Lawyers frustrated by delays, opacity and alleged judicial incompetence believe the EU courts system requires an urgent overhaul, reports Marialuisa Taddia.
When practitioners are asked to describe their recent dealings with either the Court of Justice or the General Court, their responses catalogue a list of complaints. These include: opaque procedures; a lack of competence among judges; severe delays; a lengthening backlog of cases; and a tendency to power-grab to advance political goals.
Critics are not just confined to lawyers in England and Wales. Take, for example, Rolfjosef Hamacher, a tax lawyer at Cologne-based Axis Advisory Group. Hamacher is a strong defender of the EU’s judicial arm. ‘Without this institution we couldn’t have any progress in Europe,’ he says of its role in harmonising community law, keeping in check member states, EU institutions and agencies, and protecting the rights of all EU citizens.
But, echoing the views of other lawyers canvassed by the Gazette, Hamacher adds: ‘The system of the courts must be reformed.’
The Luxembourg-based Court of Justice of the European Union (CJEU) comprises three main courts: the Court of Justice (formerly the European Court of Justice); the General Court (formerly the Court of Justice of First Instance); and the Civil Service Tribunal, which deals with disputes between EU institutions and their employees.
Both the Court of Justice and General Court have a significant backlog of cases. But it is the lower General Court – which deals mainly with competition law, state aid, trade, agriculture and trade mark cases – where the blockage is most severe. At the end of 2014, there were 1,423 cases pending in the General Court, nearly double the number of cases in the Court of Justice.
Hugh Mercer QC, who chairs the Council of Bars and Law Societies of Europe permanent delegation to the CJEU, says: ‘It is a very different jurisdiction and it’s reflected in the workload that [the two courts] have got.’
The Court of Justice mainly takes on references (for a preliminary ruling) from national courts, he notes, which means that when they are in doubt about the interpretation or validity of an EU law they can ask the court for clarification: ‘The General Court is different. It is more of an administrative court of the EU, so any decision or legislative act by one of the EU institutions – mainly the European Commission but also the European Central Bank and the European Parliament and others – can be the subject of judicial review proceedings before the General Court.’
The General Court does not just receive more cases than the Court of Justice (which also hears appeals from the GC) but also takes longer to complete them. Competition cases take almost four years on average, and this is an improvement, Mercer notes. ‘It used to be five years and some cases have gone up to eight, nine or even 10 years. This is manifestly wrong. It means that you have to advise clients that, if particular types of case are going to get put on the back-burner in Luxembourg, it may not be worth bringing a challenge in that court.’
When companies are fined by the European Commission for breach of state aid or competition rules they can bring an action for annulment before the General Court. Peter Scott, a London-based antitrust and competition partner at Norton Rose Fulbright, says that nowadays fines are so hefty that ‘an appeal makes commercial sense’.
But any infringement period may pre-date the start of a commission investigation by several years, significantly adding to the time it takes the General Court to reach its verdict. ‘Determining liability for events that may have taken place a decade ago is in itself an unacceptable delay,’ Scott says.
He adds that consumer and business victims of antitrust breaches such as cartels are encouraged ‘both on a policy and commercial level’ to recover any losses suffered as a result of the infringement. But they cannot bring claims in a national court until the final outcome of the commission’s infringement process is completed. ‘So it is acting as a drag to victims accessing justice through the national court systems,’ Scott says.
These delays are starting to cost the General Court dear. In the last year there have been five actions for damages brought before the court for breach of the right to have cases heard within a reasonable time; the total damages claimed has amounted to €26.8m, the CJEU said in April.
‘At the moment, the General Court is not really fulfilling its function, which is to control the exercise of power by the commission. That’s bad for citizens and it is bad for the commission too,’ Mercer says.
‘If the commission gets away with things which it shouldn’t get away with, either because cases take too long or because the court doesn’t investigate sufficiently or doesn’t apply an intensity of review which is sufficiently great to overturn unjust cases, then the commission has too much power. Obviously the courts are the counterbalance to political power.’
