materials which have been removed from the file in a criminal case under investigation relating to illegally obtained assets;

(2) persons connected to the assets;

(3) the measures he/she proposes with regard to the illegally obtained assets;

(4) the victim, where applicable.

3. The decision and the attachments shall be sent to the rajona (pilsētas) tiesa (District (City) Court).

5. A decision of the person directing the proceedings refusing a request for access to the materials in the case file may be the subject of an appeal to the rajona (pilsētas) tiesa (District (City) Court) hearing the proceedings relating to illegally obtained assets. The court shall adopt a decision allowing or dismissing the action in whole or in part. No appeal may be brought against that decision. In order that the court may decide whether access to the materials in the case file jeopardises the fundamental rights of other persons or the public interest or impedes the attainment of the objective of the criminal proceedings, that court may request the materials in the criminal case file and examine those materials.’

II. The disputes in the main proceedings and the questions referred for a preliminary ruling

Between 2012 and 2020, criminal proceedings were brought in Latvia against various companies registered in third States and, in respect of one of them, in Estonia, as well as several natural persons who were third-country nationals for large-scale laundering of the proceeds of a crime committed using their Latvian bank accounts. In the context of those criminal proceedings, which are still at the investigation stage, the funds deposited in those accounts and immovable property were seized.

Subsequent to the seizure measures and in parallel with the abovementioned proceedings, the prosecuting authority decided to institute proceedings, under Articles 626 and 627 of the Law on Criminal Procedure, for the illegal acquisition of assets and, to that end, to refer the matter before the court of first instance which has jurisdiction. While some of those proceedings are currently suspended, others have given rise to decisions either to confiscate for the benefit of the State the seized assets, regarded as being illegally obtained, or to discontinue the proceedings, without confiscation, in respect of assets the illegal origin of which had not been established. Following appeals brought by the prosecuting authority, the decisions at first instance which terminated the proceedings were annulled by the court of second instance, which, following a fresh examination of the evidence adduced, ordered the confiscation of the assets concerned on the ground that they had been illegally obtained.

Proceedings have been brought before the Latvijas Republikas Satversmes tiesa (Constitutional Court, Latvia), the referring court, by persons connected to the assets which are the subject of the abovementioned proceedings and measures concerning the conformity with the National Constitution of several provisions of the Law on Criminal Procedure governing the procedure for the confiscation of illegally obtained assets.

In the context of the assessment which it must make and, to that end, of the consideration given to EU law, the referring court asks, in the first place, whether the national legislation at issue falls within the scope of Directive 2014/42 and Framework Decision 2005/212/JHA (5) (Cases C‑767/22, C‑49/23 and C‑161/23). It observes, in that regard, that the procedure implemented for the confiscation of assets is specific in that it is criminal in nature and the confiscation ordered does not follow a conviction of the person previously found guilty of a criminal offence, a situation which has not yet been examined by the Court in the cases concerning the interpretation of the abovementioned provisions.

In the event that any of those provisions were to be regarded as applicable in the present case, the referring court considers that the question arises, in the second place, as to the compatibility of the national rules on access to the case file by persons connected to the assets with the right to an effective remedy and a fair trial to which such persons are entitled under Article 8(1) of Directive 2014/42, read in the light of Article 47 of the Charter (Case C‑767/22). It points out that those persons may access the materials in the case file, which come from the main criminal proceedings seeking to establish individual liability, only with the authorisation of the prosecuting authority and to the extent stipulated by that authority, and the latter’s decision may be subject to judicial review.

The referring court also asks, in the third place, whether the national rules setting out the system for proving the source of the assets is compatible with the right to a fair trial and the presumption of innocence guaranteed by Article 8(1) of Directive 2014/42, read in the light of Articles 47 and 48 of the Charter (Case C‑161/23). It states that, under that system of proof, the prosecuting authority in the proceedings is not required to prove beyond reasonable doubt that the assets have a criminal source and it is for the person connected to the assets to prove that the origin of those assets is legal.

In the fourth place, the Latvijas Republikas Satversmes tiesa (Constitutional Court) asks whether a right of appeal must be granted against the decision ordering the confiscation of assets which is adopted, for the first time, at the stage of the appeal judgment in respect of a decision at first instance which discontinued the proceedings without ordering such a measure, which is not provided for by the national legislation. It points out that the decision adopted at the end of the confiscation proceedings settles definitively the property issue. The referring court considers that the answer to that question involves an interpretation of the second sentence of Article 8(6) of Directive 2014/42, read in the light of Article 47 of the Charter (Case C‑49/23).

In the fifth place, and in the event that the national provisions at issue are regarded as incompatible with the Latvian Constitution and EU law following the judgment of the Court, the referring court states that they should be declared null and void, which would have negative repercussions on the stability of the State budget and legal certainty in the event of that nullity having retroactive effect. It therefore asks whether it is possible for it itself to determine, in its forthcoming judgment, the date on which those provisions will cease to have effect, a date which could correspond to the date on which their validity expires when those provisions are no longer in force.

