Newsletter
Taiwan Constitutional Court Judgment 111-Hsien-Pan-18 (2022)
Does the retroactive nature of new provisions on confiscation of the proceeds of crime violate the principle of nulla poena sine lege (the principle of no penalty without law), the principle of lex retro non agit (the principle of non-retroactivity), and the principle of legitimate expectation (Vertrauensschutz) and, consequently, infringe the right of the Taiwanese people to protection of property under the Constitution?
On December 2, 2022, the Taiwan Constitutional Court rendered Taiwan Constitutional Court Judgment 111-Hsien-Pan-18 (2022). In this judgment, it was specified that, when applied to confiscation as stipulated in Paragraph 1 and 2, Article 38-1 of the Criminal Code of the Republic of China (Taiwan)[2], the provisions of Paragraph 2, Article 2 of the Criminal Code, that is, "For confiscation […], the law in force at the time of judgment shall apply"[1] ("the provisions"), do not conflict with the principle of nulla poena sine lege (the principle of no penalty without law), the principle of lex retro non agit (the principle of non-retroactivity), and the principle of legitimate expectation. Therefore, the provisions do not violate the Constitution.
I. Background
The amended regulations regarding confiscation in the Criminal Code ("the New Confiscation Scheme") were implemented on July 1, 2016. The features of the New Confiscation Scheme include the following: addressing confiscation in its own section of the Code, expanding the scope of the persons subject to confiscation and the objects to be confiscated, and allowing a confiscation order to be issued independently even without a judgment rendered (as was originally necessary). Moreover, Paragraph 2, Article 2 of the newly amended Criminal Code ("the said provision"), that is, “For confiscation and punishment made as a rehabilitative measure that does not involve restrictions on personal freedom, the law in force at the time of judgment shall apply," allows for the New Confiscation Scheme to be applied retroactively to conduct that occurred before the law entered into force. The petitioners, therefore, argued that retroactively applying the New Confiscation Scheme violated the Constitution's principle of nulla poena sine lege (the principle of no penalty without law), the principle of lex retro non agit (the principle of non-retroactivity), and the principle of legitimate expectation (Vertrauensschutz) and, consequently, infringed the property rights protected under the Constitution.
II. Reasoning
i. Given the following reasons, the Constitutional Court affirmed that the nature, purpose, and effect of confiscation can be distinguished from a penalty. Accordingly, the provision regarding confiscation of the proceeds of crime does not concern violation of the principle of nulla poena sine lege (the principle of no penalty without law).
1. The purpose of confiscating the proceeds of crime is not to condemn a crime committed by an offender or a third party; instead, it is meant to restore the proprietary status quo ante and restore the legal order that was disrupted due to the unlawful conduct. Furthermore, the purpose of confiscation is to prevent the proceeds of crime from being invested in other illegal activities. Confiscation is, thus, not meant to punish criminals, rehabilitate criminal behavior, or deter repeat offenses.
2. The sentencing of penalties is strictly restricted by the principle of nulla poena sine culpa (i.e., the principle of no punishment without culpability). When determining sentencing for penalties, the severity of the crime committed and the culpability of an offender are considered regardless of whether sentencing is for imprisonment or issuing monetary penalties. By contrast, for confiscation, the amount confiscated is not determined with regard to the severity of the crime, nor is it determined based on the degree of culpability of the offender. Confiscation can, therefore, be distinguished or differentiated from penalty.
3. Conviction is not required to conduct confiscation. A conviction is only required to carry out a penalty against an offender.
4. In the Criminal Code, "compulsory collection" is the sole substitute for confiscation. By contrast, for those who cannot make full payment of a fine, said fine may be commuted to labor or social work penalty.
5. If the proceeds of a crime have already been legally returned to the victim, the proprietary status quo ante disrupted by the unlawful conduct has thereby been restored. The state shall, then, not further confiscate or collect from the offender or third party.
