As for now, the United Kingdom will leave the European Union on 31 October 2019, unless a withdrawal agreement is ratified before this date. The UK aims to sign “continuity” agreements with third countries to replace existing agreements with the EU before Brexit to avoid disruptions in trade flows. With smaller market leverage and under political pressure to deliver results, there would be an incentive for the UK to adopt an approach that is more lenient than the EU’s in its negotiations of post-Brexit trade agreements. There have been reports of requests from non-EU trade partners for the UK to lower its human rights standards and to soften its food standards once it is out of the EU. However, there are indications that the UK will stick to a normative approach comparable to the EU’s when it comes to development cooperation and environmental standards, as can be seen in the UK’s first continuity agreement with a group of Eastern and Southern African States,. In this post, we argue that despite the pressures, the UK does not diverge from the normative approach that the EU takes in its post-Brexit trade agreements.
‘Rolling over’ Trade Agreements post-Brexit
With Brexit looming, the UK is in the course of ‘rolling over’ existing trade agreements between the EU and third countries. The UK has thus far managed to agree on deals with relatively few states. As of April 2019, the UK has signed nine continuity trade agreements to replace the 36 EU trade agreements with external partners. One of these is the Economic Partnership Agreement (EPA) with the Eastern and Southern Africa (ESA) countries, which comprise the Comoros, Madagascar, Mauritius, the Seychelles, Zambia, and Zimbabwe. This EPA, which aims to replace the EPA between the EU and ESA, was claimed by Theresa May to be the first secured post-Brexit trade deal. The agreement has not yet been ratified by the UK nor is there an official version with signatures of the parties attached. As it would be the first such continuity agreement with developing countries, the EPA provides an opportunity to examine the UK’s normative approach to post-Brexit trade relations.
Status Quo Ante Brexit
The EU has an interim EPA with ESA countries, which has been provisionally applied since May 2012. The EU-ESA EPA has a relatively broad scope. The general objectives of the EPA include contributing to the reduction of poverty “through the establishment of a strengthened and strategic trade and development partnership consistent with the objective of sustainable development” and fostering a gradual integration of the ESA states in the world economy (Article 2). It aims to reduce barriers to trade, including EU duties and quotas for imports, and to increase exports to the ESA countries as stipulated in the specific objectives of its Article 3. Moreover, the agreement includes rules on development cooperation between the parties and sets out the mechanism for the settlement of disputes in its Chapter VI. Furthermore, the agreement includes a so-called rendez-vous clause in Article 53, which provides for the continuity of negotiations in a number of areas provided, including “trade, environment and sustainable development” and “development issues”.
Continuity Agreement or New Agreement?
The UK’s continuity EPA aims to maintain the EU agreement, recalling the success of the EU-ESA EPA. However, the UK-ESA EPA does not “incorporate” provisions from the EPA between the EU and ESA, as is the case for the agreement between the UK and the Palestinian Authority, for example, where direct reference is made to the EU agreement. The UK-ESA EPA instead reproduces provisions, as can be seen in Article 1 for instance, where the general objectives are identical to those in the EU-ESA EPA. Other provisions concerned with reduction, or removal, of tariffs for trade in goods and services are also duplicated from the EU-ESA EPA. In particular, the continuity EPA aims to guarantee the UK’s development support and to enhance trade, as well as investment in the same way as the EU-ESA EPA. The agreement allows for a reduction, or removal, of tariffs for trade in goods and services. Other trade obstacles, such as quantitative restrictions, are to be removed as well. Additionally, non-trade clauses have been included in this agreement, such as promoting sustainable development. The agreement stresses development and economic cooperation to promote sustained growth for the ESA nations by addressing structural transformation and competitiveness of their economies. Areas for further negotiations are also incorporated, such as agriculture and other development issues.
The tariffs on goods, included in the annexes of the agreement, are equal to those agreed upon in the EU-ESA agreement. The provisions concerning the rules of origin have been altered to reflect the bilateral trade flows observed in recent years and taking into account that the UK is a smaller market than the EU28. Thus, instead of incorporating provisions by reference, the UK-ESA agreement aims to ensure continuity by directly reproducing many of the provisions of the EU-ESA agreement.
The UK’s Normative Approach
A point of concern with regard to the UK’s post-Brexit trade agreements is whether the proclaimed “Global Britain” will follow the same approach as the EU, or whether it would loosen this normative position in order to extract better terms. Looking at the EPA with the ESA countries as a case study, one can see that there are only few changes in the continuity agreement compared to the original EU agreement. Development cooperation still constitutes one of the core objectives of the agreement. Additionally, the provisions included in the EU-ESA EPA concerning sustainable development are incorporated as well into the UK-ESA Agreement. Furthermore, the chapter on natural resources and environment has also been reproduced. Similar to the EU-ESA EPA, the importance of sustainable management of both natural resources and the environment is emphasised. In addition, there is a specific focus on fisheries in both agreements, which takes into account both environmental and economic aspects. The UK continues to commit to contributing to the reduction of poverty. Hence, the UK does not diverge from the EU’s approach with regard to emphasising development cooperation and environmental protection in this trade agreement.
There were certain policy incentives for such a divergence. For instance, it might have been easier for the UK to conclude new agreements if it would have been more lenient with regard to environmental standards. This would have helped to improve its record in signing new trade deals around the world before even leaving the EU. Nonetheless, the UK continued to emphasize normative standards in the areas of development and environment, vindicating to some extent Michael Gove’s claims for a “Green Brexit”, though the UK does not go beyond the EU;s standards here; it merely maintains them. Nonetheless, the UK’s post-Brexit trade policy might be greener than was initially expected.
A Future Outlook on Global Britain’s Normative Approach
The UK has attempted to replicate the agreement of the EU and the ESA states in order to preserve trade relations after Brexit. Contrary to what may have been expected, the UK did not diverge from the EU’s normative approach in important respects. The EU’s trade strategy is mainly enshrined in the New European Consensus on Development – Our world, our dignity, our future. When assessing the EU’s external trade agenda as set out in this policy document, it can be concluded that the approach the UK is currently taking is fairly similar. The new EPA continues to highlight development cooperation and environmental protection.
Looking to the future, the question is whether “Global Britain” will retain this normative approach, pursuing similar goals to those of the EU, or whether continuity agreements such as the EPA with the ESA countries in its current form only represent cases of temporary path dependency. This EPA could be seen as a stopgap that was rushed through, as there was increased time pressure due to the then impending Brexit date. The lack of time for negotiations might have caused the UK to rely on the previously existing provisions of the EU-ESA EPA, as time for negotiations was expected to be limited. It remains to be seen whether the UK will continue to pursue this kind of normative trade policy for future trade negotiations. It might stick with this approach or change its stance when time pressure is not a factor.
The external relations of the EU are often subject to debate amongst the EU institutions. In particular the division of competences between the Union and the Member States can give rise to difficult discussions, not only in the various stages of the procedure for the negotiation and conclusion of an international agreement, but also in the stage of the fulfilment of the commitments entered into. Does the EU have competence with regard to a position to be taken in an international organisation? How should this position be determined? Who may present a position and on behalf of whom? Who should exercise the right to vote? These and other “mixity”-related questions often lead to lengthy – sometimes heated –discussions, which are occasionally relocated from the Council Premises to the plateau de Kirchberg. People who are confronted with EU external representation issues for the first time, soon discover that the primary focus is actually often the “cuisine interne” of the EU. While these discussions usually remain “EU-internal”, they sometimes do become – painfully – visible to the outside world. This is also happened during the events that have led to the judgment of the CJEU in Case C-620/16 Commission v. Germany (OTIF). In this case, the CJEU was called upon to give its judgment on the compatibility with Union law of the conduct of Germany at the 25th session of the OTIF Revision Committee.
