Tyler 284-4444, Sarah 487-5467 SEPTEMBER This N.T.C. covers the September class lectures, Van Empel,Lasok and Mathijsen readings AND Rhonda/Suzy's "summary" (of course). On the course outline, that's up to and including Binding Acts/Non-Binding Acts. Table of Contents: 1. Introduction to the course: why study EEC law? 2. Historical background of the EC and the Maastricht Treaty - major milestones in the development of the EC - the Maastricht Treaty - general terminology 3. Objectives of the EEC Treaty -where does the EC fit within the spectrum of economic goals and organizations? -what kind of institution is the EEC Treaty creating? Does the classic model of intergovernmental organizations apply to the EC? -what type of economic goals are enshrined in the economic union? What are the purposes of the EEC treaty? -the nature of these obligations 4. Institutions and Powers of EC Institutions (1) The Institutions -the European Parliament -the Council -the Commission -the European Court of Justice (2) Powers of the Institutions -If the concept of the attribution of powers is the governing concept, what meaning do you give to article 235? -ERTA Case (p. 6 Van Empel) -Summary re: Powers of Institutions -EES Opinion 1/91 (sup. mat. 190-199, referred to in class as EFTA (space) Case (great statement on EEC law) 5. Sources of EC Law -What is EEC Law? -Costa v. Enel (sup. mat. 229) (important statements on EC law) -summary of sources 6. EC Law-Making Process -articles 189-192 -articles 137-163 -articles 87.1, 99, 100 -does the EC as with its law-making process, fit into a democratic theory? 7. Delegation and Legally Binding/Non-Binding Acts (1) Powers of Delegation -Netherlands v. High Authority Case (p. 18) -Koster Case (p. 21) -Tedeschi Case (p. 21) -Opinion of the Court (p. 23) -Akzo Chemie Case (p. 29) (2) Binding Acts/Non-Binding Acts - General (i)acts provided for in article 189 -regulation -directives -decision -recommendations and opinions (ii) binding acts not provided for in article 189 (3) Legally Binding Acts of the Council and the Commission -Is the enumeration of Community acts in article 189 exhaustive? --arts. 189-192 set out the principle methods by which the Community makes law -Dairy Products Case (p. 34) (4) The Binding Acts of Art. 189 (i) Regulations -Zuckerfabrik Watenstedt Case (p. 36) -Turkey Tail Case (p. 38) -Slaughtered Cow Case II (p. 40) (ii) Directives -Marketing of vegetable seed Case (p. 42) -Enka Case (p. 43) (iii) Decisions -Cement Convention Case (p. 55) (iv) Summary of Binding Acts of Article 189 1. INTRODUCTION TO THE COURSE Q- Why study EEC Law? (DeMestral on the glories of EEC law) DeMestral characterized EEC law as a remarkable legal system. He further noted that the law is central to promoting the goals of the EEC, that the law has developed successfully and without it, it is unlikely that the EEC would have succeeded. DeMestral's other points included that EEC law has been able to get through difficult situations and is pragmatic (rooted in civilian traditions but is pragmatic); The Treaty of Rome is like a constitution within the EEC; and that EEC law is a bit of everything - but really it is sui generis (that is, it is unique, of its own kind). DeMestral stated that the court has arguably played the leading role in the development of the law. DeMestral's interest is with international trade law; trade law is very much the essence of EEC (the question of sovereignty of states - giving up barriers that are protectionist). 2. HISTORICAL BACKGROUND OF THE EC and MAASTRICHT TREATY In many ways the Maastricht treaty is the final step in the process begun in the 1950s. For this section, we have put in bold those steps that are key. Proposals began after WWII: prime movers were the French and Germans who felt that a new economic and political framework was needed if future Franco-German conflict was to be avoided. Almost immediately following WWII, the Cold War began which further encouraged the objective of unification (eur. unification vs. USSR; as well as added the US's encouragement of this objective) Rhonda/Suzy note that there were 3 approaches to the academic debate: (i) pragmatists: need to pull together some sort of European Union (ii) federalists: need a Federation of European States (iii) constitutionalists: higher than a federation --> need a genuine state of Europe. 1947 creation of GATT: with its aim to lower tariff barriers on an international level 1948 Council of Europe: is founded. Its membership was open to all Western Democratic nations. Essentially, the Council was composed of 2 parts: (1) Union of Parliamentarians, basically set up for debate; and (2) the European Convention on Human Rights. 1949 Benelux Treaty: still in force today, it created a free trade agreement between Belgium, Holland, and Luxembourg based on a customs union and some commitment to achieve basic economic goals. 1950 Robert Schumann Plan: Schumann wanted progress on the economic front and wrote that a Coal and Steel Community should be developed first 1950: creation of the organization for European Economic Cooperation. Its creation was influenced by the Marshall Plan of 1947. It had a broadly based membership, which included Canada and the US. Essentially an intergovernmental organization which coordinated policies but was not a decision-making organization. April 1951 Treaty of Paris: which established the European Coal and Steel Community(ECSC) to create a common market for those commodities. Six founding countries: Belgium, France, Germany, Italy, Luxembourg and the Netherlands. Based on the Schumann Plan of 1950. It consisted of 5 organs: (1) a permanent executive (the High Authority) (2) a consultative committee attached to the High Authority (consisting of representatives of employers, trade unions and consumers) (3) a Special Council of Ministers (4) an Assembly (5) a Court of Justice whose decisions were binding on the Member States Lasok explains that the most important feature of the ECSC is that it is truly a supranational organ. The ECSC proved that a supranational institution could function despite diverse national interests. Note that problems did occur in the ECSC: i.e. there was a crisis in 1959 due to the overproduction and increase in the use of oil which rendered coal mines redundant; the Council of Ministers refused to sanction measures to finance the stock-piling and the decrease in production because of their national interests. Nevertheless the ECSC was a success, so founding members expanded the agreement with the: March 1957 Treaty of Rome. 1954: The European Defence Treaty (to have supranational control of the armed forces) failed in 1954 and defence was then undertaken by NATO 1955: meeting of the Foreign Ministers of the 6 members of ECSC resulted in the Messina Resolutions which dealt with: (1) community of liberalization of trade (pursuing the concept of economic union) (2) special community with respect to research (etc) on atomic energy 1956: Spaak Report which contained 2 concrete proposals for 2 new communities based on the Messina Resolutions. Very much based on the model of the ECSC (in terms of the High Authority and the Court). Discussion of actual vesting of authority in a community institution, thus, going beyond mere intergovernmental cooperation. March 1957 Treaty of Rome: drafted; Came into force Jan 1 1958. Established the EEC, which was to remove all tariffs and quotas among member states by 1968. This treaty created 2 new communities: (1) the European Atomic Energy Community (EAEC): aim was to develop nuclear energy, distribute it within the community, and sell the surplus to the outside world. (2) the European Economic Community (EEC) The Merger Treaty: Because it was clear that 3 assemblies were not necessary (ECSC, EEC, EAEC), the Merger Treaty instituted a single commission and a single council (as opposed to the parallel institutions). The European court being responsible for all 3. Other Western European countries eventually joined: the U.K., Denmark and Ireland in 1973 (the 1st Treaty of Accession was signed by these 3 in 1972); Greece in 1981; and Spain and Portugal in 1986. [therefore, as of today, there are 12 members] Despite the removal of tariffs, a complex web of non-tariff barriers continued to hamper trade among EC members. Further integration was argued for in order to revive the sagging EC economies. 1970, 1975- Budget Treaties: as the Community developed, the major issue became whether the Community should have it own direct budgetary resources (that is, should it have the capacity to tax) or not. With the Budget Treaties, certain moneys go directly to the Community: (i) custom duties, and (ii) 1% of VATS in each member state. 1976- direct elections now 1976- Tindemanss Report: postulated a gradual development towards European Union, envisioned the closer cooperation of Member States; it failed. 1984- the European Parliament adopts the "Draft Treaty Establishing European Union", thereby reviving the notion of European Federalism. This triggered off a reaction which ultimately resulted in the passing of: February 1986 Single European Act: called for greater economic and monetary union, although it did not spell out how to achieve it. More concretely, the act established the goal of a single market by the end of 1992. To ensure the free movement of people, goods, services and capital as of Jan. 1, 1993, directives to harmonize standards in the community cover new jurisdictions, including environmental law, immigration control. Article 1 of the SEA makes it clear that the objective of all the Community treaties is to contribute together to making concrete progress towards European Unity (from Opinion 1/99 EFTA case). Rhonda/Suzy described it as one of the landmarks in the long road towards European Union. The main merit being that it's simultaneous reform of the 3 treaties establishing the 3 communities, as it further advanced the concept of one community. It is an important landmark in EC law itself as well as being a catalyst for the major legislative effort to secure a genuinely free common market by 1992. It also provided the impetus for complex and ambitious new negotiations on monetary and economic union within the EC. DeMestral noted that this is not the 1st time the Community has set out to achieve a single market without any frontiers but it looks as though they are getting close to achieving the goal. December 1991 Maastricht Treaty: was signed by the leaders of the 12 EC member countries to expand the role of the EC beyond its current trade and economic issues. In providing for a single European currency and co-coordinated financial policies under one central bank sometime between 1997 and 1999, it outlines the mechanism of how the EC will achieve its long-stated goal of economic and monetary union (EMU). There is the qualitative change with the Maastricht treaty from a common market to a single market. Article 2 speaks of the harmonization of policy on the economy: "common policies", "a harmonious and balanced development of economic activities", "economic and social cohesion and solidarity among Member States". The political dimension of the proposed treaty can be seen in Title V p. 83 (article J.1 "The Union and its Member States shall define and implement a common foreign and security policy, governed by the provisions of this Title and covering all areas of foreign and security policy.") DeMestral stated that this political commitment is less strict than other commitments (i.e. economy) and that it is just the groundwork, the beginning of cooperation in a political dimension. Prof. Garon (the visiting prof. on Sept. 24) told us that this introduction of a "politique commune generale" is what distinguishes Maastricht and what makes it important. DeMestral also referred to art. 1 saying that it speaks to the people, not just to states and governments. The Treaty cannot come into force until its 12 signatories ratify it. Luxembourg, Greece, Ireland, and France have done so. Belgium's lower house has approved the treaty. In June, Danish voters rejected the treaty (however, the Danes have since made conciliatory notes in that now they say that they are prepared to vote again). In calling for joint foreign, defence, health and consumer protection policies, among others - in effect, political union -the treaty has collided with nationalistic fervour. The concern that Community institutions are remote and unaccountable was reflected in the large NO vote (48.95%) in France, but also has been increasingly reflected in other EC countries. General Terminology: economic and monetary union: the final objective of the Maastricht treaty. Each member nation has to meet certain requirements, including a budget deficit of less than three per cent of the GDP. Members will eventually share (if passed) a common currency, the European currency unit, or ecu, which will finally fix the exchange rate among the EC nations. customs union: Art. 9 of the EC treaty states that the community shall be a customs union and shall cover all trade in goods. That is, b/w these member states, there will be no tariffs (tax on imports) or barriers of equivalent effect. tariff: charge/tax levied on goods coming into a country. European Monetary System: intended to maintain exchange rates at parity; formed in 1979 to foster currency stability and to promote anti-inflationary economic policies in the EC's 12 member nations. In September during the currency crisis prior to the referendum in France on the Maastricht treaty, Britain and Italy dropped out, allowing their currencies to float; Greece has not joined. Exchange Rate Mechanism: the tool for implementing the EMS, it requires its signatories to keep their currency trading within a predetermined range in relation to the German mark. Those who want the Maastricht Treaty to be abandoned argue that the treaty's core - the plan for economic and monetary union (EMU) - cannot proceed now that the mechanism for powering it, the ERM, is breaking apart. 3. OBJECTIVES OF THE EEC TREATY Q-Where does EC fit within the spectrum of economic goals and organizations? The spectrum listed in class was from Free Trade, Customs Union, Common Market, Single Market, Economic Union, Monetary Union, Political Union, Federation, to Unitary State. Keep this question in mind. Q- What kind of institution is the EEC Treaty creating? Does the classic model of intergovernmental organizations apply to the EC? A- No. The Classic Model: members are sovereign states that are involved in discussions and negotiations. Member states can say no at any point. The international organizations exist to discuss, not to tell their members what to do (only in certain circumstances are the members bound ie. with the GATT in certain circumstances). The EC: The right to withdraw is not envisioned; nor can member states be expelled (a problem with Maastricht). The very form seems to imply that you are in it for the long run. In effect, it is a supa-national organization as opposed to an inter-governmental organization. And unlike international organizations, the Treaty often can affect individuals (note: as a general principle, the rules of international organizations bind only states). However, the EC is like an international organization in that: (1) The principle of liberalization of trade seen in article 9 is similar to the principle of GATT. Furthermore, from this article and others, can see that it is more than a mere debating forum. (2) The EEC Treaty is described as "un loi cadre" , that is, something that sets up a large framework, with a broad scope for future developments. "Un loi cadre" can be distinguished from "un traite du loi", where rules are set out in detail (i.e. the ECSC where the fundamental rules are spelled out). The EEC Treaty does not say in detail where the community will go and what the limits are. That it is characterized as "loi cadre" implies that it is an organization with broader powers and scope that are spelled out. The treaty does has a core, an agenda set out in concrete, to be met. The Court in Opinion 1/91 (EFTA Case) states that it is clear that the provisions on free movement and competition, far from being an end in themselves, are only means for attaining those objectives. Q-What type of economic goals are enshrined in the economic union? What are the purposes of the EEC treaty? (sept. 14) One can get an idea of what kind of institution the EEC is by looking at the purposes it discusses in the articles of the Treaty. 1. DeMestral listed the 2 great goals of the EEC Treaty as seen in art. 2: (1)"establishing a common market" (2)"progressively approximating the economic policies of member states" The Court in Opinion 1/91 (ERTA case) on the objectives of the EEC Treaty: "It follows inter alia from Articles 2, 8a and 102a of the EEC Treaty that that treaty aims to achieve economic integration leading to the establishment of an internal market and economic and monetary union." 2. art. 9: the community shall be based upon a customs union which shall involve: (i) prohibition between member states of customs duties on imports and exports. (ii) prohibition of charges having equivalent effect. (iii) adoption of common customs tariffs in their relations with 3rd countries. [noted that before the Community was created, the tariffs were high (in the 40 to 50% range)] This provision is based on a theory of liberalisation of trade: Premise #1 is that the freer the flow of goods, the better the resources will be allocated. Premise #2 is that tariffs make trade more onerous (because it is harder to bring goods in to other countries). Therefore, the conclusion is that the goal is to eliminate inside tariffs and create common external tariffs because this will promote more trade among the member states, and increase their trade with the outside world. (this looks very much like GATT, an international institution, which is also designed to lower tariff barriers around the world....therefore, can say that in this respect, the EC is like an international organization). 3. A common market is created: Free Trade Area. Elements of the common market: art. 10: principle that as soon as foreign goods come in, they are free to travel. art. 12 & 13: customs duties shall be progressively reduced art. 18: community negotiates art. 30: a quota and all measures having equivalent effect are prohibited. art. 38: a common agricultural policy art. 48: freedom of movement of workers art. 52: freedom of establishment (that is, freedom of professional peoples to move and establish their business) art. 67: freedom of movement of capital Q - The nature of these obligations (Sept. 14) What can be gathered from the above discussion on Sept 14 of the economic goals enshrined in the EC Treaty is that these rules can be divided into various categories. DeMestral mentioned this in class, but this being the approach he took last year to the goals of the EC Treaty, Rhonda/Suzy's discussion has been added. DeMestral concluded that the binding rules, the programmatic duties and the powers given to the institutions add up to "a program that binds its members and states". (i) Rules that bind states and individuals: The binding nature of the obligations is key: these rules are binding on member states, on companies, and individuals w/i states (ie. arts. 8,9,10,12,16,30,31,34 have all been held by the court to have direct effect because they speak to individuals) art. 8: the common market shall be progressively established during a transitional period of 12 years. art. 9: the Community shall be based upon a customs union. art. 12: the Member States shall refrain from introducing between themselves any new customs duties on imports or exports or any charges having equivalent effect. art. 31: Member Sates to refrain from introducing new quantitative restrictions These provisions are "shall" provisions: clear mandatory language is used; legally binding. The Treaty intends to create a customs union: no debate, concrete and binding language. (ii) Programmatic rules/duties: there is an obligation to achieve these goals. art. 2: The Community shall have as its task, by establishing a common market and progressively approximating the economic policies of Member States, to promote throughout the Community a harmonious development of economic activities, a continuous and balances expansion, an increase in stability, an accelerated raising of the standard of living and closer relations between the states. art. 3: the activities of the Community shall include... art. 6: Member States shall... coordinate their respective economic policies art. 8a: The Community shall adopt measures with the aim of progressively establishing the internal market over a period expiring on 31 December 1992. These provisions are programmatic as they set out a program: they are not self-executing (other measures must be taken first); they are not directly applicable rules that speak directly to states and individuals. (iii) Institutions are set up to help: rules empowering the institution to act (ie. arts. 6 and 8a above), are coupled with the powers given to various organs of the community (the Commission) (ie. arts 7(2),40,41,46,130). For example, art. 7(2): The Council may...adopt...rules designed to prohibit discrimination [on grounds of nationality]. art. 40(2): deals with how the common agricultural markets organization will take place (what its form will be). These rules empower the institution; the institutions have a wide discretion with respect to timing, method. Noted that one sees fairly strong language with respect to implementation. 4. INSTITUTIONS AND POWERS OF EC INSTITUTIONS (Sept. 14 and 17) (1) THE INSTITUTIONS There are 4 central organs of the Community. The nature of the institutions is judicial (the court), executive (the council and the commission) and legislative (again, an intermingling of the council and the commission, and even the parliament). Most legislation is adopted by the council on the recommendation of the commission. Article 4: The tasks entrusted to the Community shall be carried out by the following institutions: (i) the European Parliament (ii) Council (iii) Commission (iv) Court of Justice Community Activities are financed primarily through (i) agricultural levies, (ii) customs duties, and (iii) % of VAT collected in member states. As of Jan 1, 1980, the Community's expenditures were entirely financed by the above. (i) The Parliament arts. 137-144 1. composition The European Parliament is composed of representatives of the peoples of the States. The members are elected according to National methods; the process is by direct election to the European Parliament by the countries' electorate; the allotment of the number of members per country being unequal (it is a population based system). Mathijsen noted that few members have double mandates, that is, in terms of the European and their national parliament. 2. powers (a) history/today: change in the power Since 1978, there has been a change in the power of the European Parliament: originally, its power was to help the commission; today, its power has become more broad. The European Parliament has the (i)limited power of supervision, and (ii) more and more articles in the Treaty require the Council to consult with Parliament in policy making: (i) the limited powers of supervision: For example, article 140 states that the Commission must respond to the Parliament's questions; article 144 states that if 2/3 of the European Parliament carry a motion to censure, the members of the Commission shall resign; article 203 states the right to amend the draft budget (yet must act in partnership with the council). (ii) more and more articles in the Treaty require the Council to consult with Parliament in decision-making: For example article 149 which was introduced with the SEA , is a new cooperation procedure, Council to adopt common position. DeMestral noted that while of the 4 institutions of the EEC, the Parliament is the weakest, in all likelihood, its powers will increase as the EC expands. Rhonda/Suzy expanded this in noting that with the Maastricht Treaty, we see an increase in the role of Parliament with the establishment of ombudsmen to hear complaints, and the ability to veto legislative proposals. Lasok: Parliament participates in law-making but it is not a legislative body. Its functions are (i) supervisory (censure of commission, questions); and (ii) advisory (can be consulted on major policy proposals). Mathijsen notes that until the Single European Act of 1986, this institution was not known as the Parliament (but rather, was known sometimes as the Assembly, sometimes as the Parliament). (b) what these duties/powers are: today, it still has no real legislative or taxation powers; it is an advisory/supervisory body (it is only referred to for opinion). -no real legislative or taxation powers -advisory/supervisory role -consulted on budgetary matters -can censure the Council and the Commission -can institute proceedings against either of the above if they fail to act -since the Single European Act, there has been an increase institutionalization of the required consultation to the Parliament; Today, it is a cooperative procedure Basically, the flowchart goes like this: Commission-(delivers proposal)--->council-(delivers "common position"--->parliament-(can propose amendments by majority, and then send back to the Commission for proposal to Council; the Council making the final decision) (c) specific duties: Power to Censure: This is one "real" power according to Mathijsen. If the Parliament disagrees with the activities of the Commission, it can adopt a motion of censure forcing the members of the Commission to resign as a body. Note, that the Council, however, is out of reach of censure and can re-appoint some earlier commissioners. Censure requires (i) majority presence, as well as (ii) 2/3 votes in favour. Mathijsen adds that censure has not yet past, although motions of censure have been made. Budgetary Approval Power: There is a complicated series of approvals and counter-approvals; with the bottom line that Parliament now has the final word in the approval of the budget, within the designated spending parameters set by the Council. The Parliament also oversees the Commission's implementation of the budget. Court Proceedings: The Parliament can now ask the Court to review the Council's or Commission's acts/omissions in accordance with their binding treaties (this is not an official power granted to Parliament as it was to the Council and to the Commission, but it was done/allowed in 1990). (d) Conclusion: The Parliament's powers have increased and will increase with time (i.e. the cooperation procedure on budgetary matters). However, Mathijsen states that for more power, the Parliament will have to become directly responsible to a well-defined electorate. (ii) The Council articles 145-154 (a) General The Council is the central organ of the EC. It is the legislature, the coordinator, the kingpins! It was originally responsible for the "progressive approximation of economic policies of member states"(Mathijsen). Generally, it ensures the cooperation and coordination of national economic policies. (b) Composition In each specific council, there is 1 member per country. Countries have different weighted votes, according to population. These members are appointed by their own governments. Though they are supposed to act in the interests of the Community, it is not always clear that this is the case. Their duty is to represent their governments, therefore, the Council is a political organ. The council meets only 5 days each month; So there is a Committee of Permanent Reps ("Coreper"), consisting of ambassador-ranking civil servants, which acts as the Council when the ministers of the Council are not present. Permanent Representatives prepare the work of the Council and are a liaison between national administrators and Community institutions. Although the Coreper has no legal power to make decisions, most of their decisions are adopted. Working groups consisting of senior national civil servants assist the Coreper; these represent the national interests in Brussels, and the Community's at home. In addition to the Council is the European Council which is composed of heads of state. Under the Single European Act, is must meet twice a year. It is recognized as a body of the Council; it has no role in the legislative process, but an increasingly important role in the highest level of policy-making. They make broad policy outlines, and broad policy decisions. Basically, the flowchart goes like this: Working Groups--->Coreper--->Council--->European Council (c) Powers of the Council The Council plays the leading policy-making role; it also makes law. While it is the central decision-making body, in exercising its power of decision, the Council can only act upon a proposal from the Commission. And the Council can only amend a Commission proposal by doing so unanimously (article 149.1). In general however, most of the law making powers of the Council must be exercised by a qualified majority (there is a complex weighted voting system, article 148). It concludes International Agreements negotiated by the Commission. It issues decisions via: (i) regulations, (ii) directives, (iii) decisions. The co-ordination of Economic Policies is one of its prime objectives/powers/responsibilities. Note this Problem: In the pursuit of the above, often the most important decisions are taken by the European Council or council in informal ways (that is, not in the above 3 modes). And Tyler notes that the council is not subject to review by the other institutions. Generally the Council's powers are conferred powers, but there is some residual power in the council to fulfil EEC objectives. Lasok stated that sometimes the Council seeks to exercise a power on its own initiative, claiming it can do so under its residual powers; and in so doing, it often abuses its powers. A new cooperation procedure with the European Parliament was created with the Single European Act in 1986. This is to be used for legislation with respect to the elimination of discrimination on grounds of nationality, free movement of workers, free movement of services and harmonization measures with respect to the creation of the internal market. In such cases, the Council must adopt common position with respect to the commission proposal, and then refer it to the European Parliament (as per article 149). The purpose is to give a 2nd reading to the legislative process in certain fields (it gives the European Parliament more influence). (d) Quasi-Institution for Political Co-Operation: This body is made up of one half Foreign Ministers (Council), and one half Political Committee and Secretariat based in Brussels. The Parliament and the Commission are also involved. Note that "Political Cooperation" was the title III for the Single European Act of 1986. (iii) The Commission articles 155-163 (a) General The Commission is like an executive branch of the EEC says Mathijsen; to Tyler, it is more like a big bureaucracy. There is a permanent Brussels staff and its commissioners are completely independent of their national governments, with 4-year, renewable terms. Some say the Commission is too politicized, but it tries to present itself as a non-political body, embodying the Community's interest. (b) Composition The Commission is made up of 17 members (big states get 2 members, others get 1). The term of office ends by death or by resignation (can be compelled to resign if censure approved by 2/3 of the European Parliament). The members act entirely independently, they are not to be influenced by their own governments (article 157). The Commission president often speaks for the community. Britain is the current president of the EC. (c) Functions In brief, Rhonda and DeMestral saw the 3 functions of the Commission as being the (i) initiator and coordinator of Community Policy, (ii) executive agency of the Communities, and (iii) guardian of the treaties. (i) initiator and coordinator of Community Policy by initiating legislative proposals: recall that the EEC Treaty can be characterized as traite cadre; therefore, the details of policy must be worked out. The Commission formulates proposals for submission to the Council to help the Council in the formulation of policy; many important policy initiatives have to come from the Commission. One of the fundamental roles of the Commission is to propose and draft regulations and directives; if the Commission withdraws a proposal it dies. (ii) executive agency of the Communities: Commission with wide range legislative and executive functions and powers (article 155). (iii) it is the guardian of the Community Treaties: acts as a watchdog to ensure that treaty obligations are respected. The Commission investigates allegations of infringement of the Treaty. (d) Further duties laid out in Mathijsen Mathijsen lists as the duties of the Commission (iv) the functioning and development of the common market, the community budget, competition rules etc; (v) the administration of community; finances; (vi) to negotiate International Agreements; (vii) to represent the Community in the International field; (viii) to enforce the community law. Mathijsen noted that the Commission has the powers to investigate the Council's failings or a national government's failings and to bring proceedings before the court (but no coercive measures are possible). The Commission issues recommendations and opinions (these are not binding). It exercises its own power of decision. Powers of decision-making are conferred by: (i) treaties, and (ii) council (the more specific powers). Note that often the Commission can only act once the Council has failed to do so. (iv) The Court of Justice articles 164-188 DeMestral only briefly spoke of the Court of Justice. A discussion of it being included in the Mathijsen readings, we have described it here; with the statement that this is really only for your own understanding. According to "The Economist", though governments that violate single-market rules can be taken to the European Court, "the scope for cheating is great; the power to enforce disturbingly weak." Most governments have abided by the court's judgments. But at the end of 1991, a total of 105 court rulings were not being applied by the EC governments against which they had been made. The Maastricht treaty would bolster the court's enforcement powers by allowing it to levy fines on national governments. But getting the treaty passed by all 12 countries looks increasingly difficult. In any case, even fines can be ignored. (a) General DeMestral simply stated that it behaves like a court, but its procedures are very different from what we know. The Court deals with states, the EC and individuals. Remedies are set out by the Treaty of Rome. (b) Composition The Court of Justice consists of 13 judges and 6 Advocates General; there are 5 chambers. And Complete Independence! The terms are 6-year, and renewable; the Chief Justice is elected by 12 peers for a renewable 3-year term. (c) Powers and Duties The court has the duty to make sure that all member states are applying the law in the same way. So, it interprets Treaty law, and makes sure that it is observed (it can establish penalties for failure to comply with the law). Not only does it interpret existing rules, it develops new ones: its own common law has been developed. Disputes are brought before it by the Commission or a member state. It also has jurisdiction over claims for damages resulting from non-contractual liability of the community (articles 178, 185) and disputes between the institutions and their servants. The commission and member states have standing before the court. In terms of the question of standing for natural/legal persons, see articles 173-176 and BP v. Commission  E.C.R. 1513 at 1525(13). In brief, only where it can be shown that a community's acts provision have in reality an "individual" rather than a general application, will the natural/legal person have standing. The Court of Justice can annul the community's/institution's acts if there is: (i) lack of competence (that is, the institution overstepped the competence conferred on it in the treaties), (ii) the infringement of essential procedural requirement, (iii) infringement of Treaty or any rule relating to its application, or (iv) misuse of power by the institution or officer thereof (that is, the use of power of public authority to attain an objective for which the powers were not