62024CJ0562_RES
Case C‑562/24 [Munik] (
i
)
S.H. d.o.o.andM.A. d.o.o.
(Request for a preliminary ruling from the Okrožno sodišče v Kopru)
Judgment of the Court (Fifth Chamber) of 29 January 2026
(Reference for a preliminary ruling – Judicial cooperation in criminal matters – Mutual recognition of confiscation orders – Framework Decision 2006/783/JHA – Article 8(2)(d) – Reason for non-recognition or non-execution – Rights of interested parties – Bona fide third parties – Mortgage creditor – Immovable property constituting the proceeds of the offence – Procedure for recognition and execution of a confiscation order – Judgment mortgage registered before the adoption of that order)
Judicial cooperation in criminal matters – Application of the principle of mutual recognition to confiscation orders – Framework Decision 2006/783 – Reasons for non-recognition or non-execution – Scope – Fundamental rights – Right to property – Refusal of the judicial authority of the executing Member State to recognise and execute a confiscation order issued in another Member State in respect of an immovable property which constitutes the proceeds of a criminal offence – Whether permissible – Condition – Rights of a mortgage creditor with the status of a bona fide third party making it impossible to execute that order – Judgment mortgage registered by the creditor against that property before the proceedings for recognition and execution of the confiscation order – Review of the status of a bona fide third party by the referring court
(Charter of Fundamental Rights of the European Union, Art. 17; European Parliament and Council Directive 2014/42, recitals 24 and 33 and Arts 2(1) and (2), and 6; Council Framework Decisions 2005/212, recital 3, and 2006/783, recitals 1 and 8 and Arts 1, 7, 8(2)(d) and 9(1))
(see paragraphs 31-51, 55, operative part)
Résumé
Ruling on a request for a preliminary ruling from the Okrožno sodišče v Kopru (District Court, Koper, Slovenia), the Court of Justice provides clarification on the reason, laid down in Article 8(2)(d) of Framework Decision 2006/783, (
1
) by which the competent judicial authority of the executing Member State may refuse to recognise and execute a confiscation order if ‘the rights of any interested party, including bona fide third parties’, make it impossible, under the law of that Member State, to execute that order.
S.H., a company governed by Croatian law, and two Italian nationals, were convicted in Italy by final judgment in respect of the charges of participating in a criminal organisation, serious fraud and money laundering, misleading persons by promising them to invest their money in the Forex platform, whereas in actual fact they used the money for private purposes, in particular in respect of the acquisition of various immovable properties situated in Italy, Slovenia and Croatia.
In October 2018 and February 2019, the company M.A. registered, in the context of enforcement proceedings conducted in the Republic of Slovenia against S.H., two judgment mortgages on an immovable property owned by that company, situated in Plavje (Slovenia), for the purpose of securing two claims. By judgment delivered in March 2019 (‘the confiscation order’), an Italian court ordered the confiscation of the immovable properties constituting the proceeds from the criminal offences in respect of which S.H had been convicted, including an immovable property in Koper (Slovenia) and an immovable property situated in Plavje. That confiscation order was forwarded to the competent Slovenian authorities for the purposes of its recognition and execution. On that basis, a freezing order together with a prohibition on the sale of the properties and subjecting those properties to new charges was entered, during the criminal proceedings pending in Italy, in the land register of the Republic of Slovenia in favour of that Member State.
In addition to those proceedings, in December 2020, S.H. was declared insolvent by a Croatian court. Furthermore, at the request of M.A., in April 2019, a second insolvency proceedings was initiated against S.H. in the Republic of Slovenia before the Okrožno sodišče v Kopru (District Court, Koper), which is the referring court. M.A. argued that the immovable properties which had been entered in the land register as owned by S.H. had to form part of that estate. In that context, M.A. declared its preferential right, whereas the Republic of Slovenia, in turn, did not declare its claim arising from the entry of the freezing order in the land register.
In November 2022, the investigating judge in Koper ordered the recognition and execution of the confiscation order, which led to the entry in the land register of the ownership of the immovable properties in Koper and Plavje in favour of the Republic of Slovenia. Both the liquidator of S.H., and M.A. brought an appeal against that order before the referring court.
That court dismissed those actions, holding that the fact that M.A. had registered judgment mortgages against the immovable property situated in Plavje, of which S.H. is the owner, before the prohibition on the sale of that property and subjecting that property to new charges had been entered in favour of the Republic of Slovenia in the land register, had no effect on the lawfulness of the order recognising and executing the confiscation order. Following that decision, the Ustavno sodišče (Constitutional Court, Slovenia), hearing a constitutional complaint brought by M.A., set aside the decision and referred the case back to the referring court, taking the view that the Court had not yet been called upon to clarify the circumstances in which mortgage creditors may be regarded as ‘bona fide third parties’.
