Ships Waste Oil Collector B.V. and Others v Netherlands – Article 34 and the margin of appreciation: companies as rights-holders under Article 8

Eloïse Ward

In Ships Waste Oil Collector B.V. and Others v Netherlands, the applicant companies alleged that the transmission of data intercepted during criminal investigations to the Competition Authority violated their rights to private life under Article 8. The substance of this case raises important questions about what safeguards against arbitrariness are adequate when data is transmitted between government agencies and indeed, the bulk of the many dissenting opinions are dedicated to this issue. However, this post focuses not on the safeguards afforded to the applicants, but rather on their nature as companies. This case provides an opportunity to discuss the Court’s approach to companies as applicants under Article 8: both in relation to the legal basis for their applications, and to the applicable margin of appreciation.

Facts

The applicants in this case were two groups of limited liability companies. The first group was made up of Ships Waste Oil Collector B.V., Burando Holding B.V., and Port Invest B.V.

A subsidiary of Burando Holding and Port Invest was investigated by the Ministry of Housing, Spatial Planning and the Environment (the Ministry) for suspected forgery and illegal waste disposal. With judicial authorisation, the Ministry intercepted conversations between the employees of the subsidiary and Ships Waste Oil. Some recordings suggested price-fixing, prompting the Ministry to share selected transcripts and recordings with the Netherlands Competition Authority (NMA) with approval from the public prosecutor. The criminal case against the subsidiary was eventually settled but relying on the Ministry’s data, the NMA concluded that the subsidiary and Ships Waste Oil Collector had engaged in price-fixing, violating competition law. They were fined, and Burando Holding B.V. and Port Invest B.V.  were held jointly and severally liable for their subsidiary’s fine, as they were deemed to have exercised decisive influence over its actions.

The second group of companies was made up of Janssen de Jong Groep B.V., Janssen de Jong Infra B.V. and Janssen de Jong Infrastruktur Nederland B.V. They were suspected of bribery offences. With judicial authorisation, the Public Prosecution Service intercepted certain conversations between employees. Once again, extracts of the intercepted conversations were identified as of potential interest to the NMA on suspicion of price-fixing. This time, NMA officials were allowed to access a selection of police reports and transcripts on police premises, before any data was transmitted. The public prosecutor then gave the NMA a CD with selected audio recordings purely for information purposes, but later agreed to allow the NMA to use the data to investigate potential violations of the Companies Act. The police provided more transcripts on the basis of search terms provided by the NMA. The public prosecutor dropped the criminal case, but the NMA found the companies in breach of the Companies Act and imposed joint fines.

Due to their similar nature, the two groups of cases were joined. The companies claimed that the transmission of data initially intercepted for the purpose of a criminal investigation to the NMA violated their Article 8 rights, and that the exploratory interactions between the criminal investigators and the NMA, prior to the transmission of information, were not in accordance with the law. They also alleged a violation of their Article 13 right to an effective remedy, on the basis that they were not informed about the transmission of the data, and that there was no ex ante judicial review of the decision to transmit. They also deemed the ex post facto review ineffective.

At the Chamber level, the Court found that there had been no violation of Article 8 nor of Article 13. The three dissenting judges took issue with the national framework for data transmission, and with the lack of safeguards or written reasoning for the transfer of data. The applications were referred to the Grand Chamber on the 25^th September 2023.

Judgment

The Grand Chamber found that neither Article 8 nor Article 13 had been violated. It recognised that both the interception of data and its subsequent transfer interfered with the applicants’ right to respect for correspondence under Article 8.

With regard to Article 8.2’s requirements, the Court found that the transmission of the data was lawful and in pursuit of a legitimate aim, namely, the economic well-being of the country. While the applicants challenged the fact that the domestic courts had found by-catch data to fall within the scope of “criminal data” that domestic legislation allowed to be transmitted, the Court found that this was foreseeable. Domestic law had a non-exhaustive list of agencies that criminal data could be transferred to, and the Court also found it foreseeable that the NMA would be included within it, given its responsibility in enforcing the Competition Act. The Court found that the exploratory interactions between the NMA and the criminal investigators were lawful. It concluded that they were a reasonable and foreseeable part of the proportionality and necessity assessment required by domestic law, ensuring that the data transmission was targeted and that only the information needed for the NMA’s investigation was transmitted.

