European Judicial Training Network. Seminar on EU Institutional Law. Ljubljana, Slovenia June Alastair Sutton, Brick Court Chambers, UK
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1 European Judicial Training Network Seminar on EU Institutional Law Ljubljana, Slovenia June 2014 The Use of EU law in National Court Proceedings: Preliminary References Background Alastair Sutton, Brick Court Chambers, UK Unlike some federal legal systems (e.g. the United States), EU law is an intrinsic part of the national law of all Member States. Thus, all judges, courts and tribunals in each Member State are EU judges, courts etc. It follows that not only judges and courts, but also lawyers have a responsibility to be aware of EU law in their practice. Even the lowest or most specialized national courts may have to apply EU law and must do so even if it conflicts with national law. The material scope of EU law is now very broad indeed. The Lisbon Treaty (2009) covers the classical freedoms for any customs union or common market (the free movement of goods, persons, services and capital, including the right of establishment), as well as competition policy in its broadest sense. But the Treaty also covers economic and social policy areas such as employment, social policy, education, sport, health, consumer protection, environmental protection, energy, tourism and taxation. Crucially, areas such as criminal and civil law (both substantive and procedural) previously dealt with by inter-governmental cooperation have, since 2009, fallen under EU competence. Human or fundamental rights are also an integral part of EU law. 1 Reference: EU law for UK lawyers, Aidan O Neill Q.C., 2011 O Neill refers to the following areas as being of particular importance for UK lawyers: 1 In the UK - and possibly elsewhere- a confusion is often made between the European Union courts in Luxembourg and the European Court of Human Rights in Strasbourg. Although legally distinct, there is increasing substantive convergence between the two legal orders (EU and ECHR). At least in the UK, there is also increasingly vociferous complaints (including by senior members of the judiciary) against interference by foreign judges in the UK! 1
2 - fundamental rights; agriculture and fisheries; the protection of commercial agents and the recovery of commercial debts; competition law 2, consumer protection law, criminal law, employment protection law, environmental protection and planning law, equality law, free movement of people, asylum and immigration law, freedom of information and data protection, intellectual property law, private international law, public procurement law, restrictions on trade, taxation and workplace safety and health law. The relationship between national courts and judges and their EU counterparts The EU legal order is based on a system of cooperation between national and EU judges. The system is not (overtly) hierarchical. The EU courts 3 are - as far as national courts are concerned not appellate courts. 4 The preliminary reference procedure under Article 267 TFEU is the basis for cooperation between national and EU courts. Reference: Article 267 TFEU The Court of Justice of the European Union shall have jurisdiction to give preliminary rulings concerning: a) the interpretation of the Treaties; b) the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union. Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court to give a ruling thereon. Where any such question is raised in a case pending before a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court. If such a question is raised in a case pending before a court or tribunal or a Member State with regard to a person in custody, the Court of Justice of the European Union shall act with the minimum of delay. The role of the Commission as guardian of EU law Article 258 TFEU provides that: 2 Note that since 2004 EU anti-trust law has been de-centralised under Regulation 1/2004, whereby national enforcement authorities have been given express authorization to apply the principles of EU competition law set out, inter alia, in Article 101 and 102 of the Treaty on the Functioning of the European Union (TFEU). 3 Specifically the General Court (formerly the Court of First Instance) and the European Court of Justice (ECJ). 4 The ECJ does hear appeals from the General Court on points of law. 2
3 If the Commission considers that a Member State has failed to fulfil an obligation under the Treaties, it shall deliver a reasoned opinion on the matter after giving the State concerned the opportunity to submit its observations. If the States concerned does not comply with the opinion within the period laid down by the Commission, the latter may bring the matter before the Court of Justice of the European Union. Note: many if not most of the key cases in EU law have originated under Article 264 rather than 258. However, more than 90% of the cases initiated by the Commission under Article 258 (as infringement procedures ) are satisfactorily resolved by discussion between the Commission and the national authorities without reference to the Court. Examples of key cases raised under the preliminary reference procedure The early case law on the direct effect and supremacy of EU law: Van Gend en Loos [1963] ECR 1; Costa v. ENEL [1964] ECR 585. The principle of mutual recognition one of the founding principles of the Single Market - was established by the ECJ, om a reference from a German court, in