In those circumstances, the referring court is uncertain, in essence, whether Article 8(2)(d) of Framework Decision 2006/783, read in the light of Article 17(1) of the Charter of Fundamental Rights of the European Union (‘the Charter’), must be interpreted as meaning that the competent judicial authority of the executing Member State may refuse to recognise and execute a confiscation order issued in another Member State in respect of an immovable property which constitutes the ‘proceeds’ of a criminal offence, as defined in Article 2(e), of that framework decision, for the reason that the rights of a mortgage creditor make it impossible, on account of his or her status as a ‘bona fide third [party]’, within the meaning of Article 8(2)(d), to execute that order, where that creditor has registered a judgment mortgage against that immovable property in the executing Member State before the proceedings for recognition and execution of that order were brought in that Member State.
Findings of the Court
In order to answer the question referred for a preliminary ruling, the Court states that it is necessary to establish the scope of the concept of ‘bona fide third parties’ referred to in Article 8(2)(d) of Framework Decision 2006/783. In the first place, it states in that regard that it is clear from the wording of that article, read in conjunction with that of Article 9(1) of Framework Decision 2006/783, that the persons whose rights are liable to prevent the recognition and execution of a confiscation order, within the meaning of the first of those provisions, correspond to those who must have an effective remedy to challenge such an order, in accordance with the second of those provisions. According to settled case-law, those persons include, in addition to those convicted of a criminal offence, third parties whose property is affected or concerned by a confiscation order.
In the second place, the Court notes that Framework Decision 2006/783 is closely linked to the common minimum rules on confiscation orders set out, inter alia, in Directive 2014/42. (
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) It is clear from the provisions of that directive that confiscation of the proceeds of an offence which has been transferred to a third party or acquired by such a third party may be prevented only if it is established that that third party was not aware of the fact that the purpose of that transfer or acquisition was, for the suspected or accused person, to avoid confiscation. Consequently, a mortgage creditor may be regarded as an ‘interested party’ having the status of a ‘bona fide third [party]’, within the meaning of Article 8(2)(d) of Framework Decision 2006/783, the rights of which may be affected by a confiscation order relating to an immovable property constituting the proceeds of a criminal offence, where that creditor has registered a judgment mortgage against that property before the adoption of that order and, therefore, before the proceedings for recognition of that order were brought. The Court adds that it must be demonstrated that that third party did not know or could not know that the purpose of that judgment mortgage was, for the suspected or accused person, to avoid confiscation by the transfer of a right in rem in respect of that property to that third party.
Lastly, the Court points out that that interpretation is entirely consistent with the objectives pursued by Framework Decision 2006/783, in particular the principle of mutual recognition. In that regard, it states that that principle must be reconciled with the respect for fundamental rights. In that context, in order to strike a fair balance between the principle of mutual recognition and respect for the right to property enshrined in Article 17 of the Charter, Article 8(2)(d) of Framework Decision 2006/783 seeks to ensure the protection of the rights of bona fide interested third parties.
The Court concludes that, under Article 8(2)(d) of Framework Decision 2006/783, read in the light of Article 17(1) of the Charter, the competent judicial authority of the executing Member State may refuse to recognise and execute a confiscation order issued in another Member State in respect of an immovable property which constitutes the ‘proceeds’ of a criminal offence, as defined in Article 2(e) of that framework decision, for the reason that the rights of a mortgage creditor make it impossible, on account of his or her status as a ‘bona fide third [party]’, within the meaning of Article 8(2)(d), to execute that order, where that creditor has registered a judgment mortgage against that immovable property in the executing Member State before the proceedings for recognition and execution of that order were brought in that Member State, it being understood that it is for the referring court to ascertain whether that creditor may be regarded as ‘bona fide’, within the meaning of that provision, taking into account all the circumstances surrounding the issue, in the executing Member State, of the enforcement order that gives rise to the mortgage claim.
(
i
)	The name of the present case is a fictitious name. It does not correspond to the real name of any of the parties to the proceedings.
(
1
)	Council Framework Decision 2006/783/JHA of 6 October 2006 on the application of the principle of mutual recognition to confiscation orders (OJ 2006 L 328, p. 59).
(
2
)	Directive 2014/42/EU of the European Parliament and of the Council of 3 April 2014 on the freezing and confiscation of instrumentalities and proceeds of crime in the European Union (OJ 2014 L 127, p. 39).