Criminal proceedings against former executives of Kaupþing Bank, a major international Icelandic Bank, were mainly fair but resulted in one violation connected to a judge’s impartiality.

In September 2008, an investigation revealed that the funds for the purchase of 5.01% of Kaupþing Bank’s shares by a member of Qatar’s royal family had been provided in loans by Kaupþing itself and that none of the loans had the necessary approval of Kaupþing’s Credit Committee. The Financial Supervisory Authority lodged a complaint with the Special Prosecutor who issued an indictment against the applicants – Mr Einarsson the chairman of Kaupþing Bank, Mr Sigurðsson the chief executive officer, Mr Ólafsson the majority owner of a company which indirectly owned another company which was Kaupþing’s largest shareholder and Mr Guðmundsson the chief executive of the bank’s Luxembourg subsidiary. After proceedings in the District Court and the Supreme Court, which ended in February 2015, Mr Ólafsson was found guilty of market manipulation while the others were convicted of that offence and of breach of trust. Three of them sought to have the proceedings reopened, but their applications were rejected by the Committee on Reopening Judicial Proceedings.

Relying on Article 6 §§ 1 and 3(b) and (d) of the Convention, the applicants alleged that in the criminal proceedings against them they had been denied full access to the file held by the prosecution, that insufficient efforts had been made to summon two key witnesses and that the Supreme Court had not been impartial on account of the positions held by family members of one of its judges. The applicants also complained that conversations with their lawyers had been intercepted and recorded in breach of domestic law and of Article 8 of the Convention.

Access to Evidence

The Court reiterated that the prosecution authorities should disclose to the defence all material evidence in their possession for or against the accused for equality of arms to prevail and for a fair trial. In this instance however, the prosecution was not in fact aware of what the contents of the mass of data were, and to that extent it did not hold any advantage over the defence, hence it was not a situation of withholding evidence or “non-disclosure.”

The Possibility to Question Witnesses

The Court relied on the principles set out in the recent Grand Chamber judgment of Murtazaliyeva v. Russia, which clarified the case-law established in Perna v. Italy wherein the Grand Chamber formulated the following three-pronged test:

1. whether the request to examine a witness was sufficiently reasoned and relevant to the subject matter of the accusation;
2. whether the domestic courts considered the relevance of that testimony and provided sufficient reasons for their decision not to examine a witness at trial;
3. whether the domestic courts’ decision not to examine a witness undermined the overall fairness of the proceedings.

Interception and Recording of Conversations with Applicants’ Lawyers

The Court assessed the question whether the applicants should have made use of a civil action for damages against the State. The domestic courts would be able to examine the lawfulness and necessity of the measure in question and, if appropriate, award compensation. The applicants have not contested the Government’s submission in that respect. In these circumstances, the applicants’ complaints under Article 8 of the Convention were rejected for non-exhaustion of domestic remedies in accordance with Article 35 §§ 1 and 4 of the Convention.

Impartiality

This complaint on the judge’s impartiality was deemed admissible as it resulted that the defence had never been officially notified that the same judge’s son had a consultancy agreement with the bank. Nor had the defence expressly stated that it had no objection to the judge taking part in the case despite the family link.

In its decision, the Court considered the tests of subjective impartiality concerning a judge’s personal interest, and the test of objective impartiality relating to whether a court or its composition provided sufficient guarantees of impartiality. The Court noted that the judge’s son had worked at Kaupþing from 2007. During the investigation into the applicants, and the trial and civil proceedings brought by the bank against two of the applicants, he was the head of the legal department of the Resolution Committee and the Winding-Up Committee, and while the applicants’ case was being dealt with by the Supreme Court he also held the position of a consultant to the bank. The family link was enough to create objectively justified fears about the Supreme Court judge’s impartiality in the applicants’ criminal appeal proceedings.

There had therefore been a violation of Article 6 § 1. Court held that the finding of a violation was sufficient just satisfaction for any non-pecuniary damage and awarded 2,000 Euros to each applicant in respect of costs and expenses.

Article by Dr Maria Attard.

For more information on Litigation & Alternative Dispute Resolution please contact Dr Ivan Gatt on igatt@gtgadvocates.com

Disclaimer: This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.