Faculty of law blogs / UNIVERSITY OF OXFORD

LuxLeaks Scandal and Corporate Whistleblowing: Reflecting on ‘Halet v Luxembourg’


Hava Yurttagül
PhD graduate in Law, Saarland University


Time to read

4 Minutes

Over the last decade, several leaks of confidential information shed a unique light on the tax avoidance strategies of multinational companies. In the impact assessment accompanying its proposal for an EU Whistleblower Directive, the European Commission stated that profit shifting by multinational companies led to a loss of tax revenues for the EU and its Members estimated at around €50 to €70 billion per year. It further underlined that the LuxLeaks scandal in particular illustrated the distortions of competition resulting from tax schemes. 

Mr Halet was one of the two whistleblowers behind these LuxLeaks revelations. In 2012, he disclosed PricewaterhouseCoopers’ internal company documents to the French journalist Edouard Perrin, helping to uncover a whole financial system of tax avoidance. Because of this disclosure, Luxembourg courts prosecuted Mr Halet on several charges, including internal theft, breach of professional secrecy and breach of trade secrets, and sentenced him to a €1,000 fine.

In the Halet v Luxembourg judgment delivered on 11 May 2021, the European Court of Human Rights (ECtHR) had to decide whether the criminal conviction of Mr Halet was compatible with the safeguards granted to whistleblowers by Article 10 of the European Convention of Human Rights (ECHR). Since 2008, it has been established case-law that employees may enjoy protection under the ECHR when disclosing in-house information, including secret information, if the divulgation corresponds to a strong public interest. 

That said, the binding nature of Article 10 ECHR in private-employment relationships prompted the ECtHR to specify in its 2011 Heinisch ruling that the commercial success and viability of private companies also has to be protected for the benefit of shareholders, employees and the broader economic good: The ‘employee’s right to freedom of expression by signalling illegal conduct or wrongdoing on the part of her employer [thus has to be weighed] against the latter’s right to protection of its reputation and commercial interests’.

In light of the criteria established by the ECtHR to conduct the balancing exercise between these conflicting interests, the Luxembourg Court of Appeal concluded that the value of the information contained in the documents revealed by Mr Halet was not cardinal, ‘essential, new and hitherto unknown’. The public interest in the disclosure was thus insufficient to outweigh the damage suffered by the private employer. In Halet, the ECtHR considered that it did not have serious reasons to substitute its opinion for that of the national court and decided that Mr Halet’s criminal conviction did not constitute a breach of his right to freedom of expression under Article 10 ECHR.

In a case analysis, I argue that this ruling sets a dangerous precedent and greatly weakens the protection of whistleblowers in Europe. Not only does it contradict the ECtHR’s own case-law, but it also disregards the European consensus which has emerged over the last decade with regard to whistleblower protection. This consensus, as I argue in my recently published book ‘Whistleblower Protection by the Council of Europe, the European Court of Human Rights and the European Union’, has put Europe at the international forefront of ambitious whistleblower protection standards. However, this leading position suffered a significant setback following the ECtHR’s latest judgment on the issue. Indeed, the Halet ruling, putting emphasis on the damage suffered by the employer, is in sharp contradiction with the spirit of the 2019 EU Whistleblower Directive and the Council of Europe 2014 Recommendation on the protection of whistleblowers which focus instead on the damage employees could suffer following their disclosure. 

To understand this contradiction, one must return to the raison d’être of whistleblower protection initiatives. Experience has shown that employees who blow the whistle on wrongdoing within their companies or institutions are often dismissed, transferred or harassed as a result. Such was the case for LuxLeaks whistleblower, Mr Halet, who was dismissed and criminally charged following his disclosure. The economic and occupational vulnerability of employees combined with the risk of retaliation thus represent a particularly strong deterrent to the report of wrongdoing in the workplace. To address this issue, the Council of Europe endorsed a protective vision of whistleblower laws, stating that ‘[t]he normative framework should reflect a comprehensive and coherent approach to facilitating public interest reporting and disclosures’, in order to ‘ensure that potential whistleblowers are not discouraged or penalised by conflicting or restrictive legal provisions’. On the EU level, the EU Whistleblower Directive follows the same protective approach and the EU Market Abuse Regulation goes even further and introduces the possibility, left to the discretion of EU Member States, of offering financial incentives to individuals reporting on abuses in the single market. 

This distinction between protecting whistleblowers and promoting whistleblowing is at the centre of the ECtHR’s legal dilemma. Unlike the situation in the US, Europeans have been particularly resistant to the idea of encouraging whistleblowing, best illustrated by their reaction to the introduction of anonymous whistleblowing channels. As an example, when a US Fortune 500 multinational launched anonymous hotlines in Europe in compliance with the US Sarbanes-Oxley whistleblowing provisions, a French employee sent an all-hands e-mail to every company employee in France denouncing the company’s ‘Vichy’ tactics (Dowling Jr (2008)). In Germany, while the Data Protection Authorities first authorized German companies listed on the New York Stock Exchange to introduce anonymous channels but without encouraging their use (Hertel (2019)), they made a volte-face in 2018 and provided in their update guidelines that employees should be encouraged to use anonymous channels (Baker McKenzie (2019)). 

The Halet v Luxembourg judgment of the ECtHR further exemplifies this ambivalence between public interest disclosure and employers’ interest in secrecy. A referral to the Grand Chamber in accordance with Article 43 ECHR would be an opportunity for the ECtHR to clarify its position with regard to corporate whistleblowing. Indeed, while only 4.98% of requests for referral were successful to date, the Grand Chamber Registry emphasised that cases affecting case-law consistency or which represent an opportunity for development or clarification of the case-law were more likely to succeed. In my view, the unprecedented character of the Halet case, as it involves for the first time a fully private employer, and the inconsistency of the Third Section’s judgment with established case-law and the European consensus legitimize such a referral to the Grand Chamber.

Hava Yurttagül has recently completed a PhD in Law at the Saarland University, Germany.


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