The research by the District Court of Riga “PROCESS OF THE COURT OF ECONOMIC AFFAIRS IN CIVIL CASES AND CRIMINAL CASES. STATISTICS. ISSUES. POTENTIAL SOLUTIONS.”
Attorney-at-law Ph. D., Dr. iur.
The District Court of Riga have published Research of 2022 “PROCESS OF THE COURT OF ECONOMIC AFFAIRS IN CIVIL CASES AND CRIMINAL CASES. STATISTICS. ISSUES. POTENTIAL SOLUTIONS” (hereinafter the Research).
Aim of the Research
The Research is prepared in order to identify problem matters, and, simultaneously, is intended as the supportive material for processing the cases that are of the competence of the Court of Economic Affairs. Moreover, the Research have analysed the number of and types of decisions that have been appealed during the first months of the operation of the Court of Economic Affairs, also number of complaints reviewed and number of decisions of the Court of Economic Affairs rejected by the District Court of Riga.
The Research also assess the matters concerning “Special Confiscation of Property”. Processes on criminally obtained property (criminal cases) are reviewed in closed court hearings, thus, while analysing these categories of cases, often are complicated to interpret the court’s ruling as the decisions are not publicly available. Society must know and understand the main take-aways from the court rulings, therefore it is required to perform the preventive work in order to inform the society about the risks of consequences.
Material norms for the special confiscation of property are regulated in Chapter VIII 2 “Special Confiscation of Property” of Criminal Law (hereinafter the CL), included in CL with law “On Amendments to the Criminal Law” that entered into force on 1 August 2017. Special confiscation of property is the compulsory alienation of a criminally acquired property (CL Section70. 11 ) or object of a criminal offence (CL Section 70. 12 ), or the property connected to a criminal offence (CL Section 70. 13 ) to the State ownership without compensation. The special confiscation of property, according to CL Section 70. 10 , is not a criminal punishment, however is independent institute of the criminal law, that in the theory of the criminal law is included together with other coercive measures by the criminal law.
With amendments in the Criminal Procedure Law, that entered into force on 24 December 2019, the Section 125 of the Criminal Procedure Law is complemented with the third part. It premises that it shall be considered proven that the property with which laundering activities have been performed is criminally acquired if a person involved in criminal proceedings is not able to believably explain the legality of origin of the relevant property and the totality of evidence provides grounds for the person directing the proceedings to assume that a property is, most likely, of criminal origin.
Among the practitioners, the matter of the powers granted to the person directing the proceedings, when totality of the evidence is sufficient or is not sufficient for the person directing the proceedings to obtain the basis for the assumption that the property has or has not criminal origin, is as controversial as the procedural term ‘reasonable time’. It is subjective decision of the person directing the proceedings that depends on the correct understanding and application of the procedural norms, the knowledge of other jurisdictions, the specifics of the researched entrepreneurial area, understanding of accounting principles and due other factors. In addition, the critical thinking has essential importance. Also, having the assumption of the possible corruption risks have high importance.
In the conceptual report of 22 August 2019 “On the creation of the Court of Economic Affairs” (hereinafter the Conceptual Report) while justifying the need for establishing the Court of Economic Affairs, as one of the main reasons was mentioned the unreasonable term of complex and specific case review process.
Upon ratification of the European Convention for the Protection of Human Rights and Fundamental Freedoms (hereinafter the Convention) in 1997, Latvia undertook the commitment. Whereby, Article 6 of the Convention deals with rights to a fair trial. Respectively, reasonable time for the process, according to of Article 6 of the Convention, is one of the rights stipulated (indicated) within the scope of a ‘fair trial’. Rights to a fair trial are also stipulated in Section 92 of The Constitution of the Republic of Latvia.
