Article 6 of the French Code of Criminal Procedure (“CPP”) forbids a defendant from being prosecuted twice on the same charges. However, certain French legal provisions enable both the French Financial Market Authority (“AMF”) and criminal judges to prosecute and possibly sanction, consecutively, a defendant on the same financial charges. On 18 March 2015, the French Constitutional Court repealed these provisions of the French Financial and Monetary Code (“FMC”) which allowed dual administrative and criminal prosecutions in the area of insider trading. Consequently, as Oberthur and EADS had already been prosecuted before the AMF, the Paris Criminal Court put an end to the ongoing criminal trials on 6 May 2015 and 18 May 2015 respectively.

Pursuant to Article 6 of the CPP « public prosecution for the imposition of a penalty is extinguished by [among others] res judicata ». The corollary is the ne bis in idem principle, which means that res judicata, resulting either from a dismissal, an acquittal or a conviction, forbids a defendant from being prosecuted twice on the same charges.

This fundamental principle has until now been strictly limited to criminal law: only a criminal court decision would extinguish public prosecution. Administrative authorities were so far excluded from the scope of application, and wrongdoings already prosecuted before the AMF for “insider dealing” (manquement d’initié), in violation of Article L.621-15 of the FMC, were frequently prosecuted anew before criminal courts for “insider trading” (délit d’initié), in violation of L.465-1 of the FMC.

In two high-profile cases - EADS and Oberthur -, the defendants were criminally prosecuted on the grounds of insider trading after EADS had already been cleared, and Oberthur sanctioned, by the AMF for insider dealing. The French Supreme Court allowed the criminal courts in question, before ruling, to seek from the Constitutional Court two preliminary rulings on the constitutionality of the principle of the dual prosecutions Oberthur and EADS were subjected to.

In its 18 March 2015 decision, the French Constitutional Court ruled that the insider dealing and insider trading offences (1) could be similarly defined, and therefore aimed to repress the same offences, (2) shared the same goal of safeguarding French public economic policy, (3) are likely to be subject to sanctions that are of similar nature, and (4) both fall under the jurisdiction of the courts.

The French Constitutional Court therefore held that the provisions allowing a second trial for insider trading were in violation of the principle of necessity of penalties and repealed them as from 1 September 2016.

The French Constitutional Court thereby recognized the potentially criminal nature of the penalties imposed by the AMF, due to their often very high amount – capped at €10 million, which is 6 times the maximum which could be incurred before the criminal courts.

In so doing, the French Constitutional Court has complied with the European Court of Human Rights (“ECHR”) case law, which recently found that administrative penalties of a certain amount may be qualified as criminal penalties (ECHR, Grande Stevens and others v. Italy, 4 March 2014). In this decision, Italy had been censured for its system, similar to the French system, of dual prosecution in the field of insider trading.

Nevertheless, the French Constitutional Court reiterated that “Article 8 of the French Declaration of Human Rights of 1789 [a key element of the body of French Constitutional rules] does not prevent the same charges committed by a same person from being the subject of different prosecutions for the purpose of sanctions of different nature by application of distinct sets of rules before separate jurisdictions” and merely concluded that these conditions were not met in the particular instance of this decision relating to insider dealing and insider trading.

It follows that this ruling on insider trading may not be automatically extended to other offences. Nonetheless, other financial offences could be subject to a constitutionality review due to possible dual prosecution, such as the communication of insider information (Article L.465-1 of the FMC) and market manipulation (article L.465-2 of the FMC), both also subject to prosecution before the AMF.

For now, as a result of the 18 March 2015 decision, an exoneration or conviction issued by the AMF in the field of insider trading extinguishes public prosecution. Conversely, as soon as a prosecution is engaged on the same charges and against the same person before criminal courts, no prosecution may be initiated before the AMF. This principle applies to ongoing proceedings.

The courts in charge of the EADS and Oberthur criminal trials therefore had no other choice but to acknowledge the extinction of the public prosecution.

The French legislator has until 1 September 2016 to set out new provisions and rethink the link between its administrative and judicial procedures.

Conseil constitutionnel, décision n°2014-453/454 QPC et n°2015-462 QPC du 18 mars 2015.