In those circumstances, the Latvijas Republikas Satversmes tiesa (Constitutional Court) decided to stay the proceedings in each of the three cases concerned and to refer the following questions to the Court of Justice for a preliminary ruling in Case C‑767/22:

‘(1) Does national legislation pursuant to which a national court rules on the confiscation of the proceeds of crime in separate proceedings relating to the illegally obtained assets, which are separated from the main criminal proceedings before it is established that a criminal offence has been committed and before anyone has been found guilty of that offence, and which also provides for confiscation based on materials taken from the criminal case file, fall within the scope of Directive 2014/42, in particular Article 4 thereof, and Framework Decision 2005/212, in particular Article 2 thereof?

(2) If the first question is answered in the affirmative, is the legislation on access to materials in the case file in proceedings relating to illegally obtained assets to be considered compatible with the right to a fair trial enshrined in Article 47 of the Charter and in Article 8(1) of Directive 2014/42?

(3) Is the principle of the primacy of European Union law to be interpreted as precluding the constitutional court of a Member State, which is seised of an action for a declaration of unconstitutionality brought against national legislation which has been held to be incompatible with European Union law, from ruling that the principle of legal certainty is applicable and that the legal effects of that legislation are to be maintained in relation to the period during which it was in force?’

In addition to the first and third questions already referred for a preliminary ruling in Case C‑767/22, the Latvijas Republikas Satversmes tiesa (Constitutional Court) referred the following question to the Court of Justice in Case C‑161/23:

‘(2) If the first question is answered in the affirmative, may national legislation concerning proof of the criminal source of assets in proceedings concerning illegally obtained assets, such as that established in the provisions at issue, be considered compatible with the right to a fair trial enshrined in Articles 47 and 48 of the Charter and in Article 8(1) of Directive 2014/42?’

In addition to the first and third questions already referred for a preliminary ruling in Case C‑767/22, the Latvijas Republikas Satversmes tiesa (Constitutional Court) referred the following questions to the Court of Justice in Case C‑49/23:

(2)‘(2) If the first question is answered in the affirmative, must the concept of “confiscation order” within the meaning of Directive 2014/42, and in particular the second sentence of Article 8(6) thereof, be found to include not only the judicial decisions declaring that assets have been obtained illegally and ordering their confiscation but also judicial decisions discontinuing proceedings relating to the illegally obtained assets?

(3)If the second question is answered in the negative, is legislation compatible with Article 47 of the Charter and with the second sentence of Article 8(6) of Directive 2014/42 in so far as it provides no right for persons connected to the assets to challenge confiscation orders?’

III. The procedure before the Court

Written observations have been submitted by some of the applicants in the main proceedings, the Latvian and Czech Governments and the Commission. The applicants in the main proceedings, the Latvian Government and the Commission presented oral argument at the hearing on 15 April 2024.

As is apparent from the requests for a preliminary ruling, the referring court considers that it must obtain from the Court an interpretation of Directive 2014/42 and Framework Decision 2005/212, in addition to Articles 47 and 48 of the Charter, since it has doubts as to the compatibility of provisions of national legislation on the confiscation of illegally obtained assets concerning access to the file, the rules for proving the source of the assets, and the bringing of an appeal against the confiscation order. Before the substantive debate, the referring court questions the applicability of those rules in the present case, and therefore I must examine whether the Court has jurisdiction.

According to settled case-law, the Court does not have jurisdiction to reply to a question referred for a preliminary ruling where it is obvious that the provision of EU law referred to the Court for interpretation is incapable of applying. (6) Where a legal situation does not come within the scope of EU law, the Court has no jurisdiction to rule on it, and any Charter provisions relied upon cannot, of themselves, form the basis for such jurisdiction. (7) The Commission and the Czech Government consider that, in the light of the Court’s case-law on the scope of Directive 2014/42 and Framework Decision 2005/212, those provisions cannot apply to the national legislation at issue.

The criminal nature of the confiscation procedure implemented in the main proceedings

Given the objectives and the wording of the provisions of Directive 2014/42 and the context in which it was adopted, it must be considered that that directive, like Framework Decision 2005/212 whose provisions, in accordance with recital 9 thereof, it aims to expand, is an act aimed at obliging Member States to establish common minimum rules for confiscation of crime-related instrumentalities and proceeds, in order to facilitate the mutual recognition of judicial confiscation decisions adopted in criminal proceedings. (8)

As regards the material scope of Directive 2014/42 and of Framework Decision 2005/212, the Court has held that those acts do not apply to legislation of a Member State which provides that confiscation of illegally obtained assets is to be ordered by a national court ‘in the context of’ or following proceedings which do not relate to a finding of one or more criminal offences. (9) It should, in that regard, be recalled that, under Article 2(4) of Directive 2014/42, (10) confiscation means a final deprivation of property ordered by a court ‘in relation to a criminal offence’. The Court thus held that confiscation proceedings of an administrative (11) or civil nature did not fall within the material scope of Directive 2014/42 and Framework Decision 2005/212. In support of that conclusion, the Court held that such proceedings coexisted, in national law, with the regime for confiscation under criminal law, concerned only assets alleged to have been illegally obtained and were conducted independently of any criminal proceedings brought against the person accused of committing the offences at issue, and of the outcome of such proceedings, and, in particular, of the possible conviction of that person. (12)

