On June 18th, 2021, The Conseil d’Etat issued two judgements on two different sanctions resulting from CoRDiS' decisions (Conseil d’Etat June 18th, 2021, Lislet 2, n°422616; Conseil d’Etat June 18th, 2021, Société Vitol, n°425988).
These judgments, which are eagerly awaited, come in a context of intensification of the supervisory and investigative powers of the Commission for the Regulation of Energy (CRE).
The high administrative court verified that the CoRDiS’ sanctions complied with the principle of legality of criminal offences and penalties and the rights of the defence, but seemed to make a flexible interpretation.
1. Reminder of CoRDis' power of sanction
The CoRDiS has a power to impose sanctions (i) for any breach of the principles governing the energy sector and the rules defined by Regulation (EU) N° 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholescale energy market integrity and transparency ("REMIT Regulation") as well as (ii) in the event of non-compliance with a dispute settlement decision (Articles L. 134-25 et seq. of the Energy Code).
In this respect, CoRDS may impose (i) a temporary ban, for a period not exceeding one year, on access to networks, transmission and distribution facilities and energy transmission and storage installations, and in the event of breaches of the REMIT Regulation, on the exercise of all or part of the professional activities in question, or (ii) a financial penalty, the amount of which is proportionate to the seriousness of the breach, the situation of the party concerned, the extent of the damage and the benefits derived from it.
It is on these grounds that CoRDiS adopted the two decisions challenged before the Conseil d’Etat.
The first decision, issued on 11 June 2018, fined Enedis €3 million for not fully complying with a previous decision of the CoRDiS in a litigation regarding a public electricity distribution network access contract with the company Parc éolien Lislet 2.
The second decision, issued on 5 October 2013, sanctioned Vitol under the REMIT Regulation, imposing a fine of €5 million for market manipulation (article 5 of REMIT Regulation).
After clarifying the conditions for applying the principle of legality of criminal offences and penalties and the rights of the defence, the Conseil d'Etat modified the quantum of the fine imposed on Enedis but confirmed it imposed on Vitol, in two judgments dated 18 June 2021.
2. Framework of CoRDiS’ sanction power with regard to the principle of the legality of criminal offenses and penalties and the rights of the defence.
Independent administrative authorities must exercise their power in compliance with constitutionally guaranteed rights and freedoms, such as ‘the principle of the legality of criminal offenses and penalties and the rights of the defence, which are applied to any sanction resulting in a punishment, even if the legislator gave a sanctioning competence to a non-jurisdictional entity: independence and impartiality principles deriving from Article 16 of the Declaration of 1789 should also be applied’ (Conseil Constitutionnel, Decision n°2013-331 QPC dated 5 July 2013, Sociétés Numéricâble SAS et NC Numéricâble ; see also Conseil Constitutionnel, Decision n°88-248 dated 17 January 1989, Loi modifiant la loi n° 86-1067 du 30 septembre 1986 relative à la liberté de communication).
Therefore, the CoRDiS has to use its power of sanction in compliance with these principles of constitutional value.
The Conseil d’Etat expressly pointed this out by reaffirming its role in the control of the principle of the legality of criminal offenses and penalties (2.1), but limiting the application of the rights of the defence (2.2).
2.1. Control compliance with the principle of the legality of criminal offenses and penalties
The fundamental principle of legality of criminal offenses and penalties requires that the sanction should be prescribed by a text predating the commission of the offence. This requirement guaranteed by Article 8 of the Declaration of the Rights of Man and of the Citizen of 26 August 1789 and Article 6 of the European Convention for the Protection of Human Rights and Fundamental Freedoms applies also to administrative sanction, as the the Conseil d’Etat already ruled in previous cases (see Conseil d'État, Assemblée, December 3rd, 1999, n° 207434 ; Conseil d'État, October 12th, 2009, n° 311641).
The Conseil d’Etat confirms its control of the application of this principle in its Lislet 2 judgment. Indeed, it examined the Enedis' argument based on infringement of the principle of the legality of criminal offences and penalties, but dismissed, in this case, its violation.
According to the public rapporteur, this review consists of a 'concrete' examination of the grounds for the contested decision.