Scott observes: ‘There are particularly acute concerns among practitioners who are used to a common law, adversarial litigation process where a regulator’s decision can be expected to be challenged in great detail on the facts, with witnesses of fact cross-examined to get to the bottom of the facts. That process is simply not followed through the European system.’ He cites Imperial Tobacco & Others v OFT before the UK’s Competition Appeal Tribunal (CAT) as an example.
In that case, the CAT rigorously tested the factual basis on which the Office of Fair Trading reached its decision to impose a £112m fine on a group of tobacco manufacturers, including Imperial Tobacco. It led to the OFT’s decision being quashed. Although the General Court only has judicial review functions that do not involve a full rehearing of the facts, Scott argues that ‘it should be encouraged to test the commission’s case in a more robust way than it often does at the moment’.
Lawyers from civil law jurisdictions are likely to be more comfortable with the workings of the CJEU, which follows the civil law tradition and is modelled on France’s highest courts, the Conseil d’État and Cour de Cassation. Instead, Scott says, ‘common law practitioners are used to a more thorough review of the underlying factual evidence by the court. They are not comfortable with the heavy written procedure with a very short oral hearing stage’.
There are other complaints about the lower court. For example, Mercer says, it is ‘very reluctant’ to give interim relief to protect rights pending final decision. It can, he adds, be ‘very formalistic on procedural issues’, and ‘the rules on admissibility of action are very strict’.
Recognising the slowness and length of proceedings, there are moves to increase efficiency at the CJEU. Some have been welcomed, but there are concerns that they may undermine the quality of EU justice.
New rules of procedure are set to enter into force this year at the General Court. New provisions include the power to adjudicate by judgment without a hearing, and the possibility of assigning intellectual property cases (which represent over 30% of new cases) to a single judge. Currently, the court may sit as a full court, in a Grand Chamber of 15 judges, or in chambers of three or five judges. Hamacher believes that allocating cases of minor importance or complexity to a single judge would be a solution to the court’s problems.
The Court of Justice, meanwhile, has been prioritising speed. Now references for a preliminary ruling take 15 months on average, for example. But Mercer cautions: ‘Certain procedural safeguards have been removed in order to achieve the productivity gains. The report for the hearing has gone. There are advocate general’s opinions only in a small proportion of cases.
Also, oral hearings are not infrequently refused, even when asked for, and that is tending to lead to decisions that are more doubtful.’ Mercer points to HS2 Action Alliance v Secretary of State for Transport, in which the UK’s Supreme Court criticised the Court of Justice for interpreting certain words of the Environmental Impact Assessment Directive in a way that lacked ‘any textual or contextual basis’.
Iain Connor, who heads Pinsent Masons’ contentious intellectual property practice, says: ‘The Court of Justice has an awful habit of being at best obtuse in the way it purports to answer questions from national courts. One of the reasons why there are more and more references is because they refuse to answer questions. So you get repeated cases from different member states on essentially the same issue, asking virtually the same questions in a slightly different format in an attempt to finally force the court to answer.’
Instead of ‘dodging the bullet’, Connor says, ‘it would enhance the credibility of the court if they answered the questions that were asked of them’.
That apparent obtuseness may be partly explained by the impersonal style of EU jurisprudence, which contrasts sharply with the more discursive, essay-style of English common law judgments. ‘It is almost as if decisions have been made by robots,’ says Mike Cain, a solicitor at Leigh Day in Manchester. ‘
There is very little invitation into the thinking that’s gone behind the answer.’ This is not always so. Cain says that the CJEU’s preliminary ruling in the Woolworths/Ethel Austin case in April (Cain represented trade union USDAW) on the duty to consult in redundancies was ‘very similar to the style and method of jurisprudence’ of the English higher courts.
It may not help that, as the working language of the CJEU is French, many judges are deliberating and drafting in a language other than their own. More significantly, judgments cannot contain dissenting opinions. ‘When you get really important, difficult cases in Luxembourg some judges are not in agreement with the majority. The result is that the judgment gets shorter and shorter as all reasons which people can’t agree on are omitted. In some of the most difficult cases you get minimalist reasoning,’ Mercer says.