A judgment which shows the importance of the principle of sincere cooperation in the context of the EU’s external relations, and sheds more light on the admissibility of infringement actions launched by the European Commission where the alleged improper conduct lies in the past.
Article 17(1)(a) and b of the COTIF empowers the OTIF Revision Committee to decide to modify certain parts of the COTIF and its Appendices and/or submit amendments for approval at the General Assembly of OTIF. The Revision Committee is in principle composed of all parties to the COTIF.
At its 25th session, which took place on the 25th and 26th of June 2014, the Revision Committee decided upon certain amendments to the COTIF and some of its appendices. One day prior to this meeting, on the 24th of June 2014, the Council of the European Union adopted Decision 2014/699/EU establishing the position to be adopted on behalf of the EU at the 25th session of the OTIF Revision Committee. This decision also established the division of competence between the EU and its Member states regarding the exercise of voting rights at the said session. It was adopted on the basis of article 91(1) in conjunction with article 218(9) TFEU, which requires qualified majority voting in the Council. Germany, which disagreed with the adoption of the Council decision, made a unilateral statement, taking the view that the EU lacked competence to adopt the decision in regard to certain amendments.
At the 25th session of the OTIF Revision Committee, the European Commission put forward the position of the EU as set out in the annex to this decision. Germany, however, expressed a separate point of view and voted against the position of the EU. In addition, Germany publicly expressed its disagreement with the European Union exercising the right to vote.
On the 24th of December 2014 Germany brought proceedings under Article 263 TFEU against the Council asking the CJEU to partially annul Council Decision 2014/699/EU on the grounds that the EU lacked competence to adopt that decision in so far as it concerned amendments which fall in an area of shared competence which the Union had not yet exercised internally by adopting rules of secondary law. The CJEU however, rejected the appeal of Germany in its judgment of 5 December 2017, clarifying that the exercise of the external competence by the Union is not limited to cases in which the Union (under article 3(2) TFEU) has an exclusive competence to act (see also for an earlier post on this particular judgment here).
The saga continues with the case at hand: the European Commission has brought infringement proceedings under Article 258 TFEU against Germany, claiming that with its conduct at the 25th meeting of the OTIF Revision Committee, Germany failed to fulfil its obligations under Decision 2014/699 and the principle of sincere cooperation.
Summary of the judgment
In its judgment, the CJEU first of all addresses the objection of inadmissibility of the action raised by Germany. Germany argued that the action was inadmissible since the conduct at issue lied in the past and had ceased to produce any legal effects before the time limit laid down in the reasoned opinion of the Commission had expired. In addition, Germany pointed out that its exercise of the right to vote at the 25th session of the OTIF Revision Committee did not have any bearing on the outcome of the decisions taken.
The CJEU however, shares the Opinion of Advocate General Szpunar that this argument cannot be accepted, stressing that an infringement of a Council decision adopted on the basis of Article 218(9) TEFU, manifests its effects not only at domestic level, but also at international level on the unity and consistency of the external action of the EU. The detrimental effects of an infringement of a Council decision adopted under Article 218(9) TEFU are not confined to the decision-making process of the body of the international organisation concerned, but also manifest themselves, more generally, in the international action of the EU within that international organisation. The CJEU adds that Member States might take advantage of their own misconduct, if they could evade infringement proceedings on the grounds that an infringement of a decision adopted under Article 218(9) TFEU has already exhausted its effects. In such a situation, the Commission would be unable to bring proceedings against the Member State concerned and to perform fully its role as guardian of the Treaties, conferred on it by Article 17 TEU.
Moreover, to uphold the inadmissibility of an action for failure to fulfil obligations would be detrimental both to the binding nature of decision adopted under Article 218(9) TFEU, and to the respect of the values on which the EU, in accordance with Article 2 TEU is founded, such as the rule of law.
Violation of Decision 2014/699
It is undisputed that Germany expressed a separate point of view from the position adopted by the Union at the 25th session of the OTIF Revision Committee, voted against that position and expressed its disagreement with the EU exercising a right to vote. The CJEU therefore holds that Germany violated Decision 2014/699, pointing out that this measure produces binding legal effects, in that it establishes the European Union position at the 25th session of the OTIF Revision Committee for the Commission, and on the other hand for the Member States inasmuch as it obliges them to defend that position.
The CJEU continues by stating that the fact that Germany disputed the lawfulness of Decision 2014/699 under Article 263 TFEU, in no way alters the binding nature of that decision. The CJEU therefore rejects Germany’s argument that the Decision is unlawful, on the ground that Germany was not able to obtain judicial protection against that decision before the opening of the 25th session of the OTIF Revision Committee. Germany failed to seek either the suspension of the implementation of that decision or the adoption of interim measure by the Court, so that the action for annulment had no suspensive effect.
Furthermore, the CJEU recalls that the TFEU makes a distinction between actions against a Member State for failure to fulfil obligations under Article 258 and 259 TFEU, and actions which seek review of the lawfulness of acts or failures to act of EU institutions under Articles 263 and 265 TFEU. Pursuant to the CJEU, those remedies have different objectives and are subject to different rules. Therefore, a Member State cannot properly plead the unlawfulness of a decision or a directives addressed to it as a defence in an action for a declaration that it has failed to fulfil its obligations arising out of its failure to implement that decision or directive.
Violation of the principle of sincere cooperation
Lastly, the CJEU shares the vision of the Commission that Germany has violated the principle of sincere cooperation as laid down in article 4(3) TFEU. The CJEU holds that a Council Decision adopted on the basis of Article 218(9)TFEU is a specific expression of the requirement of unity of representation of the EU, arising from the obligation of sincere cooperation. By its conduct at the 25th session of the OTIF Revision Committee, Germany allowed doubts to exist as to the EU’s ability to express a position and represent its Member States on the international stage. According to the CJEU, the fact that Germany distanced itself at that session from the position of the EU, runs the risk of undermining the EU’s power of negotiation within the OTIF. It follows that, by its conduct, Germany harmed the effectiveness of the international action of the EU, as well as the latter’s credibility and reputation on the international stage.
The judgment of the CJEU is first of all interesting in light of the admissibility of infringement actions launched by the European Commission where the alleged improper conduct lies in the past. At the same time, the CJEU’s rejection of the objection of inadmissibility raised by Germany was to be expected. After all, it does seem quite illogical, if Member States could simply escape infringement proceedings for failure to observe an EU-position established by a Council Decision on the basis of Article 218(9) TFEU on the grounds that the infringement has already exhausted its effects and by relying upon a fait accompli caused by their own misconduct.
In its inadmissibility plea, Germany relied upon settled case-law from the CJEU in the area of public procurement, from which it follows that an infringement action by the Commission is inadmissible when, on the expiry of the period laid down in the reasoned opinion of the Commission, the disputed procurement notice or the contracts at issue had already exhausted all their effects. In his opinion, AG Szpunar submitted that the aspect crucial to the Court’s reasoning in this line of case-law was the fact that the Commission neither acted when it could have done so in those cases, nor provided an appropriate justification for such an inaction. In such circumstances, the Commission should not be able to institute infringement proceedings against a Member State at a later stage if the alleged infringement had ceased to exist. The AG suggested that a two-part (cumulative) test can be derived from the case-law of the CJEU: 1) an infringement must have ceased to exist on the expiry of the deadline set forth in the reasoned opinion; and 2) the Commission must have been able to act in order to prevent the alleged infringement from producing effects. If either of these stages is not fulfilled, the action cannot be inadmissible, according to the AG.
