The court says that FSFM supervisors have more rights than operatives

The MTS company refused to provide the FSFM, which was hunting for the insiders, with the detailing of the client’s accounts and IMEI of his phones without court order. It was fined for 500000 roubles and decided to appeal against the sanction. However, the Court of Arbitration of the city of Moscow upheld the position of the federal authority: the Service had not requested texts of messages and transcriptions of conversations, which means that there was no violation of the privacy of correspondence. Experts believe that the judge ignored the position of the Constitutional Court.

In February of 2013, the Federal Service on Financial Markets requested MTS OJSC for the information on the client with the phone number +7-916-449-07-97. The Service was conducting an office check looking for facts of undue use of insider information and manipulations with the price of the shares of “Project Investments” OJSC (the FSFM discovered the breaches in April). Names or denominations of clients, which were assigned that number since January 1^st of 2010, their addresses, the information on payments for communication services including commutations, traffic and payments of the client (part 1 of Article 53 of the Law “On communications”) were demanded from the communications operator. The FSFM also requested copies of agreements and questionnaires of the clients, the detailing of the accounts since January 1^st of 2012 and IMEI of the terminal equipment (international mobile equipment identification, the unique digital code of the phone). Besides, similar data was demanded from MTS on other numbers of the client under suspicion, which he used since January 1^st of 2010 till the moment of the request.

The company provided the FSFM with the requested information except the detailing of the accounts and the IMEI data. MTS explained that it did not wish to violate the privacy of correspondence of the clients, and that, moreover, criminal liability is established for that (Article 138 of the Penal Code, up to four years of imprisonment). The lawyers of the company stated: “The privacy of correspondence may only be limited by court order”. They motivated their statement by referring to part 2 of Article 23 of the Constitution of the Russian Federation and the Determination № 345-О dated October 2^nd of 2003 by the Constitutional Court of the Russian Federation. According to that, “any information transferred, saved and stored with the use of telephone equipment, including the data of incoming and outgoing signals of commutation of telephones of concrete communication users is considered” private. MTS elaborated that the norms of the Law on Inside Information stipulate limitation of privacy of correspondence only for mail (concerning the information on money mail orders), and no such limitation is fixed for phone calls (part 1 of Article 16 of the Law on Inside Information).

But the FSFM was deaf to those arguments and on April 29 fined MTS for 500000 roubles for failure to fulfil the instruction – the minimum amount under part 9 of Article 19.5 of the AOCRF (the maximum is 700000 roubles). The company responded by requesting the Court of Arbitration of the city of Moscow (the case No. А40-56142/2013) to revoke the allegedly illegal resolution to bring to administrative liability.

The operator held its position: the refusal to submit certain information contains no corpus delicti. The detailing of the accounts and IMEI is only done by the telephone equipment, which means that it is protected by the Constitution and the Communications Law (Article 63) under the privacy of communications. In particular, according to the in-house counsel of MTS, IMEI is only determined during calls and reflected in the protocols of commutation of certain users, whose SIM-cards were used in the apparatus.

However, Judge Svetlana Andriyanova decided that the norms guaranteeing the privacy of phone calls only apply to the information contained in the message and the talks itself. In her decision, she wrote: “The FSFM requested the detailing of the user’s accounts and the IMEI information, not the texts of the messages or the transcription of the conversation. The Communications Law and the rules of rendering services do not prohibit the operator to communicate [such information] to competent federal authorities that act under the norms of a special law (the Law on the Inside Information)”.

She also dismissed the MTS’s allegations of the determinations Nos. 345-О and 528-О dated October 2^nd of 2003 and October 21^st of 2008 respectively by the Constitutional Court, since “the legal positions [in those] only relate to the actions by the authorities that conduct operative investigations”. The Judge is convinced: “The Constitutional Court of Russia only evaluated the constitutional meaning of the Law’s provisions as applied to the criminal procedural mechanisms, and did not consider the powers of the FSFM of Russia”. Operatives may request a court to approve the receipt of information on commutations of mobile communications users, while the FSFM does not have such powers, “since no such special right is required due to the provisions of a special law (Articles 14, 16 of the Law on the Inside Information)”, says the decision.

The declaration also contains reasoning on the importance of cooperation with the FSFM. The Judge writes: “The information on the detailing of the clients’ accounts and IMEI numbers is a necessary and essential factor for [discovery of the] signs of market manipulation. In [other] case, the FSFM will be unable to inform the law enforcers of the crime that has been committed (Article 185.3 of the Penal Code “Market manipulations”), and, consequently, the offenders will be able to avoid criminal liability”.

As a result, Judge Andriyanova concluded that the FSFM has the right to demand the detailing of the user’s accounts and IMEI information, and that MTS was legally fined for its refusal. The Judge dismissed MTS’s claim on June 21st (the declaration was published on July 8).

The spokesperson’s service of MTS told Pravo.Ru: “We will appeal against the decision. We believe that we acted in strict conformity with the requirements of the Constitution and the Communications Law”. The practice of Vympelkom (Beeline trade mark) appears to be different. When asked whether the company provided the FSFM with IMEI information and the detailing of the accounts within the framework of “insider” checks, the press service responded: “According to the federal legislation on communications, on operative investigations and personal data, we provided the Service with all requested information”.

Meanwhile the experts are doubtful about the rightness of the court’s ruling. Marina Agaltsova, Associate of the AstapovLawyers International Law Group, believes that the CACM severely limited the effect of the Constitution in the dispute and says that Article 23 of the Constitution stipulates the privacy of phone conversations, and that the Constitutional Court of Russia has earlier expanded its effect to include the information of commutations of concrete users. M.Agaltsova is convinced: “The detailing of the users’ accounts and IMEI allow ascertaining, what users communicated with each other. Therefore, such information ideally [fits] in the term “the data on incoming and outgoing commutation signals”, and this means that Article 23 of the Constitution applies to them”.

Advocate Anna Kotova-Smolenskaya, Associated Partner of the Law Firm "YUST", draws an analogy with the Mail service Law. She says: “The concept of privacy of mail communications, inter alia, includes the information of addresses of the mail service users. As far as telephone communications are concerned, the information on the users’ phone numbers, connections with which were established, is apparently analogous to this”.

According to M.Agaltsova, the CACM incorrectly dismissed the allegations of the determinations by the Constitutional Court. The lawyer reasons that, even if those deal with the operational and investigation activities, the Court gave in them its interpretation of the concept of “privacy of phone conversations”, which is applicable in all spheres. A.Kotova-Smolenskaya concurs: “The content of the term “privacy of phone conversations” cannot depend on the subject – an investigative body, the FSFM or any other - that demands the respective data from the communications operator”. Also, according to her, the opposing of the rights of the law-enforcement agencies and the powers of the FSFM appears illogical. The lawyer says: “The operative and investigation activities are aimed at the investigation of crimes, that is – of offences of high danger to the public. And if a court’s order sanctioning the limitation of the privacy of phone conversations is required for the investigation of that, the necessity of obtaining the court order for investigating less grievous public offences cannot even be questioned”.

See the source of the publication here.