Harmonising national sanctioning administrative law: An alternative to a single capital‐markets supervisor

DOIhttp://doi.org/10.1111/eulj.12291
AuthorFabio Pascua Mateo
Published date01 September 2018
Date01 September 2018
ORIGINAL ARTICLE
Harmonising national sanctioning administrative
law: An alternative to a single capitalmarkets
supervisor
Fabio Pascua Mateo*
Abstract
Since the disclosure in 2009 of the Larosière Report, legislative acts disciplining financial markets
have established a set of rules called to form the foundations of a sanctioning administrative law
to be enforced by the Member States. Furthermore, the ECtHR and the ECJ, are contributing to
apply here the guarantees of the Rome Convention and the Charter of Fundamental Rights. This
study, in addition to giving account of such legislation and caselaw, aims to outline the broad
principles of this new law, whose purpose is levelling the playing fieldamongst NCAs and fostering
supervisory convergence without creating new institutions. Should this experimentbe successful,
and a new way of cooperative federalismcould emerge at a global level in the Union. Otherwise,
further centralisationwhich is neither possible nor desirable at this stageshould be expected in
future years, with a sort of single supervisory mechanism in securities markets.
1|INTRODUCTION: THE TENSION BETWEEN FUNDAMENTAL RIGHTS
AND THE NECESSITY OF EFFECTIVE SANCTIONS TO ENFORCE UNION LAW
In recent years, we have witnessed the emergence, within the framework of European Union law, of a common
administrative sanctioning law to be applied not by the Union institutions but by the Member States. Such law has
appeared in the very specific area of the securities markets, though it has quickly extended to other areas of capital
markets law. In other sectors, there is nothing similar, as the principle that corresponds to the Union law establishing
only the material rules and to Member States freely regulating the applicable disciplinary systems,
1
is maintained. This
novelty arises from the need to harmonise and increase sanctions against those who violate substantive rules as a
means of ensuring the homogeneity of the applicable legal regimes and thus avoiding regulatory arbitrage, and is laid
*Full Professor at the Complutense University of Madrid. Former General Counsel of the CNMV. I want to acknowledge the peer
reviewers for their comments to improve the article and to express my gratitude to Patricia Kosack, who revised the accurateness
of my use of English. Of course, any remaining mistakes remain under my whole responsibility.
1
Like almost every rule, this one also knows some exceptions, yet in a less developed stage. It is the case for Regulation (EU) 2016/
679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the process-
ing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation)
(Text with EEA relevance), which also contains a detailed sanctioning system that shall be (or has been) adopted by the Member
States.
Received: 6 February 2017 Revised: 22 December 2017 Accepted: 27 June 2018
DOI: 10.1111/eulj.12291
Eur Law J. 2018;24:321348. © 2018 John Wiley & Sons Ltd.wileyonlinelibrary.com/journal/eulj 321
down in a series of newly passed pieces of legislation. In addition, it is complemented by a set of principles
established by the European Court of Human Rights (ECtHR) and the European Court of Justice (ECJ) caselaw,
which, on the contrary, seeks to ensure respect for the fundamental rights of Union to citizens exposed to disciplin-
ary proceedings. Both currents, of course, contribute to clarify an already dense content of this sanctioning law.
However, at the same time, they imply two opposing optics that subject Union law to a fruitful, albeit sometimes
disturbing, tension in opting for a greater protection of the defendant's guarantees or to ensure the effectiveness
of Union law, which permeates all legal solutions adopted. In this article, in addition to giving a brief account of
the process of creating this sanctioning law, we will see the contents of the caselaw of the ECtHR on the require-
ments arising from the Convention to the sanctioning rules of its signatories at the administrative level, with special
emphasis on the securities markets. Then, we will expose the developments experienced theough EU law from its
early years until the present day. We will go on to outline some rules and principles which must be observed by
all State legal systems in the light of the caselaw of the ECtHR and the rights derived from the Union. Finally, we
will defend the utility of this experimentas an alternative way of promoting coherence amongst national legislations
and the internal market, without creating new administrative structures at the Union level.
2|THE ECHR AND THE CASELAW OF THE ECtHR
It was not, however, an institution or norm of the Union that was first to discipline the sanctioning administrative
systems of the Member States from outside, but the caselaw of the ECtHR. The starting point are sections 6 and
7 of European Convention on Human Rights (ECHR) and Article 4 of the Protocol 7 Annex to the aforementioned
Convention, relating, respectively, to the right to a fair trial (especially in the criminal process), and to the no punish-
ment without law right and the right not to be tried or punished twice.
From these premises, the ECtHR extended sanctioning criminal law guarantees to merely administrative sanc-
tions, with a jurisprudence that is somewhat different from the approaches made by different national constitutional
courts. In fact, whilst the latter recognise the specificity of sanctioning administrative law, but apply, with the neces-
sary adaptations, criminal process guarantees, the ECtHR establishes the general possibility of considering certain
offences and sanctions as criminal in the strict sense, regardless of what national legislation might state. In particular,
since its judgment in the case of Engel and others v. Netherlands,
2
although it recognises the possibility for States to
draw a distinction between criminal and administrative sanctioning law (derived primarily from Article 7 ECHR), this
could only be done under strict conditions, in order not to void the guarantees of Article 6. For this purpose the Court
determined three criteriain principle alternative, although exceptionally they can be construed as cumulativeto
establish the criminal nature of a sanction and, consequently, the application in its entirety of the warranties
contained in the exposed precepts: firstly, the typification of the national legislature, which can serve as a reference,
but does not offer a definitive result; secondly, the nature of the offence criminalised, in which the more general pre-
vention in its typification is pursued, the closer it will be to a criminal nature; and, thirdly, the severity of the sanctions
that can be imposed (no matter if the real sanction is lower).
Of course, the ECtHR does not ignore all these implications and tries to save to some extent the conformity of
administrative penalties with the Convention through the control exercised on them by the internal judicial bodies.
Thus, in what are known as Austrian judgments,
3
it states that any organisational and procedural failures produced
2
ECtHR, Engel and others v. Netherlands, Appl. No. 5100/71; 5101/71; 5102/71; 5354/72; 5370/72, judgment of 8 June 1976, para.
81.
3
For instance, ECtHR, Schmautzer v. Austria, Appl. No. 15523/89, judgment of 23 October 1995, para. 34; ECtHR, Umlauft v. Austria,
Appl. No. 15527/89, judgment of 23 October 1995, para. 37; ECtHR, Gradinger v. Austria, Appl. No. 15963/90, judgment of 23 Octo-
ber 1995, para. 42; and ECtHR, Pramstaller v. Austria, Appl. No. 16713/90, judgment of 23 October 1995, para . 39. A comment on
their impact on sanctioning administrative law can be found in Moreno Trapiella, El control judicial de las sanciones administrativas
en el convenio europeo de derechos humanos, (2008) 280281 Documentación Administrativa, 326 et seq.
322 PASCUA MATEO

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