The punitive power of independent administrative authorities: focus on financial and tax violations (a comparative study)

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THE PUNITIVE POWER OF INDEPENDENT ADMINISTRATIVE AUTHORITIES: FOCUS ON FINANCIAL AND TAX VIOLATIONS (A COMPARATIVE STUDY)

Gehad Mohamed AbdelAziz, Alaa Abouahmed

In 1978, the first independent administrative authority, the National Commission on Informatics and Liberty, was established in France. Dominique Custos, `Independent Administrative Authorities in France: Structural and Procedural Change at the Intersection of Americanization, Europeanization and Gallicization' in Susan RoseAckerman and Peter L Lindseth (eds), Comparative Administrative Law (Research Handbooks in Comparative Law series, Edward Elgar Pub 2010) 277, doi:10.4337/9781849808101.00026. The establishment of such authorities marked the beginning of a trend that spread rapidly during the 1980s in response to the state's new role towards the establishment of some balances necessary for the practice of economic activities and freedoms.

The spread of these new authorities was further supported by the failure of traditional administrative structures to address the complexities of modern society. Kawthar Bougheita, `The Independent Administrative Authorities in the Economic and Financial Fields' (Master's thesis, Faculty of Law and Political Science, University Center of Maghnia 2016) 13. Consequently, economics witnessed the emergence of these authorities for the first time in 1991, when an independent administrative authority was established for bank control. Bruno Genevois et Louis Favoreu, `Le Conseil constitutionnel et l'extension des pouvoirs de la Commission des operations de bourse' (1989) 4 Revue Fran^aise de Droit Administratif 671.

THE NON-DEPENDENCY OF ADMINISTRATIVE AUTHORITIES TO THE EXECUTIVE AUTHORITY

The independent administrative authorities are official and complete public authorities and not just advisory bodies; they have the legal power to issue decisions and decrees. Their functions are not limited to mere management procedures but are mainly concerned with control, that is, to develop the required frameworks and monitor certain activities in different fields (e.g. economics and finance). This aims to guarantee the smooth workflow of these activities, as well as the fulfilment and respect of specific balances. Therefore, the legislator has granted these authorities several legal powers to ensure the complete and due performance of their assigned duties, including the required powers of regulation, supervision, and infliction of sanctions. Hence, the French legislator preferred to call these entities 'authorities' rather than organisations or bodies to manifest their special nature and distinguish them from other traditional administrative bodies. Bougheita (n 3) 17.

Accordingly, an issue has been raised as to whether establishing a new authority not included in the traditional bodies of the state is permissible. In fact, the French Constitutional Council has duly answered this question while addressing the issue of the National Commission on Informatics and Liberty. The council emphasised the full independence of this authority Decision n 86-217 DC (n 1).; therefore, the presence of another new authority (i.e. other than the three known major authorities) may not be considered contradictory to the French Constitution. It is permissible to establish such a new authority and acknowledge its independence and regulatory power, considering that control authorities shall be entitled to self-legislation; that is, they are permitted to escape the traditional shackles of administrative dependency and hierarchical order. Genevois and Favoreu (n 4) 684.

Consequently, the legal powers of these independent authorities may not be subject to supervision by executive authorities. These authorities may also be entitled to all other powers as required. For instance, they may exercise legislative authority over the development and application of their own executive regulations.

The French Constitutional Council has acknowledged the right of these authorities to develop their executive regulations, noting that Article (21) of the Constitution may not be considered a legal impediment to the permissibility of granting the power of legislation to another authority other than the Prime Minister, when concerning the development of executive regulations. Decision n 86-217 DC (n 1). However, this should be limited to specific fields determined by laws and regulations. It is noteworthy, though, that the Constitutional Council held a legislative provision unconstitutional because it failed to specify the standards for developing executive regulations by independent authorities, as this unconstitutional provision was limited to the general rules of the General Commission. Decision n 88-248/DC (Conseil Constitutional, 17 Janvier 1989) <https://www.conseil-constitutionnel.fr/ decision/1989/88248DC.htm> accede 10 fevrier 2024.

Moreover, these independent authorities may be entitled to exercise the role of judicial authority regarding the imposition of sanctions. However, this judicial role arguably conflicts with the principle of separation of powers. Evidently, the right to exercise the power of imposing punishment makes independent administrative authorities appear as semi-judicial authorities, hence presenting them as contradictory to the principle of separation of powers, given in Article (16) of the Declaration of the Rights of Man and of the Citizen of 1789. Jean Waline, Droit Administratif (26e edn, Dalloz 2016).

The French Constitutional Council has clarified that granting independent administrative authorities the power to punish may not be considered contradictory to the separation of powers principle, as such power is merely exercised within the framework of a necessary administrative mandate. This mandate must be their commitment to the stated technical restrictions as well as the desired targets of constitutional value. ibid.

Furthermore, in another decision, the Constitutional Council added that the legislator granted the power to punish any independent administrative authority, provided that the potential penalty does not include a custodial sanction. Additionally, it requires that the exercise of such power is based on certain legal grounds accompanied by specific measures that shall guarantee the protection of all rights and freedoms granted to all people by virtue of the Constitution. Decision n 89-260/DC (Conseil Constitutionnel, 28 Juillet 1989 <https://www.conseil-constitutionnel.fr/ decision/1989/89260DC.htm> accede 10 fevrier 2024.

