THIRD SECTION
CASE OF BJARKI H. DIEGO v. ICELAND
(Application no. 30965/17)
 
JUDGMENT
 
Art 6 § 1 (criminal) • Impartial and independent tribunal • Conviction of applicant, director within a bank, of bank-collapse related offences • Losses sustained in that and another bank’s collapse by one of the five judges on the Supreme Court’s panel, not sufficient to raise doubts as to his objective impartiality
Art 6 § 1 (criminal) and Art 6 § 3 (a) and (c) • Fair hearing • Existence of a “criminal charge” against the applicant at the time of his questioning as a witness by virtue of him already being considered a suspect • Failure to inform applicant of charges against him and provide him with legal assistance during that interview in relation, inter alia, to the investigation ultimately resulting in his indictment and conviction • Overall fairness of criminal proceedings irretrievably prejudiced

 
STRASBOURG
15 March 2022
 
FINAL
 
15/06/2022
 
This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Bjarki H. Diego v. Iceland,
The European Court of Human Rights (Third Section), sitting as a Chamber composed of:
 Georges Ravarani, President,
 Robert Spano,
 María Elósegui,
 Darian Pavli,
 Peeter Roosma,
 Andreas Zünd,
 Frédéric Krenc, judges,
and Milan Blaško, Section Registrar,
Having regard to:
the application (no. 30965/17) against the Republic of Iceland lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by an Icelandic national, Mr Bjarki H. Diego (“the applicant”), on 5 April 2017;
the decision to give notice to the Icelandic Government (“the Government”) of the complaints concerning the lack of an independent and impartial tribunal and the manner in which the applicant was interviewed during the investigation, and to declare the remainder of the application inadmissible;
the parties’ observations;
Having deliberated in private on 22 February 2022,
Delivers the following judgment, which was adopted on that date:
INTRODUCTION
1. The case concerns the applicant’s complaint that his indictment and conviction for financial offences following the financial crisis of 2008 entailed a violation of his right to a fair trial. THE FACTS
2. The applicant was born in 1968 and lives in Reykjavik. He was represented before the Court by Mr Þórir Júlíusson, a lawyer practising in Reykjavik. 3. The Government were represented by their Agent, Mr Einar Karl Hallvarðsson, State Attorney General. 4. The facts of the case, as submitted by the parties, may be summarised as follows. Background to the case
5. In the autumn of 2008, the global liquidity crisis affected the Icelandic banking sector. From 7 to 9 October 2008 the Financial Supervisory Authority (Fjármálaeftirlitið) appointed a resolution committee for each of the three largest Icelandic banks, which took over the banks’ operations. The collapse of each of the banks had major effects on the other banks left standing. One of the banks that failed was Kaupþing Bank hf. (hereinafter “Kaupþing”), which collapsed on 9 October 2008. Following these events, the office of a Special Prosecutor (hereinafter “the Special Prosecutor”) was established. 6. The applicant, who is a lawyer licensed to practise before the Supreme Court of Iceland, held the positions of director of the loan division and member of the group credit committee of Kaupþing until the bank’s collapse. Criminal proceedings against the applicant
7. By a letter of 1 October 2009, the Financial Supervisory Authority sent a complaint to the Special Prosecutor regarding alleged market manipulation of shares in Kaupþing between June 2005 and October 2008. Several investigations were subsequently launched into the trading practices of Kaupþing, during which twelve of its former employees were investigated for alleged violations of the Act on Securities Transactions in relation to several individual transactions and trading practices by Kaupþing prior to its collapse. The applicant was among those investigated. 8. In connection with the investigation of those cases, the Vesturland District Court granted the Special Prosecutor several warrants to tap all telephone calls made to and from the telephone numbers registered to or used by the applicant. In his initial request dated 9 March 2010, the Special Prosecutor cited four substantial investigations relating to Kaupþing’s activities prior to its collapse: the “Al Thani”, “Holt”, “CLN” and “Desulo” investigations. The Special Prosecutor stated that “there is suspicion that [the applicant] took part in decisions concerning allegedly criminal conduct in connection with [Kaupþing’s] activities”. That assertion was mirrored in a subsequent Vesturland District Court ruling granting a warrant to tap telephone calls, and in the Special Prosecutor’s subsequent requests to continue the telephone tapping. On the basis of those warrants, the applicant’s telephones were tapped from 9 March to May 2010. Reports on the progress of the telephone tapping refer to the subjects of the tapping, including the applicant, as “suspects” (sakborningar) and refer to, inter alia, the applicant’s conversations with others during which Desulo Trading Ltd., Mata Investment Company Ltd. and Holt Investment Group Ltd. were mentioned. 9. On 19 April 2010 the applicant was questioned in relation to the Al Thani investigation. He was ultimately not prosecuted in that case. 10. On 14 May 2010 the applicant was questioned in relation to the Holt investigation, one of the investigations referred to by the Special Prosecutor in his application for a warrant. The applicant was questioned as a witness and, as such, was notified of his obligation to testify truthfully and his right not to incriminate himself (see paragraph 21 below). He was informed that the investigation concerned suspicions of criminal behaviour on the part of the directors and employees of Kaupþing in connection with stock purchases by Holt Investment Group Ltd. and that the allegedly criminal behaviour might concern violations of the financial crimes chapter of the General Penal Code, the market manipulation provisions of the Act on Securities Transactions, the Act on Public Limited Companies and the Act on Financial Undertakings. He was not accompanied by a legal representative during the interview, nor does it appear that he was given any notification as to the right to have such a representative present. 11. On 12 November 2011 the applicant was again questioned in relation to the Holt investigation, this time as a suspect. He was accompanied by his chosen defence counsel and was notified of his right to remain silent and his obligation to testify truthfully, should he choose to answer questions. On 17 November 2011 the applicant was again questioned as a suspect. 