In its judgment, however, the CJEU does not confirm or apply this test suggested by the AG. Instead, the CJEU dismisses Germany’s reliance on the CJEU’s case-law in the area of public procurement “bearing in mind the particular context to which the disputed conduct relates”, pointing out that this case-law was “delivered in contexts that are purely internal to the European Union”. Thus, the determining factor for the admissibility of the Commission’s infringement-action in this case is the unity and consistency of the EU’s external action.
As mentioned above, the CJEU’s judgment in this cases is preceded by the judgment rendered in respect of the action of annulment sought by Germany in Case C-600/14. In that case, the CJEU rejected Germany’s plea that the EU lacked competence to adopt Council Decision 2014/669/EU in so far as it concerned amendments which fall in an area in which the EU has not taken internal action by adopting rules of secondary law. With this judgment the CJEU confirmed the existence of “facultative mixity”. The fact that that this sometimes requires a politically difficult choice to be made, is illustrated by the recent legislative acts which the EU has adopted as part of the contingency preparations for a “no-deal” Brexit scenario in the field of transport.
However, this choice was made by the Council when adopting Decision 2014/699 on aspects concerning shared competences on which the EU had not yet taken internal action. This case illustrates that individual member states may be outvoted when such a decision is taken. Nevertheless, all Member States are obliged to comply with a decision adopted by the Council under Article 218(9) TFEU and individual Member States are not allowed to unilaterally adopt, on their own authority, corrective or protective measures designed to cure any (alleged) breach by an institution.
The CJEU also rejects Germany’s claim that Decision 2014/699 is unlawful, on the ground that the Germany was not able to obtain judicial protection against that decision before the opening of the 25th session of the OTIF Revision Committee. The CJEU notes that the disputed conduct occurred at a date prior to that on which Germany brought its action in Case C-600/14 seeking annulment of Decision 2014/699 and adds to this that Germany failed to seek either the suspension of the implementation of that decision or the adoption of interim measures by the Court. This may seem strict, considering the fact that Council Decision 2014/699 was adopted by the Council only one day prior to the 25th session of the OTIF Revision Committee. Then again, as the CJEU observes in para. 90 of its judgment, Germany is a member of the Council, which was the author of that decision, and therefore necessarily had knowledge of it. It therefore does not seem impossible for Germany to have taken the necessary preparatory measures in order to bring its action for annulment and seeking the suspension of the implementation of that decision/adoption of interim measures by the Court, on the day of the adoption of the Council Decision.
In any case, it becomes clear that the CJEU does not appreciate the approach taken by Germany to take matters into its own hands and deviate from the Union position laid down in Decision 2014/699. The judgment of the CJEU makes clear that, with this conduct, Germany not only violated Decision 2014/699, but also the principle of sincere cooperation. As the CJEU finds in para. 75 of its judgment, it follows from a reading of the minutes of the 25th session of the OTIF Revision Committee that Germany indeed expressed a separate point of view from the position by the EU, voted against that position and expressed its disagreement with the EU exercising a right to vote.
The discussion on the division of competences between the Member States and the EU has even led the Secretary-General of OTIF to express his concerns with regard to the situation and to note that “it was not up to OTIF to deal with the EU’s internal decision-making problems”. It is therefore hard to deny that the events that have led to this case did not affect the unity of the external representation of the EU.
The CJEU’s finding that, by its conduct, Germany harmed the effectiveness of the international action of the Union, as well as the latter’s credibility and reputation on the international stage is therefore not surprising. The case also perfectly illustrates why external relation discussions should remain internal to the EU.
*The views expressed are exclusively those of the author.
 International agreements are “mixed” if they are concluded by both the Union and the Members states on the one hand, and one or more third countries or an international organization on the other hand.
 All Member States are party to COTIF, except Cyprus and Malta
 Annex I to Decision 2013/103/EU contains a Declaration by the EU concerning the exercise by the European Union of the shared competence with the Member states in the rail sector and Annex III sets out the internal arrangements for the Council, the Member States and the Commission in proceedings under OTIF.
 See case C-600/14 Germany v. Council of the European Union (OTIF)
 See in particular the disclaimers made in respect of the necessary exercise of shared competences by the Union in order to adopt these contingency measures in recital 10 of the Regulation with regard to the common rules ensuring basic road freight and road passenger connectivity with regard to the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the Union; and in recital 10 and article 2 of the Regulation on common rules ensuring basic air connectivity and the statements made in respect of that act. It is clarified that in view of the exceptional and unique circumstances that necessitate the adoption of these Regulations, it is appropriate for the Union to exercise temporarily the relevant shared competence conferred upon it by the Treaties. The exercise by the Union of the shared competence is limited to the period of application of these Regulations. Accordingly, the shared competence will cease to be exercised by the Union as soon as these Regulations ceases to apply. In addition, it is noted that the exercise of Union competence pursuant to these Regulations shall be without prejudice to the competence of the Member States concerning traffic rights in any ongoing or future negotiations, signature, or conclusion of international agreements related to air services with any third country, and with the United Kingdom with respect to the period after this Regulation has ceased to apply.
 Indeed, as follows from the note sent by the General Secretariat of the Council to Coreper and Council in preparation of the adoption of the act: the proposal for the Council Decision has been examined by the responsible Council Working Party on three occasions before it was sent to the Council (via Coreper) with a view to adoption. At the last meeting, on 16 June 2014, it was quite clear that there was not much support for Germany’s position and that the text of the Decision would be submitted to the Coreper and the Council as an I/A Item (meaning that there was sufficient support for the Decision to be adopted by the Council)
On 19 March 2019, in Jawo vs. Germany, the Court of (ECJ) the question of whether the Charter of Fundamental Rights of the European Union (the Charter) prohibits the transfer of an asylum applicant to the Member State responsible for processing the asylum application if there is a serious risk that the applicant will be subjected to inhuman or degrading treatment. The ECJ established that when deficiencies in the asylum system of a Member State put a person who has been granted international protection in a situation of extreme material poverty, in which his or her most basic needs are not met, the threshold of a high level of severity is reached. As a result, the asylum seeker may not be . . In contrast to previous judgments, namely N.S. and Others and C.K. and Others, the ECJ considered the applicant’s circumstances after having been transferred to the responsible Member State and granted international protection. In addition, this judgment provides another instance in which the principle of mutual trust – which is the cornerstone of the Common European Asylum System (CEAS) – can be rebutted, leading to an asylum applicant not being transferred.
Mr Jawo, a Gambian national, left Gambia and reached Italy by sea; he lodged an asylum application in Italy. As he made his way to Germany, he submitted another asylum application in Germany. The German Federal Office for Migration and Refugees rejected Mr Jawo’s application because he had already filed an asylum application in Italy, and ordered his transfer to Italy. In an appeal filed by Mr Jawo before the Higher Administrative Court in Germany, the appellant argued that the transfer to Italy was inadmissible because of systematic flaws in the asylum procedure and in the for asylum applicants in Italy, meaning that a transfer would go against Article 3(2) of the Dublin III Regulation.
The Higher Administrative Court referred the case to the ECJ for a preliminary ruling on whether, in assessing the lawfulness of the transfer to Italy, the national court had to take into account Mr Jawo’s living conditions and the serious risk of his being subjected to treatment contrary to Article 4 of the Charter once he had been transferred to Italy and granted international protection.
Extreme material poverty: the threshold for non-transfer
In the present judgment, the ECJ refers to the importance of the principle of mutual trust, particularly within the CEAS which requires the transfer of an applicant to the responsible Member State to examine the asylum application (para. 82). Within this context, the ECJ reiterates the presumption that all Member States comply with the Charter and the Geneva Convention (para. 82). However, it is not inconceivable that the system within a Member State might have problems. Applicants for international protection might, therefore, not be treated in a manner that gives full respect to their fundamental rights, including the right not to be subjected to inhuman and degrading treatment (para. 83). The Court clarifies that when national courts are seized with cases concerning a transfer decision, an assessment needs to be carried out to determine whether there are systematic deficiencies to the detriment of the person’s rights.