In this sense, the independent authorities' exercise of the power to punish is, in fact, subject to all established constitutional principles (e.g. the principles of 'non-retroactively of criminal penalties' and 'necessity and proportionality of penalties'). Moreover, according to the constitutional judiciary, all constitutional principles regarding criminal penalties shall also apply to any other sanctions of a punitive nature, even if the legislator has granted the power to impose such sanctions to any other non-judicial authority. Louis Favoreu et Lo'ic Philip, Les Grandes Decisions du Conseil Constitutionnel (Grands arrets - Grandes decisions, 12e edn, Dalloz 2003).

JUSTIFICATIONS FOR GRANTING THE INDEPENDENT ADMINISTRATIVE AUTHORITIES THE PUNITIVE POWER

Maintaining the State's Financial and Economic Interests (The Unique Nature of Independent Administrative Authorities)

Over the years, a large arsenal of criminal laws has continually interfered with the financial and economic fields by criminalising several types of actions, thereby causing severe damage to the state's financial and economic interests. Consequently, a new attitude has been adopted, calling for the exclusion of these actions from the scope of criminal law, as they should be addressed by independent administrative authorities with certain punitive powers that may be used against such actions. Consequently, the power to punish was transferred entirely or partially from the criminal judiciary to these new independent authorities.

Granting punitive power to these new independent administrative authorities is meant to replace the criminal penalties with other administrative sanctions; it removes the criminal judge's oppressive power in favour of other competent authorities. Mousa Rahmouni, 'The Judicial Oversight of Independent Control Authorities in Algerian Legislation' (Master's thesis, University of Batna 1 - Hadj Lakhdar 2012/2013) 66. Interestingly, most sanctions imposed by these independent administrative authorities in the financial and economic fields have been so severe that they are similar to criminal penalties. Hence, they are known as 'Administrative Sanctions of Punitive Nature', taking into consideration that these sanctions may vary between financial and non-financial penalties. Najwa Sultani and Mounira Rakti, `The Independent Administrative Authorities between Independency and Dependency' (Master's thesis, Faculty of Law and Political Science, University 8 May 1945 Guelma 2015/2016) 67.

The Inefficiency of Criminal Penalties Imposed by Criminal Judiciary in the Economic and Financial Sectors

Granting competent judges punitive powers after the introduction of independent administrative authorities proved inadequate. The judicial system suffers several problems, including delays in adjudicating cases and the lack of any significant criminal errors by the concerned party in many cases. Mireille Delmas-Marty et Catherine Teitgen-Colly, Punir sans Juger? De la Repression Administrative au Droit Administratif Penal (Economica 1992) 18. Consequently, the desired deterrent effect of the criminal penalty shall not be achieved because of the delay in the adjudication process. Rahmouni (n 14) 66. This problem is mainly caused by the huge body of legislation in criminal law and the enormous number of claims submitted before the judiciary. Accordingly, most defendants enjoyed many legal guarantees granted to them by virtue of criminal law, not to mention that some criminal penalties (especially the penalty of imprisonment) were widely considered inadequate for the nature of these activities, as well as the inability to adjust many administrative violations as criminal actions punishable by such penalties. Mohamed Bahi Abuyounis, Judicial Oversight of the Legitimacy of General Administrative Sanctions (Dar Al Gamaa Al Gadida 2000) 29.

The Efficiency of Sanctions Imposed by Independent Administrative Authorities

The legislator granted independent administrative authorities the legal power required to impose sanctions due to various significant justifications. The legislator's main objective is to seek the best and most efficient ways to control economic activity in different sectors, to ensure good market functioning and conduct, and to minimise the judge's role in these sectors, which should be solely subject to the economic control of independent administrative authorities. Ghanam Mohamed Ghanam, The Administrative Criminal Law (Dar Al-Nahda Al-Arabia 1998) 3-5.

Independent administrative authorities have been practically proven more efficient in exercising such legal powers. They are capable of providing diversity and gradation in their sanctions, with the fulfilment of a number of guarantees that avoid any deviations in implementation. Radia Shebouti, `The Independent Administrative Authorities in Algeria: A Comparative Study' (PhD thesis, University of Mentouri 2014/2015) 20. Additionally, they are capable of finding innovative solutions that could be unusual to traditional laws, a fact granted to independent administrative authorities by virtue of the punitive power transferred to them from ordinary criminal judges.

Moreover, the sanctions imposed by those independent administrative authorities are, in fact, faster and far more deterrent than the traditional penalties of ordinary criminal judges (e.g. the suspension of licences or approvals, the ban from practising a profession, or the ban from certain markets), which will undoubtedly be more damaging and effective than criminal fines or suspended imprisonment.

To this effect, on 28 July 1989, the French Constitutional Council issued a decree confirming the constitutionality of granting punitive powers to the independent administrative authorities. In this decree, the French Constitutional Council explicitly acknowledged the power and right of these authorities to impose general administrative sanctions. The decree stated that:

“There is no constitutional principle whatsoever that might prohibit an administrative authority from imposing sanctions through the exercise of their powers and privileges as a public authority, provided that the imposed sanction does not include a custodial penalty and that this power is exercised pursuant to the stated measures of rights and freedoms protection as granted to all by virtue of the Constitution.” ibid, para 6.

Additionally, on 17 January 1989, the French Constitutional Council clarified that pursuant to Article (6) of the Declaration of the Rights of Man and the Citizen, all sanctions imposed by public authorities (even if they are non-judicial authorities) shall be subject to the same guarantees governing judicial penalties. Decision n 88-248/DC (n 9); Rahmouni (n 14) 69.