Summary with European Union Law - Barnard & Peers - 2nd edition

How can the European Union be legitimized? - Chapter 1

What is the European Union about?

The European Union (EU) is a legal construct: the law is central. The EU provides flexible regulation through law. Of course politics is an important part of the EU as well, but in this book the law (set in the political context) is the main subject.

How did European Union law develop?

Economic integration

The EU used to put their main focus on the four freedoms: the free movement of goods, persons, capital and services. It also used to focus on competition law and state aid. This focus on economic integration was essential because now states would depend on each other and wouldn't go to war.

Widening of the material scope

The material side of EU law has been expanding. One of the founding fathers of the EU, Jean Monnet, hoped that the spillover effect would occur: integration in one sector needs integration in another sector to maximize the integration in that first sector. For example: free movement of goods was legitimized because of consumer protection and if you really want to optimize the free movement of goods you need a single currency. This was launched by the Maastricht Treaty (1992) and was the first step in creating an economic and monetary union (EMU). With further integration of economic policies and greater political control, the tension between the need for effective governance of the EU while at the same time still respecting State autonomy grows. This tension for example led to the United Kingdom leaving the EU (Brexit 2016). The EU law seems to be expanding on the non-economic issues as well: for example regarding criminal law and immigration or asylum issues.

Widening of the territorial scope

The EU has widened its territorial scope as well (from six to 28 members). For member states the EU law has a greater force into national law than other international law.

Institutional framework

EU law also develops an institutional framework for the adoption and enforcement of its law: a political system as well as a judicial system have been established. The EU puts a great focus on human rights.

The debate

With the development of the EU, questions about national sovereignty within the EU legal system rise. And questions rise about how for example the separation of powers has been integrated in the system. What is the role of multi-level governance within the EU and how does the EU relate to other international bodies outside its influence?

Which two types of legitimacy are there?

There are two types of legitimacy: in- and output legitimacy. Output legitimacy answers the question of 'what' the EU should be doing, input legitimacy answers the question of 'how' the EU should be doing it.

Input legitimacy

Input legitimacy regards the fairness and the amount of democratic legitimation of the decision-making of the EU. Various systems help achieve this legitimacy, think of separation of powers or procedural rights. These systems all come together in a broader system: protection of human rights. In 2009 the legal order was restructured to provide for a binding EU Charter of Fundamental Rights and the EU had an obligation to sign up for the European Convention of Human Rights (ECHR).

A tension remains: the more that the EU gets involved, the less individual states can make their own decisions. On one side there is a vertical issue: the issue with the diversion of powers between the EU en its member states. On the other side there's the horizontal issue: the issue with the priority of economic over non-economic objectives.

Output legitimacy

Output legitimacy regards the effectiveness in contributing to achieve things in subjects that have a wide public support. It relates to the core issues of economic integration and other areas such as health care and social policy. The EU has reinforced its politics and because of this they got better at negotiating international agreements.

This results in a situation in which maintaining the four freedoms, makes it impossible for member states to control their own borders.

The hardest challenge is being able to deliver growth and prosperity due to the financial crisis. This crisis has also posed big challenges for the welfare state. There are three main reasons for these challenges.

1. The measures taken in the crisis have led to cuts in for example social benefits or health care.
2. Member states have been forced to cut wages and labour standards, because they don't have their own currencies anymore to devalue.
3. There is greater pressure from the EU on States to open up the provision of public services in order to obtain value for money.

This tension between objectives (economic vs. non-economic) are played out in other areas as well: for example in environmental law the EU has to strike a balance between environmental and economic objectives as well.

How can the EU gain legitimacy?

The EU has changed the relation between states and their citizens, they have also reformed major policy areas and improved the quality of life of individuals. However, national politicians can't seem to explain the benefits of EU membership, the justification of 'delivering peace' doesn't seem to be relevant anymore as well. Therefore, output legitimacy needs to be made strongly for the EU to keep legitimacy.

How did the European Union develop? - Chapter 2

How did the EEC become the EU as it currently is?

There are three themes central to the development from the European Economic Community (EEC) to the European Union (EU) as it currently is:

1. European integration and the amount of influence on member states.
2. The importance of output and input legitimacy: there has been a shift from a main focus on output legitimacy to input legitimacy which has been fueled by the financial crisis.
3. The balance between economic and social objectives within the EU integration: the initial focus of the EEC was on economic integration, while social objectives have gained importance over the years.

Why was there a need for European unity?

In the late seventeenth century the first ideas of European unity were introduced when the Englishman William Penn called for a European Parliament. The more important reasons, however, date in the nineteenth century. (Note: Germany and Italy only became states in 1871) At that time nationalism became more popular: there was a strong feeling that people with a common language and a common culture should coexist. Nationalism had a darker side as well: that became clear at the end of the nineteenth century and at the beginning of the twentieth century, when nationalism resulted in the two world wars.

After the Second World War there was a strong feeling of need for a way of organizing international affairs. Therefore the United Nations (UN) was founded in 1945. The founding of the EEC was a response to the two world wars as well. The resistance wanted a united Europe, but Churchill didn't get reelected and he had been the strongest proponent of the unity. Other moves toward union appeared before the EEC finally came to life. For example the creation of the North Atlantic Treaty Organization (NATO) in 1948 and the Western European Union (WEU) in 1954. These are the more concrete moves towards the founding of the EEC.

How did the ECSC develop to become the EEC?

European Coal and Steel Community (ECSC)

France and Germany decided they wanted an international agreement with supervisory authority regarding coal and steel. The plan was drafted by Jean Monnet. The focus on coal and steel was economic but political as well: coal and steel were the principal materials for war.

The European Coal and Steel Community (ECSC) Treaty was signed in 1951. It was signed by France, Germany, Italy, Belgium, the Netherlands and Luxembourg. It had four institutions:

1. The High Authority. The High Authority was composed of nine members of the Member State governments, it was the main executive institution.
2. An assembly made up of delegates of national parliaments with supervisory and advisory powers
3. A council of a representative from each national government with limited decision-making powers and a consultative role.
4. The Court of Justice composed of nine judges.

The ECSC was already seen as a supranational authority and it served as a fist step towards a broader European integration.

European Defense Community and European Political Community: EDC and EPC

Around the 1950's there were major setbacks in the moves towards integration as well. Around this time there were ideas for a European Defense Community (EDC) and a European Political Community (EPC). The EDC was signed by the six ECSC states in 1952, but the process towards ratification was slow. It felt like the EPC should be called to life first: the EPC was supposed to call to life a European parliament with real legislative power. The plan for the EDC and EPC both failed. This was a major setback for the process of integration.

European Economic Community: EEC

The failure of the EDC/EPC led to a shift of focus from the political to the economic. The European Economic Community (EEC) was founded in March 1957 with the Treaty of Rome. The member states were: France, Germany, the Netherlands, Belgium and Luxembourg. At the same time the Euratom Treaty came into effect.

A common market was to be established with a main focus on the four freedoms: the free movement of goods, workers, capital and establishment and the provision of services.

The institutions were:

• A Parliamentary Assembly (shared with the ECSC)
• A Court of Justice (shared with the ECSC)
• A Council of Ministers with representatives from each member state
• The Commission: a separate executive authority composed of members drawn from the member states.

Only in 1965 these institutions were merged and shared by the three Communities. At this time an Economic and Social Committee with advisory status were set up and were shared with the Euratom Community.

In reality the legislative power was divided between the Commission (proposing initiatives) and the Council of Ministers (voting on the initiatives). The Parliamentary Assembly (name changed to European Parliament in 1962) only had the right to be consulted.

The executive power was originally divided in the Treaty as well. In reality the Commission was given he most power. The commission had the role of 'watchdog'

How did the EEC develop?

Tensions within the Community

After the Treaty of Rome there weren't many treaty reforms until the Single European Act (SEA) in 1986). There were however some important developments in the time between that.

The first development was the accession of new member states. The UK tried to join in 1961 and in 1963 but the French president, Charles de Gaulle, vetoed. When he resigned in 1973 the UK became a member together with Ireland and Denmark, followed by the membership of Greece in 1981 and Portugal in 1986.

Secondly there was a shift in decision-making. There was a dispute: de Gaulle of France thought that the state's interests should be put first and Walter Hallstein, the Commission President, thought the overall Community good should be the primary objective. In 1965 there was a move from unanimous to qualified majority voting in the Council. So when de Gaulle didn't agree with a following proposal he refused to attend further meetings because now suddenly his vote didn't matter anymore (known as the empty-chair policy). After seven months a settlement, the Luxembourg Compromise, was reached: if a State pleaded that its 'very important interests' were at stake, other member states had to respect this. You could compare this to a veto.

There were more developments that enhanced member state power over supranationalism. In 1970 the Davignon Report recommended the holding of meetings of the foreign ministers of each member state. This became a forum for cooperation in foreign policy: the European Political Co-operation. This enabled the EEC to be represented as a whole in other international organizations.
In 1974 the European Council was established to hold summits with the heads of government of the member states. This weakened the supranational elements. It was not within the framework created by the Treaties. Now member states interest could have high impact on matters of political or economical concern. The Member States could now influence the content of secondary Community legislation as well through what became known as comitology (member states controlling how the commission implements EU law).

There were developments that enhanced supranationalism as well. In 1976 direct elections were established. More important were the developments in the resources and the budget. In 1969 it was agreed that funding should come from the Community's own resources and the role of the Parliament in the budgeting was expanded. This resulted in greater financial independence. The European Court of Justice also strengthened the supranational dynamic by using the doctrine of direct effect.

From the mid 70s to the mid 80s there was a period of political stagnation. The passing of legislation was a very slow process which was confirmed by the Tindemans Report and the report of the 'three wiser men', which all recommended a stronger supranational dynamic. This was ignored. In 1984 a radical reform was proposed, but this was ignored as well. In a meeting of the European Council two committees were established to consider Treaty revision. This led to the establishment of an intergovernmental conference (IGC) to discuss Treaty amendments in 1985, this generated the Single European Act (SEA).

Single European Act: SEA

The SEA brought institutional and substantive changes and is therefore one of the most significant Treaty revisions. The SEA gave a legal basis to European Political Co-operation and recognition to the European Council. A Court of First Instance was created and the comitology procedure was formally included.

The SEA started the transformation of the European Parliament to how it is today as well. A new legislative procedure came to life: the cooperation procedure, which applied to a defined list of Treaty articles. Before the SEA, the commission proposed and the council voted. The change to the cooperation procedure meant that now the Commission would have to take the views of the Parliament serious in the areas where the procedure applied.

The importance of this change becomes clear when looking at legislation concerning the common market. To achieve a common market there should be European regulation in place of national regulation (=positive integration). The former article concerning decision with regard to the common market required unanimity in the Council, therefore legislation almost never came through. Therefore the former Article 100a EEC, now article 114 TFEU, was changed: it did now require the cooperation procedure and voting by the Council now went by qualified majority. This article now became the way for legislation concerning the common market to be made and therefore having a great impact on achieving a common market.

Lastly, new areas of Community competence were also added: cooperation in economic and monetary union, social policy, environmental policy etc.

How did we go from the SEA to the Nice Treaty?

Maastricht Treaty: the Treaty on European Union

A lot of good things for the internal market happened before 1992, but the internal market couldn't be fully completed because of changing external circumstances. Therefore a committee on economic and monetary union (EMU) reported a plan for reaching EMU. The European Council held an intergovernmental conference (IGC) on the subject. This led to the Treaty on European Union (TEU) signed by the member states in Maastricht in February 1992.

The three-pillar system

The TEU made changes in institutional and substantive terms. It also introduced the three-pillar system. The pillar system was later removed by the Lisbon Treaty. The pillars were:

1. Communities
2. Common Foreign and Security Policy (CFSP)
3. Justice and Home Affairs (JHA)

Title I of the TEU contained common provisions with basic principles for the union. The EU was now given new responsibilities in relation to CFSP and JHA.

The reason for creating separate pillars was that setting up new meetings for new problems in these areas was time-consuming, but they didn't want these areas to be subject to the normal supranational methods that characterized the Community pillar. So the second and third pillar had to be more intergovernmental, with the member states in the Council and European Council retaining the power and not the other Community institutions such as the Commission or the European Parliament.

The Community Treaties

One of the main institutional changes was the further increase in the Parliament's legislative involvement. This was done by introducing the co-decision procedure, this allowed the European Parliament, when it disapproved, to block legislation. The Parliament now had the right to request the Commision to initiate legislation and the power to block the appointment of a new Commission.

Other institutional changes were for example the provision for a European System of Central Banks (ESCB) and a European Central Bank (ECB) to oversee economic and monetary union.

There were substantive changes as well. The principle of subsidiarity was introduced. A new concept of European citizenship was introduced and there were new provisions on economic and monetary union. New areas of competence to the EC were added as well sch as public health and consumer protection.

Common Foreign and security policy

The CFSP Pillar established the objectives of EU action in this area such as preservation of peace and respect for human rights. It was the Council which was to define the principles and guidelines for the CFSP.

Justice and home affairs

The JHA pillar governed politics such as asylum and immigration. Decision-making was dominated by the Council.

Treaty of Amsterdam

Austria, Sweden and Finland joined in 1995. An agreement on the European Economic Area (EEA) was made in 1994 between the EC and the States that were party to the European Free Trade Association (EFTA).

The next Treaty reform, the Treaty of Amsterdam, happened short after the Treaty of Maastricht, it was signed in 1997 and came into effect in 1999. It deleted provisions from the EC Treaty and renumbered al the articles/ titles of the TEU and the EC Treaty.

At this time there was a lot of debate concerning the legitimacy of the EU, so legitimacy was assured in the Treaty of Amsterdam: the principle of openness was added and an area of 'freedom, security and justice' was added. It was decided that the EU should respect the fundamental rights in de national constitutions and the ECHR.

There were some institutional changes. The co-decision procedure was amended to give the Parliament more power and it now was applicable to more articles. The cooperation procedure was eliminated, apart from provisions on EMU.

The Treaty of Amsterdam also amended the Second and Third Pillars. The Second Pillar were small, but the changes to the Third Pillar were bigger. The aim of the change was to provide citizens with a higher level of safety in the area of freedom, security and justice. This was done by providing common action in three areas: police cooperation in criminal matters, judicial cooperation in criminal matters and the prevention and combating of racism and xenophobia.

Treaty of Nice

The Treaty of Nice was concluded in 2000 en entered into force in 2003. The number of member states had expended to 15, therefore the weighting of votes etc. were amended in this Treaty.

Charter of Rights

The European Council in 1999 suggested that the Charter would be important on itself and as a mechanism for enhancing the legitimacy of the EU. A body named a 'Convention' drew up a Charter in 2000. It was drafted to be legally binding. It should've been resolved when the Treaty of Nice was deliberated, but was postponed until 2004.

How did we go from the Nice Treaty to the Lisbon Treaty?

The Laeken Declaration

The issues of the Charter of Rights, the scope of the Community competence and the role to be played by national parliaments in the Community decision-making process were considered further during the Laeken European Council in December 2001. There was a growing feeling that there should be a rethinking of the fundamentals o the EU. The Laeken European Council gave formal approval to the broadening of those issues post-Nice trough the Laeken Declaration. It also embraced the Convention model which had been used to draw up the Charter of Rights and it established a Convention on the Future of Europe.

Constitutional Treaty

The Convention existed of representatives from national governments, parliaments, the European Parliament and the Commission. The work of the Convention resulted in a proposal for a Constitutional Treaty in 2003. The agreement on the Constitutional Treaty was ony secured in 2004. Fifteen member states ratified the Treaty, but the Netherlands and France rejected the Treaty in their referenda, therefore it never became law, however the Lisbon Treaty did manage to take a lot of changes from the Constitutional Treaty.

Lisbon Treaty

In 2004 ten new states entered the EU: the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia. In 2007 Bulgaria and Romania joined and in 2013 Croatia joined, making a total of 28 member states.

Case Study: Negotiation of the Lisbon Treaty

There was a large debate as to what should happen with the 'Constitutional Treaty'. The member states didn't want this work to get lost. It was, however, important that some terminological changes were made, so that it wouldn't seem like a 'constitution' and get rid of the idea of the EU as a state entity. In this way the same changes could be made, without having the risk that it would be rejected by France or the Netherlands again. The Lisbon Treaty was to contain two principle clauses, which amended the TEU and the EC Treaty, which would now be named the Treaty of the Functioning of the European Union (TFEU). The Union were to have one single legal personality, and the word 'Community' was replaced by the word 'Union' throughout.

In 2007 IGC produced a document that was signed by the member states and the Lisbon Treaty entered into force in 2009.

Form

Article 1 and 2 of the Treaty are the most important. Article 1 changed the TEU and contained some principles that govern the EU. It also contained revised provision concerning the CFSP and enhanced cooperation. Article 2 changed the EC Treaty to the TFEU. Both the TEU and the TFEU have the same legal value.

Substance

The revised TEU has some constitutional principles for the EU. The main rules concerning competence and provisions concerning the hierarchy of norms are in the TFEU. The TFEU was divided into seven parts.

1. 'Principles' has two titles: Categories of Competences and Provisions having General Application.
2. Discrimination and Citizenship of the Union
3. Policies and Internal Actions of the Union
4. Association of Overseas Countries and Territories
5. EU External Action
6. Institutional and Budgetary Provisions
7. General and Final Provisions

The Lisbon Treaty was not built on the pillar system, but there are still distinctive rules relating to the CFSP, which means that in reality there still seems to be a 'pillar'.

What challenges did the EU face recently?

The Financial Crisis

The ratification of the Lisbon Treaty overlapped with the beginnings of the financial crisis. The Maastricht Treaty introduced the framework for EMU which was overseen by a European Central Bank. EU control over national budgetary was, however, weak.

The problem of the EU started with downgrading the credit rating to be repayed by Greece. This led to problems for the euro. Other countries provided support package for Greece. The sovereign debt crisis was overlapped by the banking crisis. A number of countries (Greece, Ireland and Portugal) required large amounts of money from other member states to be saved.

This crisis had big effects on the EU, especially for it constitutional architecture. Measures took various legal forms.

Brexit

In 2016 the UK voted to leave the EU. Four issues were central in the debate: the economic implications of leaving, control over immigration, sovereignty and a populist sentiment.
Leaving the EU is regulated by article 50 TEU.

Migration Crisis

Recently there has been a migration crisis, enormous numbers of people from Africa and the Middle East seeking to move to the EU. Some people are fleeing war, others are economic migrants: people searching for a better life. There is an asylum policy, but it wasn't designed to deal with these mass movements.

What is the rationale for the integration?

Neofunctionalism

Neofunctionalism was the early ideology of Community integration. The concept of spillover is central in neofunctionalism: integration in one sphere creates pressure for integration in other areas.

There was a empirical failure because it couldn't explain the reality of the Community's development. The 1965 Luxembourg crisis and its effects showed that Member-States were not willing to allow Community development that was inconsistent with their own interests.

There was a theoretical challenge as wel based on its failure to accord with political reality and its failure to relate to general themes within international relations.

Liberal intergovernmentalism

Liberal intergovernmentalism was championed by Moravcsik. This thesis is that states are the driving forces behind integration. The demand for integration depends on national preferences. The supply of integration is a function of interstate bargaining and strategic interaction. It is pursued through a supranational instrument, simply because it is more (cost-)efficient.

Multi-level governance

Marks, Hooghe and Blank argues that integration was a process across multiple levels of government: sub-national, national and supranational. National governments do not have a monopoly of control and supranational institutions cannot be seen as agents of national government (like with liberal intergovernmentalism).

Rational choice institutionalism

Rational choice institutionalism is derived from rational choice theory: individuals have preferences and choose the course of action that is the optimal method of securing them. They acknowledged that institutions are important. They also state that there is a principal-agent relation, with the member states as principals, who delegate to supranational 'agents'. Institutions are rules of the fame that provide incentives within which players pursue their preferences.

Constructivism

Constructivists agree that institutions matter. They do dispute the idea that preferences are 'given'. They contend that the environment in which preferences are formed is social. Therefore institutions will embody social norms and will affect a person's interests.

What can be concluded?

There have always been debates as to why the EU has the powers it now possesses. It is good to keep in mind that it was the member states themselves acting through unanimity that gave the EU these powers. Secondly we can conclude that the balance between the economic and social side has always been fluctuating and probably will continue to do so.

There are three themes central to the development from the European Economic Community (EEC) to the European Union (EU) as it currently is:

1. European integration and the amount of influence on member states.
2. The importance of output and input legitimacy: there has been a shift from a main focus on output legitimacy to input legitimacy which has been fueled by the financial crisis.
3. The balance between economic and social objectives within the EU integration: the initial focus of the EEC was on economic integration, while social objectives have gained importance over the years.

What are the EU's political institutions? - Chapter 3

What is this chapter about?

Article 10 (1) TEU states that the EU is founded on representative democracy. Article 10 (2) specifies that the European Parliament is directly elected and that the Council consists of Member States' ministers, and that the European Council consists of heads of State. The EU also ensures that EU law is effective. There has been a tension between this democracy and effectiveness.

The role of various EU institutions has changed over time: for example the bigger role for the European Parliament, which increases the democratic legitimacy but decreases the effectiveness. Another change is for example the shift from unanimous voting to majority voting, which decreased the democratic legitimacy, but increases the effectiveness.

In this chapter the tension between democracy and effectiveness in context of the EU's institutions is being examined.

What is the concept of representative democracy about?

In theory a representative democracy means that the public decides which politicians they wish to vote for at the time of the elections, then judge their performance, and decide if they want to keep these politicians at the next election, or if they want someone else.

In practice it isn't that straightforward: with the diverse groups countries have, the point of view on key issues might differ a lot. Some countries therefore are a 'federal' states: there is a difference between the central (federal) government and the sub-federal government (e.g. Germany). Unitary states (e.g. the Netherlands) can give a significant role to local governments. Another way of addressing regional concerns/ concerns by other diverse groups is by establishing a second parliamentary chamber.

The government does not consist of legislatures only, but have an executive and the judiciary branch as well.

Representative democracy and the EU

The Commission can be compared to the executive and administration of the EU. The Council and the European Parliament can be compared to a two-chamber legislature. The lower house is the European Parliament, and is directly elected. The upper house, the Council, is not directly elected.

The EU's division of powers is comparable to the division of power between federal states. This will be discussed in chapter 4 and 5.

The Treaty states 'Member States shall adopt all measures of national law necessary to implement legally binding Union acts.' EU law is almost entirely administered by member states. This is different to the most federal systems.

What is the role of the Commission?

Introduction

Most EU measures are either adopted by the Commission or begin as a Commission proposal. The Commission has great power and many believe that it isn't democratically accountable enough. This is why the Commission faces a lot of criticism. The Commission constitutes a part of the executive and is responsible for the administration of the EU. The key provisions on the Commission are in art. 17 TEU and art. 18 TEU and art. 144-250 TFEU.

Composition

The Commission consists of a college of Commissioners. Two particular Commissioners are most important: its President and the EU's High Representative for its common foreign and security policy.

Number of members

The Commission initially had one member from each member state and one extra member from the largest member states. There were concerns that the Commission would grow to have to many members, but it would lose some democratic legitimacy if it wouldn't have one member of each member state.

The Treaty of Nice provided that it would be only one Commissioner per member state. The Treaty negotiators decided that from 2009 there should be fewer members, however could not agree on how this would be done, so they left it up to the Council to decide.

The rules for further reduction from 2009 never came into effect, because the provisions were amended with the Treaty of Lisbon (2009). The treaty decided that it would remain one member per state until 2014 and that after that the members would be reduced.

This didn't happen either, because the EU leaders promised Ireland that in exchange for their vote for the Treaty of Lisbon, they would keep it at 1 member per state after 2014 as well.

The President

The president lays down the guidelines for the Commission's work, decides on the internal organization of the Commission, ensuring its efficiency and collegiality and appoints vice-presidents. The president can reshuffle the commission as well and get a commissioner to resign. The president does not have a veto or a right like that.

High Representative

This job was created by the Treaty of Amsterdam, the post was at that time part of the Council. The post was intended to simplify the Union's representation regarding foreign policy. The Treaty of Lisbon made the High Representative member of the Commission, but answerable to the Council

Appointment

Historically the Commission President (and the rest of the Commission) was appointed by the member state.

First, the Parliament was given the power to approve the appointment of the Commission as a whole (Maastricht Treaty, then the Commission President as well (Treaty of Amsterdam). Even though the European Parliament can formally only choose whether to vote for the entire commission, they have found a way (since 2004) of rejecting nominees. They simply threaten to reject the whole, unless this individual withdrew their name.

The Parliament now has the power (Treaty of Lisbon) to 'elect' the Commission president. The European Council must first nominate a candidate and they have to take in account the results of the Parliament's election.

After the election of the President, the other Commissioners are appointed on the basis of member state's proposals. There has to be agreement of the Commission President, a qualified majority vote of the European Council and approval of the European Parliament as well.

The High Representative is selected by the European Council by a qualified majority vote, with agreement by the Commission President.

Control of the Commission

In member states, a government usually has to resign if it loses confidence. Similarly, the EU treaties did provide for the possibility for the Parliament to remove the entire Commission, by a 'censure' vote. It requires a two-thirds vote of Members of the European Parliament. Even if one passed, the High Representative would remain in office.

No censure vote has ever passed. One time it almost happened, but the members of the Commission quickly resigned before it could happen. There is no way for the Parliament to get rid of one single member or a small group of members. However, the President can reshuffle the Commission or force members to resign. This has never happened as well.

The High Representative can lose their job through the same procedure which applies to their appointment.

Powers

Article 17 TEU provided a lists of the Commission's tasks.

Starting with the executive tasks: the Commission proposes EU legislation, the Commission negotiates international treaties on behalf of the EU and represents the EU on an international level (except for foreign policy and monetary issues). The Commission can adopt delegated acts or implement measures as well: this is comparable to the powers that are delegated to the executive and civil servants in de member states in order to implement legislation. Lastly, the Commission has the right to take infringement actions against member states that haven't met their obligations under EU law.

The administrative tasks are administering the EU's budget and applying EU law in individual cases (e.g. investigating cartels and monopolies).

The High Representative makes proposals regarding the foreign policy. She chairs the EU's Foreign Affairs Council and wits in the Commission and coordinates the Commissions external activity.

Functioning

The Commission is completely independent, it cannot take instructions from governments or any other body. As an exception: the High Representative is accountable to the Council as far as foreign policy is concerned. The college of Commissioners make decisions by a majority. For the administrative tasks, the Commission is organized into Directorates-General, each responsible for a particular subject.

What is the role of the European Parliament?

Introduction

The European Parliament is elected by popular vote at regular intervals. The Parliament's main tasks are to participate in the legislative and budgetary process and to hold the executive to account.

The functioning and composition of the European Parliament is regulated by the Treaty provisions on the European Parliament as well as art. 223 TFEU, art. 14(2) TEU and art. 22(2) TFEU.

Composition

Number of members

The Treaty of Lisbon raised the normal ceiling of the MEPS to 751 MEPs. The distribution of seats is on basis of 'degressive proportionality': giving small member states more weight (relative to their population) than large member states. No member state can have more than 96 seats or less than six. The exact allocation of seats between member states is decided by the European Council.

Elections

The European Parliament is elected for five-year terms (art. 14(3) TEU). The term is absolutely fixed, which means that the Parliament cannot resign earlier/reelections can happen before this term is over.

The Treaty of Amsterdam (1999) decided that electoral law should be based on common principles of the member states. This allowed an amendment of the Council Act in 2002, in which is decided that voting must take place on the basis of proportional representation: this means for example when there's 10 people to be chosen, the party with 30% of the votes gets 3 seats, one with 60% gets 6 and 10% gets 1.

There is still flexibility to have constituencies for example, as long as the system is proportional. The fixed date can be altered as well, but the results cannot be public until all member states have voted.

You cannot be a MEP and hold another post in an EU institution or a national government post as well.

Voting in the European Parliament election takes place on the basis of national political party affiliation.

Voter turnout is usually low. This might be because it's hard for voters to understand what they are voting for. It could also be because of the remoteness of the European Parliament: both in the sense of its location as regard to individual MEPs. It could also be because of irritation of the public about the cost of the Parliament.

The eligibility to vote and run for election is defined by national law, subject to compliance with EU law.

Powers

Legislative and budgetary functions

There are two main categories of powers for the Parliament: legislative and budgetary functions and political control and consultation

All five Treaty amendments have expanded the Parliament's decision-making powers, so that it now has equal power with the Council on most areas.

1. The SEA (1987) created the cooperation procedure, which gave the Parliament additional influence.
2. The Maastricht Treaty (1993) created the co-design procedure, which put the Parliament and the Council on the same footing as regards legislation in some areas. The cooperation procedure expanded to new areas as well.
3. The Treaty of Amsterdam (1999) extended the co-decision procedure and streamlined the procedure, so that now the Council and Parliament were on an entirely equal footing.
4. The Treaty of Nice (2003) extended the co-decision procedure to even more areas.
5. The Treaty of Lisbon (2009) expanded the use of the co-decision procedure, renamed it the 'ordinary legislative procedure'.

Political control and consultation

The most important power of political control is the appointment and dismissal of the Commission President and the rest of the Commission.

The Parliament also has political control as regards the Commission's delegated acts.

It has control in the form of the power of consent as well (as regards to sanctions against member states for breach of human rights, enlargement of the eu, extensions of EU competence over criminal law etc.).

The Parliament exerts is power via means of parliamentary questions, inquiry, petitions and the European Ombudsman.

The power of consultation applies to other non-legislative procedures.

The Parliament did find ways beyond the strict letter of the law. When negotiations with the Council are tough, the Parliament sometimes 'freezes' the funds or other proposed legislation etc.

Functioning

The link between the Parliament and the Commission is weaker than in most national systems. Therefore there is no parliamentary majority party/ no opposition parties. There are just 'political groups' that simply vote on Commission's proposals. The day-to-day work is largely carried out by committees.

What is the role of the Council?

Introduction

The council is the main decision-making organ. To a large extent this role is now shared with the Parliament. It is made up of ministers from the member states' governments, therefore it's one of the most intergovernmental institutions. Keep in mind that the Council is different from the 'European Council'.

The rules on the composition and functioning of the Council are to be found in art. 16 TEU and 237-243 TFEU.

The Council is comparable to the upper chamber of a two-chamber system. It can be compared to the upper chamber in Germany/US, where membership is linked to the division of the country into states. The difference is that the Council has executive functions as well as legislative functions.

Art. 10(2) TEU states that the Council's democratic legitimacy is based on each individual minister's democratic accountability to the parliament of each member state. There is no collective legitimacy.

Composition

The Council consists of national ministers, who represent their government: the minister is chosen by the member states themselves. There is no fixed membership, it is made up of different ministers depending on the subject being discussed. There for example is a General Affairs Council and a Foreign Affairs Council.

Powers

The Council has two main categories of powers: legislative and budgetary functions and policy-making and coordination functions. The first one matches the powers of the European Parliaments.

The Council's policy-making role is mostly obvious in the areas where it can adopt acts which are not legislative (in areas such as State aids rules). It also consists of the role of deciding on whether to give the Commission a mandate to negotiate and deciding on the content of that mandate.

The Council has the power to coordinate member states economic, employment and social policies. This method is referred to as the 'open method of coordination' and results in 'soft law'.

Functioning

Voting in the Council

There are two main issues with the voting procedures of the Council:

1. Whether the Council votes by unanimity or by a qualified majority
2. How to calculate a qualified majority

On the first point: Each Treaty extended the qualified majority voting to more areas. But unanimous voting still applies with special legislative procedures. There are often disputes about what the legal basis for a certain matter is: should there be a qualified majority or unanimity?

On the second point: Votes have always been weighted in the form of degressive proportionality (giving smaller states more weight in proportion than bigger states). A discussion started when new countries joined: the bigger countries were scared that they wouldn't be able to form blocking minorities anymore. This dispute became connected with the discussion about the number of commissioners. They didn't want to give up their commissioners, without getting an increase of their voting weight in the Council.

The reweighing took place in 2004 provided that if there were 206 (of 352) votes in favor, there would be a qualified majority. The distribution of votes was now more proportionate. In addition there was a requirement of 'dual majority' in favor of a measure: a proposal had to be supported by a majority of member states, but also by member states representing 62% of the EU population.

In the Treaty of Lisbon this was changed to a simple dual majority system: proposal needs the support of 55% of member states with 65% of EU population. A blocking minority has to exist of at least four member states. Until 2017, the old and new rules coexisted.

There is another limited on the revised quality majority voting rules: discussion must continue if a proportion of member states, falling short of a blocking minority, insist on it.

There are two variants on qualified majority voting:

1. When the proposal was not made by the Commission, 72% of the votes must be in favour
2. Where not all member states participate in an EU measure, the relevant member states do not participate in the Council vote.

In a few sensitive cases, Member States with profound objections to a measure can stop its action by an 'emergency brake' procedure

Council Presidencies

Before the Treaty of Lisbon, the presidency was held by each member state for six months. This system was amended by the Treaty of Lisbon to provided that the Foreign Affairs Council is chaired by the High Representative. For the remaining Council configurations, according to art. 16 TEU the role must be taken on the basis of equal rotation. The presidency is nominally held by groups of three member states working together. One small member state, one medium and one small, from different parts of the EU.

Holding the presidency means that the member state is chairing en scheduling all of the Council meetings. Before the Treaty of Lisbon he also had a role in representing the EU, but this task now lies with the High Representative.

Case Study: The Irish Council Presidency of 2013

Ireland had the Presidency in 2013. The most important task at this moment was to reach agreement between the Council and European Parliament over the proposed legislation establishing the EU's spending and revenue.

Negotiations took place between member states (it had the norm of a special legislative procedure so there had to be a unanimous vote). After the President helped reaching a deal between the Council and the Parliament, the Parliament imposed a 'Freeze' and delayed its vote of approval, because it wanted to influence the content of the budget. So it was up to the following Lithuanian President to negotiate these issues and reached a deal in November 2013.

There was discussion on about 70 more measures regarding the details of the multi-annual spending. It was all on the council President to negotiating and reaching an agreement. He did on a lot of matters. He reached deals on a lot of legislation.

This shows how much EU business Council Presidencies are able to conclude and how efficient they are.

Other Aspects

For all the EU measures, the Council is assisted by a Committee of Permanent Representatives (Coreper). Coreper meets in two different formats:
Coreper II deals with the general affairs, foreign affairs, justice and home affairs and economic and financial affairs (referred to as 'high politics') Council.
Coreper I deals with the subject matter of the other Council configuration (referred to as 'low politics').

Beneath the level of Coreper, there is a number of working groups and committees.

The Council has a permanent staff who assist with its tasks as well. They are organized in a form of a General Secretariat.

European Council

Introduction

The European Council exists primarily of the heads of State of each member state. The rules concerning the European Council are set out in art. 15 TEU and art. 235-236 TFEU.

Composition

It is up to the member states to decide who attends as its representative in the European Council: often not the heads of states who aren't political (e.g. the King of the Netherlands). It's often the prime ministers who attend.

The High Representative takes part in the work of the European Council as well. The president of the European Council and the President of the Commission are members as well, however only the heads of the member states are allowed to vote.

