Plus ça change: the legal implications of remaining within the EU

Claire Darwin - Matrix ChambersClaire Darwin, Matrix Chambers

[This article was written on 5th February 2016, and does not reflect any legal or political developments after that date].

Whilst much legal ink has been spilt on the legal implications of the UK leaving the EU (aka Brexit), remaining a member of the EU will have legal implications too. The EU referendum, currently expected to be held on 23 June 2016, will offer the UK electorate a choice between remaining within the EU on the basis of a “new settlement” hurriedly being negotiated between the UK and the 27 other EU member states, and leaving the EU forever.

Greater clarity on the settlement proposals was finally achieved on 2 February 2016, with the publication of the draft Decision of the Heads of State or Government, meeting within the European Council, concerning a new settlement for the UK within the EU (the draft Decision). Section E specifically states that the draft Decision will only take effect if the UK decides to remain a member of the EU.

The key proposals

The Draft Decision is, according to the FT, modelled on an agreement reached at a European Council meeting in Edinburgh in December 1992 whereby it was agreed that Denmark would be granted four significant exceptions from the Maastricht Treaty. That agreement was achieved by way of a binding accord signed by all Member States which the FT describes as having ‘acted like a promissory note from EU leaders’ or ‘a form of post-dated treaty change.’

Similarly, the draft Decision will not amend the EU Treaties and there are no details of any specific draft amendments to them. However, it does promise that certain matters, such as the agreement on a “multi-speed” EU, will be incorporated into the Treaties at the time of their next revision. The recital also states that the clarifications in the draft Decision will have to be taken into consideration as being an instrument for the interpretation of the Treaties. These promises and clarifications, which will be contained within a European Council decision signed by all 28 member states, will then be binding on those member states.

Treaty change is, of course, now impossible before 23 June 2016 (the likely Referendum date), since any such change would have to be ratified by national Parliaments and, in some cases, by referendums. It is unclear when the anticipated revision of the EU Treaties will happen in practice, and it may well not happen for some years.

Sovereignty and the new “multispeed” EU

The phrase “an ever closer union among the peoples of Europe”, which first appeared in the 1957 Treaty of Rome, has been restrictively interpreted in the draft Decision. The draft Decision clarifies that references in the Treaties and their preambles to ever closer union should not be interpreted as an equivalent to the objective of political integration, and that they do not offer a basis for extending the scope of any provision of the Treaties or of EU secondary legislation. Further, the phrase “should not be used either to support an extensive interpretation of the competences of the Union or of the powers of its institutions as set out in the Treaties”.

The recital recognises the existence of a “multispeed” EU, whereby different member states will have different paths of integration and those that want to deepen integration will move ahead whilst respecting the rights of other member states, such as the UK, who do not. This is further recognised in Section C, which records that the references to ever closer union in the Treaties are consistent with different member states adopting different paths of integration.

The draft Decision acknowledges that the UK does not agree that further integration is inevitable or desirable.

Competence and subsidiarity

The EU legal system is based on the principle of conferral of powers, whereby the EU is only permitted to act within the limits of the competences (or powers) that have been conferred on it by the member states (Article 5, Treaty on European Union (TEU)). The principle of subsidiarity (Article 5(3), TEU) was introduced by the Maastricht Treaty in order to prevent the EU from unduly encroaching on the role of national governments in areas of shared competence. The EU is only permitted to act if and in so far as the objectives of the proposed action cannot be sufficiently achieved by member states, but can be better achieved at EU level.

The draft Decision reiterates the importance of the principle of subsidiarity, and explains that its purpose is to ensure that decisions are taken as closely as possible to the citizen

In line with its emphasis on the accountability of EU institutions and the repatriation of competences, the draft Decision includes a mechanism which gives a national Parliament 12 weeks to object to draft EU legislation on the basis that it does not comply with the principle of subsidiarity; however, a significant percentage of national Parliaments will have to object for this “red card” to come into play.

Eurozone and non-euro discrimination

The UK and other EU member states outside of the Eurozone have apparently become increasingly concerned about fair treatment by the bloc of countries that have adopted the euro. The draft Decision requires countries within the Eurozone to respect the rights and competences of those member states that are outside it. It also introduces a new form of unlawful discrimination: anti-sterling discrimination! Member states will be prohibited from discriminating based on the official currency of the member state, and any discrimination will have to be justified.

Freedom of movement

The draft Decision will not impede the ability of EU citizens to move freely between member states; however, it does contain a number of measures which are intended to discourage freedom of movement within the EU by certain groups. Such measures are intended to address concerns about so-called “benefit tourism” and marriages of convenience between EU citizens and non-EU citizens. The draft Decision recognises that it is legitimate for member states to adopt measures avoiding or limiting flows of workers, provided that the flow is of such a scale that it has negative effects for both the member states of origin and the host member states.

The Draft Decision notes that the European Commission will submit proposals to amend secondary legislation (Regulation 883/2004 on the coordination of social security systems) so that child benefits can be linked to the cost of living where the child resides.

Further, the European Commission will submit proposals to amend Regulation 492/2011 on freedom of movement for workers within the Union. The latter will be amended to introduce an ‘emergency brake’, a mechanism which would allow a Member State to restrict access to its in-work benefits if an exceptional situation as regards the inflow of workers exists. It will be for the European Commission to determine whether such an exceptional situation exists.

