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28 September 2012
According to the Bankruptcy Act (120/2004) a debtor that has been declared bankrupt is obliged to cooperate and disclose information so that the administrator of the bankruptcy estate can discharge its duties and the bankruptcy proceedings can be concluded in an appropriate manner. If the debtor is a corporation, the provisions regulating its obligations shall apply to its representatives, such as a person who is personally liable for the commitments of a corporation, the manager or director of a corporation or another person in a corresponding position.
A debtor's obligation to cooperate and disclose information and the privilege against self-incrimination may conflict, especially in circumstances where the debtor is suspected of a crime committed in connection with its business activities. In a recent decision (KKO:2012:5) the Supreme Court of Finland examined whether the debtor's obligations to provide information complied with the requirement of a fair trial, and more specifically the privilege against self-incrimination, when at the same time the debtor was subject to a separate criminal investigation.
A debtor's obligations are set out in the Bankruptcy Act. The debtor's obligation to provide information primarily serves the interest of the insolvency procedure and is necessary for the purpose of protecting the interests of creditors.
The European Court of Human Rights has ruled on self-incrimination in several cases, and the decisions have been based mainly on Article 6, Section 1 of the European Convention on Human Rights, which regulates the right to a fair trial.
There are no explicit provisions or regulations in Finnish law relating to the privilege against self-incrimination. It has been left to the authorities applying the law to respect the right to silence and the right not to incriminate oneself. However, the legal praxis supports the privilege against self-incrimination. The Supreme Court has held that the governing principle of a fair trial is that the suspect has the right to silence and the right not to incriminate himself or herself in a criminal investigation and other administrative procedures. A suspect is not obliged to give information if the suspect has reason to believe that it could endanger or weaken his or her defence in a possible criminal trial.
In this case, based on the request filed by the estate administrator, a district court had ordered that an employee of the debtor be considered as a representative of the debtor. The district court considered the employee to have been in charge of the operations of the debtor, been responsible for its management and administered its assets. At the request of the estate administrator, the district court threatened to impose a fine against the employee in order to force him to discharge the duty of cooperation and information.
Regardless of this threat, the employee refused to provide information to the estate administrator, claiming that he had been a regular employee of the debtor and therefore had no information regarding the debtor. A fine was duly imposed. During the bankruptcy proceedings, the employee was suspected of aiding in a tax fraud and other crimes committed in connection with the debtor's business activities.
The employee appealed to the Court of Appeal to have the decision regarding the fine reversed, but the appeal was rejected. The Supreme Court granted the employee leave to appeal.
According to the Supreme Court, a debtor's obligation to cooperate and disclose information is remarkably wide in its scope. Therefore, it is necessary that this obligation is specified in detail when a threat of enforcement measures is imposed. Fulfilment of the obligation should be possible with reasonable efforts. The court ruling on the enforcement measures shall examine whether the obligation is in compliance with the right to a fair trial.
The Supreme Court held that the information requested by the estate administrator from the employee may have related to the same matters as the criminal investigation to which the employee was subject, proving that the information requested by the estate administrator could have weakened the employee's defence in a possible criminal trial.
The Supreme Court considered that the employee had not been requested to discharge any information or duty of cooperation that had been specified in detail, and that the court had inadequate information on the pending criminal investigation in which the debtor was suspected of criminal offences. Therefore, the court did not have sufficient grounds to consider that the employee had failed to fulfil an obligation that it could have fulfiled with reasonable effort and without endangering the right to privilege against self-incrimination. Therefore, the Supreme Court reversed the decision regarding imposition of a fine.
The Supreme Court referred to the earlier judgments of the European Court of Human Rights on the right to privilege against self-incrimination (Kansal v The United Kingdom, April 27 2004; Marttinen v Finland April 21 2009).
For further information on this topic please contact Juho Lenni-Taattola or Klaus Majamäki at Hammarström Puhakka Partners, Attorneys Ltd by telephone (+358 9 474 21), fax (+358 9 474 2222) or email (firstname.lastname@example.org or email@example.com).
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