Before the Treaty of Lisbon presidency was rotated every six months. The Treaty of Lisbon decided that the President is appointed by the European Council for two-and-a-half years and is renewable by a majority vote once.

The powers of the President of the European Council are limited. He cannot vote in the European Council and he cannot veto legislation, nor give instructions to EU institutions etc. The President just chairs the European Council and drives its work forward.

The President of the European Council is not banned from having another EU post.

Although it's hard to say if the function has any legal powers, former presidents have been highly involved in the politics.

Powers

Historical background

The European Council was created in 1974, but this was only on an informal basis. Despite that, the European Council quickly became the main organ for discussing key issues in the EU.

The Maastricht Treaty specified that the task of the European Council was to provide the Union with the necessary impetus for its development and shall define the general political guidelines thereof. it provided the European Council with a few formal roles as well.

The Treaty of Amsterdam gave the European Council the power to adopt common strategies in some areas.

The Treaty of Nice included a declaration on the venue of European Councils (Brussels).

Treaty of Lisbon

The Treaty of Lisbon made three significant changes to the status and functioning of the European Council:

1. The European Council was made an official institution of the EU
2. The role of the European Council was enhanced: it could now adopt a wider array of formal decisions. The European Council retained its power to decide on sanctions against member states and to adopt strategic foreign policy decisions. The role of giving general guidance also has been retained and enhanced.
3. The approvement of a full-time President of the European Council

The European Council cannot exercise legislative functions. The work of the European Council, however influences the legislative process.

The European Council decides when the EU is willing to open negotiations if a country wants to join.

As a whole, the Treaty of Lisbon has increased efficiency, however legitimacy could decrease.

Functioning

The European Council must act by consensus, except when Treaties provide otherwise and this frequently happens.

Transparency of the EU's political institutions

There have been concerns about the openness and transparency of the decision-making of the EU institutions.

The Treaty of Amsterdam provided some rules regulating access to their documents: there is an exception for the access to the documents when it's related to the decision-making process, but the Court of Justice doesn't go with it: the right of access to documents is linked to the democratic accountability of the EU institutions.

Conclusion

The application of a representative democracy on the EU is complex. Even though the European Parliament is chosen directly, people still don't buy it's democracy, the same's for the Council. This may be because of a lack of understanding of the EU system.

The EU prioritizes legitimacy over efficiency a lot of times.

Article 10 (1) TEU states that the EU is founded on representative democracy. Article 10 (2) specifies that the European Parliament is directly elected and that the Council consists of Member States' ministers, and that the European Council consists of heads of State. The EU also ensures that EU law is effective. There has been a tension between this democracy and effectiveness.

The role of various EU institutions has changed over time: for example the bigger role for the European Parliament, which increases the democratic legitimacy but decreases the effectiveness. Another change is for example the shift from unanimous voting to majority voting, which decreased the democratic legitimacy, but increases the effectiveness.

In this chapter the tension between democracy and effectiveness in context of the EU's institutions is being examined.

What is constitutionalism in the context of the EU? - Chapter 4

What is constitutionalism?

Constitutionalism is the set of ideas that sets what a constitution is or ought to be. There are multiple conceptions of constitutionalism.

• Descriptive constitutionalism: a constitution is a factual description of the institutions and powers of the government
• Normative constitutionalism: a constitution prescribes governments their composition and powers (in contrary to describing)

Normative constitutionalism has a:

• Formal definition: A constitution stands above all laws
• Material understanding of constitutionalism: the concept of a constitution is linked with a particular political philosophy

This can be divided in two political understandings:

• Democratic constitutionalism: A constitution only exists when it's based on the idea of a government of the people, by the people, for the people
• Liberal constitutionalism: A constitution only exists if it sets limits to the powers of government (e.g. separation of powers and fundamental rights)

Does the EU have a constitution? It could be different from each perspective. This is what will be discussed in this chapter.

Does the EU constitution have supremacy?

Formal constitutionalism is the belief that the constitution is the highest set of rules. Their validity is socially given. The constitution has to have the status of the highest law: this legal status is not granted by a legal norm but by a social convention.

When the EU was born, the Treaties did not state the supremacy of EU law. Does this supremacy need to be determined by the national legal orders or by the Union. This decentralized solution (national) and centralized (EU) solution have been competing views.

Legal supremacy: two perspectives

Centralized view

In Costa v ENEL the EU judiciary had been asked if national legislation could prevail over the EU treaties. The court in this matter insisted on the supremacy of EU law.

In Internationale Handelsgesellschaft a German Court had doubted that EU legislation could violate fundamental rights granted by the German Constitution. The European Court of Justice stated that the validity of EU law could never be affected by national law.

The EU is pretty clear in its view: EU law always prevails.

Decentralized view

This EU perspective is not shared by the member states. They accept EU law as a new legal order, but many member states insist that its validity derives from their decision to accept the EU law in their national system. Member states now interpret their own competences: the problem of ultra vires control (going beyond one's legal power). This is explained by the following case study:

Case study: Constitutional conflicts and the German Federal Constitutional Court

After the European Court of Justice ruled in Internationale Handelsgesellschaft, the case moved back to the German Federal Constitutional Court.

The response of the German Federal Court was the So-Long Doctrine. "In the question of which system of law takes precedence, in this conflict of norms, the guarantee of fundamental rights in the Constitution prevails as long as the competent organs of the EU have not removed the conflict of norms in accordance with the Treaty mechanism​​​​​​".

The EU law was clear: national courts cannot invalidate EU law. But once again in the German Federal Constitution Court's Maastricht decision, the court stated that it could happen that EU law would not be legally binding in some cases.

Contested hierarchies: federalism and constitutional pluralism

There can only be one supreme constitution in a legal order according to classic constitutionalism. Can an EU constitution coexist with a national constitution?

There has recently been a new movement that make this possible: constitutional pluralism. Constitutional pluralism accepts the coexistence of multiple constitutional orders that interact in a heterarchical way (opposed to: hierarchical). This theory (which is like federal constitutionalism) has the problem that it results in contradictory answers to the question of supremacy.

Democratic constitutionalism: which view fits best?

Unitary constitutionalism

Democratic constitutionalism insists on sovereignty of the people. The constitution has to be adopted through a referendum or by an elected assembly, which adopts the constitution on behalf of the people.

What is we apply this unitary theory to the EU? Only a 'people' can formally constitute itself into a legal sovereign. A constitution is regarded as an act of a democratic 'pouvoir constituant' (constituent power). There is no EU 'people', it's just member states, therefore the EU cannot have a Constitution.

It this unitary constitutionalism even applicable to the EU: the principle is based on the idea of one people who must form one state on the basis of one constitution. Unitary constitutionalism is unable to envisage two peoples lives in one territory, it is unable to envisage a pluralist pouvoir constituant.

Federal constitutionalism

Maybe federal constitutionalism is a better fit. For this it's best to look at the US: they founded their constitution on the idea that the constituent power was with a plurality of peoples.

The best theoretical generalization of this idea came from Carl Schmitt: he stated that the normative foundation of every union of states is a federal treaty: this is a treaty of a constitutional nature. Its conclusion is an act of the pouvoir constituant. A federal constitutional theory will not locate the constitution-making power in one unitary body, but there is a pluralist constituent power.

This can be democratically validated by holding a referendum in each member state or leaving the ratification to the ordinary state legislatures: this is often the way it's done. This doesn't seem like enough democratic validation: that's the problem with federal constitutionalism.

Democratic constitutionalism: how does the EU get democratic legitimization?

A governmental system is usually democratic, when each function can be legitimized by the will of the people. The constitution delegates power to elected officials, which exercise public power in the name of the people.

In practice, democratic constitutionalism simply means parliamentarism: the parliament is the central and dominant actor.

For the executive branch two models of democratic government have been developed:

• The parliamentary model: the executive (prime minister and the cabinet) will be elected and controlled by the parliament
• The presidential model: the executive has its own direct legitimacy

How does this apply to the EU?

Democratic legitimacy and the Union legislature

The EU is based on dual democratic legitimacy (see chapter 3). One legislative branch is not chosen directly.

The quotas with the distribution of seats can be seen as undemocratic as well: it's not simply one person, one vote. Germany has questioned this democratic deficit in the Lisbon decision.

Case study: The democratic deficit and the Lisbon decision of the Bundesverfassungsgericht

The court held that in a Union the primacy of national democratic legitimation could be justified, yet were the Union to move towards a federal state, a structural democratic deficit would arise.

Democratic legitimacy and the Union executive

The EU's governmental regime sits somewhere in between the parliamentary and the presidential mode: the European Council is composed of the heads of state, which is not dependent of any parliamentary election, whereas the Commission got its power from the Parliament that has been given legitimacy. The European Union's governmental system can be seen as a semi-parliamentary democracy.

Liberal constitutionalism: how are the powers separated?

The classic separation of powers principle

Liberal constitutionalism establishes a limiting of power: the oldest way of doing that is by splitting it.

Liberal constitutionalism bases this on the trias politica by Montesquieu: the legislative, the executive in respect to things dependent on the law of nations and the executive in regard to matters that depend on the civil law. The first makes laws, the second establishes the public security and receives embassies etc, the third punishes criminals and settles disputes (judiciary power).

According to the functional separation vision, each governmental institution must not be given more than one function.
According to the institutional cooperation vision, each governmental function should be distributed over more than one institution.

These to visions have in common that it required that there are distinct governmental institutions with personal independence from one another. Liberal constitution even requires the political independence of each institution.

Separating powers in the EU

When it was born, the EU barely could be viewed in the light of the trias politica. The ascendancy of power of the Parliament changed that. Today the EU Treaties formally acknowledge legislative procedures in the legal order. The Treaties do allow delegation of legislative power to the executive.

The EU's legal order has followed the institutional cooperation version of the separation of powers. The TEU describes each function the institutions have. Institutional cooperation is required in the exercise of most functions.

Article 13(2) TEU is known as the principle of institutional balance. It contains two constitutional demands.

1. Each institution must act within its powers defined by the Treaties. It means institutions cannot extend their powers or transfer it to another institution.
2. Observance of the institutional balance means that each of the institutions must exercise its powers with due regard for the powers of the other institutions. This is the principle of mutual sincere cooperation.

Case study: European Parliament and judicial review

The Treaty of Rome (1958) only gave the European Parliament 'advisory and supervisory powers'. This meant only the Commission and the Council could challenge the legality of Union acts before the Court. In Parliament v Council (1988) the Court rejected the idea that the Parliament should be able to action before the Court, because the SEA provided the Parliament with rights to cooperate in the adoption of legislation. In Parliament v Council (Chernobyl) the Court changed its view and gave the Parliament the power to action before the Court. This because the principle of institutional balance should mean that institutions can penalize any breach of rules which may occur.

Independence of the institutions

Personal independence is guaranteed by the Treaties. For political independence it is not always the case: the Parliament is involved in the selection of the Commission and the Commission is responsible to the Parliament. From a liberal constitutionalist perspective, this is a breach of the separation of powers.

How do we look at fundamental rights in the light of liberal constitutionalism?

Fundamental rights are based on the 'individual'. Since the twentieth century the protection of fundamental rights has become a central task of most constitutions. It's a judicial safeguard of liberalism.

Two sources for fundamental rights in the EU treaties were developed: the European Court identifies fundamental rights in the constitutional traditions of member states. And with the Lisbon Treaty the Charter of Fundamental Rights of the European Union was added.

Fundamental rights as general principles

In Stork (1958) an applicant had challenged a European decision on the right that the Commission had infringed German fundamental rights. There was no bill of rights, so this claim was based on the mortgage theory: the powers conferred to the EU are tied to a national human rights 'mortgage'. This argument was rejected by the Court.

The Court view evolved. With Internationale Handelsgesellschaft it was said that fundamental human rights enshrined in the general principles of law. These rights are 'inspired' by the common constitutional traditions of the member states.

The Court also uses international agreements such as the European Convention on Human Rights (EHCR). The Lisbon Treaty requires the EU to accede to the ECHR. Once this happens, the Union will be directly bound by the convention.

The EU Charter of fundamental rights

The Union got its own bill of rights in the late twentieth century. The initiative came from the European Council. The Charter was proclaimed in 2000, but at this time it wasn't legally binding: its status was similar to the ECHR. With the Lisbon Treaty it got the same legal value as the Treaties.

What can be concluded?

This chapter has analyzed the EU legal order against three versions of constitutionalism: formal constitutionalism, democratic institutionalism and liberal constitutionalism.

The liberal constitutional claim is the most easily satisfied, because the Union has adopted the separation of powers and protect fundamental rights.

With regard to formal and democratic constitutionalism, staking the claim is harder. This is due to the 'unitary' standard, so looking at a federal/pluralist standard changes things.

Constitutionalism is the set of ideas that sets what a constitution is or ought to be. There are multiple conceptions of constitutionalism.

• Descriptive constitutionalism: a constitution is a factual description of the institutions and powers of the government
• Normative constitutionalism: a constitution prescribes governments their composition and powers (in contrary to describing)

Normative constitutionalism has a:

• Formal definition: A constitution stands above all laws
• Material understanding of constitutionalism: the concept of a constitution is linked with a particular political philosophy

This can be divided in two political understandings:

• Democratic constitutionalism: A constitution only exists when it's based on the idea of a government of the people, by the people, for the people
• Liberal constitutionalism: A constitution only exists if it sets limits to the powers of government (e.g. separation of powers and fundamental rights)

How does legislation come to life in the EU? - Chapter 5

What is this chapter about?

The exercise of decision-making is subject to some constraints (procedural and substantive) and is fully amendable to judicial review by the Court of Justice. This chapter is about the procedures for adoption of measures in the EU, it describes the legal structures and the rules governing the allocation of powers.

What are the different forms of legal act?

The main forms of normative act adopted by the institutions in implementing EU's policy objectives are regulations and directives. However, they may also adopt rule-making decisions and international agreements and guidelines and recommendations.

The Treaty prescribes the form of legal acts in some areas. For the most part, however, they may choose the form of legal act they use.

Secondary normative measures (delegating and implementing acts) also take the form of regulations, directives or decisions.

Regulations

A regulation 'shall have general application and is binding in its entirety and directly applicable in all Member States'. Thus, it is the equivalent of a law in a national legal order. The member states need to adopt any national measures to give effect to a regulation.

Directives

Directives are normative acts, which require member states to adopt the necessary national provisions to give effect to the policy objectives set out in this directive. A directive is therefore binding as to the result, while leaving the choice of form and methods to the member states. Thus, it is equal to a guideline.

Rule-making decisions

A decision is an act which is binding in its entirety upon those to whom it is addressed.

International agreements

International agreements are binding on the institutions of the EU and the member states. They are concluded by the Union and incorporated into its legal order by a decision of the Council.

Inter-institutional agreements

Inter-institutional agreements might be considered more contractual than normative. They can be a useful supplement to the Treaty provisions, thus the Court will give legal effect to these agreements, where institutions intended to do so. Even when an agreement is not formally binding, the institutions would have to keep their word since the Treaty obligates the institutions to make arrangements for their cooperations.

Recommendations, opinions and other non-binding acts

Recommendations and opinions are essentially not binding, but there are exceptions. If in the area of economic and monetary policy the Council addresses recommendations to a member state, then if the member state does not put this into practice, the Council may order it to take measures. Even broad guidelines on economic policy can have some legal effects.

An opinion of the Court of Justice is binding.

The institutions also adopt 'soft law'. These do not have legal effect. An example is the 'open method of coordination', this is applied in areas where traditional mechanisms are inappropriate. Under this method the Union gives guidelines, the fulfillment of these guidelines is monitored by benchmarking and peer review.

When a purported act of 'soft law' has an effect of creating legal rights, it is not 'soft' anymore: it is subject to judicial review and can be annulled. This was the case in France v Commission: the Commission had issued a communication which restated the substantive provisions of a proposal for a directive on pension funds: the Court said that this created obligations for member states and therefore annulled it.

What is the Hierarchy of norms?

The Treaties, the Charter of Fundamental Rights and the fundamental principles of Union law developed in the case law of the court, are on the highest point of the pyramid. They are termed primary law.

After that, there's secondary law: Acts based directly on the Treaty, including Union legislation and similar normative measures.

The relationship is simple: secondary law must comply with the Treaty, the Charter and general principles of EU law. A delegated or implementing act, which gives effect to a measure of secondary law, must respect the conditions of the provision of that measure.

It can get problematic, when there's a clash between the sources of primary law. In Emese Sugar it was argued that the Treaty provisions which prevented parties to Court of Justice proceedings from commenting on the Opinion of the Advocate General, were clashing with the case law of the right to a fair hearing. The Court ruled that this case law didn't apply to an Advocate General. This view has been vindicated by the Strasbourg Court. These kind of disputes would be resolved by the planned accession of the Union to the European Convention of Human Rights.

What competences does the Union have?

Competence

In the Treaties the term competence is used as a synonym for legal authority.

The Treaty of Lisbon classified the competences of the Union into three categories: exclusive, shared and ancillary competences. Which provided a definition of competence as power to 'legislate and adopt legally binding acts'. The principles of conferral, subsidiarity and proportionality watch over the Union's competences.

Conferral determines what competences the Union enjoys. Subsidiarity provides a test as to whether or not they should be exercised. Proportionality ensures the competences are exercised in a manner as to hurt the competences of member states and the rights of individuals as little as possible.

Conferral

Art. 1 TEU states that 'the member states confer competences to attain objectives they have in common', this is the raison d'être (reason for the calling to life) of the European Union.

The principle of conferral is found throughout the Treaties. Art. 4(1) TEU declares that competences not conferred upon the Union in the Treaties remain with the member states. Art. 5 (1) states that the limits of the Union's competences are governed by the principle of conferral. Art. 5(2) and art. 13(2) TEU state similar things.

Grants of legislative power (legal basis)

The Treaty grants the EU legislative competence in a number of discrete areas. Every binding act of the Union, must have a legal foundation in the Treaties or in a valid pre-existing normative act. This we call the legal basis of the act.

Since the SEA (1987) the Court has built up a lot of case law on the determination of the legal basis of Union acts.

In 1986 (the GSP Case) the Court ruled that the legislature was obliged to identify the legal basis o the binding acts and that this choice was amendable to judicial review.

In Titanium dioxide, it was made clear that the aim and material content of the measure were to count as the criteria for the determination of the legal basis.

Classification of competences

The domains of activity of the Union are classified into 'categories and areas of Union competence', and each 'category' is comprised of 'areas'.

The lists of categories of competence are set out in art. 2 and 6 TFEU. The three areas of competence are

1. Exclusive
2. Shared
3. Ancillary

Two areas are excluded from these categories: the power to adopt arrangements for the coordination o f the member states' economic and employment policies and the competence to define and implement a common foreign and security policy.

Exclusive competence

Only the Union may legislate and adopt legally binding acts in this category. This is in areas where member state action would render Union action ineffective and the Union is legally obliged to exercise. The exclusive character is not absolute.

Before the Lisbon Treaty, the Court's case law had recognized that member states may be authorized to adopt the necessary measures on a national level, where the Union had failed, to exercise an exclusive competence.

Art. 3 TFEU provides a list of exclusive competences: the customs union, competition rules, monetary policy for the eurozone, the conservation of marine biology resources, the common commercial policy and the adoption of international agreements.

Shared competences

Most Union competences are shared. It is a category, which includes everything that is not exclusive and not ancillary.

Member states may exercise their competence to the extent the Union has not exercised its competence or has decided to cease exercising its competence: once the Union has adopted rules on a matter, member state action is no longer needed and they may no longer legislate.

To avoid that, art. 4(3) and (4) TFEU provides that the exercise of Union competence does not have the effect of preventing the member states exercising their competence.

Ancillary (or 'complementary') competences

In some areas, the Union is allowed to 'carry out actions to support, coordinate or supplement actions of the member states: its action is ancillary to that of the member states.

The exercise of an ancillary competence may not lead to the harmonization of national provisions in itself.

Common Foreign and Security Policy

The CFSP is given separate treatment, because the decision-making procedures and legal instruments differ from those under the regular regime. Legislation is excluded in preference to guidelines, decisions, positions and implementing arrangements and cooperation between member states.

The Court has been given jurisdiction to review to categories of measures:

1. Restrictive measures against natural or legal persons
2. Ensuring that CFSP measures do not encroach the competences conferred to the Union and to ensure that the exercise of competences under the general regime do not encroach on the CFSP. This means that a CFSP decision can be challenged, because it falls under the general regime.

What is subsidiarity?

Subsidiarity in the Union means that decisions be taken as closely as possible to the citizen.

In art. 5(3) TEU it is formulated that subsidiarity provides a test, which can act as a brake on the exercise of competence.

The subsidiarity test

The test doe not apply to Union action in areas where it enjoys exclusive competence.

The first (negative) condition is: 'that the objectives of the proposed action cannot be achieved by the member states, either at a central or regional or local level.' This is the necessity test.

The second (positive) condition is: 'that by reason of the scale or effects of the proposed action, the Union objectives can be better achieved at Union level'

The early warning mechanism

The early warning mechanism is designed to allow national parliaments to ensure the Union legislation complies with the subsidiarity test. The national parliaments receive draft legislative acts as well as the amended drafts and the drafts are accompanied by a statement making it possible to appraise compliance with subsidiarity and proportionality. The parliaments then produce an opinion. There are three varieties: the individual opinion, the collective opinion and the special legislative opinion.

Opinion of individual parliaments or chambers

The institutions are obliged to take account of the opinions issues by an individual parliament, but they are not obliged to follow such opinion or take further action.

Collective opinion

A collective opinion is adopted by at least one-third of the total voted. If it falls under the area of freedom, security or justice it is lowered to a quarter of the votes. It is an opinion of all the national parliamentary bodies.

Special legislative opinion

This can only happen when parliaments are examining a Commission proposal under the ordinary legislative procedure: such an opinion can be adopted with a simple majority of the total votes. The Commission may choose to maintain, amend or withdraw this proposal.

Scope of the early warning mechanism

The early warning mechanism is subject to some limitations.

1. It only applies to legislation, excluding measures adopted by an innominate non-legislative procedure.
2. It only applies to the initial proposal and amended versions of the proposal.

Even then, it doesn't guarantee to be of any help. A proposal to oppose a measure on subsidiarity grounds is actually harder than to oppose it on other grounds: 16 member states have to object to the measure, whereas normally it would only require 13 votes. This can be found under Protocol No 2.

Judicial review of compliance with the subsidiarity test

The question whether the subsidiarity test applies in the context of the adoption of internal market measures was answered in the Working Time case. The Court rules that once the legislature had found it was necessary to pursue a particular objective, achievement of that objective necessarily presupposes Community-wide action'. This was interpreted as indicating that subsidiarity did not apply to internal market measures.

In British American Tobacco the Court clarified that, as the Union doesn't have exclusive competence to regulate economic activity on the internal market, subsidiarity does apply to measures in this area.

When a measure tries to achieve two objectives, then when one of these can be better achieved at member state level is not sufficient to show a breach of the subsidiarity.

There have also been made special provisions on judicial review for the subsidiarity.

What is proportionality?

The proportionality principle is currently formulated in art. 5(4) TEU: 'The content and form of Union action shall not exceed what is necessary to achieve the objectives of the Treaties'.

The court will only intervene is the action taken is inappropriate to the objective sought by the measure, therefore to show that the proportionality has not been respected, a party would have to show that the objective of the measure was not one the legislature could pursue under the Treaty, or that the same objective could have been achieved by less intrusive means.

In British American Tobacco the Court ruled that the legislature could take the view that a ban of manufacturing cigarettes for export to third states was more effective to combat illegal trafficking in cigarette, than only reinforcing import controls.

In Spanish Cotton Subsidies the Court ruled that the Council didn't take all the relevant factors into account and therefore had failed to comply with the proportionality.

The proportionality does not have an early warning mechanism or special provisions on judicial reviews.

Case Study: Vodafone

In 2007 the Roaming Regulation made sure the princes went down for phone calls made from other member states. The regulation was challenged by mobile phone operators on the grounds that it breached the principles of subsidiarity and proportionality.

The Court of Justice first restated the fundamental tenets of its case law on the internal market:

• The object of the measure should be genuinely to improve the conditions of the internal market;
• The legislature can only act where the differences in national rules are to obstruct the fundamental freedoms and have direct effect on the functioning of the internal market or when differences are likely to emerge;
• The legislature can amend already existing legislation concerning the internal market to adapt it to a change in circumstances or a change in knowledge;
• The legislature has a discretion with regard to the method of approximation of national law.
• Provided that the conditions are fulfilled, the fact that other considerations may be decisive does not prevent the legislature relying on that legal basis

The Court ruled, with regard to subsidiarity, that given the dependence between wholesale and retail charges, reducing retail charges alone, without affecting the costs for the wholesale, would have been liable to disrupt the functioning of the roaming market. Therefore the objective pursued could best be achieved at a Community level.

The Court, as to proportionality, ruled that the legislature's discretion means that the criterium of legality is not whether it was the best possible measure, but whether it was 'manifestly inappropriate having regard to the objective which the competent institution is seeking to pursue'.

The main issue with the proportionality was whether the consumer prices could have been brought down by imposing ceilings on the wholesale prices only (instead of on the retail prices). The Court ruled that a ceiling on wholesale prices was indeed appropriate as a measure, but the Court also noted that there was no competitive pressure on operators, so capping wholesale charges wouldn't have had any effect on the retail prices. Therefore the legislature was allowed to set a ceiling for the retail prices.

What are the different kinds of decision-making procedures?

Decision-making procedures are the means by which the Union exercises its competences in a case. The procedure determines the degree of formal influence each institutional actor may bring to the outcome.

Since the Lisbon Treaty there is an explicit distinction between legislation and other forms of normative act and between primary and secondary normative measures.

Legislative and assimilated procedures

There are: the ordinary legislative procedure (OLP), the special legislative procedures (SLPs) and various innominate non-legislative procedures (INPs). The OLP is the most important.

The ordinary legislative procedure

The OLP is set out in art. 294 TFEU. The procedure may only be initiated by the Commission submitting a proposal (with some exceptions). Prior to submitting a proposal, the Commission is legally obliged to 'carry out broad consultations with parties concerned': the Commission is obliged to engage with citizens and representatives to keep an open, transparent dialogue.

After initiation, the Commission can amend its proposal at any time during this procedure as long as the Council has not acted.

On second reading the Council has to have a unanimous vote if it wishes to adopt a European Parliament amendment on which the Commission has given a negative opinion, then the Commission takes part in the proceedings.

Institutions and bodies other than the Commission can initiate the OLP only in areas of their special competence. For example: the Court of Justice can propose amendments to its Statute.

In the field of judicial cooperation in criminal matters and police cooperation, legislative measures can be initiated by only a quarter (7) of the member states.

Where the OLP isn't initiated by the Commission, the Parliament's first reading takes place on the basis of an initiative, a request, or a recommendation. The OLP closes by the signature of the legislative act by the presidents of the Parliament and the Council.

There are two important Treaty rules in context of the protection of the Commission's position:

1. The Council may act by a qualified majority unless the Treaty provides otherwise
2. The Council may only amend a Commission proposal if acting unanimously.

The adoption of a legislative act under the OLP thus required the complete agreement of the Parliament and the Council. This can happen by Council approval of the Parliament's first reading, mutual acceptance by the Parliament and the Council on each others amendments on the second reading, or the convening of a conciliation committee to hammer out a joint text on which they both agree on the third reading.

The Commission can withdraw a proposal as long as the Council has not acted.The Commission must provide reasons for the withdrawal supported by evidence/arguments.

A first reading rejection by the Parliament could be refused by the Council. In this case the Parliament would require a vote by the majority of its component members to prevent the adoption of this legislation.

Emergency Brakes

A single member state could call a 'time-out' during the procedure of adoption and have the matter referred to the European Council for reflection. This can only apply if the legislation would affect 'important' or 'fundamental' aspects of its national system.

Special legislative procedures

There's a wide variety of special procedures. Most of these are derogations from the application of an OLP in a particular area. For example: measures to facilitate the right to free movement is adopted under the OLP, but there's an exception concerning social security and social protection, here an SLP applies.

The Union budget is adopted under a very special legislative procedure.

Innominate non-legislative procedures

With INP's the procedural requirements are mostly minimal. In many of the cases the Council adopts a measure by a qualified majority on the basis of a Commission proposal, without any participation of the Parliament. Examples of things that would be going through the innominate non-legislative procedure are: measures that are more executive rather than legislative, the adoption of rules on private and public sector competition and certain emergency measures.

An INP may be required by the derogation from an OLP for the adoption of for example sensitive measures in a normal policy field.

The character of INP acts can be illustrated by the division between the agricultural policy measures the legislature adopts on the basis of art. 43(2) TFEU and the fixing of agricultural prices and similar measures under art. 43(3) TFEU. While (2) entails a policy decision reserved to the legislature, (3) is 'of a primarily technical nature and are intended to be taken in order to implement provisions.' Each of these bases had a specific field of application and may thus be used separately for measures under the common policy. The Court emphasized that such INP-measures cannot be assimilated to implementing acts adopted under 291 TFEU.

Consultation and assimilated requirements

The consultation of different institutions may be required in the context of the SLP or INP or in the first reading of the OLP. The opinion of these institutions does not bind the decision-making institutions, but if if it isn't done the breach can justify an annulment.

The Parliament must be 'immediately and fully informed at all stages of the procedure' for negotiating and concluding international agreements. This is to allow the Parliament to exercise democratic control over the EU's external action.

What are delegated and implementing acts?

Derived normative measures are measures based on an enabling provision contained in an act which is based directly on the Treaty, thus, legislation or acts under the INP. This may not be called 'legislation' because the Treaty reserves that term only for normative measures by the OLP or an SLP. Therefore, there's the term 'regularly act', this covers all non-legislative normative acts (delegated acts, implementing acts and acts adopted under an INP).

Delegated acts

Delegated acts are a particular kind of measures, which the Commission adopts under art. 290 TFEU. These measures could in principle have been adopted by the legislature, but have been delegated to the Commission. In 290 TFEU they are described as 'non-legislative acts of general application which supplement or amend non-essential aspects of the legislative act'

The Common Understanding

Art. 290 only requires that the legislature determine in each case the objectives, content, scope and duration of the delegation and the supervisory mechanisms which apply to the exercise of the delegated powers, it does not require any implementing measure to be applicable.

Forms of supervision

There are two forms of supervision:

1. The right of revocation: either branch of the legislature may revoke the delegation
2. The right of objection: they may prevent the entry into force of individual delegated acts

Both mechanisms may be applied to the same delegation. The restriction to these two forms would allow the Council, acting under an SLP, to exclude the Parliament from the supervision of the relevant delegated acts.

Under te objection procedure, the delegated act doesn't enter into force before the two-month period in which can be objected, is expired. When there are no objections, the delegated act may be published in the Official Journal.

Under an urgency procedure the delegated act can enter into force before the expiry of this period.

Limitations on delegation and identification of delegated acts

Delegated acts may only be effected in legislative measures. Implementing acts can be adopted on the basis of any legally binding Union act.

A delegated act can 'amend (formal amendment of a provision) or supplement (addition of new elements)' a basic legislative act.

In adopting a supplementing act, the Commission must comply with the entirety of the legislative act, while the power to amend allows it to 'modify non-essential elements.. the Commission is not required to act in compliance with the elements that the authority conferred on its aims to amend'.

The legislative measure must determine which of the powers it is conferring to the Commission, rather than letting the Commission choose.

Implementing acts

An implementing act allows the Commission to provide further detail in relation to the content of a legislative act, in order to ensure that it is implemented under uniform conditions in member states. It must comply with art. 291(2) TFEU and the provision of the legislative measure conferring the power to adopt such an act (interpreted in the light of art. 291(2) TFEU). The Commission cannot amend nor supplement the measure.

The legislature has given discretion to choose between delegated and implementing acts, therefore judiciary review only answers whether the legal framework being implemented 'needs the addition of further detail, without its non-essential elements having to be amended or supplemented and, that the provisions require uniform conditions.

When uniform conditions are required, the conferral of delegated powers to the Commission is obligated and the Commission remains answerable to the Parliament.

These arrangements in 291 TFEU are the second part of comitology (member states controlling the Commission). When implementation is the responsibility of member states, the Union can only adopt implementing measures when 'uniform conditions are needed'.

Conferral of implementing powers and the Neo-comitology Regulation

Implementing powers may, according to 291 TFEU, be conferred in any legally binding Union act. The Council adopts the majority of acts under SLPs and INPs. The Parliament adopts a limited number of legislative acts concerning its own functioning. Implementing powers in duly justified specific cases may be conferred to the Council.

The mechanisms for control by the member states is defined by Parliament and Council Regulation 182/2011: the Neo-Comitology Regulation. Existing of two supervisory mechanisms, an advisory procedure and an examination procedure. The Commission is obliged to refer its draft to a committee, which can require it to reconsider or amend the draft, or prevent the Commission from adopting the measure.

Common features of the supervisory procedures

All the committees in the neo-comitology procedure exist of representatives of the member states. Under both the advisory and the examination procedure, the Commission submits a draft, then members of the committee may present amendments and the Commission can present an amended draft.

Choice of supervisory procedure

There are flexible guidelines regarding the choice of an appropriate procedure. The choice should take into account the nature and the impact of the implementing act.

The examination procedure: acts of general scope and sensitive implementive acts in member states (such as taxation, agriculture, common commercial policy)

The advisory procedure: everything else

The advisory procedure

The Commission submits a proposal, the committee gives their opinion and the Commision then takes this in account, they are not bound. Non-compliance could however justify the annulment.

The examination procedure

It is way more complicated then presented here. These are only the outlines:

• If the draft is supported by a qualified majority of the committee, then the Commission may adopt it
• A negative opinion prevents the Commission from adopting that measure: the Commission has to present an amended version or refer the matter to the appeal committee.
• When the committee can't adopt an opinion, the Commission may adopt the measure except for when the basic act provides it may not do so, or a majority of the component members of the committee oppose to the draft, or in sensitive areas, or when the measure lays down countervailing duties and a simple majority of the members of the committee oppose. In the first 3 matters, the Commission can amend, but in the last one, the Commission has to go to the appeal committee.

The appeal committee

The national representatives in the appeal committee should be at a higher level. In the appeal committee, members can propose amendments, and the Commission is then obligated to 'endeavour to find solutions which command the widest possible support' and the Commission has to inform the committee how it has taken into account the amendments and why, if so, it has rejected them.

The committee acts by a qualified majority: a positive opinion means the Commission must adopt the measure, no opinion at all means the Commission may adopt the measure, and a negative opinion means the Commission cannot adopt the measure.

Immediately applicable implementing acts

On 'duly justified imperative grounds of urgency' the Commission may implement a measure before it is submitted to the committee. The Commission then submits it within 14 days of its adoption: a negative opinion obliges the Commission to repeal the measure immediately.

Openness in committee governance

This regulation ensures open government as well: committees have to allow access to their documents as well and the Commission has to keep a register of committee proceedings, accessible to the Council and the Parliament.

