FIRST SECTION
CASE OF GEORGOULEAS AND NESTORAS v. GREECE
(Applications nos. 44612/13 and 45831/13)
 
JUDGMENT
 
Art 7 • Nullum crimen sine lege • Administrative fines imposed for market manipulation contrary to the stock exchange law • Article 7 applicable • Requirement of “foreseeability” as concerns an offence defined as the dissemination “in any way” of false or inaccurate information • Legislator wishing to include as many ways of committing the offence as possible and domestic courts’ interpretation compatible with the very essence of the offence and foreseeable, notwithstanding the doctrinal interpretation of the law • Precedents available beforehand in first-instance courts judgements and subsequent change in the case-law only after the commission of offence • Special care expected from the professionals in the field • Sufficient precision of the relevant provisions at the material time, with no relevance of subsequent rewording of law in a more detailed manner as a result of the transposition of an EU directive
 
STRASBOURG
28 May 2020
 
FINAL
 
28/08/2020
 
This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision. In the case of Georgouleas and Nestoras v. Greece,
The European Court of Human Rights (First Section), sitting as a Chamber composed of:
 Ksenija Turković, President,
 Linos-Alexandre Sicilianos,
 Aleš Pejchal,
 Armen Harutyunyan,
 Pere Pastor Vilanova,
 Tim Eicke,
 Raffaele Sabato, judges,
and Abel Campos, Section Registrar,
Having regard to:
the applications (nos. 44612/13 and 45831/13) against the Hellenic Republic lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by two Greek nationals, Mr Ilias Georgouleas and Mr Spyridon Nestoras (“the applicants”), on 6 July 2013 and 12 July 2013 respectively;
the decision to give notice to the Greek Government (“the Government”) of the complaint under Article 7 of the Convention;
the parties’ observations;
Having deliberated in private on 28 April 2020,
Delivers the following judgment, which was adopted on that date:
INTRODUCTION
1. The applications concern the imposition on the applicants of fines in 2007 by the Hellenic Capital Market Commission for disseminating false or inaccurate information concerning the value of securities, which could affect their price through entering into certain transactions. They complained that the sanctions imposed on them fell under criminal law but were not foreseeable, as required by Article 7 of the Convention. THE FACTS
2. The first applicant was born in 1965 and lives in Athens. The second applicant was born in 1974 and lives in Piraeus. They were represented by Mr I. Ktistakis, a lawyer practising in Athens. 3. The Government were represented by their Agent’s delegate, Mrs G. Papadaki, Advisor at the State Legal Council. 4. The facts of the case, as submitted by the parties, may be summarised as follows. 5. The Hellenic Capital Market Commission (“the Commission”) is an independent administrative body empowered to supervise compliance with stock exchange legislation. It decided to investigate trading in the shares of the D.K. company, listed on the Athens stock market, which had been conducted during the periods from 1 January to 17 July 2003, 18 July to 26 September 2003, 29 September 2003 to 19 March 2004, and 7 September to 22 October 2004. 6. The Commission concluded that there was evidence that individuals linked to a limited liability company, “G.” (“the company”), had entered into transactions organized for the purpose (“κατάρτιση μεθοδευμένων συναλλαγών”) of artificially determining the value and marketability of the shares of the company D.K., with the consequence of disseminating inaccurate and misleading information within the public of investors. Based on the volume of the transactions, on the time when they had occurred and on the identity of the persons who had entered into them, the Commission concluded that the transactions had had an artificial effect on the price and marketability of the company’s securities during the periods in which their price had risen, that is to say from 1 January to 17 July 2003 and from 10 October 2003 to 28 April 2004. 7. The Commission also concluded that the first applicant, the majority shareholder, president and chief executive officer of the company, acting as a coordinator in collaboration with the second applicant, an employee in that company, had participated in the manipulation of the price and marketability of D.K.’s shares. They had entered into transactions on their own behalf, but also on behalf of clients of the company. More specifically, they had:
a) pre-arranged trading: (i) by conducting, on their own behalf and on behalf of clients of the company, purchases and sales through the same or several stockbroker companies, mostly having as counterparties people participating in the scheme; (ii) by placing matched orders; (iii) by confirming and/or recommending to the counterparty stockbroker companies the artificial fixing and trading of D.K.’s shares, as proven by a sample check of telephone archives;
b) done substantial trading at the closure of the market, part of which had been conducted between the implicated persons, in order to artificially determine the price and marketability of D.K.’s shares. 8. On 19 August 2005 the Commission sent letters to the applicants informing them about the evidence collected by the investigation. They were requested to express their views and provide any relevant documents. On 27 September 2005 the applicants sent their replies. 9. On 2 October 2007 the Board of the Commission found both applicants guilty of violating the first sentence of Article 72 § 2 of Law no. 1969/1991. It issued decision no. 7/447/2.10.2007 against the first applicant, fining him 100,000 euros (EUR), and decision no. 8/447/2.10/2007 against the second applicant, fining him EUR 60,000. 