intended. The court's rulings have a direct effect, applied by the national courts. (d) specifics Preliminary rulings: questions of law brought to the court by national court judge Compensation for damages caused by the institutions: can be handed out to natural/legal persons even if they can't challenge the legality of the initial measures. It presupposes the unlawfulness of the action or policy. -the community will not be liable for policies improperly implemented by member states. Interim measures: the Court can suspend the operation of a regulation, if on application the applicant proves that the measure will cause increase harm to him/herself. However, there is some reluctance on the part of the court to do so. Court of Appeal, Court of Justice: exists as of 1989. This court hears appeals on points of law only from the court of 1st order. It can hear final judgements, or challenges on interlocutory procedure. [note that on pages 92/93 of Mathijsen there is a summary of what the court proceedings different institutions and natural/legal persons can bring.] Court of 1st Instance: This is the forum for natural/legal persons to bring proceedings against institutions and member states; with the right to appeal to the Court of Justice. -See pages 97/98 for exact types of applications. Court of Auditors: This court was set up by "The Treaty". It examines the expenses and intake of all revenue of the community and all institutions, to make sure that all is (i) lawful and (ii) financially sound. Its annual report is forwarded to all institutions and allows Parliament to perform its budgetary function. (2) POWERS OF THE INSTITUTIONS The ERTA case and the EES Opinion 1/91 were both discussed in class. The two legal basis for the EC powers were laid out by our Van Empel readings: 1. Powers of Attribution The powers by which the Council and Commission of the EC are authorized to legally bind the subjects of the communities are not of a general nature: Such powers of attribution are therefore, particularly attributed to or conferred upon the institutions by the Treaties. Therefore, in theory, there is no general concept of implied powers; everything is attributed. (Reason: it is a fundamental principle that all the powers are derived from the Treaty (treaty origin therefore); Rhonda: so, even though it is a traite cadre, there are certain limits) 2. Article 235: "If action by the community should prove necessary to attain...one of the objectives of the community and this Treaty has not provided the necessary powers, the Council shall, acting unanimously on a proposal from the commission and after consulting with the European Parliament, take the appropriate measures." Therefore, article 235 provides the legal basis for additional decision-making powers. Q: If the concept of the attribution of powers is the governing concept, what meaning do you give to article 235? (SEE ERTA CASE) ERTA Case (1971 p. 6 van empel) facts: Five of the six Member States of the EEC working on Agreement as to International Road Transport. The agreement never went through. The Council of EEC passes regulation dealing with certain social provisions in the field of road transport in 1969. Member States then renew negotiations and draw up revised ERTA for states to sign in 1970, taking up the agreed position to Council discussions. Commission argues: that the procedure followed with respect to the revised ERTA was wrong, as the states no longer had the authority to do what they did. Since the Community has broad powers for implementing a common transport policy (under Art. 75), these powers extend to external relations. as well as domestic ones. The Commission seeks annulment of Council's discussion. Council argues: since the Community only has such powers as have been conferred on it, the authority to enter into agreements with 3rd parties (countries) cannot be assumed in the absence of an express provision in the Treaty. Art. 75 relates solely to the internal measures. held: In areas of EC jurisdiction, only the EC can negotiate with non-member states; individual states cannot do this. "Although Art. 235 empowers the Council to take `any appropriate measures' equally in the sphere of external relations, it does not create an obligation, but confers this option of the Council." reasoning: It is necessary to determine which authority was, at the relevant date, empowered to negotiate and conclude the Agreement. To determine the Community's authority to act and to enter into international agreements, regard must be had to the whole scheme of the Treaty. Such authority arises not only from an express conferment by the Treaty but may equally flow from other provisions of the Treaty and from measures adopted, within the framework of those provisions, by the Community institutions. Each time the Community, with a view to implementing a common policy envisaged by the Treaty, adopts provisions laying down common rules... The Member States no longer have any right, acting individually, or even collectively, to undertake obligations with 3rd countries which affect those rules; as when such common rules come into being, the Community alone is in a position to assume and carry out contractual obligations towards 3rd countries. While Arts. 74 and 75 do not expressly confer on the Community authority to enter into international agreements, the bringing into force of the Council Regulation necessarily vested in the Community power to enter into any agreements with 3rd countries relating to the subject-matter governed by that regulation. These community powers exclude the possibility of concurrent powers by Member States. So, even when no explicit authority is attributed by the Treaty, the Community may have the power to do something because of: (i) other provisions in the Treaty (i.e. Art. 235), and (ii) measures adopted by the Community within the framework of those provisions (measures were legitimate because of Art. 235). Even though no express provision in Art. 75 of ability to deal with external relations, this was within the power of the Community due to Art. 235 and Council Regulation. (Recall: Art. 75 only said that the Community can create common transport policy.) Summary re: Powers of Institutions The general rule is the theory of attribution: all powers are derived from Treaty. But, even when there is no explicit authority attributed to an institution, such institution may be able to act, based on article 235, when "the measure taken is necessary to attain an objective of the Community" (and the Treaty does not provide the necessary powers) [Massey-Ferguson Case, this reading was not assigned this year]. In EC areas of jurisdiction, only the EC can negotiate with non-member states; individual states cannot do this. EES Opinion 1/91 (sup. mat. 190-199, referred to in class as EFTA (space) Case (great statement on EEC law) facts: The agreement was between members of the EFTA (European Free Trade Association) and the EC and its member states. The purpose of the agreement was to create a European Economic Area (EEA) covering the territories of the member states of the EC and those of the EFTA countries. Aiming for homogeneity with Community law, the agreement proposed that: (i) The rules which were to apply to this European Economic Area (EEA) were essentially those laid down in the corresponding provisions of the EEC and ECSC Treaties; The provisions to be used in this agreement being textually identical to the corresponding provisions of EEC law. (ii) and, an interpretation mechanism: The agreement provided for the setting up of an EEA court; and for the purposes of implementation and interpretation of these provisions, the agreement provided that the provisions be interpreted in conformity with the rulings of the Court of Justice on the corresponding provisions of the EEC Treaty. This was an advisory opinion on the legitimacy of this system. held: "The system of judicial supervision which the agreement proposes to set up is incompatible with the EEC Treaty". It is institutionally incompatible. reasoning: (i) The Court first compared the objectives of the agreement with those of the EEC Treaty. It found that the objectives of the EEA agreement were limited to free trade and competition, whereas, the objectives of Community law go beyond that. (ii) The Court then compared the context of the agreement with that of the EEC Treaty (this is great stuff): "The EEA is to be established on the basis of an international treaty which, essentially, merely creates rights and obligations as between the Contracting Parties and provides for no transfer of sovereign rights to the inter-governmental institutions which it sets up. In contrast, the EEC Treaty, albeit concluded in the form of an international agreement, none the less constitutes the constitutional charter of a Community based on the rule of law. As the Court of Justice has consistently held, the Community treaties established a new legal order for the benefit of which the States have limited their sovereign rights,..., and the subjects of which comprise not only Member States but also their nationals...The essential characteristics of the Community legal order which has thus been established are in particular primacy over the law of the Member States and the direct effect of a whole series of provisions which are applicable to their nationals and to the Member States themselves." From the above 2 comparisons, it was held to follow that homogeneity of the rules of law throughout the EEA was not secured by the simple fact that the provisions were to be textually identical to those corresponding provisions in Community law. The Court concluded that the interpretation mechanism would also not secure legal homogeneity. The Court then considered whether the proposed system of Courts may undermine the autonomy of the Community legal order (in the light of the conclusion that legal homogeneity would not be secured) and concluded that it would. (i) On jurisdiction: "The exclusive jurisdiction of the Court of Justice is confirmed by Article 219 of the EEC Treaty, under which Member States undertake not to submit a dispute concerning the interpretation or application of that treaty to any method of settlement other than those provided for in the Treaty...Consequently, to confer that jurisdiction on the EEA Court is incompatible with Community law." (ii) On the system of courts: "An international agreement providing for such a system... is in principle compatible with Community law...However, the agreement at issue takes over an essential part of the rules...which govern economic and trading relations within the Community and which constitute, for the most part, fundamental provisions of the Community legal order. Consequently, the agreement has the effect of introducing into the Community legal order a large body of legal rules which is juxtaposed to a corpus of identically-worded Community rules." Furthermore, the agreement's objective of ensuring homogeneity of the law throughout the EEA will determine not only the interpretation of the rules of the agreement itself but also the interpretation of the corresponding rules of Community law. "It follows that in so far as it conditions the future interpretation of the Community rules on free movement and competition, the machinery of courts provided for in the agreement conflicts with Article 164 of the EEC Treaty and, more generally, with the very foundations of the Community." 5. SOURCES Q- What is EEC Law? The Treaty itself does not list the Sources. However, Art. 164 states that the Court of Justice shall ensure that in the interpretation and the application of this Treaty the law is observed. EEC law is traditionally divided into: (1) Primary law: this includes 1. The Treaties: ECSC, EAEC, EEC, the Merger Treaty, Treaties of Accession, Budgetary Treaties (1970, 1975), the Single European Act (1986) 2. Conventions between Member States (i.e. Art. 220) 3. External Treaties made by the Community (2) Secondary law 1. obligatory Acts: those capable of producing immediate obligations at least on states and sometimes on citizens. Unlike the Treaties, these articles did not exist on day 1, they had to be enacted i. Regulations: directly applicable in all member states: Art. 189 ss.(2)- A regulation shall have general application. It shall be binding in its entirety and directly applicable to all member states. Regulations have a mandatory effect: they bind states and have the force of law in their territory without the need to transform it or confirm it by their legislature. ii. Directives Art. 189 (3) - A directive shall be binding as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authority the choice of form and methods. Directives are not meant to be an instrument of uniformity (as opposed to regulations) Directives must be addressed to the states, and can't be addressed to individuals (Lasok) The Distinction between Regulations and Directives (Lasok, according to article 189): Regulations: methods and form are imposed by the community; the entire thing is binding on member states; can affect individuals. Directives: methods and form are left open to the Member States themselves; binding only as to the result/the objective to be achieved; cannot affect individuals. Yet, some directives are drafted in such detail that little discretion is left to the Member States, and therefore, appear to be indistinguishable from regulations. iii. Decisions: Art. 189 (4) - A decision shall be binding in its entirety (like a regulation) upon those to whom it is addressed (like a directive). These acts make references to measures which have direct effect and those that are directly applicable. On Direct Applicability: -the concern is with the State -implies that the provision of EC law is directly applicable to the state and therefore, no further need exists for state intervention. --> speaks immediately and directly to the state and is therefore part of the legal system --> no interposition: Community law maker speaks directly --> rules become, automatically upon their enactment, part of the corpus juris of the member states. -i.e. regulations are directly applicable On Direct Effect: -the concern is with the individual and the remedies that citizens may enjoy with respect to certain categories of community law -when measures have direct effect, citizens can use and contest those measures -if the state has a discretion in how to use a certain measure, it is not likely to produce a direct effect as it will not meet the tests of direct effect. -Lasok: the test = primarily the capacity of the measure to produce rights and obligations which the individual may seek to enforce against the state. -examples of articles that have been held to have direct effect: articles 12, 30-34, 37, 48, 52, 59, 62, 67, 95, 106, 221, 85, 86, 76, 119, 93-3 2. Non-Obligatory Acts -auxiliary elements of the process, recommendations, opinions, resolutions of Council, of Commission. -article 189: Recommendations and opinions shall have no binding force. i. recommendations ii. opinions 3.Non-Treaty Acts flowing from the administration: administrative issues, guidelines, etc, (memoranda, communications) -not necessarily legally binding: merely tell you about what the administration thinks about different things. 4. General Principles that Control Legality -concepts asserted by the court in its judgements 5. Rules Governing Judicial Control -these are rules that set out the remedies against illegal acts -include everything from rules of practice, precedents, basic Community law doctrine, formal rules, etc. 6. Rules of the Advocate General -Lasok: judges of the court are assisted by 6 Advocate-Generals -they act as the conscience of the court -they are spokespeople of law and justice -required to reach own personal conclusions impartially but their submissions are not binding on the ECJ. 7. Acts of States Acting in Council (European Council) -i.e. nominating process 8. Domestic Law of Member States -domestic law does not frustrate the efficacy of the Community -domestic law as secondary source shows supremacy of the EC law and its treatment as its own self-contained legal system. Costa v. Enel (1964) (sup. mat.p. 229) (important statements on EC law) facts: In 1962, the Italian Republic nationalized the production and distribution of electric energy and created the organization ENEL to which the assets of the electricity undertakings were transferred. Proceedings took place in Milan between Costa and Enel (Mr. Costa was a shareholder in a company affected by the nationalization). Mr. Costa requested the court to apply article 177 of the EEC Treaty so as to obtain an interpretation of articles 102, 93, 53 and 37 which he claimed were infringed by the Italian law regarding nationalization. The Italian government argued that the request was inadmissible because a national court which is obliged to apply a national law cannot avail itself of article 177. That is, a national court cannot have recourse to article 177 when it is deciding a dispute that only requires application of national law. held: (The Court)The Italian government's plea for inadmissibility was rejected. "By contrast with ordinary international treaties, the EEC Treaty has created its own legal system which, on the entry into force of the Treaty, became an integral part of the legal systems' of the Member States and which their courts are bound to apply." (p. 230) "By creating a Community of unlimited duration, having its own institutions, its own personality, its own legal capacity...the Member States have limited their sovereign rights and have thus created a body of law which binds both their nationals and themselves." (p. 230) It follows therefore that "the law stemming from the Treaty, an independent source of law, could not because of its special and original nature, be overridden by domestic legal provisions, however framed, without being deprived of its character as Community law and without the legal basis of the Community itself being called into question."(p. 230) A unilateral act is incompatible with the concept of Community; it cannot prevail. The Advocate General The Treaty establishing the EEC creates its own legal system which partly replaces the internal legal system. The provisions of the Treaty that have direct effect are self-executing (that is, have an immediate application in the Member States). The provisions that are not of direct effect enter the domestic legal system in one of 2 ways: (i) when the Community has the power to make regulations, the incorporation into the domestic legal system takes place the moment the regulation is published. (ii) when the Community does not have the power to make regulations, a Member State can either carry out the provision on its own initiative or in pursuance to directives or recommendations from the executive. When a self-executing provision or regulation conflicts with the national law, there are 2 possibilities: (i) if the national law came into force prior to the Treaty, then the doctrine of implied repeal takes effect. (ii) if the national law came into force after the Treaty, then either amend the constitution if it allows the national law to take priority or renounce the Treaty. Rhonda pulls the following 2 conclusions from the case: (i) supremacy of EC law is shown (in that EC law displaces the sovereignty of Member States to an extent) (ii) The EEC Treaty has created its own legal system. Note that a primary source of EC law is the Treaty itself, and all other EC Treaties. Summary of Sources 1. Primary Law (...treaties) -Treaties -Conventions between Member States -External Community Treaties 2. Secondary Sources (...law made by the EC itself) -Obligatory Acts - Regulations - Directives - Decisions -Non-Obligatory Acts -Domestic Law -Recommendations -Gen'l Principle of Legality -Opinions -Rules of Jud'l Control -Non-Treaty Acts -Advocate-Gen'ls Opinion Costa v. Enel: EC Treaty created own legal system -Body of law therefore comes from the Treaties, the Institutions, and the individual countries 6. EC LAW MAKING PROCESS There are a variety of articles that illustrate the nature of the law making process under the EC. 1. Articles 189-192: These articles set out the principle methods by which the Community makes its law, the basis categories of law-making. article 189(1): In order to carry out their task, the commission and the council, in accordance with the provisions of this Treaty, make regulations, issue directives, take decisions, make recommendations or deliver opinions. Rhonda notes that under article 189, regulations and decisions can produce direct effect. And that directives can produce direct effect (as per Enka) article 190: Regulations, directives, and decisions of the council and the Commission shall state the reasons on which they are based and shall refer to any proposals or opinions which were required to be obtained pursuant to this Treaty. This article sets out certain conditions of form. The legislative authority of the body enacting legislation must be set out in the text of the legislation. If it is not, there is no authority. So, all procedural regulations must be followed as set out in article 190 . article 191: Regulations shall be published...they shall enter into the force on the date specified in them, or, in absence thereof, on the 20th day following their publication. Directives and decisions shall be notified to those to whom they are addressed and shall take effect upon notification Therefore, regulations are published; directives and decisions, notified. article 192(1): Decisions of the Council or Commission which impose a pecuniary obligation on persons other than States, shall be enforceable. article 192(2) Enforcement shall be governed by the rules of civil procedure in force in the State in the territory in which it is carried out. Therefore, enforcement is dealt with by domestic law although it is generally made by the Community. 2. Articles 137 - 163 These articles deal with the institutions of the EC and their powers. They are relevant for the law-making process because they explain which institution can do what. 3. Articles 87.1, 99, 100 These articles consider the law-making process in more specificity. Article 87.1: Within 3 years of entry into force of this Treaty, the Council shall, acting unanimously on proposal from the Commission and after consulting with the European Parliament, adopt any appropriate Regulations or directives to give effect to principles in article 85 and article 86. So, while general authority to adopt regulations or directives is stated in article 189, here it is stated with more specificity (De Mestral). Article 99: Council is to adopt provisions for harmonization of legislation concerning taxation so as to help create the internal market. DeMestral: it is not stated here how they will do this (i.e regulation or directive). Yet, there is a clear mandate to legislate. Article 100 (and 100(a)): Council can... issue directives for the approximation of provisions laid down by law... deMestrael: These articles empower the Commission and the Council to make legally binding instruments. In comparison with the language of article 200: "Member States shall, so far as is necessary, enter into negotiations with each other with a view to securing for the benefit of their nationals...", we are not really dealing with the same kind of legally binding instrument here; It is not to be done as directly here. Q: does the EC as with its law-making process, fit into democratic theory? Recall Costa v. Enel: The Community is of unlimited duration; the community has received sovereign powers that the states have ceded. The EC has been criticized for being highly bureaucratic. 7. DELEGATION and LEGALLY BINDING/NOT BINDING ACTS (1) POWERS OF DELEGATION The EC is a large law-making and administrative body. Therefore, there is a need for delegation. The cases in this section deal with the exercise of transferred competence and the conditions under which such a transfer is allowed. The General rule is that the delegate cannot further sub-delegate (Rey Soda case). Netherlands v. High Authority Case (66/63) In this case standing bodies of the High Authority purported to make Decisions on behalf of the High Authority. It was held that where the Treaty requires a particular institution to act, that institution must act. Koster Case (1970 p. 21) facts: A Management Committee introduced a procedure into a Regulation. The plaintiff argued that the power to adopt this system belonged to the Council which acts on proposal of the Commission as per Art. 43 when dealing with common agricultural policy. Therefore, the plaintiff argued, this was a violation of the Treaty because here it was a Committee of the Commission that acted. held: No violation. The Council delegated to the Management Committee the ability to consult with the Commission as to implementation. It was held that this delegation is allowed. reasoning: The legislative scheme of the Treaty and the practice of the Community institutions establish a distinction between (1) measures directly based on Treaty and (2) derived law intended for their implementation. "It cannot therefore be a requirement that all of the details of the regulations regarding common agricultural policy be drawn up by the Council (according to the procedure in Article 43)." It is sufficient for that provision that the "basic elements of the matter to be dealt with are adopted". The provision to implement the basic regulations may be adopted either by the Council or by the Commission as per Art. 155 ("In order to ensure the proper functioning of the common market, the Commission shall...exercise the powers conferred on it by the Council for the implementation of the rules laid down by the latter"). Therefore, the Commission was validly authorized. Management Committee procedure forms part of the detailed rules to which Council may delegate power to the Commission. The function of the Committee is to consult and issue opinions. Not to have the power to take decision in the place of the Council and the Commission. Therefore, delegation is acceptable between 2 different organs of the same organization. The Court states that " without distorting the Community structure and the institutional balance, the Management Committee machinery enables the Council to delegate to the Commission an implementing power .., subject to its power to take the decision itself if necessary." Tedeschi Case (1978 p. 21) facts: This case deals with directives aimed at harmonizing national provisions intended to ensure that feeding-stuffs don't endanger animal and human health; with the maximum level of undesired substances to be fixed by Member States. Article 5 however provided that if a Member State wished, it could lower that maximum level. Defendant argues that Art. 5 is invalid because it gives Member States discretion, since under the directive, a Member State can keep its changes if no decision to the contrary is taken by Council or the Commission. The question before the court then was whether providing this power to Member States was an illegal delegation? held: NO. Because the Commission still has jurisdiction to issue any other measure it considers appropriate: the Commission is not paralysed (it can still act). Opinion of the Court (1977 p. 23) facts: This case deals with a draft agreement on a "European Laying-up Fund for inland waterway vessels" created by the Commission and Switzerland and 6 of the Member States. The question was whether this agreement was compatible with the EC Treaty. held: No. This agreement was not compatible with the EC Treaty. Given the practical problems of renegotiating treaties, it was acceptable that negotiations be done by governments as opposed to the Commission. Yet, in the future, no representatives of single states allowed (only the EC reps). "The participation of these Member States in the negotiations, though justified for the abovementioned purpose (because of the difficulties of renegotiating in this case), has however produced results extending beyond that objective which are incompatible with the requirements implied by the very concepts of Community and its common policy." Akzo Chemie Case (1986 p. 29) facts: In order to complete its examination of Akzo's pricing behaviour, the Commission announced that it would carry out an investigation into Akzo's behaviour in the plastics sector. Akzo refused to submit to the investigation. The Commission ordered it to by a decision. Akzo seeks an annulment of the decision. Akzo argued that the decision is not in accordance with the principle of collegiate responsibility laid down in the Merger Treaty (collegiate resp. being that decisions of the Commission should be subject to a collective deliberation etc). Here, the decision was taken by the member of the Commission responsible for competition matters. held: There was no breach of the principle of collegiate responsibility. The delegation is allowed. The system of delegation which the Commission established guarantees respect for the above principle because "machinery is provided which ensures that important decisions are adopted by the full Commission." Here, there was no need to refer it to the full Commission. The decision was a simple measure of management. The Commission can authorize its members to adopt certain decisions without the principle of collegiate responsibility being impaired. The considerations are (i) that such a system of delegation of authority does not have the effect of divesting the Commission of its powers, and (ii) that limited to specific categories of measures of management or administration, such a system of delegation of authority appears necessary. The Decision is still deemed to have been adopted by the full Commission. Therefore, the member did not act in his own right. Such an action is limited to decisions of management or administration, as was the case here. (2) BINDING ACTS/NON-BINDING ACTS - GENERAL I. Acts Provided for in Article 189 (i) Regulation Regulations are of general application, binding in their entirety. Their application is direct, in all member states; that is, it is not required that there be a national measure to make the regulation binding on institutions/persons. As such, a regulations are capable of creating individual rights which the national courts must protect. Note the principle seen in the CAM Case: a natural person can challenge a regulation where that person is directly and specifically affected. (ii) Directives Directives can be issued either by Council or by the Commission and are appropriate when existing national legislation must be modified or national provisions enacted. Nations can decide whether these measures will be legislative or administrative. Directives are not directly applicable since they require some national measure to enact. Directives are of direct effect since they create individual rights and national courts must apply them. (iii) Decision A decision is binding in its entirety to those whom it is directed/addressed. The addressee can be a member state or legal/natural person. It has direct effect. There are no specific requirements as to form, but it must be recognizable as a decision. (iv) Recommendations and Opinions Recommendations and opinions are non-binding and their legality can be reviewed by the Court. They do not create rights themselves, though do have an interpretive effect on national judgements. II. Binding Acts Not Provided for in Article 189 Binding Acts not provided for in Article 189 include: -agreements between the Community and the outside world, and member states amongst themselves -decisions of "Member States in Council" (though these are less easily challengeable) -resolutions (these are like political commitments) -decisions which do not emanate from the Treaty and only relate to Community affairs, but do not impose rights or duties on the institutions of the Community. (3) THE LEGALLY BINDING ACTS OF THE COUNCIL AND THE COMMISSION General: Whether an act of the Council or the Commission entails legal consequences for subjects of the Communities is a question ultimately decided by the Court of Justice. In this respect, neither the form nor the designation of the act appears to be conclusive: the nature and content of the act should also be considered (p. 32 Van Empel). Q: Is the Enumeration of Community acts in article 189 EEC Exhaustive? If an act is found to entail legally binding consequences, it does not immediately follow that it must be categorised as one of the acts mentioned in art. 189 EEC. However, by far the greater part of Community law does consist of the art. 189-type acts. (p. 33 Van Empel) Arts. 189-192 set out the principle methods by which the Community makes its law: Art. 189: "In order to carry out their task the Council and the Commission shall in accordance with the provisions of this Treaty, make regulations, issue directives, take decisions, make recommendations or deliver opinions. A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States. A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods. A decision shall be binding in its entirety upon those to whom it is addressed. Recommendations and opinions shall have no binding force." Art. 190: "Regulations, directives and decisions of the Council and of the Commission shall state the reasons on which they are based...." Dairy Products Case (1964 p. 34) facts: Belgian and Luxembourg governments introduced a tax payable on the delivery of import licenses for various dairy products. The Commission said that this was contrary to the Treaty (especially Art. 12: no new customs duties allowed). The Governments argued that the Council had resolved to issue a regulation related to the setting up of a common organization of markets for dairy produce before July 31, 1962; however, this Council Resolution was not effected within the proper time limit; therefore, the Commission lacked the right to bring proceedings (since the Community had failed to comply with its obligation pursuant to the Council Resolution). held: Governments lose. The Governments argued that since the Community did not live up to its obligation, it cannot now plead infringement of the Treaty. Community law, however, does not work that way. "The Treaty is not limited to creating reciprocal obligations between different persons...(Rather), it establishes a new legal order which governs the powers, rights, and obligations of the persons." Therefore, unless expressly provided, "the basic concept of the Treaty requires that the Member States do not take the law into their own hands". So the fact that the Council had failed to carry out its obligation does not relieve the defendant from carrying out theirs. Also, the Resolution of the Council does not create time limits having the same effect as those laid down in the Treaty. The intention of the authors is clear, given that they adopted the measure under a style and form which are not those of the binding measures of the Council within Art. 189. Therefore, the Council did not infringe the Treaty when it failed to observe the time limits. Thus Belgium and Luxembourg were found to have failed to comply with the obligation under Art. 12, under the substantive part of the case. DeMestral: we have seen then that (i) a resolution is not law. It does not create legal effects re. time limit (no legally binding consequences) (ii) the obligations created in the Treaty are not merely limited to reciprocal obligations. There can still be an obligation even if the other party has not lived up to its obligation. (4) THE BINDING ACTS OF ART. 189 EEC The distinction between the various acts mentioned in art. 189 EEC is important for a number of reasons. i.e.: (i) The extent of the right of appeal of private parties against Community acts varies according to the type of act used. (ii) In certain areas of Community competence the institutions are obliged to exercise their powers by the adoption of a particular type of act. i. Regulations More use is made of the Regulation than any other legal instrument provided by the Treaties. The principal characteristics of the regulation (that is,its general and direct application), facilitate the uniform application of Community law, a factor indispensable to the proper functioning of the Communities.