The CJEU interprets the ne bis in idem principle and defines criteria to determine whether a penalty is criminal in nature.
In 2005 Mr Bonda made an application to the District Office of the Agricultural Restructuring and Modernisation Agency (the Office) for a single area payment for 2005. In connection with that application, he submitted an incorrect declaration of the extent of agricultural land cultivated and the crops grown on that land, overstating the area used for agriculture by giving a figure of 212.78 hectares instead of 113.49 hectares.
On 25 June 2006 the director of the Office, on the basis of Article 138(1) of Regulation (EC) No 1973/2004, adopted a decision refusing Mr Bonda the single area payment for 2005 and imposing a penalty on him consisting in the loss of entitlement to the single area payment, up to the amount of the difference between the real area and the area declared, for the three years following the year in which the incorrect declaration had been made.
By judgment of 14 July 2009, the District Court, Goleniów convicted Mr Bonda of subsidy fraud in accordance with the Criminal Code, on the ground that, for the purpose of obtaining subsidies, he had made a false declaration concerning facts of essential importance for obtaining a single area payment. On that basis Mr Bonda was sentenced to eight months’ imprisonment suspended for two years and a fine of 80 daily rates of PLN 20 each.
Mr Bonda appealed against that judgement to the Regional Court Szczecin becasue an administrative penalty had already been imposed on Mr Bonda for the same act.
The preliminary reference by the Regional Court Szczecin raised the question what the legal nature of the penalty provided for in Article 138 of Regulation No 1973/2004 which consists in refusing a farmer direct payments in the years following the year in which he submitted an incorrect statement as to the size of the area forming the basis for the single area payment. Consequently, it must be determined whether the proceedings brought by the Office may be regarded as criminal within the meaning of the provision on the national Criminal Procedure Code.
The Court noted that the ne bis in idem principle can be applied only if the measures provided for in Article 138 (1) may be classified as criminal penalties. In order to determine if the penalty is criminal in its nature, three criteria are relevant: The first criterion is the legal classification of the offence under national law, the second is the very nature of the offence, and the third is the nature and degree of severity of the penalty that the person concerned is liable to incur (see, inter alia, ECtHR, Engel and Others v. the Netherlands).
As regards the first criterion, it must be observed that the measures provided for in Article 138(1) of Regulation No 1973/2004 are not regarded as criminal in nature by European Union law, which must in the present case be equated to ‘national law’ within the meaning of the case‑law of the European Court of Human Rights.
As regards the second criterion, it must be ascertained whether the purpose of the penalty imposed on the farmer is punitive. In the present case, the measures provided for in the second and third subparagraphs of Article 138(1) of Regulation No 1973/2004 are to apply only to economic operators who have recourse to the aid scheme set up by that regulation. Moreover, the purpose of those measures is not punitive, but is essentially to protect the management of European Union funds by temporarily excluding a recipient who has made incorrect statements in his application for aid. Further, if the farmer does not apply or ease to be eligible for aid, the penalty which may be imposed on him under Article 138(1) of Regulation No 1973/2004 becomes ineffective, which also points against a punitive nature of those measures.
As regards the third criterion, it should be noted that the sole effect of the penalties provided for in the second and third subparagraphs of Article 138(1) of Regulation No 1973/2004 is to deprive the farmer in question of the prospect of obtaining aid. Accordingly, the nature and severity of the penalty does not render it criminal in nature.
Thus, the judgment states that the measures provided for in the second and third subparagraphs of that provision, consisting in excluding a farmer from receiving aid for the year in which he made a false declaration of the eligible area and reducing the aid he can claim within the following three calendar years by an amount corresponding to the difference between the area declared and the area determined, do not constitute criminal penalties.