10. The applicants lodged appeals with the Athens Administrative Court of Appeal against the Commission’s decisions. On 31 October 2008 their appeals were granted by decisions nos. 3289/2008 and 3290/2008. The appellate court considered that the first sentence of Article 72 § 2 of Law no. 1969/1991 could not be infringed by entering into transactions, unlike the second sentence of the same Article, even though the latter referred only to professional facilitators. Therefore, the transactions which the applicants were accused of having carried out did not fall within the scope of the first sentence of Article 72 § 2 of Law no. 1969/1991, as they could not be regarded as publication or diffusion of inexact or misleading information, even if they had aimed at manipulating the price of shares and had resulted in artificially influencing it. 11. On 8 April 2009 the Commission lodged appeals on points of law against the decisions granting the applicants’ appeals, arguing that the Athens Court of Appeal had erroneously interpreted the impugned legislative provision. The fourth Section of the Supreme Administrative Court, composed of a panel of five judges, issued decisions nos. 1679/2012 and 1681/2012, referring the case to a seven-member panel, due to its importance and to the existence of conflicting case-law (see paragraphs 20 ‑21 below). 12. On 15 January 2013 the Supreme Administrative Court issued judgments nos. 109/2013 and 111/2013, granting the appeals on points of law lodged by the Commission and quashing judgments nos. 3289/2008 and 3290/2008 of the Athens Administrative Court of Appeal. In particular, the Supreme Administrative Court held that Article 72, the purpose of which was to secure the smooth running of the market and the protection of investors, did not specify particular forms of disseminating inexact or misleading information that could lead to artificially influencing the price of shares. If those transactions had therefore been entered into with the intention of providing false information concerning the price and marketability of securities so as not to reflect their true value, and had resulted in misleading investors as regards elements that could influence their decision-making, then the performance of those transactions would be in breach of the provision. The transactions entered into had constituted dissemination of inexact or misleading information, given that the artificially formulated data concerning the price and marketability of the shares had been published, by virtue of the relevant legislation, in the daily stock exchange official list and in the electronic record of transactions. In addition, the above-mentioned conclusion was reinforced by the second sentence of Article 72 § 2, which provided that professional facilitators, that is to say those who on a daily basis enter into many transactions on behalf of others, would not be sanctioned unless they knew or ought to have known that by entering into those transactions, they had been attempting to disseminate inexact or misleading information. The conclusions mentioned above were not affected by the fact that in a subsequent law, no. 3340/2005, the ways in which manipulation of the market could be achieved were specified. Those included both entering into transactions and disseminating inexact or misleading information as two distinct ways of manipulating the market. In fact, Law no. 3340/2005 had merely specified the terms and conditions of an infringement of the said provision, in compliance with Directive 2003/6/EC. 13. The Supreme Administrative Court additionally held that the above-mentioned interpretation of Article 72 § 2 merely clarified the scope of application of the provision. Those who were involved in the stock market and showed the usual diligence could have foreseen that entering into transactions with the features mentioned above would be considered as having risked misleading investors. They could also have anticipated that sanctions would be imposed on them by virtue of Article 72 § 2. Furthermore, the applicants had not claimed that the Supreme Administrative Court or the administrative courts in general had interpreted the provision differently. Having regard to those considerations, the applicants had erroneously claimed that the above-mentioned interpretation of the impugned provision had violated Article 7 of the Convention, which applied not only to criminal sanctions but also to other sanctions that emulated “penalties” based on certain criteria. 14. A minority of two judges disagreed. In particular, they argued that the literal meaning of the first sentence of Article 72 § 2 did not include entering into transactions as a way of disseminating inexact or misleading information, irrespective of whether the intention behind the performance of those transactions had been to mislead investors. Otherwise, there would have been no need to distinguish, in Article 7 of Law no. 3340/2005, between the dissemination of information and the performance of transactions, as two different ways of manipulating the market. 15. Subsequently, the Supreme Administrative Court remitted the cases to the Athens Administrative Court of Appeal. The latter issued new judgments nos. 4704/2013 and 1132/2014, upholding the fine imposed by the Commission on the first applicant and reducing the fine imposed on the second applicant to EUR 20,000. 16. In the meantime, the first applicant was charged with breaching Article 34 of Law no. 3632/1928. By decision no. 2655/2007 of the Indictment Division of the Athens Court of First Instance Athens Council of Magistrates (“the Indictment Division”) issued on 7 September 2007 he was acquitted of all charges. In particular, the Indictment Division held that it did not follow from the file that the applicant had attempted to influence the value of the securities of D.K. by using fraudulent methods and that during the period in issue the shares’ value had dropped by 46%. RELEVANT LEGAL FRAMEWORK AND PRACTICE
Domestic law and practiceLaw no. 1969/1991