The secrecy of judges’ deliberations adds to the perceived lack of transparency, as do other procedural rules. ‘The process lacks transparency at a level which is completely wrong,’ Connor says, commenting on his experience of dealing with the Court of Justice. ‘They can accept representations from 28 member states, but unless you are party to those proceedings, you have no access to those representations.’ These include submissions by the commission. Connor believes this contravenes the right to fair trial and fair hearing of the European Convention on Human Rights.
He adds: ‘Everybody in the EU should be entitled to see those representations. People would be quite surprised to see that it is taking policy considerations into account when supposedly interpreting the law.’
One criticism is that the EU’s judicial arm is seeking to further EU integration through law and by so doing is exceeding its jurisdiction.
Since its establishment in 1952, the CJEU has been expanding its powers. The Lisbon Treaty of 2007 extended its remit to include justice and home affairs. ‘We are not keen on the European court being involved in justice and home affairs issues,’ says Stephen Booth of pro-market thinktank Open Europe. ‘We think that is something that should return to the previous [EU] treaty format, which basically was intergovernmental. These were agreements between member states; you don’t need a supranational authority.’
CJEU IN NUMBERS
Budget (2013) (0.27% of EU budget)
New cases in the Court of Justice (2014)
New cases in the General Court (2014)
Completed cases in the Court of Justice (2014)
Completed cases in the General Court (2014)
Cases pending in the Court of Justice (2014)
Cases pending in the General Court (2014)
Sources: CJEU; House of Lords; European Commission
Booth points to the commission’s referral of the UK’s ‘right to reside’ test to the Court of Justice (the preliminary hearing was held in June). The case, which relates to a mechanism to determine EU migrants’ eligibility for UK benefits, has ‘the potential to be very controversial’, he says.
Booth argues in favour of ‘greater checks’ on the CJEU’s powers, particularly in relation to ‘totemic constitutional cases’. Notable examples are Thomas Pringle’s unsuccessful challenge before the Court of Justice to the legality of the permanent EU bailout fund. Also cited is the advocate general’s opinion confirming the legality of the ECB’s bond buying programme (Outright Monetary Transactions, or OMT). Booth contrasts these cases with those related to the ‘nitty-gritty of how the single market works’.
‘Once the Court of Justice rules it is very difficult for the member states to challenge [its decision],’ he says. ‘Often these cases boil down to the federalist agenda driven by community methods and institutions versus the rights and powers of the member states. If this is a union of the member states, they should have a right to either adjudicating directly or reviewing the decision.’
Connor observes: ‘Once [the Court of Justice] has spoken there is nothing that you can do, apart from effect a change of directive and that takes decades.’
But even on such matters as the single market the CJEU suffers from criticism. Connor adds: ‘They are hellbent on determining matters with a big consumer focus for the benefit of the single market but they completely ignore the proper rights of the businesses which are actually bringing the cases.’ He points to the EU’s Trade Mark Directive as an example: ‘The Court of Justice has extended the black-letter directive to breaking point.’
The concerns extend to other areas of community law. ‘There is a strong policy objective to deter companies from engaging in cartel conduct and there is a perception that the General Court wishes to encourage the commission’s work in that area,’ says Scott. He points to a recent judgment by the Court of Justice which upheld the commission’s decision to fine three importers a total of €60.3m for participating in a cartel for bananas in northern Europe.
The firms’ conduct was found to be anticompetitive ‘by object’ (or by their very nature) without the need to examine its effect on competition in the market. The CJEU’s highest court dismissed the appeal brought by one of the three banana importers against a General Court judgment of 2013.
‘That is an illustration of the court being prepared to allow the commission quite a bit of leeway in how they go about their public policy of deterring and preventing cartel conduct,’ Scott says.