(p. 36 Van Empel) Zuckerfabrik Watenstedt Case (1969 p. 36) facts: The Council issued a regulation on the common organization of the market in sugar. The regulation provided for guaranteed sales and guaranteed prices for various kinds of sugar products. Art. 9(3) of Regulation said that the scheme of guarantees will stop with respect to raw beet sugar at a certain date. The applicant is a producer of raw beet sugar; and asked the ECJ to annul Art. 9(3) on the grounds that this is a decision disguised as a regulation [Note: under article 173 a natural person can institute proceedings against a decision (re: can't do this with respect to a regulation)], and that it prejudices his special interests. The applicant argued that it is too specific to be a regulation, that it is not of general application. The Council argued that the applicant's claim is inadmissible as this is a regulation. issue: Is this a regulation or a decision? held: This is a regulation; therefore, the claim made by the applicant is inadmissible. The Court reasoned that: 1. "By virtue of article 189(2), the criterion for distinguishing between a regulation and a decision is whether the measure at issue is of "general application" or not. One must look at the nature of the provision and at the legal effects which it is intended to or does produce" (p. 37). 2. "This measure is of general application because it is applicable to objectively determined situations and involves legal consequences for categories of persons viewed in a general and abstract manner "(i.e. buyers, sellers, producers of raw beet sugar) (p. 37). 3. "A measure does not lose its character as a regulation simply because it may be possible to ascertain with a greater or lesser degree, the number or even the identity of the persons to which it applies at any given time so long as there is no doubt that the measure is applicable as the result of an objective situation of law or fact which it specifies and which is in harmony with its ultimate objective. 4. also the fact that a legal provision may have different practical effects on different persons to whom it applies in no way contradicts its nature as a regulation provided that the situation to which it refers is objectively determined" (p. 38). Therefore, a regulation can have different practical effects on different persons; and it is still of general application even if you can identify exactly who it applies to. All that is required is that the measure is applicable to an objective situation which is specified (i.e. to maintain a certain level of prices so as to protect the Community growers of sugar beet and sugar cane) and that the situation is related to this ultimate objective (the common organization of the market of sugar). Turkey Tail Case (1970 p. 38) facts: The Community had made a Regulation establishing the common market organization for poultry. The defendant imported into Germany turkey tails. The German customs office classified them under one heading and then,later, changed its classification of the turkey tails, and charged the defendant an additional levy. The question was whether the Regulation establishing the Common Market organization of poultry allowed the national legislation to interpret these definitions autonomously or not. held: NO. The government has no authority to interpret what a regulation means. Regulations are directly applicable to Member States. Therefore, "Member States are precluded from taking steps for the purpose of applying the regulation, which are intended to alter its scope or supplement its provisions"(p. 39). The transfer of legislative powers means that Member States can no longer legislate in that field (DeMestral stated that there is no such thing as concurrency in EC law; however, as years go by, there will be greater flexibility on this point; but today, EC is supreme in those areas it has moved on.) Member States cannot interpret regulations in any manner they wish. So, even if there is doubt as to a classification, "interpretation can only be settled in accordance with Community procedure"(p. 40). Provisions are to be applied in "uniform manner" in all Member States. Therefore, the description of goods covered must have exactly the same range in all Member States. So, only 1 meaning is to be given to a regulation throughout the Community (DeMestral: concept of "legal certainty"). Slaughtered Cow Case II (1973 p. 40) facts: Regulation issued by Council which instituted a system of premiums for slaughtering cows and withholding milk. The Italian government readopted this as Italian law. The Commission argued that this implementation was invalid, on principle. held: The Commission was right: By adopting this regulation, the Italian government was implying a right of implementation; but states have no choice whether to implement or not. Regulations are already binding; therefore, a government can't readopt it. By adopting this regulation, "the Italian government has brought into doubt both the legal nature of the applicable provisions and the date for their coming into force...As per Art. 189 and 191, Regulations are directly applicable in all Member States and come into force solely by virtue of their publication as of the date specified in them or date provided by the Treaty, if no date is specified"(p. 41). "Therefore, all methods of implementation are contrary to the Treaty which would have the result of creating an obstacle to the direct effect of Community Regulations and of jeopardizing their simultaneous and uniform application in whole community."(p. 41) ii. Directives As opposed to the use of the Regulation, the use of the Directive is not intended to achieve complete uniformity in the area with which it deals. The Directive is binding as to the result to be achieved, the choice of the method of implementation being left to the addressee. However, it is doubtful whether the difference between the end to be achieved and the method of implementation is as clear cut as would appear from the wording of art. 189 EEC. In many cases the result to be achieved is so dependent on the method of implementation that the choice of the later is severely restricted. (p. 41 Van Empel) DeMestral described the Directive as allowing each government to maintain its own traditions and enables the government to best enforce as they are the one who must ultimately enforce all the laws (he noted later that in most cases, enforcement is by national forces, the EC does not administer law except in a few limited areas). Marketing of vegetable seed Case (1976 p. 42) facts: The Commission argued that Italy failed in its Treaty obligation by failing to bring into force a Council Directive within the time limit for implementation laid down in the Directive. issue: Is a time limit on implementation in a directive binding? (note that directives normally contain time limits for implementation) held: Yes. "The correct application of a directive is particularly important since implementing measures are left to the discretion of Member States and would be ineffective if the desired aims are not achieved within the prescribed time limits."(p. 42) "By not adopting within the time prescribed all the laws, regulations and administrative provisions necessary to comply with the Council Directive, the Italian government had failed in one of its obligations under the Treaty."(p. 43) Enka Case (1977 p. 43) facts: A Regulation was adopted on the valuation of goods for customs purposes. Then a directive was issued to supplement this which said that the cost of warehousing and the cost of preserving goods in the warehouse are not to be included in the value for customs purposes.This did not agree with the Dutch customs principle which always included this cost. Can dutch officials disagree or is this Directive of direct effect? held: In some instances, a directive can have direct effect. This one did. "In order to bring about the uniform application of the common Customs Tariff by a harmonization of provisions it may prove necessary to ensure the absolute identity of those provisions which govern the treatment of goods imported into the community."(p. 44) This directive therefore has direct effect (measure speaks directly to individual) yet the court recognized that this is an unusual situation. For DeMestral, this case shows that there is less difference between a directive and a regulation. iii. Decisions The characterization of a legal act as a Decision within the meaning of art. 189 EEC is important primarily because of the extended judicial remedy available to the addressee [recall: under art. 173 EEC, a natural person can institute proceedings against a decision (as opposed to against a regulation)]. (p. 44 Van Empel) Cement Convention Case (8-11/66 see p. 55) facts: 74 enterprises made a cartel. This cartel then notified the EEC of its agreement as required by Regulation. The Regulation states that enterprises engaged in cartels contrary to the Treaty are liable to heavy fines. They are not liable however if they notify the Commission so long as the Commission has not yet pronounced on their validity and on the possibility of exemption from the prohibition of cartels. If after a provisional inquiry, the Commission does not think that cartel passes Treaty rules, it can communicate this to the parties. This communication, once received, means that the cartel can now be subject to a fine. The Commission sent such a communication to this cartel. The cartel lodged an appeal against this communication. The cartel argued that this communication is a decision because of its legal effects; Since it is a decision, we have standing; We seek annulment of the decision. The Commission argued that this communication is an opinion, not a decision. Recall Art. 173: Court of Justice does not review the legality of opinions or recommendations. Natural and legal persons have standing to challenge a decision. Individuals do not have standing with respect to regulations. issue: What is the nature of this communication? Is it a decision (as the cartel argues) or an opinion (as the Commission argues). held: It is a Decision. The effect of the communication was that the cartel was no longer protected from fines; therefore, it posed the cartel to a grave financial risk; therefore, it affected their interests by bringing about a distinct change in their legal position. It produces legal effects and is binding on them. Therefore, it is a legal act, a decision and not a mere opinion (p. 57) iv. RHONDA/SUZY'S SUMMARY OF BINDING ACTS OF ART. 189: (1) Regulation -binding in its entirety -directly applicable The Test: Is this provision something of general application? This something is generally applicable when it is applicable to objectively determined situations (which is in harmony with its ultimate objective) and involves legal consequences for categories of persons viewed in a general manner (Zuckerfabrik) -does not matter if can identify the persons in the category exactly (Zuckerfabrik) -does not matter if it has different effects on different persons (so, can be specific) (Zuckerfabrik) Characteristics: (i) only 1 meaning can be given to a regulation throughout the Community; Member States cannot merely interpret a regulation any way they want (Turkey Tail) (ii) a regulation is directly applicable to all member states; therefore, it cannot be readopted by member states (Slaughtered Cow Case) (2) Directive -binding as to the result to be achieved -national authorities have choice as to form, methods -often hard to tell the difference between the above 2 because the implementation choices may be restricted. -directives can have direct effect (like regulations) (Enka), yet this is unusual and rare. -time limits set on directives are binding (Vegetable Seed) (3) Decision -binding in its entirety upon those to whom it is addressed. -important because individuals have standing with respect to decisions (article 173) -so must distinguish between regulations, decisions, and a non-binding act. *If an individual wishes to challenge something, that individual will argue that the measure is a decision; And the Commission will say that it is a regulation or a non-binding act (i.e recommendation or opinion) Examples of Above in Sup. Mats. (1) p. 105 Regulation on freedom of Movement for workers -regulations have to come from proposals from the Commission -has direct effect (article 1); and p. 140 example of a regulation (2) p. 128 example of a directive (3) p. 161 example of a decision (4) p. 99 example of a resolution Dan's week JUDICIAL REVIEW OF COMMUNITY AND NATIONAL ACTS Arts. 164 - 188 (i.e. various ways to attack community law) INTRODUCTION Judicial review is one of the fundamental elements of EEC law. The EEC courts exist because of the constitution, this is itself a clear indication that the drafters wanted a court that could make the treaty uniformly binding and applicable. The law produced by the court transcends the normal concept of internat'l and interstate rules. The court has made it clear that EEC law stretches into every corner of the "daily law". It draws upon all sorts of legal traditions and sources of law (e.g. The Rule of Law). Arts. 164-168 are the skeletal provisions that create the EEC Court of Justice. The court consists of 13 judges who sit fro 6 yrs. (want every country represented so change them fairly often, however, many of the judges are re-appointed) . S.M. - Protocol on the Statute of the Court of Justice of the EEC Complete indep. of the court. States and community institutions are to be represented b4 the court by an agent. Other parties must be rep'd by a lawyer. Prescription of proceedings against the community: Art. 43, Non-K matters are prescribed after 5 years from the date of occurrence of the event. Court always renders only one decision (so always speaks with unanimity). No tradition of dissenting judges. The Court of 1st instance was created in 1988 and operational in 1989 to decrease the workload of the European Court of Justice (ECJ) (See; art. 168 of the Treaty). Its jurisdiction is comprised of categories of actions transferred to it from the ECJ. In these areas it has exclusive jurisdiction subject to the right of appeal to the ECJ on points of law. REMEDIES AND RECOURSE I. REVIEW OF LEGALITY OF COMMUNITY ACTS Arts. 173-175, 184-185 Annulment Illegality Failure to Act Interim Measures II. AREAS OF UNLIMITED JURISDICTION In matters of extra- contractual liability the Court has unlimited jurisdiction: Arts. 172, 178-215 III. PRELIMINARY RULINGS - THE ROLE OF NATIONAL COURTS Art. 177 IV. ACTIONS AGAINST MEMBER STATES Arts. 167, 170 WHY THESE CATEGORIES? One reason for the variety of remedies found in the Treaty of Rome (TOR) is that you have to take into account the variety of interests amongst the different member states (bear in mind that this type of rational is not always applicable to all multi-state treaties. For example, the Atomic Energy Treaty does not, nor should it, take into account the varying interests of subscribing countries; at the atomic level ever country should, in principle, be viewed the same). The TOR is more than just an international treaty with a standard dispute resolution mechanism like arbitration. The TOR is much more intense. Its a supra-national agreement so powerful that in some instances individuals can even invoke it against their own governments. DM: But its not clear that these remedies are well defined. The courts have tried hard to broaden them and inter-relate them, but it is still difficult to outline their exact scope and meaning. However, in the final analysis, there seems to have been a good deal of examination of these remedies. Some, like s.170, appear to be ways of doing things indirectly which otherwise could not be done directly. I. REVIEW OF LEGALITY OF COMMUNITY ACTS (i) Annulment (Art.173) Van Empel: Community treaties allow for community legislation in specific fields but only under several restrictions. Regulations, directives and decisions all need an explicit basis in the treaty (See; Art. 190). The ECJ is charged with the legal review of such provisions. Whenever an act of a community organ doesn't fulfil the necessary conditions it can be annulled by the court. Art. 173 Specifies that the ECJ shall review the legality of acts of the Council and the Commission other than recommendations and opinions. It shall for this purpose have jurisdiction in actions brought by the Member States, the council or the Commission on grounds of 1. Lack of competence. 2. Infringement of a special procedural requirement. 3. Infringement of the Treaty. 4. Any rule of law relating to its application, or misuse of powers. Any natural or legal person may under the same conditions institute proceedings against a decision addressed to them or against a decision which although in the form of a regulation or a decision addressed to another person, is of direct and individual concern to the former. The proceedings provided for in this article shall be instituted within 2 months of the publication of the measure or of its notification to the Plaintiff or, in the absence thereof, on the day on which it came to the knowledge of the latter, as the case may be. (NOTE: An action for annulment is easier to achieve in the European Coal and Steel Community (i.e. its easier to challenge decisions addressed to other persons). DM: The action for annulment id one of the central procedures of the court. The consequences of a well-founded action for annulment are set-out in Art. 174. The act concerned will be declared void (although the poss. of severability exists (i.e. saving the parts that are o.k.)) It raises the question of how far the law making instruments of the Commission are to be subject to review. Historically, you could attack the legislation. Is that what's intended here, to allow an attempt completely annul the law? We're used to the notion that anyone can go to the Supreme Court of Canada to challenge a piece of legislation. Is that the case with Art. 173? can anyone take their case all the way to Luxembourg? Art.173 is actually much stricter. There appears to be a radical difference between the power of states and state organizations to take actions under Art.173 and the power of others (basically, we're talking about natural, legal persons here) to take similar actions. There are more restrictive conditions imposed on individuals and companies. They can only attack a decision, (Art. 173(2)) which is the most particularized of the three possible outputs (with the exception of a regulation or form addressed to a particular person, but of direct interest to some other person.) A challenge Art. 173 is restricted by a two month prescription period, but it doesn't start counting from the day of adoption, its a bit more flexible than that. Why is there this distinction between regulations, directives and decisions (i.e. why are persons limited to seeking the annulment of decisions?) The parties negotiating the treaty wanted to allow for a certain amount of judicial review, but, by the same token, they didn't want to leave every single person in Europe free to take a pot shot at the TOR either. The presiding mentality was that once a bill comes into force at the behest of the member states it cannot simply be annulled by some person with time to kill on their hands. So regulations couldn't be challenged by mere mortals. With respect to directives, pretty much the same mentality prevailed. An individual could, in theory, challenge a directive if he\she could show direct effect, but since directives are directed at the state and not at the individual, the chances of it happening were pretty slim.There are, however, other ways for individuals to raise the legality of certain issues. They can, for example, take an Action in Damages for the damages resulting from the Community rules. Remember, the grounds for lodging a complaint under Art.173 are: 1. There was a lack of competence. 2. Procedural requirements were not have been complied with. 3. There was an infringement of the Treaty. 4. There was a misuse of powers. Bear in mind that in order to attack a measurement, you don't have to attack all of it, it remains possible to just attack part of it. Also, any kind of Act which produces legal effect (ie ratifying a treaty) can be susceptible to a challenge. Several issues must be addressed in order to determine when an action for annulment will be successful. Firstly, we must ask "what acts are susceptible to an action for annulment ? In other words, what is an act for the purposes of Art. 173? The following cases have examined that issue. The Geitling Case I An action for annulment can be brought against a part of a decision. The ERTA Case Is an action for annulment poss. against acts other than those enumerated in Art. 189? Yes. The only acts not under review in terms of Art. 173 are opinions and recommendations. Opinions are declared to have no binding force as per Art. 189 therefore they cannot be placed under review. so the court can review all measures that are designed to have legal effect. In this case, a decision to ratify a treaty (European Road Transport Agreement) could be susceptible to an action for annulment. The IBM Case pg. 53 CSBK In this case, the Court is trying to determine what kind of Act is subject to an Act of annulment. The IBM Co. received a letter saying that the Community had taken an action against them b\c IBM had allegedly infringed on Art. 86 of the EEC Treaty. IBM tried to have the letter annulled. The Court had to decide if the letter was itself an act susceptible of appeal (i.e. could one bring an action against an act that wasn't necc. final?). The Court decided that it wasn't and that, consequently, the case was inadmissible. In Art. 173 an act is any measure which has binding legal effect and is capable of affecting the persons by bringing about a distinct change to his legal position. In principle, an act is only open to review if it is a measure that definitively states the position of the Commission or Council. An act is not open to review if it is merely a provisional measure intended to pave the way for the final decision. Capacity to Bring an Action States are never limited in their capacity to bring an action but individuals face certain restrictions, as noted above. An individuals can only bring an action against a decision addressed to himself. Actions against regulations are impossible and actions against decisions addressed to others are extremely difficult.. An indiv. who wants to challenge an act other than a decision addressed to himself has to overcome 2 hurdles: 1. He must show that the act was really a decision and not a regulation. 2. He must show that the act is of direct and individual concern to him. (See; CAM) So, remember, there are three requirements for an individual to bring an action 1. There must be a legal act. 2. The act must be a decision. 3. The decision must be of direct and individual concern to the applicant. (1) Legal Act The Cement Convention Case pg. 55 CSBK The cartel had received a notice from the community. Was the communication a decision (as the cartel argued) or was it merely an opinion (as argued by the Commission)? The court held that it was a decision b\c once they received the notice they could no longer claim that they enjoyed any immunity from prosecution. The Court therefore decides that this clearly produces legal consequences (i.e. it brings about a distinct change in their legal position) so it can be the subject of an action in annulment. The court is saying that the communication to the cartel was a legal act (in this case a decision) which could form the basis of a legal action. DM: What happens when you have a regulation that, to the mind of the person contesting it, really addresses that person. Should that person be allowed to contest it? Where do you draw the line? (2) The Act Must be a Decision The Cement Convention Case (supra) The CAM Case (1975) pg. 57 CSBK This case concerned an agricultural regulation for price fixing. The regulation clearly identified both of the countries affected by the regulation. The Council adopted a regulation, to take effect Oct. 7th, to increase by 5% the common prices of many agricultural products. The Commission then adopted a regulation pursuant to this that said that the price increase did not apply to the export of cereals whose certification occurred b4 Oct. 7th. CAM sought the annulment of the regulation, arguing that it was not really a regulation but a group of decisions in the form of a regulation that directly and individually concerned a limited number of addressees, including themselves. The Commission maintained that this was simply a regulation and therefore not open to attack from a company. The court held that by adopting these distinguishing criteria the contested measure affects a fixed number of traders identified by reason of the individual course of action they pursued. Such a measure, even if it is one of a number of provisions having a legislative function, individually concerns the persons to whom it applies in that it affects their legal position b\c of the factual situation which differentiates them from all other persons. The Scholten-Honig Case I pg 59 CSBK Regulation on the amount of subsidy to be given on starch that was to be used in the manuf. of glucose. SH was a manufacturer of glucose. He lodged an application for an annulment of the regulation. Argued they were bundles of decisions which were of direct and individual consequence. The court dismissed the application on the grounds that SH lacked the capacity to take the action. This was a measure of general application which applied to objectively determined situations and produces legal effects w.r.t. categories of persons regarded generally in the abstract. The Giuffrida Case II pg. 60 CSBK The Council passed a regulation which amended the basic salary tables of particular groups of staff members. The applicants sought the annulment of this regulation and argued that it was merely a decision that directly and indiv. affects them b\c the addressees were identifiable. The Council argued that the regulation had a general and abstract legislative nature. The court held that it was a regulation. A regulation is a measure of general application where general application means that it applies to objectively determined situations and involves legal effects in respect of categories of persons regarded generally and in the abstract. (3) The Act Must be of Direct and Indiv. Concern The Plauman Case pg. 61 CSBK In a decision, the Commission refused to grant a request of the German gov't for a partial suspension of customs duties on the import of fresh mandarins and clementines. The German importer took an action to annul the decision. The Commission argued that the decision was addressed to a member gov't and was of a specific nature and therefore it couldn't be appealed by an indiv. Also argued that Plauman (the importer) was not directly and individually affected. The Court decided that Plauman was not directly and individually affected. All traders had been equally affected. A person can only claim that he is individually concerned if that decision affects him by reason of certain attributes that are particular to him or by reason of the circumstances by which he is differentiated from all other persons. In this case, the applicant was affected as an importer of clementines (i.e. by reason of a commercial activity) which may at any time be practised by any person. DM: This is a fundamental case, echoed in subsequent cases. If the court had reasoned otherwise then whenever an industry received a decision there would be a challenge. You cannot claim that you are indiv, concerned when you are affected by a commercial activity which can be practised by anyone (b\c you have no particular attributes and you are not differentiated). Its a policy type of decision, too. Want to protect regulations and decisions addressed to 3rd parties from direct challenges. The Toepfer Case pg. 63 CSBK The applicants were a German co. engaged in the wholesale trading of cereals. Some of the maize imported in Germany came from France. A regulation subjected maize imports under certain circumstances to a levy. The customs authority said that the levy would be $0.00 on Oct. 1st. The applicants applied for import licenses that day with the levy fixed in advance at $0.00. The licenses were refused. Then on Oct. 1st there was an increase on the price of the levy with the increase scheduled to take effect on Oct. 2nd. Then, by a decision of Oct. 3rd, the Commission authorized the German gov't , with retroactive effect, to maintain the protective measures up until Oct. 4th inclusive. The applicants brought an action against this last decision. The court held that the Commission's decision did directly and individually concern the applicants. In this case, the only people affected were the importers who applied for a license on Oct. 1st. A factual situation had created a difference between these importers and other persons, distinguishing them individually, just as if they'd been individually addressed. International Fruit Case pg. 65 CSBK A regulation gave protective measure to limit the import of dessert apples from 3rd countries into the community during the period of April 1st - June 30th, 1970. A system of import licenses was created whereby apples were allowed in to the extent that the community market could absorb them without detrimental effects on the prices. Each week, member states would tell the community the quantities of apples requested for the preceding week. On the basis of this info. the community decided how many licenses to issue. The community then issued regulations that said that only 80% of the applications for licenses filed up until March 20th should be granted. Another regulation said the same w.r.t the week ending May 22nd. The regulation was adopted May 28th. The plaintiffs sought to annul this regulation. They argued that it was really a decision that directly and individually concerned them. The court held that it was a decision which directly and individually affected them. The regulation wasn't a regulation but a conglomeration of decisions taken by the Commission. When the regulation was adopted the number of applications affected by it was fixed. No new applications could be added so the "regulation" was really deciding the fate of each of these persons after the fact. These decisions directly affected the plaintiffs by directly affecting their legal position. Even though done by regulation, the people affected were very specific and easily identifiable. The COFAZ Case pg. 67 CSBK In the Netherlands, a gov't owned company granted special rebates for Dutch Ammonia produces. The cheap ammonia allowed the dutch nitrate industry to produce their fertilizers much cheaper than their competitors. The French Assoc. of Nitrate Fertilizer Producers (or FAONFPOEEC, just kidding) complained to the Commission. The Fr. and Belgium gov'ts also objected to the Dutch tariff system. The Dutch company was nice and decided to change its tariff structure so the Commission issued a formal decision withdrawing any proceedings it had initiated against the company. The Fr. Assoc. of Reticent Tariff-Watchers (FART) were still unhappy and believed that the tariff was still discriminatory. They sought to annul the Commission's decision. A regulation addressed to a 3rd party but which affects the 1st party (The competitor got a better price for Ammonia). They were given standing. The court decided that the decision addressed to the dutch company was of direct and indiv. concern to the Fr. association. In this case there was direct concern b\c the Commission's decision left intact all of the effects of the tariff system in place, when the applicants had sought to abolish the system altogether. The applicants successfully demonstrated that the Commission's decision may have adversely affected their legitimate interests by jeopardizing their position in the market. DM: Art. 173 states very broad powers but subjects individuals and companies to much stricter tests of standing than we are accustomed to here in Canada. It makes attacking the regulation virtually impossible and allows for attacks on directives only where clearly identifiable. But, remember, one doesn't just need standing. You also need a case. Its under these 4 headings that you can attack community law and its these 4 headings that the Court has used to broaden the law. Up until now, we've been looking at who can take the action and, specifically, under what circumstances can a person take an action. In the cases that we've looked at, the person was usually complaining that there had been some violation of the treaty. But remember, there are 4 possible grounds for taking an action under Art. 173 and this includes "failure to comply with a procedural requirement." The following is a case argued on exactly that ground. The Maizena Case pg. 79 CSBK Maizena challenged certain provisions of a Council regulation. The regulation was based on Art. 43 and required consultation with the Euro. Parl. Maizena claimed that the consultation that the regulation had undergone was insufficient (Euro. Parl. intervened to agree with Maizena). This is how it worked: The council sent a Commission proposal to the Parl . for discussion in the April session. Parl., however, didn't discuss it in April b\c they 1st had to send it to their committees. In May, the committees approved the proposal but the Parl. rejected it. Parl. wasn't in session btwn. May - Aug. b\c of Parl. elections, but said that an extra session could be convened at the request of the Council. Commission or Parl. The council didn't request an extra session, instead they just adopted the regulation. In other words, sufficient time hadn't been allowed for but it was adopted anyways. The Court decided that a fundamental procedural error had been committed. The consultation was an essential formality and disregarding it meant that the measure adopted would be void. Cases Dealing with Infringement or any Rule of Law Related to its Application The Handelsgesellschaft Case pg. 82 CSBK H received an export license for cornflower which required a deposit of a certain sum of money. When H didn't export the entire amount of cornflower, he lost his deposit. H argued that this was a violation of his basic human rights and therefore unconstitutional. he argues that b\c such fundamental freedoms are part of EC law any regulation which violates these rights must be deemed to be void. The court held that the system of deposits was contrary to German constitutional law. but recourse to national law rules or concepts in order to judge the validity of community measures would have an adverse effect on the uniformity and efficiency of community law. The validity of such measures can only be judged in light of the community law. The law stemming from the Treaty cannot b\c of its nature be overridden by rules of national law b\c this would call the legal basis of community laws into question. so its to be judged by community law. The respect of fundamental rights forms an integral part of the community law. The court decided that general principles of Human Rights Law form part and parcel of the community law and come under the heading of Art. 173(3)(1). The Court decided that the deposit had been an approp. measure for the agr. market and that it did not violate fundamental rights. The Nold Case II pg. 83 CSBK Nold argues that a decision should be annulled b\c it infringed rules of law relating to the application of the Treaty. It infringed on his fundamental rights. He argued that the restriction on trading rules violated a right akin to a proprietary right as well as a right to freely pursue business activities, a right protected by the constitutions of several of the member countries, as well as by internat'l treaties. The court pointed out that fundamental rights form an integral part of the general principles of law, the observance of which the court ensures. In safeguarding these rights, the court is bound to draw inspiration from the constitutional traditions common to the member states. Also, internat'l treaties fr the protection of human rights on which the member states have collaborated or of which they are signatories can supply guidelines which should be followed within the framework of the common law. In this case, the court felt that the disadvantage claimed by Nold was due to an economic change and not to the decision adopted by the community, therefore, his application was dismissed. DM: Just b\c a national law regards s\t as a fundamental right or freedom, doesn't mean that the community law does as well. The community law is supreme and the Treaty is an indep. source