6. The petitioners asserted that the relative gross principle adopted in determining the range of the proceeds of crime (i.e., when expenditures tainted by crime or unlawfulness, e.g., expenditures for the purchase of drugs, cannot be deducted from the gross proceeds of crime) is equivalent to depriving people of their existing property. However, the Constitutional Court affirmed that the adoption of the relative gross principle demonstrated that legislators had used the "legal principle of risk allocation," thereby burdening the offender and mala fide third party with the risk of losing their unlawful expenses or costs through confiscation. The state cannot guarantee that parties will recover expenses or costs in all transactions. Consequently, although the Criminal Code adopts the relative gross principle in determining the range of the proceeds of crime, it cannot then be determined that confiscation is a penalty by nature or is similar to a penalty.
ii. The Constitutional Court considered that the said provision is a law with false-retroactivity effect (unechte Rückwirkung) and, so, does not constitute a violation of the principle of lex retro non agit (the principle of non-retroactivity) and the principle of legitimate expectation.
1. The state of unlawful proprietary status caused by a crime cannot be restored until the proceeds of that crime are confiscated. For this reason, the said provision is a law with only a false-retroactivity effect, and it does not violate the principle of lex retro non agit (the principle of non-retroactivity).
2. The proceeds derived from unlawful conduct that undermines the legitimate legal order are tainted by unlawfulness. The New Confiscation Scheme aims to uphold the fairness and inviolability of the legitimate legal order, thereby strengthening people's trust in the rule of law and ensuring the public good of a society working in accordance with the legitimate order. For this reason, any expectation on the part of the offender and the mala fide third party of permanently retaining the proceeds of crime does not deserve protection.
III. Expert and Dissenting Opinions
i. Expert Opinion of Prof. Shih-Hsuan, Huang: Confiscation of proceeds of crime that have the nature of a penalty should still be bound by the principle of nulla poena sine lege (the principle of no penalty without law) and the principle of lex retro non agit (the principle of non-retroactivity).
In criminal practice in Taiwan, confiscation aims not only to prevent proceeds from being reinvested in unlawful conduct, but also to condemn the crime committed and assess liabilities. Therefore, confiscation can be similar to rehabilitative measure or penalty-like. It is impossible to simply define confiscation as rehabilitative measure or penalty-like. When the unlawfulness (the fulfillment of the elements of the crime charged) shows a high correlation with legal liability, confiscation of the proceeds of crime should be considered penalty-like in nature. In such cases, confiscation of the proceeds of crime that is similar to a penalty should be bound by the principle of nulla poena sine lege (the principle of no penalty without law) and the principle of lex retro non agit (the principle of non-retroactivity).
ii. Expert Opinion of Prof. Chao-Chun Lin: The New Confiscation Scheme may result in personalized legislation.
Even if the confiscation of the proceeds of crime is rehabilitative, it is a violation of the principle of legitimate expectation when the offender and mala fide third party cannot properly foresee such criminal procedure. Further, allowing the retroactive application of the New Confiscation Scheme may result in personalized legislation.
iii. Justice Tai-Lang Lu's dissenting opinion (joined by Justice Ming-Cheng Tsai and Justice Jau-Yuan Hwang): Property exceeding the scope of confiscation based on the law at the time of the commission of a crime should be protected under property rights.
It is debatable whether the conclusion that "the proceeds of crime should not be protected under property rights" can be directly drawn from the idea that "no one shall keep the proceeds of crime." If such proceeds are not protected by property law or rights, it is, then, also true that depriving others of the proceeds of crime is not condemned or prohibited by law. This contradicts the current provisions of the Civil Code and Criminal Code regarding the protection of property rights. To be more specific, under the principle of nulla poena sine lege (the principle of no penalty without law), no one can claim rights against proceeds exceeding the scope of confiscation by the law at the time of the commission of a crime, including through the penal power of the state, unless otherwise prescribed by the Civil Code. If the state can seize such property through laws enacted after a crime has been committed, this is equivalent to confiscating property protected by law and, thus, violates the Constitution.