Friday, June 17, 2011

The Right to Remain Silent

Here's another brain teaser: Does the (Dutch) right to remain silent enjoyed by the employees of companies under competition law investigation extend to former employees as well? Here are the steps of the problem:

Under art. 53 of the Dutch competition law, the right to remain silent of art. 6 ECHR extends to companies under competition law investigation as well.

Since companies obviously cannot speak for themselves, this right would be meaningless unless it includes a right to remain silent for "those who speak on behalf of the company", even if they themselves are not under investigation. Let's leave to one side for the moment the question of whether they would have a fiduciary duty under company law to exercise that right.

The next question concerns the circle of people who are covered by this right. At the very least, it has to include those who are the legal representatives of the company under the relevant provisions of company law, i.e. the company board. However, in the 2003 case of Texaco v. NMa, the Rotterdam court extended the right to remain silent to all employees, on the grounds that they all operate "on the side of the company". (Apologies for the translation, but in this case a literal translation is probably preferable. The Dutch is "aan de zijde van de onderneming".)

Based on that precedent, the plaintiff in the new case of X v. NMa argued that the normal rule for a derived right to remain silent should apply: even after the relationship which gave rise to said right has ended, the right still applies for matters the person learned while the relationship existed, as a result of the relationship, etc. Doctors, lawyers and spouses cannot violate (or cannot be obligated to violate) the privacy of their former client or spouse even after the relationship is over. The Court, however, says "no dice". That would be one step too far. Former employees cannot be said to be speaking on behalf of the company by any stretch of the imagination.

There is no question that it would have been preposterous if the judgement had gone the other way. However, that does not mean that the line has now been drawn in the correct place, either as a matter of statutory interpretation or as a matter of policy. Starting with the latter, it is interesting to note that the European Court of Justice, in Orkem v. Commission (1989), declined to read a full right to remain silent into the procedural rules of European Competition Law:

29 In general, the laws of the Member States grant the right not to give evidence against oneself only to a natural person charged with an offence in criminal proceedings . A comparative analysis of national law does not therefore indicate the existence of such a principle, common to the laws of the Member States, which may be relied upon by legal persons in relation to infringements in the economic sphere, in particular infringements of competition law.
35 [However], the Commission may not compel an undertaking to provide it with answers which might involve an admission on its part of the existence of an infringement which it is incumbent upon the Commission to prove.

For this reason, there is no right to remain silent codified in Regulation 1/2003 or Commission Regulation 773/2004. Instead, the Orkem rule governs.

This seems reasonable. It is difficult to see the moral case for an absolute right of silence when the person who is asked to speak is not the one who is at risk of being punished. To be sure, we shouldn't make life too easy for the Competition Authority, but the Orkem rule seems to strike the balance about right. For the specific problem of this post, the Orkem rule seems to mean that there is no right to remain silent for ordinary employees or ex-employees, since they are hardly in a position to admit "the existence of an infringement". (I couldn't find any ECJ case law on point, though.)

For the Dutch case law, this means that the jurisprudence went off the rails at the earlier stage of the Texaco ruling. In that case, the court should have preferred the narrower reading of the statute, rather than the broader one. The Texaco court said with so many words that the narrow reading was not compelled by either the text or the history of art. 53 Competition Act, which suggests that it felt that the broad reading was not compelled either. Instead of avoiding the issue, which it could have done given that the Texaco case concerned a franchisor who was asked to testify against its franchisees, the Texaco court applied the reading it preferred without properly considering the consequences.

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