of law, therefore, we must look at the community law on its own, but we can look at the constitutions of member states to draw guidelines. O.K. that's it for Action on Annulment. (ii) Failure to Act (Art. 175) Art. 175 is related to Art. 173 particularly where private parties are concerned. It involves a complaint that the Counsel has failed to take a decision(s) that it should have taken. It is usually invoked when there is a specific goal set (e.g. the removal all tariffs within 10 years) and the necessary steps have not been taken to achieve that goal. It is also used by persons who want the community to do something. It need not only be invoked against the Counsel but can be invoked against the Parliament as well. A very similar test as the one previously examined is used to determine whether or not the entity invoking Art. 175 has standing. Bear in mind that Art. 175 cannot be used by private parties to force individuals to act. an once a decision has been taken by the Counsel on some issue, Art. 175 cannot be used to try and make the Counsel go back and reach a different conclusion. What's being sanctioned here is the failure to make a decision, any decision. The Steel Subsidies Case pg. 89 CSBK The French gov't granted some French steel companies some low interest loans. these loans were not prohibited by the ECSC. The Commission confirmed this opinion in letters to the French gov't. The dutch learned of this and didn't agree with it. They requested the Commission to issue a decision declaring that the French gov't had violated its obligations under the ECSC. After waiting a while, the dutch gov't finally lodged an appeal under Art. 35 for a failure to act. The court held that the Dutch gov't couldn't use Art. 35 b\c the time was prescribed to make that request. (Note: Art. 35 ECSC corresponds to Art. 175 EEC Treaty). A reasonable time limit had been allowed for and that time had passed, so the matter was prescribed. DM: The necessary inference is that the time limit under Art. 35 ECSC (and , consequently, Art. 175 EEC Treaty) is 2 months. See Art. 184. This article can be invoked after the prescription periods for Art. 173 have expired where an individual is the object of a particular community measure and that individual feels that its illegal, they can raise this before the Court. But there has to be an action before the Counsel before these interim measures can be invoked. (iii) Plea of Illegality Not done in class this year. An indiv. may want to bring an action against a decision addressed to him which is based in an irregular regulation. In such a case, he would have no judicial remedy as the decision is not illegal and the underlying regulation is not to open to attack by individuals. To remedy that situation, the indiv. may invoke the illegality of the underlying regulation when attacking the decision. The Meroni Case (1958) pg 91 CSBK M objected to certain decision in which powers were delegated to some pvt. institutions in Brussels. The court held that an applicant's right to take advantage of the irregularity of general decisions or recommendations cannot lead to an annulment of the general decision or recommendation but only to an annulment of the individual decision based on it. (iv) Interim Measures (Arts. 185, 186) Not done in class this year. Art. 185 Actions brought b4 the court of justice shall not have suspensory effect. the court of justice may, however, if it considers that circumstances so require, order that the appreciation of the contested act be suspended. Art. 186 The court of justice may in cases b4 it, prescribe any necessary interim measures. II. UNLIMITED JURISDICTIONS (Non-K Liability; Arts. 178 and 215) The rule of contractual liability is that its governed by the law of the contract and by standard private international law rules. Non-contractual liability is governed by Arts. 178, 215. The Court is required by subsection 2 to determine the common rules of "delict" amongst the countries. Because of this subsection, the community has gone ahead and built up a wealth of law in this area. The CNTA Case pg 102 CSBK CNTA sues the community b\c of a regulation which abolished compensatory amounts. The court decided that since the disputed measure is of a legislative nature and constitutes a measure taken in a sphere of economic policy, the community cannot be liable for any damage suffered by individuals as a consequence of that measure under art. 215(2), unless a sufficiently flagrant violation of a superior rule of law for the protection of individuals has occurred. The community is liable if, in the absence of an overriding matter of public interest, the Commission abolished the compensatory amount without warning and without adopting transitional measures which would permit traders to either avoid the loss or be compensated for that loss. The Krohn Case II pg 105 CSBK Krohn requested the German gov't to issue it some licenses for the import manioc from Thailand. Germany refused the request on the instruction of the community. Krohn brought an action against the community relying on the illegality of the community instructions. The court held that the community can be liable if it told the national institution to act that way. It may be the case that the applicant must first exhaust all local/national measures for obtaining annulment but only when those national rights provide an effective means of protection for the individual concerned and if they are capable of resulting in compensation for the damage done. So if there is no remedy, or an insufficient remedy provided by the domestic system then the person can go to community law. DM: With a damage action, you can raise issues of illegality even after the 2 month prescription set out in Art. 173. III. PRELIMINARY RULINGS This has become the central remedy in many ways. Many of the most significant cases have gone to the Court under Art. 177. The purpose of Art. 177 is to fit the court into a system whereby virtually all community law is fit-in/administered by members of the Community in accordance with their own traditions and interpretations. This article allows the Court to impose a uniform interpretation of Community law. Only the Court can give this kind of opinion (i.e. an authoritative interpretation of the legislation). It occurs when an EC regulation which is directly applicable is involved in a dispute in a domestic court or if there is a dispute concerning whether a measure is a customs barrier. The local court must stop the case and refer it to the EC Court. The domestic court essentially asks the EC Court for guidance but only in terms of the interpretation not on the facts or the verdict. The court of justice only controls the legality of the community law. Its appreciation is left to the national courts. These courts must apply the community law as part of their national legal system. When applying community law, national courts may face the question of interpretation or validity of community law. They may, or if its the highest national court then they must, obtain the official interpretation from the court of justice. This official interpretation is called the preliminary ruling. The procedure of preliminary ruling was introduced primarily to guarantee uniform interpretation within all of the member states of community law. In addition to using Art. 177 to interpret community law, one can use this ruling to learn the validity of community acts. This widens the scope for judicial review b\c while the indiv. is unable to bring an action b4 the court of justice for annulment of regulations or decisions addressed to others, he may invoke the illegality of the act b4 the national court (see above). The national court then asks for a preliminary ruling on the validity of that act. If the court of justice rules that the act is invalid then it cannot be applied by the national court which actually means that the act has no practical force in law. The Costa - ENEL Case pg 114 CSBK The Justice of the Peace in Italy asks for a prelim. ruling on the compatibility of the countries nationalization law with the Treaty. The court held that the national court against whose decision there is no remedy must refer the matter to the ECJ for interp. whenever a question of interp. id b4 them, This provision does not give the ECJ any jurisdiction either to apply the Treaty to a specific case or to decide upon the validity of the domestic provision w.r.t the Treaty. Art. 177 is based upon the clear separation of powers. The ECJ, therefore, is not empowered to investigate the facts of the case or to criticize the grounds and purposes of the request for interpretation. The Schwarze Case pg 115 CSBK A national court referred several questions of interp. to the ECJ. The french gov't argued that many of these went beyond interp. and concerned the actual validity of the decisions. The issue was whether the ECJ, when approached under Art. 177(1) could decide on the validity of an act of a community institution. The court held that when the real purpose is to look at the validity a.o.t. interp. it is appropriate for the court to inform the national court at once of its view without compelling the national court to comply with the purely formal requirements which would uselessly prolong the procedure under Art. 177. Strict adherence to formal requirements are inappropriate to the special field of judicial cooperation under Art. 177. So the ECJ doesn't have to refer the question back to the national court in order to change the question to one of validity a.o.t. interp., the ECJ an just do it itself. The Foglia Novello Case II pg 116 CSBK Two parties to a dispute, both agree that certain charges levied by France are illegal., merely seek the condemnation of France. The court refers to ECJ prelim. ruling on the legality of the charges. The ECJ decides that since the two parties agree w.r.t. the result obtained, Art. 177 can't be used. Art. 177 can only be used when the courts need to interp. community law to settle a genuine dispute brought b4 them. The court applies for a new prelim. ruling b\c finds this first one to be insufficient. The ECJ refused to give another prelim. ruling. The Obligation to Request a Preliminary Ruling The CILFIT Case pg. 124 CSBK Art. 177(3) must be interpreted as meaning that the court or tribunal, against whose decision there is no judicial remedy under national law, is required, when a question of community law is b4 it, to comply with its obligation to bring the matter b4 the court of justice unless it is established that : 1. The question is irrelevant; 2. The community provision in question has already been interpreted by the court; or 3. That the correct application of the community law is so obvious as to leave no scope for any reasonable doubt. In other words,once the court of justice has interpreted the law, it is then enforceable throughout the community and is accepted as the only alternative. The court made it very clear that all questions of interpretation must be referred to it unless; "...it has been established that the question raised is irrelevant or that the Community provision in question has already been interpreted by the Court or that the correct application of Community is so obvious as to leave no scope for any reasonable doubt." The court has left very little room for anyone else to interpret the law but itself. The Foto-Frost Case pg .127 CSBK Art. 177 says that lower courts may request a preliminary ruling on the validity of community acts. does this mean that the lower court is entitled to review the validity itself or is it under an obligation to request a preliminary ruling on its validity? The community court pointed out that only it is entitled to decide if a community act is invalid. The national courts do not have the jurisdiction to declare community acts invalid. The reason is to encourage the uniformity in the application of community law. If the courts could annul acts then there would be discrepancies from place to place and this would go against the principle of legislative certainty which is a fundamental requirement. Also, a coherent system has already been established by the Treaty in Arts. 173, 177 and 184. This is a system of legal remedies and procedures which allow the court to review the legality of community acts effectively. Today, its not so clear, the question might be decided differently. The court is beginning to question whether or not domestic courts can declare community acts illegal (see par. 19 of the case). Up until now, it been a monopoly in the hands of the community court with the only the community court interpreting community law and the domestic courts bound to apply it. IV. ACTIONS AGAINST MEMBER STATES TAKEN BY THE COMMUNITY Actions can be brought against a member state by (1) the Commissioner (Art. 169) and (2) other member states (Art. 170) when they believe that the member state has failed to fulfil its obligations under the Treaty. If the Commission feels that the member state hasn't fulfilled its obligations it: 1. Gives the state the poss. to explain. 2. Delivers a reasoned opinion on the matter. 3. If the state doesn't comply with the opinion within the period laid down by the Commission then the Commission can bring an action. If another member state feels that another member state has failed to comply with its obligations under the Treaty it: 1. Brings the matter to the attention of the Commission. 2. Commission gives the state a chance to explain,then delivers a reasoned opinion on the matter. 3. If the state doesn't comply then the complaining state can bring an action. The Lutticke Case I pg 139 CSBK L asked the Commission to start a proceeding against Germany. The Commission didn't agree that Germany had violated the Treaty and therefore felt that L did not have any right to ask for such an action. L brought proceedings against the Commission under Art. 175 (failure to act). b\c it failed to act against Germany and under Art. 173 to try to get the letter of the Commission annulled. The court held that w.r.t. Art. 175, the Commission had defined its position in this case so there can be no action here and w.r.t. Art. 173,the letter is not a binding act and therefore no action to annul was granted. So it appears that you cannot force the Commission to act if you believe that the Commission is wrong. The Art Treasures Case II pg 140 CSBK In Art Treasure Case I the ECJ had held that the Italian gov't had failed to fulfil its obligations under the Treaty b\c it continued to impose a tax on the export of treasures to Member States. Two years later, the Italian gov't had still not repealed the law and continued to enforce it. The Commission brought a new action b4 the ECJ for its failure to fulfil its obligation. The Commission argued Art. 171 b\c Italy had not taken the neccess. measures to comply with the previous ECJ judgment. Just b4 the judgment in this case, Italy informed the ECJ that it had repealed the law with retroactive effect. The court decided that Italy had failed to fulfil its obligation. Failure to comply with the court's decision constitutes a violation of the Treaty as per Art. 171. E.E.C.N.T.C. Oct. 19 & 22 Stacey 288-5675 REMEDIES: There are two recent decisions on procedural matters relating to judicial review: i) LES VERTS V EUROPEAN PARLIAMENT ii) EUROPEAN PARLIAMENT CASE i) Parti Verts was a case where the court discussed the nature of different institutions of the Community. The Ecologist Party, a minority party, objected to the rules wrt the distribution of $ for elections. They brought an action against the Parliament and the Commission for their decisions as to allocation of funds. The European Parliament decided to set up a system of financing for the expenditures of political parties. It was adopted as part of the budget. This system clearly favoured those parties already involved in the parliamentary scheme. The PV's argued that money should be allocated pro rata instead and challenged the existing system under article 173. Q: did the new party legally exist? Yes, it was made up several old parties combined. Q: was the party directly and individually affected? Yes. Q: does article 173 give a legal recourse against the Parliament? Yes. The parliament argued that its decisions could not be attacked because of article 173(1) which states: "the court of justice shall review the legality of acts of the council and the commission, other than regulations." There is no express mention of the parliament being included in such a review. The Court used the principle of legality to state that it would be incompatible to restrict such a remedy to the Council and the Commission. Even though the Parliament is not explicitly referred to the remedy applies to their actions as well so as not to go against Community order. This is an excellent example of the use of broad principles in law. ii) European Parliament Case was a case where the Parliament objected to a legal instrument adopted by Council and wants to annul it. The action was brought under article 173. Issue: can the parl bring an action for annulment of acts of the commission or the council under a.173 although the parl is not mentioned? Held: no. In order to be eligible to bring an action under a.173 the applicant must be directly and individually concerned by the content of the action they're contesting. Therefore the parl is not eligible. The Court said that Parti Verts did not apply because the case at hand did not deal with individuals. Here, Parliament already had a large role ,as it acted as a consultant, but it did not have an implied right to annul. The Court indicates that its purpose is to guarantee the equality of the Commission, the Council and the Parliament. DeM says that these are two important decisions on procedural matters with regard to judicial review. He also said that the barriers created by a.173 can be overcome by using a.177. The court has expanded the scope of the remedies and their jurisdiction. In Francovitch, the court held that where a state fails to implement a EC directive, decision or regulation and damage has occurred to an individual there must be an indemnity for that individual. This gives as strong incentive to the Member States to implement. The obligation is the uniform application of Community law across the Community. This case shows the Court venturing out into uncertain and unclear areas and expanding the ambit of EC law. RELATIONSHIP BETWEEN EC AND NATIONAL LAW: DeM says that the problem is an interesting example of a much broader question in international law: HOW DO YOU IMPLEMENT LAWS? It reflects the shift from international laws between the states to how economics are going to affect the policies and laws within the Member State's territory. In the EC close integration was predicted from the start. The Community is described as a supranational organization. RHONDA'S: the central question of EC law = to what extent is there a willingness to let go of economic and/or political power on the part of the states? What are the commitments of the states to the goals set out in a.2? Note that the ultimate sanction is being expelled from the Community. The court has given a number of powerful images to explain the relationship, stressing the two legal orders. It has defined the competence and the application of EC law, it is supreme therefore defines its own jurisdiction. For Community law to develop it was necessary to overcome domestic procedural and constitutional hurdles. For example, each country has different traditions of judicial review. 4 ISSUES: 1) what is the extent of the duties of the states to implement? 2) how good are the remedies that are available to enforce the Treaty? 3) how successfully has Community order defined itself? 4) how successfully have domestic courts overcome hurdles? The Treaties establishing the EC have created a new legal order which can neither be explained in terms of general international law nor be described as a particular type of national law. In a series of decisions the Court has ruled that the legal system set up by the Treaties is autonomous in its own sphere. Even though it's a legal system sui generis there is still a need for close contacts between Community legal order and the legal systems of the Member States. Community legal order said to be integrated with the municipal legal systems of the Member States. Therefore, municipal courts and ECJ apply Community law. Different approaches taken by Member States for implementation: Germany says it's part of their domestic law, France says if ratified it will superceed all other laws, Holland gives primacy to international law, Denmark and Britain take the Canadian approach- say it must be set up by national parliaments, can violate international laws and will if done expressly. Cannot interpret the laws detrimentally, future parliaments are not bound by the supremacy of EC law. Interpret the laws to ensure that the Treaty is given effect. It is within the capacity of the Court to review and rule on the legality of EC laws. Germany was the only country that had full scale judicial review. Now France has it for before laws are adopted (so does Spain, Portugal, Austria, Italy). This implies that there is no real judicial review. More and more there are constitutional accords which are issued in order to circumvent this lack of review power. Sanctions: Questions: are these adequate remedies? How widely available are the mechanisms to implement? The effectiveness of the remedy is a good way to test the relationship between the Community and the Member States. THE DEVELOPMENT OF COMMUNITY LAW AS AN AUTONOMOUS SYSTEM THE COMMUNITY'S NEW LEGAL ORDER Van Gend en Loos The Community constitutes a new legal order of international law for the benefit of which the states have limited their sovereign rights in limited fields. Subjects comprise Member States and nationals as well, therefore Community law imposes obligations and confers rights on individuals. These rights arise: i) when expressly granted in the Treaty ii) by reason of obligation which the Treaty imposes in a clearly defined way upon the individual. Article 177 - the object of this is to ensure uniform interpretation of the Treaty by the national courts. It confirms that the states have acknowledged that Community law has an authority which their nationals can invoke. This case states that the objective is to create a common market therefore it is more than just an agreement of international law that merely creates mutual obligations between states. Institutions have been created and endowed with sovereign rights, the Community speaks to the Member States and their citizens. It is a new legal order, the states have limited their rights. The Court makes it clear here that if a conflict arises the Community law will prevail. Reliable Importers Facts: Regulation for a manufacturer exporting tinned meat which allowed them to be exempt from paying an import levy on the frozen meat needed for their exports. The German authority said that a condition was that the exporter had to be reliable. Issue: Did EEC regulations permit further national requirements or were they exhaustive? Held: Uniform application of Community provisions allows no recourse to national rules except to the extent necessary to carry out those regulations. No such need was established in the case at hand. Such rules cannot be applied if they are based upon criteria which doesn't conform to Community rules (ie: if too much discretion is left to the member states) because this may lead to a difference in treatment between importers of various member states. This would result in a lack of UNIFORMITY. Therefore, even if there is room for national legislation there can't be enough so as to compromise the uniform application of Community law. Any creative limitations that work to the detriment of an individual will not be accepted. Walt Wilhelm Facts: W was fined for violating German competition law. The EC had already initiated proceedings against W for the same offence under EC law. Issue: Are cumulative proceedings possible? Held: YES, except in the case where it will prejudice the full and uniform application of EC law or the effects of its measures taken to implement it. Member States can't have measures which would prejudice the practical effectiveness of the Treaty. The binding force of the Treaty must not differ from one Member State to another because of internal measures. When there's conflict the Community rules take precedence. Community law is binding with regard to existing and future domestic law. If the ultimate general aim of the Treaty is to be respected then a parallel domestic proceeding cannot prejudice uniform application throughout the Community and the uniform effect of Community law. This is a reaffirmation of the supremacy of Community law. DE M SAYS THAT THIS IS A RADICAL LIMITATION ON PARLIAMENTARY SOVEREIGNTY. NOLD: fundamental rights are an integral part of the general principles of Community law. to safeguard these rights, the court is bound to draw inspiration from the constitutional tradition common to the member states and it cannot uphold measures which are incompatible with the fundamental rights recognized and protected by the constitutions of those member states. also, there are international treaties for the protection of human rights on which the member states are signatories or collaborated on and can be used as guidelines. This case dealt with a doctrinal debate. The German constitutional court said they had supreme international human rights which prevailed over Community law and therefore could not be subjected to the European court of justice. The Court (ECJ) resolved the problem by saying that human rights are part of Community law and the Court will always apply them. DE M questions if supremacy was maintained and did not think that the issue was entirely resolved. Cross's article reviews recent cases on supremacy with regard to the American concept of pre-emption. More and more the ECJ is being influenced by USA. The ECJ has been going into the member states and has been pre-empting their domestic laws. This contrasts with Canada where we do not talk overtly about pre-emption, in USA there's an express provision permitting it. In the Community, there are some areas (ex: agriculture, fisheries) where the Community authority is not clearly defined yet. The local government rules until the Community decides to overtake them. There is an increasingly federal concept of Europe. As more explicit authority of the EC evolves so will the doctrine of supremacy. NB: the SEA gave a huge extension to Community power. The Bold Assertion\ Assumption is that where the EC acts it does so supremely. If you're still confused about the difference between direct application and direct effect then read on. I've tried to explain the distinction as clearly as possible. DIRECT APPLICATION in the ideal case a directly applicable provision satisfies: (a) the provision imposes a clear and precise obligation (b) the obligation is not qualified by a reservation or condition (c) no further legislative intervention of the Member State or Community institution is needed. Basically, a directly applicable provision is capable of standing on its own. A provision may be held to be directly applicable if the Member states do not have a lot of discretion in executing or implementing it. DIRECT EFFECT Several provisions have been held to have direct effect: 7, 9, 12, 13(2), 16, 30, 31, 32(1), 34, 37(1)(2), 48, 52, 53, 59, 60, 85(1), 86, 90(1), 93(1), 95(1)(2), 119. Others have been held not to have direct effect: 5, 32(2), 33, 67, 71, 90(2), 92(1), 97(1), 102, 107. Basically, a provision which has direct effect is one which is automatically enforceable against that member state and can be invoked by any citizen or against any citizen. They can be invoked by governments and citizens. Generally, regulations are directly applicable and have direct effect. There is an argument that only regulations are directly applicable because of a.189, but if this is true then the Community won't get very far. If an individual proves that an article has direct effect on him then any conflicting national law must fall beneath the supreme EC law of the Treaty. Winter's article was written at a time when there was no answer and the court attempted to explain article 189. It said that all regulation, directives and decisions were binding in their entirety and were directly applicable to all of the member states. He said that the rules of Community law were directly slated into the member state law with nothing else needed. If Winter is right then article 189 cannot be read literally because it only expressly allows regulations to be directly applicable. Authors after Winter have said that a broad vision of direct applicability and direct effect is needed. Steiner says that direct effect is necessary and useful wrt EC legislation and that it should cover any legally binding act that is capable of creating an immediate obligation. Concepts of supremacy would be compromised and a.177 would not be useful if there was no concept of direct effect. Therefore, once there is an unconditional, clear and precise obligation that is absolute it is capable of having direct effect regardless of whether it comes in the form of a regulation, directive or decision. GRAD issue: can an individual invoke a decision? held: Yes, decisions can have direct effect. Even though a.189 only mentions direct effect wrt regulations that doesn't mean that other categories of legal measures could never produce similar effects. One must examine whether the provision in question, by its legal nature, background and wording, is capable of producing direct effects in the legal relationship between the addressee of the measure and a third party. RATTI facts: R affixed labels to dangerous substances in compliance with a directive that the Italian government had yet to implement and was therefore contravening Italian law. held: After the expiration of the period fixed for the implementation of the directive a member state may not apply its internal law, which has not been adopted in compliance with the directive, to an individual who has complied with the requirements of the directive. Directives can have direct effect under a.189. BECKER facts: Germany failed to implement a directive and an individual wanted to benefit from that directive. held: a.189 makes it clear that wrt directives the member states are under an obligation to achieve a result before the expiration date set by the directive. Even if it has nit been implemented, if the directive is unconditional and sufficiently precise it may be relied upon by an individual against any national provision which is incompatible. The member states cannot plead against the individual its own failure to perform the obligation which the directive entails. Therefore, an individual can rely on the directive against a government. MARSHALL facts: general retirement policy, women to retire at an earlier age than men. Argued that this violated the EC policy of equal treatment directive. Argued that the directive had horizontal direct effect and therefore it applied to private employers as well. held: the policy did discriminate on the basis of sex. The provision was sufficiently precise and unconditional so an individual can rely on it to avoid the application of a national provision which does not conform to the directive. KOLPINGHUIS facts: legislation implementing the directive was only passed after the facts against K were alleged to occur. held: state cannot use a directive not yet in force to determine the criminal liability of a person. This would violate the principle of legal authority and the prohibition of retroactive effect. SLAUGHTERED COW1 facts: regulation stated that farmers with 2 dairy cows qualified for a slaughter premium and that it was to be paid within 2 months of the delivery of the certification of the slaughter. Member states were allowed to make further rules. Italian government issued directives but decided that their execution would be postponed until the necessary budgetary provisions were adopted. Mrs. L slaughtered cows and claimed a premium. issue: were the regulations directly applicable in the Italian legal order and did they create a claim which an individual could enforce against a state. held: a. 189 makes regulations directly applicable and they have direct effect on account of their nature. Budgetary provisions of a member state cannot stand in their way. PRINCIPLES: individual can claim the benefit of a directly applicable regulation. member states cannot hide behind the failure to take necessary measures. SLAUGHTERED COW2 facts: regulations not effectively carried out by Italy. The Commission complains of the dilatory implementation and the legal methods used by Italy to give effect. held: delay in preforming the obligations imposed on Italy constitutes a default in its obligations. Regulations come into force upon the public therefore all implementing measures that would create obstacles to the direct effect of the regulations and would jeopardize their simultaneous and uniform application in the entire Community are contrary to the Treaty. COMET issue: do directly applicable provisions of the treaty require the member states to grant individuals an independent right of action which is unaffected by procedural limits in the national laws. held: not really. National courts are the ones which must ensure that legal protection is conferred on individuals by the direct effect of the Community's provision. If there are no Community rules then it is the national legal order which sets out the procedural rules. however, these rules must not be less favourable than those governing the same right of action in an internal matter. Note that this is a strain upon the principle of uniformity and efficacy due to the fact that different procedures are used in different countries to enforce Community law. SIMMENTHAL facts: Italian constitutional court is the only court that can declare a national law unconstitutional. issue: was it necessary to go before the constitutional court in order to attack a Community law? held: no. Direct application means that the rules of Community law must be fully and uniformly applied to all member states. These provisions are a direct source of rights and duties for all those affected. It is the task of the national court, as an organ of the Community, to protect those rights. Precedence of Community law means that any inconsistent national law is invalid. Any provision of national law that prevents courts from being able to apply Community law, or prevent the Community rules from having full force, are incompatible with the requirements that are the very essence of Community law and must therefore be set aside. RHONDA: -cases dealing with community regulations seem to be saying that regulations are directly applicable and that by their very nature they have direct effect. -directives and decisions can also have direct effect: a directive must be unconditional and sufficiently precise. examine the legal nature, background and wording to see if a provision is capable of producing direct effects. -an individual can rely on a directive in proceedings even if the directive has not been implemented in the necessary time period and it conflicts with national law. -a state cannot use a directive not yet in force against its citizens to determine criminal liability. DE M: -Notions of direct application and direct effect say something about the degree of integration of Community law into domestic legal systems. -with direct effect the member states alone don't determine the scope of their commitments to their nationals. -have we reached a point where there is no distinction between a regulation and a directive? no. there are still differences, directives have direct effect in more limited circumstances and require a transformation. Oct.29,1992. 