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EPPO, OLAF and CJEU — a brief look at their interplay

Jan Inghelram during an OLAF conference. Source: David Plas.

The creation of the European Public Procesutor’s Office (EPPO) undoubtedly has a large bearing on the activities and proceedings of the European Anti-Fraud Office (OLAF). And both OLAF’s and EPPO’s activities have been and will be affected by judgments of the European Court of Justice (CJEU). Jan Inghelram is well-placed to give his insights on how three crucial actors in the EU’s legal realm interact in the fight against fraud and corruption related to EU funds. Not only is he currently Director and Legal Adviser on Administrative Matters of the CJEU, but he also the author of several publications on EU finances, the ECA and the CJEU. Before joining the CJEU, Jan worked for several years in the ECA’s Legal Service. Below he gives his personal views on some legal challenges the three EU bodies face, particularly when it comes to the protection of some fundamental rights, and the role of the CJEU in a changing institutional context.

By Jan Inghelram, Court of Justice of the European Union

Developing the protection of the EU’s financial interests

Thirty years ago, the European Court of Justice (CJEU, hereinafter referring to all EU courts) rendered its famous judgment in the Greek maize case (68/88, Commission v Greece). It obliged Member States to give the protection of the EU’s financial interests the same weight as their own financial interests and to provide for effective proportionate and dissuasive penalties to protect the EU’s financial interests.

This judgment was the direct cause for important developments in the area of the protection of the EU’s financial interests. It was ‘codified’ in the Treaty of Maastricht in order to become what is now Article 325 TFEU. This Article was first implemented in 1999 when it became the legal basis for the regulation governing the investigative competences of the newly created European Anti-Fraud Office (OLAF, Regulations 1073/1999 and 1074/1999, now Reg. 883/2013).

At the time when OLAF became operational in 1999, a European Public Officer’s Office (EPPO) was no more than an academic proposal, tabled in the ‘Corpus Juris introducing penal provisions for the purpose of the financial interests of the European Union.’[1] Ten years later, however, the possibility of establishing an EPPO was already provided for at Treaty level by the Treaty of Lisbon, and another ten years later we are witnessing the setting up of the EPPO, the creation of which was decided in 2017 (Reg. 2017/1939). So far 22 Member States are participating in this project.

CJEU and OLAF

Indirectly involved in OLAF’s inception, the CJEU also contributed to shaping OLAF during the twenty years of its existence. The first OLAF-related cases were submitted in 2002 and, in the meantime, OLAF’s investigative competences have been dealt with in some 60 cases, resulting in case law with a sometimes decisive impact on OLAF investigations in practice.

Many OLAF-related cases raise the issue of fundamental rights, leading to judgements in which the importance of those rights are stressed, such as the right to an impartial investigation (T-309/03 Camós Grau v Commission) as well as the right to be heard, the presumption of innocence and the reasonable time requirement (T-48/15 Franchet and Byk v Commission). General principles of EU law and the Charter of Fundamental Rights of the EU are a particular source of inspiration in this respect. The importance of this case law on fundamental rights is confirmed by the fact that, when revising the OLAF Regulation in 2013, the EU legislator literally copied case law into the regulation on the existence of a right to be heard before information is sent to national judicial authorities. Core fundamental rights were directly incorporated in EU rules pertaining to the fight against fraud and corruption relating to EU funds.

Case law is more reserved on the existence of a right of access to the file at the stage of OLAF investigations (T-381/15 International Management Group (IMG) v Commission) as well as on the admissibility of actions for annulment against OLAF investigative acts (T-261/09 P Commission v Violetti and Others). This inadmissibility deprives, in practice, the applicant of the possibility to ask for interim measures in the context of such an action, and, thus, of an effective remedy in urgent matters.

There is also case law on the important issue of the law (EU and/or national) applicable to OLAF investigations. It has been ruled that OLAF has an autonomous right, based on EU law, to carry out on‑the‑spot checks and inspections on the premises of economic operators. National law only applies if national authorities are required to give assistance to OLAF because the economic operator opposes on‑the‑spot checks and inspections (T-48/16, Sigma Orionis v Commission). As a general rule, therefore, there is no duplication of applicable laws, which greatly improves legal certainty.

OLAF and EPPO

The EPPO will most likely also have an important impact on the further shaping of OLAF. OLAF will remain independent from the EPPO and it will have a larger territory of operation than the EPPO, since it is competent for the entire EU, whereas the EPPO will only be competent within the participating Member States. The fields of operation of the EPPO and OLAF are, however, closely linked. Therefore, a division of tasks will most likely develop in practice, affecting also OLAF’s current functioning.

