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

A criticism of the CJEU’s ruling that allowing London taxis to use bus lanes while prohibiting private hire vehicles from doing so does not appear to involve State aid (Eventech, C-518/13)

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

In its judgment of 14 January 2015 in Eventech (C-518/13, EU:C:2015:9), the Court of Justice of the EU (CJEU) ruled on the preliminary question referred by the Court of Appeal (England and Wales) in the Addison Lee “taxis in bus lanes” case [as part of the challenge of the High Court’s decision in Eventech Ltd (R on the application of) v Parking Adjudicator (2012) [2012] EWHC 1903 (Admin)]. The CJEU decided that allowing London taxis (black cabs) to use bus lanes while prohibiting private hire vehicles (PHVs) from doing so does not appear to involve State aid. While the Eventech judgment leaves a minimum scope for the Court of Appeals to find differently in view of the specific facts of the case and the parts of the file not referred to the CJEU, this is most likely the end of the dispute.

The decision comes at a time when the regulation of the taxi sector is under significant pressure due to the political and economic waves that sharing economy initiatives (such as Uber) create – or, in the words of AG Wahl in the Eventech Opinion, “taxis and PHVs are engaged in fierce competition with each other across Europe, and London is not the only city where conflicts have arisen” (EU:C:2014:2239, para 2). This is a sector where competition rules have always been difficult to enforce due to the heavy regulation to which it is subjected (OECD, Competition Roundtable on ‘Taxi Services: Competition and Regulation’, 2007). Some claim that it is a sector ripe for proper deregulation and liberalisation, while others claim the opposite [for recent discussion, see L Eskenazi, ‘The French Taxi Case: Where Competition Meets—and Overrides—Regulation’ (2014) Journal of European Competition Law & Practice, and Publicpolicy.ie, The Taxi Market in Ireland: To Regulate or Deregulate? (2014)]. The discussion on the State aid implications of certain privileges derived from such regulation in crisis, and particularly the privileged use of bus lanes, added one layer of complication that the CJEU seems to have been keen on taking off the table.

The legal dispute in front of the CJEU can be condensed to opposing views on whether allowing black cabs to use bus lanes while prohibiting PHVs from doing so infringed the prohibition in Article 107(1) TFEU. It can be further narrowed down to the two key issues of whether this policy involves a commitment of State resources and whether it confers on taxis a selective economic advantage. Both elements need to be present for the prohibition of Article 107(1) TFEU to apply. The CJEU found in the negative on both aspects and determined that the practice of permitting, “in order to establish a safe and efficient transport system, black cabs to use bus lanes on public roads during the hours when the traffic restrictions relating to those lanes are operational, while prohibiting minicabs from using those lanes, except in order to pick up and set down passengers who have pre-booked such vehicles, does not appear, though it is for the referring court to determine, to be such as to involve a commitment of State resources or to confer on black cabs a selective economic advantage for the purpose of Article 107(1) TFEU” (C-518/13, para 63).

In my view, the Eventech judgment is criticisable in both areas. It fails to address the issues of economic advantage and selectivity in a functional manner—not least because the analysis of the selectivity of the measure ultimately relies on an assessment of ‘equality’ or ‘comparability’ of the legal position of black cabs vis-à-vis PHVs that falls into a logic trap derived from the pre-existing regulation of black cabs. Moreover, the analysis of the element of transfer of State resources is very counterintuitive and seems to contradict both economic theory (particularly as the use of public goods is concerned) and the case law on access to essential facilities under private ownership.