Finally, the Draft Decision records that Member States are able to take action to address cases of contracting or maintaining marriages of convenience with third country nationals for the purpose of making use of free movement to regularise unlawful stay in a Member State.

Interestingly, the draft Decision does not contain any proposal to limit the definition of a worker (for the purposes of Article 45 of the Treaty on the Functioning of the EU and secondary legislation) to workers earning more than about £13,000 a year, a proposal which according to the FT is now said to be “off the table”. Nor does it make any mention of the proposal by the UK government that new EU migrants should be banned from qualifying for in-work benefits and social housing for four years after their arrival in the UK. Continue reading

Is the right to vote ‘governed’ by EU Law?

Dr Iyiola Solanke

Voting is a civil right, guaranteed by international instruments for the protection of human rights as well as in primary EU law. Article 10 TEU sets out that elections are central to the democratic life of the Union; Under Article 14 (3) TEU MEPs are to be elected in free and secret ballots for a term of 5 years; under Article 20 TEU, EU citizens enjoy the right to vote and stand in EP elections. This is repeated in Article 39 CFR. In addition, Article 3 of Protocol 1 of the ECHR, protects the ‘free expression of the opinion of the people in the choice of the legislature’.  Given this, is the deprivation of the right to vote under national law compatible with EU law?

The Facts

Mr Delvigne was sentenced in 1988 to 12 years in prison for murder – under the French Criminal Code of 1810 this sentence also attracted loss of the right to vote. In 1992, the Code was updated to enable anybody subjected to deprivation of civil rights to apply for their reinstatement, either wholly or in part. According to French electoral law, any person so deprived of the right to vote was not to be registered on the electoral roll for the period set out in the judgment. Mr Delvigne lost his right to vote not only in national but also in European Parliament elections. He argued that this was a breach of the principle of equality set out in Article 39 CFR – French law stripped him of his rights as a Union citizen. Being unsure as to the answer, the national court referred two questions to the CJ.

A preliminary question in this request for a preliminary ruling was whether the CJ had jurisdiction under Article 51 (1) CFR – was French electoral law implementing EU law? France, Spain and the UK argued that there was no connection thus no CJ jurisdiction. However, Germany, the EP and the Commission disagreed: by adopting national provisions on the right to vote in elections to the EP, France was implementing its obligation under Article 14 (3) TEU. The AG and the Grand Chamber agreed – by ‘performing a specific obligation derived from EU law’ [AG,31] to ‘ensure that the election of Members of the European Parliament is by direct universal suffrage and free and secret’ [CJ, 32] France was implementing Union law.

However, the Grand Chamber narrowed its enquiry to Article 39(2) – it held that as Delvigne was a French citizen seeking the right to vote in France, Article 39(1) CFR –  an expression in the Charter of Article 20(2)(b) TFEU – did not apply. Yet as an expression of Article 14 (3) TEU, the CJ was

‘… clear that the deprivation of the right to vote to which Mr Delvigne is subject …represents a limitation of the exercise of the right guaranteed in Article 39(2) of the Charter’ [45]

Although Mr Delvigne won in relation to this principle, he lost upon its application – the Grand Chamber found that the limitation arising from the French Criminal Code respected the ‘essence’ of the right to vote in the Charter, was proportionate and necessary to meet genuine objectives of general interest. The national rule therefore was not precluded by Article 39(2) of the CFR. Continue reading

Si.mobil v European Commission (T-201/11) – ‎Undermining the Effectiveness of EU Competition law?

si.mobilPablo Figueroa and Catherine Derenne[1]

“”That’s very important,” the King said, turning to the jury.  They were just beginning to write this down on their slates, when the White Rabbit interrupted:  “Unimportant, your Majesty means, of course,” he said in a very respectful tone, but frowning and making faces at him as he spoke.

“Unimportant, of course, I meant,” the King hastily said, and went on himself in an undertone, “important—unimportant—unimportant—important—” as if he were trying which word sounded best.”

(L. Carroll:  “Alice in Wonderland”)

According to the Automec case-law (paras. 73 ff), the European Commission has discretion as to how it deals with complaints.  That said, the Court of Justice of the European Union has clearly stated that the Commission’s discretion when rejecting complaints is not “unlimited” (Ufex and Others v. Commission, para. 89).  Regulation 1/2003 awarded to the Commission two additional grounds under which to dismiss cases.  Pursuant to Article 13, the Commission can dispose of complaints where “one authority is dealing with the case” (13(1)) or where a complaint “has already been dealt with by another competition authority” (13(2)).

In late 2014, the General Court has issued a Ruling in the context of the Si.mobil case interpreting the first of these provisions in a way which further enhances the Commission’s “not unlimited” discretion when rejecting complaints (the “Si.mobil Ruling”).  More specifically, the General Court endorsed the Commission’s deference to the National Competition Authorities of the EU Member States (the “NCA”s).  In our view, in doing so, the General Court allowed the Commission to abdicate from its constitutional Role of Guardian of the Treaties and to disregard the effectiveness of the Competition provisions in those Treaties.

