Case Comment: Gascogne (C-40/12 and C-58/12) and Kendrion (C‑50/12)

40901_0159Pedro Caro de Sousa

The present note is concerned with what the appropriate remedy is when the European courts breach Article 47 of the Charter of Fundamental Rights (the “Charter”) and Article 6 of the European Convention of Human Rights (the “Convention”) by taking an excessive length of time before reaching a decision.

It looks at three recent judgments by the Court of Justice of the European Union (“CJEU”) (Case C-40/12 P Gascogne Sack Deutschland GmbH v European Commission; Case C‑50/12 P Kendrion NV v European Commission; Case C-58/12 P Group Gascogne v European Commission) on appeal from decisions by the General Court regarding the industrial bags cartel. The decisions were to the effect that:

–                whenever a European court breaches Article 47 of the Charter and/or Article 6 of the Convention by taking too long to take a decision, the appropriate remedy is an action for damages against the EU;

–                in the light of Treaty provisions, this action will need to be brought before the General Court, even if it was this court’s delay that provides the basis for the action for damages.

Beyond the relevance of these developments in themselves, these decisions also raise a number of interesting questions that the CJEU avoided for the moment but that seem destined to raise their head in the future – including:

–                does it infringe upon Article 6 of the Convention to have the General Court adjudicate on actions for damages that are based on that court’s own previous breach of Article 6 of the Convention – in particular, will this case law survive scrutiny before the European Court of Human Rights (the “Strasbourg Court”) when the EU finally accedes to the Convention?

–            what will be the consequences if this case law is found to infringe the Convention? In particular, what happens when two different sources of EU primary law (namely, Treaty provisions and the Charter) conflict?

The Facts

The facts underlying these cases are quite simple. 15 applications for annulment were made from the Commission’s decision imposing fines for participation in the industrial bags cartel. Of these, three cases remain pending before the General Court, and, even after the cases analysed in this note were decided, two appeals will still be pending before the CJEU.

From the moment when the parties’ appeal of the Commission’s decision was lodged with the General Court, it took this court well over five years to decide these cases – including a period of inactivity of three years and two months during which no active case management took place. The parties appealed from the General Court’s judgments to the CJEU, and included as a ground of appeal that the General Court took an excessive length of time before reaching a decision.

The legal framework

Article 47 of the Charter is entitled ‘Right to an effective remedy and to a fair trial’. It provides, inter alia, that: ‘Everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal previously established by law. …’. The Charter has had the same status as the Treaties ex vi Article 6 TEU since the coming into force of the Lisbon Treaty on 1 December 2009.

By virtue of Article 52(3) of the Charter, since the rights guaranteed by Article 47 of the Charter correspond to rights guaranteed by the Convention, their meaning and scope are to be construed in the light of Articles 6(1) and 13 of the Convention.

According to the criteria set out in the case law of the Strasbourg Court, the reasonableness of the length of proceedings is to be assessed in the light of the particular circumstances of the case on the basis of four criteria: importance of the case to the applicant, the complexity of the case, the applicant’s conduct, and the conduct of the competent authorities (see Pélissier and Sassi v. France). These criteria were also adopted by the CJEU in Baustahlgewebe and in Der Grüne Punkt.

In the event of a breach of Article 6(1) of the Convention, a failure to adjudicate within a reasonable time must, as a procedural irregularity constituting the breach of a fundamental right, entitle the party concerned to an effective remedy granting him appropriate relief (Kudla v. Poland). However, the Strasbourg Court’s case law does not determine what such a remedy must be.

The European courts enjoy unlimited jurisdiction to review decisions whereby the Commission has fixed a fine (under Article 31 of Regulation 1/2003 and Article 261 TFEU). In the past, the CJEU followed two different approaches as to the appropriate remedy for a breach of Article 47 of the Charter. In Baustahlgewebe, a case where the General Court took too long to decide an appeal regarding a Commission decision imposing a fine for breach of competition law, the remedy adopted consisted of a reduction in the fine. In Der Grüne Punkt, it was also found that the General Court took too long to decide an appeal regarding a Commission decision establishing liability for a breach of competition law, but in this case the Commission did not impose a fine; as such, the appropriate remedy was found to be a separate action for damages.