In Section 14 of the Criminal Procedural Law (hereinafter the CPL) is regulated one of basic principles of the criminal procedure – the right of each person to the completion of criminal proceedings within a reasonable term. The term ‘reasonable term’ have always received great criticism. Among the lawyers the observation that the norm, which is included in the fifth part of Section 14 of the CPL, have remained as directive, because in the special part of the CPL the violations of reasonable time of the criminal proceedings, even if it is included as possible grounds for termination of criminal proceedings, in practice have been applied rarely. The Author in more than 10 years of her practice, have never encountered any termination of the criminal proceedings under such grounds. The first part of Section 14 of CPL is complemented with explanatory note, that “The completion of criminal proceedings within a reasonable term is connected with the scope of a case, legal complexity, amount of procedural activities, attitude of persons involved in the proceedings towards fulfilment of duties and other objective conditions.” Since 2014 other changes in Section 14 of the CPL have not been made.
According to the information provided in the Conceptual Report, on 1 January 2021 the Court of Economic Affairs had to start its operation. In the courts competence is to consider commercial disputes and criminal cases about serious and especially serious crimes that are causing significant damage to business environment and economic development.
Problem matters reviewed in the Research
The area of operations of the Court of Economic Affairs covers all territory of Latvia. The Court of Economic Affairs is located in Riga. On appeal, the District Court of Riga is reviewing the rulings of the Court of Economic Affairs. The Court of Economic Affairs (hereinafter the CEA) started its operation on 31 March 2021. In the court, higher attention is dedicated to its work, as such specialised court, created with aim to conduct fast, high-quality and efficient assessment of certain civil and criminal case categories, previously have not existed in Latvia. New composition of judges was created, yet society had ambiguous evaluation of that, indicating that judges had lack of experience in the court.
According to the Research, CEA have received 410 criminal cases in the period since it started to operate until 31 May 2022. From those 271 cases are about criminally obtained property. In Research’s section 2.5 the following is indicated: “After evaluating the impact on the process for criminally obtained property proceedings in the court, by the person directing the proceedings, it was concluded that there are cases when the process on criminally obtained property is terminated, or as one of the reasons for terminating the process have been the procedural violations conducted by the person directing the proceedings.” The Collegially of the Court of Criminal Cases of District Court of Riga have upheld 20 rulings of CEA, terminating the process for criminally obtained property. In many cases, both instance courts have terminated the proceedings due to procedural violations conducted by the person directing the proceedings. For instance, in the criminal procedure No 11816014118, both instance courts ruled that the person directing the proceedings have qualified the proceeding of the criminal case on criminally obtained property based on third part of CL Section 70. 11 and not based on first part of CL Section 70. 11 that cannot be ascertained pursuant to Chapter 59 of the CPL. In this case, the person directing the proceedings upon requesting to submit the information on explaining the legality of origin of the relevant property, have not notified the person related to the property, as per the fifth part of CL Section 356, but its’ provider of legal aid, furthermore setting the interval for the submission of additional evidence only 17 days. Also, in cases No 11816005219, No 15840019319 and No 11904002220 the persons related to the property were not notified according to the law about proving the evidence on legality of the seized property and about the consequences of non-complying with these obligations. In the cases No 11904004819, No 11816012019 and No 11903000520, both instance courts ruled that the person directing the proceedings have not proven that the seized properties have possible criminal origin, because in any situation the person directing the proceedings is responsible to prove that the property is criminally obtained or that it is related to the criminal offence. In cases No 11904002220 and No 11904004819, both instance courts concluded that “the person directing the proceedings at the same time have asked to recognize the property criminally obtained and also related to the criminal offence, which both are mutually excluding justifications.”
Respectively, in 7.3% cases that are reviewed by the CEA, the person directing the proceedings have made procedural violation, which, in addition, have not been discovered by the prosecutor supervising the case. The first part of Section 626 of CPL regulates that the investigator with the consent of the supervising prosecutor or a prosecutor has the right, in the interests of solving the financial matters which have come about in pre-trial criminal proceedings, in timely manner and in the interests of the economy of proceedings, to separate the materials from a criminal case regarding criminally acquired property and to initiate proceedings. Therefore, it is not possible to prove that the issue is only related to the lack of knowledge of the person directing the proceedings (investigator).
