The Pisciotti case: How can free movement rights impact EU citizen extradition to a third country?

The story of Romano Pisciotti is the first ever case that resulted in extradition of an EU citizen to the US on antitrust charges. On 10 April 2018, the Court of Justice rendered its second ruling in the saga. Before, in Case C-411/14 P, the Court declared inadmissible Pisciotti’s complaint that the European Commission had not instigated infringement proceedings against Germany for breach of EU law. In the most recent case (C-191/16), the German court referred questions to Luxembourg concerning compatibility of the different treatment in extradition cases of German nationals and other Member States’ nationals with EU law. When Member State nationals are treated differently than nationals of other Member States, such extradition practices may raise questions of compatibility with EU free movement law and the principle of equal treatment.

Background

Romano Pisciotti, an Italian national and a former senior executive of Parker ITR, had been under investigation in the United States for participation in the marine hose cartel and consequently charged with having taken part in the infringement. The cartel involved price fixing, market sharing and bid rigging activities on a global scale. Apart from the US, the undertakings participating in the cartel were also fined by the European Commission and criminal proceedings against other individuals than Mr Pisciotti were successfully conducted in the UK.

The Department of Justice carved Mr Pisciotti out of the plea agreement of his former company (Parker ITR) and reserved the right for prosecution. US authorities issued an international arrest warrant and, on 17 June 2013, Mr Pisciotti was arrested at Frankfurt Airport by the German authorities during a stopover on his flight from Nigeria to Italy. He was provisionally detained and a few months later, the US request for extradition was accepted by the German authorities. He pleaded guilty in criminal proceedings in the US and was sentenced to two years of imprisonment which was reduced by the period of his detention in Germany.

It is worth mentioning that extradition in most cases, including the case of Mr Pisciotti, requires the fulfilment of the double criminality criterion, i.e. a given offence must be regarded as criminal in both states participating in extradition. In most EU Member States, competition law infringements are not regarded as criminal offences, but rather as administrative violations. However, in Germany, bid rigging (in contrast to other cartel-type infringements) is a criminal offence, so the double criminality requirement was fulfilled and Mr Pisciotti could be extradited. He was released from the US prison in April 2015 and, following his return to Europe, went again to Germany claiming he had been discriminated and seeking compensation for the breach of EU law.

The essence of the case before the Court of Justice evolved around the interpretation of Articles 18 and 21 TFEU, laying down the principle of non-discrimination and free movement rights. Before the German court, Mr Pisciotti argued that Article 16(2) of the German Basic Law, which precludes extradition of German citizens to third countries but does not preclude the extradition of other EU citizens, infringes the fundamental principle of equal treatment and thus Articles 18 and 21 TFEU.

The German court referred the case to the Court of Justice and submitted two main legal questions to the Court : (i) whether Mr Pisciotti’s situation falls within the scope of EU law and (ii) whether Article 18 and 21 TFEU preclude a rule of a constitutional law status which does not allow for extradition of own nationals to third countries while permitting extradition of nationals of other Member States to those countries.

Ruling

First, the Court of Justice established that due to applicability of the EU-US Extradition Agreement, the situation of Mr Pisciotti indeed falls within the scope of EU law (para. 31).

In addition, the Court went on to assess whether Mr Pisciotti exercised his right of free movement while making a stopover in Frankfurt on his way to Italy. The Court held, unsurprisingly, that Mr Pisciotti exercised his free movement rights and therefore EU law is applicable. Without detailed reasoning, it was established that the fact that Mr Pisciotti was only in transit when he got arrested in Germany ‘is not capable of casting doubt on that finding’ (para. 34).

The second question, regarding equal treatment, was considered within the context of the EU-US Agreement. The EU-US Extradition Agreement allows the Member States to decide upon extradition of their own citizens and therefore it is up for the Member States whether to include citizens of other Member States in their respective national provisions. This discretion must, however, be exercised in accordance with EU law, in particular with the principles of equal treatment and free movement of persons. Citing the Petruhhin judgement, the Court went on to find that the national rules such as the ones applicable to the German proceedings, are liable to affect the free movement of EU citizens (para. 44).

