The Court of Justice of the European Union (CJEU) has continued its run of opinions of great importance for the UK, whether we stay in or out of the EU.
The first was an opinion requested by the Belgian government following the fuss surrounding the adoption of the free trade agreement with Canada (Comprehensive Economic and Trade Agreement – CETA) – Opinion 1/17. The opinion concerns the mechanism for the resolution of disputes between investors and States provided for by CETA.
Investor-state dispute settlement (ISDS) mechanisms have been controversial for some time, partly because of alleged conflicts of interest of those lawyers who act both as counsel for parties in one case and subsequently arbitrators in the next. To combat this and other complaints against ISDS, the EU moved against the idea of lawyer-led arbitration, and settled on a multilateral investment tribunal and appellate mechanism, to be staffed by judges. This system was introduced into CETA through CETA-specific tribunals, which would be replaced if and when a multilateral system were established.
Belgium had concerns regarding the compatibility of the mechanism with EU primary law, for instance whether the jurisdiction of the CETA tribunal and appellate tribunal over EU law compromised the sole jurisdiction of the CJEU over EU law. After going at great length through the various matters raised, the CJEU concluded that the ISDS mechanism in CETA did not breach EU law and could stand.
What has this to do with the UK? First, if we leave the EU, including the customs union, the free trade agreement eventually concluded with us will doubtless have just such an ISDS mechanism, with presumably the same clause that, if the EU ever succeeds in establishing a multilateral mechanism to govern all its trade agreements around the world, the UK mechanism will be absorbed into that global court.
Second, if we do not leave the EU, or leave the EU and stay in the customs union, meaning that our trade agreements will be negotiated by the EU (as has been canvassed recently during the talks between the government and the Labour Party), then this is the mechanism that will govern our future trade agreements with other countries outside the EU.
The second opinion was from the Advocate General, and is another in a series of cases as to how electronic platforms providing popular services are regulated under EU law. In simple terms, the question always boils down to whether the platform provides a taxi or real estate service and so is regulated at national level like all other such providers (think Uber and taxis), or whether it is an information society service as defined under Directive 2000/31/EC which means that it is regulated at European level and escapes burdensome national regulation.
The previous cases focused on Uber, which was finally held not to be a pure intermediation service because it exercises decisive influence over the conditions under which Uber services are provided by its drivers.
The present case concerned Airbnb, and the question is whether it is in the real estate business for the purpose of French regulations – or whether it is an information society service and so escapes such regulation.
The Advocate General concluded two things. First, Airbnb’s service consists of connecting potential guests with hosts offering short-term accommodation via an electronic portal, and Airbnb does not exercise control over the essential procedures for the provision of those services. Therefore, it constitutes an information society service and escapes national regulation.
Second, Airbnb outside the US is run entirely out of Ireland, and France was trying to control its services. It is possible for another Member State to impose restrictions on such a service hosted in another Member State, but only by following a strict procedure. This procedure was not followed, and so France was barred from applying its real estate law. The Advocate General’s opinion is usually followed by the court.
This is another example of Ireland’s hosting of the tech giants causing other Member States some concerns.
The eventual judgement of the CJEU will affect us in the UK, too, regardless of whether we stay in or out of the EU. It is not just that the regulations applying to our future Airbnb bookings will depend on the outcome of the eventual judgement, since I presume that Ireland will continue to be the centre for all out-of-US bookings.
But, as I have said before in relation to the Uber cases, the future of the regulation of legal services provided via an electronic platform also depends on these cases. If such a platform were based in Ireland and offered services into the UK, we must hope that it would not provide an information society service like Airbnb, and so escape national regulation, but rather be treated in the same way as Uber.