Moreover, the Si.mobil Ruling was issued in the context of a broader series of Rulings which further enhance the Commission’s discretion when rejecting complaints (See Alexiadis, P. and Figueroa, P., “Commission Discretion Unchained”, Competition Law Insight, 17 March 2015).  Indeed, the Si.mobil Ruling becomes particularly surprising in the light of a series of unambiguous and repeated statements of the Commission in relation to the institutional failures of certain NCAs.  Note for example the Speech of former Vice-President Almunia in May 2014 where he expressed concerns in relation to the lack of resources and independence of certain NCAs.

The Si.mobil Ruling hinged on the interpretation of Article 13(1) Regulation 1/2003, according to which, “[t]he Commission may […] reject a complaint on the ground that a competition authority of a Member State is dealing with the case”.

On 14 August 2009, Si.mobil telekomunikacijske storitve d.d. filed a complaint before the Commission against Telekom Slovenije d.d. (“TS”), the incumbent mobile operator in Slovenia, for an alleged abuse of TS’ dominant position consisting, inter alia, in margin squeezes and predatory pricing.  On 24 January 2011, the Commission rejected the complaint mainly on the grounds that the Slovenian NCA (the “UVK”) was already dealing with the case.

The Commission’s case rested on the proposition that Article 13 of Regulation 1/2003 should be interpreted in such a manner that the mere fact that an NCA claims to be dealing with a case is sufficient, in and of itself, to enable the Commission not to take the case (Commission Decision Si.mobil / Mobitel, Section 2(1)).  Under the Commission’s interpretation, even in scenarios with an effect on trade between Member States, and thereby meriting the application of the EU Competition rules, as long as such NCA claims to deal with, for example a margin squeeze case, which tends to be resource-intensive to investigate, the Commission is obliged to relinquish jurisdiction.

However, such a proposition involves a dramatic re-assessment of the Commission’s role as regards the exercise of its jurisdiction in relation to subject-matter which falls within the exclusive competence of the Union, and thus has far-reaching implications for the Community’s legal order.  By de facto completely disregarding the general legal principle of “effectiveness” from its decision to assert jurisdiction to apply European law, the Commission undermines the very foundations of the Treaties whose application is entrusted to ensure pursuant to Article 17 of the Treaty on the European Union (the “TEU”). Continue reading

EU referendums and renegotiations

Maria Kendrick

The last referendum on Britain’s membership of the European Union was forty years ago, neither within the memory nor the lifetime of a significant number of those eligible to vote this time around – which notably will not include the youngest, 16 and 17 year olds. Since then, dissatisfaction with the European Union has been evident amongst its citizens. The Economist recently dated this attitudinal change back to at least 1992, when the French narrowly approved the Treaty of Maastricht in a referendum.  One of the many explanations proffered for this change is the impact of political populists, such as UKIP, in influencing voters. In the same article in The Economist Catherine Fieschi, Director of Counterpoint, is identified as suggesting that a consequence of the rise of populists is the increase in “Coliseum Politics” such as the grand gesture referendum. Although UKIP has not achieved any great success in Parliamentary elections, it appears to have achieved the credit (or blame depending on your point of view) for causing concern amongst the Conservative Party of possible inroads into Tory constituencies and for making the question of Europe loom large, again, in the Conservative Party itself. Hence David Cameron’s Bloomberg speech and subsequent election manifesto promises of a referendum and legislation to guarantee it is conducted.

The populist party or Eurosceptic argument, which is now well versed, centres around a dislike – so it would say – of being dictated to by Brussels and paying a hefty budget contribution which the British taxpayer can ill afford, only to be subject to European laws it does not want. Despite the reticent tone of history, for example from Professor John Mackitosh MP who appeared in the BBC’s referendum results coverage in 1975, to opine that referenda are contrary to the parliamentary system and are therefore unfortunate. Even in the recent House of Commons debates on 7 September 2015 on the European Union Referendum Bill itself, a well known constitutional law historian and academic was quoted as saying that referendums are used where it is thought that the Parliamentary system cannot provide the required level of legitimacy. Paradoxically, both politicians and lawyers alike are citing the preservation of Parliamentary sovereignty as the reason for supporting Brexit whilst at the same time backing the use of a referendum because of a lack of legitimacy in the parliamentary system.

Whatever the political motivation, the election of a majority Conservative government has precipitated developments in the legal situation. The European Union Referendum Bill was swiftly published following the Queen’s Speech. It initially worded the question as Should the United Kingdom remain a member of the European Union? This was considered to be too one sided for the Electoral Commission, which has proposed that the question be changed toShould the United Kingdom remain a member of the European Union or leave the European Union? to which its suggested options for responses are “Remain a member of the European Union” or “Leave the European Union”listed in that order. This wording was subsequently accepted by the Prime Minister. The ‘yes’ and ‘no’ camps have become the ‘remain’ and ‘leave’ camps.

