Legal alert no. 13

It was published, in the Portuguese Official Gazette, on 4 January 2017, the Decision of the Constitutional Court n. 360/2016, which decided to not consider unconstitutional (i) the normative interpretation extracted from articles 383 to 386 of the Portuguese Securities Code (PSC), with a sense of allowing “that CMVM, when it has obtained knowledge of facts which may be qualified as crimes against the securities market or other financial instruments, without being instructed by the Public Prosecution, may initiate and promote investigation proceedings in order to verify the eventual existence of a crime notice, without any temporal limitation, and without a formally organized process” and (ii) the normative interpretation extracted from articles 116 and 120 of the General Framework for Credit Institutions and Financial Companies (GFCIFC), 361 of PSC, 41 and 54 of the General Framework of Administrative Offences (GFAO) and 126 and 261 of the Criminal Procedure Code (CPC), with the sense that, “after the notification of the crime, the Regulators may convene the supervised entities to provide documentation, under the imposition of a sanction, due by the breach of the collaboration duty, outside the framework of a formally organized sanction procedure and the documentation obtained may be used as proof against the persons affected/suspect and/or other, in future sanction procedures”.

The first issue raised by the appellant, regarding articles 383 to 386 of PSC was knowing whether or not the normative interpretation of those provisions was against articles 2, 3, 20/4, 32/1, 5, 8, 10 and 219 of the Portuguese Constitution.

The Constitutional Court argued that the preliminary investigations performed by CMVM, in accordance with the provisions in question, are a «speciality of the financial and economical criminality» (quoting Frederico da Costa Pinto), forming a specific form of supervision, with several advantages.

In relation to the constitutional rules invoked, the Court considered that the same were not breached by the rule extracted from articles 383 to 386 of PSC.

First of all, although the preliminary inspections are performed by an administrative entity, at the end of the same, the eventual notice of the crime is sent to the Public Prosecution, who will, in accordance with article 219 of the Constitution, exercise the criminal action. In addition, if someone is considered suspect, he will have all the rights granted by the Criminal Procedure Code and, therefore, article 32 of the Constitution is not breached.

Secondly, the Constitution Court also rejected the understanding presented by the appellant that the preliminary investigations mean a disproportionate restriction of the right to a fair trial, of the principle of the presumption of innocence, of the obligation to promote evidentiary diligences and of the prohibition of self-incrimination.

The Constitutional Court sustains that the proceeding of preliminary investigations does not breach the principle of proportionality, considering its three sub-principles, - sub-principle of adequacy; sub-principle of enforceability and principle of proportionality in the stricter sense.  

In this respect, in relation to the sub-principle of adequacy, the Court sustains that the preliminary investigations are a suitable way for obtaining facts which may be the notice of an eventual crime and also recognises that the complexity of the matters requires specialized expertise which enables the understanding of such matters.

In relation to the principle of enforceability, the Court also considers that the proceeding of preliminary investigations is necessary to obtain facts which may constitute the notice of an eventual crime, and it is not apparent the existence of other less restrictive ways to achieve the same goal.  

Finally, in relation to the principle of proportionality in the stricter sense, the Court argues that, considering the purposes intended, the preliminary investigations carried out by an non-judiciary administrative entity are not an excessive way, even because the proper functioning of the markets and financial system justify the intervention of specialized entities, in order to, among other things, prevent the sending of elements without technical feasibility to criminal investigation, in the context of crimes against the market.

The second issue raised by the appellant, related to the rule extracted from articles 116 and 120 of GFCIFC, 361 of PSC, 41 and 54 of GFAO and 126 e 261 of CPC was to know if such rule breached articles 2, 3, 13, 16, 18, 20/4, 29, 32/1, 5, 8 and 10 of the Portuguese Constitution, as well as article 14/5 of the International Covenant on Civil and Political Rights (ICCPR) and article 6 of the European Convention on Human Rights (ECHR)

Also in this case, the Court considered the rule extracted from the provisions in question non-unconstitutional, invoking the Decision n. 340/2013, of 17 June, of that Court, in which it did not judge unconstitutional the rule resulting from article 61/1d) and 125 of the CPC, with the sense that the documents obtained by a tax inspection under the collaboration duty may be later used as proof in the criminal procedure for the commission of a tax fraud crime.

To access the full text of the Constitutional Court’s decision, please click on the following hyperlink

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