The fact remains that the Latvian legislation is clearly distinct from the national legislation referred to in the abovementioned case-law in that the procedure for the confiscation of illegally obtained assets at issue is neither administrative nor civil but criminal. The rules governing that procedure are all set out in the Law on Criminal Procedure, principally in Articles 626 to 631. It follows that the special confiscation procedure must be initiated during the preliminary stage of a criminal investigation aimed at establishing individual criminal liability, by decision of the investigator in charge, with the consent of the public prosecutor leading the investigation, or the public prosecutor him or herself. That decision to ‘institute proceedings for the illegal acquisition of assets’ concerns the assets removed or seized in respect of which all of the evidence suggests that they were illegally obtained or are linked to a criminal offence, (13) since that evidence comes from the file relating to the ‘main’ criminal proceedings aimed at establishing the guilt of the person concerned. That evidence is covered by the confidentiality of investigations and persons connected to the assets concerned may access those materials only with the authorisation of the person responsible and to the extent determined by him or her, since a refusal is open to challenge before the courts, the assessment of the merits of which requires that account be taken of the attainment of the objective of the main criminal proceedings, initiated at the same time as and in parallel with the confiscation proceedings. Moreover, the rules on proving the source of the assets are set out in several provisions of the Law on Criminal Procedure. Lastly, the confiscation order is taken by the criminal court which will then rule on the merits of the case by determining criminal liability. (14) That decision may be appealed before a criminal court of second instance with the same jurisdiction as the court of first instance. (15)

Although the special procedure for the confiscation of assets in question is formally separate from the main criminal proceedings seeking to determine the guilt of the accused person, it is unquestionably and closely linked, by several factors, to those proceedings, and is an addition to those proceedings. The same acts are at the origin of that procedure and it is the same person who is the subject of criminal proceedings related to a given offence and whose assets are seized before ‘proceedings’ are brought against him for the illegal acquisition of assets. As the Latvian Government points out, the former can be brought only in the context of the latter, and is therefore not entirely independent of ‘any’ criminal proceedings brought against the person accused of committing the offences.

Lastly, it should be noted that the offence alleged against the persons whose criminal liability is under investigation and who are, at the same time, the subject of special procedures for the confiscation of assets, in the present case money laundering, corresponds to one of the offences covered by the legal instruments listed exhaustively in Article 3 of Directive 2014/42, and more specifically Article 3(d), and therefore the subject matter of the national confiscation proceedings falls, on that basis, within the material scope of that directive.

However, it is common ground that the competent criminal court, seised by the investigator or public prosecutor on the basis of Article 626 et seq. of the Law on Criminal Procedure, rules only on the origin of the assets before a decision is made on the guilt of the person concerned and therefore independently of any decision to convict that person in the main proceedings conducted in parallel. That situation excludes the application of Article 4(1) of Directive 2014/42, but raises the question of the application of Article 4(2) of that directive, read together with Article 2(4) thereof. This is an unprecedented legal issue to which the case-law of the Court, recalled above, does not provide a clear answer, since Article 4(2) of that act has never been mentioned and has therefore never been incorporated into reasoning concerning the interpretation of the concept of ‘confiscation’. (16)

The interpretation of Article 4(2) of Directive 2014/42

The Court has consistently held that, in interpreting a provision of EU law, it is necessary to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part. The origins of a provision of EU law may also provide information relevant to its interpretation. (17)

Literal interpretation

Article 4(2) of Directive 2014/42 provides that, where confiscation on the basis of paragraph 1 of that article is not possible, at least where such impossibility is the result of illness or absconding of the suspected or accused person, Member States are to take the necessary measures to enable the confiscation of instrumentalities and proceeds in cases where criminal proceedings have been initiated regarding a criminal offence which is liable to give rise, directly or indirectly, to economic benefit, and those proceedings could have led to a criminal conviction if the suspected or accused person had been able to stand trial.

As regards, first, the literal interpretation, Article 4(2) of Directive 2014/42 defines in the negative one of the two types of confiscation provided for in that article, since it refers, by contrast, to confiscation that is not possible ‘on the basis of paragraph 1’ of that article, which concerns confiscation which is subject to a final conviction of the person accused of committing a criminal offence. The Member States must therefore provide for a regime for the confiscation of illegally obtained assets which does not involve such a conviction.

Must that regime be understood as necessarily limited to situations where the person concerned is ill or has absconded, since the expression ‘at least’ reflects the minimal nature of the harmonisation rules? Or, to the contrary, is it not more appropriate to interpret that expression as merely indicating an example of impossibility which is by no means exhaustive, since the minimum harmonisation introduced by Article 4(2) of Directive 2014/42 results in the requirement for a national regime for the confiscation of assets without conviction based on the finding that it is impossible to enforce such a conviction under normal conditions? (18) The wording of the provision at issue is therefore not entirely unambiguous, which makes it difficult to understand its scope and the relationship between the two paragraphs of Article 4 of Directive 2014/42. (19)

That said, I note that the special confiscation procedure at issue coexists under Latvian law with the more traditional procedure linked to the conviction of the offender, and that the initiation of that procedure presupposes, inter alia, that ‘bringing the criminal case before the courts in the foreseeable future (within a reasonable period) is, for objective reasons, impossible or may give rise to substantial unjustified costs’. (20) That wording reflects the idea of the impossibility in practice of implementing the traditional confiscation procedure envisaged from the same temporal perspective as that adopted by Article 4(2) of Directive 2014/42. (21)