In addition to the focus on the wording and layout of the referendum question some of the legal technicalities of the provisions of the European Union Referendum Bill have developed a particular significance of their own. It is not difficult to see why. In 1975 the referendum result was an overwhelming ‘Yes’ to the union, with a majority vote of 70% in favour of continued membership being returned in most regions throughout the UK. The ‘leave’ camp appear convinced that this was due to the large disparity in the capabilities,- or rather, resources – between themselves and the opposing campaign. Both the establishment and big business, which then acted in cohort in support of Britain’s membership, are reported to have outspent the ‘no’ campaign by twelve to one.  A concern to avoid history repeating itself has prompted the fervour of debate on purdah, which has been seen recently in the House of Commons. The ‘leave’ camp expressed concern that if the legislation allowed them to be outspent again, they would surely lose and this would undermine the public’s faith in the outcome. The role of BBC journalists in asking businessmen and women questions (even if inadvertently) in interviews on subjects unrelated to Europe as to the future of their business should there be a vote to leave the EU was discussed by John Redwood in an impassioned speech. Essentially, any possibility of an implied use of government resources in the purdah period (up to 28 days before polling day), however tenuous, has been criticised for compromising the legitimacy of the result. Those in the ‘leave’ camp – comprising MPs from all political parties – were keen, if not to have the law drafted in their favour, to avoid having it drafted in their disfavour – all in the name of democracy of course. When it came to it, the government was significantly outvoted on this issue. Continue reading

Greece: My two (euro)cents

CormacCormac Mac Amhlaigh

Greece is obviously at the forefront of many EU scholars’ minds over the past number of weeks. There has been an avalanche of commentary and analysis on the Greek bailout negotiations both from those with intimate knowledge of the situation and familiarity with Greek politics, the EMU and sovereign debt crises as well speculation from the sidelines from those of us more ignorant of these matters.  Therefore as someone whose credibility in the debate (such as it is) is limited to the expertise of the constitutional lawyer with a good familiarity of EU law generally, I have limited my two (euro)cents on the topic to a number of (mostly factual) propositions related to the crisis for what they are worth. Most I think are obvious and (hopefully) few are contentious but I think that they are worth (re)stating in the context of the war of words and recrimination from all sides present in the debate in recent days.

  • Greece went bust. The fallout from this was never going to be pretty. There were going to be losers, including losers in Greek society, whatever happened.
  • Debt relief in some shape or form has been part of Troika negotiations at least since 2012.  This includes, significantly from the viewpoint of commentary in some media, debt relief on money owed to private investors who took a significant ‘haircut’ on their investments in 2012 as well as other means of extending Greece’s loans and lowering interest rates to lighten the debt burden.    I will not comment as to whether debt relief should have been more prominent in negotiations now or before or whether private investors should/could have lost more on their investment other than to say that at least some private creditors should be counted amongst the losers of the crisis.
  • Losers generally complain and protest – it doesn’t mean that they have been dealt with unjustly.  I will not comment on whether the actual losers in the Greek crisis were the ‘right’ losers and/or whether they have been treated unfairly.
  • There is a strong case for a moral duty for all involved to mitigate the effects of Greece’s bankruptcy on the most vulnerable in Greek society.  I will not comment on whether this was actually achieved or could have been achieved more effectively.
  • Greece is a first world country. Even within the Eurozone there are poorer countries and more vulnerable people than Greece/Greeks, not to mention globally.
  • The Eurozone is not a (federal) state.
  • No country (or at least no pre-1995 accession country) was forced to join the eurozone. Even if we accept the argument that eurozone membership benefits one or one group of member states more than others – and is not entirely clear that it does – each EU Member state has to take responsibility for bringing its country into the eurozone.
  • There are 19 democracies in the Eurozone.  It is arguable  that this is perhaps too many. As the Eurozone negotiations revealed, what was possible in negotiating Greece’s latest package was contingent upon whether eurozone representatives had/could gain the support of national MPs in national governments and/or national public opinion.  This arguably made the bailout negotiations much more complex and acrimonious than they might otherwise have been.
  • It is a truism that the eurozone was badly designed; although this may not have become so apparent so quickly had the global financial crisis not happened when it did. What this debacle has taught us is that the euro cannot live on rules alone.  We have known this for some time ever since the eurozone states beginning with Germany started to breach the rules of the Stability and Growth Pact. Therefore further and deeper reforms to Eurozone governance are necessary and should be inevitable beyond drafting and attempting to enforce new fiscal disciplinary rules. There are many possible reforms, here are three:
    • Establish a new permanent mechanism to off-set the inability of individual eurozone economies to deal with major shocks due to their loss of monetary and fiscal sovereignty through some sort of fiscal transfer fund or otherwise.  The ESM operates too much like an international organisation like the IMF, involving conditionality and MoUs. This model is unsuited to the more integrated condition of Eurozone states.
    • Establish independent EU financing through EU taxation to finance this fund.
    • Make the eurozone accountable to one democracy rather than 19 – i.e. the European Parliament so that EU taxpayers, as represented through the European Parliament, rather than national taxpayers, represented in national parliaments, shoulder the burden of bailouts (but only where absolutely necessary).

These proposals will require a(n) (even) greater sense of solidarity between Eurozone states than has been displayed since the eurocrisis began. However, it will need to be found, and quickly, if the euro is to survive.

The CJEU’s Response to the German Constitutional Court in ‘Gauweiler’

juropean-justiceProf Herwig Hofmann

This post originally appeared on the europaeus site and is re-produced here with permission.

