THE BOTTOM LINE
- Operating in legal grey areas carries significant risk. A business cannot expect compensation for damages (like a business shutdown) from a prosecution, even if ultimately acquitted due to a subsequent change in legal interpretation.
- Prosecutors have leeway on unsettled law. The State is not liable for prosecuting a company based on a ‘reasonably defensible’ interpretation of the law, even if that interpretation is later proven incorrect by a higher court, such as the Court of Justice of the EU.
- An acquittal does not automatically trigger compensation. A not-guilty verdict is not a blank check for damages. To win a claim, a company must prove the prosecution was unjustified from the start—a very high legal standard to meet.
THE DETAILS
A claim for over €3 million in damages against the Dutch State has been rejected by The Hague Court of Appeal, in a case that serves as a stark reminder of the risks of doing business on the edge of regulatory boundaries. The case involved Maya Europe B.V., a company prosecuted in 2011 for selling synthetic cannabinoids in violation of the Dutch Medicines Act. Years later, following a landmark ruling from the Court of Justice of the European Union (CJEU) which clarified that such substances are not “medicines,” Maya was acquitted. The company subsequently sued the State, arguing the entire prosecution was unlawful from its inception and had destroyed its business.
The court’s decision hinged on whether the Public Prosecution Service’s actions were justified at the time of the prosecution in 2011. The core of Maya’s argument was that the authorities should have known the substances were not medicines. However, the Court of Appeal found that the prosecutor’s initial legal interpretation was ‘reasonably defensible.’ Before the clarifying 2014 CJEU ruling, the law defined a medicine partly as a substance that could ‘modify physiological functions.’ The court agreed that it was plausible, at that time, to believe that psychoactive substances fell under this broad definition. A prosecution is not automatically rendered unlawful simply because a prosecutor’s interpretation of an ambiguous law is later overturned by a higher court.
Furthermore, the court dismissed the argument that the acquittal itself proved Maya’s innocence in a way that would justify compensation. Under established Dutch case law (the Begaclaim criteria), an acquittal is not sufficient grounds for a damages claim. It must be shown that the initial suspicion was entirely unfounded. In this instance, the acquittal was a direct result of a new legal interpretation by the CJEU, not a finding that the original facts were wrong or that the prosecution was baseless under the law as it was understood in 2011. This crucial distinction protects the State from liability when acting on a plausible, albeit ultimately incorrect, understanding of the law.
SOURCE
Source: Gerechtshof Den Haag (The Hague Court of Appeal)
