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Focus on Regulation

German court refers questions on extradition discrimination to the Court of Justice in the case of the first business executive extradited to the U.S. on cartel charges

This week the request for a preliminary ruling (C-191/16) by the Regional Court of Berlin (RC Berlin) in the topical case Romano Pisciotti v. Germany was published in the Official Journal. The judges in Luxembourg will have to rule on the question whether it is compatible with the principle of non-discrimination under EU law that Germany extradited an Italian citizen to the United States (U.S.) under cartel charges while at the same time refusing to extradite a German national involved in the same cartel case.

The RC Berlin, on 18 March 2016, referred four questions to the Court of Justice requesting a preliminary ruling on whether Mr Pisciotti could have suffered discrimination and can claim compensation from the German government. The RC Berlin suggests that Germany may have breached the principle of non-discrimination (Article 18 of the Treaty on the Functioning of the European Union, TFEU), by extraditing Mr Pisciotti to the U.S., although the German Constitution prevents the government to extradite German citizens.

This referral comes about two years after Pisciotti made the headlines as the first business executive being extradited to the U.S. on cartel charges.

This referral constitutes Mr Pisciotti’s first (preliminary) victory in the long fight against his extradition

After being arrested in 2013 by the German state during a stopover at the Frankfurt airport, Mr Pisciotti was extradited to the U.S. in 2014. The extradition request was based on the U.S. Department of Justice (DOJ) accusing Mr Pisciotti of having participated in bid rigging, price fixing and market share allocation for sales of marine hose in the U.S. and elsewhere. So far, Mr Pisciotti had fought without success against his arrest and extradition before many different courts and regulators, including the German Federal Constitutional Court, Italian local courts, the European Commission (and the Luxembourg courts on appeal) and the European Court of Human Rights.

Pisciotti claims that German extradition system violates the principle of non-discrimination under EU law

Before the RC Berlin Mr Pisciotti claims damages from the German government for having (allegedly) manifestly and gravely disregarded the limits of its discretion when arresting and extraditing him to the U.S. His claims rely on the argument that the German state violated Articles 18 (principle of non-discrimination), 21 (freedom of movement) and 56 (freedom to provide services) of the TFEU. According to Article 16 (2) of the German Constitution, “No German citizen may be extradited to a foreign country“. Based on this provision, Germany grants privileged treatment to its own citizens in relation to extradition matters and refused to extradite a German businessman in the same cartel case whose extradition was also requested by the DOJ.

Should the Court of Justice follow the RC Berlin, significant impact on extradition matters in cartel cases is to be expected

The RC Berlin expresses serious doubts as to the compatibility of the German extradition practice with the principle of non-discrimination under EU law. Remarkably, its reasoning is contrary to the decisions of the Higher Regional Court of Frankfurt and even the German Federal Constitutional Court in the same case.

Should the Court of Justice agree with RC Berlin’s legal assessment in this case, this judgment would likely have a significant impact on the extradition practice of Germany as well as other Member States, particularly in cartel matters. EU Member States, when responding to an extradition request, would have to extend the preferential treatment of their own nationals to citizens of other EU Member States. This could de facto put an end to extradition of EU nationals to the U.S. on cartel charges, at least for those Member States that follow the nationality principles such as Germany.

Importantly, such judgment is also likely to affect the role of extradition as a deterrent in the fight against global cartels.

There are currently two other referrals pending before the Court of Justice dealing with similar questions (see C-182/15, Alexksei Petruhhin, EU:C:2016:330; C-473/15, Schotthöfer & Steiner). In the first case Advocate General Bot recently proposed to conclude that EU law applies to domestic extradition, but that the difference in treatment between a Member State’s own citizens and citizens of another Member State can be justified by the overriding objective to either extradite or prosecute, and thereby combat the impunity of persons suspected of having committed an offence in a third State.

The forthcoming Court of Justice preliminary ruling will be the next episode of this cautionary tale for global cartel compliance.