Do exceptional situations make exceptionally good or exceptionally bad law? This is an old question often asked anew – especially in the context of the post-2008 economic crises travails of the European Economic and Monetary Union (EMU). The legal disputes which resulted from differing opinions about how to solve the crises and also how, incidentally, to improve the EMU’s governance have reached the Court of Justice of the European Union (CJEU). The most prominent case to date is the so-called Gauweiler case, a preliminary reference procedure initiated by the German Constitutional Court, the Bundesverfassungsgericht (BVerfG). I discuss this case in more fully argued working paper available on SSRN, ‘Gauweiler and OMT: Lessons for EU Public Law and the European Economic and Monetary Union‘.

Gauweiler concerns the legality of the decision of the Governing Board of the European Central Bank (ECB) of September 2012 on so called ‘Outright Monetary Transactions’ (OMT). This case is significant for legal integration in the EU since, although it is the first instance in which the German BVerfG has ever taken advantage of the preliminary reference procedure (Article 267 TFEU), the reference by the BVerfG was formulated in very terse words. Essentially, the reference asks for clarification about the legality of the ECB’s OMT decision. But that reference is not formulated in terms of a dialogue between Courts, each respecting the other’s distinctive powers. Instead, the BVerfG explains why it considers the ECB’s decision to be ultra vires of its mandate and asks the CJEU essentially to confirm this interpretation warning about potential consequences in its assessment of the ‘constitutional identity’ of the Federal Republic of Germany. Inherent in the reference is a thinly veiled threat not to accept the exclusive competence of the CJEU to review the legality of EU law and, instead, to unilaterally hold an act of an EU institution to be invalid within a Member State of the EU. The BVerfG reinforced its sceptical position of the primacy of EU law over the law of Member States by recalling in its decision for preliminary reference its case-law concerning the limits it perceives are set for the Federal Republic of Germany’s integration in the European Union. In its decision, it refers to and further interprets the scope of its own case-law making reference inter alia to its judgments concerning the Treaty of Maastricht, the Treaty of Lisbon and in Honeywell, as precedent for its questions to the CJEU. Continue reading

Reform of the EU’s Court System: Why a more accountable – not a larger – Court is the way forward

Alberto Alemanno and Laurent Pech

Recent media coverage of the EU Court of Justice suggests that the period of ‘benign neglect by the powers that be and the mass media’ – once described by Professor Eric Stein – may well be truly over once and for all. The most unexpected aspect of this rather unique level of media attention is that it does not directly concern any particular judicial ruling by a Court, which, since it decided its first case in 1954, has issued more than 28,000 judgments and orders. Instead, the Court of Justice (CJ) and its President, Mr Vassilios Skouris, have been subject to unprecedented media scrutiny following intense internal infighting about a contentious proposal which officially aims to ‘reinforce the efficiency of justice at EU level’ by doubling the number of judges working at the General Court (GC).

Before offering a review of the CJ’s diagnosis and critically assessing the solutions defended by its President, it may be worth briefly recalling that the GC – initially known as the EU’s Court of First Instance – was set up in 1989 to help the CJ cope with its increasing workload. To help in turn the GC cope with a similar issue, the first EU specialised ‘judicial panel’ was set up in 2005: Known as the EU Civil Service Tribunal (CST), the jurisdiction is exclusively limited to disputes between the EU and its civil servants and consists of 7 judges. By contrast, both the CJ and the GC currently consist of 28 judges, with one judge from each Member State. The CJ is however also assisted by nine Advocates-General.

The Court of Justice’s diagnosis

The casus belli, which has prompted the current debate about the EU’s judicial architecture, is the increase in the number of new cases brought before the GC (from 398 in 2000 to 912 in 2014); the stock of cases currently awaiting to be decided (1,423 in 2014 and expected to rise to 1,600 in 2015); and finally, the increasing number of actions for damages brought against the EU due to the excessive length of proceedings before the GC on the basis of Article 47 of the EU Charter, which guarantees a right to have cases heard within a reasonable time.

While increasing workload is not in itself a new phenomenon – and has indeed been a recurrent problem for both the CJ and the GC – the latter’s growing workload has been seen as particularly worrying. Indeed, in addition to a rapid increase in the number of cases before it, the GC’s productivity has decreased despite an increase in the number of both judges (due to the Union’s enlargement) and their legal assistants known as référendaires (see howeverhere for a recent update from four GC judges where it is submitted that 80% of the GC’s backlog has now in fact been liquidated and that in the first four months of 2015, the number of completed cases exceeded the number of new cases filed).

In parallel to these distressing trends, the situation has begun to worsen as well with respect to the CST due to the rather childish inability of the Member States to fill two vacant slots since September 2014 – out of a total of seven as previously noted – following persistent disagreement about how the principle of rotation should be implemented.

The Court of Justice’s latest solution

In 2011, the CJ initially refused to consider the creation of new specialised courts – a solution which at the time was favoured by the GC itself – and suggested instead the appointment of 12 extra judges at the GC. However, following persistent disagreements between the Member States on how to rotate the appointments between themselves, this preliminary solution was removed from a package of reforms to the Statute of the Court of Justice.