For the first time, the Court provides the criteriathat must guide the assessment carried out by the national courts in determining whether there are systematic deficienciesof a particularly high level of severity leading to a real risk of inhuman or degrading treatment. In paragraph 91 of its judgment, the Court states that the deficiencies must attain a particularly high level of severity, and that this level is reached when “the indifference of the authorities of a Member State result in the person wholly dependent on State support, finding himself, […] in a situation of extreme material poverty” which, in turn, “does not allow him to meet his most basic needs, such as, inter alia, food, personal hygiene and a place to live, and that undermines his physical or mental health or puts him in a state of degradation incompatible with human dignity” (para. 92). If this is the case, the applicant must not be transferred because of the real risk of inhuman or degrading treatment.
However, the ECJ clarifies that “a high degree of insecurity or a significant degradation of the living conditions of the person concerned”, as well as an absence of integration programmes, less favourable social protection or poorer living conditions in the requested Member State when compared to the requesting Member State, do not reach the threshold of a particularly high level of severity leading to a situation of extreme material poverty (para. 93). In fact, in the present case, the ECJ states that the mere fact that the asylum seeker did not have a family support structure did not mean that he would face extreme material poverty.
While the criteria that guide the assessment to determine whether there are systematic deficiencies of a particularly high level of severity are provided by the ECJ for the first time in the Jawo case, the European Court of Human Rights had already considered this in M.S.S vs Belgium & Greece which concerned the transfer of an asylum seeker. In the latter judgment, the European Court of Human Rights established that prior to transferring an asylum seeker to the Member State responsible, national courts are to consider whether a situation of extreme material poverty is in breach of Article 3 of the European Convention on Human Rights on the prohibition of torture, inhuman or degrading treatment (para. 252-254). It follows that the ECJ has derived the criteria to determine deficiencies of a particularly high level of severity from the M.S.S judgment of the European Court of Human Rights.
In N.S. and Others, the Court stated that the transfer of an asylum seeker can be incompatible with Article 4 of the Charter when there are substantial grounds to believe that there are “systematic flaws in the asylum procedure and in the reception conditions for asylum applicants in the Member State responsible” (para. 86). Furthermore, in C.K. and Others, the Court looked at the actual transfer of the asylum applicant to the requested Member State. The Court concluded in that case that although the requested Member State had no systematic failures in its asylum procedure and reception conditions, the transfer of an asylum applicant who is seriously ill could, in itself, still entail a risk of inhuman or degrading treatment (paras. 71-74).
In contrast to the two judgments mentioned above, in the present case the Court considers whether there can be a breach of Article 4 of the Charter by analysing the circumstances of the applicant after the person is transferred to the requested Member State and granted international protection. This is the first time that the Court has considered the expected living conditions of the beneficiary of international protection in another Member State. It therefore adds another instance in which the assessment of a particularly high level of severity is to be taken into account in deciding whether to transfer an applicant to the responsible Member State. However, the Court has set a high bar for a successful argument that an applicant should not be transferred because of a breach of Article 4 of the Charter. The non-transfer of the applicant is justified when the beneficiary of international protection would live in a situation of extreme material poverty to the extent that he cannot meet his most basic needs.
As the cornerstone of the CEAS, the principle of mutual trust provides the necessary safeguards to avoid having to check the level of protection and respect for fundamental rights in other Member States for every individual case. However, since Member States can breach fundamental rights, the principle of mutual trust – like other presumptions – can be rebutted. While the above-mentioned case law, including the Jawo case, provides for circumstances that merit the non-transfer of an applicant following the appropriate assessments and the establishment of a real risk of inhuman and degrading treatment, the balance between the principle of mutual trust and its rebuttal is maintained. Ultimately, the rebuttal of the principle of mutual trust should only occur in exceptional circumstances, in order to preserve the functioning of the CEAS.
Pending before the European Court of Justice (ECJ) is a core issue of legal protection against European Union (EU) acts – can a bank itself challenge the withdrawal of its license by the European Central Bank (ECB) even when the powers of the bank’s board have been taken over by a liquidator, or can the shareholders act for the bank or, alternatively, for the protection of their own interests?
Three years since the ECB withdrew the license of a Latvian bank, Trasta Komercbanka, in March 2016, this issue of effective judicial protection is at the centre of proceedings in which the Advocate General (AG)’s Opinion is just out. This post sketches the background to the on-going proceedings and summarises the AG’s Opinion, highlighting the issue of contestation of withdrawal of a bank’s license: who can challenge the ECB in court: the bank’s board, side-lined by the liquidator, or its shareholders?
The specificities of Latvian law led to the bank (hereafter: Trasta, or TKB) being put into liquidation almost immediately after the withdrawal of its authorisation, which Latvia’s National Competent Authority (NCA), the Finanšu un kapitāla tirgus komisija (in English: the Financial and Capital Markets Commission, or FCMC) had proposed to the ECB. The liquidator, appointed at the request of the FCMC, had revoked all powers of attorney issued by the bank’s board. In spite of this revocation, confirmed in a Latvian court decision against which no appeal was possible, the Administrative Board of Review (ABoR) had considered the bank’s review request admissible but held “that the allegations of procedural and substantive breaches entailed by the contested decision were unfounded and that [the ECB’s] decision was sufficiently reasoned and proportionate, while recommending that the governing body of the ECB clarify certain elements.” (General Court (GC)’s Order, para 7).
Thereupon, the ECB issued a new decision of withdrawal of the banking license. Court proceedings were initiated against both ECB decisions: the original withdrawal of 3 March 2016 and the post-ABoR withdrawal decision of 11 July 2016. In the first of these cases (Case T-247/16, Trasta Komercbanka and others v ECB, renamed Fursin and Others v ECB), the GC issued an Order (ECLI:EU:T:2017:623) on 12 September 2017 rejecting the claim of Trasta as inadmissible and upholding the shareholders’ claim as admissible. So, in the view of the GC, in the circumstances of this Latvian case, the bank’s board could not challenge the withdrawal but the bank’s shareholders could. This Order was contested by the ECB (Case C-663/17 P), the European Commission (Case C-665/17 P) and Trasta and its shareholders (Case C-669/17 P). Note that this threefold appeal still only concerns the admissibility of a judicial challenge, not the substantive issues of the license withdrawal.
The AG’s Opinion in four sentences
On 11 April 2019, Advocate General (AG) Juliane Kokott gave her Opinion (ECLI:EU:C:2019:323). The AG advises the Court of Justice to rule that, even when a liquidator has revoked the mandate of the lawyer representing the credit institution, a bank – represented by its former management and not by its liquidator – can challenge an ECB license withdrawal in court. She suggests to – in so far – set aside the Latvian rules on revoking a bank’s mandates in order to provide an effective remedy against the withdrawal of the authorisation. She also advises the ECJ to find that the shareholders have no right to challenge the withdrawal of the license of a bank.
The Advocate General’s reasoning
Confronted with three appeals with conflicting aims (the Commission and the ECB wished to see the General Court’s Order to allow the shareholders to oppose the withdrawal in court annulled, whereas Trasta and its shareholders wished to see the Order quashed to be able to both oppose the withdrawal), the AG chooses to start with the appeal by the bank and its shareholders and, then, to discuss the appeals by the ECB and the Commission.