17. Article 72 § 2 of Law no. 1969/1991, as replaced by Article 96 § 1 of Law no. 2533/1997 and applicable at the time, provided as follows:
“A fine of up to five hundred million drachmas (500 000 000) [EUR 1,467,349.99] shall be imposed by the Capital Market Commission on natural or legal persons who publish or disseminate in any way inaccurate or misleading information regarding securities to be listed or already listed on an official stock exchange that by its nature may affect the price of or dealings in those securities. Persons who act professionally as facilitators shall not have administrative sanctions imposed on them on the basis of the previous sentence simply for entering into transactions on those securities, unless the facilitator knew or ought to have known that by entering into the transaction, he was attempting to disseminate false or inexact information or if he was contributing in any additional way to facilitating those transactions. This provision shall also apply to members of the board of directors of companies applying for admission of their shares to a recognised stock exchange, where inaccurate or misleading information is contained in the listing particulars required for the purposes of the above-mentioned admission or is published or disseminated in any way”. Law no. 3340/2005
18. By Article 32 of Law no. 3340/2005, Article 72 § 2 of Law no. 1969/1991 was repealed, but it remained in force for acts that had been committed prior to its entry into force. In addition, Article 7 of Law no. 3340/2005, transposing Directive 2003/6/EC of the European Parliament and of the Council on insider dealing and market manipulation (market abuse), provides as follows:
“1. Market manipulation shall be prohibited.
2. ‘Market manipulation’ means:
(a) transactions or orders to trade which give, or are likely to give, false or misleading signals as to the supply of, demand for or price of financial instruments, or which secure, by a person, or persons acting in collaboration, the price of one or several financial instruments at an abnormal or artificial level, unless the person who entered into the transactions or the person on behalf of whom the transactions have been entered into or the person who issued the orders to trade establishes that these transactions were entered into or that he issued the orders for the transactions for legitimate reasons and that these transactions or orders to trade conform to accepted market practices on the regulated market concerned;
(b) transactions or orders to trade which are combined with/constitute fictitious devices or any other contrivance;
(c) dissemination of information through the media, including the Internet, or by any other means, which gives, or is likely to give, false or misleading signals as to financial instruments, including the dissemination of rumours and false or misleading news, where the person who carried out the dissemination knew, or ought to have known, that the rumours or information was false or misleading ...”
Law no. 3632/1928
19. Article 34 subparagraph a) of Law no. 3632/1928 provided at the material time:
“Whosoever acts in the following way shall be punished by imprisonment and pecuniary sanction ... or by either of those penalties:
a) whosoever, in order to receive unlawful gain, knowingly uses fraudulent means misleading others so as to affect the prices in the stock market;
...”
Domestic case-law
20. According to certain judgments issued in 2002 and 2003 by administrative courts of first instance, the adoption of the first sentence of Article 72 § 2 proved that the legislator wanted to secure the market’s credibility in order to effectively protect investors. If someone entered into transactions in order to affect the price of securities, his or her action could be considered as disseminating false or inaccurate information that could affect the price and marketability of those securities, as the prearranged transactions would be published and other investors would take that information as a basis for choosing to buy or sell securities. Therefore, conducting a large volume of pre-arranged trading was in breach of the first sentence of Article 72 § 2 (judgments nos. 10698/2002, 9294/2002, 14735/2003 of the Athens Administrative Court of First Instance, and judgments nos. 1413/2003 and 244/2003 of the Piraeus Administrative Court of First Instance). 21. On 30 June 2006 the Supreme Administrative Court issued judgment no. 1898/2006, by which it held that the first sentence of Article 72 § 2 could not be breached by conducting transactions, as that case was only provided for by law in the second sentence concerning professional facilitators. European UNION law