This led the President of the CJ to suggest last October the progressive doubling of the number of GC judges (from 28 to 56). However, to mitigate the economic burden engendered by the proposed doubling, the abolition of the CST was also suggested – with its seven judges expected to move to the GC – and a gradual implementation of the reforms, with an initial increase of 12 judges in 2015; a further increase of 7 in 2016 following the dissolution of the CST and the transfer of its case-load to the General Court; and finally, a last set of 9 additional judges to be appointed in 2019. The proposed abolition of the CST was something of a surprise as most observers consider it a success story and indeed, it has been presented as such by President Skouris himself on the occasion of its 5th Anniversary.

Be that as it may, the CJ’s proposal would therefore ‘only’ result in the net creation of 21 extra judges, at an alleged net cost of €13.875m per year, assuming that there are 7 judges working at the CST in 2016. While this amount does not appear to take into account the €168m for the construction of a new tower, an expense which is however justified by the need to ‘repatriate’ staff who have been working in prefabricated buildings since 1999, the economic cost of the CJ’s proposal may be viewed as relatively modest. One may for instance compare this estimated cost to the total amount of damages currently claimed against the EU on the basis of Article 47 of the EU Charter, i.e., €26.8 million. The economic importance of the cases heard by the GC is also such that the cost of the CJ’s proposal is not a significant argument one may raise against it. We argue however that the solution put forward by the President of the CJ (and recently endorsed by the Council) is not adequate both from a structural and sustainability point of view.

Critical Assessment

As nicely summed up by our colleague Steve Peers, supporters of the CJ’s solution have relied on the following arguments to support the proposal to progressively double the number of GC judges:

  1. It would be a more flexible solution than the creation of specialised courts to the extent that litigation may increase in areas not initially foreseen and that cases most suitable for specialised courts tend to be repetitive and easy to deal with;
  2. Keeping such cases closer to the CJ would also make sense considering that the CJ may have to deal with similar cases via national references for a preliminary ruling;
  3. The appointment of new judges to the GC could be done swiftly and would also avoid any pork-barrel politics should the specialised courts not consist of a judge per Member State (as has been the case with the CST);
  4. Finally, the CJ’s solution would have the singular advantage of simplifying the EU judicial system.

These are sound arguments but unfortunately none of them are, in our view, empirically substantiated. The lack of any proper prospective impact assessment of the CJ’s proposal is, in this respect, particularly regrettable. Similarly, one may deplore the top-down, not to say authoritarian, approach adopted by the President of the Court, which suggests a deliberate attempt to avoid any meaningful discussion of reasonable alternative proposals, such as the establishment of specialised courts with jurisdiction to hear and determine direct actions in a specific area. The CJ’s proposal also marks a shift away from the principle of specialisation – endorsed by the Masters of the Treaties and set to materialise into the creation of subsequent specialised chambers, such as in trademark litigation (representing around 1/3 of the GC’s workload) – towards a generalist jurisdiction made up of two judges per each Member State.

As for the argument raised against the principle of specialisation – to avoid creating a court with a ‘rigid’ jurisdiction that might not be justified in the light of future workload – well, the same argument could actually be invoked against the creation of a ‘super-GC’ whose future caseload is unlikely to double in the near future. This is especially true given the limited access to justice in direct actions currently granted by the Treaty as interpreted by the CJ. More critically, we submit that the doubling of GC judges is an unnecessary distraction from less visible and arguably more decisive issues such as case management and productivity per personnel unit. Those challenges, if tackled properly, would most likely bring long-lasting benefits to the institution without entailing a radical restructuring of the EU’s judicial system.

We therefore propose to step back from what has become a largely emotive and not always evidence-based debate in order to gauge whether an alternative diagnosis and set of reforms should not be in order. Continue reading

Spain v Parliament & Council (C-146/13) – a giant step towards (dis)integration of the European patent system

Aurora Plomer

The green light for the introduction of a European unitary patent and a centralized patent court (UPC) was finally given by the CJEU in Spain v Parliament and Council (Case-146-3). This marks the end of longstanding but frustrated  efforts by the European Union to introduce a uniform patent system in Europe. Like its forerunners, the aim of the latest initiative in the form of the EU ‘patent package’,  is to create the legal conditions for a more secure, less complex  and less costly system for industry and investors to foster scientific and technological advances in the Union.  But whilst driven by the European Union,   the ‘patent package’   is a   mix of EU Regulations and an international Treaty  signed by twenty five out of the existing twenty eight Member States. The  ‘unitary patent’  or European patent with uniform effect (EPUE) across the twenty five signatories, has been created by means of Regulation (EU) No 1257/2012 of the European Parliament and of the Council of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection (OJ 2012 L 361, p. 1).  By contrast,  the centralized  ‘unified patent court’ (UPC),  with exclusive jurisdiction to enforce and revoke the EPUE,  is the product of an international treaty (the Agreement on a Unified Patent Court, signed at Brussels on 19 February 2013 (OJ 2013 C 175, p. 1.)  The  legal architecture of the patent package  is therefore complex  and raises important constitutional questions regarding the legal basis of the patent package under EU law, the delegation of powers to the European Patent Organization and the principles of autonomy and uniform application of EU law. These questions were raised by Spain in an application for annulment of the legal instruments creating unitary patent protection. The Grand Chamber’s decision of 5 May 2015, rejecting Spain’s application,  has removed the last legal objection to the implementation of the ‘patent package’.  Spain raised seven pleas, all rejected by the court, in a laconic judgment which leaves many questions open. Some of the most salient issues left open by the judgment are discussed below.