Borderline between delegated and implementing acts

The borderline between delegated acts and implementing acts is not clear. The Treaty defines a delegated acts in terms of its content (non-legislative acts of general application..) , while the implementing act is defined in terms of its rationale (laying down uniform conditions for implementing legally binding acts).

The European Parliament usually prefers delegated acts, whereas the Council prefers implementing acts.

Case Study: Frontex

The Commission proposed a set of rules governing sea-border operations to tackle the problem of immigration by sea. The draft was submitted in late 2009. The adoption of the decision was subject to a comitology procedure left from the pre-Lisbon time: the regulatory procedure with scrutiny. This procedure meant that when the committee did not give a positive opinion, the power to adopt went to the Council, and this happened.

After that the Parliament took the view that the rules should have been adopted as a legislative act, rather then an implementing measure. This was presented to the court by the Council: three questions were asked.

1. Was the European Parliament allowed to challenge the validity of an act whose adoption it could have prevented?
2. Is the legislatures determination that a provision constitutes an 'essential element' of the basic legislation open to judicial review?
3. Did the contested decision exceed the implementing powers granted by the Schengen Borders Code?

Answer 1: The Parliament didn't have to have interest in the outcome of the legal proceedings to initiate an annulment action. The Parliament's scrutiny power could not be considered as a substitute for judicial review.

Answer 2: The legislature does not enjoy untrammeled freedom to decide whether an aspect of an act constitutes an 'essential element' or a 'non-essential element'. It must be based on objective factors, amendable to judicial review.

Answer 3: The adoption of rules concerning enforcement on the border entails political choices and constitutes a major development in the system. The exercise of such powers means that fundamental rights may be interfered with, therefore involvement of the legislature is required.

By ruling the Parliament's action admissible the Court held together the desirability of judicial review and respect for the political discretion. The Court's interpretation of 'essential elements' would become very important for the application of art. 290 TFEU, because according to this article only 'non-essential elements' can be amended. The most important choice is the role that the Court has given itself by this ruling: it has shown to be strict in enforcing the rules determining which procedure applies.

What is enhanced cooperation?

There has been an increase in heterogeneity in the EU, this results in an unwillingness to participate in different projects. This has led to some opt-outs of the Treaties (e.g. Denmark not participating in the euro).

When support of a measure is insufficient for adoption, the Treaty allows for a coalition of the willing to proceed, adapting the calculation of voting majorities. This is called enhanced cooperation.

The decision to authorize enhanced cooperation is taken by the Council when it is established that it cannot be attained by the Union as a whole.

The Schengen Protocol (no 19) authorizes the establishment of enhanced cooperation between all member states excluding Ireland and the United Kingdom. They may only take part in the Schengen acquis by means of the procedure laid down in the Protocol.

How does Treaty revision work?

The Treaties may be amended under the 'ordinary revision procedure' or a simplified revision procedure. It depends on the character and the extent of the modifications.

Simplified revision procedures

There are three different simplified procedures. They are laid down in art. 48(6) TEU, art. 48(7) TEU and art. 48(3) TEU.

Article 48 (6)

There are two restrictions with using this article: it cannot be used to increase the competences conferred on the Union and it can only be used to amend part 3 of the TFEU (policy provisions of the old EC Treaty and the area of freedom, security and justice).

Amendments can be proposed by a member state, the Parliament or the Commission. The European Council decides unanimously after consulting with the Parliament and the Commission. The amendments do still need national ratification before they can come into force.

Article 48(7)

This procedure allows the European Council to replace a Treaty requirement for Council unanimity with a qualified majority rule, except for decisions with defense or military implications.

The article also allows the European Council to replace an SLP in which the Council is the adopting institution with an OLP, however highly sensitive matters are excluded from this provision.

In every case the (majority) consent of the European Parliament is required. It can be vetoed by the national parliaments, the two chambers of a bicameral parliament would have to agree on a veto. These procedures, known as 'passerelles' do not allow for substitution of unanimity for a qualified majority rule on an SLP where the Treaty provides already for an OLP.

Miscellaneous specific revision procedures

The other forms of specific simplified revision are found throughout the Treaty.

Ordinary revision procedures

The ordinary revision procedure is available for any Treaty amendment. They can be proposed by Parliament, the Commission or any member state. The European Council decides, after consulting the Parliament and the Commission, by a simple majority vote, whether the process should continue.

'Then the President of the European Council convenes a convention of representatives of the national parliaments and the European Parliaments, the heads of State and the Commission.

By consensus, the convention can recommend Treaty amendments to an IGC, which adopts the amendments by common accord.

Amendments still need ratification by member states.

Accession and withdrawal

The decision to grant accession to a state is taken by the Council, unanimously, informing the national parliaments, consulting the Commission and obtaining consent of the majority of the Parliament.

Art. 50 TEU provides a procedure for dealing with a withdrawal request by agreement. When there is no agreement the state will remain to be be party for two years, unless there is a unanimous agreement to extend this period of time. This is the article that is used with Brexit.

What is the democratic deficit of the EU?

Case law references

It is perceived that the Union institutions have lesser accountability than the governments of the member states. The Court of Justice has noticed this too. In Van Gend en Loos the Court relied on the fact that the citizen participate through the choosing of the European Parliament, therefore the legal order can be justified. In the Titanium dioxide ruling the Court prioritized the Community-level democratic participation in the legislative procedure of the European Parliament over the rights of member states to exercise a veto.

Reform of decision-making procedures and principles

These concerns have led to a lot of Treaty revisions giving the Parliament more power. At the same time the principles of conferral, subsidiarity and proportionality ensure that decisions are only taken when it's more appropriate then action on national level.

Treaty provisions and democratic principles

The Lisbon Treaty inserted new provisions on democratic principles into the TEU. One of these provisions is the providing for the European's citizens initiative (ECI), which allows a million citizens from seven member states to request the Commission to take a policy initiative.

What can be concluded?

Constitutions grant powers to institutions of government. While not being a constitution formally, the EU Treaties have laid down rules on competence and on decision-making.

In the recent years, the member states have increased the policy-making powers of the Union and established new rules and procedures, which brings more focus to the Court of Justice.

The Court has managed to set some limitations to its own role and it has managed to oversee a significant degree of judicialization of political decision-making.

The exercise of decision-making is subject to some constraints (procedural and substantive) and is fully amendable to judicial review by the Court of Justice. This chapter is about the procedures for adoption of measures in the EU, it describes the legal structures and the rules governing the allocation of powers.

What are the effects of EU law in the national legal systems? - Chapter 6

What is this chapter about?

This chapter explains the national dimension and the grand Brussels world of the EU. It shows how EU law enters into the national legal systems.

The principles discussed in this chapter are the backbone of the legal system: the principles however are not written anywhere: they have been brought to life by the case law of the Court of Justice. Because of this there is a constant interaction between the national courts and the Court of Justice.

Enforcement: Who, how and by what principles?

To understand the constitutional settlement within the EU there are three important elements to be discussed: institutions (who enforces EU law), procedures (how is EU law enforced) and principles (by what principles is this enforced).

Institutions: EU law in the member states is carried out by the existing institutions, these institutions become de facto EU institutions, when they're acting within the scope of EU law.

Procedures: EU law is being enforced through the existing national rules of procedure.

Principles: The principles therefore may be the most important distinction. Principles like direct effect, primacy or indirect effect. These principles decide what happens in cases of divergence or collision with national law.

In Van Gend en Loos and Costa the Court pre-empted the national choice and diversity with respect to the status of EU law in member states.

The Union could currently be seen as a type of cooperative federalism. On one side the Union has moved away from a public international model, through unification and harmonization, principles of national application became unified and so did certain procedures and remedies. On the other side, the Union could be seen as far from a fully fledged federal structure, in which a structure and procedures would be set up and the supremacy would be clear.

The Union is sui generis, which means of its own kind.

What is direct effect?

Direct effect means that an EU provision, becomes an immediate source of law in a national court. There is no implementing act necessary.

Van Gend en Loos

Direct effect first appeared in 1963. Van Gend en Loos, a company in the Netherlands, imported urea-formaldehyde from Germany and the company disagreed with the amount of duty charged by the Dutch Inland Revenue. It claimed that the Netherlands changed the duty, which was contrary to the (then) art. 12 EEC. The Court ruled that this provision did indeed have direct effect, because the Community constitutes a new legal order. They stated that such a clear and unconditional prohibition such as art. 12 EEC, is capable of producing direct effect.

The Conditions and the real test

In Van Gend en Loos the Court stated that a Treaty provision may produce direct effects in the member states if it is:

1. clear
2. unconditional in the sense of not allowing any reservations on part of the member states;
3. not dependent on any subsequent further implementation measures to be adopted by member states

This has been changed by case law, because even sometimes when provisions weren't in accordance with these rules, they could still have direct effect according to the Court. Therefore the new conditions are that a provision is:

1. unconditional
2. sufficiently precise
3. the member state in question failed to implement the directive

This basically means that the provision can be slightly vague, as long if a clear and unconditional prohibition can be extracted from it.

Direct effect in action

A directly effective provision can act in different ways. For example a directly effective provision may create a new rule (thus substituting the directive for a non-existed provision of national law). It can also exclude the application of an existing, but contrary national rule (thus excluding a national law from the national legal order).

There are two other important characteristics as well. First, the test for direct effect is carried out with respect to individual provisions of EU law. Secondly, even EU provisions which do not grant any individual subjective rights may be directly effective.

Types of legal acts

Case law expanded direct effect to other sources of EU law. With that, differentiation between the various direct effects, their conditions and their scope, did rise.

The first type of differentiation relates to the type of source of EU law which may be directly effective. The second type is based on the nature of the parties to a legal relationship for which the EU provision is supposed to be directly effective.

Treaty provisions

In 2009 the Charter of Fundamental Rights became primary law. It was to have the same legal value as the Treaties. Does it therefore have direct effect? There is definitely vertical direct effect (an individual suing the state). Whether it could have horizontal application (private individuals on both sides) is left open by the Court.

Regulations

Regulations are 'directly applicable in all member states', direct applicability means that unless expressly requested by the regulation, no national implementing act is necessary. Direct effect focuses on the justiciability of the provision: can it be applied directly by a national authority?

The Court did state that direct effect of regulations can generally be presumed.

Decisions

Under art. 288 TFEU there are two kinds of decisions: addressed and non-addressed. An addressed decision is an individual act, stating its addressee. A non-addressed decision amounts to a legislative act in all but name: it does not expressly name its addressees, but it provides general and abstract rules.

Direct effect of a decision is linked with vertical situations. The Court ruled that they cannot have direct effect horizontally.

Types of legal relationship

In Van Duyn the Court stated that directives may be vertically directly effective. The Dutch Mrs van Duyn, who was refused leave to enter the UK to be employed as a secretary with Scientology. The UK considered these activities harmful. Mrs Van Duyn wished to rely on provisions of a directive in her appeal. The Court stated that individuals can rely on a directive's provision against a member state. The provision however must be sufficiently clear and precise, unconditional and the implementation period for transposing the directive into the national legal order had to have passed.

In later case law the Court justified this decision by the estoppel argument: when a member state has failed to implement a directive, the state cannot rely on that failure as a defense. In that context it is almost like a sanction for not implementing the directive.

In Marshall the Court stated that directives may not be horizontally effective.

No horizontal direct effect of directives: the rule and the exception

The decision made by the court with respect to the horizontal effect is criticized, the greatest problem is that the Court has not been ready to adhere its choice in substance.

The Court dit create some alternative options for reaching into horizontal relationships.

1. The Court has inflated the notion of the 'State' to include any organization that is subject to the authority of the State. Therefore the relationship will be seen as vertical in these situations. The Court also decided that when a State is acting privately, it's still a vertical relationship.
2. When a member state fails to notify technical standards and regulations to private people, then when these people face problems, these are caused by the state and therefore do not fall under the states' basic law.
3. The Court ruled that principles of law are applicable in horizontal relationships as well, without any limitations.
4. The Court has promoted a very robust vision on indirect effect as a way for directives to reach into horizontal relationships. This will be further explained in the next paragraph.

What is indirect effect?

Indirect effect is also known as consistent interpretation, harmonious interpretation or EU-consistent interpretation. It means the duty of all national bodies to interpret all national law in light of EU law. It is an important principle.

The Notion

The principle was first articulated in Van Colso, after that it has been repeated in other cases, most recently in Pfeiffer. There are no exceptions to the rule of indirect effect.

The Scope

Drawn from EU law it can be said that indirect effect may include:

1. Weak indirect effect. An EU law provision is used as a confirming argument. The EU provision is used as an additional authority.
2. Medium indirect effect. An EU law determines the choice between interpretative options, which are all plausible.
3. Strong indirect effect. The wording of a national provision starts to be twisted and bent to achieve conformity with an EU law provision.

An example of a strong indirect effect is seen in the European Arrest Warrant (EAW). Art. 14 of the Czech Constitution states that 'no citizen may be forced to leave his homeland'. This does not preclude a citizen being surrendered to another EU country according to the Constitutional Court: the EU should be faced as their homeland. This article was strongly interpreted in conformity with EU law.
Germany and Poland had the same problem, but they had to change their national law provision. There are no clear borders between strong indirect effect and direct effect.

Interpretation unbounded?

Indirect effect thus is an alternative to the prohibition of the horizontal effect of directives. The only thing needed is a national law provision that could be claimed to be interpreted in conformity with EU law, then all the previously discussed limitations fall away.

The state cannot rely on a non-implemented directive to impose obligations on an individual. But what if a member state uses a provision of a directive for the purpose of consistent interpretation (indirect effect) of national law. They can, which can lead to very different outcomes.

Introducing limits

The Court did formulate some limits:

1. Interpretative methods recognized by national law. Interpretation of law should remain interpretation, even in the face of 'full effectiveness' of EU law.
2. General principles of law. Principles can put a break on far-reaching interpretative adventures.
3. No interpretation contra legem.

What does primacy mean?

In a case of conflict, EU law prevails over national law. Both the EU and the member states have a different view on what that means. That will be explained in this chapter.

The Court's view

In van Gend en Loos direct effect entered the national legal systems. But what happens in the case of conflict?

Costa

In Costa, the Court answered this question. The case was about Italian legislation, which was incompatible with the Treaty, but it was adopted after Italy joined the EEC. Can such subsequent national legislation unilaterally derogate from Treaty obligations? The Court ruled a 'no'. All EU law prevails over all national law. The basis for this is the special and original nature of the law stemming from the Treaty.

The key to the succes is the synergic effect of the direct effect and primacy.

The scope and effect of primacy

There are three important aspects of primacy.

1. Primacy means primacy in application. It does not affect the validity of the national law provision. It can only be applied in individual cases.
2. The primacy is unreserved and absolute. It is absolute both hierarchical and temporal.
3. The primacy of EU law empowers national justice to set aside incompatible national laws.

The national views

The national responses to the Court's absolute primacy claim, are as followed:

• The basis for the system of EU law is not a 'special and original nature', but it is the Treaties signed by the member states as an obligation under international law. The last word lies with the member states.
• Internally, within a member state, the reason for application is the national constitutional mandate in which the constitution-maker expressed the wish to join the EU. Therefore, EU law is hierarchically under or beyond national law, but not above it.
• If this Euro-article in the national constitution opens the gate for domestic application of the EU law, then a national guardian is entitled to check whether the Union remains within the powers conferred upon it by the national constitution.

What are the national procedures for enforcing EU law?

So far we've talked about the three key principles of national enforcement of EU law: direct effect, consistent interpretation (indirect effect) and primacy. The EU law has formulated some requirements with respect to procedures and remedies for enforcing EU law as well, those will be discussed in this paragraph.

The general rule is that:

1. If the EU has its own procedural rules, they take precedence over national rules
2. If there are no Union rules on the matter, EU law is enforced through the national rules and procedures
3. There are two qualifications to such full national autonomy: requirement of equivalence and requirement of effectiveness.

The default procedures are mostly national, but sometimes an EU 'brick' is added. These 'bricks' can be of legislative or judicial origin. The legislative bricks either unify or harmonize segments of national procedures. Unification of national procedures ensues by regulations which provide for a special regime in specific areas. Harmonization proceeds by directives. It seeks to approximate, not replace, national procedural rules.

The EU procedural rules can also be of judicial origin: a notable example in this category is the principle of State liability, which is on the border line between procedural and substantive.

The not-so-autonomous national procedural autonomy

The fact dat national procedures will govern the enforcement of EU law, unless the EU provides otherwise, is called 'national procedural autonomy'. This term implies freedom, but that's not the case. There is no space free of EU law on a national level.

In contrast to the legislative unification of procedural rules, the judicial reach (unification by the Court) is limitless. The logic of EU legislation is area-specific (conferred competence). In contrast, the Court's engagement is functional and transversal: it is not limited to any area of law. Therefore all national procedural rules may subject to the dual requirement of equivalence, provided that EU law is involved in the individual case at hand.

From equivalence/ effectiveness to the principle of effective judicial protection.

The national provisions will be the default provision, however, these might be altered in sectors by pieces of EU legislation or requirements formulated by the Court.

Any non-harmonized questions of national procedure are subject to the double requirement.

The requirement of equivalence is a prohibition of discrimination. EU law based claims cannot be treated as less than national claims.
The requirement of effectiveness requires that the enforcement of eu law-based claims cannot be seen as practically impossible, but also not as excessively difficult.

The rhetoric of the requirement of equivalence/effectiveness has shifted in the recent case law of the Court. The case law has started to discuss issues concerning national remedies more in terms of effective judicial protection.

State liability

An example of a more advanced judicial unification of a remedy is state liability for breaches of EU law. This became clear in Francovich. The conditions for state liability since then have been reformulated by the court, the current test is formulated in Brasserie du pêcheur/ Factortame. There are five conditions in total:

1. A wrong (an act or an omission violating EU law). This wrong was of a legal provision which was intended to confer rights on individuals and the wrong was sufficiently serious.
2. Damage
3. A causal link between the wrong and the damage.

The member state can be liable for violations by any branch of government. The duty to implement EU law rests on the state as a unity and may therefore be committed by any body of the state.

How do these principles work in practice?

Case Study: Audiolux

Audiolux was a minority shareholder in the RTL group. Bertelsmann had gotten the majority share and did some things Audiolux didn't agree with. Audiolux suggested that when a major shareholder transfers its shares to another, minority shareholders need to get equal treatment.

Company law has been harmonized by EU law. Art. 42 of Directive 77/91/EEC provides that 'for the purpose of the implementation of this directive the laws of the member states shall ensure equal treatment to all shareholders in the same position.

In Court Audiolux might try to rely on direct effect. The article seems sufficiently clear, precise and unconditional, because it is a clear prohibition of discrimination. However, these are both private undertakings and therefore it is a horizontal relationship and therefore Audiolux can not rely on the direct effect.

Audiolux could try indirect effect. In this case Audiolux would have to find a provision that can be interpreted in this law (a provision that prohibits discrimination for example).

If this doesn't work, Audiolux could try to say it is a general principle of EU law, principles know no bounds.

If that doesn't work either (which indeed was the case), Audiolux could try to put out a claim for State liability. It could be said that Audiolux suffered actual and certain damage, the damage has a causal link to the Luxembourg failure properly to implement the law. It could even be seen as a serious breach, because it could be suggested that the member state had little discretion in choosing to implement.

What can be concluded?

The problem of this system of remedies is the lack of foreseeability and predictability.

This chapter explains the national dimension and the grand Brussels world of the EU. It shows how EU law enters into the national legal systems.

The principles discussed in this chapter are the backbone of the legal system: the principles however are not written anywhere: they have been brought to life by the case law of the Court of Justice. Because of this there is a constant interaction between the national courts and the Court of Justice.

Is EU law international law? - Chapter 7

What is this chapter about?

This chapter will try to present the discussion about the legal nature of EU law and help to place EU law in the world of law.

Can EU law be seen as a sub-system of international law?

Is the EU an international organization?

In the literature views differ. One view is that the EU is no longer na international organization, but not a federal state as well, it is a legal construction in between those two. Other people think the EU still is an international organization and is still located within international law. There are two reasons why it makes sense to see the EU as an international organization.

1. EU law finds it origins in international treaties. The rule of recognition in EU law is whether a norm can be traced back to the FEU and the TFEU.
2. These is an extraordinary flexibility of international law. It is developed by treaties, but there are no limits as to what kind of cooperation the states can undertake.

The European Communities then and the European Union now simply tick all the boxes of an international institution: they are created by a treaty and it possesses organs with a will distinct from the member states.

The international origins of the European integration process

Between 1948 and 1951 three new international organizations were created in Western Europe: the Organization for European Economic Co-operation (OEEC), the Council of Europe and the European Coal and steel Community (ECSC). All these organizations expressed that they wanted a greater European unity.

During these post-war years, groups of federalists wanted to create a United Europe based on a federal constitution. The governments chose not to take the federal route and they shaped new initiatives of European cooperation by using the legal tool of the international treaty. All the organizations were based on a treaty and both the OEEC and the Council of Europe were set up as traditional international organizations: they're organs were under close control of member state governments. The ECSC treaty however created a different functionality.

By signing the ECSC the governments agreed to relinquish national control over the sectors of coal and steel and allow the supranational High Authority to exercise state-like authority in their stead. The supranational character sprang from the way in which it distributed legal authority and organized the decision-making. The ECSC had three institutions composed of persons who were not government representatives. Its institutions had the power to adopt binding acts.

When the EEC and the European Atomic Energy Community (EAEC) were created, they were equipped with a supranational regime as well. The Community's power to make directly applicable rules was extended.

The later evolution of the European Communities and the European Union

The Creation of the European Union by the Maastricht Treaty was seen as a step back in the European integration process. The CFSP and the JHA powers had a lesser degree of supranationalism than the EEC.

The Lisbon Treaty fixed that. There are multiple Treaty provisions that use the term 'international organization'. Under some of the constitutional laws of member states it is seen as an international organization as well. Many member states thus have the perspective that the EU is indeed a creature of international law.

The Court of Justice doesn't give any conclusive views on the matter.

Case study: Revision treaties

The deepening of the European integration has taken place through the revising of treaties. The widening of the European integration was done by creating accession Treaties with new member states. Accession treaties are based on the simple principle that newcomers must accept the existing legal order, whereas revision treaties have led to major changes in the international set-up of the EU.

The rules regarding Treaty revision are in articles 39 to 41 if the Vienna Convention on the Law of Treaties. The international legal regime of treaty amendment has a lot of flexibility: the contracting parties are free for the later amendment of their treaties in the way they wish. Therefore, treaties nowadays often have amendment clauses.

The EU's rule of change requires the agreement of all the parties for the adoption of amendments and it requires some involvement of the EU institutions.

In Treaty amendments the member states acted as die Herren der Verträge (masters of the Treaties), which means they act as independent and sovereign states deciding freely.

The Lisbon Treaty innovates the Treaty amendment process in two aspects: they prescribe the use of the 'convention method' for future revisions, and they provide for two simplified revision procedures. The convention method means that all important Treaty revisions must be preceded by a deliberative phase within a Convention comprising representatives of the EU institutions. The new simplified procedures allow for the text of the Treaties to be amended by a unilateral decision of an organ of the EU itself on condition that member states approve of that decision.

What we can take away from this that in any case of Treaty revision, the approval of all member states is needed, which is much stricter than with other international organizations.

What are the specific features of EU law?

Many EU law scholars have argued that the legal characteristics of Union law are so peculiar that it does not make sense that it would be a part of international law. The EU is a sui generis legal system. The legal features that support this view are

• the broad and flexible nature of EU competences;
• the existence of a common currency and citizenship;
• the decision-making regime;
• the effective mechanism of state compliance and the habit of obedience by national courts to their duty to apply EU law

The incomparability of the EU's legal features

Especially the democratic control of the European Commission and democratic input in the law-making by the Parliament, which is directly elected by European citizens makes the EU different from any other international law regime. It is also rare to have international courts with direct access for individual plaintiffs.

The power of the European Commission to sue the member states before the court of justice is unique as well. This allowed the Court to state that the general international rule that allows states to retaliate in the event of non-compliance by other parties to the same treaty, does not apply in Union law.

The primacy of EU law, a federal characteristic?

The feature that is seen as the most distinct from other international is the primacy of the EU law, this is similar to federal law. When looked closed, the primacy of EU law is however quite different from federal law. In federal countries the supremacy of federal law is guaranteed by the fact that its enforcement is in the hand of federal courts. In the EU law issues with the inconsistency of a national law with an EU law cannot be examined by the Court of Justice, this can only be done in the framework of an infringement action. The rest is done by national courts and there is no right of appeal to the Court of Justice.

The doctrines of primacy and direct effect could also just be seen as a creative development of international law. The central rule of international treaty law is pacta sunt servanda: states are bound by their treaty obligations and when there's a conflict the treaty rule will prevail.

Finding a name to describe the EU's specificity

There's a strong urge to find new names and concepts to describe the nature of the EU. This could either be a sub-category of advanced international organizations or it can be an entirely new concept.

The term supranational organization served this purpose for years, but now it fails to reflect the intergovernmental mode of integration. Occasionally the term confederation is proposed, but this implies weakness that derives from the historical examples of confederations.

In Germany the term used is Staatenverbund and in France it's the fédération d'Etats-nations, other terms in literature are the federation of states, a commonwealth or a constitutional order of states.

The constitutional perspective on EU law

It is often claimed (also by the Court of Justice) that EU law forms a constitutional legal order.

What is the EU in relation to international law?

The EU is both an object of international law made by others (the member states) and a subject entitled to make new law. This is not a unique feature of EU law. The EU contributes to the development of international law in the same three ways as states do:

• Through its unilateral practice
• Through concluding treaties with non-EU states or international organizations
• Through its activity as a member of some multilateral organizations

Treaty making is particularly important.

When the EU concludes an international agreement, then international law acts as a constraint on the EU. This can be concluded by the rule in the TFEU that says that EU agreements are binding on the institutions of the EU and on its member states. The Union often seeks to insert clauses into these agreements that guarantee the prevalence of EU law over the obligations in the agreement. This phenomenon we call 'reverse primacy'.

The most blatant form of reverse primacy is the 'disconnection clause', according to this clause EU law dealing with that subject shall continue to apply between EU member states, so that the conventions provisions will only apply to non-eu states.

The statement that the EU legal order is autonomous may mean two different things:

• It could mean that EU law deviates from the general rules of international law;
• or that the EU fails to comply with specific international agreements and prioritizes its own rules.

The first meaning is unproblematic. The general rules of international law are default and can be set aside and replaced by states. The Advisory Opinion (1996) of the International Court of Justice actually stated that the object of treaties is to create new subjects of law endowed with a certain autonomy to which the parties entrust the task of realizing common goals.

The second meaning. is typical for the international organizations that are subjects of international law and have used this capacity to conclude international agreements with states. When acting as subjects, it may be possible for the rules to conflict with their own internal rules.

In Kadi the Court of Justice refused the application of external obligations in order to preserve the own internal legal order of the EU. They just repeated the view that internal obligations of the EU can not prevail over the highest norms of the internal EU legal order.

What can be concluded?

The treaties show that the member state governments were not contemplating a fundamental change of the EU's legal order. Legal scholars disagree on what the EU is, luckily there are no consequences for not giving it a proper name. Since van Gend en Loos the Court has shown why the EC Treaty should be constructed in a broader way.

In the literature views differ. One view is that the EU is no longer na international organization, but not a federal state as well, it is a legal construction in between those two. Other people think the EU still is an international organization and is still located within international law. There are two reasons why it makes sense to see the EU as an international organization.

1. EU law finds it origins in international treaties. The rule of recognition in EU law is whether a norm can be traced back to the FEU and the TFEU.
2. These is an extraordinary flexibility of international law. It is developed by treaties, but there are no limits as to what kind of cooperation the states can undertake.

The European Communities then and the European Union now simply tick all the boxes of an international institution: they are created by a treaty and it possesses organs with a will distinct from the member states.

What are the general principles of EU law and EU administrative law? - Chapter 8

What is administrative law?

An important factor in how law can take effect in reality is the implementation through administrative action. Administrative law is part of public law enabling and constraining administrative conduct (activity designed to implement EU law). Therefore the essence of administrative law is the rules governing the procedures for exercising administrative function sand the organization of the bodies in charge of these functions. This chapter will give an overview of the administrative institutions of the EU and it creates an understanding of the applicable law.

What are the organizational levels and how are powers distributed when implementing EU law?

Conferral of powers on the Union

The EU cannot enact legislation where it's not authorized to do so and it cannot pass implementing acts if not authorized. This results from the principle of conferral (art. 5(1) and (2) TFEU, art. 291 (1) TFEU).

Administrative functions are spread across the Commission (and to a certain degree to the Council) and to EU agency. Comitology committees are made up to supervise and advise the Commission when undertaking implementing activity. (see chapter 5)

When administrative powers are conferred to a body, they are authorized to adopt acts with general content (rule-making). More and more EU agencies are taking decisions of EU wide concern. However, in most policy areas final decisions are taken by member states' bodies. This is referred to as indirect administration of EU law.

Implementation of EU law by the member states

When there are no EU law provisions, member states are obliged to implement EU law through their administrative apparatus. This is stated in art. 4(3) TEU and is called 'the principle of sincere cooperation'.

The autonomy of member states is limited by the fact that the member states' administrative law is to be applied within the framework of EU law. There are three basic concepts to be found in this framework:

1. Member states have the right to set their own standards for substantive and procedural law only in the absence of requirements in Union law.
2. With indirect administration, the legality of member states' rules will be measured by their compliance with the general principles of EU law and the Charter of Fundamental Rights.
3. The application of national procedural rules in the implementation of Union law must be exercised in strict compliance with the principles of equivalence and effectiveness.

Equivalence and effectiveness

Under the principle of equivalence, member states must, when EU law is absent, grant equivalent protection for violation of EU law to that available against violation of national law. Provisions used in national law cannot be less favorable than provisions governing similar domestic actions. The principle of equivalence will override the principle of effectiveness, where there is no equivalent national law or when is application doesn't leas to the result of enforcing a right under EU law.

Under the principle of effectiveness, member states cannot make the exercise of rights conferred by Union law impossible or extremely difficult.

Decision-making with 'trans-territorial' effect

Implementation of EU law by member states requires the national bodies to take decisions which have to take effect in the territory of that state, but also in the entire EU. For example when a toy from China is imported via Rotterdam, the toy can then be sold through the Union without facing any further custom controls. This phenomenon is called decision-making with trans-territorial effect.

Delegation of powers within the union

Delegation of powers from legislators to executive are an inevitable aspect of modern legal systems. Articles 5(2) and 13(2) TEU seem to not want delegation, by stating that powers should be exercised in the EU by those who got the powers by the Treaties. However, delegation is a general phenomenon on the implementation of EU policies.

The provisions on the delegation of powers are art. 290 and 291 TFEU. Delegation to the Commission is favored. No reference is made to agencies. Even though they are recognized in the provisions on judicial review of acts as potential decision-makers. The Comitology Regulation does not mention agencies as well and it doesn't clarify the relation of decision-making with the help of comitology committees as opposed to agency decision-making. It does establish for the delegation to the Commission of the advisory and the examination procedures.

In the Meroni case the Court allowed sub-delegation of Commission powers to private parties. It did set some conditions for sub-delegation:

1. The Commission was authorized only to sub-delegate powers which it had been previously granted
2. The Commission had to control the exercise of these powers
3. The Commission could not delegate powers to private parties which would allow them to adopt acts with quasi-legislative content.

Today, therefore, it is established that delegation of clearly defined powers and powers that are subject to supervision is allowed.

What are the criteria for legality?

Criteria for the legality mostly exist in the form of general principles of law.

Proportionality

Art. 5 (4) gives a definition of proportionality, however its meaning mostly arises from the interpretation by the Court of Justice. Proportionality is the most widely used principle of EU law. The Court has defined a three step test:

1. Measures of the European Union institutions cannot exceed the limits of what is appropriate and necessary in order to attain the objectives pursued by the legislation.
2. Where there's a choice between more than one measure, the last onerous has to be chosen.
3. The disadvantages caused cannot be disproportionate to the aim pursued. There has to be a reasonable ratio between means and outcome.

Case study: Broadcasting of sports events in news programs

Proportionality can be explained through the Sky Österreich case. A provision required companies which has acquired broadcasting licenses or sports events to allow limited reporting of those events by other channels. The Court found that the right of freedom to conduct a business had to be balanced with the right to the freedom to receive information. With regard to the first step, the Court found that the provision was indeed appropriate and necessary. In the next step the Court looked if there were any alternatives for this measure. The Court found that the less restrictive options wouldn't achieve the objectives pursued by the directive. The Court found in the third step that the legislature had struck a fair balance between the rights of the parties involved. Therefore the provision was not disproportionate.

Context

The principle of proportionality is applied in different context. The review varies per context. For example, where institutions enjoy wide legislative discretion, there will only be checked for manifest errors of assessment in the different steps.

The Court increasingly checks in the area of legislative acts not the substance of an act, but whether the institutions can prove that they reviewed the proportionality before adopting it. In other areas than EU legislation, the Court will conduct a more full review.

Rule of law: transparency, legality, legal certainty, legitimate expectations

The EU is established as a Community based on the rule of law. The rule of law could be seen as an umbrella principle with sub-elements. In the next paragraphs these sub-elements will be explained.

Legality

Actions of public bodies take place under and within the law. This means that a legal basis is required. Institutions and bodies must act within the limits of the conferred powers as well. The discretionary powers must be correctly exercised as well.

Legal and institutional transparency

There has to be a minimal openness of process, access to documents and publication of official measures. The key provision on access to documents and freedom of information is art. 15 TFEU. Under art. 297 TFEU the legislature has to publish all legislative measures and decisions.

Case study: Tennis racquets on board planes?

An airport refused someone to board, because he had a tennis racquet in his cabin luggage. The Austrian court noted that the authorities were acting on an EU regulation, but that is was impossible for individuals to comply with this regulation, since the regulation wasn't published in the Official Journal. And that thus the principle of transparency was in breach.

The Court of Justice had a different position. They said that the regulation didn't even have binding force, because art. 297 (2) TFEU states that EU law cannot take effect unless it has been published in the Official Journal.

Legal certainty and the protection of legitimate expectations

Legal certainty requires two things:

1. Legal rules have to be clear and precise and aim to ensure that situations and legal relationships remain foreseeable
2. Individuals should be able to ascertain what their rights and obligations are

The most importance consequence of this is that retroactive effect of EU law is prohibited.

Case law with regard to revocation of acts of Union institutions distinguishes lawful and unlawful acts (acts with a legal defect). Even unlawful acts have effect if not challenged and annulled. This is a consequence of legal certainty as well. Lawful acts may not be revoked. Unlawful acts can be revoked.

Protection on the basis of legitimate expectation requires:

1. The existence of justifiable reliance (a valid legislative act or any act of the Union conferring individual rights)
2. An affected interest
3. Priority for the protection of expectations over the interest of the Union

Case study: Tobacco farmers

The price of tobacco was established on the basis of a Council regulation. The Commission however reduced its price and then requested its farmers to pay back the advance they had received.

The Court found that a regulation can have retroactive effect when its purpose demands it and where the expectations of those concerned are respected. The Court held however that the farmers were not notified on time and therefore this wasn't the case.