1) Direct Effect/Direct Application 2) Foreign Relations 3) Extra Territorial Effect Direct Effect/Direct Application (Factorame Case) The Factograme case was the most important of a series of cases regarding direct effect. The case deals quite specifically with the battle between the notion of parliamentary supremacy in the U.K. and the effectiveness of Community law. The case is instructive by exemplifying a modification in the traditional policy that the laws of the British parliament could not be challenged in court. It goes to the root of the power struggle between the EEC and a Member State government. The interesting aspect of the case is that the U.K. courts had to defer to the European courts on specific questions of law. Although the U.K. statute which brought the U.K. into the EEC, states that European Community Law is the law of England, and empowers the courts to declare a conflict, it does not indicate the type of action to be taken in this situation. Factograme case (1990) The applicants were owners of deep sea fishing vessels registered under the British Registry. The Merchant Shipping Act of 1988, imposed new regulations requiring that at least 75% of the beneficial ownership remain in the hands of British citizens or companies. The applicants were Spanish nationals and, therefore, their vessels could not qualify as British. The applicants thereafter sought to challenge the validity of the legislation claiming that it contravened the provisions of the EEC treaty by depriving them of their Community Law rights. Since the loss of the fishing license would cause the company to suffer irreparable damage, the Divisional Court requested a preliminary ruling from the ECJ on the substantive validity of Community law in order to determine the application of Community Law. It also granted an interim injunction pending a final decision on the matter so that the applicants could resume operating their vessels in the interim. The Secretary of State appealed against the granting of relief to the applicants because under common law the court did not have jurisdiction to grant an interlocutory judgement against the crown or a judgement impeding the crown from fully enforcing a statute. The appeal was allowed and the whole thing went up to the House of Lords, who referred the Question to the European Court. The ECJ held that a national court was required to set aside a rule of national law if that rule is the sole obstacle from granting interim relief in a case concerning Community Law. If the court does not do so then the it risks impairing the full effectiveness of the subsequent judgement to be given on the substantive issue. The House of Lords held, based on this preliminary ruling, that a court confronted with an issue as in the case where an applicant claims that an injunction should be granted based on the invalidity of the authority, the court should use its discretion according to the balance of conveniences. The H.of L suggests that a court should consider the importance of upholding the law of the land in the public interest and in the interest of social stability. The court should not restrain an apparently authentic law unless it was satisfied , having regard to all the circumstances , that the challenge to its validity was prima facie so firmly based as to justify such an exceptional course being taken. The H.L held in this case that the damage caused to the applicants without interim relief outweighed the Secretary of State's evidence, based on the balance of conveniences. note: The doctrine of direct effect sets off the Treaty of Rome with all other domestic law. All regulations are made by the EC and not the domestic legislatures. Until 1980, the courts did not use the concept of direct effect but rather entertained a broader concept referred to as direct application. The ramifications are that Treaties need not be transferred into domestic law by some art, that is by the legislating of a special Act. In this case the Treaty is law. Not only does the Treaty become part of your law (EC Law) but it produces effects (direct effect) such that citizens can invoke these laws against state governments and against the Community itself. Foreign Relations. The external competence of the EEC with regard to its participation in international relations depends upon its capacity to enter into international legal commitments. Its capacity is defined by the Treaties which have created the EEC. The parameters of the EEC's external capacity is as broad as the " field of objectives defined in part one of the EEC treaty "(ERTA case). The authority to act internationally stems not only from the express conferment by the treaty but also is found implicitly from other related provisions. The authority to act externally is conditional upon the necessity of achieving one of the objectives of the Treaties. The ERTA case further develops this notion. Where the Community has the power to exercise authority in a particular circumstance, does not prohibit the Member States to legislate in that area. It is only where the Community enacts legislation with the objective of establishing a common policy envisaged by the Treaty, that the member states then do not have the right to contract with non-member states with regard to the common policy. There cannot be a concurrent authority on the part of the member states. ( ERTA case ) The ERTA case was the first of several cases which combine to hold that if the Community has legislative power in a given area of law, the authority is not restricted to internal matters but may be extended outward as well. The Community has become an actor in the international scene, however, a question still exists as to the scope of such power, since the Community is a non-sovereign power. Armand( get the hell out of my class!!!) de Mestral offered several examples of the Community's status as international actor. Canada for example, has two ambassadors in Brussels. One for Belgium and the other for the EC. In Ottawa, similarly, a delegation of the EC is resident. Another example of EC foreign relations having an international dimension is the case of Italy and France wanting to take over de Havilland aircraft in Canada. The Dutch argued that art. 86 of the Treaty( competition) would be offend ed since the acquis ition by Franc e and Italy of de Havill and would have the effect of conce ntratin g too much of the indust ry in those countr ies' hands . The Frenc h gover nment was pushin g Bob Rae to convin ce the EC to allow policy (art. 86) to be contra vened . It is clear then that Memb er gover nment s have not lost their intere st in econo mic activiti es, howev er, legally where the Comm unity has jurisdi ction , they remai n in charg e. There does exist nonetheless a form of power struggle between states and the Community. de Mestral suggests the litigation over sea boundary and fishing rights of St. Pierre et Miquelon as an example. In this case the EEC wanted Canada to negotiate with them as opposed to France. France , however, emphasised that what is at stake in such a negotiation are the rights of France and its Colony. France enjoys these sovereign rights under international law and, therefore, are privy to the negotiation with Canada. Which ultimately they were. The Law of the SEA (1973) negotiations demonstrate the insistence of the EEC to be represented in the UN talks. At the Conference, there was some infighting among the individual states and the EEC pertaining to the jurisdiction of specific matters. The relationship between community law and international law : the question of direct effect. In order for a Community subject to be able to contest a Community act on the basis of rights claimed under international law, the Community must not only be bound by that provision of international law but one must also consider the meaning,the spirit, the general scheme and the form of the provision and of the agreement in which it is included. p.677. Kupferberg Case Prior to Portugal's membership in the Community, an economic agreement was made between the two parties. Art. 21 of the Agreement reads as follows: " the contracting parties shall refrain from any measure or practice of an internal fiscal nature establishing whether directly or indirectly, discrimination between the products of one contracting party and like products originating in the territory of the other contracting party". The plaintiff, a German importer, is arguing the validity of an import tax on port wines he is bringing into Germany from Portugal. The Treaty establishing the Community has given it the authority to make agreements with non-member states and international organizations in accordance with the provisions. A question exists, however, whether the agreement in principle is capable of having direct effect in the member states of the Community. In this case it is necessary that the agreement does have direct effect in order for the German importer to use this agreement against the tax regulation of his country. The plaintiff argues that the Treaty in this case should be considered as Community law since it is both clear and precise. It should therefore be considered as a directive fully applied and direct effect should be found to exist. The court implements a very important test to determine if there is direct effect. Two questions must be answered. 1. The stipulation of the contract must be unconditional. 2. The stipulation must be sufficiently precise. The question whether such a stipulation is unconditional, and sufficiently precise to have direct effect must be considered in the context of the agreement of which it forms part. In this case, the first paragraph of art.21 (of the treaty) seeks to liberalize the trade of goods by abolishing customs duties. It seems as though art. 21 of the agreement imposes on the contracting parties an unconditional rule against discrimination in matters of taxation . THIS BEING THE PURPOSE OF THE AGREEMENT MUST THEREFORE PRODUCE DIRECT EFFECTS THROUGHOUT THE COMMUNITY. The effect of which is to confer to individual traders, rights which the court must protect. International Fruit Company Case The case concerns the International Fruit company, opposing the implementation of quotas on its imports into the Community. The Community it is argued, has bound itself and therefore its members to art.11 of the GATT which prohibits quotas. Two questions are referred to in this case. The first, is whether the Community is in fact bound by the provision of international law. And second, whether that provision of international law is capable of conferring rights on citizens of the Community which they can invoke before the courts, and contest the validity of the Community regulation. 1) The court decided that the terms of the EEC Treaty had the effect of conferred powers to the Community, which the Member States previously exercised vis a vis the GATT, such that they became bound by the subsequent agreements by the EEC. The Community and its members, therefore,are bound by the international provision of the GATT. 2)In determining the direct effect of the provision, the court considers the terms, the general scheme and the spirit of the General Agreement. The court finds that the General Agreement is based on the principle of negotiations on the basis of reciprocal and mutually advantageous arrangements. It is further characterized by the great flexibility of provisions. This suggests this type of Agreement is not specific enough to have direct effect. Art. 19 of the provision even allows a contracting party to the Agreement," the power to unilaterally suspend the obligation and to withdraw or modify the concession." It is clear that the provision therefore, does not satisfy the requirement of unconditionality. The GATT Agreement is not capable of conferring rights on citizens of the community because its obligations were too general and too uncertain. They represented a commitment only to negotiate and left too many ends untied. The bi-lateral Agreement between Portugal and the Community, however, entailed obligations that were clear and specific, that were immediately enforceable and well understood, and consequently had direct effect. Extra-Territorial Effect. The concept of extra-territorial effect refers to the scope of regulatory power of the EEC. The common question concerns whether the EEC can reach out and regulate activities outside of the Community. The landmark Woodpulp case represents the first time that the Community had taken competition proceedings against a corporate entity outside of the EEC, that did not have some representation in the Community. Woodpulp case (1972). Several woodpulp producers, all having their registered offices outside the Community brought an action opposing the imposition of fines by the EEC Commission due to infringements of art.85 of the Treaty. The infringements concerned the concertation of prices between those producers, which was viewed by the Commission as repugnant to art.85, the competition article. The Community defended its actions by arguing that the producers were exporting directly to purchasers within the Community or were doing business through branches, subsidiaries, agencies or other organizations in the Community. It further argued that two thirds of total shipments and 60 % of consumption of the product had been effected by the illegal concertation. The Community supports its jurisdiction in levying the fines due to the substantial and intended concertation that was the primary and direct result of the agreements and practices. The applicants submitted that the Commissions decision was incompatible with Public International Law since the the competition regulations in this case were founded to deal exclusively with economics within the Common Market. In this case the Community was attempting to restricting competition which was adopted outside the Community. The court suggests that the infringement of art.85 ( restricting competition in the Common Market), consists of two types of conduct. The first is the formation of the of the agreement or decision to concert prices and the second is the implementation of such a decision. The court found that if the jurisdiction to impose prohibitions under comp etition law were to depen d on the place where the agree ments were made, then evasio n of the comp etition law would beco me ludicro usly easy. The decisi ve factor , theref ore, is the place of imple menta tion of the decisi on, which is within the Com mon Marke t. The court furthe r admit s that the Com munit y's jurisd iction to apply its comp etition rules to the condu ct of the produ cers is allow ed accor ding to the "territ orial Princi ple" of Privat e Intern ationa l Law. The Comm ission s decisi on theref ore was not contra ry to art.85 of the Treaty or to the tenets of PIL. note : deMestral suggests that the Advocate General argued for a Full Effect Doctrine. This doctrine says that all activity must be regulated if that activity has an impact on the Economic Community. It is an " all the way " doctrine. deMestral does not think the courts go quite that far, but rather they come out with a "fuzzy" doctrine. There simply was not a unanimous feeling of desire by Member States for such an absolute rule. HOWARD LEIBOVICH - 488-4533 NOV.2,5 FREE MOVEMENT OF GOODS DeMestral [D.M.] talked about the EEC's goal of having the free movement of goods throughout the EEC. He approached this topic by dividing the relevant Treaty articles into six categories: 1) The "Principle" articles that deal with the general objectives of the program. These are articles 2,3,4,5,6,7,8,8a 2) The Custom Union - articles 9,10,12,18 3) Custom Duties - article 12 4) Taxes - article 95 5) Quotas - article 30 6) Exceptions - article 36 1) The "Principle" articles that deal with the general objectives of the program. These are articles 2,3,4,5,6,7,8,8a The EEC's commercial power was the central focus of the Treaty. This power has worked the best and has produced the most obvious economic impact. After World War II, it was felt that one way to reconstruct and rebuild faster was to eliminate barriers and increase trade. This elimination of barriers was the core of the EEC initially. Barriers did come down and very quickly. What sets the EEC apart from other treaties such as GATT, Canada - U.S. free trade agreement is the institutional backing and the broad programs that are outlined in the Treaty. article 2 - " The Community shall have as its task, by establishing a common market and progressively approximating the ecpnomic policies of Member states, to promote throughout the Community a harmonious devlopement of economic activities.... article 3 - The activities of the EEC shall include: a) The elimination, between member states, of custom duties, quantity restrictions on the import and export of goods, and all other measures having equivalent effect. b) The establishment of a common customs tariff and common policy towards third countries. The countries have given up their individual role in dealing with third countries. Now it all goes through the EEC. c) The abolition as between member states of obstacles to the free movement of persons, services and capital. f) The institution of a system ensuring that competition in the common market is not disturbed. h) The approximate of the laws of member states to the extent required for the proper functioning of the common market. D.M. did not go over the other articles in this part but he said we should read them . This is what the Rhonda/Suzie summary had to say. article 4: Description of the institutes of the EEC article 5,6: Description of cooperation between the member states and the institution of the EEC. article 7: Prohibition of discrimination on the grounds of nationality. article 8: sets out the schedule for setting up the common market French Maritime Labour Code Case p.242 Facts: The French government implemented a law which insured a certain number of jobs on a merchant fleet be reserved for French nationals. The commission felt this contravened the Treaty and asked the French govt. to amend its legislation. Held: The French govt. had to amend its legislation. Ratio: In order for the court to decide if in the area of "sea transportation" the rules of the Treaty must apply, you have to look at the general principles of the Treaty and apply it to this specific area. The court stated that article 2 created an important general principle which is to promote a "harmonious development of economic activities by establishing a common market and progressively approximating the economic policies of Member states." The court states that the basic object of the community is the free movement of goods as well as persons, services and capital. The court then looked at the specific area of transport where there are specific rules to deal with it and said that the French legislation contravenes them and so the govt should amend its rules. The case basically shows that the EC system is comprised of both specific rules and of general principles. The specific rules are means of giving effect to the general principles and the specific rules must be interpreted in light of them. D.M. says that these general principles are critical because they are the guarantor of the free movement of goods. The general principles put the bite into the rules. D.M. then mentioned the Can-U.S. free trade deal and asked if an agreement itself is enough of a guarantee or do we need an institutional framework to back it up. Article 8a - "The Community shall adopt measures with the aim of progressively establishing the internal market...." This article was recently added in 1986 by the Single European Act. It calls for the establishment of an internal market. (we see the progression from a custom union (original EC Treaty) to a single internal market.) D.M. pointed out that the language of article 8a is very similar to that of article 12 and article 12 has been held to give direct effect, so will article 8a as well ? Rewe Case p.246 - case deals with the fundamental problem of rules that are created by a center institution being applied by individual states Facts: Plaintiff company, Rewe, was subject to a German charge on a "phytosanitary inspection" when it imported apples from France. The EEC judged these charges to be equivalent to custom duties. Rewe applied to the German Courts to annul the decision imposing these charges and to refund the amount paid including interest. The German courts said that the action was too late and that the prescription period had passed. The top court in Germany referred the following question to the EEC for a preliminary ruling pursuant to article 177. 1) Where an illegal charge having an equivalent effect to a customs duty is imposed on a corp., has this corp a right under EC law to: a) the annulment or reversal of the decision imposing the charge b) the refund even if under the rules of procedure of the national law the time limit for contesting the validity of the measure is past ? Held: The answer to (1a) yes, (1b) no Ratio: (1a) The court held that the prohibition on charges having equivalent effect to a custom union set out in art. 13(2) has direct effect on the citizens and gives them a right that the national courts are required to protect. (1b) Generally it is the national courts which are entrusted with ensuring the citizen's legal protection. So the civil procedure of the national courts must be applied. But the court gives three exceptions to this rule. a) The Community has not created any EC law that would harmonise the procedure. (Courts leave open the possibility of the EC creating Rules of Procedure pertaining to its laws.) b) The conditions can not be less favourable than those relating to similar actions of a domestic nature. c) The procedural rules cannot make it impossible in practice for the national courts to protect these rights. In our case reasonable prescription periods were fixed. 2) The Custom Union - articles 9,10,12,18 A Custom Duty is a tax that is levied at the point of importation into a country. The tax can be calculated a number of ways. Usually it is a function of the value imported. It can also be based on weight and/or volume. It can also be described as a Border Tax. There are two parts to the custom union. The first part is eliminating customs within the EC and the second part is setting up a common external custom duty to countries outside the union. The courts are the arbiters and interpreters of this common external tariff. The more difficult part is the removal of the tariffs between states and insuring that non tariff measures (administrative or service fees) that have the same effect as tariffs are not implemented. This custom union was brought forth under a time table. The community was given legislative authority to ensure that this custom union was done. The commission would push the council that would push the states to get it done. When a union of countries is trying to implement the free movement of goods between them, there are three standards that they can adopt: 1) Can prohibit any government measure that discriminates on the basis of origin. 2) Prohibit any govt measure that is aimed directly at imports or exports. 3) Prohibit any govt measure which directly or incidentally affects interstate trade at all. This third standard is the strictest one and it is the one that is adopted by the EC. This can be shown by the following articles. Art. 9: The Community shall be based upon a customs union.... which shall involve the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect" (The cases define exactly what this means.) Art. 10: D.M. calls this article very significant ( he described other articles as; critical, central, important and interesting). All products that come from external countries are in free circulation throughout all the member states. So once a product enters any member state it can circulate freely to the others. 3) Custom Duties - article 12 Art. 12 (central): " Member States shall refrain from introducing between themselves any new customs duties on imports or exports or any charges having equivalent effect and from increasing those which they already apply." This article has mandatory language that is directly applicable to the states and has direct effect to the citizens. There is a 12 year phase out period ( Can-U.S. deal has a 10 year one). At the end of these 12 years you can't have any custom duties are ones of equivalent effect. D.M. likes to point out that the cases have adopted a very strict standard when interpreting this article, such as the third standard shown above. Van Gend - Loos Case p.255 D.M. referred us back to p.112 to show us that art. 12 has direct effect. "This obligation is not qualified by any reservation on the part of states which would make its implementation conditional upon a legislative measure enacted under national law. The very nature of this prohibition makes it ideally adapted to produce direct effects in the legal relationship between member states and their subjects." What is a charge having equivalent effect as custom duties -- Let's look at the Statistical Levy Case p.256 Facts: Italy levied a charge called a statistical levy on both imports and exports. The charge is 10 lire on every 100 kgs. of goods (regardless of the nature of the goods). The question is if this is a charge "having equivalent effect". Held: Yes, it sure is. Ratio: The court held that the prohibitions in articles 12,13,16 have a fundamental role in the EC. Custom duties are prohibited independently of any consideration of the purpose for which they were introduced. Any pecuniary charge, no matter how small, that is imposed on goods simply because they cross a border is considered an obstacle to the free movement of goods. It does not matter what the method of application of such charge is nor does it matter that the state does not benefit from the charge or that the charge does not have a discriminatory or protective effect. It does not matter that the good being charged is not in competition with a domestic good. If the charge that was applied to the good could have been linked to a very specific service that the state rendered then maybe it would be allowed. This is what the Italian govt claimed in this case but the court didn't buy it. The court said that the services that were provided where very general. The courts are not very generous and it is very difficult to convince them that a valid service is being rendered for the imposed charge. Capolongo Case p.260 Facts: Capolongo buys large quantities of eggs which were delivered in cardboard containers imported from Germany. There is a tax that is levied on all domestic and imported cardboard container but the money goes to the domestic association of cardboard producers. C. complained. Held: This is a charge having equivalent effect to a customs duty. Ratio: The court held that even pecuniary charges intended to finance the activities of an agency governed by public law can constitute taxes having equivalent effect within the meaning of art. 13(2) of the treaty. The court in this case looked at the destination of the money that was collected. Here the destination was to support a domestic product. The court does not describe in the abstract, what a charge having equivalent effect is, rather it is a case by case analysis. One common factor, according to D.M., is if the charge was levied when it crossed the border. 4) Taxes - article 95 Art. 95: Prohibition on imposing taxes on imports in excess of those imposed on domestic products of a similar nature or impose "any internal taxation of such nature as to afford indirect protection to other products. " You can not manipulate your tax system to promote the interest of local goods. Again here the fundamental purpose is to knock down barriers. The ultimate effect is to try to reach common levels of taxation. The value added tax is now common throughout the community. D.M. brought up the problem of how to handle taxation when the product is made in one country and then shipped to another country. Should the tax just be placed on the country in which it was produced (high production countries would love this) or do we tax and then remit the tax as it crosses borders and charge a different tax (what is done now). I don't know why D.M. really got into this since he said that this topic is really one for EEC II. This article ( like article 12) has direct effect - shown in Lutticke case II p.264 (we do not have to read it). In any case where you are questioning the validity of a tax you can invoke art. 12 or 95 but not both. This standard is also very high. Any kind of taxation that gives local product an unfair advantage will be prohibited. Taxation of alcohol in Denmark case p.274 Facts: Denmark imposed 2 levels of taxation on alcohol: 1) Tax applicable to aquavit (schnapps) which is very popular in Denmark. Almost all aquavit consumed in Denmark is also produced there. 2) A higher tax rate on other types of alcohol. This tax was applied on a nondiscriminatory basis. Held: The danish taxing of alcohol violates art. 95. Ratio: The court held that although the tax system does not formally discriminate on the basis of the origin of the product,it has the effect of higher taxation almost exclusively on imported alcohol (because aquavit is domestically produced while the other alcoholic spirits are basically imported.) The bulk of alcohol produced domestically falls within the most favourable tax category. It does not matter that a small fraction of imported alcohol falls within the most favourable tax category as well. Think of a country that decides to tax expensive, luxury sweaters at a lower rate then lower cost sweater because it knows that its country is an expert at producing these luxury sweaters. When different products are taxed differently there must be a valid reason for the price difference. Denmark's tax system taxes two types of alcohol differently. ( The danish govt failed to persuade the court that aquavits is a dissimilar product. The court said that aquavit has the same common alcoholic characteristics as the other alcoholic products). There is no valid reason for this. The system is designed to give the domestic producers an edge and that's bad. Commission v. U.K. 1980 p.283. Britain had a lower tax rate for beer than wine. The court was unable to decide if this was contrary to art. 95 because they were unclear about the economic evidence. D.M. gave the example where the govt legislates a minimum price for a product. This would give the efficient producer a disadvantage because he would be forced to raise his price. D.M. said this situation would not survive EC laws. 5) Quotas - article 30 art. 30: " Quantitative restrictions on imports and all measures having equivalent effect shall... be prohibited between Member States A quota is a quantitative restriction on a product that is allowed to enter the country. For ex: If you only allow 1000 Honda Accord to enter the country,you are placing a quota on the number of Honda Accords allowed to enter the country. Art. 30 also gives us mandatory, direct effect language. Art 31: strong prohibition on new quotas and ones that have similar effect. This is hard to define. Basically its a flexible notion that prohibits anything that slows down trade. Art. 33: allows for a phase in period. Art. 34: Prohibits export quotas as well. The only quotas allowed are those authorised by the common agricultural plan. Dassonville case p.302 Facts: Belgium law prohibits the importation of spirits unless accompanied by official documents which tell among other things, the original country of production. Dassonville had bought Johnny Walker from France and wanted to import it into Belgium. Dassonville didn't have the papers that stated who the original producer was, this was impossible for him because he had bought it in France. Dassonville complained, stating that the Belgium law was equivalent to a quota. Held: It is equivalent to a quota. Ratio: The court held that "all trading rules enacted by Member states which are capable of hindering, directly or indirectly, actually or potentially, intra-community trade are to be considered as measures having an effect to a quantitative restrictions. Member states are allowed to take measures in order to prevent unfair trade practices but these measures must be reasonable. This measure was not held to be reasonable. It was impossible for Dassonville to get the required information. The means of proof was not accessible to all countries. The court held that in virtue of art. 36, the country is allowed to adopt health measures to protect its citizens (we'll get more to art. 36 next week). The ct. held that this was not the proper use of art. 36 and in reality it was a disguised restriction on trade and the measures are not allowed to be a means of arbitrary discrimination (according to the second line of art. 36.) D.M.: As we can see the definition of measures having equivalent effect is very broad and the basic test is one of reasonableness. D.M. then referred us to the Van Tiggele Case p.304 (we didn't have to read it). Here Dutch legislation prohibited the sale of certain spirits below a minimum price (now we know where D.M. got that example I mentioned just before). This minimum price is applied to both domestic and imported spirits but the effect of the legislation is more detrimental to the imported spirits as it prevents their lower costs from being reflect in the retail price. The basic purpose of the legislation was to protect the local beer, Heinnekein from competition. The courts therefore held that this is a measure having equivalent effect to a quantitative restriction and thus it is contrary to art. 30. Cassis de Dijon Case p. 306 Facts: A German imported is prohibited from importing the liquor "Cassis de Dijon" into Germany from France because it only contained 20% alcohol and Germany had legislation that required spirits to have a minimum of 32% alcohol. Is this fixing of a min. alcoholic content a measure having equivalent effect to a quantitative restriction on imports ? Held: Yes Ratio: The court held that in the absence of community rules relating to the production and marketing of alcohol, it is up to the member states to regulate in this area. Obstacles to the movement of goods due to different national marketing laws can be allowed if they are in relation to 1) fiscal supervision, 2) protection of public health, 3) the fairness of commercial transactions and 4) The defence of the consumer. The court looks to see if these measures are reasonable and proportionate to the objects sought. Germany says that the legislation is for health reasons but the court does not buy it. Germany then says that its to protect the consumer. The court doesn't buy this either, after all the consumers can read and can check the alcoholic content on its own. The court stated that the implementation of the 32% does not serve a purpose that should take precedence over the free movement of goods. This 32% rule simply promotes beverages having a high alcoholic content at the expense of ones having a low alcoholic content. The Sequel p.309 The Commission issued a communication concerning the case. Any national measure capable of hindering, directly or indirectly, actually or potentially, intra-community trade are prohibited by art. 30. Any product lawfully produced and marketed in one member state must in principle be admitted to the market of another state. Technical and commercial rules may create barriers only where those rules are necessary to satisfy a mandatory requirement and to serve a purpose which is in the general interest and which there are an essential guarantee. Only under very strict conditions will the court allow barriers to trade resulting from difference between commerce. and technical rules admissible. They will have to satisfy one of the four areas mentioned in the case and they must not be excessive, and they must be the most appropriate means and at the same time the least hinderance on trade. Other Examples of Measure having equivalent effect to a quota - max. price measures - product limits - unreasonable party or destination requirements - buy national policy (from the govt themselves, private companies can do it on their own) - duplicate checks at the border - administrative practices that purposely slow down stuff at the border. Addendum to Nov. 2, 5 NTC Buy Irish Case 1982 Note: This case was not covered in class but it was on DeMestral's reading list for the exam. Facts: The Irish govt introduces a whole measures to promote the sale of Irish products. The govt introduced a "guaranteed Irish" symbol, and created the Irish Goods Council which accepted complaints with goods bearing that symbol. it also created the "Shoplink Service" that provided consumers with information on Irish Goods. It also help finance advertising of Irish Goods through the Irish Goods Council. The Commission found these procedures incompatible with Article 30. The ct. then looked at the matter Held: These measures are incompatible with art. 30 Ratio: These are measures having