CEDH · CASELAW;CLIN;ENG — 1 février 2007

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Norway (dec.) - 12277/04 Decision 1.2.2007 [Section I] Article 4 of Protocol No. 7 Right not to be tried or punished twice Criminal convictions for bankruptcy offences after orders had been made temporarily disqualifying the applicants from setting up companies or holding directorships: inadmissible   [This summary also covers the Decision of the case Mjelde v. Norway , no. 11143/04, 1 st February 2007] The applicants were disqualified for two years from establishing limited liability companies or holding directorships in such companies following the failure of businesses in which they had been involved. The orders were made under bankruptcy legislation on the grounds that they were unfit to act and that there were reasonable grounds for suspecting them of criminal offences in connection with the insolvencies. Both were subsequently convicted of bankruptcy related offences. Their appeals to the Supreme Court on the ground that the disqualification order barred under the ne bis in idem rule their subsequent prosecution in relation to the same matters were dismissed. Inadmissible under Article   4(1) of Protocol No. 7 – The aim of this provision was to prohibit the repetition of criminal proceedings that had been concluded by a final decision. The applicants had been subjected to two distinct measures in separate and consecutive sets of judicial proceedings, namely a disqualification order under the bankruptcy legislation and prosecution under the Penal Code. It was undisputed that at least some of their acts had constituted the basis for both the disqualification orders and the prosecutions. Once the Court was satisfied, as here, that the first decision was “final”, it had to examine whether it concerned a “criminal” matter within the autonomous meaning of Article   4(1) of Protocol No.   7, interpreted in the light of the general principles concerning the words “criminal charge” in Article   6 and “penalty” in Article   7 of the Convention. Relevant factors were the legal classification of the offence under national law; the nature of the offence; the national legal characterisation of the measure; its purpose, nature and degree of severity; whether the measure was imposed following conviction for a criminal offence and the procedures involved in the making and implementation of the measure. Applying these criteria the Court noted as follows: Legal classification of the offence and measure under national law : The procedure leading to a disqualification order was civil in character; the offence that could lead to the imposition of a disqualification order and the order itself were classified as civil under national law. Nature of the offence : The disqualification orders had been made on two grounds under the bankruptcy legislation, the first being unfitness for office owing to “unsound business conduct” and the second reasonable grounds for suspecting the person concerned of a criminal offence in relation to the insolvency. It was not disputed before the Court that the former ground was of a civil/administrative regulatory nature. An issue arose, therefore, only with regard to the latter. However, all that was needed was a reasonable ground for suspicion, not the establishment of guilt, and this in turn was relevant to the issue of fitness. In practice, the two grounds were often applied together. In any event, a disqualification order could only be imposed if it was reasonable having regard to the debtor’s conduct and the circumstances as a whole. Accordingly, the “reasonable ground for suspicion” condition did not deprive the disqualification order of its essentially regulatory character. Purpose, nature and degree of severity : The primary purpose of a disqualification order was preventive, namely to protect shareholders, creditors and society as a whole against exposure to undue risks of losses and mismanagement of resources if an irresponsible and dishonest person was allowed to continue to operate under the umbrella of a limited liability company. It thus played a supplementary role to criminal prosecution and conviction at a later stage. As to the nature and degree of severity of the measure, a disqualification order entailed a prohibition against establishing or managing a new limited liability company for a limited period, not a general ban on engaging in business activities. The character of the sanction was not, therefore, such as to bring the matter within the “criminal” sphere. On the basis of these criteria and noting further that the two types of measure (disqualification and prosecution) pursued different purposes and differed in their essential elements, the Court concluded that the imposition of a disqualification order did not constitute a “criminal” matter for the purposes of Article   4 of Protocol No. 7: manifestly ill-founded .   © Council of Europe/European Court of Human Rights This summary by the Registry does not bind the Court. Click here for the Case-Law Information Notes