Good administration

Good administration is an umbrella term as well containing rights, rules and principles guiding administrative procedures.

General observations on good administration

The right of good administration can be found under art. 41 of the Charter of Fundamental Rights. Failures to comply with the rules set out in this article can result in a manifest error of assessment and thus lead to annulment.

Art. 41 is more limited in its scope, therefore it is better to see it as a general principle because then it is applicable to general acts as well as for non-legislative acts and to member state action in the scope of EU law. While the scope of art. 41 is limited to single case decision making and to institutions bodies, offices and agencies of the Union.

Sub-Principles of good administration

The central duty is the obligation of the administration to establish and review the relevant elements of a case prior to making decisions. It should also happen within a reasonable time.

There is also a right to a fair hearing before any individual measure. This contains the right to:

• Full information which may affect a person's position in an administrative procedure
• Be informed of the administration's response to complaints or representations, the outcome of procedures and decisions made and all matters necessary for their defense, including rights of appeal

The party concerned must

• receive an exact statement of the claims or objections raised
• be given the opportunity to make its views known on the truth and relevance of the facts and on the documents
• be given access to documents and the file

There is also an obligation to give reasons for decisions/ provide grounds for the action taken. This can be found in 296(2) TFEU and art. 41 Charter

There is also an explicit right to receive compensation for damage under art. 340 TFEU.

Lastly, there's a wright to free choice of language when communicating with institutions of the EU.

Information related rights: freedom of information and data protection

Even though there's a right to transparency, the Court has stated that activities of the Commission should enjoy a general presumption of confidentiality.

Under art. 8 Charter protection of personal information is a protection of misuse of information by governments an non-governmental actors.

The right to an effective judicial remedy and additional rights of defense.

Right to an effective remedy

A tribunal has to be independent and impartial according to art. 47 of the Charter. Hearings have to be fair and public and everybody has the possibility of being advised, defended and represented.

Any act that fails to provide a possibility for someone to pursue remedies.

Under the Factortame formula, the right to an effective remedy offers protection against any provision of a national legal system and any legislative judicial practice which might impair the effectiveness of Union law. Therefore member states:

• May not render virtually impossible or excessively difficult the exercise of rights
• Are obliged to guarantee real and effective judicial protection
• Cannot apply any rule that might prevent Community rules from having full force and effect

Compliance depends on both the procedural aspect (is there a possibility to bring a case?) and the substantive aspect (whether a violation would lead to a remedy which is capable of addressing the violation of the right)

Additional rights of defense

Not only in court, but also in administrative procedures the right of defense needs to be ensured. It includes

• A right of legal professional
• privilege
• A right against self-incrimination

Case study: terrorism and rights

After 9/11 the UN made a list of potential terrorists and members could freeze their accounts. Mr Yusuf and Mr Kadi from Sweden their funds were frozen. The Kadi case was about whether the rights of defense and the right to an effective judicial review were violated by the EU legal acts.

On the appeal in Kadi I the Court said that the right to be heard was not respected by implementing the UN resolution. Therefore it annulled the regulation freezing Kadi's assets. They should have communicated the grounds for the listing.

The UN therefore published a small list of reasons for the listing. Kadi asked the Commission for evidence in support of these claims and he wanted to be allowed to submit comments on that evidence. The Commission didn't respect his request and continued freezing his assets.

The Court found that there was a breach in Mr Kadi's right of defense because his rights had only been respected in a purely formal and superficial sense. He had no access to the evidence against him and the allegations against him were vague and insufficient. The Court also found that the principle of effective judicial protection had been infringed.

The rights of defense can be found in art. 42(2) and art. 47 of the Charter and limitations can be found in art. 52(1) Charter. Limitations still have to respect the right and have to be proportionate.

What will be the conclusion?

In the Charter many case law principles are now restated in positive law. Art. 6 TEU states that rights are protected as general principles of law.

An important factor in how law can take effect in reality is the implementation through administrative action. Administrative law is part of public law enabling and constraining administrative conduct (activity designed to implement EU law). Therefore the essence of administrative law is the rules governing the procedures for exercising administrative function sand the organization of the bodies in charge of these functions. This chapter will give an overview of the administrative institutions of the EU and it creates an understanding of the applicable law.

What are the fundamental rights in the EU? - Chapter 9

Where can the EU's fundamental rights be found?

The original Treaties did not contain any reference to fundamental rights. Therefore the Court had to establish a fundamental rights jurisprudence. With the Charter of Fundamental Rights, the EU now had its own catalogue of rights, which became legally binding with the Lisbon Treaty. The Lisbon Treaty also provided for competence for the EU to accede to the European Convention on Human Rights (ECHR).

What is the historical background and how did the case law develop?

After the war, the codification of fundamental rights became very important to ensure that such a war could never happen again. Therefore state parties created the ECHR, the parties accepted to be bound by its rules and they established a supervisory mechanism through the European Commission of Human Rights. However the Treaties didn't establish any fundamental rights, so there was a large gap.

The development of case law of the Court of Justice

This gap became clear when national courts started to fear that the Communities could circumvent the fundamental rights. Individuals were seeking to enforce domestic fundamental rights against the Communities, but those attempts failed because EU law can only be measured according to its own constitutional standards. Because of this, national courts were not willing to allow executive action to go unchecked, rather declaring that ultimately they would exercise jurisdiction to assess compatibility with fundamental rights. Therefore the supremacy of EU law was at risk.

In Stauder the Court made clear that:

• It considered fundamental rights unwritten general principles applicable to the acts of the Communities' institutions
• It would protect those rights by making sure an act of the Communities adopted in breach of fundamental rights would be declared void
• If more than one interpretation of a legal instrument was possible, that which did not infringe fundamental rights would be infringed.

To decide what the fundamental rights were, the Court would draw inspiration from constitutional traditions common to the member states.

The scope of the application of fundamental rights as general principles

Fundamental rights as a limit to the acts of Union institutions

Fundamental laws apply first as a limit to the acts of Union institutions. It is therefore a precondition of the legality of any act.

Case study: Terrorism, fundamental rights and the ruling in Kadi I

Kadi stated that there was

• No competence for the measures (of freezing assets after putting potential terrorists on a list)
• Breach of human rights by adopting those rights

The General Court had found that since these measures were giving effect to a UN resolution, they could not be scrutinized in relation to fundamental rights as principles of EU law. Because it were UN resolutions it would be impossible to apply EU fundamental rights.

The Court of Justice ensured the existence of EU autonomy and fundamental rights and said that the judicial review would only regard the implementing measures and not the UN resolution. The Court therefore found that fundamental rights indeed had been violated.

Fundamental rights as a limit upon the acts of member states

Fundamental rights also apply to the acts of member states when acting within the scope of EU law.

Case study: Immigration, sovereignty and fundamental rights: the case of Mr and Mrs Carpenter

Mrs Carpenter had to leave the country for a new visa, even though she was married to Mr Carpenter. This they thought was an interference with he right to family life. His counsel argued that, because Mr Carpenter traveled through Europe for work, he could not provide services (art. 56 TFEU: service provider) because his wife couldn't watch his children. The Court accepted this argument, EU law was applicable.

What was the response of the political institutions?

In 1977 the Parliament, the Council and the Commission issued a joint declaration to the effect that they considered themselves bound by fundamental rights as general principles of Community law. After this every Treaty strengthened the protection of the fundamental rights in the EU.

The Lisbon Treaty gave the Charter the same legal value as the Treaties themselves (art. 6(1) TEU). Art. 6 allows the Court of Justice to go beyond the rights contained in the Charter, should this ever be needed.

Article 7 TEU and the rule of law initiative

The charter applies to member states whenever they are implementing EU law. This means the Commission cannot bring infringement proceedings against a member state violating fundamental rights, unless this is connected with EU law.

Art. 7 TEU was introduced with the Amsterdam Treaty as a procedure to react to a 'serious and persistent breach' of the values in art. 2 TEU by one of the member states. The EU however, could only react after a breach had occurred: it could not prevent a breach. Therefore the article was amended in the Nice Treaty, now it has two safeguard mechanisms to ensure compliance with the principles:

• When there's a clear risk of breach, the Council can issue recommendations to the member state in question and it can monitor the situation. The procedure can be triggered by a proposal of one third of the member states.
• The determination of a serious and persistent breach must be agreed by the European Council. After the determination, the Council might adopt sanctions.

What is the Charter of Fundamental rights and when can it be applied?

The drafting of the Charter

The Convention was proclaimed by the European Parliament, the European Commission and the Council at Nice on 7 December 2000. After this the problem of its legality rose, but since it simply codified already existing rights, making issues about its legal value was less crucial than would have been the case otherwise. This issue has been settled by the Lisbon Treaty with article 6 TFEU.

The structure of the Charter

The Charter is divided into titles according to six fundamental values: dignity, freedom, equality, solidarity, citizens' rights and justice.

The substantive provisions of the Charter

Title I: Dignity

The rights of dignity are the rights essential to the enjoyment of any other right:

• The right to human dignity
• The right to life
• The right to integrity of the person
• The prohibition of torture and inhumane and degrading treatment
• The prohibition of slavery and forced labour

Title II: Freedom

This contains some of the traditional civil and political rights. E.g:

• The right to liberty
• The right to private life
• The right to freedom of expression
• The right to property
• The right to to work/ right to education

Title III: Equality

This contains traditional equality rights such as:

• Non-discrimination on ground of sex/race/sexual orientation/religion/belief
• The right to not be discriminated against on ground of nationality
• The rights of more vulnerable members of society (children, elderly, disabled)

Title IV: Solidarity

This is the most contested part of the Charter. It contains traditional social rights and principles. E.g:

• The right to collective bargaining and action
• The right to strike and protection against unjustified dismissal
• The right to fair working conditions and protection for children and young people at work
• Recognition of social security and social assistance. (right to health care and consumer protection

Title V: Citizens Rights

These are rights that benefit Union citizens, including:

• The right to vote
• The right to move and reside freely in the territory of the member states
• The right to consular and diplomatic protection.

Title VI: Justice

This title is concerned with the administration of justice. Including:

• The right to an effective remedy and a fair trial
• The right to be presumed innocent
• The right to defense

The horizontal provisions

Articles 51 to 54 set out the scope of the application of the Charter.

The scope of application of the Charter

EU institutions are the addressees of the Charter and they can never escape the provisions of the Charter. The court can annul an act of the EU institutions infringing the Charter.

The member states are bond when they exercise a discretion which has been conferred by EU law of when they act within the scope of EU law. Article 51 states that the provisions only bind member states when they implement EU law. The interpretation of what 'implementing' is, can be very broad. It covers cases in which

• the member state is giving effect to a directive, regulation or decision
• they are limiting one of the rights granted by the Treaty
• they exercise a power that was reserved to them in a piece of secondary legislation
• the subject is only partially related to EU law.

Akerberg Fransson: a broad definition of implementing

In Akerberg Fransson the question was whether the ne bis in idem principle provided for in art. 50, applied to the proceedings brought against mr Akerberg Fransson on charges of tax offenses. So the main question is: is the legislation applied, based on implementing EU law? The Court said found that it follows from Directive 2006/112 that member states have an obligation to take all measures to ensure collection of VAT due on there territory. Article 325 TFEU obliges member states to counter illegal activities affecting the financial interests of the EU. Therefore the member state was implementing EU law and the Charter was applicable.

McB: EU rules coordinating national procedural rules

A more limited approach is to be seen in cases where the EU rules aim at coordinating, rather than harmonizing national rules. In McB the issue related to Irish custody rights. A mother gets custody of her kids automatically, the unmarried father must then apply to a court to get his rights. When the McB couple separated Mr McB applied for custody, but Ms McB took her children out of the Irish jurisdiction. The Irish Supreme Court asked whether Regulation 2201/2003 concerning children wrongfully removed from their country, precluded the national rule. Mr McB argued that the Irish rights were inconsistent with his right to private and family life.

Regulation 2201/2003 merely coordinates national rules and does not harmonize them. The Court relied on art. 51 to limit the effects of the Charter. Therefore the Court performed an indirect review of national law by focusing on its own interpretation of the regulation.

Cases in which the charter does not apply

In the case of Siragusa the Court stated that art. 51(1) Charter requires a certain degree of connection above and beyond the matters covered being closely related or one of those matters having an indirect impact on the other. The Court then explained the factors to be taken into consideration:

• Whether the national legislation is intended to implement a provision of EU law
• The nature of that legislation and whether it pursues objectives others than those covered by EU law
• Whether there are specific rules of EU law on the matter or capable of affecting it

The scope and interpretation of the Charter

Art. 52(1) states that limitations on the exercise of Charter rights must:

• Be provided by law
• Respect the essence of those rights
• Respect the principle of proportionality
• Be necessary to meet the objectives and general interests recognized
• by the Union or the need to protect the rights and freedoms of others,

Article 53 ensures that the protection afforded by the Charter cannot fall below that afforded by international law and international agreements to which the EU or all of the member states are parties. In Melloni the Court clarified that art. 53 cannot be used to apply national fundamental rights to EU law which complies with the Charter. As a result national courts are prevented from their own constitutional standards in those cases in which to do so would affect the uniform application of EU law. When EU law leaves discretion for national authorities, the Charter only provides member states with a floor of rights.

Article 54 provides a prohibition on abuse of rights.

Protocol no. 30 on the application of the Charter to Poland and the UK

Poland and the UK have a serene attitude towards EU fundamental rights. Protocol no 30 should be understood in this light: it is a clarification.

Art. 1 states that the Charter does not extend the ability of the Court of Justice or any of the courts to find that the legislation is inconsistent with the Charter. Art. 1 (2) states that title IV (solidarity) does not create justiciable rights applicable in Poland or the UK, except insofar as Poland or the UK has provided for such rights in national law. Article 2 restates that if the Charter refers to national laws and practices, it shall apply to the UK and Poland only to the extent to which those two countries recognize in their laws and practices the rights and principles therein.

What is the relation between the EU and the ECHR?

Art. 6 (2) TEU provides that the EU shall accede to the European Convention for the Protection of Human Rights an Fundamental Freedoms, such accession shall not affect the Union's competences as defined in the Treaties

Background to accession

The ECHR was adopted in the aftermath of the Second World War by the Council of Europe. The European Court of Human Rights (ECtHR) was entrusted with interpreting the ECHR. Cases can be brought before the ECtHR by individual parties. With the Maastricht Treaty, the centrality of the ECHR in the system of fundamental rights protection has been stated at Treaty level. Discussions had been running as to whether the EU should accede to the Convention, this eventually led to the adaptation of art. 6 (2) TEU.

The Case law of the European Court of Human Rights: the doctrine of equivalent protection

In M&Co (1990) the problem that the EU is not a party of the Convention became pressing. To require the member states to check whether the Convention rights had been respected in each individual case would be contrary to the idea of transferring powers to an international organization. This stance was challenged in Matthews.

In Matthews the ECtHR found that acts of the European Community were not subject to its scrutiny since the EC was not a contracting party to the convention and this did not exclude transfer of competences to international organizations provided Convention rights continued to be secured. However in the case of EC primary legislation, where the Court has no jurisdiction to assess compliance, the member states would be responsible for violations of the Convention.

Matthews lays the foundation for the evolution of case law of the ECtHR on the relationship between the Convention and EU law. In Bosphorus the ECtHR clarified that, even when the Court has jurisdiction, the review of the ECtHR is not excluded. In Michaud v France the ECtHR clarified that the presumption of equivalent protection of EU law with the ECtHR only applies when the control mechanism provided for by EU law has been fully brought into play.

EU accession to the ECHR

The ECtHR has accepted in limited cases to exercise jurisdiction in order to ensure that membership of the EU does not deprive individuals of protection equivalent to the Convention. But:

• The jurisdiction of the ECtHR is limited to those cases where the claimant can rebut the presumption of equivalent protection; thus, it is more difficult for individuals to seize the ECtHR in cases relation to EU law than domestic
• The EU is not party to the proceedings so it is the member states that incur responsibility and the EU is not bound by the ECtHR ruling.

For these reasons, accession is desirable.

Co-respondent mechanism

Art. 3 (2) draft agreement provides that when an application is directed against a member state, the EU can become a co-respondent. The EU will then be a full party to the proceedings, which means it will be bound by the ruling of the ECtHR.

The reverse is also possible: in cases concerning an EU provision, member states can be co-respondents since, should a violation be found, they would have to act collectively to modify the treaties.

The Court of Justice found that the co-respondent mechanism was incompatible with the Treaties and particularly with the exclusive jurisdiction of the Court of Justice in determining the division of powers.

The role of the Court of Justice

In cases where the EU is co-respondent, there is the possibility to delay proceedings to allow the Court for itself to assess whether the rule is compatible with the Convention.

In the case of national rules, an individual must have exhausted domestic remedies before being able to bring a complaint before the ECtHR. It is, however, not a further court of appeal. It just ensures that a minimum standard of protection is applied throughout the territories of contracting parties.

In case of the EU this is harder. It's not that easy for an individual to get in front of the Court of Justice. It isn't fair to penalize an individual for not being able to go to the Court, however it is beneficial for the Court to have a first look. Therefore when the EU is con-respondent, the proceedings are delayed to allow the Court to examine the matter.

When a member state is a co-respondent, the delaying procedure is not available.

The Court of Justice found that this mechanism infringed the autonomy of the EU legal order.

Opinion 2/13: the special nature of EU law

The Court objected to two elements of jurisdiction of the ECtHR

1. That the ECtHR would have jurisdiction over the entire body of EU law
2. That the EU would be treated similarly to a state party.

What can be concluded?

The field of fundamental rights is complex and deeply contested.

The original Treaties did not contain any reference to fundamental rights. Therefore the Court had to establish a fundamental rights jurisprudence. With the Charter of Fundamental Rights, the EU now had its own catalogue of rights, which became legally binding with the Lisbon Treaty. The Lisbon Treaty also provided for competence for the EU to accede to the European Convention on Human Rights (ECHR).

How does judicial protection before the Court of Justice of the EU work? - Chapter 10

What Courts and proceedings does the EU have?

Art. 19 (1) provides that the Court of Justice of the European Union has three tiers: The Court of Justice, the General Court and the specialized courts. There are two main sets of proceedings: direct actions and preliminary references. Preliminary references begin before a national court, the Court of Justice then provides a preliminary ruling on the issue, and the national court then will decide on the dispute. In this chapter the two of these procedures are further explained.

What is the structure and jurisdiction of the Court of Justice?

The Court of Justice has 28 judges (one from each member state) and 11 advocates general. The Court generally sits in chambers of three or five judges, but it can also have a Grand Chamber of 15 judges.

The General Court has 56 judges. There are no Advocate Generals attached to the General Court.

There are four main types of direct actions:

1. Infringement (art. 258 to 260 TFEU)
2. Action for annulment (art. 263 and art. 264 TFEU)
3. Action for failure to act (Art. 265 and art. 266 TFEU)
4. Action for damages (art. 268 and 340 (2) and (3) TFEU)

The plea of illegality (art. 277 TFEU) is brought directly before the Court but is used to plead the illegality of an EU act in an incidental way. It cannot be brought independently, but is attached to a direct action.

Enforcement proceedings are brought by the Commission or a member state against a member state. Enforcement proceedings aim to ensure the compliance of member states with the EU. The other actions aim to provide protection against illegal acts and omissions of the EU institutions.

The action for annulment and for a failure to act are used to challenge illegal acts and omissions of the institutions of the EU. The action for damages is used to obtain compensation for damage of loss suffered as a result from an unlawful act of the EU.

In direct actions the Court adjudicates on the dispute between parties, while in preliminary rulings it just gives advice on a point of EU law.

The Court of Justice has full jurisdiction in most matters covered by EU law: including the provisions in the area of freedom, security and justice. The Court doesn't have jurisdiction in common foreign and security policy.

The General Court has jurisdiction principally to hear in the first instance, direct actions from private parties or member states against the Commission. Or of member states against the Council.

What are the different types of direct action?

Infringement proceedings

Infringement procedures address the situation in which a member state has breached EU law. The main applicant is the Commission. Private parties can't bring infringement actions before the Court.

First there is an administrative phase. The Commission gives a member state an opportunity to remedy the infringement. If a member state does not comply, then sanctions may be imposed on it by the Court.

The elements in art. 258 TFEU

The provision know two elements: a member state has to have failed to fulfill an obligation under the Treaties.

A Member state can mean the legislative, executional, judicial branch, but also any other public bodies of a member state. The question should be whether the activities leading to the infringement can be attributable to the State. In the end action is formally brought against the member state and not the branch that has failed.

Whether the state failed to fulfill a Treaty obligation refers to positive acts and omissions. And it shouldn't only been imposed by the Treaties themselves, but also by secondary law, international agreements and general principles.

Procedure

The first step in the administrative phase is the letter of formal notice. In this the Commission defines the subject matter. The member state has a reasonable period to respond and the Commission can deliver a reasoned opinion describing the EU law and giving the member state time to comply with the opinion.

If the member state fails to comply, the Commission can decide to bring the matter before the Court.

In the following judicial phase, the Court will decide whether the member state has breached EU law.

Sanctions

The Maastricht Treaty enabled the Court to impose sanctions. The Lisbon Treaty amended the aim of expedition the application of sanctions (art. 260 TFEU).

The article firstly provides a simplified pre-litigation procedure. Secondly for the specific case where a member state has failed to notify measures transposing a legislative directive on time, arrangements will apply. The Commission may suggest the penalty that the Court could set.

The action for annulment

Overview

The action for annulment together with the action for a failure form one same remedy; one that addresses the situation where an EU institution has adopted an illegal act or has failed to act when it had an obligation to act.

Art. 263 TFEU set out the principles for the annulment procedure. These point the Court will examen:

1. Compliance with the time limit for bringing the action
2. Whether the act is reviewable
3. Is the applicant 'privileged', 'semi-privileged' or 'non-privileged'
4. The existence of grounds for the annulment

Time limit

The time limit is two months from the date of publication of the measure or when it comes to the knowledge of the applicant.

Reviewable acts

The essential quality of a reviewable act is that it must be legally binding. In the case of regulations, directives and decisions the requirement of reviewability will be automatically fulfilled. When it isn't one of these, the Court takes a non-formalistic approach, it looks at the substance of the act and the intention of who drafted it.

In addition to this requirement, it should also emanate from one of the bodies subject to review. This regards the institutions of the Union (except the Court, the court of Auditors, the agencies, offices and bodies of the Union).

Standing

Applicants can be classified in the categories privileged, semi-privileged and non-privileged.

According to art. 263 (2) TFEU privileged applicants are the member states, the Parliament and the Council. They have an automatic right to bring proceedings.

The semi-priviliged applicants are the Court of Auditors, the European Central Bank and the Committee of Regions. They do not have the automatic right of action. They can only bring proceedings, when their prerogatives are at stake.

Natural and legal persons are non-privileged applicants, because art. 263 (4) TFEU imposes strict conditions when they want to challenge an unlawful act. They can only challenge an act when:

• They are the addressee of the act, they will have automatic standing;
• When they are not the addressee, they need to show that they are concerned directly and individually (The General Test of standing)
• But if they are not the addressee and they want to challenge a regulatory act, they need to show that they are directly concerned by the act and that it does not entail implementing issues. (The Lisbon test)

The General Test of Standing

Non-privileged applicants can challenge decisions, regulations, directly and basically any sui generis act that produces a legal effect.

The concept of individual concern was explained in the Plaumann case. The Plaumann test held that: 'By reason of certain attributes that are peculiar to them or by reason of circumstances in which they are differentiated from all other persons and by virtue of these factors distinguishes them individually just as in the case of the person addressed.' The Court ruled that carrying out a particular economic activity that was affected by the measure, this does not satisfy the test of individual concern. Not even when the applicant was gravely affected or the applicant was one of the very few/ only one that was affected, as long as others could decide to undertake that activity in the future. When people did achieve the status of individual concern in case law it was:

• when someone before the measure was adopted had pursued an individual course of action such as applying for a license
• when the applicant had a specific right acquired before the measure entered.

The court has also based its reasoning on a cumulative test in some cases. In this test the applicant has to be a member of a closed category and it also has to show that the institution enacting the measure had a duty by EU law to take into account the situation of the applicants. As you can see: there is a high unpredictability with the application of the test of individual concern.

The test of direct concern is easier. There is direct concern when there is a causal relationship between the act and the effect that it had on the applicant.

The Lisbon test

This test was made to improve the ability of private parties to challenge EU acts, since it doesn't require individual concern.

The term regulatory act has two elements:

1. The act must be non-legislative
2. It must be of general application

The Court stated that the interpretation of direct concern would not be stricter than it is in the general standing test.

The last element of the test is because if a regulatory act requires further implementation then there are other avenues for the challenge of the implementing measure. This concerns any measure.

The standing of associations and interest groups

In Federolio the General Court identified three situations in which actions brought by associations would be admissible

1. When a legal provision grants the association a series of procedural rights
2. When their members are themselves directly and individually concerned
3. When the own interests of the association are affected (in particular its position of negotiator)

Grounds for annulment and effects of a successful action for annulment

1. Lack of competence (due to the principle of conferral)
2. Infringement of an essential procedural requirement
3. Infringement of the Treaty or of any rule of law relating to its application.
4. Misuse of powers

If an action for annulment is well-founded, the Court will annul the act. The act will be treated as if it had never existed.

The action for failure to act

This is the complement to the action for annulment. This is applicable when an institution failed to act when it had an obligation to do so. The action for failure to act has a lot in common with the action for annulment. The most significant difference is the admissibility requirement: before an action for failure to act can be brought to Court, the institution must have been called upon to act. When it doesn't define its position within two months, action can be brought.

There are two categories of applicants: privileged and non-privileged. The first one is the member states and EU institutions, the second one is private parties.

The plea of illegality

This mechanism is linked to a main direct action. They can only be brought against an act of general application and they are depending on the existence of another action before the Court. Any party can bring a plea of illegality.

The action for damages

This is not a declaratory action. Any party may bring an action for damages. In Lütticke the Court laid down three conditions for establishing liability:

1. There's an unlawful act or conduct on the part of the institutions
2. There's actual damage suffered by the applicant
3. There's a causal link between the illegality and the damage suffered

In Bergaderm the Court aligned the requirements of liability with the Frankovich requirements. This means that liability for unlawful acts under art. 268 and 340 TFEU arises when the rule of law infringed, was intended to confer rights on individuals, the breach is sufficiently serious and there is a causal link between the breach and the damage.

What is the preliminary reference procedure?

The parties in the case bring their action before the national court. The national court asks the Court of Justice for an interpretation or the validity of EU law. The Court of Justice delivers a ruling and then the national court applies this ruling to the facts of the case and rules in the case. The procedure is set out in art. 267 TFEU.

What constitutes a court or tribunal of a member state?

Only a national court or tribunal can ask preliminary questions. In Syfait I the Court provided a summary of the cumulative factors that determine the classification, the body must:

1. be established by law
2. have a permanent existence
3. exercise binding jurisdiction
4. have procedures that are inter partes
5. apply the rule of law
6. be independent

Types of preliminary references: references on the interpretation and references on the validity of EU law

There are: interpretative rulings and rulings on the validity of EU law.

With interpretative rulings, the Court interprets a provision. The Court of Justice can only interpret EU law, but not decide on the legality of national law. In practice, however, preliminary rulings will often leave national courts with no alternative but to declare that a national measure is contrary to EU law.

Preliminary references on validity can only concern legally binding acts of the institutions, bodies or agencies of the Union. Only the Court of Justice has the power to declare an EU act invalid.

The relationship between annulment proceedings and preliminary references on validity

The preliminary reference avenue may succeed in a remedy for private parties unable to satisfy the art. 263 TFEU conditions.

Discretion to refer and limits to this discretion

There are four main categories of cases where references have been rejected on the basis of inadmissibility:

1. In Foglia v Novello the Court ruled that it would not entertain a reference when there is evidence that the parties before the national court have no genuine dispute, when they are only in court because they want to trigger a reference on a particular point in EU law.
2. The Court has also stated that it wouldn't give a reference in cases where the question referred is irrelevant, when it doesn't have any relation to the actual case
3. When the question submitted is only hypothetical
4. When the national court has not articulated the questions properly.

The duty to refer and the exceptions to this duty

There is an obligation to refer when there's no judicial remedy. There are some exceptions to this duty:

1. When the question referred is identical to a question that has already been dealt with by the Court
2. In CILFIT the Court held that a national court does not have an obligation to refer when the correct application of EU law is so obvious. This we call the acte clair doctrine.

Effects of a preliminary ruling

A preliminary ruling on interpretation is binding on the national referring court, other national courts and public authorities should treat the ruling as authoritative as well.

A preliminary ruling on validity gives ground for other national courts to regard the act as void.

How are interim measures regulated?

Three main typed of scenario's can be distinguished

In relation to direct actions, interlocutory relief is provided in the Treaty itself. Articles 278 and 279 TFEU allow for the application for negative and positive interim relief in connection with a direct action pending before the Court. The requirements are existence of urgency and the existence of a prima facie case.

In the case of preliminary references on interpretation, interim relief will be granted according to the rules of national law, while a reference is pending as long as these rules are both effective and non-discriminatory.

When a preliminary reference on validity is pending, interim relief is not provided in the Treaty. However, common principles were developed by the Court of Justice.

What is the relationship between the Treaty remedies?

Case study: seal products, animal welfare and hunting for subsistence: the Inuit litigation

The European Parliament and the Council adopted a regulation which had the aim of harmonizing national rules across the EU concerning the commercialization of seal products in the EU. Several applicants (associations representing inuit people, seal hunters, trappers, companies) brought annulment proceedings against this regulation under art. 263 TFEU.

At the same time the applicants filed for a negative interim relief under art. 278 TFEU, asking for a suspension of the Regulation. The General Court rejected this because there was no urgency.

The General Court also ruled that the Lisbon standing test was not applicable, because this regulation was not within the meaning of 'regulatory act', therefore the general standing test had to be applied. The applicants were not individually concerned, so this didn't work.

Then the Commission adopted the implementing regulation. Once again the applicants brought annulment action and this time they raised a plea of illegality against the parent regulation.

The Court rejected this.

Case study: perishable cargo and a rare success story for a private applicant: the Sofrimport litigation

A French importer of Chilean apples brought an action for annulment of the act of the Commission that suspended the issue of import licenses of dessert apples, without taking in mind the position of traders. The applicant brought an action for damages as well.

The applicant applied for interlocutory relief under at. 278 and 279 TFEU and the Court ordered the suspension of the regulations since there was a prima facie case and the threat of serious and irreparable damage to the applicant.

The applicant actually managed to secure an action for annulment under art. 263 (4) TFEU and the Court annulled.

The action for damages was successful as well.

Case study: Milk quotas and legitimate expectations: the Mulder litigation

In 1979 the council introduced measures to reduce the oversupply of milk. Mr Mulder agreed to not deliver milk for five years. However in 1984 further regulations were made whereby farmers had to apply for reference quantities of the production for calculations. The application of Mulder was rejected on the basis that he had not produced any milk the year before.

The applicant had two options. The first was to bring an action for annulment. When he would do this it would be hard to overcome the barrier of art. 263 TFEU. The second option was to challenge before the national court the decision of the national authority rejecting his reference quantity. This he did. The Court ruled that the regulations were invalid on the ground of breach of legitimate expectations.

What can be concluded?

It is good to realize that the protection provided in the Treaty is just one dimension of the remedial system. The role performed by national courts is essential as well.

In this chapter we've seen there's aspects of horizontal interaction (e.g. annulment proceedings, the plea of illegality, the action for damages), and also aspects of vertical interaction (between national courts and the Court of Justice in the form of preliminary references).

It is good as well to realize that not all gaps in the system of remedies have been plugged yet.

Art. 19 (1) provides that the Court of Justice of the European Union has three tiers: The Court of Justice, the General Court and the specialized courts. There are two main sets of proceedings: direct actions and preliminary references. Preliminary references begin before a national court, the Court of Justice then provides a preliminary ruling on the issue, and the national court then will decide on the dispute. In this chapter the two of these procedures are further explained.

How does the internal market work? - Chapter 11

What is the internal market?

Common market was for a long time a synonym for what we now call the EU. The internal market is one of the few concepts the Treaties actually define (art. 26 (2) TFEU). In order to understand the internal market, the four freedoms have to be understood.

What are the three models for the nature of the internal market?

In the EU the four freedoms of goods, services, persons and capital provide for the free market.

Three models of market integration

In theory there are three different models of organizing an internal market.

1. Host country control. The rules of the country where the economic activity takes place apply.
2. Harmonized model. There are conditions at EU level. For each issue there is only one rule, made by the EU.
3. Home country model. The rule that applies is that of the country of origin

The implications of the models

Consequences for sovereignty

The first model imposes the fewest constraints on the autonomy of each state.

The second requires a vertical transfer of power from the state to the EU, they lose their power to regulate their own affairs.

The last model has a reassignment of sovereignty between the member states.

Institutional consequences

In the first model the national legislatures play the dominant role. The influence of the courts can be big as well.

In the second model it can be expected that the EU legislature has the dominant role, however the judiciary can engage in harmonization as well.

In the third model, the role of the judiciary is likely to be pronounced. The judiciary has to make sure that mutual recognition takes place.

Welfare considerations

The first model allows trade to take place. This should make all participants wealthier.

The second model should bring economic benefits as well. There is only one rule that actors should comply with. Under this model, other interests (like the environment) can be protected as well. However there are problems.

1. An EU wide rule cannot take diversity into account: even if the preferences of countries vary, the rule has to fit all
2. It can be doubted whether the EU legislature would be capable of producing rules in sufficient quantity and quality to afford non-economic interests
3. Rules by the EU can be inflexible and difficult to change.

The welfare implications of the third model are the most difficult to assess. There is competition between firms, but also between legislatures. This is called regulatory competition. This can have many beneficial effects.

1. It increases choice.
2. It creates a discovery mechanism. Countries innovate to produce attractive rules.
3. Regulatory competition may counteract the predatory tendencies of public officials.

However in situations where the costs and the benefits of a policy fall on different jurisdictions, regulatory competition can prove detrimental. Countries might impose lower standards.

Democratic concerns

The democratic concern in the first model is that it is under-inclusive. The lawmakers do not take into account the interests of outsiders.

The harmonization model is subject to the same democratic concern that it always has (see previous chapters)

The worry with the home country model is that it distorts national democracy by favoring capital over workers.

What is the historical experience with the internal market?

The original Treaty of Rome used the term common market. The SEA used the term internal market, but also the term common market. The Lisbon Treaty replaced common market with internal market.

The common market

The common market was at the heart of the Treaty of Rome. The groundwork for the common market was laid down in the Spaak Report. This report argued for the merger of national market into a common market. First, national protections creating obstacles had to be suppressed. Secondly distortions of competition needed to be dealt with. Thirdly conditions for common growth had to be ensured.

The EEC followed this report closely. The common market was a mix of freedom and fairness. It had similarities with the harmonized model.

This harmonization however did not proceed as planned.

The single market

In the early 70s the Court found that the four freedoms were directly effective. It also brought to life the principle of mutual recognition, which meant that if a product is good enough for country X, the product is also good enough for country Y.

