CJEU: Financial supervisors should facilitate access to protected data in the event of litigation


EU Court cracks open professional-secrecy exemptions in civil or commercial litigation proceedings.

In two recent Judgements, the Court of Justice of the European Union (“CJEU”) has ruled that Financial supervisors may be obliged to provide a priori data covered by professional secrecy, provided that these are necessary to guarantee the right of defense or when they are determinant for the future of a civil or commercial proceeding. These judgements may have important consequences in current proceedings before the same court, such as in the case of Spain’s Banco Popular.

Judgments in Cases C-358/16 UBS Europe and Others and in C-594/16 Enzo Buccioni v Banca d’Italia

1. Case C-358/16

The plaintiff, identified in the ruling only by his initials, “DZ”,  had been fighting since 2010 to annul a decision that forced his resignation from CSSF, Luxembourg’s financial supervisory authority. The regulatory body decided that DZ could no longer direct any entity it regulates because of his role in setting up Luxalpha, a Madoff feeder fund said to have given the Ponzi scheme the appearance of legitimacy. DZ claimed that the CSSF had documents that would shed light on the role UBS played on Luxalpha’s creation. According to DZ, these documents were vital to understanding the roles of the various players, but the CSSF  refused to turn over the materials, contending that their production would violate its responsibility to maintain professional secrecy.

In its Judgement, the CJEU determined has determined that information covered by professional secrecy may also be used in civil or commercial proceedings. In its judgement in Case C-358/16, the Court first states that the directive on markets in financial instruments, when it provides that the obligation of professional secrecy may exceptionally be disregarded in ‘cases covered by criminal law’, covers only the communication or use of confidential information for the purpose of conducting proceedings or imposing sanctions in accordance with national criminal law.

According to the CJEU, “the right to disclosure of the documents relevant to the defense is not unlimited and unfettered,”. “On the contrary, […] the protection of the confidentiality of the information covered by the obligation of professional secrecy on the competent authorities […] must be guaranteed and implemented in such a way as to reconcile it with the rights of the defense.”

Accordingly, in the event of a conflict of, on the one hand, the interest of the person who is the subject of a measure adversely affecting him in having access to the information necessary for him to be in a position to exercise fully his rights of defense and, on the other hand, the interests in connection with maintaining the confidentiality of the information covered by the obligation of professional secrecy, it is for the competent authorities or courts to seek to strike a balance between these opposing interests in the light of the circumstances of each case.

In this sense, the ruling continues, “it is for the competent national court to ascertain whether that information is objectively connected to the complaints upheld against him and, if this should be the case, to weigh up the interests set out in the previous paragraph of this judgment, before taking a decision whether to communicate each of the requested pieces of information.”


2. C-594/16

In this case, an Italian national Mr. Enzo Buccioni had held a current account with an Italian credit institution, Banca Network Investimenti SpA, until its compulsory liquidation of that institution in 2012. Mr Buccioni asked the Italian regulator “Banca d’Italia” to disclose documents about its supervision. The regulator refused to turnover the documents that Buccioni requested on the grounds that it would frustrate its professional-secrecy obligations.

The CJEU  considers in its judgement that directives do not preclude national authorities from disclosing confidential information to a person who so requests in order to be able to institute civil or commercial proceedings with a view to protecting proprietary interests which were prejudiced as a result of the compulsory liquidation of a credit institution.”

Therefore, in order to protect not only the specific interests of the credit institutions directly concerned, but also the public interest linked, in particular, to the stability of the financial system within the European Union, Directive 2013/36 imposes, as a general rule, the obligation to maintain professional secrecy. However, the Court goes on to observe that Directive 2013/36 provides for exceptions to that general rule. In the present case, the directive permits confidential information which does not concern third parties involved in attempts to rescue that credit institution to be disclosed by the competent authority, for use in civil or commercial proceedings, only to persons directly concerned by the bankruptcy or compulsory liquidation of the credit institution.

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