Such a situation may be caused by the illness or absconding of the suspect or accused person, but also very complex criminal proceedings involving a large number of persons concerned, companies and individuals, their residence in a State other than that of the authorities in charge of the proceedings, the international and organised nature of the criminal activities and the subsequent difficulties of mutual police and judicial assistance, the inherently complicated nature of the alleged offence(s), all of which must be set against the size of the national law enforcement system and its capacity to manage such proceedings in compliance with the strict rules on limitation while dealing with ordinary law offences. That set of circumstances appears to me to correspond to that described by the referring court in national criminal proceedings relating to large-scale laundering of the proceeds of crime using accounts opened with various Latvian banking institutions by companies registered in Estonia, Switzerland and Belize and by nationals of the Republic of Ukraine, Uzbekistan, the People’s Republic of China and the Russian Federation. The confiscation procedure in question is triggered by a situation in which those persons are the subject of criminal proceedings concerning an offence, in the present case money laundering, which is liable to give rise, directly or indirectly, to economic benefit and in which those proceedings would have been likely to result in a criminal conviction if those persons had been able to appear before the trial court under normal conditions.

It should be noted that the proposal for a directive (22) contained a specific provision entitled ‘Non-conviction based confiscation’ setting out explicitly and exhaustively the cases in which such a measure could be taken. It is common ground that the co-legislators expressed different views on that provision, with the European Parliament’s desire for a general provision on non-conviction based confiscation running up against the Council’s opposition, resulting in the formulation of a compromise, which was less precise, in Article 4(2) of Directive 2014/42 and the use of the expression ‘at least’ before the reference to cases of impossibility linked to illness and to the person’s absconding. (23)

The contextual interpretation involves, in the first place, linking the confiscation order provided for in Article 4(2) of Directive 2014/42 with the asset freezing measure, the possibility of confiscating the assets of third parties and the effective procedural safeguards afforded by that directive to persons affected by those freezing and confiscation measures.

It is important to point out that the fundamental rights referred to in Article 47 of the Charter are reaffirmed by Directive 2014/42 itself, Article 8(1) of which provides that Member States are to take the necessary measures to ensure that the persons affected by the measures provided for under that directive have the right to an effective remedy and to a fair trial in order to uphold their rights. (24) The Court has repeatedly emphasised the general nature of the wording of that provision, which does not refer to suspects or accused persons, or to those convicted of an offence. It was in the light of that wording of Article 8(1) of Directive 2014/42 and that of recital 33 thereof that the Court held that 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 or confiscation order. (25)

That all-encompassing interpretation, based on the effective judicial protection of everyone whose rights are substantially affected by the implementation of a freezing or confiscation measure, is fully compatible with the scope ratione materiae of Directive 2014/42 incorporating the criminal proceedings for the confiscation of assets at issue in the main proceedings. The abovementioned case-law of the Court may and even, in my view, must be able to benefit the persons who are the subject of those proceedings, since any result to the contrary would lead to situations which are, to say the least, paradoxical and undesirable.

In the present case, it is apparent from the order for reference that funds in Latvian bank accounts and immovable property owned by legal and natural persons who are alleged perpetrators of the money laundering offence were seized in the context of the criminal proceedings brought against them on that charge, prior to the initiation of the procedure for the confiscation of assets. Since the sums and immovable property seized have become unavailable as they are under the control of the public authorities, it must be considered that the seizures at issue in the main proceedings are ‘freezing’ measures within the meaning of Article 2(5) of Directive 2014/42. Moreover, to the extent that the property belonging to those persons was, at the time it was frozen, subject to possible subsequent confiscation under Latvian law, the situation of those persons falls within the scope of Article 7 of that directive. Accordingly, they are affected by a measure provided for under that directive, within the meaning of Article 8(1) thereof, which 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. (26)

An interpretation of Article 4(2) of Directive 2014/42 which excludes from its scope the confiscation procedure at issue in the main proceedings would lead to a situation where the judicial protection provided for by that directive is applied distributively, in that that protection would benefit the persons affected by a freezing measure who would subsequently be deprived of that protection when the abovementioned procedure was initiated. Such a situation is all the more incoherent given that freezing and confiscation measures are closely linked, as stated in recital 27 of Directive 2014/42, since they contribute to the same mechanism aimed at neutralising the proceeds of crime.

It is also interesting to note that, given the particularly broad formulation of Article 626 of the Law on Criminal Procedure regarding the scope of the procedure for the confiscation of assets, (27) the person concerned by the latter is not only someone accused of committing the criminal offence prosecuted in separate proceedings, but may also be someone falling within the category of third parties, within the meaning of Directive 2014/42, whose assets may be subject to confiscation under the conditions laid down in Article 6 of Directive 2014/42, (28) both of whom may be concerned by the same proceedings. Here again, a restrictive interpretation of Article 4(2) of Directive 2014/42 would lead to a striking dichotomy, in the same proceedings, between third parties who should benefit from effective judicial protection as persons affected by the confiscation measure provided for under that directive, within the meaning of Article 8(1) thereof, and the alleged offenders who would not benefit from that protection, even though those two categories of individuals are placed on the same footing by Directive 2014/42 as regards the infringement of their rights, as a result of the implementation of that measure.