The most visible part of the single market was the adoption of a new treaty, the SEA, which set out the aim of achieving the international market by 1992. Under the new approach harmonization would focus on the national rules that survived the direct application of the Treaty. The type of legislation would be different: broader directives would be adopted that would seek to harmonize only the essential requirements.

The success of the single market was a qualified one and the paradigm was not fully stable. Mutual recognition is in practice less effective than it seems on paper. Attempts by companies to penetrate the market of another country were often frustrated by the insistence of the host State that local rules had to be obeyed.

For national governments, two types of difficulty were created. The governments have given up their ability to fully control the products that are sold in their country, but they do get blamed when something's wrong. The kind of competition the single market entails may be branded unfair as well.

For organized interest groups, the mutual recognition principle represented a threat as well. The principle allows regulatory competition to take place. This can undermine the labour standards.

The market was insufficient as well for the advocated of further integration.

The expansion of the EU with new countries created a political problem. Mutual recognition requires mutual trust and with the enlargement, this trust was undermined.

Is there another shift right now?

There might be an other shift happening. The unstable single market paradigm leaves an opening for an economic union paradigm. At least 4 points need to be made:

1. The advantages of the single currencies can in turn be expected to provide a boost and a strong internal market increases the benefits of the currency
2. The problem with a single currency is the reduction of flexibility
3. Labour mobility has been identified as one of the key factors for a successful currency union.
4. A well-functioning internal market allows the real exchange rate channel to work. This means that when a country's economy is overheating, it is automatically cooled down.

The crisis has shown that the countries are highly interconnected. The crisis also demonstrated the need for change in the field of financial services.

Case study: internal market as a source of legitimacy and discontent

This case study focuses on the Commission's drive for the 'Europe of results' and Brexit.

The Commission has sought to rely on the internal market as a source of legitimacy for European integration. It is increasingly concentrating on key sectors that resonate among the public. The Digital Single Market is one of the key priorities. It seeks to improve access to digital goods, create a regulatory environment and use digitalization as a driver for growth. The plan for fairer corporate taxation is one of the key elements as well.

The internal market, however, has fueled discontent as well. There's worries that the social dimension of the EU project has lagged behind its market dimension. This emerged in the debates on the UK's positions. From their perspective, migrant workers from Poland were a source of competition for the British workers.

The UK is likely to press for limits on immigration. Maintaining all four freedoms is optimal from an economic perspective. As a result, if the UK is unwilling to grant free movement of workers, it is unlikely that they will be able to be a part of the rest of the internal market in full.

What is the power to harmonize?

The law needs to supply in rules on free movement and rules that allows the EU to legislate for international market purposes in order to establish the internal market.

The power

Article 114 TFEU is the most important rule. There are a number of points that the article makes:

1. Article 114 TFEU is a residual provision: it may only be used when there's no other legal basis.
2. The procedure under this article is the ordinary legislative procedure.
3. The article allows the EU to adopt measures.
4. The measures adopted must have as their object: the establishment and functioning of the internal market
5. It only gives the power for the 'approximation of the provisions laid down by law, regulation or administrative action in member states'.

The reach of art. 114 TFEU was confronted in the case Tobacco Advertising. The key points are that art. 114 does not provide a general power to regulate the economy: measures adopted under it must genuinely seek to establish the internal market. This means two things: either the measure must eliminate obstacles or it must deal with appreciable distortions.

In ENISA the limits of the requirement of approximation were set. The legislature is entitled to establish a body to contribute to the process of harmonization, however the task of such a body have to be closely related to the previous EU internal market legislation. Without this ruling the creation of new agencies would have to be based on art. 352 TFEU (which requires unanimity)

Case study: tobacco advertising

The question in this case was whether the EU could ban tobacco advertising in member states in order to improve the internal market or whether this would be beyond the scope of art. 114.

The Court first concluded that the Directive was in reality a health protection measure, not an internal market one and the Treaty specifically excludes any harmonization for the protection of human health. However, the Court did recognize that in the internal market economic and non-economic issues are intertwined. The Court did say that the article does not give the legislature a general power to regulate the market. It only provides two specific powers:

1. The competence to establish the internal market (to eliminate obstacles to free movement)
2. The competence to improve the functioning of the internal market (eliminate distortions of competition)

The question that should be answered therefore should be whether the directive did either of these things. The Court emphasized that only the elimination of appreciable distortions could justify the use of art. 114. However, the directive went much further than this. Therefore the Court annulled the Tobacco Advertising Directive.

The exceptions

Article 114 (4) allows a member state to maintain a higher level of protection, then what was envisaged in a harmonization measure. A derogation for pre-existing national rules is provided. This is subject to two qualifications:

1. Only major needs (listed in art. 36 TFEU) or the protection of environment or the working environment can justify a derogation
2. The Commission must me notified

Article 114 (5) provides a derogation for new national rules adopted after the harmonization.Again there are cumulative conditions:

1. There needs to be new scientific evidence, which relates to the environment or the working environment
2. There must be a problem that is specific to the member state and that
3. raised
4. after the harmonization.
5. The Commission must be notified.

So, article 114 TFEU gives the Union power to harmonize in the name of the internal market and it does not require unanimity. The power is wide, but it does have limits: it is not a general competence to regulate the economy.

What are the different types of harmonization?

Total harmonization takes place when an EU measure regulates something exhaustively, not leaving any room for rules of member states. A consequence is that a national rule that complies with an EU measure is no longer open to challenge on the basis of the four freedoms.

Minimum harmonization sets the floor below which member states cannot go. But they are free to adopt more demanding rules.

What can be concluded?

There is no consensus on the fundamental nature of the internal market. When the integration moved from the original common market model to the single market model it did take a step towards the home country model and away from the harmonized model. Whatever the model is: there need to be rules on the free movement and a conferral of legislative power.

Common market was for a long time a synonym for what we now call the EU. The internal market is one of the few concepts the Treaties actually define (art. 26 (2) TFEU). In order to understand the internal market, the four freedoms have to be understood.

How does the free movement of goods work? - Chapter 12

How was the internal market established?

The internal market was fostered by the Europeans, as well as the American initiative (the Marshall Plan). The Treaty of Rome (1957) established the common market. In the current Treaties the 'common market' is the 'internal market'.

This chapter will look at the provisions that ensure the free movement of goods.

What is the concept of a customs union?

The concept of a customs union

According to art. 28 (1) TFEU, the EU constitutes a customs union, which entails liberalization of trades, but also entails the establishment of uniform rules for goods coming from third countries. Therefore there is an external and an internal dimension.

The external dimension is reflected in the adoption of uniform common rules that apply to products from third countries:

• A common customs tariff (art. 31 TFEU)
• A common commercial policy in trade with third countries (art. 207 TFEU)

This chapter however is about the internal dimension. Free movement of goods has to be established through:

• The prohibition of customs duties and charges of equivalent effect
• The prohibition of quantitive restrictions and measures of equivalent effect
• The prohibition of internal discriminatory taxation

Goods originating in a member state and goods in free circulation

The provisions on free movements apply to goods originating in any member state: this is states in art. 28 (2) TFEU. The provisions also extend to products that come from third countries, that are in free circulation in member states. They are to be considered in free circulation if the import formalities have been complied with and any custom duties or CEEs due have been levied in a member state.

In Donckerwolcke it was ruled that goods originating in third countries and placed in free circulation are definitively and wholly assimilated to products originating in member states.

What is the meaning of 'goods'

In Commission v Italy the court defined goods as 'products which can be valued in money and which are capable of forming the subject of commercial transactions'. This definition is not exhaustive.

Does the nationality and residence of the trader or the purchaser matter?

The Treaty provisions in this chapter apply regardless of the nationality of the trader or the purchaser. The only relevant criteria are the origin of the goods and (if they are from third countries) whether they have been put into free circulation.

What are the rules on custom duties and charges or equivalent effect?

The prohibition of customs duties is to be found in art. 30 TFEU.

Customs duties

Custom duties are charges levied on goods by reason that they cross a border. This is an essential provision and it constitutes one of the foundations of the EU

Charges of equivalent effect

The same article also prohibits Charges of equivalent effect (CEEs). The following aspects should be highlighted:

• A CEE is a pecuniary charge (an obligation to pay a sum of money).
• The charge must be imposed on domestic or foreign goods by the reason of the fact that they cross a border.
• The amount of charge is minimal.
• The designation and mode of application are irrelevant
• The concept is not confined to charges imposed for the benefit of the state, but extends to those which finance another entity.
• Charges may constitute CEEs even if they are not discriminatory or protective
• The prohibition constitutes a fundamental rule and therefore there are no exceptions

Permissible charges

There are, however, two situations which may escape the prohibition:

1. Where the payment is consideration for a service rendered
2. Where it relates to inspections required by EU law

Services rendered

The service must confer a specific advantage on the importer or exporter and the charge must be proportional.

Inspections required by EU law

In Commission v Germany the conditions for this were stated to be:

1. the charge must not exceed the actual cost of the inspection
2. the inspections in question must be obligatory and uniform for all products
3. the inspections must be required by EU law
4. they promote the free movement of goods by elimination obstacles

Charges imposed at the internal boundaries of member states

The provisions are about borders between member state. However, case law has made it clear that a charge on an internal border can also be regarded to as an CEE.

Remedies

The consequence of breach is that the member state must eliminate the CEE. The persons concerned have a right to repayment from the member state in question.

What are the quantitive restrictions and measures of equivalent effect?

Article 34 TFEU states that quantitive restrictions (QRs) and measures of equivalent effect (MEEs) are prohibited. These provisions are intended to eliminate non-fiscal barriers.

Quantitive restriction: imports and exports

The Court has established that the prohibition on QRs covers measures which amount to a total or partial restraint of imports, exports or goods in transit.

Measures of equivalent effect: imports

The definition

The definition of MEE becomes clear through the relevant caselaw.

Dassonville

The classic definition can be found in Dassonville. The court stated 'All trading rules enacted by member states, which are capable of hindering, directly or indirectly, actually of potentially, intra-Community trade are to be considered as measures having an equivalent effect to QRs'.

This is a very broad definition. In a handful of cases, however, the Court has held that measures fell outside art. 34 TFEU on the ground that the possibility of their affecting imports was too uncertain and indirect. The Court has ruled that art. 34 TFEU covers in general all barriers to imports which are not already specifically covered by Treaty provisions. The Dassonville formula refers exclusively to the effects of a measure.

Cassis de Dijon

The Court in Dassonville did not say whether discrimination is a necessary ingredient of an MEE. In Cassis de Dijon de subject was an indistincinctly applicable measure, the measure did not discriminate against imports on its face, but it was a more subtle form. The Court ruled that this constitutes an MEE.

Keck

In Keck the Court divided measures in two types

1. Product-bound measures, which concern the inherent characteristics of a product
2. Measures relating to certain selling agreements.

The fist category was definitely an MEE. In the second category only the measures which discriminated against imports in law were to be regarded as MEEs. In later case law the last category was defined:

• Restrictions on when goods may be sold
• Restrictions on where or by whom goods may be sold
• Advertising restrictions
• Price controls

The rationale behind this ruling is that selling arrangements are less restrictive of free trade then product-bound measures.

Trailers

In Trailers the Court added to this that any other measure which hinders access to the market also constitutes an MEE.

Comparison with US constitutional law

The US constitution doesn't contain such a provision as art. 34 TFEU. The Supreme Court did read a 'dormant commerce clause' into art. 1 of the Constitution. 'The congress shall have power ... to regulate commerce ... among the several States'. In the US discriminatory measures are unlawful, but non-discriminatory measures are lawful unless the burden imposed is clearly excessive in relation to the putative local benefit.

Examples

Examples of MEEs are inspections and controls, an obligation to produce a certificate, requirements to the presentation, restrictions on use etc.

Measures of equivalent effect: exports

Article 35 TFEU is about restrictions on exports. The Court says that art. 35 only covers measures that discriminate against goods intended for export in favour of those destined for the domestic market.

Purely national measures

The Court recently has appeared to suggest that even traders in domestic products may rely on a breach in art. 34 TFEU, which is hard to square with the wording of the provision, because it specifically talks about restrictions between member states and not internal restrictions.

Justification under art. 36 and the mandatory requirements

Justifications under art. 36

Art. 36 lays down exceptions to art. 34 and 35.

The status of the mandatory requirements

The mandatory requirements are the grounds of justification not mentioned in art. 36. In Cassis de Dijon they appeared for the first them, the Court there recognized three public interest exceptions: the prevention of tax evasion, the prevention of unfair competition and consumer protection. Others followed: environmental protection, improvement of working conditions, fundamental rights.

The general principles governing art. 36 TFEU

Proportionality is a general principle. The word 'justified' in art. 36 should be understood to mean 'necessary'. The measure is not proportionate if it's not appropriate (applied in a systematic manner). An aspect of proportionality is mutual recognition.

'Arbitrary discrimination' in art. 36 refers to disparate treatment, which cannot be justified on an objective basis

Grounds of justification.

Purely economic considerations cannot justify restrictions that fall under art. 34 or 35.

Public health deserves some attention. It ranks first among the interests protected by art. 36.

Case study: How does the Court decide complex public health issues

The Court will in these issues take full account of the results of scientific research. The Court has developed some rules however:

• The party seeking to show that a measure is justified on the ground of public health, bears the burden of proving this to be true
• If that party makes out a reasonably convincing case, the burden shifts to the other party
• A national measure may be justified even if no other member state has adopted such a strict rule
• Importance is attached to the position taken by international organizations
• Evidence of protectionist intent will weigh against a member state claiming that its measure is justified on public health grounds.

Remedies

Art. 34 and 35 are directly effective. Therefore persons who suffer from it are entitled to an effective remedy. In appropriate circumstances, the usual remedies should be available: annulment, injunctions and damages

What are the rules on internal taxation?

Art. 110 TFEU prevents member states from circumventing the prohibitions in art. 30/34/36 TFEU by introducing internal taxes. This article relates to imported products and products intended for domestic consumption. The provision 'covers all taxation procedures which directly or indirectly conflict with the principle of equality of treatment.'

Two separate prohibitions are in issue:

• A prohibition on internal discriminatory taxation in favor of similar domestic products (art. 110 (1))
• A prohibition on internal taxation affording protection to other domestic products in competition with imported/exported products (art. 110 (2))

Article 110 (1)

Two cumulative conditions have to be met

1. The relevant imported product and the relevant domestic product have to be similar
2. There must be discrimination

Similar products

According to the court a comparison between products has to be made between products which have similar characteristic and satisfy the same consumer needs, at the same stage of production. The concept of similarity has been interpreted broadly by the Court, but there are no real clear boundaries.

Discrimination

According to art. 110 member states must ensure that their taxation is neutral between imported and domestic products. It prohibits direct and indirect discrimination.

Direct discrimination is when the taxes differ on the basis of the origin of the basis. Indirect discrimination when the taxes doe not differ because of the origin, but does impose heavier tax on imported products.

Art. 110 doesn't prohibit reverse discrimination: imposing higher taxes on domestic products.

Article 110 (2): competing products

There are two cumulative conditions:

1. The imported product and the domestic product must be in competition with one another
2. The tax must protect the domestic product

The products don't have to be similar for this.

The holistic approach to art. 110

In certain cases the Court has followed a holistic approach: an approach which does not distinguish between the paragraphs. This approach can be problematic, because art. 110(1) prohibits discrimination, while 110 (2) prohibits protectionism.

Justification

Different taxation can be justified by an objective and legitimate policy reason (environmental protection, social policy or economic policy).

Remedies

In the case of a discriminatory tax (art. 110 (1)), the member states must equalize the taxes imposed on similar products. In case of a protective tax (art. 110 (2)), the protectionist effect has to be eliminated, without necessarily equalizing the tax.

Persons who've paid to much tax can recover the sums.

What is the boundary between the provisions on free movement of goods?

Articles 30 and 34 are mutually exclusive, article 24 and 110 are mutually exclusive as well. Article 35 cannot be applied cumulatively with 30 or 110 either.

The two Danish cars judgments

In Commission v Denmark the Court had to rule if Denmark had infringed art. 110 because it had high registration taxes for new vehicles. The Court says this provision couldn't be infringed, because there was no domestic production of new motorcycles. The Court however stated that it could be possible to bring it under art. 34.

CEEs and discriminatory internal taxation

Art. 30 sees on products that cross a frontier, while art. 110 applies to taxes imposed within a state.

Two types of situations have to be mentioned: the cases in which the charge is imposed on goods not produced in the member state, and the 'parafiscal' charges.

In the first situation there's no production of the product in the member state. If it is imposed by reason of the origin or destination, it is a CEE. It is internal taxation when it relates to a general system of internal dues applied systematically to categories in accordance with objective criteria even if there's no similar product produced.

Parafiscal charges relates to when the proceeds are used to provide a benefit for the domestic industry. The charge is often imposed on both imported and domestic products. When the advantage granted to the domestic production wholly offsets the burden of the charges it will be regarded as a CEE. If this happens partly it is a discriminatory internal taxation.

What is there are two distinct, but closely linked measures?

There can be situations in which two distinct measures will nevertheless be closely linked.

What can be concluded?

The Treaties do recognize that member states can impose quantitate restrictions and MEEs for the public good, but this is in limited circumstances. The Union legislature can't possibly harmonize everything.

The internal market was fostered by the Europeans, as well as the American initiative (the Marshall Plan). The Treaty of Rome (1957) established the common market. In the current Treaties the 'common market' is the 'internal market'.

This chapter will look at the provisions that ensure the free movement of goods.

What are the rules on free movement of natural persons and citizenship of the Union? - Chapter 13

What are the different types of movement?

• Art. 45 TFEU covers the free movement of workers
• Art. 49 TFEU covers the freedom of establishment
• Art. 56/57 TFEU cover the free movement of services

Since the Maastricht Treaty every person with the nationality of a member state, is a citizen of the Union (art. 20 TFEU). This gives them the right to free movement (art. 21 TFEU)

Does EU law apply at all?

Does EU law apply?

In the Viking case, the Court states that even in areas such as social security, taxation and strike action, where the EU has no competence to legislate, the four freedoms and their provisions will still apply. There are three significant limitations on the application of free movement, the free movement provisions only apply to (cumulative conditions):

1. Those who hold the nationality of a member state
2. Those who have moved to another member states
3. Those who have been engaged in some economic activity in the member state they have moved to.

EU nationality

In Rottmann the Court stated that even when a matter fell within the competence of the member states, the national rules have to regard for EU law. On this ground nationality is established as well; it is not necessarily an issue of national law

The interstate element

If there's no interstate element (someone has moved), then only national law applies. This can mean that people have more rights when they move, then when they don't.

Economic activity

The workers must be involved in economic activity. This is the decisive factor. In many cases economic activity is assumed. In Jundt the Court ruled that the activity must not be provided for nothing'. However for art. 21 to apply they merely have to hold the nationality of one of the member states.

Which Treaty provision is engaged?

Free movement of workers

The definition of workers

In Lawrie-Blum the Court said that the essential feature of an employment relationship that 'for a certain period of time a person performs services for and under the direction of another person in return for which he receives remuneration'.

The position of work-seekers

The term 'worker' also includes work-seekers. The worker must be allowed a reasonable time to find work. A period of six months is sufficient.

Those deemed workers or self-employed

An individual retains worker status in the host member state is given when:

1. Someone is temporarily unable to work as the result of an illness or accident
2. Someone is duly recorded involuntarily unemployed after having been employed for more than a year and has registered as a job-seeker
3. Someone is in duly record involuntary unemployment after completing a fixed term employment contract of less then a year or after having become involuntarily unemployed during the first 12 months.
4. Someone embarks on vocational training

Establishment

Art. 49 (freedom of establishment) focuses on independent labour. The distinction with service providers (art. 56) might be hard. In Gebhard the Court clarified that if the service provision is on a 'stable and continuous basis' art. 49 will apply. If it's temporary, art. 56 will apply.

Services

Freedom to provide services

The distinguishing feature of art. 56 and 57 is that the service which is 'normally provided for remuneration' is temporary. In Gebhard the Court clarified that this can be determined in the light of its duration, regularity, periodicity and continuity.

Other situations

Article 56 also applies to EU nationals wishing to travel to receive services.

Union citizens

Economically, semi-economically and non-economically active migrants

Art. 21 applies to economically, but also semi-economically and non-economically active citizens.

Non-migrant EU citizens

It should not be forgotten that the majority of EU citizens don't use their free movement rights (except for tourism).

Does the EU measure apply?

Case law makes clear that the Treaty provisions have vertical as well as horizontal direct effect.

However, with art. 49 and 56 it isn't clear if they really have horizontal effect as well or if it's just an extended vertical effect.

What rights do migrants enjoy?

The rights

The nature of the rights depend on the classification of the individual, the duration of the residence and which piece of secondary legislation is being considered.

With workers, the Workers Regulation 492/11 and the CRD (Capital Requirements Directive) are important.

For the self-employed it is only the CRD.

Service providers don't fall under the CRD, but they could fall within art. 6 CRD and art. 7 CRD.

The Treaty however remains hierarchically superior. The position of non-economically active migrants is more heavily regulated by the CRD.

The right of residence and their family and the principle of equal treatment

The right of residence

The CRD states that the longer a migrants is resident, the greater rights he/she enjoys. There are three periods.

Entering for up to three months

Union citizens have the right to residence another member state for up to three months without being subject to any conditions or formalities. However, the citizens who are not economically active are not entitled to equal treatment in respect of social assistance or student loans.

Three months to five years

They can stay for longer than three months if:

• They are an employed person
• They are a self-employed person
• They have sufficient resources for themselves and their family members not to become a burden on the social assistance system in the host state
• They are enrolled at a private or public establishment for the purpose of following a course of studying and if they have comprehensive sickness insurance and sufficient resources for themselves and the family members not to become a burden on the social assistance system
• They are family members accompanying or joining a Union citizen who falls in one of the above categories

Thus, this is about economically active and semi-economically active migrants.

Economically active migrant EU citizens enjoy equal treatment with nationals. Semi-economically active migrants will enjoy equal treatment except in respect of maintenance aid for studies.

Permanent residence

EU migrants with permanent residence enjoy equal treatment with nationals. There are two ways of acquiring permanent residence: EU citizens residing in the host state for more than five years will have the right of permanent residence. Workers and self-employed migrants have the right to permanent resident if there in one of the following situations:

• Retirement at the pension age, provided they have been employed in the host state for the previous 12 months and resided in the host state for more than three years
• Incapacity, provided they have resided for more than two years in the host state and have ceased to work due to permanent incapacity
• Frontier workers, provided after three years of continuous employment and residence in the host state X, they work in an employment in state Y, while retaining their residence in state X to which they return each day or at the minimum once a week.

Family members

EU migrants can migrate with their family members, including third country nationals (TCNs). Family members fall in the categories of those who must be admitted and those whose entry and residence the host state merely must facilitate.

The category of those who must be admitted consists of:

• spouse
• partner with whom the citizen has a registered partnership, if the legislation of the state treats this as equivalent to marriage
• direct descendants who are under the age of 21 (or are dependents) and those of their partner
• dependent direct relatives in the ascending line and those of the spouse

The other category consists of:

• any other family members who are dependents
• or members of the household of the union citizen (with primary right of residence) or where serious health grounds require the personal care of the family member
• the partner with whom the citizen has a durable relationship

The meaning of equal treatment

The law gives effect to this principle through the negative concept of non-discrimination: national rules should be neither directly not indirectly discriminatory.

Direct discrimination is when te migrant is treated differently on the grounds of nationality. An indirectly discriminatory measure focuses on the discriminatory effect of the rule on the migrant.

Equal treatment and social tax advantages

Workers are in a more beneficial position than other migrants, because can benefit from the rights in the Workers Regulation 492/11 as well.

The workers enjoy equal treatment in respect of social advantages, while non-economically active citizens can be denied of social assistance for the first three months.

Other areas of equal treatment or the economically active and their family members

The Court developed a principle of mutual recognition of qualification: this means that a host state can compare a migrant's qualifications with those required by the national system. If these were equivalent the host had to recognize the diploma.

Other rights specifically attached to EU citizens qua citizens

Overview

Migrant citizens enjoy the right to vote in local and European elections, they have the right to diplomatic and consular protection and migrants enjoy the right to equal treatment. The right of equal treatment can be read from art. 21, 20 (2) and 18 TFEU. With the CRD the equality principle is even more protected

Grzelczyk and the golden days of EU citizenship

Grzelczyk studied and worked in Belgium. He applied for a minimum income, he was refused because he was not Belgian. The Court stated that Grzelczyk enjoyed equal treatment because of art. 18 TFEU. Grzelczyk should get some state support as long as he wouldn't become an unreasonable burden on the public finances.

In Baumbast a German citizen did have sufficient resources but did not have comprehensive medical insurance for himself and his family in the UK (there he lived). Could the UK now refuse to renew his residence permit? The Court said no because he had the right to reside in the UK and the limitations on that should be proportionate.

Now there's a change. The CRD will not be read in the light of art. 21 TFEU.

What rules/practices are prohibited by the Treaty?

The Treaty

In situations that fall outside the scope of the CRD and Regulation 492/11 the Court has applied the Treaty. Discriminatory national rules wil always breach the Treaty. Now non-discriminatory rules can still be considered as restrictions to free movement, when they hinder market access.

The shift to market access

The Court in Säger stated that rules that hinder market access or create a restriction on free movement, breach art. 56 TFEU, unless it is justified by reference to the public interest requirements or the express derogations.

The advantage of the market access approach

In Graf, the Court said that 'in order to be capable of constituting an obstacle, the provision must affect access of workers to the labour market'. The Säger test, therefore is now often referred to as the 'market access approach'.

The criticisms of the market access approach

Constitutional criticisms

From a constitutional perspective, it doesn't seem okay for the EU to interfere with state rules that are democratically adopted.

Legal and economic criticism

Rules can make it more costly for individuals to enter a job or profession. On top of that any regulation can be seen as a barrier to market access. Lastly, rules that interfere with intra-Union trade are subject to judicial scrutiny, while rules considered as neutral should not.

Linguistic criticisms

The Court does increasingly use the language of restrictions instead of market access in cases involving free movement issues.

Response to the criticism

In the field of taxation, the Court might have reverted to the discrimination approach. Secondly, the Court has stated that a threshold requirement may be of need to the market access test

What are the issues that arise in respect of free movement of natural persons?

Express derogations

Measures that are directly discriminatory can be justified only on one of the three derogations in the Treaty:

• Public policy
• Public security
• Public health

Common principles apply to these derogations established in Église de Scientologie

• Derogations have to be interpreted strictly, so that their scope cannot be determined by each member state without control of institutions of the EU
• Derogations cannot be misapplied so as to serve purely economic ends
• Any person affected by a restrictive measure based on such a derogation has to have access to legal redress
• Derogations are subject to proportionality

Up to three months

Individuals can in their first three months be refused/deported on one of the three grounds. The key issue for the public policy and public security derogations is personal conduct. The member state does have to consider whether it is proportionate and in accordance with fundamental rights to refuse/deport.

Three months to five years

The only ground on which the state can deport now is public policy or public security. The state must take into account the human right questions and the proportionality as well as the degree of the individual's integration into society

Five years and beyond

They can only be deported on serious grounds of public policy.

The exception

There's an exception for employment in the public service for workers and the exercise of official authority for establishment and services. This allows for states to reserve certain jobs for nationals only.

Public interest justifications

There are imperative reasons in the public interest to justify indirectly discriminatory rules

• Professional rules intended to protect the recipients of a service
• Protection of intellectual property
• Protection of workers
• Consumer protection
• Conservation of the national historic and artistic heritage
• Turning to account the archaeological, historical and artistic heritage of a country

There are about 50 more justifications.

If a host state tries to invoke a justification to extend its law to the service provider, account must be taken of the protection already provided by the home state.

What is the effect of fundamental rights and proportionality?

Once a breach has been established and the member state invokes an exception, derogation or justification, it must be read subject to the principles of fundamental human rights and proportionality.

What can be concluded?

The economically active, semi-active and the inactive can migrate in the same way. There's still a basic divide between the active and the non-active, because the inactive are denied social assistance for the first three months.

In the Viking case, the Court states that even in areas such as social security, taxation and strike action, where the EU has no competence to legislate, the four freedoms and their provisions will still apply. There are three significant limitations on the application of free movement, the free movement provisions only apply to (cumulative conditions):

1. Those who hold the nationality of a member state
2. Those who have moved to another member states
3. Those who have been engaged in some economic activity in the member state they have moved to.

What are the rules on the free movement of legal persons and the provision of services? - Chapter 14

What is this chapter about?

This chapter is about the free movement of legal persons, which can be found under art. 49 TFEU and its rights to provide services under art. 56 and 57 TFEU.

What can be found in the Treaties?

The relevant Treaty provisions

Freedom of establishment

In art. 49 the freedom of establishment of EU natural persons and companies can be found. It covers two situations:

• The right for natural or legal persons to set up and manage undertakings in other member states (primary establishment)
• The right for legal persons to set up agencies, branches or subsidiaries in other member states (secondary establishment)

The second situation may raise questions about if it's OK for companies to take advantage of EU rules by relying on these articles to go to a state with lenient incorporation rules. In Centros, the Court said that taking advantage does not substitute abuse.

Free movement of services

For article 56 and 67 to be engaged three conditions need to be satisfied:

1. There must be a service (education, medical services, lotteries, building loans etc.)
2. The service must normally be provided for remuneration
3. The service must be temporary

The material scope

Art. 56 and 57 apply in three situations:

1. To the freedom to provide services
2. To the freedom to travel to receive services
3. To the situation where neither provider nor recipient travels

For the Treaty to apply the entity must be connected to the member state an there must be some interstate element.

The relationship between art. 49, 56 and 63 TFEU

Articles 49 and 56 TFEU apply only to movements of the self-employed and companies within the EU/EEA, whereas article 63 applies to movements of capital within the EU/EEA and between the EU/EEA and third countries.

Establishment and capital

The borderline between freedom of establishment and free movement of capital is difficult. The Court looks at the object and purpose of the rule. The Court generally said:

• That national legislation intended to apply only to shareholdings which enable the holder to influence the company's decisions falls within the scope of art. 49 TFEU (freedom of establishment)
• The national legislation intended to apply to shareholdings acquired solely with the intention of making an investment without attention to influence falls within the scope of art. 63 (free movement of capital)

Who are the subjects of article 49 and 56

They have vertical direct effect. In Viking there are hints that the rules have horizontal effect as well.

Establishing a breach

Discrimination approach

The Court prohibited direct and indirect discrimination. Direct discrimination concerns less favorable treatment on the grounds of origin or on the grounds of establishment in another member state. Indirect discrimination concerns a rule, which applies to all companies, but disadvantages the companies with only a branch in the host state.

Restrictions/ market access approach

The Court can find that rules that are non-discriminatory still hinder market access (see chapter 13). The Court has found a range of rules that restrict the freedom of establishment and movement of services, such as:

• rules restricting the number of establishments in a particular area
• residence requirements
• advertising restrictions

The Court does have some tools to limit the reach of the restrictions approach:

• when the effect of the national rule on free movement is too uncertain and indirect
• a de minimis test, there has to be substantial interference

The special case of taxation

The restrictions approach has made it impossible for states to draft any tax laws which could not be challenged under EU law.

Member states do remain free (under public international law) to identify the tax base, the tax rate, the way of collecting and the tax unit. The principle of territoriality entails that resident companies are taxed on their worldwide profits and non-resident companies are only taxed on the profits from sources located in the taxing state.

Derogations and justifications

Express derogations

Art. 52 (1) and 62 allow member states to derogate on the grounds of public policy, public security and public health. The general rules which apply are set out in Église de Scientologie (see chapter 13)

There is an exception from the free movement rules for the exercise of official authority. The meaning of that was defined in Reyners: it applies only to those activities that have a direct and specific connection with official authority.

Public interest justifications

These exist for indirectly discriminatory and non-discriminatory measures which impede the activities of a provider and any other measure which hinders market access. Once a member state has made out a justification, it must show that they are proportionate and compatible with fundamental rights. The extent to which the interest at stake in the host state is already protected needs to be taken into account as well (this was made clear in Gouda).

Case study: The application of the restriction/justification/ proportionality approach

Centros was a company in the UK by two Danish citizens. The owners applied to have a branch registered in Denmark. Denmark refused, because it said that they only established it in the UK to avoid Danish strict capital requirements and they wanted to bring it back to Denmark now.

The Court ruled that the refusal was an obstacle to the freedom of establishment.

Denmark wanted to justify the refusal on the ground of the need to maintain its rules on the minimum capital requirement because the law aimed at protecting all creditors from the risk of fraudulent bankruptcy. The Court recognized this reasoning, but they added that this did not justify the refusing to register a branch of a company.

The special case of gambling

The Court tends to find that the rules on limiting gambling are restrictions on free movement. It used to be really strict, but a change came because of proportionality.

What does the secondary legislation say?

The services Directive 2006/123

This was intended to open up the market. The directive is built on four pillars:

• The freedom of establishment and the freedom of provision of services in the EU
• Administrative simplification
• Strengthening rights of recipients of services as users
• Promoting the quality of services

The first pillar is the most important

The scope

Service means any self-employed economic activity, normally provided for remuneration.. There's an additional list of services in the Directive.

Exclusions

The exclusions are in article 2 (2) and (3) of the Directive.

Establishing

The establishment chapter deals with two kinds of rules: authorization schemes and other requirements which are prohibited or subject to evaluation. The other requirements can be:

• those which are prohibited
• those which are suspect and need to be evaluated

Financial services

Financial services are well suited for the creation of an internal market in services and it promises cheaper and available capital for the entire EU economy.

There are issues with financial services:

• Information asymmetries: it is difficult for the buyer to know all the risks
• Externalities: banking is a very risky activity

The EU legislative framework

The EU legislature adopted a set of directives that were designed to create an internal market utilizing the device of mutual recognition: minimum standards were established. Later the directives went to full harmonization. Currently efforts are on the way of establishing a full banking union. As can be seen: there's been a focus on greater centralization

EU Company Law

EU legislation

National rules on the establishment of companies have been subject to extensive harmonization by EU law. This is because of the need to attain the single market. The Directive guarantees a minimum equivalent protection for shareholders and creditors through minimum standards, coordination of national rules and transparency requirements.

EU corporate forms

EU company law has now introduced its own company law forms, they create new legal forms.

• SE: Societas Europea: A public company
• SCE: Societas Cooperativa Europaea: A corporate form for the non-profit sector
• EEIG: European Economic Interest Grouping: To facilitate or develop the economic activities of its members by a pooling of resources, activities or skills.

National company law and freedom of establishment

There are still holes in the EU legislation in which national law applies. This can be problematic, for example: in Germany and France the seat of a company is determined by the real seat theory, which says that a company is to be established under the law of the state in which its operational headquarters are. Another theory used by for example the UK is the incorporation theory, which says a company is subject to the law of the state in which it is formally incorporated.