The principle of effective judicial protection
The AG quickly dismisses the appeal by the bank’s shareholders: their submissions on admissibility had been upheld by the GC, so they cannot appeal against the Order. She then discusses the admissibility of the appeal by the bank, and the substance of its arguments against the GC Order.
To establish whether the principle of effective judicial protection, invoked by Trasta, has been infringed, she focuses (para 41) on the question
“whether the General Court was right to rule in paragraph 36 of the order under appeal that the legal protection sought by the bank, namely the annulment of the decision to withdraw its licence, can be effectively achieved by reference to the person of the liquidator.”
Trasta had contested the GC’s finding that the liquidator’s mandate included the power to challenge the withdrawal (an error of fact), and considered that the GC had erred in law to regard action by the liquidator an effective legal remedy in the sense of Article 47 of the Charter of Fundamental Rights of the European Union (‘the Charter’) (para 43). On the factual error, the AG concludes (para 59-67) that the GC’s findings on Latvian law must be accepted as binding: there is no manifest inconsistency with the content of the national provisions at issue nor can an inappropriate significance attributed to Latvian law be pointed out. On the error in law, the bank had put forward three arguments why action by the liquidator could not be considered an effective legal remedy, which I quote here (para 43):
“First, the liquidator was appointed by the FCMC, on whose proposal the ECB withdrew the appellant’s authorisation. He could not therefore effectively represent the interests of TKB vis-à-vis those institutions. Second, the board of directors alone had been substantively involved from the beginning in the process concerning the withdrawal of the licence, with the result that the liquidator cannot replace it at the stage of legal proceedings. Third, the liquidator would commit a breach of duty if he attempted to obtain the reinstatement of the licence and thus of the economic activities of the company whose business he is supposed to wind up”
Preceding her assessment of these claims in para 68-79 of her Opinion, the AG explores, in para 44, a preliminary question: whether EU law, contradicting national legal provisions governing the liquidator’s powers and the representation of a liquidated bank, may justify the maintenance of the power of representation of the former directors for the purposes of bringing an action for annulment.
She argues as follows. Since the right to bring an action against an EU legal act addressed to a legal person is determined solely by EU law, the issue of who can represent this legal entity is likewise a matter of EU law. In the absence of EU provisions on legal representation of legal entities, one has to fall back on national law which, however, “may not impair the right to effective judicial protection” (para 46). AG Kokott argues forcefully that, should the GC have been right in considering binding the Latvian court’s decision denying the right of representation of Trasta in ABoR proceedings or before the European Court (para 47-48),
“the possibility of effective judicial review of the ECB’s decision, an EU act, would effectively depend on national law. It could even be entirely precluded by national law, for example if the liquidator did not have the power under the relevant domestic rules to bring an action for annulment. However, national law cannot have the final decision whether an EU act may be (effectively) reviewed in an individual case.”
She gives illustrations from other cases concerning applicants whose legal personality was considered by the Court to continue for the sole purpose of challenging a legal act addressed to them. Acknowledging that the retention of legal personality was at issue in those cases, not the representation of the entity in court, she sees an underlying principle that the European Courts cannot be bound by national law where the application thereof would mean that effective judicial protection cannot be granted (para 52).
An action for damages cannot be an adequate substitute for a direct challenge, certainly not when a legal act addressed to the applicant is concerned. Moreover, as the recent Berlusconi judgment makes clear, even a theoretical possibility of challenging an ECB act before a national court, which might then request the European Court for guidance in a preliminary reference, does not exist.
Parallel proceedings are invoked to support her case: the Maltese Financial Services Tribunal had found that representation of a Maltese bank by its board for the purposes of bringing an action for annulment against the withdrawal of the banking licence before the General Court was unaffected by the bank’s liquidation and, remarkably, Latvian courts in cases concerning withdrawals of a banking license by the FCMC prior to the establishment of the SSM had held the same. The AG concludes that the GC erred in law when it considered “that the power of representation and thus the power to revoke the powers of attorney is in any event to be determined on the basis of national law alone” (para 56-57).
Before daring to conclude that this necessitates setting aside the Order of the GC, the AG explores “if the revocation of the power of attorney by the liquidator is actually likely to prevent the bank obtaining effective judicial protection against the withdrawal of its authorisation” – only then would the GC’s error have to stand corrected. Therefore, she examines whether “the legal protection sought by the bank could be achieved equally effectively by the liquidator”. She finds it could not, taking structural considerations into account:
“(…) the existence of a purely formal possibility of a remedy cannot be sufficient if the legal framework conditions are designed such that de facto that possibility cannot be utilised. Otherwise the first paragraph of Article 47 of the Charter would be rendered meaningless.”
A liquidator entrusted with liquidating the assets of a bank whose license has been withdrawn cannot be expected to contest this withdrawal seriously: “(…) he would be expected to eliminate the cause in law for the winding up of the company. That is not part of his remit, however.” (para 71)
Also, Trasta’s argument that the board, having been involved in the long process leading up to the withdrawal, can only effectively represent the bank’s interest in challenging the ECB’s legal act finds a receptive ear. In this context, the AG notes (para 73-74):
“(…) that the ECB Board of Review did not consider the notice of review lodged by the board of directors against the withdrawal of the licence to be inadmissible and ruled on the substance even though the powers of attorney had been revoked by the liquidator and an order to the contrary had been made by the Rīgas pilsētas Vidzemes priekšpilsētas tiesa (Vidzeme District Court, Riga). This suggests that those persons should also be allowed to act for the bank at the stage of legal proceedings.”
The conflict of interest a liquidator would find her or himself in is also highlighted: the FCMC proposes a liquidator to the court and can seek to replace him at any time when it has no longer confidence in him. The AG notes that the ECB withdrew the licence at the behest of the FCMC.
A judgment of the European Court of Human Rights in a similar case underpins her argument.
The AG’s analysis of the possibility that the liquidator can effectively achieve protection of the bank’s rights results in a clear denial:
“79. Under these circumstances, the legal protection sought by TKB can [not] be considered to be effectively achieved by the reference to an action to be brought by the liquidator.”
Thereafter, the AG undertakes an examination whether an effective remedy against the withdrawal of a license can result from the shareholders acting, either for the bank or for the protection of their own rights (para 80-87). She concludes that shareholders acting in either capacity “cannot (in any event) be considered equally effective as an action brought by the bank itself” (para 84).
Her interim conclusion from all these considerations is crystal clear:
“88. The legal protection sought by the bank cannot therefore be achieved effectively either by a reference to the liquidator or by a reference to an action brought by the shareholders. By rejecting, in paragraph 36 of the order under appeal, an infringement of the right to effective judicial protection, the General Court thus committed an error in law.”
She advises that the Court of Justice is to judge on the admissibility itself. As
“(…) TKB is able to obtain effective judicial protection against the withdrawal of its banking licence only through the action which was brought pursuant to the fourth paragraph of Article 263 TFEU on its behalf by the former board of directors.”
, she suggests to disregard the liquidator’s power to revoke the power of attorney in so far as this has the consequence of depriving Trasta from effective judicial protection. Thus, in so far, national law should be set aside. This is the most far-reaching element of the conclusion: EU law, and the protection of the right of effective judicial protection trump (the application of) provisions of contrary national law.
Interest and standing of shareholders to contest the license withdrawal
Having thus concluded that the GC Order needs to be set aside where it held that the bank, acting through its former board, could not challenge the withdrawal of its license, the AG’s Opinion addresses the appeals by the ECB and the European Commission. AG Kokott distinguishes between the shareholders’ interest in bringing proceedings (para 104-130) and their standing (para 131-134).
