Victory for whistleblowers - the ECHR reaffirms corporate whistleblowers’ right to freedom of expression
Halet v Luxembourg Application No.21884/18 (14 Feb 2023)
Summary
On 7 May 2018, Mr Raphael Halet (Applicant) lodged proceedings in the European Court of Human Rights (ECHR) under Article 34 of the European Convention on Human Rights (the Convention). The applicant argued that his criminal convictions arising from disclosure of confidential corporate information constituted an infringement of Article 10 of the Convention, being his right to freedom of expression.
On 14 Feb 2023, the Grand Chamber of ECHR (the Grand Chamber) overturned the lower court decision and held by 12 votes to 5 that there had been a violation of Article 10 of the Convention.
This decision is an important win for whistleblowers because it reaffirms the protection whistleblowers enjoy under the Convention.
Facts
The applicant worked for PricewaterhouseCoopers (PwC), a company that provides accounting, auditing, tax, and business consulting services.
Between 2012 and 2014, the applicant and another PwC employee disclosed to various media outlets advance tax rulings and tax returns prepared by PwC. The disclosed information showed highly advantageous tax agreements between PwC, who was acting on behalf of multinational companies, and the Luxembourg tax authorities. PwC dismissed the applicant in 2014.
Criminal proceedings were instituted against the applicant. The Luxembourg Court of Appeal refused to accept whistleblowing as a justification for the applicant’s actions and ordered the applicant to pay a criminal fine of 1,000 euros and a symbolic sum of one euro for the non-pecuniary damage sustained by PwC.
Following this, on 7 May 2018, the applicant lodged a complaint with the ECHR on the basis that his criminal conviction amounted to an interference with his right to freedom of expression under Article 10 of the Convention.
On 11 May 2021, the ECHR initially held by a majority five votes to two that there has been no violation of Article 10. The applicant subsequently applied to have this case referred to the Grand Chamber under Article 43 of the Convention.
Decision
The Grand Chamber held for the applicant and concluded that the harm suffered by PwC did not outweigh the public interest in disclosure.
The Grand Chamber stated that the dismissal and the criminal conviction interfered with the applicant’s freedom of expression to an extent that is not necessary in a democratic society. The Grand Chamber ordered Luxembourg to pay the applicant 15,000 euros of non-pecuniary damage and 40,000 euros to cover the applicant’s costs and expenses.
In coming to this decision, the Grand Chamber applied the criteria in Guja v Moldova, no. 14277/04, ECHR 2008 to assess whether the circumstances of the applicant’s case warrant him to disclose confidential information obtained from his employment. In Guja v Moldova, the ECHR held that an employee who reports a wrongdoing by disclosing confidential information may be protected under the Convention if the divulgation of such information is significant to the public.
Application of the criteria in Guja v Moldova
The availability of alternative channels for disclosure
The Grand Chamber confirmed that where conducts relating to an employer’s normal activities were involved and where these conducts were not illegal, it is acceptable for the applicant to use media outlets as an external reporting channel.
2. The authenticity of the disclosed information
The documents that the applicant provided to the media outlets were accurate and authentic.
3. The applicant’s good faith
The Grand Chamber noted that the applicant had not acted ‘for profit or in order to harm his employer’ and the disclosed information was in the public interested.
4. The public interest of the disclosed information
The Grand Chamber concluded that the disclosed information was not only ‘alarming or scandalous’ but it provided important insight into corporate taxation. Specifically, it revealed information related to tax evasion. The Grand Chamber considered such information an important matter of interest for public opinion in Luxembourg and other countries whose tax revenues could be affected by the disclosed information.
5. The balance between the detrimental effects of the disclosure and public interest
The Grand Chamber undertook a balancing exercise. The Grand Chamber assessed the damage suffered by PwC and concluded that there was no long-term damage. But the Grand Chamber acknowledged that the applicant owed a duty of loyalty to PwC and that the applicant breached the rule of professional secrecy. Having balanced these factors against the importance attached to the disclosed information, at both a national and European level, the Grand Chamber held that the public interest in disclosure outweighed the detrimental effects.
6. The severity of the sanction
Having considered the media attention, the nature of the penalties and the effect on the applicant’s freedom of expression, the Grand Chamber noted that the applicant’s criminal convictions were not proportionate considering the legitimate aim he pursued.
Commentary
This decision is reflective of the Grand Chamber’s concern with the protection of whistleblowers in the society. The Grand Chamber emphasised this concern via its acknowledgement that criminal convictions may have a chilling effect upon whistleblowers. Penalties may deter employees from reporting wrongdoings and prevent effective newsgathering on public interest matters.
However, it is questionable whether the damages awarded to the applicant can adequately compensate him for participating in a decade long legal proceeding. This remains to be another issue for the ECHR to resolve in the future.
The full case can be read here.
Case note prepared by Rachel Chen at DLA Piper