12. On 15 March 2013 the applicant was indicted, along with several others. He was charged with seven counts of fraud committed through abuse of position (umboðssvik). Three counts concerned allegations of loans improperly granted to Holt Investment Group Ltd. Four counts concerned allegations of loans improperly granted to Desulo Trading Ltd. In both instances, the applicant was accused of having taken part in decisions to grant the companies in question loans from the bank, in disregard of the bank’s own rules and without properly ensuring the bank’s interests. 13. During the course of the subsequent proceedings before the Reykjavik District Court, the applicant submitted two requests to have the case against him dismissed, referring to the telephone tapping and the submission into evidence of transcripts of phone calls between him and two named lawyers. Both requests were dismissed by the District Court and again on appeal to the Supreme Court on the basis that the lawyers in question had not been the applicant’s defence counsel and that the submission of the transcripts had therefore not violated his right to a fair trial. 14. By a judgment of 26 June 2015 the Reykjavik District Court convicted the applicant on six counts of fraud through abuse of position, but acquitted him on one of the counts concerning Holt Investment Group Ltd. He was sentenced to two and a half years’ imprisonment. 15. The applicant appealed against his conviction by way of an appeal to the Supreme Court of Iceland lodged by the Director of Public Prosecutions at his request. 16. Before the Supreme Court, the applicant submitted that the case against him should be dismissed because he had been questioned as a witness on 14 May 2010 while actually being considered a suspect in the case. 17. By a judgment of 6 October 2016 the Supreme Court partly overturned the Reykjavik District Court’s judgment and convicted the applicant on all seven counts of fraud through abuse of position. The Supreme Court upheld the sentence imposed by the District Court. EMERGENCE of new information
18. On 5 December 2016 confidential information regarding the financial interests of the judges of the Supreme Court came to light in the media (see Sigríður Elín Sigfúsdóttir v. Iceland, no. 41382/17, §§ 13-14, 25 February 2020). A series of news reports on television, in newspapers and on the Internet disclosed that some of the judges had owned shares in the Icelandic banks before their collapse in 2008. The reports stated that the shareholdings had, at least in some cases, not been disclosed to the Committee on Judicial Functions (nefnd um dómarastörf). As a result of the news coverage, discussions arose about possible conflicts of interest of the judges on account of their investments in Icelandic stocks and funds, and whether the judges in question had adjudicated cases concerning the events leading up to the collapse of the banks despite such possible conflicts of interest. The applicant submitted that this was the first time he had learned about the shareholdings of a judge who had adjudicated in his case, namely Justice V.M.M. 19. It transpired from the news coverage and information later provided by the Committee on Judicial Functions that Justice V.M.M. had owned shares in Kaupþing and another bank, Landsbanki Islands hf. (hereinafter “Landsbanki”) before they went bankrupt. In October 2008 Justice V.M.M. had owned thirty-six shares in Kaupþing with a nominal value of 360 Icelandic krónur (ISK – approximately 2 euros (EUR) at the time of the bank’s collapse). The documents submitted indicate that their real value was approximately EUR 140 at the time (thirty-six shares with a closing price of ISK 654 per share on 3 October 2008, amounting to a total value of ISK 23,544). Furthermore, Justice V.M.M. had acquired shares in Landsbanki with a total nominal value of ISK 428,075 from 8 March to 26 September 2007. The purchase price was ISK 14,753,256, but on 3 October 2008 the shares had been valued at ISK 8,518,692 (approximately EUR 62,860). Those shares were lost when Landsbanki collapsed on 8 October 2008. Justice V.M.M. was appointed to the Supreme Court in September 2010. RELEVANT LEGAL FRAMEWORK
20. Article 70 of the Constitution of the Republic of Iceland provides that in the determination of his or her rights and obligations or of a criminal charge against him or her, everyone is entitled, following a fair trial and within a reasonable time, to a decision by an independent and impartial court of law. 21. The relevant provisions of the Criminal Procedure Act (lög um meðferð sakamála) read as follows:
Section 6
“(1) A judge, including a lay judge, shall be disqualified from sitting as judge in a case where:
...
g. there are other circumstances or conditions that may justifiably raise questions about his or her impartiality.
...”
Section 116
“(1) Anyone who has reached 15 years of age, is subject to Icelandic jurisdiction and is neither the accused nor her or his representative is obliged to appear in court as a witness to answer questions regarding the facts of a case.
...”
Section 118
“(1) A witness is entitled not to answer a question if the answer could be expected to involve a confession or an indication that the witness has committed a criminal offence, or aspects which would damage the witness’s moral repute or cause the witness substantial financial loss. The same applies if an answer could be expected to have the same consequences for someone connected to the witness, as referred to in the first and second subsections of section 117.
...”
Section 122
“(1) When a witness appears before a court, the judge shall first request that the witness indicate his or her name and identity number and then determine, if necessary, whether he or she should or is obliged to testify. ... The judge shall then solemnly remind the witness of his or her obligation to answer truthfully and accurately, omitting nothing, and shall draw the attention of the witness to the criminal and moral responsibility arising from deliberate or negligent false testimony, and the fact that he or she may be required to affirm the testimony by an oath or solemn affirmation.”
22. The relevant sections of the Judiciary Act and the Rules on Additional Functions of District Court and Supreme Court Justices and their Ownership in Companies and Enterprises, as in force at the material time, are set out in detail in Sigríður Elín Sigfúsdóttir (cited above, §§ 25-27). THE LAW
ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION
23. The applicant complained that the participation of Justice V.M.M. in his case constituted a violation of his right to a fair trial by an independent and impartial tribunal as provided in Article 6 § 1 of the Convention, which, in so far as relevant, reads as follows:
“In the determination of ... any criminal charge against him, everyone is entitled to a fair ... hearing ... by an independent and impartial tribunal ...”
Admissibility
24. The Government submitted that the complaint was inadmissible as manifestly ill-founded. 25. The applicant disagreed. 26. The Court finds that this complaint is not manifestly ill-founded. It must therefore be declared admissible. MeritsThe parties’ submissions