The criterion to establish “interest” is whether the binding legal effects of an act bring about a distinct change in the applicant’s legal position (para 104). The “pivotal point” is the answer to the question whether the shareholders have an interest of their own in bringing proceedings or can bring an action in defence of the interests of the bank (para 108). The test of direct and individual concern needs to be applied to the party on whose behalf proceedings are instituted, not to the party representing its interests. Before exploring, in para 123-129, whether the exception of shareholders having an interest in proceeding for the bank applies here, as the GC had found, the AG examines if the shareholders have an interest of their own.
The AG considers that the economic interest in retaining the license cannot create a right to bring proceedings for the shareholder since their interest overlaps with that of the bank. For a ‘non-privileged applicant’ to bring an action for annulment against a decision which is not addressed to it, establishing its interest to do so overlaps with the direct and individual concern of Article 263 TFEU. Involvement of the shareholders in the administrative procedure prior to the withdrawal of the licence does not give them in interest in bringing proceedings for themselves. This consideration is critical for the status of shareholders: a supervisory authority will involve shareholders in discussions about saving the bank they own, or about re-directing its business towards sustainability; should such talks fail to have the desired result, the bank’s authorisation will be revoked. Their earlier involvement will not give the shareholders an interest to pursue the matter in judicial (or administrative) review, according to the AG (para 114-116).
Are their property rights affected to such an extent by the revocation of a license that shareholders can be considered to be directly and individually concerned according to the criteria of established case law since the Plaumann judgment (ECLI:EU:C:1963:17)? The AG does not agree with the ECB and the Commission that the withdrawal of the authorisation directly affects the status of shareholders under company law. While this status is affected by liquidation, she notes that liquidation takes place subsequent to withdrawal of the banking license and is not required by EU law (but, as we have seen, a peculiarity of Baltic law) (para 118-119).
Loss of share value caused by the withdrawal, which jeopardises the object of the company, is not sufficient to establish direct concern either. Finding that the interest of shareholders in securing the company’s future is “not sufficiently separate from the bank’s interest in retaining its license”, the AG concludes that “the shareholders do not have an interest of their own in bringing proceedings.” (para 120-122)
Neither do the shareholders, in the Opinion of the AG (para 127-128), have an interest in bringing an action for the bank. Under company law, a legal entity is represented by its board, not by its shareholders. She would only accept such an interest, exceptionally, “in cases where the company itself cannot effectively bring an action against [an EU legal act]”. Since Ms. Kokott has argued that the bank, represented by its board, does have an action, there is no reason to grant the shareholders a right to act for the bank. This is a critical point in the AG’s reasoning: this exception fits exactly the Trasta case and is relevant for similar cases of banks whose (former) board can challenge the revocation of the authorisation, especially for banks with a restricted shareholder ownership.
Again, the AG considers that the GC Order should be set aside, this time at the request of the ECB and the Commission, namely in so far as the GC considered the shareholders to have an interest in bringing proceedings (para 129 and para 135); the AG suggests the ECJ to itself declare the shareholders inadmissible. She does not further investigate the shareholders’ standing as she has concluded they have no interest to pursue proceedings.
References to ABoR
The role of the ABoR is given consideration where the Opinion argues that, in the review proceedings, the power of attorney of the advocate for the bank’s board has been accepted and that this did not present practical obstacles (para 74 and footnote 41). Remarkable is the wording used when referring to the ABoR: it is alleged to have decision-making power and the competence to instruct the Governing Council. Both are a misreading of ABoR’s competences: it is to give an opinion and to propose to the Supervisory Board how to proceed.
Will the Court of Justice follow the AG and reverse the GC’s findings by giving the bank rather than its shareholders the right to challenge the ECB’s decision to withdraw the license of this Latvian bank? The judgment of the Court will have to be awaited. It will determine the way legal protection can be sought against the withdrawal of a banking licence by the ECB in the particular circumstances of national laws which prescribe the immediate liquidation of a bank subsequent to the revocation of its authorisation. Other cases of revocation of banking licences are pending in which the status of shareholders and the position of liquidators may be relevant, as well as the interplay between national law and EU law. Once these issues have been sufficiently cleared in the European Court’s case law, the substantive issues of the legitimacy of the withdrawals can be judicially assessed.
The judgment will also determine whether Latvian law will be set aside for a second time in 2019. Earlier this year, the CJEU annulled (ECLI:EU:C:2019:139) the Latvian measure hindering the independent exercise of his duties as National Central Bank Governor and member of the ECB’s Governing Council of Ilmārs Rimšēvičs; Case C‑202/18 (Ilmārs Rimšēvičs v Republic of Latvia) and Case C‑238/18 (European Central Bank v Republic of Latvia). I wrote on this decision, applying Article 14.2 of the
With two major decisions, March 2019 was an interesting month with regard to the ECJ’s case-law on the private enforcement of competition law: Skanska (C-724/17) and Cogeco (C-637/17). This post will comment on the judgment in Skanska, whereas a later post will analyse Cogeco.
Skanska is a challenging judgement that confirms that the competition enforcement system must be viewed as a coherent system where both public and private enforcement play a crucial and complementary role, which is demonstrated by the application of the principle of economic continuity to private enforcement. Moreover, it addresses one of the several issues that has not yet been harmonised regarding private enforcement: the responsibility for damages in private enforcement legal procedures. As such, Skanska may be a leading case in a private enforcement’s possible second stage of development in the aftermath of Directive 2014/104/EU.
Summary of the judgement
In a nutshell, the main question that the ECJ had to answer in Skanska was if determining who is liable to compensate those who were harmed under a breach of Article 101 TFEU was a matter of EU or national law.
In addition to this question, the Finnish Supreme Court referred two alternative ones. On one hand, if it was a matter of EU law, the ECJ must also clarify if the principle of economic continuity was applicable in the context of private enforcement. On the other hand, in the event that it was up to national law to determine such liability, the Court of Justice should examine if the inapplicability of the principle of economic continuity could be framed as a violation of the principle of effectiveness.
The case concerned a cartel in the asphalt market in Finland between 1994 and 2002 which was condemned by the Finnish Competition Authority in 2004 and had as participants, among others, the following companies: Lemminkäinen Oyi, Sata-Asfaltti Oy, Interasfaltti Oy, Asfalttineliö Oy and Asfaltti-Tekra Oy.
Meanwhile, several of these companies not only changed their names, but were also acquired by others under a voluntary liquidation process in which their businesses were transferred to the acquirers. As such, Asfaltti-Tekra (Skanska Industrial Solutions, since 2017) acquired Sata-Asfaltti Oy inheriting its business; the same happened with Interasfaltti and Asfalttineliö whose business was continued by NCC Industry and Asfaltmix, respectively.
By a decision of 2009, the Finnish Administrative Supreme Court, applying the economic continuity test, imposed fines on Skanska for its own behaviour and that of Sata-Asfaltti, on NCC for the conduct of Interasfaltti, and on Asfaltmix for the conduct of Asfalttineliö. Based on that judgment, private enforcement proceedings were initiated by the City of Vantaa against those companies which led to contradictory decisions from the District and Appeal courts.
Confronted on one side with its own legal order, which is based on the assumption that only the legal entity that caused the damage is liable for it, and, on the other side, with the ECJ case-law which clearly states that any person may claim compensation for damage resulting from an infringement of Article 101 TFEU, the Finnish Supreme Court decided to stay the proceedings and referred the above-mentioned questions to the CJEU for a preliminary ruling.
The Court’s interpretation was, in sum, that this was a matter of EU law and that the effectiveness of Article 101 would be jeopardised if the principle of economic continuity could not be applied in a case like the one at hand (paras. 28 and 46).
The Skanska judgment is based both in the Court’s case-law regarding the fundamental principles of the private enforcement system which have been developed since Courage/Creehan and, prior, in the very specific notion of undertaking in competition law. Moreover, it must be noted that the AG Wahl’s Opinion is crucial in order to fully understand the reasoning of the ECJ, in particular, regarding why this is a matter of EU law.
