The European Court of Human Rights (ECtHR) recently ruled that dawn raids carried out at the premises of two French construction companies by the DGCCRF (French Department for Competition, Consumer Protection and Fraud) violated both the rights of defense and the right to privacy, due to inadequate judicial review of both the decision authorizing the raids and the scope of documents seized. The ECtHR held that if, during a dawn raid, companies are unable to halt the seizure of out-of-scope or privileged documents, then they should at least have an effective judicial remedy to seek the removal of such documents from the file.
In 2007, the DGCCRF (an investigative body of the French Ministry for the Economy) obtained a search warrant from the JLD (Juge des Libertés et de la Détention or Liberties and Detention Judge) of the Paris Tribunal de Grand Instance to carry out inspections at the premises of two construction companies suspected of bid-rigging public works contracts. The DGCCRF seized a large number of documents and electronic files, as well as the entire contents of the electronic mailboxes of several employees.
The companies unsuccessfully appealed the inspections and seizures before the JLD and subsequently (restricted to points of law only) before the French Supreme Court (Cour de Cassation).
Complaint before the ECtHR
The companies then sought relief from the ECtHR, filing a complaint in October 2010 against the inspections and seizures. The objections were two-fold:
(1) Lack of effective remedy
The companies complained that their right to an effective remedy (Article 13 ECHR) had been violated because (i) the judge who ruled on the lawfulness of the inspections and seizures was the same judge who had authorized the inspections (i.e., the JLD), and therefore could not sufficiently guarantee an impartial review, and (ii) the appeal before the French Supreme Court against such ruling was limited to points of law.
Lack of impartiality. The ECtHR dismissed the first allegation, noting that the companies had not raised such argument before the French Supreme Court and therefore had not exhausted all domestic remedies.
Inadequate legal review. Regarding the second allegation, the ECtHR affirmed its earlier decision-making recognizing the failure of the French Commercial Code's (then-applicable) procedural provisions to satisfy the right to a fair trial (Article 6 ECHR). Such provisions have since been modified to allow parties to challenge the JLD's decision, both on the law and the merits, before the President of the Court of Appeal.
(2) Violation of rights of defense and right to privacy
The companies also complained that the "indiscriminate" seizure of documents and electronic data had violated their rights of defense (Article 6 ECHR) and their right to privacy (Article 8 ECHR), particularly with respect to correspondence covered by lawyer-client confidentiality. The ECtHR then assessed this complaint solely on the basis of the right to protection of one's private and family life, home and correspondence (Article 8 ECHR). Pursuant to its previous case law, it held that on-the-spot inspections at company premises constitute an "interference" with this right. Such interference is only allowed if, in pursuit of a public interest objective, it is "in accordance with the law" (i.e., with a proper legal basis) and is "necessary in a democratic society" (i.e., proportionate) (Article 8.2 ECHR).
Interference had a proper legal basis…. The ECtHR found that the inspections and seizures had a proper legal basis, as these were governed by specific statutory provisions and pursued a legitimate aim.
… But was not proportionate. As to the proportionality issue, the ECtHR found that the inspections and seizures had not been "widespread and indiscriminate." This is because the authorities carefully confined their searches to the object and purpose of the investigation, as described in the search warrant, and prepared a sufficiently detailed inventory of the seized documents and electronic files.
Nevertheless, the ECtHR found that the applicants had not been given an opportunity to review the documents during the inspections, and therefore had been unable to object to the seizure of out-of-scope or privileged documents. The applicants therefore should have had the right to seek review of the seizure's lawfulness after the inspections. However, the JLD only examined the lawfulness of the formal framework in which the seizures had been conducted, without carrying out a specific review of their proportionality. The ECtHR held that, when a judge is called upon to assess the seizure of specifically identified documents that are unrelated to the purpose of the inspection or legally privileged, he must rule on the fate of these documents. Such ruling shall be based on a concrete proportionality assessment, and a judge should order the restitution or destruction of documents where appropriate.
The ECtHR therefore concluded that the seizures had been disproportionate, violating Article 8 ECHR.