As for whether the interference was necessary in a democratic society, the Court found that neither ex ante judicial authorisation or written reasoning for the decision to allow the data transmission were required by the Convention. Their absence could be compensated for by ex post facto judicial review or by another means of independent oversight. In the present case, an ex post facto review had been carried out during judicial proceedings, during which the domestic courts had dealt with the substance of the Convention complaints. The Court found no reason to believe that those proceedings had been ineffective. The Court insisted on the strong public interest in the effective enforcement of competition law as crucial to the economic well-being of a country. This strong public interest, coupled with the fact that the data exclusively concerned business activities of legal persons led the Court to conclude that there were relevant and sufficient reasons to justify the transmission of the data. The Court concluded that Article 8 had not been violated in relation to any of the applicants’ complaints. It also concluded that Article 13 had not been violated.

The majority ruling was accompanied a partly dissenting opinion from Judges Guyomar and Ravarani who argued that the second group of companies’ rights had been violated as the NMA has been granted access to the data prior to its transmission and from Judges Bosnjak and Derenčinović who argued that Article 8 had been violated in both cases due to the lack of safeguards in the domestic legislation. It was also accompanied by a dissenting opinion from Judge Serghides which addressed issues of standing and a dissenting opinion from Judge Arnardóttir, joined by Judges Serghides and Šimáčková. She argued that Article 8 had been violated, that the majority did not accord adequate weight to the interests of those affected by the transmission and that the absence of written reasoning meant that any post facto review could only provide retrospective justification for a decision, rather than ensuring that the decision was sufficiently reasoned in the first place. In another opinion, Judges Serghides and Arnardóttir argued that Article 13 had also been violated.

Analysis

This post will examine two of the key issues brought to light by this case, namely, the legal basis for companies as applicants before the Court and the margin of appreciation granted to States in Article 8 cases involving legal persons.

The legal basis for companies’ rights – an unaddressed question

In his separate opinion, Judge Serghides brings to the fore the previously unchallenged assumption of standing for companies before the Court, and methodically examines it in light of Article 34. He criticises the fact that the legal basis for the standing of companies under the Convention has not been addressed in the Court’s caselaw to date. Judge Serghides conceives of each category of applicant under Article 34 (persons, non-governmental organisations, groups of individuals) as windows or doorways, one of which an applicant must pass through for their claim to be admissible (§ 11). Companies, he argues, cannot qualify as “persons” or “groups of individuals,” and their classification as NGOs is questionable. He notes that typically, NGOs are associated with humanitarian or philanthropic aims rather than commercial interests, and questions whether the drafters of the Convention intended companies to be seen as victims in this context. Despite this, he does not suggest that the Court should now change course and turn away all applicant companies, but rather makes it clear that the Court should bolster its reasoning on companies’ rights. He suggests that the “NGO window” is the most logical one by which a company’s complaints may be admitted, though he makes clear that it is not a good fit, in his opinion. Rather, it is the most plausible of three ill-suited options.

Judge Serghides’ dissenting opinion methodically addresses a question thus far unanswered in the caselaw: What is the legal basis for commercial companies’ rights? While his opinion does not provide any normative justification for the granting of rights to such entities, it serves as a welcome clarification of the Court’s caselaw and provides some reasoning for the Court’s use of a given “window” for admitting companies claims under Article 34. Given the history of the Convention, and the motivating factors behind the creation of the Council of Europe, the Court does seem a strange forum for companies to air their grievances vis à vis their government. The ECtHR is the only human rights court to have accepted companies as victims of human rights violations. Certain authors argue that this is because the Convention contains more of an economic aspect than the other two regional Conventions. These authors point to the Statute of the Council of Europe, which cites economic interest as one of the goals of European unity, or argue that the Convention is based in part on a common heritage which includes a certain social and legal order, of which free enterprise is an integral component. It is true that the text of the ECHR is much more amenable to the inclusion of companies than that of the other regional conventions (see here, and here), given that Article 1 Protocol 1 explicitly mentions “legal persons” and that unlike in the American Convention on Human Rights, there is no explicit restriction of the scope of rights to “human beings” (Article 21).

Either way, through its caselaw, the Court has expanded the scope of companies’ rights, which was not a necessary consequence of their initial inclusion. Therefore, beyond the question of why the Court accepts companies as applicants, is the question of why their rights have expanded since. Judge Serghides’ opinion engages critically with the caselaw and reminds us again what strange bedfellows human rights and companies make. There are those who find external justifications for the rights of companies, by arguing that they strengthen fundamental principles underpinning the Convention, like the rule of law, by pushing back on arbitrary State interference, but consequence-based arguments, or any pragmatic coherence with ECHR values, are not the same as finding a normative basis for those rights. Some suggest that the human rights of companies are derived from the human rights of those human beings behind them: as the social projections of those humans, they benefit from their human rights.  But this process of transubstantiation from humans’ rights to companies’ rights is opaque and unexplained: why should human rights transfer in that way? The absence of a normative basis for the human rights of companies makes them seem incongruous within a human rights system founded against the backdrop of the horrors of the Second World War.

