Note: 

• This summary constitutes no part of the Judgment but is prepared by the Department of Clerks for the Constitutional Court only for the readers’ reference.
• Original paragraph numbers that the summarized texts correspond to are put into lenticular brackets after each paragraph. 
• In case of any conflict of meaning between the Traditional Chinese version and the translated English version, the Traditional Chinese version shall prevail.

Headnotes

    Article 19, Paragraph 3 of the Narcotics Hazards Prevention Act (hereinafter "Provision I" and "NHPA") and Article 2, Paragraph 2 of the Criminal Code (hereinafter "Provision II") are constitutional. 

    The extended confiscation scheme under Provision I is a non-conviction-based measure that is non-penal in its nature. Provision I does not concern the principle of nulla poena sine lege, the principle of nulla poena sine culpa (Schuldprinzip), and the presumption of innocence.

    The term "other illegal acts" in Provision I can be deduced as criminal activities. The provision meets the requirement of the principle of clarity of law (the principle of clarity and precision of legal provisions). 

    Provision I conforms with the constitutional right to a fair trial and the right to institute legal proceedings. In terms of the standard of proof for ordering extended confiscation, the court must consider all evidence and balance the probability if there was a high possibility that the assets in question were unlawfully obtained. Defendants must have the opportunity to argue and defend themselves. 

    Provision II, which in practice allows extended confiscation to apply to narcotic cases committed before the implementation of Provision I, is a law with false retroactive effect, thus not violating the principle of lex retro non agit (principle of non-retroactivity) and legitimate expectations (Vertrauensschutz). 

Background Note

    In 2020, Taiwan adopted the "extended confiscation" scheme in the amendment of Provision I to prevent drug-related crimes. The provision allows the confiscation of illegal gains to be extended to those obtained from unlawful activities other than those (drug crimes) for which the accused is convicted. Furthermore, Provision II stipulated that the confiscation of proceeds shall apply the law in force at the time of judgment. Provisions I and II combined made it possible in practice for courts to order extended confiscation in narcotic cases before 2020. 

    The petitioner of this case, I-Hui CHI, was seized with her spouse for manufacturing Category Two narcotics in 2019. During the investigation, the police also seized NTD 97,093,700 in cash. The court of first instance found the petitioner guilty and ruled that NTD 92,870,000 were illegal profits obtained from other illegal activities. The court ordered the amount to be confiscated under Provisions I and II. This decision was upheld by the appellate court and was final after the appeal was dismissed by the Supreme Court. The petitioner lodged a constitutional complaint against Provisions I and II, arguing that (1) Provision I is penal but was unclear in wording; (2) Provision I lowers the standard of proof for the prosecutor to secure a court-ordered confiscation; and that (3) Applying Provision II with Provision I will result in retroactive application of Provision I, which violates the principle of lex retro non agit.  

    Judgment 113-Hsien-Pan-1 (2024) was announced on January 26, 2024. Justice Sheng-Lin JAN wrote this Judgement. Two concurring opinions and three dissenting opinions were filed.

 

Summary of the Judgment 

Holding

1. Provision I (as amended January 15, 2020 and implemented July 15, 2020) stipulated that "When offenses, as stipulated in Article 4 to Article 9, Article 12, Article 13, or Article 14 Paragraphs 1 and 2, are committed, and when there are sufficient facts supporting that the property or property interests, other than those described in the preceding two paragraphs, possessed by the offender, were obtained from other illegal acts, such property or property interests, shall be confiscated." Provision I does not concern the principle of nulla poena sine lege, the principle of nulla poena sine culpa, and the presumption of innocence. The term "other illegal acts" shall be construed as conduct of criminal nature. The prosecution shall bear the burden of proof to provide sufficient facts supporting that "the property or property interest possessed by the offender were obtained from the criminal conduct other than the one for which the offender has been convicted." Such proof shall be sufficient if the court, after comprehensive review of evidences and balancing the probabilities, is satisfied that there is a high possibility that the property or property interest (hereinafter together as "assets") were yielded from other illegal acts. However, the court shall not determine as such simply because the defendant could not clarify the legal sources of his or her assets. The defendant's rights to present an argument and motion for evidence examination shall be fully protected during trial, which could further protect the defendant's right to a fair trial. In this respect, Provision I does not violate the principle of the clarity of law, the constitutional principle of proportionality, and the constitutional principle of the right to a fair trial. Provision I also conform with the protection of the right to property and the right to institute legal proceedings under Articles 15 and 16 of the Constitution. 
2. Provision II (as amended December 30, 2015 and implemented July 1, 2016) stipulated that confiscation of proceeds shall apply the law in force at the time of judgment. The part of Provision II involving Provision I does not concern the principle of nulla poena sine lege, and does conform with the principle of lex retro non agit and the principle of legitimate expectations. 
3. The Petitioner's complaint shall be dismissed.