The Decision

The Court’s Grand Chamber issued three judgments, but their contents were similar, if not identical, as regards the issues concerning us here.

The first part of the CJEU’s decisions, which dealt with whether there had been an excessive delay by the General Court in adjudicating these cases, followed settled law. The CJEU began by noting that Article 47 of the Charter relates to the principle of effective judicial protection, which was a general principle of EU law before the Charter entered into force. In the light of its previous decisions regarding this principle, the CJEU held that the General Court breached Article 47 of the Charter by failing to adjudicate these cases within a reasonable time.

It is from this point onwards, when the judgments deal with what remedy to adopt, that they are of more interest to us. First, on the basis of Der Grüne Punkt, the CJEU found that where there are no indications that the excessive length of the proceedings before the General Court affected the cases’ outcome, failure to deliver judgment within a reasonable time cannot lead to the setting aside of the judgments under appeal.

The CJEU then interpreted Der Grüne Punkt as also holding that a failure by the General Court to adjudicate within a reasonable time cannot lead to the annulment, in whole or in part, of a fine imposed as a result of a breach of competition law. This is one interpretation of Der Grüne Punkt, but it should be remembered that in that case no fine was imposed – and that what was effectively held in Der Grüne Punkt was that the CJEU cannot allow an appellant to reopen the question of the existence of an infringement on the sole ground that there was a failure to adjudicate within a reasonable time, which seems a proposition with a more limited content than what the CJEU read into it.

It was acknowledged that, according to its own case law, the CJEU had the power to order a reduction of the fine on the grounds of procedural economy in accordance with Baustahlgewebe, which underlying facts were more similar to those in the cases at hand than those in Der Grüne Punkt. Nonetheless, the CJEU concluded that an action for damages brought before the General Court would be an appropriate remedy – expressly on the grounds that such a claim can cover all the situations where a reasonable period of time has been exceeded in judicial proceedings, and implicitly, it would seem, because the solution adopted in Baustahlgewebe would amount to a partial annulment of the fine in practice. The CJEU, however, did not address why these considerations should prevail over the procedural economy and fairness concerns that had underpinned Baustahlgewebe.

A consequence of determining that the appropriate remedy in this situation is an action for damages is that, through the combined application of Articles 256 (1), 268 and 340 (2) TFEU, it is for the General Court “to assess both the actual existence of the harm alleged and the causal connection between that harm and the excessive length of the legal proceedings in dispute by examining the evidence submitted for that purpose.” However, the General Court must sit in a different composition from that which heard the dispute which duration is criticized.

Comment

The most important questions, from the appellants’ perspective, were whether the General Court had taken too long to decide their appeals, and, if so, what the appropriate remedy would be. While the CJEU went to great lengths to explain why an excessive delay will only occur if a number of pre-requisites are met – before finally admitting that in these cases the General Court had indeed infringed Article 47 of the Charter – it was exceedingly laconic in the much more disputed issue of what the appropriate remedy should be. This is particularly surprising because, while it presented some arguments against the Baustahlgewebe approach of reducing the appellants’ fines, the CJEU completely ignored the main problem with the alternative approach – i.e. that the claim would have to be brought before the General Court, whose conduct lies at the root of the damages action.

There are indeed good reasons for considering that the most appropriate remedy in this case is an action for damages. AG Sharpston, with her customary clarity and analytical acumen, addressed them in her Opinion on Case C‑58/12 P Groupe Gascogne SA v European Commission. First, while the main advantage of a reduction in a fine is procedural economy, an action for damages means that any damages awarded would reflect the actual injury suffered by the claimant instead of an arbitrary reduction in the fine. Secondly, while the European courts have unlimited jurisdiction to review decisions whereby the Commission has fixed a fine, it seems inappropriate to exercise this jurisdiction to deal with a delay in a procedure – whether that be the Commission’s delay during the administrative phase or the European courts’ delay during the judicial phase –, an issue that has nothing to do with the undertaking’s conduct, the gravity of the infringement, or the penalty imposed. Opting for an action for damages also has the advantage of providing for a remedy that can be applied in all situations of delay in procedure, regardless of whether they are related to competition law or involve the imposition of a fine, and independently of whether it was the General Court or another European institution that committed the breach.