Given the Court’s caselaw, and the text of the Convention, it cannot be argued that companies do not have human rights under the Convention: they do. However, the normative justification therefore is hotly contested and the legal basis therefore has not been adequately addressed within the caselaw. By highlighting this issue in his separate opinion, Judge Serghides prevents the status of companies as human rights holders, and the potential expansion of those rights, from being taken for granted.

The margin of appreciation in Article 8 cases – decentring the company and focusing on human interests

Before addressing the applicants’ Article 8 claims, the Court outlined the applicable general principles. In paragraphs 162–165, it discussed the margin of appreciation in cases involving legal persons, noting that while States are sometimes granted a wider margin in such cases, this is not always the case (§ 163). In its ruling, the Court took the opportunity to clarify the caselaw, explaining that the nature of the data rather than the applicant’s status is the determining factor. The margin will be narrower where the data concerns an individual’s ‘intimate sphere’ or a ‘particularly important facet of an individual’s existence or identity.’ (§ 164). The Court did acknowledge the differences between natural and legal persons, by referring to the application of data protection laws and the function of the margin of appreciation (presumably in allowing States to make those data protection laws in the way it thinks is best), but it concluded that the minimum safeguards under Article 8 should in principle be the same. On the facts, when assessing whether the transmission was necessary and proportionate, the Court did therefore account for the fact that the data only concerned the business dealings of a legal person.

A narrower margin of appreciation and a higher level of protection for applicants where the data collected and processed concerns an individual’s intimate, personal data, is not new and was reiterated in this case (para 162). The Court has also previously dealt with cases where the State interfered with an individual’s sensitive personal data by obtaining it through a company. However, in those cases, the applicant was always been the individual, rather than the company (see Ben Faiza v France, Breyer v Germany). The increased protection available to the applicant in these cases is derived from the fact that the data pertained to their own intimate sphere. What is notable about this case, is that the Court has disconnected the width of the margin of appreciation from the nature of the applicant. This means that even if a company brings the case, it could still benefit from strong privacy protections, provided the date in question pertained to the intimate sphere of a natural person. This is in line with the Court’s approach to the margin of appreciation in Article 8 cases in other areas. Indeed, the Court has stated that the margin of appreciation will generally be determined based on the nature of the issues and the seriousness of the interests at stake (see, here, here and here). Nowhere does it specify that the issues and interests have to be the applicant’s own.

The outcome of the Court’s approach is probably the right one: States will need to justify interference with sensitive data more thoroughly than with data pertaining to business matters, regardless of who the applicant is. But detaching the margin of appreciation from the nature of a company will come as a surprise to those who saw this initial tethering as a concession to subsidiarity: some saw a wider margin of appreciation for measures applying to companies as a nod to State sovereignty, which was thus not as threatened by the broadened scope of applicability of Article 8. Emberland, for instance, argued that the more lenient standard of review granted in cases concerning companies was motivated in part by a wish to grant practical compensation to States for accepting the broadened scope of Article 8 to cover the right to respect for companies’ “homes” (p. 178-179). Going forward, this will no longer be the case.

Does this ruling mean that an individual be in a situation where he is less protected than a company which collects private data? In theory, yes: if an individual, in his capacity as an employee, has his emails intercepted, so long as they pertain solely to business matters, the State in his case would have a wider margin of appreciation due to the nature of the data intercepted. One could ask whether there is a dimension of the violation which is missed: is it the same for a human being to bring a claim that his work inbox is being surveilled by the State, and for the company employing him to bring that same claim? I am reminded of the distinction that the Court makes in cases related to reputation, under Article 8. It emphasizes that a company’s right to respect for its reputation is devoid of the moral dimension that a human being’s reputation holds, as the degradation of a human being’s reputation can affect one’s dignity. Is there a differentiating moral dimension to a state interfering with a human being’s correspondence, and a company’s correspondence, when they both pertain to business? The Court does not appear to think so and concluding one way or another is perhaps outside the scope of this post. The important consequence of this case is that States do not have a blanket wider margin of appreciation when measures concern companies: instead, that wider margin of appreciation will apply to business matters, regardless of whether the applicant is a natural person or a legal person.

Conclusion

Ships Waste Oil Collector B.V. and Others v the Netherlands is an important case regarding data transmission, but also provides an opportunity to discuss the legal basis of companies’ rights. Further, it clarifies how the margin of appreciation in Article 8 cases involving legal persons should be assessed. The facts of this case in particular, brought by the applicant companies to contest fines given due to their anti-competitive practices, seem at odds with the historical backdrop to the Convention and the Court: Judge Serghides’ separate opinion serves as a welcome reminder that the granting of human rights to companies should not be left unexamined.