By way of background to the Court’s ruling, it is important to note that patents have historically been territorial in nature so their enforcement and validity is determined by national laws (Article 3 TRIPS).  Since the adoption of the European Patent Convention (EPC) in 1973, applicants have been able to obtain a European-wide patent granted by the European Patent Office (EPO) covering any designated Member State of the European Patent Convention (currently thirty eight). The EPC preserves the principle of territoriality, so the legal effect of a European Patent granted by the EPO is the same as if the patent had been granted by the national patent office of a Member State. The grant of a European Patent thus results in a ‘bundle’ of national patents whose validity and revocation post-grant stands to be determined under the national laws of each designated Member State. A large scale study of  9,000 patent suits from seven of the largest countries in the European Union during 2000-2010 shows that judicial outcomes of revocation and infringement proceedings post-grant diverge radically across the different countries and types of patented technologies in Europe, making for a complex, uncertain and costly legal environment.  In this light,  the creation of a centralized judicial system  with exclusive jurisdiction on enforcement  of the unitary patent (UPC) has undoubtedly, in theory, many attractions from an applicant’s perspective.  Whether the legal creature created by the EU will meet applicants expectations is less clear.

Under the patent package,  applications for a unitary patent will be processed and administered by the EPO (Article 9 of the Regulation) under the rules and procedures of the EPC (Article 2(a) of the Regulation). Once granted, the European patent with uniform effect (EPUE) shall have unitary effect amongst the participating Member States (Article 2(b)). Of the seven pleas raised by Spain and dismissed by the Court, three stand out.

Spain argued that the contested regulation should be annulled as contrary to the rule of law  in Article 2 TEU because the administrative procedure for the grant of the unitary patent has been delegated to  the EPO (under Article 142 of the EPC)  but the decisions of the EPO boards are not subject to any form of judicial review to ensure the correct and uniform application of EU law and the protection of fundamental rights. The Court’s dismissal of Spain’s argument simply reiterates AG Bot’s technical answer (18th November 2014) that the contested regulation in no way delimits the condition for the grant of European patents which are exclusively governed by the EPC and not EU law. Yet, the Court’s reasoning, whilst formally correct,  represents the EPO’s intervention as an ‘accessory’ administrative act of registering a European patent granted under EPC rules as a European Patent with Unitary Effect.   In so doing, the answer evades the critical point raised by Spain that the decisions of the  EPO boards,  at the grant stage of the European patent and its ‘accessory’ registration as a EPUE – are not subject to judicial scrutiny under EU law or indeed any other form of judicial scrutiny.  Neither is the point of purely academic interest as underscored by the case  Virgin Atlantic Airway Ltd v Zodiac Seats UK Ltd [2013] UKSC 46. As the result of an administrative error by the  EPO examiners, the applicant was exposed to a claim worth £49 million  in infringement proceedings in the UK. The UK Court held that the error could not be rectified at the post-grant stage unless the EPO corrected the error. The applicant’s request to the EPO to correct the error was originally refused prompting further appeals at the EPO and in the UK courts highlighting the shortcomings of the EPO tribunal system (the case has been extensively discussed in IP blogs; for example IP Copy). By contrast, in legal proceedings in national courts or administrative bodies where EU law is engaged, an applicant in similar circumstances could invoke Article 41 of the EU Charter. Not so with the EPUE and the EPO boards.  The recent dismissal of one of the EPO officials has further fuelled concerns about  the independence and fairness of the EPO tribunals, prompting an unprecedented intervention by Sir Robin Jacob (see letter and EPO response). Also, for a discussion of parallel proceedings in German Courts Dr. Stjerna’s article on the topic is available in PDF here. Continue reading

Should Damages in Public Procurement Hinge on Disappointed Bidders’ Commercial Interests? A Comment on Energy Solutions EU Ltd v Nuclear Decommissioning Authority

ASGDr Albert Sanchez Graells, School of Law, University of Leicester

In its recent Judgment of 23 January 2015 in Energy Solutions EU Ltd v Nuclear Decommissioning Authority [2015] EWHC 73 (TCC), the High Court ruled on a preliminary issue in a public procurement dispute and held that the review court has no discretion (not) to grant damages for losses resulting from a breach of the public procurement rules. In my view, the Energy Solutions v NDA Judgment should be criticised at least for two reasons: firstly, because it misinterprets the EU rules on public procurement remedies and their link with the general principle of State liability for breaches of EU law; and secondly, because it creates an analytical framework based on the commercial decisions of disappointed bidders that would result in excessive (strategic) claims for damages. Moreover, the Energy Solutions v NDA Judgment sheds light on an important shortcoming of the system of public procurement remedies that is perpetuated under the recently adopted Public Contracts Regulations 2015 (SI 2015/102). This comment addresses these issues in turn.