The right of exit

The Court has not recognized an unrestricted right for companies to leave their states. In Cartesio the Court drew a distinction between:

• where the seat of a company under the law of one member state is transferred to another member state with no change as regards the law which governs that company
• where a company governed by the law of one member states moves to another member state with an attendant change with regard to the national law applicable.

The first situation was said to fall outside the scope of Union law. In the second situation the Court said that the company is converted into a form governed by the law of the member state to which it had moved.

What can be concluded?

The single market has been a forceful power in opening up national markets to competition.

In art. 49 the freedom of establishment of EU natural persons and companies can be found. It covers two situations:

• The right for natural or legal persons to set up and manage undertakings in other member states (primary establishment)
• The right for legal persons to set up agencies, branches or subsidiaries in other member states (secondary establishment)

The second situation may raise questions about if it's OK for companies to take advantage of EU rules by relying on these articles to go to a state with lenient incorporation rules. In Centros, the Court said that taking advantage does not substitute abuse.

What are the rules on the free movement of capital? - Chapter 15

Why are there rules on free movement?

Since the Maastricht Treaty, the focus of European integration has become the development of the eurozone, as the incarnation of EMU. Free movement is central for this.

What is the legal framework?

The evolution of the original rules on capital

Many of the key developments have economic origins (not legal).

Bretton Woods and the post-WWII international monetary environment

The original Treaty of Rome only had minor provisions for monetary cooperation. All the member states participated in the Bretton Woods monetary system. This system fixed exchange rates. It was created to create monetary stability.

Pre-Maastricht rules on capital

In the EEC the rules on capital and payments were in two different parts of the Treaty. In 1960 the First Capital Directive was adopted and in 1962 the Second Capital Directive was adopted. These directives divided transactions in two categories. The first of which completely liberalized transactions, while the other list permitted for national restrictions.

The growth of monetary instability

In the late 60s there was more currency instability. Therefore in 1969 at the Hague summit, the heads of State decided to make EMU an explicit goal of the Community.

The following Werner Report proposed a three-stage plan. The principle economic/ monetary policy decisions would be taken at Community level and certain policy responsibilities would be transferred to the national level. EMU would foster harmonization of economic policies at Community level. It would include control over the essential features of the member states' budgets.

In 1972 the Council adopted Directive 72/156, which allowed for greater restrictions on capital movements.

The foundations of EMU

In 1978 the Community decided to relaunch monetary integration by creating the European Monetary System (EMS). The EMS stabilized exchange rates, reduced inflation and prepared for monetary integration. In 1985 the Thirds Capital Directive was adopted. This introduced full liberalization.

With the adoption of the SEA in 1986, monetary cooperation was introduced as an area of Community competence.

In 1989 the Delors report set out a plan to introduce EMU over three stages. It included an idea of creating a monetary institution which would be the European System of Central Banks (ESCB).

When the Maastricht Treaty amended the EEC Treaty to allow for stage two and three, the Third Capital was rewritten to become articles 63 to 66 TFEU.

Overview of the current provisions

• Article 63 prohibits all restrictions on the movement of capital and payments between member states and member states and third countries.
• Article 64 allows member states and the Union to keep in place specific rules that were already in place on a certain cut-off date.
• Article 65 sets out grounds for an express exception to the principle of free movement.
• Article 66 allows safeguard measures to be taken by the Council to deal with exceptional circumstances.

What is the material scope of the capital rules?

Capital movements cover those resources used for investment intended to generate revenue. It covers all financial dealings relating to trade in goods and services.The Court has given some indications on what is meant by capital:

• Investments in and transfers of immovable property
• Acquisition of shares or securities in the capital markets
• Receipts of dividends

Relationship with other Treaty freedoms

On two points the division may be important:

• Until it is clear whether rules on capital are horizontally effective, knowing in which category the relevant EU rules fall, could be crucial
• Because free movement of capital potentially applies to movements to and from third countries at well, it can be vital to determine which freedoms can be invoked

Capital and payments/goods

The tax treatment of charitable gifts is covered by free movement of capital. In Thomson the Court ruled that 'means of payment are not to be regarded as goods'.

Capital and payments/establishment and services

The Court is often ambiguous as to whether the rules on capital, establishment or both should be applied. Holböck and Scheunemann provide examples of the division works. In Reischi the Court clarified that the right to acquire, use or dispose of immovable property on another member state generates capital movement when it is exercised.

On other categories the Court has been vague. The Court on some occasions has confirmed that national provisions fall within the scope of the rules of establishment when they concern shareholdings which give rise to a certain influence on the decisions of the company.

In Holböck the Court noted that the legislation in question was not intended to apply on the shareholdings which enable the holder to have an influence and it could therefore fall under free movement of capital or freedom of establishment.

In Scheunemann this ruling is contrasted. The Court accepted that the provision was made to ensure that only persons that ran a business could obtain a tax exemption, therefore it was decisive to have control over the firm and therefore the freedom of establishment was relevant.

The scope differs between the provisions on services and on capital. Free movement of capital grants the same right to EU citizens and third country national. The freedom to provide only influences EU citizens.

The Court in Italian recruitment agencies ruled that the obligation to lodge a guarantee with a bank established in Italy was a restriction on capital movement as well as discrimination within the meaning of art. 56 TFEU. Thus, it was a violation of both freedoms.

In Fidium Finanz a Swiss bank had to have written authorization to operate in Germany, but this was refused. The Court held that this was an issue of the freedom to provide services, not the free movement of capital and companies in non-member countries are not entitled to rely on the freedom to provide services.

What is the personal and geographical scope of the capital rules?

Against whom can the capital rules be invoked?

Art. 63 creates vertical direct effect. The manner in which art. 63 applies to measures that don't depend on public law powers has not been resolved yet and the issue of horizontal effect has not yet been addressed by the Court as well.

When can an EU national invoke the capital rules against their own member state?

The Court has never applied free movement of capital to a wholly internal situation. With other freedoms, it has been cleared up that when a cross-border element is in place, a national of a member state is free to invoke the Treaty's provisions against their own national authorities.

Third countries

The persons invoking the free movement of capital right need not be nationals of a member state; nor is it necessary that the currencies are those of a member state. The Court also stated that the same concept of 'restriction' applies whether the relation is between member states or a member state and a third country. Whether it's between member states or member states and third countries could affect whether a restriction can be justified.

What is a third country?

Overseas countries or territories are treated as non-member states. Iceland, Liechtenstein and Norway can't be seen as third countries since the EEA Agreement (these countries joined the single market).

What are the restrictions?

Equal treatment and non-discrimination

In UK Golden Shares the Court stated that the prohibition of art. 63 goes beyond the elimination of discrimination. If a rule doesn't discriminate, it could still fall in the scope of art. 63.

What constitutes a restriction?

A total ban will constitute a restriction. A prior authorization system will constitute a restriction as well.

The Court has offered some features a restricting measure could have:

• Discouraging the purchase of immovable property and the transfer of financial ownership to another person by a resident of another member state
• Reducing the value of an estate of a resident of a member state other than that in which the property is situated

The de minimis rule exists in regards to free movement of capital.

What are the exceptions and justifications?

Treaty-based limitations and exceptions

Fiscal matters

Article 65 (1) (a) TFEU is about fiscal matters: the provisions of art. 63 should be without prejudice to the right of member states to apply tax law between taxpayers who are not in the same situation. In Verkooijen it is confirmed that the principle of proportionality would apply if this clause is invoked.

General

Article 65 (1) (b) allows a member state to take al measures to prevent infringements of national law and regulation. It allows them to lay down procedures for the declaration of capital movements for administrative or statistical information as well. Lastly, a member states may take measures which are justified on grounds of public policy or public security.

The power to prevent infringements of national law means that member states can take measures necessary to combat activities that are of comparable gravities of those in the field of fiscal matters and the supervision of financial institutions.

In Église de Scientologie the scope of public policy was set: it would exclude typically economic interests. In Albore the Court stated that public security extends to the external security of the member state, but that it was subject to the principle of proportionality and that it could not permit arbitrary discrimination.

Justifying restrictions

National matters liable to hinder or make less attractive the freedoms, can be justified if they fulfill four conditions:

1. They must be applied in a non-discriminatory manner
2. They must be justified by overriding seasons based on the general interest
3. They must be suitable for securing the attainment of the objective which they pursue
4. They must not go beyond what is necessary in order to attain that objective

Grounds of justification

The grounds that have been accepted as objectives in the public interest or as overriding requirements of the general interests are:

• Protection of creditors
• Maintenance of a permanent population and stable economic activity in rural or mountainous regions
• Protection of the environment
• Preserving agricultural communities, maintaining a distribution of land ownership and preventing natural disasters

Proportionality

In Cassis de Dijon traders and the Commission were allowed to attack national measures that do not discriminate, but which could have a restrictive effective on trade. This could only be justified if it was an inescapable side product of the pursuit, by proportionate means, of a public interest goal.

Suitability

The measures should be suitable for securing the attainment of the objective that they pursue.

Absence of any less restrictive means

Suitability is only the floor, the real question is if they were any less restrictive means for achieving the legitimate goal. This is a very important element of proportionality.

Procedural requirements applied to justifications and exceptions

The national measure must allow traders or other persons invoking the freedom to be sure that any restriction will not be applied in a discriminatory manner, ass well as being clear when a particular restriction will be applied. The Court has ruled that if these requirements are not satisfied, the Treaty precludes such a measure without examining its proportionality.

Case study: Capital movements in the public interest

The free movement of capital can have a significant impact on the mechanisms by which social services are delivered. This case study answers the question of whether there is an emerging Union-level view of when capital movements are in the public interest.

If private law operators are responsible for social services, the financing of this can raise issues regarding free movement of capital.

Mr Persche donated money to a Portugese retirement home, while living in Germany. He thought this would be tax-deductable, but Germany said it was only tax-deductable if it concerned a German establishment. The German legislation did restrict the free movement of capital: the difference in treatment should have to concern situations which are not objectively comparable or should have been justified by an overriding reason in the public interest.

Germany held that:

1. The right for taxpayers to deduct decreases the member state's tax revenues and the member state should have to be allowed to compensate that fall.
2. Tax advantages like this allow the member state to discharge some of its duties, and these responsibilities do not exist beyond its borders
3. Giving such tax advantages outside the state cannot be controlled to ensure that the taxpayer is genuinely giving to charity

The Court's reaction to these arguments were:

1. This argument is neither among the objectives in art. 65 TFEU nor is it capable of constituting an overriding reason in the public interest
2. There is indeed no requirement in Union law for a member state automatically to confer on foreign bodies recognized as being charitable, to have the same status in their own territory. But this wouldn't allow Germany to refuse equal treatment.
3. The mere fact that administrative might be harder, could not justify a refusal to grant taxpayer advantages which they could have obtained in respect of gifts to national bodies of the same kind

In Woningstichting Sint Servatius concerned the way member states organize delivery of a social service. In the Netherlands there are non-profit housing associations which operate in the public housing sister and they answer to the minister. Housing association Servatius sought to build housing in Belgium with their funds, which they had obtained at favorable rates, because of their approved association status. The minister refused to approve this project, because it was in Belgium.

The requirement to obtain prior authorization from the minister constituted a restriction on the free movement of capital. The Court left it open to the national court whether the legitimate ground of overriding reasons in the public interest, was proportionate.

What can be concluded?

The free movement of capital will always be sensitive, because of its role in the EMU, which involves a deeper level of integration as well as of its relation to non-member countries.

Capital movements cover those resources used for investment intended to generate revenue. It covers all financial dealings relating to trade in goods and services.The Court has given some indications on what is meant by capital:

• Investments in and transfers of immovable property
• Acquisition of shares or securities in the capital markets
• Receipts of dividends

What are the exceptions to the free movement rules? - Chapter 16

How can the right to free movement be restricted?

The free movement rights are not absolute. Free movement rights can be restricted in certain cases:

• If for discriminatory or distinctly applicable restrictive measures a derogation ground in the TFEU can be engaged
• If for indirectly or non-discriminatory measures an overriding requirement relating to the public interest that is capable of justifying a restriction can be demonstrated

In both of these cases, the restriction needs to comply with the proportionality test (it should be appropriate and necessary for achieving the public interest objective).

What is the treaty framework for derogations?

The role of derogations and the legal framework

The fact that states can legitimately restrict the free movement rights, is an expression of the resulting regulatory balance. To resolve disputes connected to free movement rights, the Court usually addresses three questions:

1. Does the measure constitute a restriction of the free movement right?
2. If it does, can this measure be justified?
3. If it can, is the measure proportionate?

Derogation and EU legislation

When there's regulatory standards for a particular issue, derogation is only permitted if derogation is expressly provided for by the relevant legislation. EU legislation can provide for a:

• general derogation clause (the Commission will examine difficulties that a member state might encounter when applying the provision, and decide to permit the member state to derogate for a specific period)
• specific derogation clause (one particular exception for a member state)

When EU legislation provides for minimum harmonization, states remain free to adopt more stringent standards. However in Tobacco advertising it was stated that minimum harmonization measures must now include a free movement clause. Because of this, national measures that go beyond the standards can still be tested against the derogation and justification framework.

Overview of the Treaty-based derogation grounds

Treaty freedoms may be derogated from for reasons connected to public policy, public security or public health.

The Court has interpreted the scope of public policy very strictly.

The rights are not only subject to the derogation grounds listed in the treaty, but also to measures adopted to give effect to the treaty.

Article 45 (5) provides that the provisions of the article shall not apply to employment in the public service and article 51 states that the provision in its chapter shall not apply to activities which in that state are connected with the exercise of official authority. The scope of employment in the public service has been restricted to only mean posts which involve participation in the exercise of powers conferred by public law and duties to safeguard the general interests. The exercise of official authority must be restricted to activities which in themselves are directly and specifically connected with the exercise of official authority.

What is the framework for justification?

Restrictions on free movement rights can be:

• Directly discriminatory on the grounds of nationality
• Indirectly discriminatory (not discriminatory in law, but in effect)
• Non-discriminatory

Discriminatory restrictions can only be defended on the grounds provided by the Treaty. Indirectly discriminatory and non-discriminatory restrictions can be defended by any public interest argument states wish to use.

From mandatory requirements to overriding requirements in the public interest

The open-ended justification route was first developed in Cassis the Dijon, the Court in this stated that other grounds than those in the Treaty can be used: for example the protection of press diversity or protecting workers.

The Court has confirmed that national measures can be justified in order to meet imperative requirements or by overriding public interest reasons of justifying restrictions on the fundamental freedoms.

The open-ended justification that was developed originally for art. 34 TFEU, now only applies to measures that restrict any of the rights conferred by the Treaty freedoms.

Gebhard makes a statement of the restriction/justification formula: national measures that hinder or make less attractive the exercise of fundamental freedoms must fulfill four conditions:

1. They should be applied in a non-discriminatory manner
2. They must be justified by imperative requirements in the general interest
3. They must be suitable for securing the attainment of the objective which they pursue
4. They must not go beyond what is necessary to attain it.

The justification system recognizes national concerns relating to the public interest more than the derogation grounds in the Treaty do.

Discriminatory and non-discriminatory restrictions

The Court could reverse the convention that the justification of directly discriminatory measures is confined to the grounds in the Treaty, it would enable the application of justification framework across the board. The Court hasn't really distinguished the types of discrimination.

How are the derogation and justification frameworks applied?

General principles

The Court does not rank the different public interests in a systematic way, although nuanced differences in the approach can be distinguished.

Case Law: Derogation on the grounds of public health

The Court in DocMorris stated that the health and life of humans rank of humans rank foremost among the assets and interests protected by the Treaty and the member states can determine themselves how much protection they wish to afford to public health and how they want to achieve this. The member states have discretion.

In reality, the requirements of EU law are more prescriptive and public health defenses almost never succeed before the Court.

First a state must demonstrate that any risks to public health are genuine.

Secondly, restrictions of freedom of movement on the ground of public health are delimited by the requirements of Directive 2004/38/EC, article 29:

1. The only diseases that could lead to measures restricting the freedom of movement are diseases with epidemic potential.
2. Diseases occurring after a three-month period from the date of arrival cannot constitute grounds for expulsion from the territory
3. Where it is necessary, member states can within these three months, require persons to undergo a medical examination to make sure they do not suffer a disease as in the first condition.

Lastly, the Court has shown that it can review aspects of the structures of the national health-care systems.

Economic justifications

Aims of a purely economic nature cannot constitute an overriding reason in the general interest justifying a restriction of a fundamental freedom.

However, case law accepts that none the less interests of an economic nature can provide a legitimate defense to free movement restrictions.

In Kohll the Court stated that the objective of maintaining a balanced medical service open to all, may fall within the derogations on the ground of public health, even though the objective is intrinsically linked to the method of financing the social security system.

However, in Vanbraekel it was stated that it cannot be excluded that the risk of seriously undermining the financial balance of a social security system, might constitute an overriding reason in the general interest.

The horizontal scope of the Treaty

The Court has effected different levels of horizontality:

1. Rules that regulate freedom of movement in a collective manner
2. Member State responsibility for private actions that impede free movement
3. Rules adopted by a private law body that hold the power to regulate
4. Full horizontal reach

The Treaty can catch the actions of private bodies and private individuals, but can these individuals rely on derogation and justification frameworks? In Fra.Bo the Advocate General identified two approaches to this questions. In most judgment the Court applies the usual justification standards. But there's also a limited thread on what are 'special grounds in the private interest'.

The jurisdiction of the Court of Justice

The function of the Court of Justice is different in direct actions and indirect actions. In infringement procedures the Court must decide directly on all aspects of the case, including the outcome of any justification and proportionality arguments. However, for preliminary rulings the Court only replies in abstract and general terms.

In reality the extent of the Court's review in preliminary hearings varies. It tends to sometimes give far more detailed rulings.

The burden and standard of proof

The burden of proof falls on the member state seeking to establish a public interest defense. The requirement of standard proof has two principles:

1. It is not sufficient when a state merely asserts the relevance of a public interest objective. Generalizations will not be enough to meet the standard of proof. States must present evidence to support and demonstrate the validity of their claim.
2. The evidence must be sufficiently precise, in order to substantiate the arguments submitted.

Fundamental rights as limits to free movement

Fundamental rights as derogations and justifications

Fundamental rights are protected as general principles of EU law and through the Charter of Fundamental Rights. The Court has made it clear that a member state may invoke public rights reasons to justify a measure that restricts the free movement rights, only if the measure is compatible with the fundamental rights.

In some cases the member states themselves seek to defend a measure on the ground that it protects fundamental rights. The Court has confirmed that this could be a legitimate basis for a restriction.

Review of national measures implementing EU law

When a member state tries to extract itself from the free movement laws, the argument can be made that the national measures therefore fully fall outside the scope of Union law altogether. In ERT however, the Court held that these measures must be interpreted in the light of the general principles of law and in particular of fundamental rights. Therefore the frameworks of derogation and justification are part of Union law and any measures taken for that purpose therefore also fall under Union law.

How is proportionality applied?

The proportionality test

A restriction can only be justified if the measure is appropriate to ensure the attainment of the objective and does not go beyond what is necessary to attain it. The test of whether it is appropriate is referred to as the suitability test.

The suitability test

Measures are appropriate when the means which they employ are suitable for the purpose of the desired objectives.

Necessity

This considers whether alternative measures that can achieve the stated public interest objective but have less restrictive effects can be conceived.

Proportionality as a tool for mediating public interest

There are varying intensities of proportionality review.

Case study: Navigating public moralities through proportionality review

In the gambling cases the applicable level of proportionality becomes important. The proportionality review in this area should consist in ascertaining that the state has not exceeded its margin of discretion. The elasticity inherent in proportionality review can be used to manage a spectrum of divergent moral and social views.

The Court is, in prescribing the level of proportionality review, essentially communicating its own view as to when the free movement rights should prevail over other interests and values.

How does derogation from the free movement of persons work?

Directive 2004/38 has laid down the extent to which member states can lawfully deport EU citizens from their territories.

Deportation and Directive 2004/38

Art. 27 (2) states that a decision based on public policy or public security should comply with the principle of proportionality and it should be based exclusively on the personal conduct of the concerned individual. Personal conduct should be representing a genuine, present and sufficiently serious threat affecting one of the fundamental interests.

This legislation can shape the exercise of the free movement rights and it can attach conditions and limits to their exercise, but it cannot undermine the existence of those rights.

Art. 28 of the Directive requires a member state to take into account considerations such as how long the individual has resided on the territory, the age, state of health, family, economic circumstances and social and cultural integration. The article also prescribes criteria for the nature of public policy and public security issues, which can be taken into account. When a resident has the status of permanent residence, they can only be expelled on serious grounds of public policy or public security. Only imperative grounds can justify an expulsion decision against a citizen who has resided in the host state for ten years or is a minor.

Case study: Deportation and criminal convictions

Art. 27 of the Directive states that previous criminal convictions shall not constitute grounds for taking expulsion decisions.

In Calfa the Court stated that the public policy exception (just as all other derogations) must be interpreted restrictively. Expulsion cannot be the automatic consequence of a criminal conviction. It can only justify expulsion if the circumstances which gave rise to the conviction are the evidence for being a present threat to the requirements of public policy.

In Tsakouridis the Court provided guidance in the scope of art. 28 of the Directive. It stated that there should be a balance between the exceptionality of the threat to public security and the risk of reoffending and the risk of compromising the social rehabilitation,

Deportation on economic grounds

Art. 27 (1) of the Directive states that the grounds can not be invoked to serve economic ends. However, these are closely linked. Art. 7 establishes basic threshold conditions of 'not becoming a burden on the social assistance system'

What can be concluded?

The general approach the Court takes is to interpret the public interest concerns mindful of the act that the realization of primary Treaty rights is at stake. There is a proportionate review. Both the public interest and proportionality elements should be supported with appropriate evidence.

The free movement rights are not absolute. Free movement rights can be restricted in certain cases:

• If for discriminatory or distinctly applicable restrictive measures a derogation ground in the TFEU can be engaged
• If for indirectly or non-discriminatory measures an overriding requirement relating to the public interest that is capable of justifying a restriction can be demonstrated

In both of these cases, the restriction needs to comply with the proportionality test (it should be appropriate and necessary for achieving the public interest objective).

What are the provisions on competition law? - Chapter 17

What are the core competition rules?

The two core TFEU competition rules are the rules governing anti-competitive agreements (art. 101) and abuse of a dominant position (art. 102).

What are the provisions on EU competition law?

EU Competition law

Competition law is designed to protect the process of competition. Articles 101 and 102 govern anti-competitive agreements and conduct.

Objectives of competition law

The case law makes clear that the main goals over the years are:

1. Odroliberalism: the school that claims that competition rules should protect individual economic freedom, this freedom is a political right. The competition law should focus on eliminating cartels, the market power of single firms etc. Today this view doesn't have a widespread support from the Commission and academics anymore.
2. Consumer welfare. This is the current view of the Commission to be the goal. It is to protect competition on the market as a means of enhancing customer welfare and ensuring an efficient allocation of resources. Competition is undermined, when the conduct at issue allows the relevant undertaking to exercise market power.
3. The single market. This seems to be the view of the Court.

How is competition law enforced and what are the consequences of infringement?

The articles 101 and 102 are enforced:

• Publicly by a network of competition authorities
• Privately, through civil litigation in national courts

Enforcement by the Commission and NCAs

Council Regulation 1/2003 gives powers to the Commission to enforce articles 101 and 102. The case law of the European Court of Human Rights states that decisions are subject to review by EU Courts. The burden is on the Commission or other person, alleging an infringement, to establish sufficiently precise and coherent proof of an infringement.

Regulation 1/2003 removed the Commission's exclusive competence to apply art. 101 and 102. Therefore they could be enforced at a national level. The National Competent Authorities (NCAs) are now permitted to apply articles 101 and 102 in addition to the national competition laws. They often have the power to fine undertakings when they breach the articles or in some countries even stricter sanctions.

Private enforcement through civil litigation

A claimant may bring private proceedings seeking a declaration of nullity or damages to compensate for loss as a consequence of breach. In many states however there are many obstacles. Therefore a direction was made to facilitate damage actions in the national courts.

Who do the articles apply to and when?

Undertakings

Art. 101 and 102 apply to undertakings: every entity engaged in economic activity, regardless of the legal status of the entity and the way in which it is financed as defined in Höfner.

Entities and single economic units

The concept of entity only covers national persons, legal persons and states. A single undertaking is not necessarily a natural or legal personality.

Economic activity

Economic activity is the offering of goods or services on a market. An entity might be regarded as an undertaking for one part of its activities while the rest does not fall under the competition rules. It is not good enough if an a state is just purchasing goods. Consumers consuming is not considered as an economic activity either.

May affect trade between member states

The Court has held that in order to fall within art. 101 the agreement must affect trade between member states and the free play of competition to an appreciable extent. Therefore there must be a minimum level of cross-border effects.

The Court has confirmed that for an arrangement to be capable of affecting trade between member states, it must be possible to foresee with a sufficient degree of probability. The relevant question is whether a whole affects trade.

Arrangements relating only to products in a single member state, can also affect trade between member states.

Exclusions

The exclusions are normally justified on public policy grounds.

How can anti-competitive agreements and conduct be identified?

The use of economic analysis

The goal of enhancing consumer welfare is not easy to achieve. It can not always establish a clear outcome for a case as well.

Type 1 and type 2 errors

Competition law conducts have to consider how to construct legal rules or standards to distinguish anti competitive conduct which will harm consumer welfare from pro-competitive conduct, they should both be sufficiently:

• Clear (firms should be enabled to comply with them and courts should be able to administer them)
• Accurate (they should prohibit anti-competitive conduct and permit that which may promote competition)

An approach can

• Condemn legitimate business practices (false positives/ type 1 errors)
• Allowing anti-competitive practices to escape antitrust prohibitions (false negatives/ type 2 errors).

What does art. 101 TFEU provide?

Article 101 has two substantive parts

• (1) is the core prohibition of collusive arrangements between separate undertakings which restrict competition
• (3) provides the legal exception for agreements achieving offsetting benefits.

Agreements, concerted practices and decisions

Article 101 (1) prohibits joint conduct. There is some element of collusion between independent undertaking. The different types of collusion are distinguishable by their intensity and the forms in which they manifest themselves.

The existence of an agreement isn't often in doubt. There may, however, be doubt as to the precise terms of the agreement as to whether the terms can be said to restrict competition. There may be heavy sanctions when infringement is the case.

Agreement

When undertakings have expressed their joint intention to conduct themselves on the market in a specific way, an agreement is made. An agreement may also be found where an offer to collude is accepted tacitly.

Concerted practices

The term concerted practice does not require an agreement, but catches reciprocal coordination which substitutes practical co-operation. Firms who do this may be found not to be acting independently and fall under 101.

Decisions by associations of undertakings

It could also include recommendations and other schemes designed to coordinate the members behavior on the market and to exclude competitors.

Unilateral conduct

In Wood Pulp II the Court held that even if all suppliers on a market have acted in parallel, parallel behavior alone cannot be relied upon to be proof of a concerted practice.

Identifying which agreements infringe art. 101

Categories of analysis

A claimant must first identify the anti-competitive aspects of an agreement. Four broad categories of analysis are used in the EU:

1. Presumption of illegality. Agreements with provisions that are restrictive of competition by object are assumed to restrict competition. They are also presumed not to satisfy the conditions of (3).
2. De minimis. Agreements which do not appreciably restrict competition are outside the scope of art. 101: these are agreements between undertakings with a weak position on the market which do not contain object restraints when they have an insignificant effect on competition.
3. Safe Harbour: Block Exemption Regulations. Agreements benefiting from an EU block exemptions are presumed compatible with art. 101.
4. Full economic analysis. Other agreements should be analyzed individually to determine whether they restrict competition.

Agreements which restrict competition by object

Where it is shown that the object of an agreement is restrictive, there is no need to demonstrate anti-competative effects. Where the object is not found to restrict competition, the burden of proving that the effect is restrictive is on the person alleging the brief.

Caselaw has established that the following restraints are highly likely to be found to be restrictive of competition by object, in the category of horizontal arrangements:

• Fixing prices together, limiting output or sharing markets
• Agreeing that some firms leave the market to reduce capacity
• To exchange information designed to fix purchase or selling prices

In the category of vertical arrangements:

• To fix minimum prices at which retailers can sell the contract product
• To confer absolute territorial protection on a distributor.

Only in exceptional circumstances the objective or the context of an agreement can lead to finding that an agreement containing restraints set out in the list is not restrictive by object. From Wouters v Algemene Raad van de Nederlandse Orde van Advocaten it becomes clear that an agreement containing severe restraints, but designed to achieve public policy or efficiency objectives may escape being categorized as restrictive by object.

Agreements which restrict competition by effect

To determine whether an agreement restricts competition by effect, proof is required that:

• the agreement affects 'actual or potential competition to such an extent that on the relevant market negative effects on prices, output, innovation or the variety or quality of goods and services can be expected with a reasonable degree of probability.
• the agreement restricts a supplier's distributors from competing with each other since potential competition that could have existed between the distributors absent the restraint is restricted.

Agreements of minor importance

An agreement is likely to be of minor importance when it does not contain object restraints and the parties market does not exceed 10% (when it's between competitors) or 15% (when it is between non-competitors).

Article 101 (3) TFEU

It is a big burden to establish that the four cumulative criteria of 101 (3) are met. It must be established that:

1. The agreement leads to an improvement in the production or distribution of goods or the promotion of technical or economic progress.
2. The agreement allows consumers a fair share of the benefit
3. The agreement only contains restrictions which are indispensable to the achievement of the benefits shown to result from the agreement.
4. The agreement as a whole must not afford the parties the possibility of eliminating competition.

Case study: Cartels and the Marine Hose cartel

There is a general consensus that competition law requires clear rules against cartels. The Marine Hose cartel knows the consequences of forming a cartel: the consequences involved:

• Plea agreements and criminal convictions were made in the US under criminal antitrust laws
• Class actions for damages were launched in the US
• In the UK three nationals went to prison
• The European Commission imposed a fine of about 131.5 million Euros on five groups involved
• Even Japanese and Australian competition authorities found violations of their rules.

Case study: selective distribution and Pierre Fabre v Président de l'Autorité de la concurrence

Distribution systems where the supplier undertakes to sell the contract goods or services, directly or indirectly, only to distributors selected on specified criteria, are called selective distribution systems. They will not infringe art. 101 (1) when such a system is necessary to maintain a specialist trade capable of providing high-quality products.

Pierre Fabre used a selective distribution system for cosmetics. The French competition authority found that the agreement was not compatible with the rules on competition law. In an appeal a reference to the Court was made, it was held that:

• As the ban eliminated cross-border traint, therefore it was liable to restrict competition. It was restrictive of competition by object as it was not a proportionate means of pursuing the legitimate aim.
• Because it was a hardcore restraint, it precluded active or passive sales to endusers by the retailer within the system.
• It did not have sufficient information before it to provide guidance to the referring court on the question whether the agreement satisfied the criteria of (3)

What does article 102 TFEU provide

Art. 102 prohibits abuse by one or more undertakings of a dominant position. The dominant position must be in the internal market or in a substantial part of it.

Dominance

In Hoffmann - La Roche the Court held that a dominant position can be defined as a position of economic strength enjoyed by an undertaking. The Court has two steps in assessing dominance

1. The relevant market must be identified
2. It must be determined whether the undertaking is dominant on the relevant market

Where market shares are very large the Court stated that that generally is a good proxy for dominance. There is a presumption of dominance for firms with a market share of 50% or more. Not only should the market shares be considered, but it should also be compared to those of its rivals, it should be considered how the shares have changed over time, the dynamics of the market should be determined etc.

It's equally important to look if there are any barriers to entry or expansion is crucially important. Barriers only seem to exist when a new entrant faces higher costs than the firms already in the marketplace face.

Identifying conduct which infringes art. 102

Art. 102 states that it is not an offense to hold a dominant position; only abuse is prohibited.

Abuse

Art. 102 provides a list of illustration exploitative abuses. The main concern in the application of art. 202 has been with exclusionary abuses such as predatory pricing, exclusive dealing obligations or refusal to supply. There is an emphasis on the objective nature of the concept: it is not essential that fault or intent to exclude competitors is established.

Exploitative abuses

Art. 102 specifically targets exploitative behavior such as charging customers more than the competitive price or through providing an inferior service.

Exclusionary abuses

There's a difficult line between unlawful exclusionary behavior and competition on the basis of performance or competition on the merits.

Price discrimination

Article 102 also condemns price discrimination which may distort competition between downstream buyers.

Objective necessity and efficiencies

The Courts have consistently held that a dominant undertaking may provide objective justification for behavior that is otherwise prohibited. The dominant undertaking should show that the gains counteract the negative effects.

Case study: Predatory pricing and AZKO Chemie v Commission

Predatory pricing is when a dominant firm lowers its price to eliminate its competitors. This harms consumer welfare, because after eliminating its competitors, it wil raise pricing.

An article, Areeda and Turner, in 1975 proposed a cost-based test for identifying this behavior. The rule was that where a firm charges prices below its variable costs, it should be held to be engaged in unlawful predatory behavior. Most competition systems use a version of this test to identify predatory pricing.

The case was about AKZO Chemie. AZKO told ECS to stop supplying organic peroxides. They didn't. AZKO therefore offered the organic peroxides to ECS' customers for extremely low prices.

The Court affirmed that the relevant market was that of organic peroxided and that AZKO was dominant on the market with a 50% market share. Then the Court affirmed that AZKO had abused its dominant position.

In Post Danmark A/S v Konkurrencaradet the Court confirmed that prices above average of the total costs are not predatory.

What can be concluded?

Article 101 and 102 apply insofar the agreement or conduct appreciably affects trade between member states.

The case law makes clear that the main goals over the years are:

1. Odroliberalism: the school that claims that competition rules should protect individual economic freedom, this freedom is a political right. The competition law should focus on eliminating cartels, the market power of single firms etc. Today this view doesn't have a widespread support from the Commission and academics anymore.
2. Consumer welfare. This is the current view of the Commission to be the goal. It is to protect competition on the market as a means of enhancing customer welfare and ensuring an efficient allocation of resources. Competition is undermined, when the conduct at issue allows the relevant undertaking to exercise market power.
3. The single market. This seems to be the view of the Court.

What EU law applies to public services? - Chapter 18

Are there any rules at all?

Questions are raised when EU law is applied to public services, do for example competition rules and state aid rules apply?

What are public services and SGEIs?

Services in EU law are defined in art. 57 TFEU, however public services are not defined. Opinions on what a public service is differ per member state. They are understood as services that supply some public good, thus a good of which the consumption is in the general interest. When the State does not perform the public service itself, it usually defines the characteristics of the service.

EU law does recognize the concept of SGEIs (Services of General Economic Interest) in art. 14 and art. 106 TFEU. SGEIs are a subcategory of Services of General Interest (SGIs). SGEIs are economic in nature. Qualifying as an SGEI requires that the services involved are provided by undertakings in markets.

SGEIs could be provided by the state itself as well, but when the state decides that the public service should be provided by a private operator, it can grant this operator special rights. They could for example give an operator the monopoly right to do something.