I consider it relevant, in the second place, to place Article 4(2) of Directive 2014/42 in a broader legislative context which includes the United Nations Convention against Corruption, Article 54(1)(c) of which encourages the States Parties, in order to facilitate international cooperation in confiscation, to consider taking such measures as may be necessary to allow the confiscation of the proceeds of corruption without a criminal conviction in cases in which the offender cannot be prosecuted by reason of death, flight or absence or ‘in other appropriate cases’. (29) I note that Article 1(d) of the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism states that ‘confiscation’ means a penalty or a measure, ordered by a court following proceedings ‘in relation to a criminal offence or criminal offences resulting in the final deprivation of property’. Article 23(5) of that convention also calls on the parties to assist in the enforcement of confiscation orders that are not based on a criminal conviction, provided, in particular, that they were ordered ‘in relation to a criminal offence’.

Reference should also be had to Regulation 2018/1805, Article 2(2) of which, which defines a ‘confiscation order’, (30) must be read in the light of recital 13 thereof, in accordance with which that regulation must apply to all types of freezing orders and confiscation orders in relation to a criminal offence, thus excluding those issued within the framework of proceedings in civil or administrative matters. Therefore, that regulation covers confiscation, whether or not based on a conviction, provided that the conviction orders are issued within the framework of proceedings in criminal matters. (31) Lastly, I would point out that Directive 2024/1260 was adopted on 24 April 2024, replacing Directive 2014/42, in which, in essence, the shortcomings that hamper the ability of the Member States to freeze and confiscate illicit assets inter alia are highlighted. It is interesting to note that that new legislation provides for two types of non-conviction based confiscation orders, one responding to a list of well-defined situations, (32) and the other occurring where confiscation is not possible under other provisions of that directive and where the national court is satisfied that the frozen property is derived from criminal offences committed within the framework of a criminal organisation, taking into account all the circumstances of the case, such as the fact that the value of the property is substantially disproportionate to the legal income of the owner of the property. (33)

The teleological interpretation of Article 4(2) of Directive 2014/42 must take into account another objective mentioned in recital 41 thereof, which clearly states that the purpose of that directive is ‘facilitating’ confiscation of property in criminal matters. That measure, together with the freezing measure, is rightly presented as one of the most effective means of combating organised crime, in that it removes the financial incentives which drive crime. (37) That more than legitimate concern for effectiveness calls, in my view, for a dynamic interpretation of Article 4(2) of Directive 2014/42 encompassing within its scope criminal confiscation proceedings of the type implemented in the cases in the main proceedings, bearing in mind that, according to the Court’s settled case-law, where a provision of EU law is open to several interpretations, preference must be given to that interpretation which ensures that the provision retains its effectiveness. (38)

As the Commission essentially points out in a working document, (39) in the field of organised crime, law enforcement services are often faced with complex financial flows aimed at hiding the illicit origin of assets as well as structures (shell companies, straw managers …) that distance the offender from the crime. Even if illicit funds are discovered, connecting them to a criminal act and an offender can pose considerable obstacles. The non-conviction based procedure for the confiscation of assets is the appropriate response to that phenomenon.

Such a procedure makes it possible to resolve the property issue quickly, which also corresponds to an objective of Directive 2014/42, Article 8(3) of which provides that the freezing order is to remain in force only as long as it is necessary to preserve the property with a view to possible subsequent confiscation. That need for speed stems from the infringement of the rights of the person concerned (40) and the objective difficulty for the Member States arising from the obligation to manage frozen assets in order to preserve their economic value. It is clear that preserving and securing assets such as villas, yachts, planes or works of art represent a significant cost and the monetisation of those assets by selling them (41) to third parties is not a legally simple and risk-free solution. A regime for the confiscation of assets which is independent of the determination of individual criminal liability appears to be fully capable of satisfying the abovementioned objective.

Moreover, as has been stated, Directive 2014/42 seeks to protect the rights of persons affected by the freezing and confiscation measures, which is of particular importance in the event of proceedings for the confiscation of assets without any assessment of that liability. It seems to me desirable, in order to standardise the conduct of those procedures, that they should be covered by Article 8 of Directive 2014/42 which establishes the right of persons affected by the freezing and confiscation measures to an effective remedy and a fair trial in order to uphold their rights. (42)

In that context, in order to ensure the overall coherence of the EU legal order in the fundamental area of combating organised crime and to ensure that it is consistent with the relevant international legal instruments, it seems relevant to conclude that Article 4(2) of Directive 2014/42 is applicable to criminal confiscation proceedings concerning illegal assets seized in the course of an investigation into a criminal offence and based on the impossibility of bringing to trial and, where appropriate, convicting, within a reasonable period, the alleged perpetrators of that offence, in separate proceedings conducted in parallel.

If, on the other hand, Article 4(2) of Directive 2014/42 were to be interpreted in such a way as to exclude confiscation provided for by the national legislation at issue from the minimum rules established by that directive, in accordance with Article 1(1) thereof, that legislation would fall within the scope of the power of the Member States, referred to in recital 22 of that directive, to provide more extensive powers in their national law. (43) That conclusion does not, however, put an end to the discussion as to whether the Court has jurisdiction to respond to the present requests for a preliminary ruling. The Advocate General’s task of assisting the Court means that other approaches must be considered in this regard.

