The scope of application of EU Law and national criminal law: some thoughts on Taricco (C-105/14)

Taricco is an important Grand Chamber judgment, rendered by the Court of Justice today, concerning time limitations and the scope of Member State action when implementing EU Law by way of criminal law. In fact, Taricco is the reverse case of Akerberg Fransson: whilst the famous 2013 decision concerned a national legal order that sanctioned too harshly the breach of a Directive, Taricco concerns a national rule that makes criminal prosecution for breach of EU Law too inefficient to serve its purpose. However, both cases touch the same sensitive chord: the ability of Member States to decide on how to organize their systems of criminal justice when they serve the purpose of guaranteeing the compliance of EU Law.

The facts of Taricco are quite straight-forward: under Italian law, criminal proceedings can be time-barred after the interruption of a limitation period, if the proceedings are still under way within a quarter of the limitation period following the interruption. Therefore, if criminal proceedings take longer than a quarter of the limitation period, the accused can no longer be charged.

Taricco deals with a case of VAT fraud prosecuted before an Italian criminal court. The accused were alleged to have taken receipt of invoices issued by shell companies for non-existent transactions. Despite the interruption of the limitation period applied to the facts of the case, under Italian law that period could not be extended beyond seven years from the date on which the offences were committed. The referring court stated that all the offences would be time-barred by 8 February 2018, before a final judgment could be delivered as regards the accused. Therefore, the accused, who were alleged to have committed VAT evasion amounting to several million euros, would enjoy de facto impunity as a result of the expiration of the limitation period.

This peculiar system, in virtue of which the scope of the interruption of a limitation period can be subject to a temporal limit, can be particularly worrisome when applied in Member States where criminal proceedings can take a long time (particularly in complex economic cases). However, no rule of EU Law has harmonized limitation periods in national criminal law, not even in areas strongly regulated by EU legislation. Therefore, the way in which a Member State arranges its own criminal proceedings could hardly come under the scope of application of EU Law.

The Court, in line with its Advocate General, disagreed.

In a detailed and well-reasoned judgment rendered today, the Court came to the conclusion that such system of time-limitations, when applied to a harmonized tax that, furthermore, contributes to the EU’s own resources pursuant to article 325 TFEU, comes under the scope of application of EU Law. The Court even went into some detail in arguing that such system, if it jeopardizes the efficiency and dissuasiveness of the criminal rules enacted by a Member State to ensure the compliance of EU Law, must result in the setting aside of the national rule limiting the scope of the interruption. It even goes further when stating that such result would be in line with article 49 of the Charter of Fundamental Rights of the EU.

This is a fascinating judgment for many reasons.

First, it sends a very clear message to Member State about the way in which their criminal systems must be brought in line with EU standards. It would be nice to know which standards are those, particularly now that the EU is struggling to legislate in the domain of criminal law. However, Taricco is a strong message in favor of a strict enforcement of EU Law by Member States through criminal law, even in the absence of general EU rules on criminal procedures.

Second, it is a wonderful source of contrast when read together with Akerberg Fransson. Whilst Taricco is a severe reminder of how stringent EU Law can be when Member State undermine its enforcement mechanisms, Akerberg Fransson is a paradigm of judicial uneasiness and defensiveness. Taricco is the decision of a Court very confident with its ability to impose authoritative decisions throughout the Union, whilst Akerberg Fransson proves how insecure the Court can feel when treading in troubled waters.

Third, and despite the very different approach and style of both judgments, they do have something in common: they both apply the Charter by apparently putting the standard of protection at a very low level, but relying on the authority of the Strasbourg court (indirectly in Akerberg Fransson, by reference to Bonda). The interpretation of article 50 in Akerberg Fransson and of article 49 in Taricco clearly indicates that the Court is still not fully comfortable in adjusting the Charter to the everyday toolbox of EU Law. This leads to a rather puzzling outcome: the scope of EU Law raises no eyebrows when it comes to scrutinize lenient criminal rules of Member States, but it becomes an issue when those rules are too harsh.

Furthermore, the fact that the Court relies in both cases on the Strasbourg case-law proves how useful the ECHR is for the Luxembourg court, particularly when EU Law enters the touchy and rights-sensitive terrain of national criminal law. Seen in this light, Taricco is another example of how severe the Court can be when ensuring the efficient implementation of EU Law by way of criminal law. It is also a timely reminder that if the Court is willing to enter sensitive and relevant domains, as is the case of criminal law, accession of the EU to the ECHR will be very much welcome.