In particular, the sanction decision provided that it was to be published in the Official Journal and on the CRE website. Enedis, followed by the public rapporteur, argued that the publication of the decision on the CRE website infringed the principle of legality of criminal offences and penalties since it was not required by Article L. 134-34 of the Energy Code. The public rapporteur, in his conclusions, added that the publication of the Conseil d’Etat’s decision must be published ‘under the same conditions as the contested decision, i.e., both in the JORF and on the CRE's website’ in order to respect ‘equivalent publicity’.
However, the high administrative court did not follow this argument of strict application of the principle of legality of criminal offences and penalties. The Conseil d’Etat dismissed its violation as the CoRDiS had ‘ordered the publication of the contested decision in the Official Journal’ pursuant to Article L. 134-34 of the Energy Code, regardless of whether it had also ordered its publication on the CRE's website.
2.2. Temporal limitation to rights of the defence's application
Under Vitol decision, the Conseil d’Etat transposed the solution it had already adopted in a previous decision concerning a sanction imposed by the Financial Markets Authority’s Sanctions Committee (Conseil d'État, May 15th, 2013, Société Alternative Leaders France, n° 356054).
Without any adaptation to the specific sanction procedure of the CoRDiS, the administrative judge states the rights of the defence ‘only apply to the sanction proceeding, which is open by the notification of grievances provided by article R. 134-32 of Energy Code and by the file transmission to the CoRDiS President. This principle does not apply to the pre-investigation phase led by the Commission for the Regulation of Energy's agents, nor to the procedure led by the Committee member designated by article R. 134-30 in order to appraise the merits of such a notification of grievances. These phases must be led in conditions which prevent irrevocable harm to the respect of this principle for the continued procedure’.
Prior to the notification of grievances, the Conseil d’Etat considered that there was no irremediable infringement of the rights of defence, even though the defendant had not been:
- informed by the CRE's President of the referral to the CoRDiS including the minutes and the company’s observations, since no text provides for this information;
- invited by the designated member of CoRDiS to present its before the notification of grievances was sent, since that it was given the opportunity to do so after the sending of this notification;
- heard by the designated member of CoRDiS, since this possibility is an option at the discretion of that member; and,
- informed by the designated member of the amount of the sanction he intended to propose to the CoRDiS, since article R. 134-32 of the Energy Code and article 14 of CoRDiS's bylaws only require to communicate the nature of the sanction.
Similarly, the fact that the designated member of CoRDiS did not have all the documents in the file does not constitute an irremediable infringement of the rights of defence, since Article R. 134-29 of the Energy Code does not require the CRE President to provide CoRDiS with all the data collected during the preliminary investigation phase, but only those which, in his opinion, justify its referral. The designated member may, if he considers it necessary, request the communication of additional documents likely to contribute to his information.
After the notification of grievances, the rights of defence were not infringed either, since the applicant company had access to the documents sent to CoRDIS and was therefore able to organise its defence in sufficient time.
Finally, the Conseil d’Etat refuted the applicant's argument calling into question the impartiality of CoRDiS because its President is the vice-president of the Conseil d’Etat. In this respect, the Conseil d'Etat stated the principle according to which no member of an administrative court may take part in the judgment of an appeal relating to a decision in the preparation of which he or she has taken part, but considered that, since the procedure for referring cases to CoRDiS is the responsibility of the CRE President, the separation between the prosecuting authority and the sanctioning authority is ensured, regardless of whether the President of the sanctioning authority is the vice-president of the jurisdiction.
With regards to the first sanction decisions released by the CoRDiS, the Lislet 2 and Vitol judgments provide a minimal framework for the exercise of CoRDIS's power to impose sanctions. However, the financial stakes of the monetary penalties imposed on the companies prosecuted in this type of procedure justify an even stricter application of the principle of legality of criminal offences and penalties and the rights of defence.
The appeal lodged with the Conseil d'Etat against the CoRDiS's decision to impose a fine of 1 million euros on BP Gas Marketing Limited on the basis of the REMIT regulation will help, if necessary, to clarify the scope of the CoRDiS's power to impose sanctions.