The finding that State resources are not involved is partial and flawed

Following the Opinion of AG Wahl, the CJEU engages in a rather counterintuitive approach to the issue of the transfer of State resources, which focusses on whether the State is forfeiting revenue by not charging black cabs for access to the bus lanes or by not imposing fines on them when they use the bus lanes, as it does with PHVs (judgment, paras 36-46). This approach comes from the AG Opinion, where he had decided to assess the question from the perspective of the regulatory powers of the Member State and fundamentally concluded that, in the exercise of those regulatory powers, there is no obligation to impose a charge for access to public infrastructure (Opinion, paras 24-35). Continue reading

Case Comment: McCarthy (C-202/13) (Grand Chamber), 18th December 2014

Catherine Taroni

Context

This case was referred from the High Court R (on the application of McCarthy and ors.) v the Secretary of State for the Home Department [2012] EWHC 3368 (Admin), and considered the applicability of Directive 2004/38 to situations not traditionally falling within the concept of a Union citizen moving to another Member State, and derivative rights for third-country family members.

The O and B decision of the CJEU had addressed some issues in relation to the rights of TCN family members of EU citizens residing in their home Member State, and this case sought to address the issue of what can be required of third-country national family members of EU citizens entering the UK.

Facts

Mr McCarthy is a dual UK/Irish national, his wife is a Colombian national, and their daughter is also a dual UK/Irish national. Mr McCarthy has lived in Ireland for 52 years, only residing in the UK for six years, from 1967 – 1973. The family has lived in Marbella, Spain since May 2010 where they own a property; they also own a house in the UK, to which they regularly travel. Mrs McCarthy has to travel to Madrid to renew her family permit every time she wishes to travel to the UK with her family. She has been refused permission to board flights to the UK when she has presented her residence card without the family permit.

The Secretary of State for the Home Department issued guidance to carriers to discourage them from transporting TCNs who are not in possession of a residence permit issued by the UK authorities. Under section 40 of the Immigration and Asylum Act 1999, a carrier who fails to meet that requirement is required to pay a ‘charge’.

The Advocate General’s Opinion

AG Szpunar gave his Opinion on 20th May 2014, and argued that the provisions of Directive 2004/38 should apply by analogy to the current situation, which involved visits to the UK, where Mr McCarthy is a national, rather than to a Member State of which he was not a national. The Advocate General advised the Grand Chamber that the UK is in breach of free movement law in relation to the requirement of the family visa In addition to residence card, and that the UK’s Frontier Protocol did not give it an opt out in relation to restricting fundamental free movement principles. Continue reading

After Opinion 2/13: how to move on in Strasbourg and Brussels?

John Morijn

In its recent Opinion 2/13 the Luxembourg Court found that plans for the EU to accede to the ECHR are not compatible with Union law as it currently stands. This ruling has been critically received, including on this blog (see here (Lock), here (Besselink), here (Michl), here (Douglas-Scott), here (Peers) and here (O’Neill)). The immediate focus has been on how the Opinion should be evaluated as a matter of Union law and followed up inside the EU. To that effect it has been suggested that the draft accession treaty would need renegotiation, or that a text with Treaty status (a Protocol) should be added to the existing EU Treaty texts which would themselves be left intact. Are other options available too in Brussels, for example freezing accession ambitions for a while or changing existing Treaty texts?

Clearly, no matter what solution is eventually found, it will (once again) take years. This raises another important prior question: what is the Strasbourg Court likely to do until an EU accession solution 2.0, or any EU-internal alternative is in place? In particular, will Opinion 2/13, and its revealing reasoning for how the Luxembourg Court currently views the place of human rights protection in Union law and the leeway that Member States have in diverting from Union law if their ECHR obligations so require, have implications for the Strasbourg Court’s “EU approach” (see here and here for its own factsheets regarding its general approach and that in Dublin cases)? This contribution offers some first reflections on moving on in Strasbourg and Brussels.