Furthermore, OLAF may be asked by the EPPO to conduct administrative investigations to support or complement the EPPO’s activity (Art. 101 Reg. 2017/1939, further developed in COM(2018) 338). This, at first glance, purely operational link hides a more fundamental discussion on adequate control of OLAF.

Whereas EPPO investigative measures will be subject to the control mechanisms of national law, which may include, for instance, prior judicial authorisation before such measures can be implemented, no such control mechanisms exist for OLAF’s investigative competences. What is more, a sufficient and immediate remedy to redress potential violations of rights and procedural guarantees of persons under investigation is currently not provided for by the OLAF legal framework (European Court of Auditors’ Opinion 6/2011 and OLAF Supervisory Committee’s Opinion 2/2013).

Well aware of this discrepancy between OLAF and the EPPO in relation to control mechanisms, the Commission proposed in 2014 the creation of a Controller of procedural guarantees for OLAF (COM(2014) 340). Until today, this proposal has not been adopted by the EU legislator, leaving the control gap between those two entities intact.

This may have implications on the usability by the EPPO, for the sake of its own investigations, of information gathered through OLAF investigations. The question may indeed arise to what extent the EPPO can use information gathered through investigations not subject to the same standards of control, in view of the protection of fundamental rights, as those applicable to its own investigations. Moreover, similar considerations could apply to the usability by the EPPO, for the sake of its own investigations, of information gathered through OLAF investigations in Member States in which the EPPO has no competence.

EPPO and CJEU

The Commission’s 2013 proposal (COM(2013) 534) was based on a legal fiction of the EPPO being a national authority for the purpose of judicial review when adopting procedural and investigation measures in the performance of its functions, notwithstanding the fact that the EPPO is an EU entity. As a practical consequence, this would have excluded all CJEU competence to review the validity of EPPO measures.

The final text adopted by the EU legislator (Art. 42 Reg. 2017/1939) is a compromise in this respect. Procedural acts of the EPPO that are intended to produce legal effects vis-à-vis third parties will be subject to review by the competent national courts in accordance with the requirements and procedures laid down by national law. In consequence, actions for annulment, brought before the EU General Court (Art. 263 TFEU), will not be possible, with one exception, i.e. when directed against decisions by the EPPO to dismiss a case, contested directly on the basis of EU law. Requests for preliminary rulings brought before the European Court of Justice (Art. 267 TFEU) on the validity of the procedural acts of the EPPO will be possible, although some conditions will apply.

It is true that Art. 86(3) TFEU states that the regulation establishing the EPPO must determine the rules applicable to the judicial review of procedural measures taken by the EPPO in the performance of its functions. However, it is equally true that the CJEU alone has jurisdiction to determine whether the act of an EU entity is invalid and that, by Art. 263 TFEU and Art. 267 TFEU, the Treaty established a complete system of legal remedies and procedures designed to ensure review of the legality of acts of EU entities, and entrusted such review to the CJEU (C-461/03, Gaston Schul Douane-expediteur). The underlying idea is that differences between courts of the Member States as to the validity of acts of EU entities would be liable to jeopardise the essential unity of the EU legal order and undermine the fundamental requirement of legal certainty. The way in which judicial review of procedural acts of the EPPO is organised therefore derogates from this fundamental rule on the system of judicial protection instituted by the TFEU.

Furthermore, a practical consequence of this compromise is that cases involving judicial review of procedural acts of the EPPO will — at EU level — almost exclusively be dealt with by the European Court of Justice through the preliminary ruling procedure, whereas the EU General Court, which is in fact the primary court to hear cases brought by individuals through actions for annulment, will be left out, so to speak.

Thirty years after: several legal challenges on the horizon

OLAF, EPPO and CJEU have interacted and/or will interact, in search of effective protection of the EU’s financial interests. Thirty years after the Greek maize case, there is no lack of challenges in this respect. It will be most interesting to see how, for example, the control gap as well as the territorial discrepancy between OLAF and the EPPO will be addressed when it comes to the EPPO using information gathered through OLAF’s own investigations. Moreover, it will be interesting to see how judicial review of procedural acts of the EPPO will work out in practice.

[1] Under the responsibility of Delmas-Marty, M., “Corpus Juris introducing penal provisions for the purpose of the financial interests of the European Union”, Paris: Economica, 1997.

This article was first published on the 2/2019 issue of the ECA Journal. The contents of the interviews and the articles are the sole responsibility of the interviewees and authors and do not necessarily reflect the opinion of the European Court of Auditors.

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The ECA Journal features articles on a variety of current audit topics, the ECA’s role and work. It is available in electronic form below, and paper copies can be ordered online at the EU Bookshop.

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