Reasoning

1.  The extended confiscation scheme is not of penal nature and thus does not concern the principle of nulla poena sine lege, the principle of nulla poena sine culpa, or the presumption of innocence. 

(1)  Provision I's extended confiscation measure is a non-conviction-based measure that aims to deprive assets yielded from illegal conduct and prevent such assets from reinforcing future crimes.【25】

    Through Provision I, the legislator allows the State to confiscate criminal proceeds of illegal acts completely to restore the legitimate proprietary order and prevent the offenders from using the proceeds as capital for future drug crimes. Such measures will extinguish incentives for illegal conduct and combat drug crimes. In this respect, Provision I clearly aims to prevent illegal proprietary allocation from continuing. Following the original intention of the legislators, Provision I is not penal—it does not condemn the illegal acts that yield such proceeds.【28】

    Increasing offenses such as drug-related crimes, human trafficking, corruption offenses, fraud, and international money laundering often involve organized crimes that work in a structural, continuous, and for-profit nature. Such crimes have become a major issue that endangers social order and public safety and could even erode the country's democracy and rule of law. To fight against the threats, various international conventions and IGO regulations require their signatory states or member states to adopt confiscation measures that could effectively deprive the proceeds of such crimes. For instance, Article 5 of the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988), the United Nations Convention against Transnational Organized Crime (2000), Article 2 (g) and Article 54, Paragraph 1 (C) of the United Nations Convention against Corruption (2003)^[1], Recommendation 4 of the Financial Task Action Force Recommendations…, etc. In recent years, European and Anglo-American countries have adopted non-conviction-based confiscation/forfeiture schemes. Some countries also deal with civil measures (e.g., the US and Canada's civil forfeiture and the UK's civil recovery method). 【30】

    In light of the continuity and repetitiveness of drug-related crimes, it is common for investigative agencies, when conducting searches, to seize the defendant's illegal gains from multiple drug-related crimes spanning over a while. The prosecutor cannot specify the offender and the criminal conduct until they clarify the facts and evidence to meet the threshold required for pressing a charge. Nevertheless, it is impossible for the prosecutor to sort out "all" the illegal facts and prosecute "all" the involved crimes.【31】

    However, the types of other crimes that the accused committed together at the time of the drug crime often have some relevance to the drug crime itself. Even if there were no direct connection between the two, the illegal gains from other crimes are still possible to be invested in drug crimes. In such circumstances, if the illegal gains are to be returned, there would be no way of eliminating crime incentives and preventing the assets from being invested in drugs or other crimes. On the other hand, if illegal gains obtained through illegal acts other than the charges are all dealt with by penalties, or if heavy fines are imposed on the charged case to deprive such gains, it may raise concerns about the imbalance between the crime and its punishment. Taking into account the spirit of the international conventions mentioned above, the legislators constructed an extended confiscation scheme that is non-conviction-based.【32】

(2)  The requirements and effects of applying Provision I are limited to confiscating criminal proceeds from the offender. It is not of a penal or penal-like nature.【33】

    When applying Provision I, the court shall first review the scope of the direct proceeds of the crime. Then, the court shall review whether the remainder of the assets seized meet the requirements for extended confiscation. Only when the court finds that certain assets derive from illegal acts other than the charged crime, it may consider applying extended confiscation stipulated in Provision I.【35】

    Since the effect and scope of application of Provision I are confined to assets obtained from illegal acts other than the crime charged, it is not punishment against certain conduct. Even if the State fails to confiscate the intended amount for extended confiscation, it cannot impose any constraints on the defendant's individual liberty in exchange. Compared to unpaid criminal fines that could be commuted to labor or social work, one cannot consider extended confiscation as a penal or penal-like measure.【36-37】 

(3)  The scope of extended confiscation does not cover non-criminal-linked assets. Extended confiscation does not have a punishing effect.【38】

    One of the major purposes of extended confiscation is to restore legal order by taking away illegal gains and rectifying unlawful proprietary allocation, which is the same as that of confiscating proceeds of crime. The design of the extended confiscation scheme has referred to the spirit of unjust enrichment law (Bereicherungsrecht) under Part II, Chapter I, Section 1, Sub-section 2 of the Civil Code (Articles 179 to 183). The legislative design for the scheme also referred to the distribution of risks (for unjust enrichment) under Article 182 of the Civil Code, making the offender or the mala fides third party bear the risk of losing the crime-related unlawful expenses to confiscation. Although confiscation under the Criminal Code may apply to both the proceeds and expenses of a crime, such distribution of economic risk cannot be deemed as a kind of criminal punishment. ^[2] Furthermore, under Article 180, Subparagraph 4 of the Civil Code, prestation made for an unlawful cause shall not be claimed for return. The ratio legis of such law is that one who spends assets to further an illegal act does so knowing the loss of expenditure is inevitable and compensation is barred.【39-41】