equivalent effect to a quantitative restriction on imports. It does not measure that the govt measure is not of a binding nature, they are still capable of influencing the conduct of traders and consumers within that State and thus frustrate the aims of the Community set out in article 2 and enlarged in article 3 of the Treaty. This govt policy is intended to check the flow of trade between member states by encouraging the purchase of domestic goods. NTC for EEC CLASSES COVERED: NOVEMBER 9 and NOVEMBER 12 ANY QUESTIONS?: DAVID WEINBERGER 483-5568 Exceptions to the freedom of movement of goods: (i) Transition period: Some resolutions or directives are given transition periods for implementation. Until this period has passed, EC states can justify non-compliance by referring to the transition period. Most transition periods have passed already. (ii) The EC has not covered the field: Exceptions exist and are justifiable so long as there is no formally adopted EC policy in that area and there is no single, uniform and binding policy adopted by the EC. Articles which refer to this exception: Arts. 8(7), 36, 48, 56, 66, 222-224. (iii) Safeguards: The basic principle is that in emergency situations EC states can legislate in violation of EC rules with the permission of the Commission. Examples: A.73 - This allows for emergency economic action in the case of a balance of payments crisis. This problem will likely be removed if there is a common currency. A.73(2) - A member state can act on its own initiative on grounds of secrecy or urgency - subject later to the Commission's approval. This is the only situation where the state can initially act without the Commission's approval. A.103(2) - Allows for the adoption of economic policies to deal with moments of economic crisis. It allows the Commission or the state with the Commission's approval to do certain things which are not necessarily compatible with the rules of the treaty. A.103(4) - Allows for the possibility of provisions being adopted to deal with severe economic situations. A.109 - In a balance of payments crisis, the states are given authority to act in moments of emergency although they should normally act subject to the Commission's approval. A.36 - Prohibitions and restrictions can be justified on grounds of public morality or security such as: - protection of life - protection of health - protection of industrial, intellectual, commercial and cultural property These allowances for certain restrictions on the free movement of goods are based on non-economic objectives. The measures are viewed as temporary. One interpretation is that a.36 is basically a statement of residual powers. It implies that at the root of the EC, the states can ultimately opt out if they feel their security is being threatened. The courts do not interpret a.36 as giving the states a residual power and feel that its provisions can be done away with if the EC adopts common standards. The test to be applied to any measures adopted as exceptions to EC rules is that the measures must be: - reasonable - proportional - non-arbitrary Art Treasures Case p.323 C.B. FACTS: The Italian government was authorizing export restrictions by way of an export tax which it claims was justified on grounds of the protection of national treasures possessing artistic, historic or archaeological value. It bases its power to levy this tax in a.36. HELD: Exceptions to the general principle of the elimination of all obstacles to the free movement of goods between member states must be strictly construed. The effect of the tax is to render more onerous the exportation of the products in question without attaining the objective referred to by the government. In order to avail itself of a.36 a member state must observe the limitations imposed by that provision both as regards the objective to be attained and as regards the nature of the means used to attain it. The tax is disproportionate and unreasonable and falls outside the limits of a.36. More examples of the use of art.36: (1) All members of NATO are required to comply with export restrictions on certain sensitive materials (military arms, technology...). This system of export controls is a;ways subject to the EC taking it over, but this has not been done yet. This policy has been ground in military security (a.36) and has not yet been covered by the EC. However, it can always shift to the EC and a.36 would not protect it. (2) The protection of intellectual and commercial property allows the author or patent holder to issue exclusive licenses. This has potential monopolistic effects and has implications for the free movement of goods, however, it is an allowable exception under art.36. The courts have said that there are limitations to the ability to patent and it must be done reasonably. Centrafarm - Sterling Drug Case p.324 C.B. FACTS: Centrafarm, an English company, imported a product into the Netherlands which was produced in England under license from Sterling. This same product was also produced in the Netherlands and was already available there at double the price. By importing this product, Centrafarm was taking advantage of a considerable price differential. Sterling Drug, the licensor, took action for an order directing Centrafarm to refrain from selling the product in the Netherlands as it was an infringement of the patent. HELD: Art. 36 allows for an exception to the restriction on imports by permitting restrictions on imports if they are justified on grounds of the protection of industrial or commercial property. However, art.36 only admits of derogations from the free movement of goods where such derogations are justified for the purpose of safeguarding rights which constitute the specific subject matter of the property. In relation to patents, the specific subject matter of the property is the guarantee that the patentee, to reward the creative effort of the inventor, has the exclusive right to use an invention with a view to manufacturing industrial products and putting them into circulation for the first time, either directly, by the grant of licenses to third parties or as the right to oppose infringements. A derogation from the free movement of goods is not justified where the product has been put onto the market in a legal manner by the patentee himself or with his consent in a Member State from which it has been imported. Once the goods are legally in free circulation they cannot be stopped from going anywhere in the Community (recall Dassonville). If the patentee were allowed to block the import of the product, it would constitute an unjustifiable derogation from the principle of the free movement of goods and would enable him to partition off national markets and thereby restrict trade between Member States. This would be more than what is necessary to guarantee the essence of the exclusive rights flowing from the patents. FREE MOVEMENT OF WORKERS (This is not on the exam!!) The free movement of workers constitutes a significant economic and political statement. It is indicative of the degree to which the EEC goes further than any other economic community. Articles 48-51 set out the basis for dealing with the free movement of workers. The free movement of labour requires: (i) The removal of legal barriers (visa/document requirements) and the removal of systemic barriers. It removes both private and public discrimination and provides for the clarification of labour laws. (ii) The social situation of the worker must be made non-discriminatory. The rule of non-discriminatory access is applied - eg. access to housing, education, workman's comp., etc... . Maastricht takes this further by creating the concept of "Community Citizenship". This carries with it the right to vote in municipal elections (national elections still require nationality). FREE MOVEMENT OF SERVICES Arts. 52 et ff. It is only since 1984 that the barriers have began to fall. The free movement of services relates to the activity of both individuals and corporations. Its purpose is to deal with problems encountered by professional workers with different concerns and it is an example of the broad reaching requirements imposed by the Treaty. Professionals have different types of problems such as a high level of regulation. Therefore, a separate category was set up - "the right of establishment". It is under this category that regulation over professionals has been chipped away at. There are many regulations whose objective is to ease the corporation's ability to function in various Member States: A.52 - Restrictions are abolished progressively. Freedom of establishment includes the ability to set up as self employed persons. A.53 - Member States shall not introduce new retrictions on right of establishment in their territories. A.54 - The program sets out general conditions for implementation A.55 - These provisions do not aply to cetain activities A.56 - The Council shall issue directives implementing Commission proposals A.57 - Amended in 1985 under the S.E.A.. Mutual recognition of diplomas A.58 - Companies or firms established within the EC shall be treated as natural persons. The general principle is the removal of discrimination and the requirement for the achievement of "national treatment" ie. to treat other nationals as you would treat your own. This is with respect to legislation affecting professions and the administration affecting legislation. Articles 52 and 59 are of Direct Effect. Art. 52 called for the guarantee of the freedom of establishment and it had direct effect as of 1974. Thieffry Case p.414 C.B. FACTS: T, a Belgian, was not allowed to join the Paris Bar because he was not a French citizen. HELD: Freedom of establishment, subject to the professional rules justified by the general good, is one of the objectives of the Treaty and it has immediate and binding effect. The practical enjoyment of the freedom of establishment can depend upon national practice or legislation, however, such legislation or practice must be applied in accordance with the objectives defined by the provisions of the Treaty relating to freedom of establishment. This case concerns an unjustified restriction on the freedom of establishment as it prevents a qualified professional who has fulfilled the specific conditions regarding professional training in force in France from practising simply because he does not possess the national diploma corresponding to the diploma he holds and which has been recognized as an equivalent qualification. He cannot be denied admission based on nationality as this is discriminatory. He must be allowed to be eligible for the Bar subject to the requirements imposed on any French national. He is not immune from the national requirements which are applicable to all. Klopp (1984) not in the C.B. The Paris Bar rule was that it was impossible for a member to practice and simultaneously be a member outside Paris and operate a second office. Klopp had an office in Germany, therefore the Bar said he could not join. The courts struck down the Bar rule. Gullig (1988) not in the C.B. G was already a member of the German Bar and he tried to become a member of the French Bar (in Colmar). The French Bar decided that he was a person in "bad character" and refused his application. In the absence of any EC standard, the French state can have such a rule and G is not immune from it as it applies to French citizens as well. The rule is non-discriminatory. In 1988 - Mutual recognition of diplomas (p. 104 S.M.). This is a good example of the movement of EC legislation. It set aside individual directives and adopted a comprehensive directive which recognizes a university degree which qualifies you in another EC state. This legislation enhances the ability of professionals to utilize their right of establishment. The right of establishment is also exercised by companies. There are 12 directives that deal with barriers faced by companies when they want to enter another EC state. Daily Mail Case p.431 C.B. FACTS: The Daily Mail wanted to move its head office out England and transfer its central management and control to another Member State. The English government placed restrictions on the Daily Mail's ability to do this by subjecting this right to the consent of national authorities, the grant of which is linked to the company's tax position. HELD: Freedom of establishment is one of the fundamental principles of the Community and the provisions in the Treaty dealing with this right are directly applicable. The rights guaranteed by arts. 52 et ff. would be rendered meaningless if the Member State of origin would prohibit undertakings from leaving in order to establish themselves in another Member State. The provisions of the U.K. law at issue do not stand in the way of a partial or total transfer of the activities of a company incorporated in the U.K. to a company newly created in another Member State. It establishes certain requirements such as the settling of the company's tax position and the winding up of the company, but once these conditions are satisfied, the company is free to transfer. Treasury consent is required only where the company wishes to maintain its legal personality and status as a U.K. company. There is no EC convention, as yet, dealing with this area. Consequently, the Treaty regards the U.K. laws as being in areas relating to problems which are not yet resolved by the rules concerning the right of establishment and which will only be subject to future legislation or conventions. In the present state of Community law, arts. 52 and 58 confer no right on a company incorporated under the legislation of a Member State and having its registered office there to transfer its central management and control to another Member State. In the absence of EC law in this area, the U.K. law governing the right to move office remains intact. Art.61 - an exception in the field of banking and insurance The right to establish and manage a corporation can be exercised in the Community, but this does not necessarily mean that an EC national can establish companies out of a non-EC country (eg. Switzerland) in Ec countries. This right is exercised only between EC countries. Art. 52 refers to the setting up and management of agencies, branches and subsidiaries. This also implies a right to participate in joint ventures. FREEDOM TO PROVIDE SERVICES Arts. 59,60 deal with this and are directly applicable after the transition period. This freedom covers: (i) the capacity of the service provider to serve in another Member State (ii) the capacity of a service recipient to go to another Member State to receive service (iii) the capacity to provide the service from another Member State (this refers to newer technologies such as services provided by computers) (i) The capacity of the service provider to serve in another Member State: The early cases deal with the ability of the service provider to go to another Member State and the elimination of barriers preventing this. The principle of the right to offer services includes: (i) non-discrimination (ii) discrimination on the grounds of public interest can be justifiable provided it applies to all in that country and that it is necessary. Van Binsbergen Case FACTS: Dutch law provides that only persons established in the Netherlands can act as legal representatives or advisers in the Netherlands. During the course of the proceedings with which Kortmann was involved as legal representative, he had transferred his habitual residence to Belgium. Kortmann invoked art. 59 which provides for the abolition of restrictions on freedom to provide services within the Community. HELD: Art. 60 provides that a person providing a service may, in order to provide that service, temporarily pursue in activity in the State where the service is provided, under the same conditions as are imposed by that State on its own nationals. A requirement that the provider of the service must be habitually resident in the State where the service is to be provided may have the result of depriving a. 59 of all useful effect. Specific requirements imposed on the person providing the service cannot be considered incompatible with the Treaty where they have as their purpose the application of professional rules justified by the general good. Examples of acceptable measures enacted for the general good include those in areas relating to: - organization - qualifications - professional ethics - supervision - liability The requirement imposed by the State must be objectively justified by the need to ensure observance of professional rules of conduct connected with the administration of justice and with respect to professional ethics. In this case, the requirement is incompatible with arts. 59 & 60 as the administration of justice can be satisfactorily ensured by measures which are less restrictive. The requirement does not meet the test of reasonableness. NOVEMBER 12, 1992 FREE MOVEMENT OF SERVICES Continued... The commitments of the Treaty of Rome in 1957 with respect to services go way beyond those in the Canada - U.S. Free Trade Agreement. The EC has developed much faster than other attempts as a result of the more advanced legislation. Even the Uruguay Round of the G.A.T.T. negotiations does less than the Treaty of Rome. The rules providing for the free movement of services allow for an exception. Member States may impose rules on grounds of public interest. These rules must apply to all and must be deemed necessary and justifiable in a rational manner in so far as the interest being protected has not already been safeguarded by the provisions to which the provider of the service is subject in the Member State of his establishment. (Art.59) Walrave-Koch Case p. 438 C.B. FACTS: The plaintiffs, both Dutchmen, earn their living as official pacemakers for cycling competition. The rules of the competitions, which are formulated by the International Sporting Federation, include provisions that state that the pacemakers must be of the same nationality as the "stayers" who ride behind of the pacemakers. This provision prevents a pacemaker from one Member State from offering his services to a stayer of another Member State. ISSUES: Does the Treaty apply to sports and private organizations? HELD: The practice of sport is subject to Community law only in so far as it constitutes an economic activity within the meaning of Art. 2 of the Treaty. When such activity has the character of gainful employment or remunerated service it comes within the scope of Articles 48 to 51 or 59 to 66 of the Treaty. These provisions prohibit any discrimination based on nationality in the performance of the activity to which they refer. This prohibition does not affect the composition of sport teams. Prohibition of such discrimination does not apply only to the action of public authorities but extends to rules aimed at regulating in a collective manner gainful employment and the provisions of a service. The objectives of the Treaty (ie. the abolition of obstacles to the freedom of movement for persons and the freedom to provide services) would be compromised if the abolition of barriers of national origin could be neutralized by obstacles resulting from the exercise of the legal autonomy by associations or organizations which do not come under public law. To limit the prohibitions in question to acts of a public authority would risk creating inequality in their application. The terms of Art. 59 make no distinction between the source of the restrictions to be abolished. Art. 48, relating to the abolition of any discrimination based on nationality as regards gainful employment, extends to agreements and rules which do not emanate from public authorities. This case is an example of horizontal direct effect. Coditel Case I p.448 C.B. FACTS: Cine Vog acquired the exclusive rights to show the film "Le Boucher" in Belgium from La Boetie. Later, La Boetie sold the rights to show the film in Germany to the German Broadcasting station. Coditel picked up the German broadcast and broadcasted it to their viewers in Belgium. HELD: Art. 59 prohibits restrictions upon freedom to provide services, but it does not place limits on the exercise of certain economic activities, which have their origin in national legislation, for the protection of intellectual property except where these activities constitute arbitrary discrimination or a disguised restriction on trade between Member States. The rules of the Treaty cannot constitute an obstacle to the geographical limits which the parties to a contract of assignment have agreed upon in order to protect the author. The parties with the exclusive rights can assert them. EC law respects intellectual property rights. The only way to control the film is by licensing it in particular countries. It is legitimate to recognize the rights of the copyright in the film. German Insurance Case p. 454 C.B. FACTS: German law required that insurance companies in the Community wishing to provide services in Germany must be permanently established and authorized in Germany. Does this violate the freedom to provide services? HELD: Articles 59 and 60 require the removal not only of all discrimination against a provider of a service on the grounds of his nationality but also any restrictions on his freedom to provide services imposed by reason of the fact that he is established in A Member State other than the one in which the service is to be provided. The freedom to provide services may be restricted only by provisions which are justified by the general good and which are applied to all persons or undertakings operating within the territory of the State in which the service is provided unless the interest being protected is already safeguarded in the State of establishment. Such requirements must be objectively justified by the need to ensure that professional rules of conduct are complied with and that the interests which the rules are designed to safeguard are protected. (i) Justified in the general good: The insurance sector is a particularly sensitive area from the point of view of the protection of the consumer. There are imperative reasons relating to the public interests which may justify restrictions on the freedom to provide services provided that the rules of the State of Establishment are not adequate in order to achieve the necessary level of protection. (ii) Existing protection: Existing EC provisions are intended to ensure that the undertaking is solvent. However, the existing directives do not harmonize the national rules concerning technical reserves (the financial resources set aside to guarantee liabilities). In the absence of harmonization, it must be recognized that the State in which the service is provided is justified in requiring and supervising compliance with its own rules on technical reserves with regard to services provided within its territory, provided that such rules do not exceed what is necessary for the protection of policy-holders. (iii) Does the protection exceed what is necessary?: (a) Authorization: The requirement of authorization may be maintained only insofar as it is justified on the grounds relating to the protection of policy-holders. It is only through authorization that the German government can supervise the undertakings. However, it cannot be used as a means of discriminating against undertakings from another Member State and once the appropriate standards are met, authorization must be granted. (b) Establishment: The requirement of a permanent establishment is the very negation of the freedom to provide services. It has the result of depriving Art. 59 of all effectiveness. Considerations of an administrative nature cannot justify derogation by a Member State from the rules of Community law. This requirement is both unreasonable and disproportionate. The authorities can perform their supervisory duties without an establishment requirement. The justification for the restrictions on regular insurance undertakings was the protection of the consumer. Co-insurance deals with relations between two corporations which do not need the same protection as consumers nor do their operations directly affect consumers. Consequently, there is no objective justification for the regulation of co-insurance. The reasonability and necessity tests cannot be met. (ii) The capacity of a service recipient to go to another Member State to receive service: Luisi and Carbone Case p.450 C.B. FACTS: L & C are Italian nationals residing in Italy. They both exported Italian currency in excess of export limits imposed by the Italian Legislature. L and C contested the validity of the Italian legislation on the ground that it was incompatible with EC law relating to currency payments and the movement of capital. L & C's claim was that they were going to another Member State and needed the money for medical services and tourist expenses. HELD: Art. 59 provides for the abolishment of restrictions on freedom to provide services. In order to enable services to be provided, this freedom includes the freedom, for the recipients of services, to go to another Member State in order to receive a service there, without being obstructed by restrictions, even in relation to payments and that tourists, persons receiving medical treatment and persons travelling for the purpose of education or business are to be regarded as recipients of services. There is a corollary freedom to seek and obtain services. (iii) The capacity to provide the service from another Member State: Coditel Case II p.450 C.B. Messages were passed through a wire service. The free movement of services is also involved in broadcasting and electronic transfer of data. There is a suggestion that art. 36 with respect to goods is similarly applicable (ie. there is an analogy between the freedom of movement of goods and services). The movement of goods and services between EC States and non-Member States is subject to different regulation. The EC has shown that if you want to knock down barriers it is difficult, but it can be done. Regulation of services must also be dealt with and not just with respect to goods. FREEDOM OF MOVEMENT OF PAYMENTS This is a sort of double freedom. Its objectives are set out in arts. 67 - 76. Art.67: Member States shall abolish any restrictions with respect to the movement of capital. Less mandatory language than with respect to goods or services. Problems with respect to currency and capital movements will persist until a Common Economic Unit is in effect. This is why restrictions on the movement of capital have been the last to be abolished. P.135 S.M.= the latest directive on the free movement of capital. NTC - NOV. 23 & 25, 1992. Joshua A. Fireman - 695-9795 or 989-3237 De Mestral started out by actually talking about a current event (will wonders never cease), namely France's suggestion that the "Luxembourg Compromise" (LC)gives it a veto over the EC's decision to accept the GATT compromise on oilseed subsidies. The LC was reached in the transitional period of the 1950s and gave member states a veto over matters that were deemed to be "of vital national interest". But, the LC was never a part of the Treaty of Rome, and was implicitly thought dead in place of the 2/3 majority rules enshrines in the Single European Act (SEA). According to De Mestral, the new rules on agriculture can be adopted with a 2/3 majority. Note that De Mestral said we should follow France's moves closely. This may be with a view to the exam. So, start reading those papers, folks! By the way, France admitted later on in the week that it didn't have an EC veto over the oilseeds compromise, but was considering exercising its right as a member of GATT to veto the entire agreement. See what happens when you pander to interest groups?! The monologue then moved on to... Article 86 Hoffman - LaRoche (1979) (p.526) =>Court deals with dominant position and abuse of dominant position. Held: 1) The dominant position referred to in art.86 relates to position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of the consumers. Although the existence of a dominant position may derive from several factors, a highly important one is the existence of very large market shares. Note, though, that this can vary from market to market. De Mestral says to look at market share, product range and the company's position as a world producer. Here, the company's 60% share of the market is ipso facto proof of its dominant position. 2) The court then had to decide whether that dominant position had been abused. The concept of abuse is an objective concept relating to the behaviour of an undertaking in a dominant position which is such as to influence the structure of a market where, as a result of the very presence of the undertaking in question, the degree of competition is weakened and which [...] has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of the competition. CONC: The larger the company and the greater its control of the market, the more likely it is to be told that its mere presence affects competition. Eg. Euro aerospace companies not allowed to buy de Havilland; Gillette forced to divest its Wilkenson Sword holdings. Continental Can (1973) (p.532) =>Concentration case. Facts: CC created a subsidiary for the purpose of entering into agreements for merger with other companies. CC argued that mergers are not prohibited. Held: If you could escape art.86 by merging, it would have no bite. The question is thus, whether the word "abuse" may refer to changes in the structure of an undertaking, which leads to competition being seriously disturbed in a substantial part of the common market. In order to answer this question, one has to go back to the spirit, general scheme, and wording of art.86, as well as to the system and objectives of the Treaty. The Court then invokes other articles of the Treaty to show general objectives, and concludes that abuse may occur if an undertaking in a dominant position strengthens such position in such a way that the degree of dominance reached substantially fetters competition, i.e. that only undertakings remain in the market whose behaviour depends on the dominant one. De Mestral then draws certain conclusions WRT arts.85&86: These are specific articles dealing with individuals, and are the equivalent of a constitutional imperative to maintain a free economy.. Their result is that all attempts to protect national markets will be struck down. The Court and the Community are moving toward prohibition of most horizontal price agreements and horizontal price maintenance agreements. However, franchises, patent licences or other restrictions, small enterprises, R&D cooperation and the like tend to be seen as exceptions to this general rule. Note that, theoretically, there can be concurrent EC and national legislation. This is basically a way of differentiating between inter-state and intra-state commerce. So, the EC doesn't regulate local cartels, whereas if an internal matter starts to impact on trade, the Community will intervene. Obviously, as globalization obliterates national borders, it will be harder and harder for states to claim that their measures are only affecting local undertakings. * * * State Aids and Monopolies 1) Anti-Dumping Legislation: Dumping implies selling goods in another country at an artificially low price. This is the global equivalent of stores offering sales on "loss leaders" to pull in customers for other products. Anti-dumping procedures are allowed under the GATT, the FTA and NAFTA. Those forward-thinking Europeans, however, went ahead and abolished dumping duties between 1957 and 1960 (although it may invoke anti-dumping rules against Godless foreigners). The end result is that international anti-competitive behaviour is incompatible between EC countries. For the exact (ant scintillatingly interesting) wording, please refer yourselves to art.91 of the Treaty of Rome. 2) Monopolies Monopolies aren't really banned under the Treaty (look, those Euro-thinkers aren't perfect, OK?). Rather, art.37 (State monopolies) and art.90 (undertakings to which member states grant exclusive rights) forbid them in a form that runs contrary to the rules of the Treaty. In particular, art.90 refers to the rules provided for in arts. 7, 85 & 94. In plain English, you can have your damn monopoly, as long as everyone gets a piece of the pie. To bring the example home to roost, this means that a company like Hydro-Quebec could exist, but it couldn't contract out exclusively to companies in the Distinct Society. De Mestral: The rule has direct effect. Companies can't abuse their dominant positions (see previous ramblings), especially WRT discriminatory purchasing and the like. 3) State aids (i.e. subsidies) State aids are a major fraggin' problem in international trade. While anti-dumping regulations are viewed as irrational and pernicious, anti-state aid measures are viewed as OK due to the aids' harmful and distorting nature and effects. They add to the cost of products, suck huge amounts of funds out of government coffers and distort trade patterns, amongst other things. They do not, however, contribute to weight-gain. The big problem is in defining exactly what constitutes a subsidy. Although the question could, conceivably, be dealt with through arts. 101 & 102, arts. 92 & 93 deal with this problem specifically. 92(1) defines subsidies as "any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods" that affects trade between Member States. De Mestral: This means one country can't always favour a particular industry, as this would place it at an advantage vis à vis the competition. NOTE: This provision is thought to be directly effective due to s.93 which requires States to notify the Commission of an intention to use a state aid. If the Commission doesn't like the idea and the State doesn't withdraw it, action can be taken under ss. 169 & 170. 92(2) lays out aid which shall be compatible with the common market: (a) aid having a social character [...] granted without discrimination to the origin of the products concerned; (b) aid to make good the damage caused by natural disasters or exceptional occurrences; (c) [doesn't apply anymore - dealt with a divided Germany]. 