Recognition of SGEIs by the Treaty

Article 14 TFEU and Protocol No 26

In article 14 TFEU and Protocol No 26 provisions can be found that are relevant to the scope and organization of public services, it was intended by member states to limit the Commission's powers with respect to SGEIs. It gives the member states discretion to decide what the definition of an SGEI is.

Article 106 TFEU

Article 106 TFEU is the main substantive provision with regard to SGEIs. It states that special rights may not breach the provisions of the Treaty. This is referring to the rules on competition and free movement. An exception is warranted to the extent that this is proportional to the public interest pursued and the measures must be:

• Suitable to their goal
• Necessary in the sense of employing the least restrictive effective means.

Conclusion

SGEIs are part of EU law, subject to the powers of EU institutions, but at the same time it falls under the powers of the member states to decide what is classified as an SGEI.

What are the rules on commercial monopolies?

The rules on commercial monopolies can be found in art. 37 TFEU. Article 37 prohibits quantitative restrictions and measures of equivalent effect (MEEs) between member states. Monopolies in themselves are not prohibited: they need to be adjusted to ensure the abolition of discrimination.

In the Swedish Pharmacy case the Court ruled that it needed to be considered whether the way in which the state monopoly was organized was liable to place medicinal preparations from other member states as a disadvantage. To rule out discrimination:

• The selection system had to be based on criteria that were independent of the origin of products.
• The retail network of that monopoly had to be organized in a way in which the number of sales outlets was not limited to the point of compromising consumers' supplies.
• The marketing and advertising of such a monopoly had to be impartial and independent of the origin of the products

What are the rules on state aid?

Public services can be either paid for by the state or by cross-subsidization from profitable non-commercial activities. The rules on state aid can be found in art. 107 and 108 TFEU. The state aid rules prevent overcompensation of public service provision and to maintain a level playing field between undertakings that are active in the same market.

Whether State aid is involved in public service compensation, is the Altmark test under art. 107 TFEU. The question whether if aid is involved, this may merit an exemption under 106 (2) has been addressed most in the Viasat case. The Court stated that these two test have to be applied sequentially:

1. Is there an aid?
2. Should it be exempted?

The State aid regime

The criteria

Article 107 (1) states that state aid is prohibited in any form if it fulfills one of the conditions in the article. Exceptions are possible. The Commission has exclusive competence to grant those exemption.

Altmark

In Altmark the Court ruled that if the undertaking concerned was entrusted with a PSO (Public Service Obligation) in exchange for its financing, there could be no case of State aid, because the compensation was a quid pro quo instead of an economic advantage. In order for State aid rules to apply the Altmark conditions should be satisfied:

1. The undertaking is actually required to discharge PSOs and those obligations have been clearly defined
2. The parameters on the basis of which the compensation is calculated have been established beforehand is an objective and transparant manner
3. The Compensation does not exceed what is necessary to cover the costs incurred in discharging the PSOs
4. Where the undertaking which is to discharge PSOs is not chosen in a public procurement procedure, the level of compensation needed has been determined on the basis of an analysis of the costs with a typical undertaking

When not all four Altmark conditions are met, then the payment may be a state aid. The aid could still be declared compatible with the internal market. The commission has adopted a body which consists of a formal exemption Decision and a soft law Framework, called the Altmark package. It is now even accompanied by an interpretative Communication and a de minimis Regulation.

The Communication

The Communication is intended to provide clearer guidance to member states on the law and Commission policies.

In order to be classified as SGEIs services must be 'addressed to citizens or be in the interest of society as a whole'. The Commission will, in addition to using the Altmark criteria, look if a service is really a genuine SGEI.

A particular focus is placed on the fourth Altmark condition. In cases where the public procurement rules have not been applied, the amount of compensation must be based on generally accepted market remuneration or on the analysis of typical costs of an undertaking.

The Decision

The Commission Decision is a block exemption that has created a safe harbour for aid to undertakings under a threshold and exempts them from the notification and standstill obligations of art. 108 (3) TEU.

In order to benefit from the exemption, the undertaking must be entrusted with the operation of an SGEI by means of one or more official acts, they have to specify at least:

• The nature and duration of the PSOs
• The undertaking and territory concerned
• The nature of any exclusive or special rights assigned to the undertaking
• The parameters for calculating, controlling and reviewing the compensation
• The arrangements for avoiding and repaying any overcompensation

The Framework

The framework presents the principles guiding the standard assessment and also includes provisions for in-depth assessment of cases involving serious distortions to competition and trade. The compatibility test under the Framework can be summarized as checking the existence of an entrustment act and the absence of overcompensation.

The Regulation

The Regulation applies a de minimis regime to aid of less than 500 thousand over any period of three fiscal years.

What is the relevant case law?

A distinction can be made between the utilities and social services. Utilities are network based and social services aim at providing various typed of care to individuals.

Utilities

The modern approach to ex ante regulation of network industries such as energy, tele-communications and transport relies on the notion of essential facilities and the idea that competition should be allowed when it leads to efficient market allocation. National regulatory authorities however are still required to supervise.

In the following case studies three different utility sectors will be examined to determine to what extent the scope for member states to impose an SGEI or PSO is limited by the market liberalization.

Case study: Broadband

The ICT sector is fully liberalized. The sector mainly benefits from state aid for broadband network infrastructure development. The relevant legislation does not mandate that the network provision is a USO (Universal Service Obligation). Member states are not obliged to impose USOs to ensure that a service is provided. If they do decide that USOs must be imposed, then the addressee must be selected in an open, transparent and non-discriminatory manner.

If the market itself does not provide the necessary levels of broadband network investment, member states can intervene. Member states cannot attach specific PSOs to services that are already provided satisfactorily by undertakings operating under normal market conditions.

However, when it can be demonstrated that private investors are not in a position to provide the broadband coverage, a public service compensation may be granted to an undertaking.

For the calculation of the SGEI compensation, the Altmark package applies. Any compensation granted should only cover the costs of putting infrastructure in the white spots (not where there already is infrastructure), taking into account the relevant revenue and reasonable profit.

Case study: Post

Postal services have been liberalized. This has highlighted a variety of issues. State aid to cover legacy costs is for example unlikely to be part of the USO and therefore has to be assessed under art. 107 (2). A network of post offices still need to be in place, the provision about a territorial presence mission does not fall within the definition of a USO, but it may qualify as an SGEI.

First in the Belgian Bpost case the Commission said there was no mission in Belgian Law requiring Bpost to operate a larger network than imposed by the USO.

In the UK POL cases, the Commission granted the POL public assistance in the form of a network SGEI subsidy for the funding of post offices. The Commission stated that the fourth Altmark criterium wasn't met and therefore the case should be assessed under the Framework. It concluded that the aid is compatible with EU rules because it does not overcompensate the net costs and does not give POL an unfair advantage.

Case study: Energy: regulated tariffs as SGEIs

Directives recognize that member states may continue to impose PSOs on energy companies.

In the Federutility case the Court confirmed that, irrespective of harmonization, member states are entitled to define the scope of their public service obligations. The measures, however, should be proportionate, it could only be temporary and it has to be reviewed at regular intervals.

Even after the adoption of a series of harmonizing measures, member states could still take into account their own national policy interests when imposing a PSO.

Social services

Three types of social services can be distinguished: social security, health care and education. A separate list of criteria is given for each of these categories as to whether they should be regarded as:

• Non-economic, not provided by an undertaking and therefore not caught by state aid rules
• Economic, provided by an undertaking and therefore potentially an SGEI.

Social security

To determine whether a social service is economic, there are two sets of criteria:

1. The fist step focuses on its characteristics. It is asked whether the service is compulsory, whether it pursues an exclusively social purpose, whether it is non-profit and whether the benefits are independent of the contributions made.
2. The second step focuses on the characteristics of the economic schemes. It sets out characteristics that are incompatible with a solidarity-based form of social security: optional membership; dependency of entitlements on contributions paid or the financial results of the scheme; for-profit status etc.

Health care

National health services (NHS) or Beveridge systems are publicly provided, tac funded and free at point of use. Bismarck systems are insurance-based. Health-care insurers are subject to the State aid rules, but NHS type purchasers are not.

Education

Public education that is part of the national education system is regarded as non-economic. Educational services that are financed predominantly by the market must be regarded as economic.

Health care

There is no harmonized sectional regime for health care, although there has long been EU regulation of health care goods and establishment.

Case study: Irish risk equalization

Risk equalization is a mutual compensation between health insurers for those among them that carry above average risks due to their make-up. BUPA was a private insurer, the market was dominated by VHI. The risk equalization system was triggered to the advantage of VHI.

The Commission first applied the Altmark criteria and after that it applied the SGEI criteria (entrustment with a PSO, necessity and proportionality).

In relation to the first criterion it did not demand that the service was available to the entire population: open-enrollment was sufficient enough. The second criterion was not contested. The necessity and proportionality were most difficult to establish. The Court accepted that the arrangement was consistent with the third condition. With respect to the fourth condition, the Court stated that because compensation was based on the average costs in the market an incentive towards efficiency would be retained. It is not sufficient to avoid notification for a member state merely to assert that the costs are less than the costs of providing the service.

Thus, in this case, the Court broadened the scope of the Altmark criteria.

Case study: Brussels hospitals and SGEI

The Commission had accepted that the IRIS-H were charged with providing an SGEI. The Commission tested the first and the fourth criterion of the Altmark criteria. It concluded that the efficiency test (fourth criterion) had not been met, because it could not be established that the IRIS-H met the standard of an average well-run undertaking.

Then the SGEI exemption was applied (entrustment, necessity, proportionality). The Court found that the Commission had not sufficiently investigated the act of entrustment of the IRIS-H and in its Decision the Commission was satisfied that cost parameters had been specified in advance, the Court did reject the conclusion that the requirement of clear anterior parameters had been respected, finally the Court rejected the conclusion that overcompensation would be effectively prevented.

Case study: Supplementary insurance for bakery workers

In Prévoyance the Court suggested that the provident society that was charged with the task of managing a supplementary health-care system, was on one hand an undertaking, so the competition rules applied, but it was also entrusted with carrying out an SGEI.

In this case it seems that the Court states that the mere existence of obligations imposed upon a managing body suffices to assume this body is engaged in providing an SGEI.

What can be concluded?

If a public service is provided by undertakings, then competition and State aid rules usually apply. Public tasks must be clearly defined and any restrictions on competition must be necessary and the costs may not exceed the public benefits achieved.

Services in EU law are defined in art. 57 TFEU, however public services are not defined. Opinions on what a public service is differ per member state. They are understood as services that supply some public good, thus a good of which the consumption is in the general interest. When the State does not perform the public service itself, it usually defines the characteristics of the service.

EU law does recognize the concept of SGEIs (Services of General Economic Interest) in art. 14 and art. 106 TFEU. SGEIs are a subcategory of Services of General Interest (SGIs). SGEIs are economic in nature. Qualifying as an SGEI requires that the services involved are provided by undertakings in markets.

SGEIs could be provided by the state itself as well, but when the state decides that the public service should be provided by a private operator, it can grant this operator special rights. They could for example give an operator the monopoly right to do something.

How was the EMU established? - Chapter 19

What is the EMU?

The EMU is one of the most important aspects of EU integration. It envisages a single monetary policy, conducted by a single monetary authority, a single currency and coordination of national economic policies.

What is the history of the EMU?

The EMU was part of the project of European integration back in the 70s. The formal origins were set in the Treaty on European Union (1991). In this the European Community was granted the competence to establish an economic and monetary policy. The Euro was introduced in 1999. The banknotes and coins were introduced in 2002.

What is the Stability and Growth pact?

The limits on national fiscal policies were initially laid down in the Treaties as well as the Stability and Growth Pact. Member states agreed to keep their annual deficit below a certain percentage of their Gross Domestic Product (GDP). This was called the 'preventive arm' of the Pact. The Council could also penalize a member state that didn't obey the rules: the 'corrective arm' of the Pact. The corrective arm however lacked effectiveness. Therefore the Pact was reformed in 2005.

Apart from this Pact, the member states also had (and still have) to follow the Board Guidelines on Economic Policy, that the Council issues every three years.

What was the Euro crisis en how does it relate to EMU?

In 2007 the financial crisis erupted. The crisis cast doubt on the viability of integration as the EMU, as well as on the future of the EU as a whole.

In the crisis, markets started to doubt the ability of Ireland, Portugal and Greece to repay the debts they had. They all got loans from the International Monetary Fund as financial assistance. It did help Ireland and Portugal, but Greece had bigger problems. Greece had a greater debt than everyone knew. Because of the mistrust, borrowing money got more expensive and other countries saw their economy threatened.

The imbalance between EU monetary policy and national fiscal policies, was relevant to the crisis:

• Different national economic policies fostered competitive asymmetries between the members of the eurozone. These asymmetries put certain members in a more vulnerable positions.
• The monetary union meant that some members were able to borrow money from the markets more cheaply than they should have been able to. This created an incentive for borrowing money.
• Individual countries weren't able to use the tools of monetary policy: they were not able to produce more money or to devalue their currency
• The perception that some euro countries may default affected the value of the common currency and thus all members.
• Independent fiscal policies meant that the better-off members were reticent to bail out members in risk.

Case study: Dealing with the Euro Crisis

Countries X, Y, Z are members of the eurozone. Country X is in trouble and decides to bail out its banks. Now Country X has a large debt. Country Y also faces problem of liquidity, but now it is more difficult to borrow money in the markets because of the financial crisis. When the struggles become public nobody will want to buy Country Y's bonds. To make up for the risk, country Y has to offer an ever-increasing interest rate.

All members now decide to bail out countries X and Y, but the residents of the other countries are not happy that they are paying for the debt of countries who chose to spend too much for example country Z.

The bailouts take place and Countries X and Y have to comply with strict conditions. The citizens of these countries will find these conditions unfair.

To keep this from happening, the EMU needs to change.

1. The troubles of Country X could have been avoided if the banks had been better regulated.
2. No member should get into a situation as ba as the situation of Country Y. This could have been avoided by proper enforcement of the Stability and Growth Pact.

Therefore right now measures are designed to improve surveillance.

How was the crisis addressed?

The EU response had many aspects. A quick intervention was necessary at first to stabilize the situation of euro countries. Loan facilities were created and the European Central Bank helped. Then several measures were adopted to improve budgetary surveillance and economic coordination. Lastly, the EU has undertaken important reforms aimed to create a stronger financial framework and a 'banking union'.

Stabilization: The ECB and bailouts

The assistance in the crisis came from the European Central Bank and from loan facilities created for the purpose of assistance.

The evolving role of the ECB

According to the Treaties the ECB cannot provide liquidity directly to the EU of member state. The main task of the ECB was maintaining price stability. The ECB had to adjust this role in the crisis: it intervened in the markets to assist euro countries, it bought their bonds directly (this is prohibited in the Treaty). The role of the ECB continues to evolve and expand.

The bailouts

In 2010 mechanisms were created to provide financial support to struggling economies in the eurozone. The European Financial Stability Mechanism (EFSM) and the European Financial Stability Fund (EFSF) provided funds as well as the International Monetary Fund (IMF). These solutions were only temporary,

In 2011 member states created the European Stability Mechanism (ESM), which may grant financial assistance to countries under stringent conditions. It has an intergovernmental nature.

Case study: The Pringle decision

Mr Pringle challenged the legality of the ESM Treaty, because it was contrary to several provisions of the EU Treaties. The Court however confirmed the legality of the ESM Treaty.

The Court stated that the ESM would not subvert the EU's coordinating competence in economic policy. It's more a financial mechanism, not a mechanism for coordination.

As to whether it contradicts the no-bailout clause, the Court ruled that it didn't. The goals of the clause are to encourage prudent budgetary policy and to safeguard the financial stability of the eurozone. This doesn't preclude a mechanism as the ESM as long as it is only activated to safeguard the financial stability.

Budgetary and economic coordination measures.

EU legislation: the Six-Pack and the Two-Pack

The Commission is supposed to ensure that member states comply with the Stability and Growth Pact.

The first measure adopted is the Six-Pack: The measures create an annual cycle of policy coordination (the European Semester) and a procedure for the prevention of macroeconomic imbalances.

After that the Two-Pack measure was adopted: it contained two regulations: the first creates a surveillance mechanism of draft budgetary plans: euro countries have to introduce a common budgetary timeline and create independent fiscal bodies that monitor compliance. The second regulation creates a system of surveillance for euro countries that face financial difficulties.

The Euro Plus Pact

In 2001 the Euro Plus Pact was established. It focuses on competitiveness, public finance, employment and financial stability.

The Treaty on Stability, Coordination and Governance

In 2011 the European Council agreed that a new Treaty had to be established. This Treaty would be purely intergovernmental adopted outside the EU framework. The Treaty on Stability, Coordination and Governance (TSCG). One part deals with budgetary discipline, the other with economic convergence and cooperation.

The Treaty sets out balance rules on fiscal stance with regard to budgetary discipline. With regard to economic convergence and cooperation, member states have to take the necessary actions in all areas which are essential to the proper functioning of the euro area.

Financial regulation and banking union

The natural response to the crisis would be to seek better regulation of the financial markets. Therefore a new European System of Financial Supervision was established and other supervisory bodies.

The intention is to create a banking union. There are two main pillars

1. A Single Supervisory Mechanism (SSM)
2. A Single Resolution Mechanism (SRM)

What is the future of EMU?

An obstacle against an EU fiscal policy is democratic legitimacy. Another obstacle is the threat to the member states' identity as states.

What can be concluded?

EMU has evolved over the years due to the crisis. There are three approaches to avoid another crisis:

1. Stabilization trough the role of the ECB and the creation of bailout mechanisms
2. The creations of further budgetary and economic coordination measures
3. Further financial regulation for the whole of the EU

The EMU is one of the most important aspects of EU integration. It envisages a single monetary policy, conducted by a single monetary authority, a single currency and coordination of national economic policies.

The EMU was part of the project of European integration back in the 70s. The formal origins were set in the Treaty on European Union (1991). In this the European Community was granted the competence to establish an economic and monetary policy. The Euro was introduced in 1999. The banknotes and coins were introduced in 2002.

What are the EU's laws on labour and equality? - Chapter 20

What do labour and equality laws entail?

Labour law regulates the employment relationship and employment rights, but it also regulates the labour market in general. Equality law is a central part of labour law, but it now extends beyond labour as well.

What is the legal framework and the evolution of labour and equality law?

The evolution and Treaty developments

Most of the social policy regulation refers to EU labour and equality law. There is however, still a great variety between the legislation of member states.

There are different traditional systems. In the Romano-Germanic system the state plays a central role in industrial relation. An emphasis is put om constitutional and statutory regulation of employment rights. The Anglo-Irish system provides a limited role for the state. The Nordic system builds on voluntarism and statutory non-intervention.

EU law on labour and equality aims for partial harmonization od the different industrial relation systems. EU labour law emphasizes and regulates issues of a cross-border nature.

EU labour and equality law is an area of shared competence, therefore the principles of subsidiarity and proportionality are important.

Law-making and legal sources in EU labour and equality law

The main body of EU labour and equality law exists of directives. The Treaty of Amsterdam incorporated the European Social dialogue: Before submitting proposals in the social policy field, the Commission must consult the European social partners. This takes place at cross-industry levels as well as sectoral levels.

What are the EU's labour laws about?

Transfers of undertakings

The Restructuring Directives (The Transfer of Undertakings Directive, the Collective Redundancies Directive, the Employer Insolvency Directive) were adopted to address social consequences of restructuring and economic change and they aimed to increase the protection of employees.

The Transfers of Undertakings Directive aims at safeguarding the rights of employees when a business is transferred. In the case of Rask the Court clarified that the Directive applied to situations in which the owner by contract assigns an owner of another undertaking the responsibility for running a facility for staff, in return for a fee.

The Directive provides that the employment relationship is automatically transferred.

The Employer Insolvency Directive

The Employer Insolvency Directive applies to claims from employment contracts against employers in a state of insolvency.

The Collective Redundancies Directives

The Collective Redundancies Directive contains an obligation to inform and consult workers' representatives. When employers are contemplating collective redundancies (a large number of dismissals with no reason relating to the individual), they must begin consultations with the workers representatives.

European Works Councils and a general framework for information and consultation

In single-channel systems worker participation is channeled through trade unions. In dual-channel systems it is channeled through trade unions and work councils.

In 2002 the Information and Consultation Directive was adopted. The purpose is to establish a framework with minimal requirements for the right to information and consultation of employees.

Freedom to provide services, freedom of establishment and national collective labour law

Freedom to provide services and posting of workers

The Posted Workers Directive 96/71 aims to enable free movement and to provide protection for workers. The focus is on posted workers and their terms and conditions, not on workers in the host State and their protection.

Viking and Laval

In Viking the ferry company Viking wanted to reflag one of its vessels to fall under the Estonian flag, because wages were lower in Estonian law.

In Laval, a Latvian company posted workers on Swedish building sites. The company negotiated with the Swedish Building Workers Union to conclude a collective agreement. However, Laval signed an agreement with a Latvian trade union and no agreement was reached with the Swedish Union. The Swedish Union started collective action in the form of a blockade.

Viking is about the compatibility of the right to take collective action with the freedom of establishment, while Laval addresses questions on the free movement of services.

In both cases the Court declared that the collective action fell within the scope of the Treaty and that art. 56 and 49 TFEU could be invoked against trade unions.

In Laval the Court concluded that the collective action did constitute a restriction on the free movement of services. The right to collective action for the protection of workers could constitute an overriding reason of public interest, but it wasn't.

In Viking the Court found that the collective action did constitute a restriction on the freedom of establishment. The national court had to rule itself on the proportionality and justification.

Flexible work and working conditions

Part-time, fixed-term and temporary agency work

Flexicurity combines flexibility for employers and security for employees. It is about deregulation of employment protection and equal treatment of flexible employment. It is formed by the Part-Time Work Directive, the Fixed-Term Work Directive and the Temporary Agency Work Directive. The purpose of the Part-Time Work Directive is to remove discrimination against part-time workers. The purpose of the Temporary Agency Work Directive is ensuring protection of temporary agency workers. The Fixed-Term Work Directive its purpose is to improve the quality of fixed-term work by ensuring the application of non-discrimination.

Working time and health and safety

In the area of health and safety Product Directives (directives related to the harmonization of regulation of member states in the area of free movement of goods and the control of goods to ensure that they're safe) and Workplace Directives (Directives related to health and safety and the working environment in the workplace) are relevant.

In addition to these directives, the EU has adopted the Working Time Directive: this directive aims to lay down minimum health and safety requirements for the organization of working time (breaks/ maximum weekly working time etc.). This directive is controversial.

EU and national labour law in times of economic crisis

The crisis had implications for European labour markets. Focus was put on deregulatory labour law reforms in many member states to get the economy back on its feet.

What are the EU's equality laws about?

First equality law only contained protection against discrimination on grounds of nationality and gender. Through the Treaty of Amsterdam (1999) the scope of combating discrimination was broadened to sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation.

Several Directives have been established. These are generally based on a human rights model. First only formal equality was recognized (people should be treated the same), but EU law now recognizes substantive equality (equality as outcome) as well.

Gender equality

The provision on equal pay (art. 157 TFEU) is the starting point for equality law. It is horizontally and vertically directly effective.

Direct discrimination cannot be justified, there are however some exemptions from the equal treatment principle, for example provisions for the protection of women and as regards employment where 'by reason of the nature of the particular occupational activities concerned or the context in which they are carried out such a characteristic constitutes a genuine and determining occupational requirement' (the GOR test).

The reversed burden of proof

The burden of proof is on the respondent and not the accuser.

Pregnancy, maternity and parental leave

In Dekker the Court clarified that discrimination on the grounds of pregnancy constitutes direct discrimination, because pregnancy is intrinsically linked to the female sex.

The EU law does not provide much protection when it comes to parenthood, these issues have been left to the member states to regulate.

Equality beyond the workplace

There is an Equal Treatment in Social Security Directive, which aims at the implementation of equal treatment in matters of social security and social protection. There's also a Directive on Gender Equality in Goods and Services, the scope herein is extended to the access and supply of goods and services.

Comprehensive equality and protection against discrimination on other grounds

Racial or ethnic origin

The Race Directive 2000/43 combats discrimination on grounds of racial origin. Art. 2 states that direct discrimination requires one person to have been treated less favorably. In Firma Feryn the Court however found that if an employer would not recruit employees of a certain origin still constituted direct discrimination, even though there was no real victim.

Other grounds

The Employment Equality Directive lays down a framework for combating discrimination on grounds of religion of belief, disability, age, sexual orientation etc.

Age

Discrimination on grounds of age can be justified. Member states may provide that differences of treatment on grounds of age are not discrimination, if they are objectively and reasonably justified by a legitimate aim.

What can be concluded?

There's been an increasing constitutionalization of EU labour and equality law.

Most of the social policy regulation refers to EU labour and equality law. There is however, still a great variety between the legislation of member states.

There are different traditional systems. In the Romano-Germanic system the state plays a central role in industrial relation. An emphasis is put om constitutional and statutory regulation of employment rights. The Anglo-Irish system provides a limited role for the state. The Nordic system builds on voluntarism and statutory non-intervention.

EU law on labour and equality aims for partial harmonization od the different industrial relation systems. EU labour law emphasizes and regulates issues of a cross-border nature.

EU labour and equality law is an area of shared competence, therefore the principles of subsidiarity and proportionality are important.

What are the EU's health laws? - Chapter 21

How has EU health law been established?

Eu health law has been developed through litigation, Treaty reform and EU legislation.

What does patient mobility entail?

Patient mobility is ensured by EU legislation covering migrant workers; Treaty law on free movement of services; and EU legislation on patients right.

Migrant workers

The EU's legislature adopted legislation which requires the coordination of the separate national social security systems and health care systems.

Regulation 883/2004/EC supports migrant workers in the event of them needing to rely on the social security or national health care system of the host state. It covers:

• Emergency medical treatment
• Authorized medial treatment
• Exceptional medical treatment

Member states do keep control over their national health systems.

Freedom to receive health care services

Art. 56 TFEU is about the freedom of services. The Court has stated that this also is about recipients of services. Private medical services fall within the scope of this article.

In the Kohll case the Court held that 'the special nature of certain services does not remove them from the fundamental principle of freedom of movement'.

Case study: Mrs Watts hip replacement

Mrs Watts needed a new hip, but she had to be on the waiting list in England for a year to get it. She decided to have surgery in France and asked the English care trust (PCT) for reimbursement of the cost. The Court held that the Kohll ruling applied to the English NHS, it was not acceptable that the authorization was based on a system that didn't pay attention to the individual concerned. An individual objective assessment of the medical situation was required at the time the authorization was sought.

The Patients Rights Directive

The scope of the Directive extends to only health care. It articulates the general principle that the home member state must reimburse the costs of patients receiving cross-border health care. There are however three important exceptions:

• The basket of care provision
• Regulation 883/2004/EC
• Directive 2011/24/EU art. 8 and art. 9

The first one means the member state controls the 'basket' of health entitlements. There is no independent right of a patient to receive any health care they might wish to receive if that treatment is not available at home. Secondly, Regulation 883/2004/EC requires national authorities to consider whether a treatment method corresponds to benefits provided for by the legislation of the home member state. Third, art. 9 and art. 9 of Directive 2011/24/EU permit member states to provide a system of prior authorization for the reimbursement of the costs of cross-border health care.

How does EU law apply to health care professionals?

The sectoral approach

In the 70s some directives aimed to promote free movement by enabling the automatic recognition in all member states of a license to practice a profession (e.g. doctor, nurse) in one member state. Each sector was covered by two directives: one defining the level of minimum educational requirements and the other listing all diplomas which satisfy these requirements.

In practice however, non-national health professionals weren't trusted. The sectoral system only worked with professions of which a general consensus existed that a diploma meant the same.

The general approach

In the 80s the EU moved to a system of general directives on mutual recognitions. In this system, member states are required to consider, case by case, whether a qualification is equivalent to its own qualification.

Concerns about EU law

There have been several problems with EU law on health professionals:

• Insufficient provision for continuous professional development
• lack of transparency on professional misconduct
• Regime shopping
• They do not concern quality o care

The EU law seeks to promote the free movement of service providers and freedom of establishment, the relevant EU directives do not grant individual rights to patients and thus could not be enforced by a patient who received sub-standard care from a professional moving between member states.

How does EU law apply to health care institutions?

Freedom of establishment

EU law on freedom of establishment and freedom to provide services applies to health care institutions where they provide services for remuneration. Policy should be justified by a public interest and the proportionality test should be met. The proportionality test is very flexible, therefore the Court can distinguish between the institutions that are closely associated with a national health care system and those that are not.

Competition law

The ways in which EU competition law applies to health care institutions can be seen in BetterCare and Ambulanz Glöckner.

BetterCare

In this case an Irish local authority had bought nursing services in BetterCare's residential homes, the authority itself provided such nursing as well. BetterCare stated that the contract had way too low prices and thus was abuse of a dominant position. The Court agreed

Ambulanz Glöckner

The Ambulanz Glockner case was about emergency and non-emergency ambulance services. The public authorities of a German Land had trusted two organizations to provide the public ambulance service. Other organizations that wanted to join the field, now couldn't join anymore.

The Court held that the medical aid organizations were undertakings and there was an abuse of a dominant position, because the land had to consult with the medical aid organizations before granting licenses.

Assessment

When a member states has a health care system on a social solidarity flooring, healthcare institutions will not be covered by EU law. If the state however acts as an economic operator, then EU law will apply.

EU competition law has also been applied to social insurance bodies.

What EU law does apply to medical devices and pharmaceuticals?

The EU has used competition and free movement law to seek open market in medical devices and pharmaceuticals and enhance the global competitiveness of the European pharmaceuticals, while at the same time protecting patients

The medical devices legislation entails product safety certification. This is determined by certification bodies.

Pharmaceuticals must have an advance marketing authorization before being sold anywhere in the EU. For example by the EU's European Medicines Agency (EMA).

How does EU law regulate blood, organs and human tissue?

The EU regulates blood, organs and human tissue by requiring member states to set up institutions and through intellectual property law.

Patient safety

In the 90s the EU adopted soft law concerning blood safety. It set out non-binding principles for blood donation. Now art. 168 (4) TFEU gives the EU competence to adopt measures setting high standards of quality and safety of organs and substances of human origin, blood or blood derivatives.

Intellectual property

Directive 98/44/EC requires member states to recognize biotechnology patients, including for products or processes that contain human material.

What EU law applies to public health?

The internal market has important effects on public health, for example when it comes to cigarettes, alcohol etc.

What is the global context?

In the Treaty of Lisbon it was stated that the Union and the member states shall foster cooperation with third countries and the competent international organizations in the sphere of public health.

In 2003 the EU signed the World Health Organization (WHO) Framework Convention on Tobacco Control

Health through the common commercial policy

The EU's common commercial policy and its development cooperation policy form a central platform for those aspects of its external health law that are more developed.

Health through development cooperation

The EU's development cooperation policy affects health in several ways, through the EU's contribution to the Sustainable Development Goals; through infrastructure and capacity building; and through specific project based wok.

An important element of the EU's development policy concerns the access to essential medicines, which are the medicines needed for the priority health. The idea is that these medicines should be available for a price affordable to all individuals.

What can be concluded?

EU health law issues illustrate many of the key tensions between EU law in general.

The EU has used competition and free movement law to seek open market in medical devices and pharmaceuticals and enhance the global competitiveness of the European pharmaceuticals, while at the same time protecting patients

The medical devices legislation entails product safety certification. This is determined by certification bodies.

Pharmaceuticals must have an advance marketing authorization before being sold anywhere in the EU. For example by the EU's European Medicines Agency (EMA).

What does the EU's environmental law entail? - Chapter 22

Wat is the aim of the EU's environmental law?

Recently the EU's environmental law has attempted to protect the environment, while at the same time encouraging economic growth. The EU's has developed over 200 secondary legislative instruments concerning environmental law.

What is the legal framework?

The Treaty of Rome did not contain any reference to the environment. At the first global summit on environmental protection in 1972 the urgent need for environmental protection was recognized. In 1985 the Court affirmed that environmental protection now was one of the Community's essential objectives. In the SEA an explicit legal basis for environmental law was created. The Maastricht Treaty elevated environmental protection to be one of the main objectives of the EC. The Treaty of Amsterdam fine-tuned the inclusion of environmental protection. The Lisbon Treaty singled out climate change as one of the global environmental issues in which the EU is expected to play a significant role. An emphasis was placed on the international dimension of the EU environmental policy.

Objectives of EU environmental policy

The objectives are generally:

• Preserving, protecting and improving the quality of the environment
• Protecting human health
• Ensuring the prudent and rational utilization of natural resources
• Promoting measures at international level

Competence and scope

The EU will only take action if the objectives of the environmental action cannot be achieved by the member states or if these can better be achieved at Union level.

Environmental competence is exercised under the decision-making procedures set out by the Treaty: it is subject to agreement between the Council and the European Parliament.

In some areas the Treaty requires unanimous decision-making:

• Provisions of a fiscal nature
• Measures affecting town and country planning and quantitative management of water resources
• Measures significantly affection a member states' choice between energy sources

Principles of EU environmental policy

The Treaties define principles that should guide environmental policy.

• A high level of environmental protection.
• The precautionary principle
• The principles that preventive action should be taken
• That environmental damage should as a priority be rectified at source
• The polluter should pay

There is, however, a significant margin of discretion in implementing the principles.

The principles

The principle of a high level of environmental protection prevents the EU from adopting the lowest common denominator among the member states' environmental protection measures. It doesn't necessarily call for the highest standard that is possible.

The precautionary principle provides guidance in situations of scientific uncertainty. It's a risk-managing tool.

The prevention principle calls for taking action at an early stage. Preventing damage and not repairing it.

The rectification at source principle means that the damage should as a priority be rectified at its source.

The polluter pays principle means that the costs of the measure should be borne by those causing the pollution.

Environmental integration

The principle of environmental integration acts as a mechanism for the operationalization of sustainable developments. It aims to prevent environmental protection from being undermined by developments in other fields. It does not assign priority to environmental concerns, it just obliges the Union to reach a balance with the other objectives.

Sustainable development

The principle of sustainable development aims to balance between the three pillars: environmental, social and economic development.

What are the EU laws on nature protection

The EU's laws on nature protection are mainly focused on traditional conservation measures. There are two main directives in nature protection law: the Wild Birds Directive and the Habitats Directive

The Wild Birds Directive

The Wild Birds Directive aims to protect the species of wild birds, it aimed to implement relevant international obligations. It includes provisions on the protections of habitats of wild birds and it designates Special Protection Areas.

The Habitats Directive

The Habitats Directive has a broader scope than the Wild Birds Directive: it aims to protect fauna and flora and Natura 2000: it aims to maintain and restore the natural habitats of species in the European territory. It offers a compromise between nature protection and protection of economic interests.

Case study: Sustainable development in the implementation of the Habitats Directive

In the First Corporate Shipping case a landowner was against the designation of an area as a Special Area of Conservation under the Habitats Directive. The Court ruled out the consideration of economic and social issues at the initial stage of designation of protected areas. The Court did not rule out the consideration of these concerns at later stages of the selection process.

