The limitation period is among the institutions of criminal law for which correct understanding and application is crucial to the final outcome of a case. On the one hand, errors can lead to significant prejudice to the rights of persons entitled to a defence. On the other hand, errors may also create conditions enabling criminal liability to be avoided, which of course prejudices the interests of society as a whole, including the right to general security.

Like any other issue of importance for the final resolution of cases, this issue has been much discussed in Latvian criminal law practice and doctrine; however, in Latvia it has been regulated in law in a sufficiently comprehensible manner. In particular, the Latvian Criminal Law clearly states at what point the limitation period starts to apply, what circumstances determine its interruption and, finally, how long the limitation period is.

It would seem self-evident that similar rules on the limitation period and the application of the statute of limitations for criminal liability could be found in all the member states of the European Union (EU).

Romanian case

However, a recent case relating to Romanian criminal law regulation and application practice shows that if the issue is to be addressed not only in terms of substantive and procedural criminal legislation and the practice of their application, but also of constitutional law’s assessment thereof, our understanding becomes considerably more complex and that there even exist risks of serious violations of procedural safeguards. It is valuable to be aware of such situations, as it cannot be excluded that similar problems may arise in the understanding and application of other criminal law institutions, in any member state and in any criminal case.

In particular, our attention has been drawn to the assessment of the Court of Justice of the European Union (CJEU) – its answers to preliminary questions from the Romanian Court of Appeal on how the courts of a member state should act in cases where the application of a judgment of its constitutional court may be contrary to EU law, and how the retroactivity of a more favourable provision of criminal law should be limited.

Insight into this CJEU judgment has been prepared by the head of the Corporate Crime Investigation and Compliance practice Dr Violeta Zeppa-Priedīte and assistant lawyer Paula Šūtava.

The Romanian Constitutional Court declared unconstitutional a norm which provided for the interruption of the limitation period for criminal liability in the event of “any procedural act”. The court stated that “any procedural act” also refers to acts that the suspect or the accused have not been notified of – meaning that they may not have known that the limitation period had been interrupted.

However, the legislator had not changed this rule and so for four years there were no clear rules on the interruption of the limitation period in Romania. Only four years later did the government amend the law to stipulate that only procedural acts that the suspect or accused had been notified of would cause the limitation period to be interrupted.

The Romanian High Court of Cassation concluded that the lex mitior principle applies to these rules – a retroactive rule must be applied in a case if it has more favourable consequences than the rule in force.

Factual circumstances in the main proceedings

In parallel, in the main proceedings, the applicants were convicted of failing to disclose certain business transactions and income in their accounting records, thereby causing losses to the state budget, including in relation to value added tax and excise duty on diesel fuel. They were ordered to pay tax losses amounting to approximately EUR 3,240,000.

The applicants appealed to the Brasov Court of Appeal, seeking annulment of their conviction on the ground that the limitation period for criminal liability had expired. They argued that, when Romania did not have a provision on the interruption of the limitation period, it should be regarded as a more favourable rule; according to the principle of the more favourable law (lex mitior), that rule should also apply retroactively in their case, thereby meaning that their criminal liability would be time-barred.

The Court of Appeal found that if this interpretation were upheld, criminal proceedings would have to be discontinued not only against the claimants, but also in thousands of other cases and there was a “risk that thousands of defendants would not face criminal liability”.

The court therefore suspended the proceedings and referred the following questions to the CJEU for a preliminary ruling:

  1. Where a national constitutional court has declared a provision governing the limitation period unconstitutional, is it permissible under EU law for convicted persons in fraud cases to apply to have their convictions overturned on the basis of more recent laws with a shorter limitation period?
  2. Does the principle of the supremacy of EU law allow national laws or practices that require national courts to comply with the decisions of the national constitutional court and the highest court, even if they contradict EU law?

CJEU conclusions

The CJEU has ruled that it is the responsibility of the member states to adopt rules on criminal liability that protect the EU’s financial interests. However, in exercising this competence, countries must comply with EU legal requirements, such as:

  • Article 325(1) TFEU requires member states to take effective measures to combat fraud and any other illegal activities affecting the EU’s financial interests.
  • Article 2(1) of the PFI Convention obliges member states to ensure that fraud affecting the financial interests of the EU, including VAT fraud, is punishable by effective, proportionate and dissuasive criminal penalties.

Where a national constitutional court has ruled that a law suspending the limitation period is invalid and has not been amended for almost four years, this situation is incompatible with the obligation to ensure that cases of serious fraud affecting the EU’s financial interests are effectively and dissuasively prosecuted.

In order to determine whether the courts are under an obligation not to apply judgments that are contrary to EU law, it is necessary to ascertain whether the non-application of these judgments would be contrary to the protection of fundamental rights, the principle of retroactive application of the lex mitior, and accessibility and predictability, both as regards the definition of the offence and the penalty imposed.

The CJEU concluded that Romanian courts are not obliged not to apply the judgments of the Constitutional Court and the Supreme Court, even though there is a risk of impunity for offences that threaten the EU’s financial interests. The court found that these judgments are in line with the principles of legality and ensure the clarity and precision of the legal rules, in particular as regards the application of limitation periods in criminal matters.

CJEU ruling

The CJEU therefore ruled:

  • The courts of a member state are not obliged to refuse to apply judgments of the Constitutional Court which overrule national law on the interruption of the limitation period in criminal matters. This is because these judgments meet the requirements of clarity and precision in criminal law, protecting the principle of the legality of offences and penalties.
  • EU law requires national courts to adopt national standards of protection in relation to the principle of the more favourable application of criminal law (lex mitior). However, it does not allow challenges to final judgments interrupting the limitation period for criminal proceedings where the procedural steps were taken before the finding of nullity.
  • The principle of the supremacy of EU law means that national courts have the right to, on their own initiative, not apply a judgment or case law of a member state if they consider it to be contrary to EU law.

These conclusions promote the rule of law and efficiency in criminal justice, protecting EU rights and interests across the union.