New draft law implements Regulation on mutual recognition of freezing and confiscation orders throughout the EU
Draft law 7758, adopted on 23 December 2022 (hereinafter the “Law”), aims to adapt Luxembourg legislation to the obligations arising from Regulation (EU) 2018/1805 of the European Parliament and of the Council of 14 November 2018 on the mutual recognition of freezing orders and confiscation orders (hereinafter the “Regulation”).
The Regulation is based on the principle of mutual recognition of judgments and judicial decisions, considered as the cornerstone of judicial cooperation in criminal matters in the European Union.
Given the lack of efficiency of the existing system of mutual recognition of freezing and confiscation orders – based on simple Council framework decisions – and given the importance of such orders in combating crime, the European legislator chose to proceed by means of a regulation, i.e. a legally binding and directly applicable act of the Union.
The provisions of the Regulation are applicable from 19 December 2020.
The Law is limited to determining the options left to the Member States in the context of implementing the Regulation and to formulating clarifications to ensure that the procedure under national law is fully effective.
Freezing orders referred to in the Regulation correspond in Luxembourg law to seizures of property for the purpose of their subsequent confiscation. Consequently, seizures made with a view to obtaining evidence do not fall within the scope of the Regulation, as the recognition and enforcement of such orders between Member States is governed by Directive 2014/41/EU, transposed into Luxembourg law by a law of 1st August 2018.
The Regulation applies to all freezing and confiscation orders issued in the context of criminal proceedings, including confiscation following a conviction and confiscation in the absence of a conviction.
Freezing and confiscation certificates transmitted by Luxembourg authorities to foreign authorities
The competence to issue a freezing certificate – by means of which a freezing order is transmitted to another Member State – lies with the judicial authority that carried out the seizure, i.e. essentially the investigating judge and, in rare cases, the public prosecutor or the court of judgment.
On the other hand, the enforcement of a confiscation order – via the issuing of a confiscation certificate – is not, in principle, the responsibility of the court that issued the order. Given that under Luxembourg law, the enforcement of sentences (including a confiscation) is entrusted to the State prosecutor, the Law provides that the latter is competent to issue confiscation certificates following final confiscation decisions handed down by the courts.
Freezing and confiscation certificates transmitted by foreign authorities to Luxembourg authorities
The freezing or confiscation certificates must be written in French, German or English, or be accompanied by a translation into one of these three languages.
The recognition and execution of a freezing order transmitted by an issuing authority of another Member State are entrusted to the investigating judge who would be competent if the offence had been committed in the Grand Duchy of Luxembourg. The State prosecutor is designated as the “central authority”, whose function regarding freezing orders is limited to that of being a transmitting and receiving administrative authority.
On the other hand, the State Prosecutor is competent to recognise and execute foreign confiscation orders. It should be noted that the Regulation assimilates the recognition and execution of a confiscation order issued by another Member State to those of a confiscation order issued under national law, so that the execution in Luxembourg of a foreign confiscation order does not require an exequatur of this order by a criminal court.
Following the execution of a freezing order or following the decision to recognise and execute a confiscation order, the investigating judge or the State prosecutor informs, to the extent possible, the affected persons known to it of such execution or of such decision without delay.
“Affected person” is defined in the Regulation as (i) the natural or legal person against whom a freezing order or confiscation order is issued, or (ii) the natural or legal person who owns the property that is covered by that order, as well as (iii) any third parties whose rights in relation to that property are directly prejudiced by that order.
The Regulation requires the existence of effective remedies in the executing State against the decision on the recognition and execution of a freezing or confiscation order.
Moreover, the Regulation specifies that the substantive reasons for issuing the freezing or confiscation order cannot be challenged before the courts of the executing State, so that the Luxembourg courts must limit themselves to a review of the formal regularity of the order.
Thus, with regard to freezing certificates, the Law provides for an ex officio review of the formal regularity of the procedure by the competent council chamber of the district court.
In addition, the Law provides for an appeal for restitution by the person who owns (or has another right to) the property if property has been seized in execution of a freezing order, as well as an appeal on the regularity of the procedure for the affected persons.
It should also be noted that the transmission to the issuing authority of another Member State of documents or information seized or disclosed in execution of the freezing certificate is subject to the formal approval of the council chamber.
As regards confiscation certificates, the enforcement division of the Court of Appeal has jurisdiction to hear the appeal lodged by an affected person against the State prosecutor’s decision of recognition and execution of a foreign confiscation order.
By introducing a new instrument for cooperation and mutual recognition of freezing and confiscation orders in criminal matters, the Regulation and the Law – which we can expect to enter into force beginning of 2023 – are likely to facilitate cross-border asset recovery and to speed up and simplify the freezing and confiscation of criminal assets throughout the European Union.