Therefore, restrictions of free movement within the meaning of Article 21 TFEU must have an objective justification and be proportionate to the objective pursued. Already in Petruhhin, the Court of Justice found that preventing the risk of impunity for offenders was recognised as a legitimate objective, based on Article 3(2) TEU. In that very case, the Court reasoned that by virtue of Article 3(2), the EU offers its citizens an area of freedom, security and justice without internal frontiers, in which the free movement of people is ensured in conjunction with relevant measures with respect to border controls and the prevention of and combat against crime. In that regard, the objective of preventing the risk of impunity must therefore be considered as legitimate (para. 47).

As the restriction of free movement analysed in the case had a legitimate objective, the Court went on to assess whether there were any less restrictive measures available for the attainment of the objective. Mr Pisciotti argued that a less restrictive measure would have been to prosecute him in Germany and not to extradite him. He based his claim on the fact that German rules provide for a possibility of prosecuting a person from another Member State internally if extradition cannot take place.

However, the Court disagreed. In the eyes of the Court, the exchange of information between Germany and Italian authorities regarding Pisciotti’s prosecution would be less prejudicial to the exercise of his right to free movement. Priority must be given to the European Arrest Warrant and if it is not issued by the Member State of nationality, then an individual may be extradited (paras 50-55).

In fact, this is exactly what happened in Mr Pisciotti’s case. The Italian authorities were informed about the arrest of Romano Pisciotti and decided not to issue a European Arrest Warrant. Therefore, the Court of Justice concluded the German authorities did not go beyond what was necessary for the legitimate aim pursued and hence did not breach EU law.

Remarks

The Pisciotti ruling clearly builds on the 2016 Petruhhin judgement which concerned extradition of the citizens of different Member State to Russia and reaffirms the principles established therein. The Court to a large extent followed the opinion of Advocate General Bot, who also suggested that Articles 18 and 21 were therefore not violated since the Italian authorities were notified of Pisciotti’s arrest in Germany and did not issue the European Arrest Warrant (paras 52-55 of the Opinion).

The Court was faced with a balancing exercise. On one hand, it is in the interest of EU law to stretch the notion of the right of free movement. On the other hand, excessive protection offered by EU law might cause a risk of impunity of sentenced individuals.

With broad interpretation of the exercise of free movement laid down in the judgement in mind, such a ruling seems rational. The Court expressly stated that the fact that he was not travelling to Germany, but only through Germany, is irrelevant for the application of EU law. The conclusion on free movement appears even less surprising given the Schotthöfer ruling, where the Court held that even cancelling a presentation in another Member State in fear of extradition to a third country from there is sufficient to trigger free movement rights. In that very case, an Austrian national was about to give presentation in Germany. He faced a death penalty in the United Arab Emirates and therefore, prior to his departure, asked German authorities for a safe passage. Having no response, he cancelled his presentation and was sued for breach of contract by the organisers. The Court held that such a situation falls within the scope of EU law, as the Austrian national was able to travel to Germany, regardless whether he actually went there or not.

As most EU Member States have similar provisions on non-extradition of own nationals, different outcome of the case could prevent the effective application of justice. By allowing the Member States to discriminate between own nationals and nationals of other Member States, the risk of impunity of individuals sentenced in third countries is lowered. However, this must be conducted in a proportionate manner, with priority given to the European Arrest Warrant and prosecution of the Member State of nationality. This outcome seems reasonable. In principle, such blatant discrimination infringes the principle of equal treatment. However, for the purpose of criminal justice, it might be allowed under certain conditions. These conditions favour interests of the Member States, as the Member State of nationality should decide on the criminal’s fate, in the Court’s view.

Furthermore, the Court gave two reasons why Pisciotti’s situation falls within the scope of EU law. This happens by virtue of the EU-US agreement, but also because Romano Pisciotti exercised his free movement rights by having a stopover in Frankfurt. By providing the latter reason, the Court indicates that similar cases, where there is no extradition agreement with a third country, also fall within the scope of EU law.

From an antitrust perspective, the case proves that the US competition authorities are willing to go rather far in cartel cases in terms of extradition. Despite the fact that Mr Pisciotti claimed that the US authorities exaggerated his involvement in the infringement and the cartel’s market impact (see interview with Romano Pisciotti), his case illustrates that US authorities treat hardcore cartels in no way differently than other criminal law violations, which might not seem obvious from a European perspective. Indeed, in most EU Member States competition law violations are prosecuted as administrative violations and therefore, the result of Mr Pisciotti’s case might come as a surprise for executives on the continent.

Although the procedure of Mr Pisciotti’s extradition was particularly lengthy, future similar cases might be executed more rapidly. The principles established in Petruhhin now appear to be firmly established.