It is important to bear in mind that, in the light of the ECJ’s case law, the constitutive conditions of the right to be compensated for harm caused by a breach of competition law must be analysed under EU law, since Article 101 produces direct legal effects in the relations between individuals. On the other hand, in the absence of harmonised rules, EU law recognises the principle of procedural autonomy of Member States, insofar as they respect the principles of equivalence and effectiveness.
In this context, AG Wahl raised a crucial question: is the determination of the persons liable to pay compensation a constitutive condition of the right at hand or, otherwise, is it a detailed rule governing its exercise? In an answer which was not consensus, the AG’s understanding was that such determination is a constitutive condition of the right to be compensated (AG Wahl’s Opinion, para. 60).
It seems difficult to disagree with the AG’s position. . The constitutive conditions are prerequisites that affect the very existence of the right to be compensated deriving directly from Article 101 TFEU. This means that, in opposition with the detailed rules, they are not subject to national law, but, instead, they are governed by EU law.
Detailed rules are those concerned with the concrete application of the claim as, for example, the limitation period or the rules governing the access to documents. They are important for the materialization and exercise of the right, although they do not constitute prerequisites for the existence of such right. On the other side, the determination of who is liable to compensate those who were injured is a prerequisite of such a right, since, without an offender, there cannot exist a right for compensation. Furthermore, due to the direct legal effect of Article 101 TFEU, these constitutive conditions need a uniform interpretation which can only be provided by handling it as a question of EU law. As said before, the Court agreed with the AG’s understanding (para. 28), even though, in what can be seen as a lost opportunity, it did not elaborate specifically on this topic.
Once the Court decided that the question at hand was a matter of EU law, the next step was to clarify if the principle of economic continuity could be applicable in the context of private enforcement.
Firstly, one must note that the competition notion of undertaking covers any entity engaged in an economic activity, irrespective of its legal status and the way in which it is financed. Additionally, this notion must also be understood as designating an economic unit even if in law that economic unit consists of several persons natural or legal.
From this specific concept of ‘undertaking’ in EU law derives the idea that the “liability is attached to assets, rather than to a particular legal personality”. This is a core difference from classical rules of civil liability where only those who caused the harm are liable for it. Notwithstanding, as both the AG and the Court reasoned, if those who are liable for damages caused by an infringement of the EU competition rules could escape penalties by simply changing their identity through corporate restructuring, the deterrent effect of competition rules would be jeopardised and a situation both unfair and illegal would result from it.
Recognising the application of such principles to private enforcement implies assuming that both public and private enforcement have complementary functions of deterrence which, even though it is settled ECJ case-law, is not consensus among the literature. An opposite understanding would, however, lead to an intolerable situation: the EU autonomous concept of undertaking would have a different meaning depending on the kind of competition law enforcement at hand. This reasoning also reinforces the Court’s idea that the competition law enforcement system (with all its principles, rules and functions) must be regarded as a whole in order to foster deterrence and to promote, among all the stakeholders, a more solid culture of competition. Therefore, the principle of economic continuity must be applied in the private enforcement context as it is in public one.
Had the Court reasoned otherwise, deciding that the determination of this specific liability was a matter of national law, some dangers could eventually arise, in particular for the uniformity of the application of EU competition rules. It could also lead to the spread of forum shopping throughout the Member-States. Moreover, national provisions like the Finnish ones – according to which only the legal entity that caused the damage is liable – could lead to situations where the victims of anticompetitive behaviour would not be compensated, in violation of the principle of effectiveness. In that scenario, the principle of effectiveness would play its role guarantying the disapplication of such national rules, if they were conducive to a situation where the exercise of such right was practically impossible or excessively difficult.
As such, it is possible to sustain that, independently of the Court’s reasoning in the first question, the principle of economic continuity would always have to be applied: either due to the holistic perception of the competition law enforcement system, or under the application of the principle of effectiveness. The Court’s decision, however, not only makes sense being in accordance with the fundamental principles of the EU legal order and with its own case-law, but it is also a much safer decision for the interests of the injured parties and for the development of the private enforcement which is in its early years. Therefore, this case confirms the Court’s sympathetic perspective towards this “arm” of the competition law enforcement system.
Skanska is a very interesting decision. It reaffirms, once again, that both public and private enforcement are crucial to a correct and complete enforcement of competition law. This makes clear, for the few who still have doubts, that the paradigm of the application of competition rules has changed for good and, as such, there are fundamental principles of public enforcement which also apply to private enforcement. Nonetheless, it should not be ignored that this judgment accentuates the peculiarity of these legal actions, since it will imply that national courts must apply the principle of economic continuity when determining who is liable for compensation, even though the national civil law provisions they apply do not accommodate this possibility. Just like Kone – a case that approached the concept of a causal link and was decided after the proposal of the Damages Directive, but before its adoption as Directive 2014/104/EU -, Skanska addresses matters of private enforcement not harmonised in the mentioned Directive. This could be the flourishing of private enforcement’s second stage which, similarly to the first one, will most probably have its biggest ally in the CJEU.
 Case C-453/99. For a list of the leading cases see: Kone (C-557/12) paras. 20-25.
 The understanding of the majority of the parties that submitted observations was that this question was a matter of national law that should be delimited by the principles of equivalence and effectiveness (AG Wahl’s Opinion, para 56).
The adoption of the European Pillar of Social Rights (‘the Pillar’) in 2017 and the 20-year anniversary of the entry into force of the Treaty of Amsterdam in 2019 provide an auspicious moment for not only take stock of accomplishments in the field of EU equality law and critically reflect on the past, but also to look forward. The Treaty of Amsterdam expanded the legal base (current Article 19 TFEU) for adopting EU legislation to six new anti-discrimination grounds (race or ethnic origin, religion or belief, disability, age and sexual orientation) and the recent adoption of the Pillar suggests that EU equality law and policy could now be at a pivotal point. In this brief blog post, we reflect on what, in our view, is one of the key current problems of EU equality law, namely, its (in)coherence at different levels (see Figure 1), and whether the Pillar carries the potential to -at least partially- address this issue.
In considering (in)coherence, we do not mean to suggest that the pursuit of coherence is valuable simply for the sake of coherence alone. We recognize that fragmentation and inconsistency, diversity and plurality, are a part of life and thus part of law and policy, especially one that is to speak to a diverse set of Member States and national models. Also, different discrimination grounds have particularities that may need to be approached differently to be properly addressed. And yet, the lack of coherence within EU equality law and with related policy fields reflect the incremental development of EU law and the often instrumental use of policy, and reveal discrepancies between the aspirational policy discourse and the possibilities of action that the legal framework actually enables. It is against this background that a more consistent and articulated approach -that addresses various forms of incoherence- can be essential to develop and improve the EU equality framework and to better match aspirations to concrete substantive outcomes.
Tjebbes is a bold and yet thoughtful judgment. It pushes the boundaries of the role of EU law in nationality matters and yet does so in a manner that both respects the primacy of the Member States in regulating this area of law, and acknowledges the genuine Union-interest in the manner in which denaturalisation decisions impact on Union citizens. It provides a follow-up and elaboration of the judgment in Rottmann, confirming the applicability of Union law in nationality law and detailing the nature of its intervention. This intervention is of both a procedural and a substantive kind, requiring an individual examination of any decision withdrawing nationality having regard to a set of consequences linked to the status of Union citizenship.