The implementation of Directive 2014/42 by the national legislation at issue

The Court has repeatedly held that it has jurisdiction to give preliminary rulings on questions concerning provisions of EU law in situations where the facts in the main proceedings were outside the scope of that law, but where those provisions, without amending their purpose or scope, had been rendered applicable by national law due to a direct and unconditional reference made by national law to the content of those provisions. The Court has, moreover, consistently held that it is, in such situations, in the manifest interest of the legal order of the Union, in order to forestall future differences of interpretation, that provisions taken from EU law should be interpreted uniformly. (44)

In the present case, it is apparent from the documents submitted to the Court that a non-conviction based procedure for the confiscation of illegally obtained assets was introduced in Latvian legislation in 2005. In its written observations and at the hearing, the Latvian Government stated that Directive 2014/42 has been transposed by means of, inter alia, legislative provisions amending the Criminal Code and the Code of Criminal Procedure. The explanatory memorandum to the draft law amending the criminal law drawn up by the Ministry of Justice of the Republic of Latvia (45) contains a table summarising the various articles of that directive and all the national provisions implementing them, which applies to Article 8 of that directive, which has been fully transposed into the Code of Criminal Procedure. It is therefore common ground that the harmonised provision which is the subject of a number of questions referred for a preliminary ruling is applicable to the non-conviction based procedure for the confiscation of illegally obtained assets, which is considered, on that premiss, not to fall within the material scope of Directive 2014/42. (46) The fact that that unequivocal reference appears in a document relating to preparatory legislative work and not in the actual text of the national law is irrelevant (47) and it is clear from the order for reference that any interpretation by the Court of the provisions of that directive is binding on the resolution of the main proceedings by the national court, which makes it possible to establish the ‘unconditional’ nature of that reference. (48)

While the question to be considered at this stage is whether Directives 2012/13 and 2016/343 apply exclusively to the procedures in the main proceedings, which are, by definition, excluded from the scope of Directive 2014/42, I would note that recital 40 and Article 8(7) of Directive 2014/42 state, respectively, that it must be implemented taking account of the provisions of Directive 2010/64/EU of the European Parliament and of the Council of 20 October 2010 on the right to interpretation and translation in criminal proceedings (OJ 2010 L 280, p. 1), of Directive 2012/13 and Directive 2013/48/EU of the European Parliament and of the Council of 22 October 2013 on the right of access to a lawyer in criminal proceedings and in European arrest warrant proceedings, and on the right to have a third party informed upon deprivation of liberty and to communicate with third persons and with consular authorities while deprived of liberty (OJ 2013 L 294, p. 1) and that, without prejudice to Directives 2012/13 and 2013/48, persons whose property is affected by a confiscation order must have the right of access to a lawyer throughout the confiscation proceedings relating to the determination of the proceeds and instrumentalities in order to uphold their rights and those persons are to be informed of that right. It must therefore be held that the EU legislature has clearly established a link between the conduct of proceedings for the confiscation of property in criminal matters, whether or not they are based on a conviction, and respect for the procedural rights of suspects and accused persons in criminal proceedings. As stated above, the procedure for the confiscation of assets at issue is undeniably criminal in nature.

The purpose of both Directive 2012/13 and Directive 2016/343 is to establish minimum rules on certain rights of suspects and accused persons in criminal proceedings. Directive 2012/13 concerns more specifically the right to information about rights and Directive 2016/343 relates, in respect of the same persons, to the presumption of innocence and the right to be present at the trial. It is clear from the order for reference that the decision to institute proceedings in respect of illegally obtained assets was, in accordance with Article 628 of the Law on Criminal Procedure, sent to the ‘suspect or accused person and to the person whose assets have been removed or seized, if those persons are the subject of the criminal proceedings concerned, or another person who has a right of ownership over the assets in question’. (54)

The respective scopes of Directives 2012/13 and 2016/343 are defined in almost identical terms in Article 2 of each of those directives. It follows, in essence, from those provisions that those directives apply from the time persons are made aware by the competent authorities of a Member State that they are suspected or accused of having committed a criminal offence until the conclusion of the proceedings. The additional clarification in Article 2 of the most recent of those directives, namely Directive 2016/343, according to which it applies at ‘all stages of the criminal proceedings’, must be regarded as applicable to Directive 2012/13. In the present case, it should be recalled that all of the natural and legal persons referred to in Cases C‑767/22, C‑49/22 and C‑161/23 are the subject of criminal proceedings for the offence of money laundering and have had the funds placed in their Latvian bank accounts and, in some cases, their immovable property, seized by the prosecuting authorities, those acts establishing that those persons are suspected by a competent authority and informed, at least implicitly but necessarily, of that suspicion. (55)

While those persons therefore fall within the scope of Directives 2012/13 and 2016/343, should they ultimately be excluded from the scope of those directives on account of the fact that proceedings have been brought against them which are connected, if not intertwined, with the proceedings to determine criminal liability, the possible outcome of which is the confiscation of assets? An affirmative answer to that question could conflict with the Court’s case-law and its dynamic interpretation of the provisions relating to that scope, justified by the fact that those directives are based on the rights set out in, inter alia, Articles 47 and 48 of the Charter and seek to promote those rights with regard to suspects or accused persons in criminal proceedings. (56) The Court has held that the concept of ‘criminal proceedings’, within the meaning of those directives, is to be regarded as also covering proceedings for the committal to a psychiatric hospital of a person who, at the conclusion of earlier criminal proceedings, was found to be the perpetrator of acts constituting a criminal offence, even though neither Directive 2012/13 nor Directive 2016/343 contain express provisions to the effect that the criminal proceedings they govern also include a procedure that may result in a measure of committal to a psychiatric hospital. That absence of express provisions does not mean that such a procedure for the committal to a psychiatric hospital is excluded from the scope of those directives on the ground that it does not lead to the imposition of a ‘sentence’. (57)

