[1] Cyprus, Law on the actions of persons in possession of confidential information and on actions of market manipulation (market abuse) of 2005 [O περί Πράξεων Προσώπων που Κατέχουν Εμπιστευτικές Πληροφορίες και των Πράξεων Χειραγώγησης της Αγοράς (Κατάχρηση Αγοράς) Νόμος του 2005], Ν. 116(Ι)/2005 available at http://cylaw.org/nomoi/arith/2005_1_116.pdf

[2] CJEU, Joined cases C-387/02, C-391/02 and C-403/02, Criminal proceedings against Silvio Berlusconi et al, 3 May 2005.

[3] Cyprus, Law on market manipulation of 2016 (O περί Κατάχρησης της Αγοράς Νόμος του 2016) Ν. 102(Ι)/2016, available at www.cylaw.org/nomoi/arith/2016_1_102.pdf

Key legal question raised by the Court:

Whether the principle of lex mitior may extend beyond the confines of the imposition of the penalty, in order to reverse a trial court decision which had convicted the appellant of a criminal offence. The appellant argued that under the 2016 law, which was adopted four years after he had made the misleading statement to the shareholders, the criminal offence for which he was convicted could not be established as the prerequisites of the 2016 law were not met.

Outcome of the case:

The Court did not endorse the appellant’s argument that the principle of lex mitior extends beyond the penalty, to cover the entire criminal classification of the act. Instead, it found that neither article 49 of the EU Charter nor article 7 of the ECHR was interpreted as meaning that lex mitior could be used to annul a criminal offence except where this is explicitly provided for in the law. 

The principle of lex mitior acquires retrospective force as far as the penalty is concerned, leading to the conclusion that the lesser penalty foreseen in the 2016 law may be imposed even if the offence took place in 2012. In support of this conclusion, the Court also cited: article 15(1) of the International Covenant of Civil and Political Rights which was ratified in 1969; interpretation of article 49(1) of the EU Charter offered by the CJEU in the Berlusconi case;^[1] the interpretation of article 7 of the ECHR offered by the ECtHR in the Scoppola case, which had established that the state’s failure to grant the applicant the benefit of a more lenient penalty, foreseen in a law which had come into force after the commission of the offence, amounted to a violation of article 7(1) of the ECHR;^[2] and the interpretation of article 29(1) of the EU Charter offered by the CJEU in the Berlusconi case.^[3]   

Nevertheless, although rejecting the argument that the conviction should be quashed on the basis of the lex mitior principle, the Court found another ground for quashing the conviction, which had not been invoked by the appellant. It concluded that the appellant’s action lacked the subjective element of a guilty conscience, known in law as mens rea, as his statement before the shareholders was not intended to manipulate the market but rather to respond to pressing questions put to him in the context of an explosive environment. The Court found that the appellant’s statements were intended to appease everyone and especially the shareholders in order to avoid negative reactions or market repercussions. Therefore although the statement was knowingly false and misleading, it was not intended to manipulate the market. The Court allowed the appeal and quashed the appellant’s conviction.

The decision was endorsed by two of the three judges on the bench. The third judge delivered a dissenting opinion, disagreeing with the other two judges on the lack of mens rea. Instead, the dissenting judge found that the appellant’s statement to the sharesholders was intentionally misleading and specifically intended to manipulate the market projecting inaccurate data intentionally presented as accurate.