The author has assessed randomly selected cases. The author indicates that, upon evaluating the work of the CEA’s judges, the District Court of Riga have pointed out that on the appeal CEA have referred to unfounded arguments. For example, in criminal process No 11270008719, the District Court of Riga with decision of 15.05.2022 have rejected the decision of CEA of 28.03.2022 in full, subsequently terminating the process on criminally obtained property. The Collegially of the Court of Criminal Cases (hereinafter the Collegially of CCC) found that the conclusions of CEA are unreasonable, that presupposes that the person directing the proceedings have not notified the person related to the property on a duty to prove the legality of the origin of the relevant property. Moreover, in criminal process No 16870001721, Collegially of CCC of the District Court of Riga with decision of 07.03.2022 have rejected the decision of CEF of 11.11.2021. in full, subsequently terminating the process on criminally obtained property. The Collegially of CCC found that the conclusions of CEA are unreasonable, that presupposes that the proceedings on criminally obtained property is initiated without sufficient totality of evidence on possible criminal origin of the property, and that the circumstances specified by the person directing the proceedings are not possible to validate due to lack of evidence. The Collegially of CCC concluded that the CEA have not assessed the full totality of the evidence. In addition, The Collegially of CCC stated that the conclusion of CEA is unreasonable, that presupposes that the person directing the proceedings are responsible to inform about exact investigative actions that additionally will be performed and the reasons that prevent as soon as possible to submit the criminal process to the court.
The main conclusions of the Research:
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In the competence of Court of Economic Affairs is to review the complaints on decisions of the person directing the proceedings on familiarisation with materials of the pre-trial criminal proceedings on criminally obtained property, evaluating all arguments expressed within the complaint;
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The grounds for initiation of pre-trial criminal proceedings on criminally obtained property is simultaneously establishing the criterions of the first part of Section 626 of CPL. Moreover, these criterions should exist throughout the course of proceedings. If during the course any of the criterions is lost, the proceedings on criminally obtained property should be terminated.
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Considering that the persons linked to the related property of the proceedings on criminally obtained property, often are declared or registered in third countries, the matter need to be assessed concerning the validity of the request for a court hearing to take place within 10 days after receipt of a decision of the person directing the proceedings to a court, stipulated in the second part of Section 629 of CPL.
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The amendments to the Criminal Procedural Law aiming to supplement fourth part of Section 631, that grants the rights to the court of appeals to cancel the decision of the Court of Economic Affairs in proceedings regarding criminally acquired property and to submit the case for a new examination to the Court of Economic Affairs, will ensure that the proceedings on criminally obtained property in essence are reviewed in two instance courts.
Potential solutions
The amount of procedural violations reported in the Research of the examined cases is not small, considering that for such type of criminal investigation for many years are under increased scrutiny and large amount of funds are invested for training the specialists.
In relation to the lack of specialists and insufficient level of knowledge, Juris Stukāns, the Prosecutor General of Prosecution Office of the Republic of Latvia, have repeatedly commented that the knowledge level of the prosecutors can be evaluated as “unfortunately, not higher than average” .
On 16 August 2022 the Government supported the initiative of the Ministry of Justice of the Republic of Latvia to establish the Academy of Justice. The Cabinet of Ministers have confirmed the informative report “On the investment 6.2.1.3.i. of Plan for the European Recovery and Resilience Facility “Establishing of a unified training centre for improving qualification of judges, court employees, prosecutors, assistants to the prosecutors and specialised investigators (in interdisciplinary matters)”” which operation is planned to start as from 1 January 2025. Investigator Training Center of the State Police College have started its operation .
It is satisfactory that law enforcement, prosecution and judicial officials have access the professionally and qualitatively improve knowledge and skills, that would support them to make lawful and legally reasoned decisions, thus ensuring effective application of Criminal law norms and fair settlement of criminal law relations without unjustified interference in person’s life. It is time to qualitatively assess the materials in the case and to make decisions not only on confiscation of property but also on reversing the initial decision and returning the property.
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