    Furthermore, the judicial practice in Taiwan adopted the Relative Gross Principle in deciding the scope for confiscation, which means that expenses incurred to commit a crime are deemed un-neutral and tainted with unlawfulness, consequently not deductible from confiscation. On the contrary, lawful expenses are neutral, and the court may deduct them from confiscation. The same deduction applies to extended confiscation. Whether neutral expense exists is a matter of evidence and proof. It shall not be construed that extended confiscation is not probable of such deduction. Based on the evidence provided in individual cases, the court may decide whether the expenses involved other illegal conducts or had nothing to do with crime. The scope of extended confiscation does not include the offender's non-crime-related assets and may deduct the neutral expenses. It is simply a deprivation of illegal gains instead of a kind of criminal punishment.【43-44】

(4)  Extended confiscation taken against illegal gains, differs from personal culpability-focused criminal punishment.【45】

    Extended confiscation certainly links to the offender's past illegal acts, but the State mobilizing its public power to rectify the resulting unlawful proprietary allocation does not therefore amount to a punishment for the wrongful and culpable conduct. The court's evaluation for ordering extended confiscation, including the amount, is not based on the offender's culpability. Thus, extended confiscation is a regulatory measure imposed from a preventive viewpoint that focuses on its future implications rather than a punishment imposed on the offender from a retributive viewpoint that focuses on past wrongdoings. Extended confiscation differs from criminal punishment in purpose, nature, and legal effects. ^[3]【47】

(5)  In conclusion of the above, Provision I, which is not a kind of criminal sanction, does not concern the principle of nulla poena sine lege, the principle of nulla poena sine culpa, and the presumption of innocence. 【50】

2.  Provision I does not violate the principle of clarity of law.【51】

    Since Provision I is not penal, its review of legal certainty (clarity) shall adopt a general standard instead of the strict standard applied in reviewing criminal punishments or measures constraining personal liberty. Provision I does not express specifically if the scope of “other illegal acts” is confined to criminal activities only. However, viewing from the definition of illegal acts (offenses) in Article 38-1, Paragraphs 2 and 4 of the Criminal Code alongside Provision I’s legislative purpose, “other illegal acts” shall be interpreted as illegal conduct condemned by the criminal law. Therefore, Provision I does not violate the principle of clarity of law.【53】

3.  Provision I does not violate the principle of proportionality under Article 23 of the Constitution, nor does it violate the protection of people’s right to property under Article 15 of the Constitution.【54】

    Assets derived from criminal conduct are, in a way, yielded from damaging the legal order. In this respect, the legislators may impose greater restrictions on such assets for public interest. Therefore, the standard of review for Provision I's proportionality shall adopt a rational basis review. 【56】

    The purpose of Provision I is to eradicate the harms of narcotics, to stop illegal assets from reinforcing drug crimes by blocking cash flow for drugs, and to make sure that nobody shall get away with crime proceeds by luck. These are all important public interests. 【57】

    Instead of all drug crimes (including petty drug crimes such as possession for personal use), Provision I is only applicable to major drug offenses such as manufacturing, transporting, possession for selling, compelled drug through violence and coercion (forced/coerced drugging) …, etc. Furthermore, even though not spelled out in its text, Provision I does not allow courts to issue confiscation if the assets have already been confiscated extendedly. Lastly, under Article 11 of the Criminal Code, reduction and exemption of confiscation under Article 38-22, Paragraph 2 are applicable to Provision I. Such application showed that the legislators allow certain case-by-case flexibility so that Provision I does not pose an undue hardship for the defendant. In conclusion, the means of Provision I is rationally connected with its purposes.【58-59】

4.  Provision I does not violate the constitutional right to a fair trial and the right to institute legal proceedings under Article 16 of the Constitution.【61】

    The right to institute legal proceedings under Article 16 of the Constitution requires the courts to hold fair trials under the due process of law. The right to a fair trial entails that court decisions shall be founded on evidence and that the defendants shall enjoy fully the right of defence. Such protections also apply to defendants facing extended confiscation.【62】