The Opinion: first a step back

It is quite understandable that the Luxembourg Court’s ruling has met with considerable disappointment. It has been suggested that it has prioritised the protection of its own position over EU human rights protection. But, taking a step back, perhaps this time there was actually (also) a veritable case for “blaming Brussels” too. For were the instructions laid out in the Treaty and the Protocols sufficiently clear to begin with? Is it at heart at all possible to establish independent external judicial review, apparently for reason that human rights protection was felt not to be properly safeguarded in the existing set-up (article 6 TEU), without redistributing competences to the disadvantage of the Luxembourg Court (Protocol 8)? In other words, if the whole point of accession actually was to change something in the institutional design of the EU, the make-up of legal remedies and even the way in which Union law had been interpreted so far by the Luxembourg Court, why not state that more clearly from the outset? From that perspective the Opinion by the Court may be a reflection of the convoluted drafting of the EU accession instructions by the Herren der Verträge.

Looking at the state of affairs from another perspective, perhaps the fact that it is now “back to the drawing board” is also a unique second (or third) chance to ask the basic prior question of the Lisbon Treaty text: quite how can the application of an EU internal human rights document (the Charter) that the Luxembourg Court is under an obligation to apply, be combined with external judicial review by the Strasbourg Court of the EU’s (including the Luxembourg Court’s) performance with regard to the ECHR, if that ECHR and the way in which it is interpreted are themselves part (but only part) of the normative content of the Charter? This is not an easy one. A binding Charter and EU accession, it should be remembered in this context, were initially alternative solutions to “fill the EU human rights gap”. Only later did they become cumulative elements in the EU treaties, as a “solution” without a prior problem analysis justifying this double-headed approach. Yet, curiously, given the great stress accorded to EU accession so far their development has somehow remained unconnected. Additional instructions on how to dovetail their two separate logics may be unavoidable.

Then Opinion 2/13 itself. In fact, by the standards of any Court ruling, it offers a surprisingly candid, concise and (mostly) clear analysis. Some of us may not like what we read, and some cross-translation from Union law to human rights law expertise may be required to clarify its full significance, but it is extremely helpful for considering future directions in Strasbourg and Brussels. In particular the reasoning under the headings “preliminary considerations” (par. 153-177) and “the specific characteristics and the autonomy of EU law” (par. 179-200) is revealing in a number of different respects, including with regard to

  • the Court’s extension of its Melloni-reasoning to ECHR Member States’ freedom to go beyond what is required by ECHR minimum norms, as well as further (unstated) implications of this reasoning with regard to interpreting the Charter and the ECHR side-by-side, and
  • the Full Court’s approach to mutual trust in the EU in the light of EU Member States’ parallel ECHR commitments, and its reference to the 2011 Luxembourg Grand Chamber ruling in NS.

These two elements will be briefly highlighted below. I agree with Scheinin that in thinking about responses to the Court’s Opinion it seems more fruitful to consider these (and many other relevant) elements of the analysis rationally, in the light of the broader questions of post-Lisbon Union human rights protection architecture, rather than being stuck in disappointment for too long. Continue reading

Kaltoft – a step (in the wrong direction?) towards protection from weight discrimination under EU law

Dr Iyiola Solanke

Over the last two to three decades the prevalence of overweight and obese[1] people has become a major public health issue across countries, age-groups, class, race and ethnicity. As long ago as 2003, research estimated that 61% of Americans were overweight, and 20% were obese. In 2006, the OECD ranked Britain’s overweight and obesity rate (62%) as the worst in Europe and the third-worst in the world, behind Mexico (69.5%) and the U.S (67.3%). In 2008, more than 1.4 billion adults were overweight, including over 200 million obese men and nearly 300 obese million women. More than 40 million children under the age of five were overweight in 2011. Children and adults are getting fatter.

The rise in body size is a public health issue because of its cost: medical experts link numerous ailments to excess weight, such as diabetes, angina, osteoarthritis, stroke, gout, gall bladder disease, breast cancer, cancer of the colon and ovarian cancer. Overweight and obese people are said to be more prone to heart disease, stroke, high blood pressure, diabetes, chronic depression and many other life threatening conditions. An overweight child is likely to become an overweight adult. The cost to the public purse could be billions of pounds.