92(3) lays out aid which may be compatible with the common market: (a) aid to promote the economic development [of poor areas]; (b) aid to promote the execution of an important project of common European interest or to remedy a serious disturbance in the economy of a Member State; (c) aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest [...] (d) such other categories of aid as may be specified by decision of the Council acting by a qualified majority on a proposal from the Commission. Note that this is to be read in conjunction with s.93 which lays out duties of the Commission in this area. One of the tests for determining if aid is acceptable turns on whether the subsidy is available to all people. Thus, a public road would probably be OK, but a road used almost exclusively by truckers in a particular industry would not fly. Note that most of the decisions on state aids are Commission decisions (see csbk p.161 for an example). These are almost always highly controversial decisions (imagine - "NO! You can't give money to Socanev to buy out Steinberg's!). Although arts. 92 & 93 may not be directly effective, the duty to notify is. WRT to damages, it is the entity which received the benefit which has to pay back the pecuniary value of the aid received. So, you are usually better off notifying, submitting and arguing before the Commission. CASES: Philip Morris (1980) (p.558) Facts: The Dutch offered aid for "major schemes". It claimed this aid was available to all who invested X amount of cash in Holland. The result was that Philip Morris ended up controlling around 50% of the Dutch market and exported about 80% of its production. The effect of the subsidy was to increase Phil's exports to the rest of the EC. Held: The relevant market to examine is not Holland's, but that of the entire EC. The proposed aid would have permitted the transfer to the Netherlands of an investment which could be effected in other Member States in a less favourable situation than that of the Netherlands where the national level of unemployment is one of the lowest in the Community. Intermills (1984) (p.563) This just goes to show that state aids can take many forms, the aid in question here being the purchase of a company's shares by a government. COFAZ (1986) (p.564) =>This case is a great illustration of procedure. Facts: The Dutch government had a policy of selling cheap gas to ammonia producers. Other companies and states complained, so the Ditch withdrew the scheme and came back with a general tariff for large buyers to meet the general availability standard. French ammonia producers kept complaining (they must be related to the farmers!), and eventually took the case to court. Held: Under 173(2), a natural or legal person may institute legal proceedings against a decision addressed to another person only if that decision is of direct and individual concern to the former. This implies that the decision affects them by reason of certain attributes which 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 has repeatedly held that where a regulation accords applicant undertakings procedural guarantees entitling them to request the Commission to find an infringement of Community rules, those undertakings should be able to institute proceedings in order to protect their legitimate interests. The same conclusions apply to undertakings which have played a comparable role in the procedure referred to in art.93 of the EEC Treaty provided, however, that their position on the market is significantly affected by the aid which is the subject of the contested decision. Here, the applicants have adduced pertinent reasons to show that the Commission's decision may adversely affect their legitimate interests by seriously jeopardizing their position on the market in question. Why? Because the Commission's decision left intact all the effects of the tariff system set up, whilst the procedure sought by the applicants would lead to the adoption of a decision to abolish or amend the system. * * * The Single European Act 1957 represented the 1st stage of Community development, with an emphasis on negative integration (the removal of certain barriers. Thus, we were given the 4 freedoms, competition policy, and rules on state aids, among other things. The 2d stage of EC development involved the working out and clarification of the programme (see the ERTA case). The 3d stage begged the question "could the EC move beyond what it was authorized to do"; i.e. what is "Community competence"? Here, the Court set out to clarify relationships between general and specific articles of the Treaty. E.g. Transportation: ASJES case. Harmonization (art.100): See Dassonville, Cassis de Dijon. Note that Dijon showed that there are different ways of achieving the same goal. Here, the EC no longer had to always look to harmonizing laws in different area, as it was decided that once goods were in circulation in one State, they were in free circulation throughout the Community. These 3 stages brought us to ... (drum roll, please) 1985, the SEA, and positive integration giving us: transportation policy; common agricultural policy; environmental policy; consumer protection; harmonization (particularly arts. 100 & 235). NOTE: SEA changes are noted in the Treaty with an "*". De Mestral then rambled off a few unusually cogent points: 1) The SEA was the last treaty prior to Maastricht (Europe's Meech) to amend the Treaty of Rome. De Mestral notes that the SEA also covers political cooperation outside the Treaty of Rome (similar to Maastricht). 2) The purpose of the SEA was to complete the internal market. art.8a(2): The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of this treaty. This article is what all of Europe will be celebrating this New Year's eve (Bwahahaha!). Rhetorical question: What is the organic relationship of art.8a to the other articles mentioned? De Mestrallian solution: It is similar to the 1957 phase-in periods for the customs union. The obligation is to get there! NOTE: I agree. This doesn't seem like the answer to the question asked in the first place. But, who am I to criticize? Did I grow up reading Socrates? Who am I? What an I doing here? NOTE: Arts. 8b & 8c require the EC to proceed with the removal of internal barriers. Question: Britain and Denmark might not guarantee the free movement of people in 1993. What happens then? Do you wave the Treaty in front of British customs officers and try to explain the doctrine of direct effect? Once again, we are left to our own wisdom to ponder this problem. What De Mestral does impart upon us is the thought that the full legal implications of the internal market will be developed through the case law. It will be interesting to see if the Court finds certain inherent characteristics in the internal market, as it has with the customs union. 3) The major change was a move away from the LC to a situation where, in most cases, voting is done by a 2/3 majority. This is, of course, a procedural change. So, under art.100a, to meet the objectives set out in art.8a: "The Council shall, acting by a qualified majority on a proposal from the Commission in cooperation with the European Parliament and after consulting the Economic and social Committee, adopt measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market. This allows the Council to adopt both directives and regulations for harmonizing measures. Exceptions: 100a(2): Fiscal provisions, free movement of persons, rights and interests of employed persons. 100a(3): The Community will take as a base a high level of protection in the areas of health, safety, environmental protection and consumer protection. NOTE: There has been concern expressed that 100a is, in effect, an extension of art.36 (which allows for exceptions). 100a(4) shows compromise, in that even after harmonizing measures, a Member state can plead "major needs" under art.36 or say the measure relates to protection of the environment or the working environment, subject to scrutiny by the Commission. 4) The SEA also impacted on Community Institutions. a) The SEA increased, incrementally, the power of the European Parliament. Although it still has no veto, it can delay adoption of initiatives to indicate dissent, and may send proposals back to the Commission for reconsideration. Thus, Parliament can be more active WRT regulations and directives. All this flows from art.149. b) The SEA also created a Court of 1st Instance, which now receives all challenges to EC decisions. Questions of law are appealed to the Court of Justice, which deals mostly now with the equivalent of constitutional questions. 5) New areas of jurisdiction are laid out in arts. 118 (social provisions) & 130 (research and technological development). EEC, November 30, 1992; G. Garner ...The Single European Act The theme of this course is harmonization; that is what the European Community is all about. The harmonization of the Community becomes more explicit with each treaty. This process of harmonization involves both the removal of trade barriers and positive integration. While the removal of barriers is close to complete, the process of positive integration evident in the SEA and Maastricht) is at a less mature stage. The rules of direct application and direct effect amount to the member states' surrendering to the Community the power to make certain laws. The Community's law making power is an ultimate form of harmonization; the same rules apply to everybody. The SEA has three main purposes: 1. Pursuit of Existing Goals The pursuit of goals already set out; inherent, implicit and explicit, in the Community text (ie. an area without external frontiers; free movement of goods, services, persons and capital). Article 8a establishes that these goals will exist as a matter of law by December 31, 1992. These are the same goals as those set out in the Treaty of Rome only they go further faster. 2. Facilitating achievement of the stated goals. Article 8b allows the Council to act on a qualified majority to ensure progress in reaching the goals set out in 8a (as opposed to requiring unanimity). The gives the Community a freer hand & makes it easier to ensure the adoption of measures taken with a view to furthering these objectives. Article 100a gives the Community a stronger mandate to act when their objective is the achievement of the objectives set out in 8a. While article 100 allowed the Council (acting unanimously) to issue directives with respect to laws in member states that directly affect the common market, 100a goes much further: Allows the Council (by qualified majority) to adopt "measures" (100 allowed directives only) aimed at achieving the internal market. This gives the Community a broader method and greater specificity as to where the Community can act with respect to achieving harmonization. Article 100a and the many directives and regulations issued thereunder, represent an effort by the Community to go further than the prohibitions issued under article 100 (preventing member states from doing things that hinder the common market) and encourage positive integration such as approximation of laws and standards (not necessarily identical), in an effort to create a single market and a single regulatory climate. Rather than seeking absolute conformity of laws, as the Community realized that this type of conformity would be hard to achieve, the Community regulations and directives take a result based approach (ie. the focus is on the free movement of goods within the internal market as opposed to having identical standards in each state Cassis de Dijon decision emphasizes free movement as opposed to identical standards). The idea is that the standard should be that whatever is marketed validly and safely in a member state should be free to circulate within the Community. This can be extended into the approval or recognition of the standard making processes of other member states. The Community is now more flexible with respect to how that ultimate goal of free trade will be achieved. NB 100a(4) refers to article 36 exceptions. This weakens 100a because, before the adoption of 100a, once harmonization had been achieved in a given area enumerated by article 36, member states had no right to take measures under article 36 (Denkavit Case). Article 100a(4) appears to allow member sates to retain article 36 restrictions even after harmonization measures have been implemented by the Community. This "kinder, gentler" Community approach has also given rise to the concept of optional harmonization: Total Harmonization: regulations or directives which allow no exceptions. Optional Harmonization: the Community recently decided that not all harmonization measures need be pushed equally. Some recent decisions allow member states the option to impose tougher standards. Remember 100a(4). DeM thinks this is good. There ought to be room for variations in the application of regulations and directives. More generally, the SEA has expanded the mandate and purposes of the Community. Article 102a operates to ensure the convergence of economic and monetary policies. This shows the impact that harmonization will have on government activity. There will be increased coordination of governmental policy. Solidarity (Pre-SEA) French rediscount case (1969) Facts: The Banque France was granting a rediscount rate for export credits that was more favourable than the rate for internal credits. Essentially, the government, through the bank, was financing French exports at a discount. The Community felt that this was an aid which was incompatible with the Common Market. Held: The treaty does allow member states to take measures with respect to monetary policy (NB this case is pre-102a). The Community, however, retains a power to prevent the member states from derogating from the treaty on the pretext that their action related only to monetary policy. Significance: The decision affirms the concept of solidarity as the basis for the member states' obligations under the treaty. This concept goes beyond the letter of the law. It implies that when a member state takes unilateral action derogating from the treaty, intervention by the Community is required to ensure the functioning of the Common Market. Solidarity under the SEA The SEA makes solidarity a much more explicit concept. It goes beyond traditional policy making, giving the Community jurisdiction in and calling for more explicit and expanded integration in areas such as: training & education research and development the environment energy public health The SEA forces the member states to take each other's interests into account to a greater extent. DeM highlighted several provisions in this regard: Article 105ff: These articles are at the heart of Economic Monetary Union (now in jeopardy). Provides for a central bank. Article 107 is an excellent example of the concept of solidarity; it provides that policies WRT exchange rates are to be treated as a matter of common concern. Article 117ff: Social provisions dealing with standard of living through working conditions, social security, occupational safety, collective bargaining, etc. The Defrenne Case held that article 119 (men & women should receive equal pay for equal work) was of direct effect. DeM says that this shows how the Community amounts to more than just economic union; it is an effort to harmonize social objectives and policies as well. Article 123ff: The Community maintains a social fund for workers to facilitate employment and increase their geographical & occupational mobility. The fund provides aid and access to social services for migrant workers. The Community is also given increased powers concerning regional policy and education. Article 130ff: These articles contain the most explicit new stuff. Article 36 addressed issues such as the environment by allowing states to restrict the free movement of goods when the purpose behind the restriction was one of the objectives enumerated in article 36. The SEA adresses these issues by giving the Community jurisdiction and a broader mandate to regulate in these areas (this mandate is limited, however, by the Community's objectives in these areas). Articles 130ff deal with the environment. For example article 130r(4) contains a very explicit statement on the concept of subsidiarity: "The Community shall take action with respect to the environment to the extent to which the objectives [...] can be attained better at a Community level than at the level of the individual member states." Under the SEA, subsidiarity applies only to the environment, but under Maastricht (article 3b) it will apply generally in areas which do not fall within the exclusive competence of the Community. Danish Bottle Case (1988) Facts: The Danes implemented a system under which all containers in which beer and soft drinks were sold had to be returnable. Under the system, the container had to be approved by the government agency. The effect was that importers had to have their bottles approved by the Danish government. In order to allow foreigners to test the market, the use of non-approved containers was allowed to a limit of 3000 hectolitres per producer per annum. Held: The 3000 hectolitre limit violated article 30. The court noted that environmental protection was an 'essential element' of the Community and may therefore justify certain limitations to the principle of free movement of goods. When the member state has a choice of various measures suitable to achieve the same aim, however, the measures used to achieve the aim must be the means which involve the least obstacles to free trade. DeM: The limitation was disproportionate to the objective. This case was attracted international attention, especially from environmentalists. They argue that this shows that the court is more concerned with economic issues than the environment. The solution is to have a system that is non-discriminatory. 3. Institutional Changes - Increased role of Parliament See Art. 149. The SEA imposes a duty on the council to cooperate with parliament. There is no need (in the legal sense) for parliamentary consent but there is a broader duty of consultation. Also, the council can only override lack of ratification by parliament by unanimous vote. The profile of parliament is also broadened by direct election through national procedures. Acquis Communautaire ie. where are we now? (up to Maastricht) 1. The Community has now achieved a free trade area known as the internal market. 2. The Community has successfully prohibited non-tariff barriers such as quotas, state aids, anti-dumping legislation and tax incentives. 3. There is a positive obligation on the Community to establish conditions conducive to a single, competitive market. 4. The Community has an ever expanding authority (re quality and range of measures) to harmonize legislation by enacting laws with respect to the free movement of goods. 5. The Community has an international persona both in the sense of the consolidation of Community law and by recognition by other countries. 6. The legislative mandate of the Community has been expanded, giving the Community exclusive heads of jurisdiction. 7. The corpus of Community law has been expanded (ie. Community law has grown by expansion of general principles). supremacy direct effect legal certainty subsidiarity rule of law 8. There has been a consolidation of institutions within the Community. These institutions continue to change (eg. role of parliament), but they have served their purpose and have done well to survive where no other free trade agreement has. DeM: the institutions have successfully survived and managed the struggle of maintaining a common market. Compare EC with Canada-US Free Trade Agreement DeM noted that Europeans do not whine the way Canadians do about the negative aspects of free trade. The reason is probably that there is no collective, broader interest at play in the Canada-US deal like there is in the Community. Also, we have no autonomous institutions to compensate the losers. Ours is a national as opposed to supranational agreement. The conclusion of this discussion was that the main difference is that Europeans openly accept that harmonization is part of the goal of the Community. Whereas most Canadians are violently opposed to any from of harmonization with US laws or government policy. Maastricht Treaty (1986) This treaty represents a watershed in the development of the Community. If Maastricht goes into force (there is no way EMU will meet its timetable), it will intensify economic and political integration by: giving the Community greater authority with respect to its traditional roles giving the Community authority in more areas DeM brought several articles to the class' attention: Article 3b: The Community shall act within the limits of the powers conferred upon it by this treaty and of the objectives assigned to it therein. In areas which do not fall within its exclusive competence, the Community shall take action, in accordance with the principle of subsidiarity, only if in so far as the objectives of the proposed action cannot be sufficiently achieved by member states and can therefore, by reason of scale or the effects of the proposed action, be better achieved by the Community. So Maastricht writes in the principle of subsidiarity where the Community does not have exclusive jurisdiction. DeM says that it will be interesting to observe the extent to which monetary powers will be considered a matter of Community competence (probably to a large extent). Title VIII: Social policy, education, vocational training and youth: most of these are, however, shared powers. The Community's role is to supplement state actions. The Community also gets a power over culture (Title IX). Implications of Maastricht: The most important implication is the principle of delimitation of the Community's jurisdiction. Some might say that delimitation, in some cases defies the subsidiarity principle (because the Community takes on areas that might be better handled the member states). The courts will have to work out how this delimitation will work (eg. with respect to cultural matters). Maastricht is a "change in kind" for the Community. There are significant incremental changes with respect to parliament: increased right to be consulted increased right to turn back council or commission measures Parliament can almost veto Community actions, but they still have no power to initiate laws. Political Cooperation: (dealt with at the end of the treaty p83). Most of Maastricht forms part of the Treaty of Rome but the provisions on common policy are separate. This section tries to lay the groundwork for a common stance vis a vis the rest of the world. The provisions have loose legal form and are implemented through the European Council (comprised of heads of state). So these leaders will wear two hats (head of state & member of Community). EXTRA BONUS STUFF FROM MARIE Introduction Mathijsen, Ch 1 European Coal & Steel Community (ECSC): 1952 - Was different than international law; it was "supranational" - The parties were not just creating mutual obligations; they were limiting their own sovereign rights - They were binding not only their states, but also directly included their citizens who became subjects of the community. The treaties make it impossible for the Member States (MS), as a corollary, to give precedence to their national law over a legal system accepted by them on the basis of reciprocity. Sources of Community Law Treaty of Rome (the Treaty), : 1957 - Could almost be seen as the constitution of the EEC - Seeks to promote throughout the Com.: 1) harmonious development of economic activities 2) a continuous and balanced expansion 3) an increase in stability 4) an accelerated raising of the standard of living 5) closer relations between the member states - Provides for two ways of achieving these goals: 1) the establishment, functioning and development of a common market 2) the progressive approximation of the policies of the MSs. - Although the first is explicitly planned, the second goal is described in only general terms. Maastricht Treaty : 1992 - It's the treaty on political union - It will come into force only after every MS has ratified it. - Problem: Denmark has already rejected it by referendum. Regulations, directives, and decisions - are issued outside most citizen's own countries - However, they may impose obligations on them, outside their national gov's control - May confer rights on them which they may ask their national courts to uphold against other citizens or even their own government. - Citizens may also challenge the legality of Com. measures in the Comm. Court (CC), when they are directly and individually concerned. Central issues of the course: 1) To what extent is EEC law directly applicable on the member states ? 2) To what extent can this law speak to and directly affect the citizens ? Historical Background Mathijsen, Ch 2 There was an attempt to stabilize Europe after WWII that was frustrated by the Cold War. The goal of stability was transformed into one of ensuring that Western Europe could withstand the Soviet military force. - Bringing France and Germ. into a long term union was of particular importance. The Benelux Union was created by a treaty signed in 1949 - Created a free-trade agreement between Holland, Belgium, & Luxembourg The ECSC was the first supranational community - It was initiated largely by the efforts of Schuman, the Fr. foreign minister - It placed the whole Franco-German coal and steel production one joint high authority. - Members: Fr., Germ, The Benelux - It served as a model for the development of broader structures. The European Economic Community (EEC) was created in Rome in 1957 - The treaty of Rome is a frame-work treaty; it was to establish the beginning of a long process - MS: Benelux, Germ, Fr, Italy. - UK, Ireland, & Denmark joined between 1959 & 1969 - Greece: 1975; Spain & Portugal: 1977 1976: Reps of the MSs agree on the conditions for direct election 1977: The Parl, Council, & Commission issued a Joint declaration of Fundamental Rights - Confirmed their will to ensure the principles of a representative democracy, the rule of law, social justice, and respect for human rights & pluralist democracy. 1979: The first elections were held, giving the EEC its democratic legitimacy The Single European Act (SEA): 1987 - It was a major amendment of the Treaty - sets out the goal of achieving a completely free market - Provides for closer involvement of the Parl. in the legislative process The Maastricht Treaty: 1992 - This treaty goes much further; 1) common monetary policy 2) common social and political policies - Ratification is now underway, although after Denmark's refusal, things don't look so good. Since its conception, the EEC has gone through major changes, especially in its institutions and with the political unity proposed in Maastricht. Purposes of the EEC Treaty Art 2: Sets down the treaties two main goals: 1) A common market (has already been achieved) 2) progressively approximating economic policies (Maastricht's goal) - This is a more constructive phase; it is less legal and more political and therefore much less defined and dependent on political and economic circumstances. Title I: Free Movement of Goods Art 9: " The Com. shall be based on a customs union which shall cover all trade in goods and which shall involve the prohibition between MSs of customs duties on imports and exports and of all charges having equivalent effect, and the adoption of common customs tariff in their relations with third countries." Ch. I: The Customs Union Under a customs union, no tariffs would be charged on goods imported from MSs. Art 12: " MSs shall refrain from introducing between themselves any new customs duties on imports or exports or any charges having equivalent effect, and from increasing those which already apply in their trade with each other.: Art 13: " Customs duties on imports in force.. shall be progressively abolished by them during the transitional period...[As will charges having equivalent effect to customs duties] The Commission will determine by means of directives the timetable for such abolition." Art 18: " The MSs declare their readiness to contribute to the development of international trade and the lowering of barriers to trade by entering into agreements designed, on the basis of reciprocity and mutual advantage, to reduce customs duties below the level of which they could avail themselves as a result of the establishment of a customs union between them" From a commercial point of view, a reduction of customs tariffs is much less important than the elimination of non-tariff barriers which are often much more difficult to detect. MS no longer have jurisdiction over the duties which are levied on goods entering their territory from third countries: they can neither modify them nor interpret them. Ch. 2: Elimination of Quantitative Restrictions Art 30: " Quantitative restrictions on imports and all measures having equivalent effect shall...be prohibited" Art 31: " MSs shall refrain from introducing between themselves any new quantitative restrictions or measures having equivalent effect." A common market is created - There is a customs union between members Quotas, as well as tariffs are abolished (art 30) MS are committed to not create new quotas between member states (art 31) - A common customs tariff is created The Community, not individual MS, will negotiate tariffs w/ other countries Tariffs are imposed on foreign goods, but once they enter the EC, they can travel freely anywhere within the area The words "measured having equivalent effect" are of particular importance: - They include "all trading rules (even temporary ones) enacted by MSs which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade. " (Procurer du Roi v. Dassonville) The prohibition of Art 30 applies not only when the import is refused admittance, but also when the import is merely made difficult. - You don't have to prove the actual hinderance; the mere existence of a possibility is enough The concept of "mutual recognition" plays a very important role in the completion of the internal market: under it, each MS recognizes the legal provisions of the other. - Hence, all products which have been produced and commercialized by one MS in accordance to the legal provisions of that country, must be admitted into all the other MSs, each one recognizing the provisions of the other. Nonetheless, some obstacles to the movement of goods within the community are tolerated when they result from "disparities between the national laws relating to marketing of the products in question in so far as those provisions may be recognized as being necessary in order to satisfy mandatory requirements" of the public interest. - The mandatory requirements can be relied on by the MSs only as long as there are no "common rules"; they do not constitute exceptions to the free movement of goods and are not to be confused with the exceptions provided in Art 36. - They will cease to be applicable when all the matters relating to the free movement of goods, which cannot be solved by the principle of mutual recognition, will have been regulated by the Community rules. (that is, by the end of 1992) Obstacles to the free movement of goods resulting from measures imposed by the MSs must only be accepted in so far as those provisions may be recognized as being necessary. ( Dansk Supermarked v. Imerco) - They must be proved to serve a purpose which is in the general interest and such as to take precedence over the requirement of the free movement of goods, which constitutes one of the fundamental rules of the community. Exceptions to the free movement of goods Art 36 provides for several exceptions where prohibitions or restrictions on imports may be justified on the grounds of: - public morality, public policy, public security. - the protection of health and the life of humans, animals or plants - the protection of national treasures possessing historic, archio., and artistic value - the protection of industrial or commercial property Although tariffs and quantitative restrictions have been abolished, practically speaking, many covert barriers continue to exist. Title II: Agriculture Arts 38 & 39: set up a common agricultural policy Title III: Free Movement Of Persons, Services and Capital Ch. 1: Workers Art 48: " 1. Free movement of workers shall be secured within the community by the end of the transition period at the latest" 2. Such freedom of movement shall entail the abolition of any discrimination based on nationality between workers of the MSs as regards employment, remuneration, and other conditions of work and employment. 3. It shall entail the right, subject to limitations justified on the grounds of public policy, public security, or public health; a) to accept offers of employment actually made; b) to move freely within the territory of MSs for this purpose c) to stay in the Ms for the purpose of employment in accordance with the provisions governing the employment of nationals of that state laid down by law, regulation, or administrative action. d) to remain in the territory of the MS after having been employed in that state... 4. The provisions in this article shall not apply to employment in the public service The free movement of workers is mainly based on the principle of non-discrimination on the ground of nationality whereas the right of non-wage earners to operate freely within the Comm. is generally expressed by the right of establishment and the right to provide services. - Social security systems are harmonized by taking account of the several countries where the beneficiary has worked will be added together for the calculation of his benefits. Ch.2: Right of Establishment Art 52: " ...Restriction on the freedom of establishment of nationals of a MS in the territory of another MS shall be abolished by progressive stages in the course of the transitional period. Such progressive abolition shall also apply to restrictions on the setting up of agencies, branches, or subsidiaries by nationals of any other MS established in the territory of any other MS. Freedom of establishment shall include the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, in particular companies and firms... under the conditions laid down for its own nationals by the law of the country where such establishment is effected, subject to the provisions of the Chapter relating to Capital. " This principle also applies to companies formed in accordance with the law of a MS. Art. 52 has had direct effect since the end of the transitional period, notwithstanding the fact that the Council has failed to issue the necessary directives to implement the general program for the abolition of existing restrictions. The rules do not apply to activities which in given MSs are connected with the exercise of official authority. "Establishment implies the setting-up in the host state of a base from which services or other activities are provided inside that same state. "Services", on the other hand, are normally provided directly from the home-country and might require only occasional, temporary entry into the other MS." Ch. 3: Services Art. 59: " ...[R]estrictions on the freedom to provide services within the community shall e progressively abolished during the transition period in respect of nationals of MSs who are established in a state of the Community other than that of the person for whom the services are intended. " This freedom not only expressed a right to provide services, but also implies a right of the potential beneficiary to receive services. The essential requirements of Art 59 became directly and unconditionally applicable at the end of the transition period and have direct effect. Both over and cover discrimination which, although based on criteria which appear neutral, in practice, lead to the same result, are prohibited. The rights provided in the Treaty apply only to nationals of other MSs; the provisions can't apply to activities whose relevant elements are confined within a single MS. CH. 4: Capital Art 67: " 1. During the transitional period and to the extent necessary to ensure the proper functioning of the common market, MSs shall progressively abolish between themselves all restrictions on the movement of capital belonging to persons resident in MSs and any discrimination based on the nationality or on the place of residence of the parties or on the pace where such capital is invested. 2. Current payments connected with the movement of capital between MSs shall be freed from all restrictions by the end of the first stage at the latest." This elimination is only required to the extent necessary to ensure the proper functioning of the common market. - The scope of the restriction varies in time and depends on an assessment of the requirements of the common market. - If movements of capital lead to disturbances in the functioning of the capital market in a MS, the Commission must authorise it to take protective measures. (Art 73) Payments MSs must authorise payments from a debtor in one MS to a creditor or beneficiary residing in another, but only so far as they are connected with the free movement of goods, services and capital. - It must be distinguished from the freedom to move capital - It is very important, as the other freedoms would be quite useless if the financial results from their application could not be re-patriated. - This freedom also has direct effect: it confers on the nationals of the MSs rights which the national courts must uphold. EEC Institutions & Their Powers Mathijsen, Ch 3: "Institutions" of the EEC are empowered to take decisions binding on MSs, institutions or persons. Other bodies act in a merely advisory capacity. The European Parliament (Assembly) This is a bit of a misnomer; although the SEA has conferred upon the Parl a larger role in the legislative process of the Com., there is strictly speaking no question yet of legislative power. This lack of power is often mentioned as an example of the lack of democratic organization of the institutions. Membership: - June '79: date of the first direct election for Parl. - composed of 518 representatives (MEPs) - the number of members per MS is distributed nationally according to the size of each MS. - 5 year terms - they may concurrently be members of a national Parl. Tasks & powers: - exercises only "advisory and supervisory" powers - It does not exercise the attributes of an elected body: legislation and taxation. 1) Participates in the leg. process by being consulted by the Council about a Commission proposal. - It can propose amendment, approve it or reject it. - If it rejects it , Council can still take the decision, but then it must be done unanimously - Parl's opinions have no binding force, yet it must be consulted - When provided for by the Treaty, consultation of Parl constitutes an "essential procedural requirement" with which failure to comply may be sanctioned by judicial annulment of Council's act. - Parl is essentially limited to issuing an opinion or proposing amendments. 