22. The relevant parts of Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on insider dealing and market manipulation (market abuse) read as follows:
“2. ‘Market manipulation’ shall mean:
(a) transactions or orders to trade:
- which give, or are likely to give, false or misleading signals as to the supply of, demand for or price of financial instruments, or
- which secure, by a person, or persons acting in collaboration, the price of one or several financial instruments at an abnormal or artificial level,
unless the person who entered into the transactions or issued the orders to trade establishes that his reasons for so doing are legitimate and that these transactions or orders to trade conform to accepted market practices on the regulated market concerned;
(b) transactions or orders to trade which employ fictitious devices or any other form of deception or contrivance;
(c) dissemination of information through the media, including the Internet, or by any other means, which gives, or is likely to give, false or misleading signals as to financial instruments, including the dissemination of rumours and false or misleading news, where the person who made the dissemination knew, or ought to have known, that the information was false or misleading. In respect of journalists when they act in their professional capacity such dissemination of information is to be assessed, without prejudice to Article 11, taking into account the rules governing their profession, unless those persons derive, directly or indirectly, an advantage or profits from the dissemination of the information in question. In particular, the following instances are derived from the core definition given in points (a), (b) and (c) above:
- conduct by a person, or persons acting in collaboration, to secure a dominant position over the supply of or demand for a financial instrument which has the effect of fixing, directly or indirectly, purchase or sale prices or creating other unfair trading conditions,
- the buying or selling of financial instruments at the close of the market with the effect of misleading investors acting on the basis of closing prices,
- taking advantage of occasional or regular access to the traditional or electronic media by voicing an opinion about a financial instrument (or indirectly about its issuer) while having previously taken positions on that financial instrument and profiting subsequently from the impact of the opinions voiced on the price of that instrument, without having simultaneously disclosed that conflict of interest to the public in a proper and effective way. The definitions of market manipulation shall be adapted so as to ensure that new patterns of activity that in practice constitute market manipulation can be included.”
THE LAW
JOINDER OF THE APPLICATIONS
23. Having regard to the similar subject matter of the applications, the Court finds it appropriate to examine them jointly in a single judgment. ALLEGED VIOLATION OF ARTICLE 7 OF THE CONVENTION
24. The applicants complained, under Article 7 of the Convention, that the sanctions imposed on them by the Commission, as upheld by the administrative courts, had violated their right not to be held guilty for an act which did not constitute a criminal offence prescribed by law. Article 7 of the Convention reads as follows:
“1. No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed. 2. This article shall not prejudice the trial and punishment of any person for any act or omission which, at the time when it was committed, was criminal according to the general principles of law recognised by civilised nations.”
AdmissibilitySubmissions by the parties