Summary of Judgment
Tjebbes concerned a Netherlands provision providing for the automatic loss of nationality for Netherlands nationals who were resident outside the Netherlands (or any other Member State of the European Union) for ten years or more. This ten-year period could be interrupted relatively easily by either residing in the Netherlands for a period of one year or alternatively by applying for a national ID card or identity document, including a passport or making a declaration of nationality. A further provision provided that the children of individuals denaturalised by virtue of the ten-year rule would also lose their Netherlands nationality. Netherlands nationality could be regained after one year’s residence in the Netherlands. Three of the applicants, resident outside the Netherlands, lost their nationality by operation of the ten-year rule. A fourth applicant, the daughter of one of the first three applicants, lost her Netherlands nationality by virtue of being a child of a Netherlands national denaturalised by operation of the ten-year rule. All four challenged a decision by the Minister refusing to issue new passports.
The Opinion of AG Mengozzi was above all wary of intruding too much into this sensitive area, still considered a core element of national sovereignty. Indeed, the AG characterised nationality law – the law determining the boundaries of the national community – as part of the national identity of the Member States, to be respected under Article 4(2) TEU (para. 107). While the measure clearly fell within, and fell to be assessed under, Union law, this was restricted to assessing the proportionality of the legislative measure in general and not an individual examination of each administrative decision (para. 118). To do otherwise would involve the Court of Justice in assessing the criteria selected by Member States when determining whether an individual had a genuine link or not to the Member State concerned (paras. 113-114). Having made this determination, AG Mengozzi found that the ten-year rule did pursue a genuine public interest i.e. maintaining a genuine link between the individual citizen and the relevant Member State and was proportionate, particularly in light of the ease with which the ten-year period could be interrupted (paras. 119-127). The rule relating to children of adult citizens denaturalised by virtue of the ten-year rule was disproportionate in that it went beyond what was necessary to secure the public interest of restoring unity of nationality within the family while taking into account the best interests of the child (paras. 128-149).
The Grand Chamber of the Court of Justice departed from the AG in a number of respects. After determining, following Rottmann, that the matter fell within the scope of Union law and required justification and to be proportionate, the Court found, drawing on international law instruments, that the need to ensure a genuine link with the Member State was a public interest capable of justifying denaturalisation and that a ten-year rule such as that contained in the Netherlands nationality law was an appropriate means of achieving this (paras. 34-39). However, an individual examination by the national authorities having regard to the consequences under Union law was required (paras. 40-42). These consequences included the possibility of maintaining or developing a professional or family life across the Union, the possibility of maintaining a family life by continued access to the Union, the right to consular protection in a third state in which the individual was resident and the rights to family and private life and the best interests of the child contained in Articles 7 and 24 of the Charter of Fundamental Rights (CFR) (paras. 40-46).
The judgment is rich and touches on various aspects of Union citizenship and its relationship to the nationality of the Member States. In my comments, I will focus on three inter-related points. Firstly, the bold manner in which the Court of Justice has intervened in Member State nationality law by laying down detailed procedural requirements in an area typically characterised by executive discretion. Secondly, the thoughtful manner in which this is done, limiting its substantive intervention to areas where there is a genuine Union interest. Thirdly, the manner in which the judgment reflects how these consequences identified by the Court reveal and clarify certain aspects of Union citizenship and in particular the link between Articles 20 and 21 TFEU.
Firstly, the judgment is bold. Following Micheletti, Chen and especially Rottmann it is undoubtedly the case that nationality law is not an area of Member State sovereignty shielded from Union law as some core area of national self-expression. Tjebbes elaborates on this line of caselaw (especially Rottmann) and details the consequences of this in both substantive and procedural terms. The procedural dimension is perhaps the most intrusive, requiring an individual examination and indeed a remedy of re-instating nationality if the measure is deemed to be disproportionate (para. 42 of the judgment). It is worth pointing out the possible impact of such a requirement in an area characterised by executive discretion, especially when combined with primacy and the principles of equivalence and effectiveness. It is likely to empower individuals and national judiciaries and ‘constitutionalise’ (in the sense of rendering it a rights-based process) denaturalisation decisions. While some intervention in this area was inevitable once the drafters of the Treaties decided that Union citizenship would be a derivative status, ‘inextricably linked’ to nationality law, the approach of the AG demonstrates that alternative, less intrusive options were available to the Court, which preferred to emphasise citizens’ rights rather than Member State discretion in the process.
That preference however, does not entirely exclude a consideration of the interests of Member States. In the substantive requirements outlined by the Court (those policy issues to be taken into account in the proportionality assessment), the Court is thoughtful and carefully delineates those matters which are the purview of Member States in determining who is and who is not a member of their political communities, and those which are properly the preserve of Union law. While assessing the overall policy choice contained in the ten-year rule as part of the proportionality analysis and in particular whether it is a legitimate public interest, this review is of a light-touch nature (although it is a relatively uncontroversial goal in light of international law instruments). In its review, the Court merely asserts the legitimacy of maintaining a genuine link with the Member State, without assessing whether a ten-year rule, such as that contained in Netherlands legislation, in fact achieves that public interest. In doing so, the Court avoids the trap identified by the Advocate General of being inevitably drawn to assessing the adequacy of national measures and hence the means by which a genuine link is maintained. Instead, the Court’s proportionality review is focused primarily on those consequences in Union law that flow from a withdrawal decision.
In doing so the Court illuminates certain core features of Union citizenship. Firstly, we should point out the basic fact, which may be missed because so obvious, that the judgment underlines the link between Member State and Union citizenship both in the operation of law (which really is obvious) but also in the underlying criterion of political membership. The absence of a genuine link with one of the Member States is sufficient to justify loss of Union citizenship; being a member of a national political community is necessary to be a Union citizenship. This point is fundamental and important in an era when some scholars are advocating an autonomous Union citizenship (see, for example, Kostakopoulou and Garner). Secondly, in outlining the consequences for Union citizenship, the Court identifies what it believes the core of that status to be. This is to build a family and professional life across the Member States, both in actual existence and the possibility of such a life. Two aspects of this should be pointed out confirming new and old trends in Union citizenship. Firstly, while the decision is not decided on Article 21 TFEU grounds, there is a clear link between the status of Union citizenship referred to in Article 20 TFEU and at stake in the judgment and the rights of free movement and residence. But those rights are to be understood in their totality in the sense of offering a set of life opportunities to individual citizens across the Union as a whole. This confirms recent links made between Article 20 TFEU and Article 21 TFEU rights in Rendon-Marin and especially Chavez-Vilchez. Secondly, this list of rights confirms an older trend in Union citizenship or more accurately part of the pre-history of Union citizenship; its market citizenship legacy. Note the Court emphasises the ability of the individual Union citizen to pursue a family life and professional life. For a discussion on the consequences of citizenship, the absence of any political or public dimension is striking. Despite the affirmation of the right to vote in European Parliament elections in Delvigne, the absence of any mention of political rights (including local voting rights or the right to participate in a citizens initiative) is notable and gives a very clear indication of the private and professional, as opposed to public and political, nature of Union citizenship.
Tjebbes is a rich judgment full of carefully balanced paradoxes. It is both progressive and conservative, bold and thoughtful. It is progressive and bold in intervening deeply into Member State nationality law, possibly fundamentally changing it by imposing procedural requirements and constitutionalising one of the few areas of executive discretion and dominance and one that lies at the core of national sovereignty. It is explanatory in offering the Court’s vision of what is the core of Union citizenship and the relationship between the rights of free movement and residence, and what they offer in their totality to the individual citizen. However, for all its dynamism, it is also conservative, confirming the private nature of this citizenship and its internal market origins.
The European Law Blog had a software malfunction in the email subscription service for the past few posts. We have resolved the issue and would therefore draw your attention to the four posts that have been published and for which you have not received an email notification.