The Court could apply that solution by analogy in the present case to ensure the consistency of the EU legal order. In that regard, it is important to recall that Regulation 2018/1805 applies to freezing orders or confiscation orders issued within the framework of ‘proceedings in criminal matters’, an autonomous concept of EU law which covers all types of freezing orders and confiscation orders issued following proceedings in relation to a criminal offence, which is the case in the proceedings at issue in the main proceedings. Recital 18 of that regulation adds that the procedural rights set out in Directives 2010/64, 2012/13, 2013/48, 2016/343, and in Directive (EU) 2016/800 of the European Parliament and of the Council of 11 May 2016 on procedural safeguards for children who are suspects or accused persons in criminal proceedings (OJ 2016 L 132, p. 1) and in Directive (EU) 2016/1919 of the European Parliament and of the Council of 26 October 2016 on legal aid for suspects and accused persons in criminal proceedings and for requested persons in European arrest warrant proceedings (OJ 2016 L 297, p. 1) apply, within the scope of those directives, to criminal proceedings covered by that regulation as regards the Member States bound by those directives. It states as follows: ‘In any case, the safeguards under the Charter should apply to all proceedings covered by this Regulation. In particular, the essential safeguards for criminal proceedings set out in the Charter should apply to proceedings in criminal matters that are not criminal proceedings but which are covered by this Regulation’. As for Directive 2024/1260, recital 51 thereof states that that directive is to be implemented without prejudice to all the abovementioned directives relating to procedural rights. Recognition of the applicability of those rules, and in particular Directives 2012/13 and 2016/343, to the Latvian non-conviction based confiscation procedure implies that the Court has jurisdiction to interpret the provisions, which are at least relevant, in the light of the Charter.

B.

Substance

Preliminary observations

The following arguments, relating to the substance of the questions referred to the Court for a preliminary ruling, are based on the premiss that the national legislation at issue in the main proceedings falls within the scope of Directive 2014/42, which dictates the applicability of the Charter. In the present case, the referring court seeks an interpretation of Article 8(1) and (6) thereof, read in the light of Articles 47 and 48 of the Charter, in the light of its doubts as to the compatibility of that legislation governing the procedure for the confiscation of illegally obtained assets, as regards, more specifically, the rules on access to the file, the system for proving the source of the assets and the bringing of an appeal against the confiscation order.

I consider it necessary, in the first place, to assess the legal nature of the measure confiscating the assets. As has been stated, under Article 70.10 of the Criminal Law, the special confiscation of assets, which is the forced disposal for the benefit of the State, without compensation, of an illegally obtained asset or an object of a criminal offence, or property acquired in connection with a criminal offence, does not constitute a penalty. The content of the file submitted to the Court does not make it possible to rule out or uphold the classification, under Latvian law, as a security measure. In any event, the application of the relevant provisions of the Charter, in particular Article 48, is not limited to proceedings and penalties which are classified as ‘criminal’ by national law, but extends regardless of such a classification under national law to proceedings and penalties which must be considered to have a criminal character on account of the intrinsic nature of the offence and the degree of severity of the penalty that the person concerned is liable to incur. As regards the criterion relating to the intrinsic nature of the offence, it must be ascertained whether the measure at issue has a punitive purpose and the mere fact that it also pursues a deterrent purpose does not mean that it cannot be characterised as a criminal penalty. (58)

While it is ultimately for the referring court to assess whether the confiscation measures at issue in the main proceedings may be classified as ‘criminal penalties’, it could be observed that those measures are taken against the assets and not the person, and are aimed at removing ‘dirty money’ or illegally acquired immovable and movable property, the objective being to prevent criminal activities by depriving them of funds and to ensure the soundness and integrity of the economic and financial system. Those factors do not, however, make it possible to clearly rule out the abovementioned classification.

I would point out that the confiscation measures were ordered following proceedings brought, under Article 627(1) of the Law on Criminal Procedure, before a criminal court for the ‘illegal acquisition of assets’ against legal and natural persons who were, at the same time, the subject of separate proceedings seeking to establish their criminal liability for the offence of money laundering. The procedures associated with the adoption of the measure in question are undeniably relevant for the purposes of its classification. (59) Moreover, the very wording of the abovementioned provision refers unequivocally to individual conduct that it appears necessary to punish, which reflects the punitive nature of the confiscation order in respect of persons in possession of assets in addition to the preventive aim. However, the confiscation of illegally obtained assets, which results in their transfer to State, does not appear to cover the specific pursuit of an objective of compensatory function, which is characteristic of a measure that is civil in nature. In any event, the aims of prevention and reparation are consistent with a punitive purpose and may be seen as constituent elements of the very notion of punishment. Lastly, it must be noted that the Latvian legislation provides, under certain conditions, for a presumption that the source of the assets is illegal and gives the criminal courts broad powers of confiscation based on a degree of certainty that merely reflects a weighing up of probabilities. (60) The severity of the confiscation penalty is capable of supporting the view that that order is criminal in nature, since it involves the total and final deprivation of those assets for the benefit of the State, without compensation. (61) The confiscation order must, in those circumstances, be regarded as a criminal sanction.