27. The applicant contended that he had had an objective fear that Justice V.M.M. lacked the requisite impartiality to hear his case on account of his holdings in Kaupþing, combined with his substantial holdings in Landsbanki. In that connection, the applicant submitted that all three of the major Icelandic banks had collapsed within a three-day period in a series of events which had been publicly regarded as a collective collapse of the banks; the Supreme Court itself had referred in many of its judgments to the collapse of the banks in autumn 2008, without any distinction between the banks. The applicant argued that Justice V.M.M.’s financial holdings, which had led the Court to find a violation on account of a lack of impartiality in Sigríður Elín Sigfúsdóttir (cited above), should therefore likewise have been considered to render him insufficiently impartial to sit on the bench in the applicant’s case. 28. The Government submitted that the applicant could not have objectively harboured doubts as to Justice V.M.M.’s impartiality in respect of his case, as the latter’s financial interests in Kaupþing had been minimal – they had not reached the ISK 3,000,000 threshold for his holdings to have been subject to the approval of the Committee on Judicial Functions – and in any event they had predated his appointment to the Supreme Court. The Government further contended that Justice V.M.M.’s holdings in other banks or related losses could not have had a bearing on the assessment of his impartiality concerning Kaupþing, as those financial interests had not been directly related to the subject matter of the applicant’s case.

Outcome for Article 6: no_violation