The practice of the European Commission of the conservation regimes of priority sites is weak. The Commission has generally approved development projects in Natura 2000 sites on the basis of low standards and unconvincing reasoning from the member states. The Commission is lenient as well in assessing the adequacy of compensation from member states to offset the negative impacts.

What are the EU's laws on water?

The main directive on water is the 2000 Water Framework Directive (WFD), which ensures the implementation of international agreements on the protection of fresh water and marine water.

The Water Framework

The WFD attempts to regulate water management by taking into account the ecological reality of fresh water, it focuses on the 'river basin'. The member states have discretion, but there are procedural requirements to make sure that this discretion is used wisely.

The Common implementation strategy

There are various actors in the implementation of the WFD. Another dimension of multi-level water governance is through the implementation of the WFD in the context of the Common Implementation Strategy (CIS). The CIS aimed to facilitate information-sharing and capacity building among member states. The CIS contributes to bring regulation of water management in situations where certain information doesn't exist yet.

Case study: Implementation of EU water regulation and sustainable development

Greek authorities have been trying to divert the river Acheloos. The Greek Council had repeatedly annulled on environmental protection grounds. The Court held that the WFD must be interpreted as meaning that

• A water diversion must not jeopardize the realization of the WFD objectives
• To the extent that water diversion is liable to have such effects, consent may to be given if the conditions in the WFD are satisfied
• Even if it is impossible for the receiving river basin to meet from its own water resources its needs (drinking water, electricity production, irrigation), it is not an essential condition for a water diversion to be compatible with the WFD

What are the EU's laws on climate change

Climate change is explicitly mentioned in the Lisbon Treaty.

An overview of the 2009 Climate and Energy Package

The 2009 Climate and Energy Package is a set of legal acts aimed at responding to European and global climate change. The sustainable development package is significant: the law offers opportunities to explore the use of economic instruments to support protection of the environment

Components of the package

The package contains a Directive revising the EU Emission Trading System (ETS), this is a market-based mechanism capping greenhouse gas emissions. The ETS Directive is complemented by the Effort Sharing Decision, which sets binding emission targets for the member states. The package also includes the Renewable Energy Directive, which aims to increase the share of renewable energy. There's also a Passenger Car Regulation, which aims to reduce greenhouse gas emissions from transport.

Case study: Influencing environmental multilateralism through EU climate regulation

The EU's attempts to try to influence ongoing multilateral environmental processes have been challenged by third countries.

In 2012 the EU tried to include aviation activities in the ETS. All airlines, including airlines from third countries, had to participate in the ETS when flying through European airports. US and Canadian airlines didn't approve of this. The Court concluded that the Directive did not violate international law. The EU was allowed to comply with the international climate change obligations.

The ruling did not stop the third countries. A coalition of Brazil, China, India, Russia, South Africa and the US opposed. Therefore the European Commission stopped the implementation for one year.

What can be concluded?

EU environmental law aims to fulfill the international obligations. The EU increasingly develops its regulation to anticipate or influence the making of international environmental law.

The Treaty of Rome did not contain any reference to the environment. At the first global summit on environmental protection in 1972 the urgent need for environmental protection was recognized. In 1985 the Court affirmed that environmental protection now was one of the Community's essential objectives. In the SEA an explicit legal basis for environmental law was created. The Maastricht Treaty elevated environmental protection to be one of the main objectives of the EC. The Treaty of Amsterdam fine-tuned the inclusion of environmental protection. The Lisbon Treaty singled out climate change as one of the global environmental issues in which the EU is expected to play a significant role. An emphasis was placed on the international dimension of the EU environmental policy.

What are the EU's consumer laws? - Chapter 23

What is the EU's consumer law about?

The EU has aimed to remove national rules that claimed to protect consumers, but acted as unjustified barriers to trade. A harmonized approach seems to be the only way to promote the free circulation of goods and services.

The core of the EU's approach is the emphasis on empowering consumers to make the right decisions: there are information duties and thee's the right to withdrawal.

What are the negative impacts on national consumer rules?

EU law removes all national consumer protection rules. The impact can be seen in a lot of cases: for example in Cassis de Dijon or the challenging of the Italian rules dor the ingredients of pasta. Almost all these kinds of rules are removed by EU consumer law.

How does consumer protection relate to the internal market?

Art. 169 provides for a specific consumer protection provision. Not many EU provisions rely on this article as a legal base for consumer protection rules. Most provisions are based on article 114 TFEU which provides for the adoption of measures for the approximation of the provisions laid down by law, regulation of administrative action in member states. This might explain why there's a dominance of the internal market perspective in the consumer policy.

EU Consumer law as a driver for greater cross-border trade

The European Commission is frustrated with the lack of growth in cross-border trade. This can be seen in the attempts to introduce maximum harmonization in the Consumers Rights Directive. The objective of EU consumer law doesn't seem to be to provide minimum rights so that consumers could be confident in buying in the union, it rather focuses on the policy to make EU rules the sole source of consumer protection to give traders the confidence to trade across borders.

Legislative approach

Regulations are the preferred legislative instrument for consumer protection regulation.

What does the information policy entail?

The EU puts a great focus on information provisions. If consumers have more information, they will make better decisions.

Information obligations

The Unfair Commercial Practices Directive contains a clause controlling unfair practices and it has clauses prohibiting misleading and aggressive practices. It also includes a positive obligation for traders to provide information.

Information and behavioral economics

The EU should pay more attention to the lessons of behavioral economics when making rules on information. This research uses psychology to see how consumers behave.

What does the right of withdrawal entail?

Harmonization

The right of withdrawal first appeared in the Doorstep Selling Directive (1985), it has since then been extended to distance selling and to particular contracts where the risks of high-pressure selling are prevalent.

Effective consumer protection?

The right of withdrawal gives consumers encouragement to buy with the confidence that they can return goods that do not meet their expectations. There are some limitation on its effectiveness. Consumer behavior for example shows that consumers can be reluctant to admit that they made a poor choice and they will not withdraw from the contract. Sometimes it can be had as well to determine whether to return in the time allowed to withdraw.

What are the rules establishing consumer expectations?

The right of withdrawal and the right to information build on the freedom of contract model. There are some rules as well that prevent the consumer from losing core rights granted by EU law. Some are specialist consumer rules, such as product safety and product liability.

What does product safety entail?

The EU adopted a General Product Safety Directive in 1992 that set general safety requirements for all consumer products, that applied when there were no specific EU rules.

What does product liability entail?

The Product Liability Directive seeks to compensate those injured by defective products. Liability is based on defectiveness that is found when a product does not provide the safety which a person is entitled to expect.

What does the Unfair Terms Directive entail?

The Unfair Terms in Consumer Directive is restricted to non-individually negotiated terms. It controls terms which are unfair because contrary to the requirement of good faith, they cause an imbalance in the party's rights.

In Mohamed Aziz v Caixa d'Estalvis de Catalunya, Tarragona i Manresa the Court stated that in order to assess whether the imbalance arises, it must be determined if the seller could reasonably assume that the consumer would have agreed to the term concerned in individual contract negotiations.

What does the principle that goods should be in conformity entail?

The principle that goods should be in conformity with the contract means that products should:

• Comply with any description
• Possess the qualities of any sample
• Be fit for any particular purpose known to and accepted by the seller
• Be fit for the purposes goods of the same type are normally used
• Show the normal quality and performance the consumer can expect.

The remedies provided by the Directive include repair, replacement or price reduction.

What are the general comments on substantive rights?

Goods and services

Most of the EU legislation has been focused on goods, only recently the EU started focusing on digital goods as well. In the services field there hasn't been done much. In the Services Directive some consumer protection measures are provided, but there isn't a lot.

General standards

The general standards do not provide concrete answers. Open standards are inevitable, but there's a severe risk on different interpretations of the standards.

Channeling of liability

Sales law traditionally focus on the seller. The General Product Safety Directive places obligations on suppliers and producers. The Product Liability Directive channels liability to the producers, suppliers are only liable when the producer cannot be identified. The Directive does impose liability on some own-branders and importers as well. This might be problematic when the importer is based outside the EU.

Minimum content

In some cases there are minimum rights that cannot be deviated from. The advantage of this is that they form a minimum set of expectations, but the downside is that they can constrain the offerings on the market and impose minimum obligations.

Case study: Air passenger rights

There's a new proposed regulation concerning air passenger rights. It includes a definition of extraordinary circumstances. Regular maintenance and unavailability of crew are not extraordinary. Natural disasters would be extraordinary.

Extent of harmonization

The Court determined that the Product Liability Directive was a maximal harmonization directive.

Cross-border-only rules

It was assumed for a long time that EU consumer rules should apply to domestic situations as well as cross-border situations. However, some laws only apply to cross-border situations

How are the laws enforced?

Enforcement is at the national level. Consumers have a right of private redress for goods that are poor quality.

Methods of enforcement

States should provide 'adequate and effective means of ensuring compliance and penalties should be effective, proportionate and dissuasive'.

The European Commission has put hope on an alternative dispute resolver. A new Directive requires all member states to ensure that alternative dispute resolver procedures are available for all consumer disputes.

What can be concluded?

There are concerns that the consumer protection character of the EU is merely an obsession with maximal harmonization and that it threatens national traditions.

The EU has aimed to remove national rules that claimed to protect consumers, but acted as unjustified barriers to trade. A harmonized approach seems to be the only way to promote the free circulation of goods and services.

The core of the EU's approach is the emphasis on empowering consumers to make the right decisions: there are information duties and thee's the right to withdrawal.

How does the EU organize its relations to the outside world? - Chapter 24

Why is the legal framework complex?

The legal framework is complex because member states want to preserve their competence and control over EU external action, but they also want to enhance the EU's external effectiveness and consistency.

What are the foundations of EU external action?

Search for consistency and effectiveness

The High Representative was introduced by the Lisbon Treaty to ensure consistency of the Union's external action.

The principle of conferral

The Union's competences are governed by the principle of conferral. This means that the Union has to determine whether it has the competence to take action. This means two things:

• The Union itself cannot extend its own competences
• The Union does not have general law-making capacity

The distinction between ordinary EU external action and the CFSP

The member states for a large part have the liberty to decide the manner in which they confer competences and how much power they want the EU to have. Therefore the EU approaches external action from two different angles, based on the two different aspects of international arrangements:

• External socioeconomic relations
• High politics, this falls within the CFSP

The CFSP

The CFSP has an absence of a precise list of what it encompasses. The allocation of competences consists of he general grant of competence in art. 24 (1). Article 21 (2) provides some CFSP objectives.

What are the EU's external competences?

Art. 281 EC explicitly conferred legal personality on the Community. This however was not a legal basis for the adoption of international agreement. It did give the Community the capacity to exercise rights in international transactions.

In the Lisbon Treaty the legal personality is given by art. 47 TEU. Article 216 (1) TFEU affirms the capacity of the Union to conclude international agreements. It states that the Union can conclude an agreement:

• Where the Treaties so provide; or
• Where the conclusion of an agreement is necessary to achieve one of the objectives referred to in the Treaties.

Implied competences

The implied competences have been relief on the most when it comes to external action. The implied external competences has been codified in art. 216 TFEU. It encompasses three principles

ERTA

The ERTA principle entails that the member states are not allowed to act internationally in a way that would affect existing EU law. The member states' competence is thus excluded, which means that the EU has to act.

Complementarity

The complementarity principle entails that the Union may act when it is necessary to achieve one of the objectives referred to in the Treaties.

Legally binding Union acts

The Union can take external action as well where the conclusion of an agreement is provided for in a legally binding Union act (a directive, regulation or decision).

What is the nature of EU external competences?

The fundamentals

The main principles of when the Union is exclusively competent have been laid down in art. 3 TFEU:

• Customs union
• The establishing of competition rules for the internal market
• Monetary policy
• The conservation of marine biological resources
• Common commercial policy

Exclusive external competence on the basis of art. 3 (2) TFEU

ERTA exclusivity

The possibility for an EU external competence to become exclusive through the exercise of an internal competence is called the ERTA doctrine. Determining whether and to what extent the EU has exclusive external competence requires a detailed analysis.

Exclusivity on the basis of a legislative act

If the possibility to conclude an international agreement is provided for in a legally binding Union act, the EU gets competence on the basis of art. 216 (1) TFEU. But if that same possibility is provided for in a legislative act, the Union acquires exclusive competence to conclude that agreement (thus through art. 3 TFEU).

Exclusivity on the basis of necessity for the exercise of internal competence

Art. 3 codifies the case law providing for the possibility of exclusivity to arise out of the fact that internal and external aspects of a policy area can only work effectively together.

Consequences of exclusive competence

when there's an exclusive competence, only the Union may legislate and adopt legally binding acts. The member states can only act when the Union has specifically asked them to implement an act. There are two main consequences:

1. When external competence in an area is exclusive, member states no longer have the right to undertake obligations with third countries.
2. When the external competence is exclusive, member states must not attempt to constrain the Union's exercise of its exclusive competence and must cooperate loyally.

There are three main reasons as to why member state cannot enter these international agreements:

1. Adverse consequences for the member states' international liability is avoided
2. The possibility that the existence of such an international agreement could prejudice the integrity of the coherent system of rules of EU law.
3. The possibility that member states might block the evolution of EU law by concluding international agreements.

Non-exclusive competences

Shared competences

International agreements in shared competences lay down minimal standards. The Union may decide to raise these standards.

Parallel competences leave the Union and the member states competent to act internationally without being able to prevent the other from acting.

The Union can, in some areas, adopt measures to coordinate the member states exercise of their competence.

The CFSP

The CFSP was intended to be a shared competence, however a separate category of CFSP is created in art. 2 (4) TFEU.

How does the decision-making in EU external action work?

The ordinary decision-making method

The ordinary decision-making method is characterized by the central role of the Commission, qualified majority voting in the Council, involvement of the European Parliament and the role of the Court.

With autonomous acts, the legal instruments of the Union are identical in internal and external policies. The role of the European Parliament is smaller with ordinary action in external politics, than with internal Union policies. In ordinary EU external action, if uniform conditions for implementing binding Union acts are required at Union level, those acts confer implementing powers on the Commission.

The CFSP

Preparation and adoption

CSFP measures are in the first place to be implemented by the member states, however where uniform conditions for implementing legally binding CFSP acts are needed, those acts confer implementing powers on the Council (as opposed to the Commission in the ordinary method).

Legal instruments

Art. 25 TEU lists the legal instruments that the EU has to conduct the CFSP.

Decision-making in the Council

Art. 31 states that decisions under the CFSP are to be taken by the European Council and the Council acting unanimously, except when provided otherwise. However, member states can decide to abstain in a vote by making a formal declaration.

The role of the Court

Art. 24 (1) TFEU and 275 TFEU exclude the Court's jurisdiction in the CFSP. There are two exceptions, the Court has jurisdiction:

• to monitor compliance with art. 40 TEU
• to rule on proceedings, brought in accordance with art. 263

The High Representative and the European External Action Service (EEAS)

The High Representative is to form a bridge between the CFSP and the other elements of the EU's external action. Art. 27 (3) provides that the High Representative is to be assisted by the EEAS.The EEAS is adopted as a functionally autonomous body separate from the General Secretariat of the Council and from the Commission with the legal capacity necessary to perform its tasks and attain its objectives.

External representation and international agreements

External representation

EU decision-making and external representation need to be distinguished. Art. 17 TEU provide that with exception of the CFSP, the Commission is to ensure the Union's external representation

International agreements

Art. 218 TFEU introduces one procedure for negotiating and concluding international agreements over the field of Union competences.

Negotiation

If the Council deems a negotiation of a proposed international agreement to be opportune, it adopts a decision authorizing the opening of negotiation and nominating the Union negotiator. The Council can also address directives to the negotiator and designate a committee.

Signature

The signing stage starts with the negotiator making a proposal to that effect. It is up to the Council to decide on the signing.

Conclusion

The Council concludes the agreement through a decision by qualified majority voting (there are some exceptions that require unanimous voting).

Role of the European Parliament

Art. 218 (1) TFEU states that the European Parliament ha to be immediately and fully informed at all stages of the procedure.

Legal instrument

The instruments used to conclude international agreements are often decisions that to not specify to whom they are addressed.

How is the vertical division of EU external competences managed?

The EU manages the horizontal and vertical division of external action competences through a combination of pragmatism and principle.

Mixed agreements

What are mixed agreements?

Mixed agreements are agreements that include among their parties the Union and some of the member states and that fall partly within the competence of the EU and party in the competence of the states.

Why are there mixed agreements?

Most of the time it is an outcome of internal power struggles within the EU. The choice between a mixed agrement or an EU-only agreement is generally a matter for the discretion of the EU legislature.

Concluding mixed agreements

The majority of mixed agreements is negotiated under art. 218 TFEU. A mixed agreement is ratified through the normal art. 218 TFEU procedure. Mixed agreements concluded by the Union are an integral part of the EU legal order.

Sincere cooperation

The principle of sincere cooperation is laid down in art. 4 (3) TEU. It requires member states and the Union to assist each other in carrying out tasks.

Case study: External environmental policy

Environment is listed as a shared competence (art. 4(2) TFEU). Art. 191 (4) lays down an explicit legal basis for EU external action. Measures based on this article leave the member states' competence to act internationally intact, which implies a parallel competence. The Court however, has limited the applicability of this article.

The PFOS case concerned infringement proceedings against Sweden for adding PFOS to Annex A of the Stockholm Convention, the objective of which was to protect human health and the environment from Persistent Organic Pollutants. The Convention is a mixed agreement. A member state can adopt a higher level of measures. Sweden was acting within its own competence, but the principle of sincere cooperation required that it take into account that the Union too is competent.

In the International Whaling Commission case, the competence was that of the environment and therefore it was a shared competence.

In The Mercury Negotiations a decision on whether the Commission was authorized to participate in negotiations was absent. Later it was decided that the Commission was authorized to participate on behalf of the Union on matters that fall within the Union's competence.

How is the horizontal division of EU external competences managed?

Pre-lisbon the third paragraph of article 1 TEU stated that the Union was to be founded on the European Communities, supplemented by the policies and forms of cooperation established by the EU Treaty. Now, post-lisbon, it provides that the Union is to be founded on the EU Treaty and the TFEU.

There is a prohibition of mutual invasion of territory between the Union competences referred to in art. 3 to art. 6 TFEU.

It is up to the Court to decide whether or not a First Pillar measure has encroached upon the CFSP.

What can be concluded?

The Union's external action operates as a multi-level system. This is a very complex system.

The member states for a large part have the liberty to decide the manner in which they confer competences and how much power they want the EU to have. Therefore the EU approaches external action from two different angles, based on the two different aspects of international arrangements:

• External socioeconomic relations
• High politics, this falls within the CFSP

What is the EU's criminal law? - Chapter 25

Why isn't EU criminal law focused on uniform rules?

There's a tension between member states having a practical necessity for certain problems to be dealt with at an EU level and a resistance with this happening. This means that the criminal law in the EU mainly is focused on helping and encouraging that criminal justice systems of the different states work together instead of making uniform rules.

What is EU criminal law?

There are five bodies of law governing five matters:

1. The body of law creating and regulating a group of European Union agencies set up to secure the better functioning of criminal justice within the EU.
2. The body of law made to facilitate cooperation between police forces of the different member states
3. The body of law called mutual recognition: rules requiring to see all the justice systems of all the member states as valid
4. The body of law with a purpose to shape the substantive criminal law of all member states
5. The body of law with the same goal but then concerning criminal procedure.

Why is there EU criminal law?

One of the main reasons for the existence of EU criminal law is to deal with the unwanted consequences of the free movement rules: the free movement of crimes and criminals.

Tensions

There are several factors that make the EU law a sensitive issue for member states:

1. The feeling that criminal justice is by its nature a measure for the nation-state alone.
2. The diversity between legal traditions of the different member states
3. There's a belief that the inquisitorial basis of criminal justice in continental Europe is unfair and that this would grow when EU criminal law is spread further

Evolution and sources

In 1985 the Schengen Convention was signed. Enhanced criminal operation and police cooperation came to life. The Maastricht Treaty (1992) gave the EU a range of legislative powers in the area of justice and home affairs under arrangements called the Third Pillar. Under these two arrangements, the legal instruments for EU criminal law were made.

The main powers of the EU to legislate are contained in articles 82 to 89 of the TFEU. Art. 82 is about criminal procedure. The EU may lay down rules and procedures for ensuring recognition throughout the Union. The EU is allowed to adopt directives to establish minimum rules as well. Art. 83 provides that the European Parliament and the Council can enact directives establishing minimum rules for defining criminal offenses and sanctions. Art. 87 to 89 confer competences in relation to police cooperation.

The measures which the EU is allowed to adopt to exercise the competences, are the ones set out in 288 TFEU: regulations, directives, decisions, recommendations and opinions.

What are the organs?

OLAF

OLAF is the European Anti-Fraud Office. It conducts administrative investigations for the purpose of fighting fraud, corruption and any other illegal activities. It is equipped with wide inquisitorial powers.

Europol

Europol is the European Police Office. It supports and strengthens action by the competent authorities of the member states and their mutual cooperation.

Eurojust

Eurojust does what Europol does for the police for the prosecutors.

The European Public prosecutor

The European Public Prosecutor does not exist yet, but it is in the course of being created.

How do the law enforcement agencies cooperate?

There are three main types of instruments designed to improve cooperation between national police forces, custom officials and other law enforcers.

1. The creation of databases for the exchange of information.
2. Schemes that give the law enforcement agencies of member states the right to request information from those of other member states.
3. Instruments that provide a legal basis for cross-border operations.

How are mutual legal assistance and mutual recognition established?

What is mutual recognition?

Mutual recognition is the arrangement whereby the decisions and rulings of the courts from one legal systems are accepted by those of another legal system. There are various mutual recognition instruments, but the European Arrest Warrant (EAW) has had the greatest impact.

The EAW: its origins and its main features

The transfer of suspects and convicted people between member states is now a purely legal matter. The procedure is based on the production by the requesting state.

Criticisms of the EAW

There are two serious criticisms on the working of the EAW:

1. Its excessive scope enables it to be used in trivial cases.
2. The fact that it sometimes returns suspects to countries where they then spend excessive periods in prison before their trial starts.

Case study: Andrew Symeou

Andrew Symeou was accused of homicide in Greece, while living in the UK. The evidence against him consisted merely of false statements. However, the truth or falsity of the evidence was a matter for the Greek Court to determined. So, Symeou was sent to Greece and he had to wait in prison for two years awaiting trial. In the trial, the Court acquitted him. This case lead to great criticism on the EAW.

What are the worries with harmonization of substantive criminal law?

When it comes to harmonization of substantive criminal law, there are worries that these instruments impose unreasonable burdens of criminalization on the member states.

What about harmonization of the criminal procedure?

The EU has adopted harmonization of criminal procedures in two different ways:

1. Legislation which requires the criminal courts of member states to take account in current criminal proceedings of stept taken by the criminal justice systems of other member states.
2. Legislation designed to ensure minimum standards of decent treatment for those caught up in criminal proceedings

There are three passive mutual recognition measures:

1. A group of articles in the CISA designed to ensure that the ne bis in idem principle is applied
2. The Framework Decision, that requires member states to give the same weight and effect to previous convictions imposed by the Courts of other countries.
3. Article 26(1) of the Framework Decision: this provides that when sentencing the person it has recovered by using an EAW, the state must deduct any period the person spend in prison while the EAW was being executed from the sentence.

What can be concluded?

As long as free movement prevails within the EU, a body of EU criminal law will be needed to deal with the consequences of these rights.

There are five bodies of law governing five matters:

1. The body of law creating and regulating a group of European Union agencies set up to secure the better functioning of criminal justice within the EU.
2. The body of law made to facilitate cooperation between police forces of the different member states
3. The body of law called mutual recognition: rules requiring to see all the justice systems of all the member states as valid
4. The body of law with a purpose to shape the substantive criminal law of all member states
5. The body of law with the same goal but then concerning criminal procedure.

How does the EU deal with immigration and asylum issues? - Chapter 26

What are the main issues for the EU?

The EU has to manage two conflicts: the balance between EU competence in the field of immigration and asylum and national sovereignty, and the balance between immigration control and the protection of human rights.

What is the legal framework?

Prior to the Treaty of Amsterdam

Initially the legal framework was an informal intergovernmental system. Member states either agreed Conventions among themselves or adopted non-binding acts such as regulations or recommendations. With the entry into force of the TEU, it became a formal intergovernmental system, which set out framework for the adoption of measures by the Council.

The Treaty of Amsterdam

The Treaty of Amsterdam applied the usual 'Community method' to the adoption of immigration and asylum measures. Ireland and the UK opted out of most proposals concerning asylum and migration. The Treaty integrated the Schengen Convention into the EU legal order.

The Treaty of Lisbon

The Treaty of Lisbon completed the process of applying the usual Community method. The co-decision process (inc. QMV) has been applied to the issue of legal migration ever since.

What about visas?

Overview/legal framework

The EU has been more active in visas and border controls since the integration of the Schengen agreement. The elements of which are: the abolition of internal border controls, the strengthening of external borders, freedom to travel between the Schengen states etc.

Border controls

The application of the borders code is complemented by the Schengen Information System. It provides for a system of issuing alerts for refusal of entry of third-country nationals who should be refused entry in the Schengen area.

Visa policy

In 2001 the Council adopted a Regulation which completely harmonized the lists of the countries whose nationals did require a visa to cross external borders. The criteria to waive a visa requirement are usually political and take foreign policy consideration into account. The visa application system is now bolstered by the VIS, which has been rolled out worldwide. The EU's visa regime is becoming more liberal.

How is irregular migration regulated?

Irregular migration (illegal migration) covers a wide variety of situations. Some irregular migrants may have the intention of threatening the national securities of member states, but the majority is seeking a better life.

Art. 67 (2) TFEU provides that the EU 'shall frame a common policy on asylum, immigration and external border control, based on solidarity between member states, which is fair towards third-country nationals. Art. 79 (1) only requires the EU to be fair toward legally resident third-country nationals. (2) of the same article sets out the powers to regulate migration for the purposes set out in art. 79 (1).

Adopted legislation

The EU has adopted measures concerning:

• The prevention of irregular migration
• The treatment of irregular migrants on the territory
• The expulsion of irregular migrants from the territory

The first category applies in addition to the visa and border control measures. The second category comprises rules sanctioning the employers of irregular migrants. The third category includes the Returns Directive which regulates the procedure for expelling irregular migrants.

Case study: Detention of irregular migrants

Art. 5 of the European Convention on Human Rights permits states to detain a migrant after a 'lawful arrest or detention'. Detention can be justified as long as expulsion proceedings are being pursued with due diligence. There is no need to show the necessity of the detention.

The Returns Directive addresses the detention issues. Persons subject to return may only be detained in order to prepare the removal process, in particular when there is a risk of absconding. Removal arrangements must be executed with due diligence. The Directive also regulates detention conditions. There must be special facilities and separation from ordinary prisoners.

The Court has interpreted these rules in the Kadzoev judgement it ruled that the relevant time limits for detention must take into account time served as a detainee before the application of the Directive. Member states could not keep a person in detention once the relevant time limit had expired.

In the El Dridi judgment, the Court ruled that an irregular migrant only could be detained where in the light of an assessment of each specific situation, the enforcement of the return decision in the form of removal risks being compromised by the conduct of the person concerned.The returns process is subject to a principle of gradation, first the person must be allowed the most liberty and ends with the least liberty.

The EU law has harmonized the issue of immigration detention fairly extensively. Detention of irregular migrants is getting harder to justify and the time limits for detention are likely to run out.

How is legal migration regulated?

The objectives can be found in art. 79 (1) TFEU, which provides that the EU 'shall develop a common immigration policy aimed at ensuring, at all stages .. fair treatment of third-country nationals residing legally in member states. It gives the EU power to legislate concerning:

• The conditions of entry and residence and standards of long-term visas and residence permits
• The definition of the rights of third-country nationals residing legally in a member states

The powers are limited by art. 79 (5) which states that the EU should not affect the right of the member states to determine volumes of the admission.

Legislation

The Commission adopted a policy plan on economic migration. The EU has also adopted legislation concerning admission to carry out a research project and the admission of post-secondary students.

Case law

The extent of EU harmonization and the tension between human rights protection and immigration control are reflected in the case law. The EU's case law has reduced member states power to restrict the benefits of EU legislation on legal migration.

What are the rules on asylum?

Overview and legal framework

The Treaty of Amsterdam granted the EU powers to set minimum standards as regards asylum law. EU leaders, however, decided that the EU should aim to establish a Common European Asylum System (CEAS). The first phase of this legislation was adopted around 2003 and consisted of a Directive on the qualification for and content of refugee and subsidiary protection status (the Qualification Directive). The second phase was established in 2013. This legislation provides for further harmonization.

Qualification for international protection

The EU legislation raises issues. For example issues concerning the definition of refugee and subsidiary protection status.

The core definition of a refugee is a person who has 'a well-founded fear of being persecuted for reasons of race, religion, nationality, political opinion or membership of a particular social group'.

As for subsidiary protection, it must be granted where there are 'substantial grounds' for believing that the person faces a real risk of serious harm. Which consists of:

• A death penalty or execution
• Torture of other degrading treatment or punishment
• A serious and individual threat to a civilian's life or person by reason of indiscriminate violence in situations of internal armed conflict

Once an applicant has this status, he or she is entitled to the benefits set out in the Qualification Directive.

Reception conditions for asylum seekers

The Directive on reception conditions regulates issues as the employment, health care, education and welfare of asylum seekers.

Asylum procedures

The rules on asylum procedures address issues as legal aid, interviews, right to an effective remedy and special procedural rules.

Responsibility for applications

The Court rules that while EU rules are based on mutual trust, it is possible that the CEAS might experience operational problems in a given member state.

What can be concluded?

The role of the EU in the areas of immigration and asylum law. There is a tension between human rights protection and immigration control.

The EU has to manage two conflicts: the balance between EU competence in the field of immigration and asylum and national sovereignty, and the balance between immigration control and the protection of human rights.

Initially the legal framework was an informal intergovernmental system. Member states either agreed Conventions among themselves or adopted non-binding acts such as regulations or recommendations. With the entry into force of the TEU, it became a formal intergovernmental system, which set out framework for the adoption of measures by the Council.

What is the legal dimension of Brexit? - Chapter 27

What is Brexit?

In 2016 the UK decided to leave the EU.

How did withdrawing work pre-lisbon?

Public International law

Pre-Lisbon there was no article that explicitly provided for withdrawal.

The Vienna Convention on the Law of Treaties provides for consensual withdrawal. This is complemented by art. 56 which states that a treaty without a provision regarding withdrawal, is not subject to withdrawal. Only in exceptional situations withdrawal is possible.

The EU

Once again discussion came on whether the EU was an international organization and was therefore subject to the provisions of the Vienna Convention or was it a new legal order?

What does art. 50 entail?

With the Lisbon Treaty a withdrawal provision was introduced: art. 50 TEU. Leaving the EU is now governed by the internal rules of the EU.

Art. 50 (2) favors a negotiated secession as the optimum solution, but there is no legal obligation to conclude such an agreement.

Constitutional requirements

Art. 50 (1) provides that a member state may withdraw in accordance with its own domestic constitutional requirements. The UK's leave was governed by the European Union Referendum Act 2015. It sets out rules governing who could vote in the referendum and provided for citizens who had moved to another member state, if they had been gone for over 15 years, they could not vote in the referendum. This Act does not fall within the scope of EU law.

Notifying the decision

A member state that decides to withdraw shall notify the European Council of its intention. Did the outcome of the referendum constitute a decision to withdraw? There is nothing in the provisions of the European Union Referendum Act 2015 that said that it was binding.

Can a notification be withdrawn?

In Miller it was agreed that the notification was irrevocable.

How does the withdrawal need to be negotiated?

Art. 50 (3) provides that the withdrawing state leaves two years after notification, unless the withdrawal treaty sets an earlier date, or they agree to extend the period.

The European Council will be required to meet to agree upon the guidelines for the negotiations. The negotiation framework was agreed on in December 2016.

The European Council

There has to be unanimous member state consent before a withdrawal agreement may take effect. Any agreement will be concluded by a qualified majority vote in the Council after getting consent of the European Parliament.

The Council of Ministers

The Council cannot conclude the withdrawal agreement without having obtained the consent of the European Parliament. Qualified Majority Voting happens through art. 238(3) (b) TFEU.

The European Parliament

According to art. 50 the European Parliament has no other role other than simply giving consent. The parliament however has two ways of influencing the content of a withdrawal:

1. Simply withholding consent from the final agreement
2. The European Parliament can influence the negotiation process through inter-institutional dialogue or insisting on having a seat at the negotiation table.

The scope of Article 50

There is a distinction between the withdrawal agreement under art. 50 and any future agreement providing for future relations between the UK and the EU. The actual withdrawing agreement will only deal with the actual terms of terminating the membership and a separate agreement will be made on the future relation.

Substantive issues

The status of UK citizens in EU institutions

An issue that still needs to be resolved is what happens to UK citizens working at EU institutions. There are no provisions on this and it seems unfair to have people from outside the EU work in EU institutions.

Status of UK and EU citizens

The UK would become a 'third country'. UK citizens may face additional border checks when visiting EU sates. Students will not be granted equal treatment with nationals regarding tuition fees and UK members in EU states would be subject to EU law on non-EU citizens.

UK legal and institutional position pending Brexit

Should the UK be allowed to continue influencing decision-making at the EU level? Art. 50 doesn't provide a solution.

What happens after Brexit?

The UK will have to consider its relation with non-EU countries with trade.

What can be concluded?

Brexit will continue to raise complex legal issues.

Art. 50 (3) provides that the withdrawing state leaves two years after notification, unless the withdrawal treaty sets an earlier date, or they agree to extend the period.

The European Council will be required to meet to agree upon the guidelines for the negotiations. The negotiation framework was agreed on in December 2016.

European Union Law - Barnard & Peers - 2nd edition - List of Abbreviations

• CFSP - Common Foreign and Security Policy
• Coreper - Committee of Permanent Representatives
• EAEC - European Atomic Energy Community
• EAW - European Arrest Warrant
• ECB - European Central Bank
• ECSC - European Coal and Steel Community
• EEA - European Economic Area
• EEAS - the European External Action Service
• EDC - European Defense Community
• EEC - European Economic Community
• EFTA - European Free Trade Association
• EHCR - European Convention on Human Rights
• EMS - European Monetary System
• EMU - Economic and monetary Union
• EPC - European Political Community
• ESCB - European System of Central Banks
• ETS - Emission Trading System
• EU - European Union
• IGC - Intergovernmental Conference
• INP - Innominate non-legislative procedure
• JHA - Justice and Home Affairs
• NCA - National Competent Authority
• OEEC - Organisation for European Economic Co-operation
• OLP - Ordinary legislative procedure
• PSO - Public Service Obligation
• SEA - Single European Act
• SGEI - Service of General Economic Interest
• SLP - Special legislative procedure
• TEU - Treaty on European Union
• TFEU - Treaty on the Functioning of the European Union
• TSCG - Treaty on Stability, Coordination and Governance
• USO - Universal Service Obligation
• WFD - Water Framework Directive
• CIS - Common Implementation Strategy