    Provision I's measures are not taken against the specific criminal conduct of the defendant. Therefore, unlike a conviction, it does not require the standard of proof to go beyond reasonable doubt for "other illegal acts" under Provision I. However, to protect the people's constitutional right to property and the right to a fair trial (in terms of the decisions shall be founded on evidence), the court shall consider the balance of probabilities—as suggested in Directive 2014/42/EU of the European Parliament and of the Council of April 3, 2014, and referred by the legislators—if there was a high possibility that the assets involved were obtained from other illegal acts thus warranted extended confiscation. The court shall not determine as such simply because the defendant could not clarify the legal sources of his or her assets.【66】

    Specifically speaking, the court must duly consider all evidence (direct and circumstantial) and balance them with all relevant factors to determine whether the (illegal) assets present a significant disparity with the defendant's legal earnings. The court shall also pay attention to case-by-case factors such as the investigation results of the charged crime, circumstances of how the assets were discovered and seized, the time/space relevance of the defendant's control of the assets to the charged crime, personal and economic relationship of the defendant…, etc. Such considerations could help evaluate whether the disputed asset is highly possible to have been obtained from other illegal acts.【66】

    Extended confiscation must be taken against a defendant charged with criminal conduct. Therefore, its review certainly attaches to the trial of such conduct. If the prosecution motioned for extended confiscation, its scope shall be specified and evidence must be provided to clarify why the prosecution deemed the assets were derived from criminal conduct other than the charged crimes. During trial, the defendant has the opportunity to argue and defend against extended confiscation of his or her assets. If such proceedings are followed, the defendant's right to a fair trial under the due process of law can be considered being fully protected.【67】

5.  Provision II is a law with a false retroactive effect (unechte Rückwirkung). It does not violate the principle of lex retro non agit and the protection of legitimate expectations.【69】

    The principle of lex retro non agit requires that new law, in principle, shall not be applied to constituent elements or legal relations that have already been fulfilled or accomplished before the new law's implementation. However, it does not count as a retroactive effect if the new law is applied to constituent elements or legal relations that happened in the past but continue to exist after the new law's implementation.【70】

    The purpose of Provision I is to end the unlawful proprietary allocation brought by illegal conduct. Crime proceeds create an unlawful proprietary allocation from the moment the conduct involved started to yield illegal gains—disregarding whether the conduct was completed or the offender was found guilty. Such unlawful proprietary allocation continues until the offender is deprived of possession of the illicit asset. Provision II enabled extended confiscation to be applied to assets obtained from other illegal acts before the implementation of Provision I. Because such illegal proprietary allocation (brought by the said illegal acts) continues to be present after Provision I's implementation, the effect of Provision II is not genuine retroactive. Provision II is a law with a false retroactive effect, which does not violate the principle of lex retro non agit.【71】

    Though the law is not genuinely retroactive, human life has a continuity that could be affected by it. Subsequently, as the constitutional protection of legitimate expectations requires, applying false retroactive laws should further consider whether the people involved have relied on a worth protecting reasonable and legitimate expectation. Even if the protection was warranted, there should also be a weighing between the pertaining public interests and reliance interests.【72】

    The illegal proprietary allocation created by "other illegal acts" under Provision I persists under the offender's control until the court orders confiscation. It is hard to say such a situation creates a reliance interest worthy of protection. Provision I serves the public interests of manifesting the fairness and inviolability of the legal order, strengthening the people's trust in the law, and ensuring the stable operation of society. Stipulating Provision I and applying it to extend confiscations before the implementation of the provision does not violate the protection of legitimate expectations.【73】

    In conclusion, the part of Provision II concerning Provision I does not violate the principle of lex retro non agit and the protection of legitimate expectations.^[4]【74】

Notes:

[1] [Note 1 of the Judgment] The United Nations Convention against Corruption was incorporated and took effect in Taiwan's domestic law (domestication) on May 20, 2015, upon the promulgation of the Act to Implement United Nations Convention against Corruption.

[2] [Note 3 of the Judgment] Such a viewpoint was also adopted by the Federal Constitutional Court of Germany. See, BVerfGE 2 BvR 564/95, Rn. 77-81.

[3] [Note 4 of the Judgment (Summarized)] See, BVerfGE 2 BvR 564/95, Rn. 67-81.

[4] [Note 12 of the Judgment (Summarized with Note 7)] Similar view was adopted by the European Court of Human Rights (ECHR) in Case of Todorov and Others v. Bulgaria (Applications nos. 50705/11 and 6 others) of July 13, 2021, in which the ECHR ruled that an independent confiscation ruling after conviction is not a new criminal charge, therefore does not concern the presumption of innocence and the principle of nullum crimen, nulla poena sine lege under Articles 6 and 7 of the European Convention on Human Rights.