2) Parl has the right to question the Commission and to obtain answers from them 3) Through the "motion of censure" it can force members of the Commission to resign. - This is its most impressive power, but with very cumbersome procedural requirements. - Requires that after a 3 day period, a majority of the reps vote, and a 2/3 majority of the votes cast is required to ass the motion. - This censure affects only the Commission; the Council, the EEC decision making body is outside the reach of Parl. 4) A month before the opening of its session, it receives a published General Report prepared by the Commission, on the activities of the EEC. 5) Participates in the budgetary procedure. 6) May bring an action against the Council or Commission before the Court for an alleged failure to act in compliance with the Treaty. The Council The proper task of the Council is to implement the second objective of the Treaty, the progressive approximation of the economic policies of the MS, by "ensuring co-ordination of the general economic policies of the MSs". Organizational aspects: Membership of the Council: - As reps of their respective countries, the Council members act on the basis of instructions or mandates received from their govs but they aren't ordinary gov. reps. - They are an EEC institution, bound to act in the community interest. - That they do not always do so has been a common criticism. - One member of each gov. can vote at each session of the Council; - Council acts by a majority of its members except where otherwise provided in the Treaty The European Council: - It is a tri-yearly meeting of the heads of state of the MSs. - Issues general guidelines which are then acted upon by the Council and the Commission. - It has refused to decide on technical matters and has limited itself to broad policy lines. Tasks & Powers: 1) Decision-Making: The Council is the central institution of the Community endowed with decision-making powers. But, it can only act ... a) on the basis of a proposal from the Commission and b) under the control of the Court of Justice If it wants to amend the Commissions proposal, it may only do so unanimously and only if it does not completely transform the initial proposal. - If the modification affects the proposal's substance, the decision of the Council is annullable on the basis of having infringed a procedural requirement. Hence, the Council has only "conferred powers" and is not endowed with general regulatory competence. - It can only take those decisions which are explicitly provided for by provisions in EEC legislation 2) Co-ordination of Economic Policies: In order to ensure that objectives set out in the Treaty are obtained, the Council may "ensure the co-ordination of the general economic policies of the MSs". - By its nature, this is more of an area of policy rather than law-making; they are not governed by the precise time-tables set out in the Treaty as is the case with the establishment of the Common Market. The absence of formal procedures in this context prevents the checks and balances of the institutional system from functioning. The same is true of the European council. - It would seem that the more important the decisions, the more formal they are. 3) Political Co-operation: In pursuance to the SEA, the MSs "endeavour jointly to formulate and implement a European foreign policy" by: a) The MSs consulting each other before deciding on a final national position b) MS endeavouring to adopt common positions in international institutions and conferences c) organizing a political dialogue with 3rd countries The Commission The Commission is the executive branch of the EEC. - It is responsible for the functioning and development of the common market - It is the guardian of the Treaty - It administers the Comm's finances, negotiates international agreements, reps the EEC both inside the EEC and in the international field. - It can exercise its own power of decision. The European Commissioners: - There are 17 members; No more than two can be of the same nationality. - Treaty provides that members shall be chosen on the grounds of their general competence and that their independence must be "beyond doubt". - This said, it seems odd that members are nominated by the very governments in relation to which their independence is so strongly stressed. - They are appointed for 4 years on the basis of a renewable appointment. Tasks & Powers: 1) It enforces EEC law by gathering information and instituting proceedings against those who fail to fulfil their obs under the EEC legislation. Procedure: a) remind gov of its duties and invite it to take the necessary measures to conform b) if no action is taken, deliver a reasoned opinion which will lay out a time limit by which compliance must be achieved. c) if still no compliance, they may take the matter to the court d) if court finds breach of ob., the state will have to take the necessary steps to comply with the judgement e) if no reaction, the Commission can start the whole procedure all over again for failure to comply with the judicial decision hence breaching another Treaty obligation. - The Commission can institute proceedings against the Council both for offensive acts and for omissions under the Treaty. 2) Recommendations and opinions: In formulating recommendations or opinions on matters dealing with the Treaty, The Commission acts in a purely advisory capacity The fact that the Commission has the power of decision does not mean that the legislative power is split between it and the Council. - The Council is the "legislative" decision-maker, while the Commission has the "executive" power of decision. - It mainly concerns the "functioning and development of the common market, the administration of the customs union, and the application of the safeguard clauses and the competition rules. Decisions are taken by a majority of its members, and when at least eight are present. - It may not delegate its powers to autonomous bodies, civil servants, or to one of its members. 3) Participation in the legislative procedure: Council can only pass EEC legislation when it is based on a proposal by the Commission; by submitting drafts of regulations, directives, and decisions, it participates in the shaping of the measures taken by council. - Although it has an exclusive right of legislative initiative, the Council may "request" it to submit to the Council any appropriate proposals. (This is usually granted) 4) External relations: The Commission is responsible for maintaining all appropriate relations with international organizations. - It is also entrusted with the task of negotiation the agreements between the EEC and one or more states or an international organization. a) Since such agreements are usually concluded by the Council, the Commission must obtain a mandate from the Council before proceeding with negotiations. b) It must also obtain the opinion of the court as to whether the envisaged agreement is compatible with the provisions of the Treaty. 5) Implementation of the EEC budget: Once the budget is adopted, the Commission must implement it according to the regulations laid down by Council. THE COURT OF JUSTICE: SEE SUPRA AT .... ERTA Case (1971) Art 75 of the Treaty conferred on the EC powers to implement a common transport policy. The Commission is claiming that in order for the provision to have full effect, it must be extended to the conclusion of agreements with third countries. Ratio: - One must consider both the substantive provisions and the whole scheme of the Treaty - Each time the EC, with a view to implementing a common policy envisaged by the Treaty, adopts provisions laying down common rules, the MSs no longer have the right, acting individually or collectively, to undertake obs with 3rd countries which affect those rules. - When such rules come into being, the EC alone is in a position to assume and carry out contractual obs toward 3rd countries. - These EC powers exclude the possibility of concurrent powers on the part of the MSs, since any steps taken outside the framework of the EC institutions would be incompatible with the unity of the Common Market and the uniform application of the EEC law. This case is one of the most important in EC law, illustrating several principles: 1) By joining the EC, member states cede a piece of their political sovereignty. The EC law is supreme to the national government's prerogative. 2) Interpretation of provisions must keep in mind the overall objectives of the Treaty and the EC. 3) The attribution of internal powers to the EC also comports with it external powers so that the exercise of internal powers might be achieved. EEA Opinion 1/91 - The Commission has here requested an opinion from the Court re the compatibility with the EEC Treaty of the system of judicial supervision set up under the EEA agreement. - The EEA essentially envisages a much looser trade union compared to the structure set up by the EEC. - The agreement provides for setting up an EEA court which will cover the settlement of disputes between the EEC and the EFTA countries (the parties) and it is agreed that the EEA court will interpret the agreement in conformity with the rulings of the EC court given prior to the date of the agreement. After that, the EEA and EEC courts will try to take into account each other's decisions so that their interpretations may be as uniform as possible. Ratio: 1) Treaties are interpreted not only according to the their provisions, but also according to their objectives - Since the objectives of the two accords are so different, they stand in the way of a uniform interpretation and application of the law of the EEA by the two bodies. 2) The EC Treaty establishes a constitution for a Community based o the rule of law. - It establishes a legal order for the benefit of which the MSs have limited their sovereign rights - EC law has primacy over national law and many provisions which apply directly to the MSs and their citizens, have a direct application. - The EEA on the other hand, creates only rights and ob between contracting parties with no transfer of sovereign rights. 3) Art. 219 of the Treaty gives the Court of Justice exclusive jurisdiction. - To confer that jurisdiction on the EEA court would be incompatible with EC law. 4) However, it is possible to do this through an international agreement which provides for its own system of courts. - The EC's competence in the field of international relations and its capacity to conclude international agreements necessarily entails the power to submit to the decisions of a court which is created or designated by such an agreement. - Here, the EEA court though, governed by the objective of their own agreement, and bound only to the precedents of the Court of Justice before the agrement, may interpret the shared provisions in a way which is inconsistent with the Treaty. this would contravene Art 164 of the Treaty. 5) The EC Treaty has conceived of the Court as a court whose judgements are binding. - Under this agreement, the judgements of the Court would not be binding on the EFTA countries or courts and this would change the function of the court as it is conceived in the Treaty. Held: The System of judicial supervision proposed in the agreement is incompatible with the Treaty. The Maastricht Treaty NOTES Until Maastricht, the EC was pre-occupied with achieving a common market. The Maastricht treaty attempts to: 1) "progressively approximate the economic policy of the MSs". 2) achieve a common foreign and security policy. - It is here that we are talking about political unity. Title V on Political Co-operation limits the obligation to one of harmonization. Maastricht addresses not only the MS but also "the peoples of Europe". It establishes the European Council of the Heads of State (?) - Didn't this already exist as part of the Council ? ; see Mathijsen. It weakens the importance of the individual state to the advantage of the European union. - It speaks to the power of a new single authority. Art. 36: The Principle of Subsidiarity - ? ... ( Of the Treaty or of Maastricht ? ) In order for Maastricht to come into force, it must be ratified by all the MSs. - So far, Denmark has rejected it by referendum. DeMestral says that it is likely the rest of the Community will try to woo Denmark if they remain the only opposition after the votes are cast. - It was ratified by referendum in France in September, but only by a slim majority. - It remains to be seen what will happen in the other countries. - The U.K. looks like it is the most hesitant. Sources of EEC Law Mathijsen, Ch. 8 What distinguishes EC treaties from other international agreements: 1) They have created quasi-governmental bodies independent from national public authorities and endowed with legislative, administrative and sovereign rights transferred to them by the MSs. 2) They lay down basic principles which are either worked out by the treaties themselves or implemented by acts of the institutions. 3) The treaties and acts constitute a set of rules which directly impose obs on, and consequently create rights for MSs and the natural and legal persons within the EC. That is to say, the treaties have established a "specific legal order". (See Costa v. ENEL) Direct Applicability: Direct applicability means that rights can be conferred and obligations imposed directly, without the intervention of the national government. They do not have to actively do anything to make the law their own. - "Regulations shall be applicable to all MSs." (Art. 189(2)) - MSs are also committees to not interfere with the application of community law. - Art. 5 provides that they should abstain from any measures which would jeopardize the attainment of the objectives of the treaty. Direct Effect: Obligations imposed on MSs have as their corollary, rights for the citizens of the EC - Ex. By prohibiting the MS from hindering free movement, the Treaty grants to persons the rights to move unhindered from one MS to another. It is not only regulations which, because they are "directly applicable" are, as such, suited to grant citizens rights. Other binding EC acts may confer similar rights to citizens - The only EC provisions which impose a clear and unconditional ob on MS, an institution, or person, but which do not have direct effect are those which leave to the addressee of the obligation a discretionary latitude. - However, when the latitude is limited in time, the expiration of the time-time limit suffices to give direct effect of EC rules. Precedence: EC provisions have precedence over national legislation in the case of conflict. - Since national courts must apply national laws alongside EC laws, it is not unlikely that conflicts will result from this simultaneous application. - The EC treaties contain no solution to be applied in these cases Some MS have enacted national legislation stipulating the EC law will take precedence over national law. However, the problem with this is that if the sole legal basis for the supremacy of EC law over national law were the national law itself, the supremacy would be at the mercy of the next legislative or constitutional amendment. - Hence, other grounds, not tied to particular national legal orders had to be found. The Court has always considered that the wording and spirit of the Treaty make it impossible for MSs to giver precedence to a later and unilateral measure over a legal system accepted by them on the basis of reciprocity. - Either the EC law stands by itself, is uniformly applied and has precedence over domestic law, or it does not subsist. In accordance to the principle of precedence, - Treaty provisions and directly applicable EC measures, by their coming into force, automatically render any conflicting national provisions inapplicable. - National courts are bound to apply EC law and protect the rights it confers on persons - National legislatures are precluded form adopting new measure which would conflict with the EC law. - National legislatures must abolish all existing contrary measures - Although these measures are inapplicable anyway, their maintenance would give rise to a state of uncertainty as to the beneficiaries' possibilities of reliance on EEC law Directives and individuals' rights of reliance: Since the choice of form and method of implementing the fulfilment of obs imposed by directives are left to the national authorities, directives are not directly applicable. - Consequently, directives have no direct effect, and individuals cannot invoke them in courts. - BUT, directives may have direct effect if the time of implementation has elapsed. (At that point, the MS is in breach of an ob. Only the method of implementing the directive was at their discretion, not the implementation itself.) Application of National Law by the Court: The Court has decided that it lacks competence to apply the internal law of MSs. - It can't hear a claim that by taking a decision, an institution has violated national law. - It can't decide on the interpretation of a national provision - The only time the Court can apply national law is when the Treaty specifically refers to national concepts. - Ex. Art 58 refers to Co.s and firms formed in accordance to the law of a MS. Costa v. ENEL (1964) (SM p. 229-43) Facts: Costa, a Milan lawyer refuses to pay his electricity bill, claiming that the Italian law nationalizing the electricity industry was contrary to provisions of the Treaty. He got a reference of the case to the Italian const. court, which then referred the issue to the Court of Justice. - The Italian government counter-argued that no-one but Italian courts could interpret Italian law, so Costa's reference could not be taken to the EEC court. Held: 1) The Court cannot: - Apply the treaty to a specific case - decide on the validity of a domestic provision in relation to the treaty 2) "The Treaty created its own legal system which became an integral part of the legal systems of the MSs, and which their courts are bound to apply.... The MSs have limited their sovereignty rights and have thus created a body of law which binds both their nationals and themselves." "This makes it impossible for the MSs to accord precedence to a unilateral and subsequent measure over a legal system accepted on the basis of reciprocity. ...The transfer of the MSs from their domestic legal system to the EC legal system of rights and obs arising under the Treaty carries with it a permanent limitation of their sovereign rights." 3) Arts 102 and 93 do not create individual rights which the courts must protect (no direct effect) 4) "A MS's ob under the Treaty [that is of direct application] is legally complete and can produce direct effects on the relations between MSs and individuals. The ob becomes an integral part of the [domestic] legal system... an directly concerns the nationals in whose favour it as created individual rights which the national courts must protect. 5) Art. 53 (prohibition on MSs introducing new restrictions on the right of establishment) is a rule which creates individual rights that the courts must protect. - Art. 53. is satisfied if the new law treats nationals of other MSs the same as its own Principles to be gleaned: 1) The Court is limited to the interpretation of the Treaty. Domestic courts apply the Treaty and decide on the validity of their own provisions. 2) By signing the treaty, MSs have given up part of their sovereignty which includes their sovereignty in legislating as they wish. a) their domestic leg must not conflict with the Treaty b) they have subjected their domestic legal system to that of the Court of Justice c) the treaty has created a body of laws which binds both Mss and their nationals. 4) An ob to the treaty that in not conditional or subject to the adoption of national measures, has direct application. a) it automatically becomes a part of the national law b) the limitation and ob of the government creates corollary rights in favour of nationals c) national courts must apply EEC law and protect these rights. Community Acts Mathijsen, Ch. 4 1) Acts provided for in Art. 189: "Art. 189: In order to carry out their task, the Council or Commission shall... make regulations, issue directives, take decisions, make recommendations, or deliver opinions. A regulation shall have general application. It shall be binding in its entirety and directly applicable to MSs. A directive shall be binding, as to the result to be achieved, upon each MS to which it is addressed, but shall leave to the national authorities the choice of forum and methods. A decision is binding in its entirety to those to whom it is addressed. Recommendations and opinions shall have no binding force." Regulations: 1) are essentially of a legislative nature and are hence applicable not to a limited number of persons, but to categories of persons viewed abstractly. 2) are binding in their entirety; - provisions of the regulation cannot be applied incompletely or selectively so as to render abortive certain aspects of the EC legislation. 3) are directly applicable; - they apply automatically to MSs without any further national measures being necessary. 4) have direct effect; - by their very nature, they are capable of creating individual rights Direct effect of EC law: An EC law is said to have direct effect when it creates rights for those who are subject to EC laws. - The beneficiaries of obligations imposed on MSs can invoke them in national courts, who in turn are obliged by the Treaty to uphold them. - This applies even if the EEC law conflicts with national measures - Some articles which have direct effect are: ... 12, 95, 96, 30-34, 37(2), 48, 52, 59, 62, 85. Directives: 1) Can be issued by the Council or the Commission 2) They are used when existing national leg. must be modified or enacted. 3) They are not directly applicable; - They describe the goals that are two be achieved but leave the MSs free to choose the means for implementing those goals. 4) They may have direct effect; - Whether they do so will depend on the particular directive's nature and wording Decisions: 1) Are binding in their entirety to those to whom they are addressed. - The addressee may be a MS or a legal or natural person. 2) May be taken by the Council or the Commission 3) Are normally of an administrative nature, implementing other EC rules Recommendations: 1) Have no binding force 2) They have a little weight in that national judges should take them into account when deciding cases submitted to them, especially if they can help in the interp. of other EEC measures. 3) They aim at obtaining a given action from the entity they are addressed to. Opinions: 1) Express a point of view, often at the request of a 3rd party. 2) They have no binding force. 2) Publication : - Regulations, since they're legislative in nature, must be published in the Official Journal - Directives and Decisions, as they concern only a limited number of persons, must be directly notified to those to whom they are addressed. - All directives, and the decisions which may affect the rights of third parties are also published in the Official Journal. Types of EC Law: A) Obligatory (binding to states) 1) Regulations 2) Directives 3) Decisions B) Non-obligatory (formally not binding, yet are on the limit between law and policy.) 1) Principles - the general principle of the rule of law is so fundamental that it cam in itself, consitute a rule of law. - it was already enunciated in the Costa Case. 2) Judicial Control (Art. 169) - the Court's pronouncements on issues 3) Opinions of the Advocates General - Advocates General, although not judges, prepare the case and suggest to the court what the result should be. - the court isn't bound to accept their opinion - Their opinions become part of the law when it agrees with the court's judgement. 4) Acts of States - EEC law ia also made up of domestic law - EEC law is implemented and enforced by national governments - National acts must be adopted to conform with the requirements of EEC law. Delegation of Powers NOTES Delegation is a central question of principle for the EC. - The EC can do nothing that it is not authorized to do. There is only a limited transfer of sovereign power from the MS and the EC exercises only delegated powers. - The EC Commission can't act beyond its powers. Art. 235: provides that where the Treaty has not given the necessary powers to attain something already envisaged as an EC objective, "the Council shall, acting unanimously on a proposal from the Commission, and after consulting with the Eur. Parl, take the appropriate measures." The Principle of subsidiarity expressed in the Maastricht treaty may well alter this - (Which article of the Treaty are we talking about here?) However, where the powers were required in order to allow the EC to perform the functions entrusted to them, the Court was prepared to read in inherent powers. - Ex. ERTA Case: - the powers in question were an international extension of domestic authority. Once the EC has a clear mandate, there is inherently an extension of the domestic power to the international scene. - It is implicit in order for it to be able the regulate the external extension of internal affairs. Most rules are executed by the MSs themselves, and not the EC. Only in exceptional cases (ie. anti-dumping) is the Community the regulator. END NOTES Köster Cas e (1970) Issue: Did the procedure used to pass the disputed regulation contravene Art. 155 ? Art. 155: "In order to ensure the functioning and dev. of the common market, the Commission shall ... exercise the powers conferred on it by the Council for the implementation of rules laid down by the latter." Tedeschi Case (1977) Facts: A directive set forth the maximum amount of various undesirable substances which could be present in food-stuffs. Art. 5 of the directive allowed MSs a safeguard claude, under which they could reduce the allowable content of these substances where they could present a danger to human health. It is contended that this would allow MSs to imposes import restriction through the use of this mechanism. Issue: Is Art. 5 of the Directive invalid ? Ratio: Its valid; the reasons given do not make it clear why this is so. Opinion of the Court 1/76 (Fund for Inland Waterway Vessels) Facts: The Commission asked the Court for its opinion as to whether a treaty with Switzerland is compatible with the Treaty. Delegations from six EC MSs were contracting parties to the agreement also. Art. 73 instructs Council to set down rules towards a common transport policy. Issue: Would an agreement of the type contemplated here be valid under EEC law ? Held: NO 1) Re-iterates the ERTA Case in saying that whenever EC law has given powers to the institutions of the EC within its internal system for the purpose of achieving a specific objective, The EC can enter into the international commitments necessary for the attainment of that objective even in the absence of an express provision to that effect. 2) Not only can the EC enter into contractual relations with 3rd parties, but it can also co-operate with that country in setting up a public international institution and may give that institution appropriate powers of decision. 3) It is justified that the six MSs participate individually in this agreement. In order for the objectives of this agreement to be reached, the six MSs had to undertake to amend two conventions. - Under those circumstances, their participation did not encroach on the external powers of the EC. 4) The fatal flaw of the agreement is that it gives the EC only a nominal role. - Although the commission provides the chairman, their is not right to vote. - The determinative functions in the operations of the fund are performed by the States, who in fact, are said to be conferring powers on their representatives within the supervisory board. - Agreements of this nature should not result in weakening the institutions of the EC and surrendering the bases of common policy, even for a limited and specific objective. NOTES: The Court has constantly held that once powers are conferred to the COmmission, then the states are excluded form exercising their powers in that domain. - An international scheme set up in part by the EC should not leave that much room for direct involvement of the MSs. Akzo Chemie Case (1986) The Commission announced it would conduct an investigation of the firm's behaviour. Akzo Chemie refused to submit to the investigation. They claimed that the failure of the Commission to publish the decision delegation authority to certain members made it impossible to review the legality of that delegation. Issue: Were the powers of delegation under which this decision was taken, improperly conferred Held: The transfer of delegation was OK 1) Conditions under which delegations of authority would be granted: as per the Commission's Provisional Rules of Procedure a) decisions delegating authority must be adopted at meetings of the commission b) such delegations may only be made to designated persons for specific categories of everyday measures of management or administration. c) the delegatee may adopt a decision only if: 1) all the departments concerned are in agreement and 2) only if she is satisfied that the decision does not need to be considered by the full Commission. d) all decisions adopted under a delegation of authority are transmitted to all the members of the Commission and all the departments on the day after their adoption. 2) Such a delegation of authority does not divest to the Commission of powers. The decisions are adopted under the name of the Commission, which is fully responsible for them, and one can apply to annul them under the same conditions as if they had been considered by the full commission. 3) For measures of management or administration, a system of delegation of authority is necessary having regard to the work load of the Commission. 4) The failure to publish the decision delegating authority to members of the Commission responsible for competition matters didn't deprive the plaintiffs of the opportunity to contest that decision or the decision adopted under the delegations on the grounds that they were defective. Legally Binding Acts of the Council and Commission CSBK pg. 33-45 & NOTES Whether an act of the Commission or the Council entails legal consequences is a question which will ultimately be decided by the Court of Justice. - The form or designation of the act are not conclusive indications of whether the act is binding - The nature and content of the act should also be considered. Dairy Products Case (1964) Belgium and Lux. introduced taxes on the delivery of imported dairy products. The Commission asked the Court to decide that this was contrary to Art. 12 of the Treaty. The two gov.s contested, arguing that the EC was to set up a dairy products regulation but it had not done so within the proper time. The two govs simply went ahead and regulated the field anyway. Hence, they claim that the Commission can't ask them to repeal measures which would have already existed in some other form if the EC had complied with their deadline. They argued their case on the basis of exception for non-performance. Held: 1) The Treaty is not limited to creating reciprocal obligations; it establishes a new legal order - The basic concept of the Treaty is that MSs shall not take matters in their own hands - Just because the Council failed to carry out its obligations doesn't relieve the MSs from carrying out their own. 2) The resolution taken by the Council to regulate the area by a certain date was not binding to them in the same way that an act within the meaning of Art. 189 would have been. Zuckerfabrik Case (1968) An EC Council regulation provided that a scheme of guaranteed prices and sales would cease to apply to beet sugar. The applicant, a Germ. beet sugar producer asked the Court to annul the measure on the grounds that it was an unlawful decision in the form of a regulation prejudicing his special interests. The Council counter-argued that the applicants claim was inadmissible. Held: The application is inadmissible 1) The test for distinguishing regulations from decisions: Regulations are of general application. 2) It isn't enough to look at the form of the measure; You must look at it nature and legal effects. 3) A reg. doesn't cease to be a reg. just because its possible to specify the number or even the persons to which it applies.. as long as: a) it results from an objective situation of law or fact which it specifies and b) which is in harmony with its ultimate objective. The provision in this case applies to objectively determined situations and involves legal consequences for categories of persons viewed in a general and abstract manner. NOTES: If an individual applicant can prove that a certain measure is a decisions, she will have standing to attack it. If it is a reg. applying to a category of persons, it cannot be attacked. Turkey Tail Case (1970) A German court interpreted whether "turkey tails" would come under the heading of the Common Customs Tariff. The Higher Court referred to the Court of Justice the question of whether national courts were allowed to make such interpretations. Held: 1) As a regulation, the provision is directly applicable. The national gov. no longer has the power to adopt legislative provisions in this field. 2) Individual countries cannot interpret EC regulations as they will. They must mean the same thing across the Community. - Although national gov.s can take measures to clarify the doubts raised by the description of the goods, they can only do so if: a) it complies with EC law and b) under the reservation that national authorities cannot issue binding rules of interpretation. Slaughtered Cow Case II (1973) This is a very important case. It clearly enunciated the principle of direct application and specifically rejected the notion that national governments have the authority to implement regulations. - "According to Art. 189, reg.s are directly applicable in all MSs and come into force solely by their publication in the Official Journal, as from the date specified in them, or from the date specified in the Treaty." - If the task of adopting the regulations were left to national governments, it would create uncertainty as to the measures' uniform application or as to their simultaneous application. Hence, a regulation applies directly and automatically, without is having to be adopted by the national government. - In fact, a national gov. is excluded form even pretending to have the power to enact the measure in its own right. Such an action could create ambiguity as to from whence the law springs. Directives don't have direct application not do they necessarily have direct effect. - The MSs is allowed a discretion as to the means it will employ in achieving the designated end. - However, in many cases, the result to be achieved is so dependent on the methods used that very little discretion as to the choice of method is effectively left to the MS. Marketing of Vegetable Seed Case (1976) The correct application of a directive is very important. - For example: A staggered coming-into-force, as for instance in tariff regulation) could give an unfair advantage to MSs which are slow to adopt the measures. By not adopting within the time prescribed the requisite national measures necessary to comply with the directive, a MS is in breach of its Treaty ob. (this type of breach by a MS would allow an individual interested in seeing the directive complied with, to bring this matter before the court.) Enka Case (1977) A directive provided that "the costs of warehousing and preserving the goods while in warehouses .. shall not be included in the price paid by the purchaser". Here, the national government was not implementing and thereby respecting the directive. Enka Corp. used this as a defense for not paying their warehousing. Held: 1) The provision of the directive had direct effect. (Hence, an individual would be allowed to appeal to it.) 2) The latitude left to MS for the implementation of the directive will vary as a function of the result that the EC body wishes to achieve. - As regards the customs provisions, in order to bring about their uniform application of the Common Customs Tariff (CCT) it may be necessary to ensure the absolute identity of those provisions which govern the treatment of imported goods, regardless of the MS across whose frontier they are imported.
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