In the second place, it is important to point out that, in accordance with recital 33 of Directive 2014/42, that directive substantially affects the rights of persons, not only of suspected or accused persons, but also of third parties who are not being prosecuted and 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 that directive. Recital 38 of that directive states that it 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 ECtHR, and therefore the directive must be implemented in accordance with those rights and principles.

As regards the fundamental rights relevant to the present cases, account must be taken of Article 17(1) of the Charter, which provides, inter alia, that everyone has the right to own, use and dispose of his or her lawfully acquired possessions. Moreover, it follows from Article 8(1) of Directive 2014/42 that the EU legislature conferred on the persons, like the parties in the main proceedings, affected by the measures provided for in particular in Article 2(4) of that directive, a protective procedural status, the first provision laying down a general obligation on each Member State to take the necessary measures to ensure that those persons have the right to an effective remedy and a fair trial in order to uphold their rights. In addition to Article 47 of the Charter therefore, Article 48(1) and (2) thereof, which enshrine the presumption of innocence and the principle of respect for the rights of the defence, also appears relevant for the purpose of providing a useful answer to the referring court.

In addition to the general obligation referred to above, it should be noted that Article 8 of Directive 2014/42 contains specific provisions intended to ensure that the adoption of a confiscation order is accompanied by safeguards specific to the adoption of judicial decisions, in particular those relating to respect for the fundamental rights of the person concerned and, in particular, the right to effective judicial protection. Thus, under Article 8(6) and (7) of that directive, reasons must be given for any confiscation order and the order must be communicated to the person affected, who is informed of his or her right of access to a lawyer throughout the confiscation proceedings relating to the determination of the proceeds and instrumentalities and has the right to bring a legal action against that decision. The fact remains that that directive does not lay down any rules determining the system for proving the source of assets which are the subject of non-conviction based confiscation proceedings, or access to the file in those proceedings by persons connected to those assets, thus leaving the Member States a margin of discretion to determine the specific procedures which will be applicable in that regard.

Although Article 8 of Directive 2014/42 gives Member States discretion in adopting the necessary measures for the purposes of that provision, the fact remains that, in accordance with Article 51(1) of the Charter and as is evident from recital 38 of that directive, the level of protection offered by Member States should never be below the standards set out in the Charter and the ECHR. (62) The procedure for the confiscation of illegally obtained assets without a conviction must be organised in such a way that the persons connected to those assets have been able to assert their fundamental rights during that procedure, which is all the more important in a system where, as in the present case, the decision adopted by the competent court at the end of the procedure, to confiscate assets where appropriate, settles definitively the property issue.

In that regard, it should be recalled that, as is clear from the Explanations relating to the Charter of Fundamental Rights (OJ 2007 C 303, p. 17), the first and second paragraphs of Article 47 of the Charter, which enshrine the right to an effective remedy and to a fair trial, correspond to the right to a fair trial as derived, inter alia, from Article 6(1) ECHR, while Article 48(1) of the Charter, relating to the presumption of innocence, corresponds to Article 6(2) and (3) ECHR. It follows, in accordance with Article 52(3) of the Charter, that it is necessary to take account of Article 6 ECHR for the purposes of interpreting Articles 47 and 48 of the Charter, as a minimum threshold of protection. (63) Moreover, any limitation on the exercise of those rights, and of the right to property, (64) by a measure ordered in accordance with Directive 2014/42, must meet the requirements laid down in Article 52(1) of the Charter, which presupposes, in particular, that the limitation in question genuinely corresponds to objectives of public interest pursued by the European Union and does not constitute, in relation to the aim pursued, a disproportionate and intolerable interference, impairing the very substance of the rights guaranteed. (65)

Access to materials in the case file

In the context of Case C‑767/22 and by its second question, the referring court expresses doubts as to the compatibility of national legislation under which the right of a person connected to the assets which are the subject of the confiscation proceedings to access the materials in the case file may be limited if such disclosure would constitute a threat to the fundamental rights of other persons, the public interest or the possibility of achieving the aim of the criminal proceedings.

It should be borne in mind that the national procedure for the confiscation of assets at issue cannot be initiated in the absence of a criminal prosecution seeking to establish the guilt of the alleged offender. Proceedings relating to individual criminal liability must therefore always be initiated, and these proceedings will usually continue, as is the case in the proceedings which led to the matter being brought before the referring court, after the proceedings relating to the assets have been closed, including where those assets have been confiscated.

Under Article 627(4) of the Law on Criminal Procedure, materials in the case file for proceedings relating to illegally obtained assets are covered by the confidentiality of investigations and may be consulted by the person directing the proceedings, the prosecutor and the court seised of the case, while persons connected to the assets concerned may access those materials only with the authorisation of the person responsible and to the extent determined by him or her. Article 627(5) thereof provides that the decision by the person directing the proceedings refusing a request for access to the materials in the case file may be the subject of judicial review, the competent court being able to request the materials in the criminal case file and examine those materials in order to decide whether access to the materials in the case file jeopardises the fundamental rights of other persons or the public interest or impedes the attainment of the objective of the criminal proceedings.

In that regard, it should be recalled that, in cases concerning administrative court proceedings, the Court has held that the principle of equality of arms, which is an integral part of the principle of effective judicial protection of the rights that individuals derive from EU law, enshrined in Article 47 of the Charter, in that it is a corollary, like, in particular, the principle audi alteram partem.