Cassis de Dijon [1979 ECR 649 Note that the fundamental principles raised in these cases are not explicitly set out in the founding Treaties. They are judge-made principles. The legal answers provided by the ECJ in these early cases depended on the questions asked by national judges, with the cooperation of national (European) lawyers. The Factortame case law ( ) An extraordinary example of cooperation between the UK courts and the ECJ. Caused a major change in UK constitutional law, affecting the supremacy of Parliament. Five phases to the case as follows: i) Factortame I - where the English courts referred the legality under EC law of a UK Statute 5 to the ECJ. The Act required UK fishing vessels to be 75% UKowned and was found to be incompatible with EC law by the ECJ - a ruling accepted and confirmed by the House of Lords; ii) Factortame II where the ECJ held that the Act were required to be disapplied by the UK courts, to the extent that they contravened EC law; iii) Factortame III - where the ECJ held that the UK could be held liable in damages for breach of EC law, provided certain conditions were satisfied; iv) Factortame IV - where the English courts (ultimately the House of Lords) confirmed the ECJ decision in Factortame III that damages could be awarded against a Member State for losses suffered by private parties under the principle 5 The UK Merchant Shipping Act
4 established by the ECJ in the Francovich v. Italy case 6, where breach of EC law by a public body generate a private law claim by an individual or company which has sustained a directly-related loss; v) Factortame V - where the UK courts held that the UK Statute of Limitations could nonetheless apply to time-bar claims by individuals under the Francovich/Factortame principles. Key points to note: i) Knowledge of EU law on the part of UK lawyers willingness to plead new EU/EC points in national courts; ii) Sympathetic approach of UK judges - at all levels to hearing EC/EU points; iii) The complete independence of the UK judiciary from the executive and legislative branches; iv) The parallelism between actions in national courts and infringement action by the Commission under Article 258; v) The accidental nature of the development of EU law under Article 267 (the Factortame cases could have been stopped or rendered unnecessary if the UK had withdrawn or amended the Merchant Shipping Act). The direct tax case law In contrast to indirect taxation, for which a legal basis for EU legislative action is provided in Article 113 TFEU, the treaty contains no express legal basis for EU action on direct (i.e. personal and corporate) tax. Partly for this reason and partly because of the sensitivity of taxation with Member States, the Commission has rarely if ever taken infringement proceedings against Member States on direct tax issues. National courts however (especially in Member States such as the UK, Netherlands and Germany) have made frequent use of the preliminary reference procedure under Article 267 TFEU. References: A complete list of ECJ rulings on direct taxation is available on the website of DG Taxud, but see in particular case C446/03 Marks and Spencer for a case involving the UK. Note in particular the ECJ s willingness to use the fundamental principles of EU law (e.g. the free movement of capital and the freedom of establishment) to decide cases involving direct taxation, notwithstanding the absence of a specific Treaty base in this field and the sensitivity of taxation in terms of national sovereignty. Discretionary and mandatory references Note also national courts discretion on whether or not to seek the guidance of the ECJ unless Article 267 (third para) applies (no further judicial remedy under national law) or unless the validity of an EU act (regulation, directive or decision) is in question. National courts may 6 [1996] ECR I
5 refuse to refer if they consider the issue in question has already been clarified by the ECJ ( acte eclairee ) or when the law is already sufficiently clear ( acte claire ). Further reading European Union Law, Chalmers, Davies and Monti (2010) Chapters 4 (The EU Judicial Order) and 7 (Rights and Remedies in National Courts) References to the European Court, David Anderson Q.C. Procedural and practical issues The importance of a national Bar and Bench educated in European law. The importance of the independence of the judiciary and willingness to hold governments and public authorities (the executive branch ) to account, including the refusal to apply or give effect to national law which is incompatible with EU law and to award damages against governments which have acted in breach of EU law and caused economic loss to individuals or companies. The costs and delays involved in the preliminary reference procedure and the scope for national courts to decide EU law issues themselves without references. The need for constructive cooperation between lawyers (from both sides) and national courts/judges in framing questions for the ECJ. The ECJ may reject cases which either have already been dealt with or where the questions framed are academic or theoretical. Discussion of possible reforms of the European legal order and judicial process bottlenecking, the ECJ s case load, the ECJ s expertise in a widening range of cases, the underlying reasons for references by national courts, possible reforms of the ECJ (regional courts?), accelerated procedures. 5
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