In summary, the ruling confirms that meaningful and effective judicial review should be available to companies subject to dawn raid searches and seizures. It clarifies that companies should be able to challenge the seizure of individual documents deemed as out-of-scope or legally privileged, and that the judge ruling on such claims should have the power to order the removal of such documents from the file, thus preventing their use as evidence. The judgment also confirms that the decisions of the judge overseeing the inspections and seizures should be subject to an appeal on issues of law and fact.
National courts scrutinizing dawn raids
Ensuring procedural safeguards. Several recent national cases also illustrate that dawn raids are increasingly attracting judicial scrutiny regarding procedural rights. For example:
- In Belgium in February 2015, the Brussels Court of Appeal ordered that all documents seized during a dawn raid at the premises of certain tour operators be expunged from the investigation file, since the then-applicable legislation did not provide for effective judicial review of the inspections and seizures.
- In France in June 2014, the French Cour de Cassation annulled a dawn raid at the premises of a French bank, finding a violation of the bank's right to a fair trial due to denial of access to legal counsel during the dawn raid (Cass. Crim., n°13-81.471).
Preventing "fishing expeditions." Other national cases spotlight the significant challenges faced by competition authorities, whose investigations often entail vast quantities of documents and electronic files and e-mails. Therefore, the "seize first, sift later" approach is often relied upon. Without adequate safeguards, however, such an approach easily can become an unlawful "fishing expedition":
- In Spain, in April 2015, the Audiencia Nacional (National Court) annulled fines of €61 million imposed in 2011 by the Spanish competition authority CNC (now CNMC) on five major electricity companies and their industry association (UNESA). The Court ruled that the dawn raids at UNESA were null and void, as the inspection order failed to adequately define the investigation's scope. Since CNC's entire case had been built on evidence seized during this dawn raid, the Court said it had no choice but to annul the findings against the companies, as well as the fines.
- In France, in April 2013, the French Cour de cassation held that when investigators seize large amounts of documents (in particular, electronic mailboxes), a breach of legal professional privilege occurs as soon as a protected document is taken, irrespective of the investigators' intention not to rely on the document and to return it at a later stage of the investigation (Cass. Crim. n° 12-80331).
These national decisions follow in the wake of the EU General Court's judgments of November 2012 (Case T-135/09 and T-140/09), where the Court partially annulled decisions ordering dawn raids conducted by the European Commission at the premises of two cable manufacturers, in France and in Italy, as these decisions defined an overly broad scope of investigation. These were hailed as landmark judgments reining in the inspection powers of competition authorities, although the subsequent rejection of Nexans' appeal by the Court of Justice (Case C-37/13) seemed to mark a return to a more deferential review (see Jones Day Antitrust Alert of 14 September 2014).
Another landmark EU judgment is anticipated in the Deutsche Bahn case (Case C-583/13 P). In this matter, Advocate General Wahl has advised the Court of Justice to rule that the European Commission may seize documents revealing anticompetitive conduct, even if these were outside of the scope of the decision ordering the inspection, but only where such discovery is "truly fortuitous." In his view, this means that the Commission cannot seize documents relating to a separate suspected infringement (i.e., not covered in the concerned inspection decision) where Commission staff were told, prior to the inspection, to pay specific attention to information relating to such potential separate infringement (i.e., no fortuitous discovery).
All of these cases remind that competition authorities should carefully define the scope of the inspection and apply proper procedures for dealing with potential out-of-scope or privileged documents. Some European countries may also face amending their legislation to ensure proper judicial review of searches and seizures by competition or similar authorities (e.g., tax authorities). Finally, for companies, these cases illustrate the importance of dawn raid preparedness and that a fundamental rights-based defense against inappropriate inspections can be effective. While compensation awards before the ECtHR are generally modest (in the present case, €15,000), this is never the primary focus of an ECtHR claim or judgment. At stake is an affirmation of fundamental rights, towards rectifying the law applied by public authorities in relation to private parties.
In the French construction case, the European Court of Human Rights' judgment of April 2, 2015, can be found on its website.