25. The Government argued that Article 7 was not applicable in the circumstances of the present case. In particular, the offence attributed to the applicants was administrative and the sanctions imposed on them by the Commission constituted administrative sanctions, not a “penalty” within the meaning of the Convention. In particular, the provision in question did not satisfy the criteria established in the Court’s case-law. Firstly, domestic law did not classify the offence as criminal. The terminology used in the provision was not that used in criminal-law provisions, nor was there in the Greek legal order a system of administrative criminal procedure law, such as the one referred to in Gradinger v. Austria (23 October 1995, Series A no. 328‑C). In addition, the degree of severity of the penalty provided for by the impugned legal provision was not such as to be considered of criminal law. Contrary to the Court’s judgment in Gradinger v. Austria (referred to above), the applicants in the present case had not run the risk of being put in prison, as the relevant law providing for the imprisonment of those who had a debt towards the State had been considered anti-constitutional. 26. The Government further argued that Article 72 of Law no. 1969/1991 provided that both criminal and administrative sanctions could be imposed on persons who infringed it. In particular, criminal sanctions were imposed if the person disseminating the information had been aware of the nature of such information, and administrative sanctions were imposed irrespective of any culpability. That was further reinforced by Directive 2003/6/EC of the European Parliament and the Council of 28 January 2003 on insider dealing and market manipulation (market abuse). Its Article 14 § 1 provided:
“Without prejudice to the right of Member States to impose criminal sanctions, Member States shall ensure, in conformity with their national law, that the appropriate administrative measures can be taken or administrative sanctions be imposed against the persons responsible where the provisions adopted in the implementation of this Directive have not been complied with. Member States shall ensure that these measures are effective, proportionate and dissuasive”. 27. Law no. 3340/2005 transposing that Directive into national law also provided for both criminal and administrative sanctions in cases of market manipulation. 28. Having regard to the above-mentioned considerations, the Government argued that it was clear that the sanctions imposed by the Commission constituted administrative and not criminal sanctions within the meaning of the Court’s case-law. As regards the Supreme Administrative Court’s judgment holding that the sanctions imposed did not violate Article 7 of the Convention, one could not conclude from the Supreme Administrative Court’s reasoning that it had accepted that the aforementioned sanction fell within the criminal law. The Supreme Administrative Court had merely referred to cases to which Article 7 of the Convention applied, without specifically saying whether Article 72 § 2 of Law no. 1969/1991 included criminal sanctions or not. 29. The applicants maintained that Article 7 of the Convention was applicable to the circumstances of the present case. They argued that the Supreme Administrative Court itself, in its judgment no. 109/2013, had acknowledged that Article 7 of the Convention was applicable to the sanctions imposed on them, as they constituted a “penalty” within the meaning of the Convention. Therefore, the domestic authorities had not disputed the applicability of Article 7 of the Convention. 30. In any event, the applicants argued that the sanction provided for by the first sentence of Article 72 § 2 of Law no. 1969/1991 fulfilled the two most important criteria among the three established in the Court’s case-law. It applied to everyone who attempted to manipulate the market, and not to a specific part of the population, as opposed to the second sentence of the same Article; and it was not of a preventive nature but had a punitive aim, given that it did not provide for compensation for damages incurred by third parties or the Greek State.

Outcome for Article 7: no_violation