Background

The dispute arises after Energy Solutions (as part of a bidding consortium, but that is not relevant for our purposes) was not chosen as the winning bidder in a tender for a nuclear waste management contract with the Nuclear Decommissioning Authority (NDA). After expressing its disagreement with the award decision and seeking additional information in the ensuing debriefing process, Energy Solutions eventually challenged the tender procedure within the 30-day limit applicable under reg.47D(2) of the applicable Public Contracts Regulations 2006 (SI 2006/5, as amended, primarily by SI2009/2992). By the time the challenge was effected, NDA had already entered into a contract with the winning bidder. Energy Solutions sought compensation for the damages it alleged to have suffered as a result of the improper conduct of the tender procedure.

NDA tried to bar the damages action by arguing that a failure to challenge the award decision within the 10-day standstill period provided for under reg.32(3) Public Contracts Regulations 2006 (which could have prevented it from entering into the contract) broke the causal link between any breach of the applicable procurement rules and the ensuing damages (which, If any, would then derive from the tardiness of the challenge). NDA basically claimed that having foregone the possibility to prevent the award of the contract to another tenderer by activating the suspension foreseen in reg. 47G Public Contracts Regulations 2006, Energy Solutions had also lost the possibility to seek damages compensation. In support of that position, NDA submitted that, under reg.47J(2)(c) Public Contracts Regulations 2006, the review court retained discretion (not) to award damages resulting from a breach of public procurement rules in circumstances such as those in the case (ie the lost opportunity of litigating within the standstill period).

The High Court ruled against NDA on both points. Edwards-Stuart J found no basis for the

submission that any award of damages is dependent on the level of gravity of the breach, or any other such factor, and thus dependent on an exercise of judicial “discretion” or judgment, or whether, absent any failure to mitigate its loss, having proved a breach of the [public procurement rules] a claimant is entitled to anything other than damages that should be assessed by reference to ordinary principles. It may well be that the claimant’s conduct will have been such that the court will be very reluctant to make any assumptions in its favour in relation to damages, but that is simply an aspect of the usual approach of the court to the assessment of damages (para 86).

As mentioned above, this finding is open to criticism, both for its inconsistency with EU law and because it creates an analytical framework that may result in excessive claims for damages. Each of these issues is addressed in turn. The problem derived from the diverging duration of the standstill period and the time limit for the challenge of award decisions is discussed last, as it also affects the brand new Public Contracts Regulations 2015. Continue reading

Sanneh and Others – access to welfare for Zambrano carers

 

Dr Iyiola Solanke

If citizenship is the fundamental status for EU citizens, what is its substance for child citizens who are too young to enjoy the rights set out in Articles 21-23 TEU to work, travel, vote or petition the EP? What does the principle in EU law of ‘genuine enjoyment of the substance of citizenship’ mean if you are a child? And what are the implications for your parent or parents? These are central questions for a specific group of children now growing up across the EU – those who themselves hold EU citizenship but their parents do not. As stated in the Zambrano case,  the parents of such ‘Zambrano Minors’ derive a right of residence in the EU so that the child is not deprived of the genuine substance of Union citizenship. Although the Court of Justice has subsequently considered when this genuine enjoyment is impinged (Macarthy, Dereci, O & O) it has not made any remarks on the substance of citizenship rights for the children. It may be necessary for it to do so to prevent these children from being consigned to lives of poverty by national interpretation of its principle.

The Court of Appeal has delivered a decision concerning access by the parents of Zambrano Minors to social assistance. The parents challenged the Regulations adopted by the Coalition Government to incorporate the Zambrano principle into national law. Three Regulations were designed to specifically exclude these parents from rights to social assistance that they would otherwise have as lawfully resident persons. In line with its policy to make Britain hostile to immigrants, the Government decided that these parents should be in the same position as those who do not have a lawful right to reside. The ‘Amendment Regulations’ therefore exclude all ‘Zambrano Parents – those in work and those out of work – from income-related benefits including income support, jobseekers allowance, employment allowance, pension credit, housing benefit, council tax benefit, child benefit and child tax credit. The Home Office justifies this policy as a measure to prevent and deter ‘benefit tourism’ but the parents argued that this policy was a faulty application of the Zambrano principle and discriminatory under EU law. It was argued that a proper application of the principle called for them to be in the same position as other EU nationals.

The Justices agreed with the Home Office. Drawing upon the ‘effective citizenship principle’, they held that

  1. Rights derived from an EU citizen [3] are not EU rights [95]. Thus although ‘their status is derived from the EU citizenship rights of the child as interpreted by the CJEU’ ‘EU law has no competence in the level of social assistance to be paid to the carer’. This is ‘exclusively governed by national law’ [27];
  2. ‘Zambrano carers’ derive their right to reside from Article 20 TFEU and therefore fall outside the EU cross-border social benefits legislative scheme (the ‘EU CBSBL scheme’) set out in the Citizenship Directive, the Long Term residence Directive and the Family reunion Directive [42];
  3. ‘Genuine enjoyment’ does not ‘require the State to guarantee any particular quality of life’ [32 & 171] – a ‘Zambrano carer’ is protected from compulsion to leave but this does not provide as a corollary a right for parent and child to live free from want and poverty. Zambrano carers are not to be left ‘destitute’ but member states remain free to determine access to benefits where individual situations fall outside of the scope of EU Directives [83];
  4. The proportionality principle is irrelevant because the question is beyond the scope of EU law;
  5. The EU principle of non-discrimination in EU law and the ECHR is inapplicable.

Continue reading