These reasons seem to have underpinned both AG Leger’s Opinion in Baustahlgewebe, and AG Bot Opinion in Der Grüne Punkt, who were also of the opinion that an action for damages was the appropriate remedy for excessive delay in adjudicating a case. However, these opinions also recognised that an action for damages presents problems of its own. Such an action is not only procedurally more cumbersome, but, more importantly, it would have to be brought before the General Court, whose conduct is – precisely – what lies at the root of the damages action. The main objection against such an approach is that it may infringe upon the requirements of Article 6(1) of the Convention – i.e. the General Court being both the party against whom the breach of fundamental rights was alleged and the court before which the claim was brought may mean that the General Court does not qualify as an ‘independent and impartial tribunal’ for the purposes of the Convention.

While the AGs are unanimous in considering that this approach would not breach the requirements of subjective impartiality imposed by the Convention, they part ways on whether it is in accordance with the requirements of objective impartiality – i.e. whether the General Court would be perceived as offering sufficient guarantees to exclude any legitimate doubt as regards its impartiality (see Findlay v. the United Kingdom).

AG Bot and AG Sharpston hold that the General Court may reasonably be considered to be sufficiently impartial since: (i) the amounts that might be payable as compensation would not come from the General Court itself but from the EU budget; (ii) the General Court would have to ensure that a damages action was heard by a different chamber of judges to that which heard the substantive issue; (iii)  although the situation giving rise to proceedings for an infringement of Article 47 of the Charter falls within the sphere of operation of the General Court, it would be the Commission’s role to defend the proceedings before that court; and lastly, (iv) the General Court’s decision would ultimately be subject to appeal to the CJEU.

However, in his Opinion in Baustahlgewebe, AG Leger held that: “(…) it is not feasible to entrust a judicial body with the task of determining whether its own conduct is wrongful or unlawful. This would unquestionably be contrary to the principle of an impartial tribunal laid down in Article 6(1) of the Convention. I think it would be difficult to avoid such a conflict by referring the case back to a differently constituted court from that which gave the original judgment because, if we adopt the approach taken by the Strasbourg Court, a change in the constitution of a court may not be enough to remove entirely the impression of partiality which would arise from a judgment concerning the court which it itself delivers.” (para. 67)

At this point, I think it is sufficient to flag that this question is not as clear cut as the CJEU or AG Bot and AG Sharpston make it seem: it is perfectly plausible that the Strasbourg Court may consider this approach to infringe upon Article 6(1) of the Convention. This is particularly so as there is case law by the Strasbourg Court to the effect that when a case is brought against judges in a given court before different judges sitting in that same court, the latter’s professional association with the former may infringe upon the requirements of objective impartiality (see Mihalkov v. Bulgaria). While the question is moot at this point, it is likely to become a live issue once the EU accedes to the Convention.

AG Leger proposed that the CJEU should have jurisdiction over actions for damages in this scenario, since in his opinion the General Court’s jurisdiction could not extend to actions for compensation relating to judicial acts of that court without breaching the Convention. AG Bot, in his Opinion, identified the main problem with this approach: changes in the Treaties since AG Leger adopted his Opinion meant that the General Court now has exclusive jurisdiction over actions for damages against the EU, and, as such, there is no legal basis for the CJEU to hear this type of action.

The problem this poses is clear: we have Treaty provisions conferring exclusive jurisdiction to the General Court that may infringe upon fundamental rights’ provisions that, according to Article 6 TEU, are of equal value to the Treaties. Which provisions are to prevail in such a situation?

This raises a question that up until here would seem to be of interest only to (constitutional and European law) academics: is there a hierarchy of different provisions in the European Treaties – and, if not, will this change after the European Union accedes to the Convention? While this topic is too complex to address here, it merits flagging that it is at the very least arguable that, in this case, the Charter (and, eventually, the Convention) should prevail, since human rights are fundamental principles of the law of the European Union and the Union is under an obligation to accede to the Convention (and, once it accedes to the Convention, under a public international law obligation to abide by it). If this were to be accepted, it could ultimately require the disapplication of a Treaty provision by the effect of another Treaty provision. Such an outcome would entail a major change in the way we understand the Treaties, and may well be an unintended consequence of raising human rights to the pinnacle of the European legal order.

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