The CJEU has now confirmed that obesity is also a matter for equality law. EU law does not formally prohibit fattism – like other public health issues, this remains within the competence of the member states[2] – but in the first case of its kind, the CJEU decided that discrimination on the grounds of obesity can fall within the disability strand of the Equal Treatment Directive 2000/78. This was stated in answer to questions arising before a Danish court during a case concerning the weight of a childminder.

Kaltoft

Mr Kaltoft was hired by the Municipality of Billund in 1998 on a permanent contract as a childminder. He was obese at the time of his initial employment and, despite periods of weight loss, remained such throughout his 15 years in this post. From March 2010, he appeared to be under informal review, being visited by his boss and asked about his weight. During 2010, when the number of children in Billund fell, he was given fewer children to look after. That same year, he was chosen to be dismissed. When Kaltoft asked why he was the only childminder to be dismissed, he was told it was due to his decreased workload. Kaltoft was convinced that it had something to do with his weight.

His trade union brought an action before the District Court seeking compensation for him, arguing that he had been subjected to weight discrimination. The Danish court stayed proceedings to ask the CJ four questions, of which only the first and fourth were answered: whether it is contrary to EU law (for example Article 6 TEU on fundamental rights) for a public-sector employer to discriminate on grounds of obesity in the labour market; and whether obesity could be deemed to be a disability covered by Directive 2000/78/EC.

The first question was dealt with relatively swiftly: the Fourth Chamber of the Court of Justice did not emulate the boldness of the Grand Chamber in Mangold but citing Chacon Navas and Coleman declared that ‘EU law must be interpreted as not laying down a general principle of non-discrimination on grounds of obesity as such…’[40]. The Fourth Chamber then considered whether obesity is a disability. Its reasoning began from the purpose of Directive 2000/78: to set out a ‘general framework for combating discrimination, as regards employment and occupation, on any of the grounds referred to in that article, which include disability.’ It then noted the meaning of direct discrimination in this Directive and its scope of application – per Article 3(1)(c) it covers all persons in the public and private sectors, and all phases of employment including dismissals. Citing HK Danmark and Glatzel, where the CJ – taking inspiration from the EU ratification of the United Nations Convention on the Rights of Persons with Disabilities – stated that

53…the concept of ‘disability’ must be understood as referring to a limitation which results in particular from long-term physical, mental or psychological impairments which in interaction with various barriers may hinder the full and effective participation of the person concerned in professional life on an equal basis with other workers

It concluded that in order to be compatible with Directive 2000/78, the concept of ‘disability’ a)‘must be understood as referring not only to the impossibility of exercising a professional activity, but also to a hindrance to the exercise of such an activity’ [54] and moreover that b) the concept had to be open-ended in relation to the ‘origin of the disability’ [55] – it could not be dependent upon ‘the extent to which the person may or may not have contributed to the onset of his disability.’ [56] Thus while obesity itself is not a ‘disability’ within the meaning of Directive 2000/78 [58], it decided that obesity could be covered by the concept of ‘disability’ in that Directive where

  1. ‘the obesity of the worker concerned entails a limitation which results in particular from physical, mental or psychological impairments that in interaction with various barriers may hinder the full and effective participation of that person in professional life on an equal basis with other workers, and the limitation is a long-term one, obesity can be covered by the concept of ‘disability’ within the meaning of Directive 2000/78.
  2. Such would be the case, in particular, if the obesity of the worker hindered his full and effective participation in professional life on an equal basis with other workers on account of reduced mobility or the onset, in that person, of medical conditions preventing him from carrying out his work or causing discomfort when carrying out his professional activity.

It was left for the Danish court to decide whether, despite the fact that he was able to work effectively for 15 years as a childminder, his obesity during his term of employment nonetheless limited Kaltoft in the way envisaged by the EU concept of ‘disability’. He would then have to prove that his dismissal was because of his obesity. Continue reading