But Jacques Derenne, head of the antitrust, competition and economic regulation practice of Hogan Lovells, Brussels, believes much of the criticism of the EU’s judicial arm is unfair. First, he says, the CJEU’s budget (€354m in 2013) ‘is too low, given its workload and should be multiplied by 10’.
Second, Derenne argues: ‘It is true that the court is integrationist but that criticism is totally flawed because it is the task of the court, given to it by the treaty, to maintain and further the integration of Europe. You shouldn’t expect it to be disintegrationist. The court promotes more Europe and less member states.’
The Court of Justice should have the final say on all matters of EU integration, and ‘nobody above that because you need to have an end to the story’, he says. But even Derenne, a self-declared federalist, does not always agree with the CJEU’s pronouncements. He found the Court of Justice’s opinion, delivered in December, that the draft agreement on the accession of the EU to the ECHR is not compatible with EU law ‘very controversial’.
With the accession, the EU and its institutions, including the Court of Justice, would be subject to the decisions and judgments of the Strasbourg-based European Court of Human Rights. ‘It is a power struggle as to who will be the chief,’ says Derenne, a French and Belgian dual-qualified lawyer. ‘The Court of Justice doesn’t want to be controlled by the ECtHR. But the Court of Justice is a bit weak on its position vis a vis human rights, and the final say needs to be with the Strasbourg court.’
Lawyers believe judges are the key to better functioning of the CJEU, but member states are accused of prioritising political considerations over merit in the appointments process.
The two main courts have 28 judges each (one per member state); the Court of Justice also has nine advocates general. Derenne argues that the only way of exercising control over the CJEU is ‘to appoint good judges, which is not the case because their appointment is too political’.
In order to cope with the ‘dramatic increase’ of cases (from 398 in 2000 to 912 in 2014), in 2011 the General Court asked for an extra 12 judges.
The proposal was welcomed by the commission, agreed in principle by the council and approved by the parliament in the first reading; but member states could not agree on the method for appointing the extra judges and the proposal failed. To appease member states, a new three-step plan was put forward in 2014: 28 extra judges, one for each member state, instead of 12. This will cost €13.9m per year (€5m extra compared to the original proposal).
The Civil Service Tribunal will be merged with the General Court as part of the plan.
Expressing the views of other lawyers, a Swiss jurist who prefers to remain anonymous says that instead of more judges the General Court needs more competency. ‘The General Court has to deal with very complex cases such as competition cases but there are very few competition law specialists among the judges,’ he says.
The same applies to state aid and IP proceedings, which together with competition account for more than half of new cases at the court. He adds that across the two courts ‘there are too many academics and civil servants and not enough people with judicial experience’. Mercer says: ‘Member states do not prioritise sufficiently the quality of their candidates.’
But quality has improved since the advent of the so-called Article 255 committee (a panel which assesses candidates proposed by member states), Mercer and other lawyers say. The committee’s chair is Jean-Marc Sauvé, vice-president of the French Conseil d’État, and members include Lord Mance of the UK’s Supreme Court. Scott points to another positive development with respect to CJEU’s jurists: the UK’s proposed appointment to the General Court of White & Case’s competition law expert Ian Forrester. ‘He will bring very significant experience of handling commercial matters,’ Scott says.
There are other changes lawyers would like to see. Each judge and advocate general is appointed for a renewable six-year term but judges in both courts ‘rotate too much’, Derenne says, arguing they should stay put for at least 10 years to build sufficient expertise.
An efficiency measure that would not hit quality could be ‘some sort of leave procedure for preliminary references or the preliminary references will go first of all to the General Court and then only the very important cases will go on appeal,’ Mercer says. He also suggests that the CJEU’s oral hearing stage should be less ‘formulaic’ and oral hearings of cases of the greatest constitutional importance should be available on video to all EU citizens. This, plus making parties’ submissions publicly available on the CJEU’s website (as are judgments), would also enhance transparency.
Damian Chalmers, professor of EU law at the London School of Economics, has more radical ideas. ‘In interpreting EU law a Europe-wide database of national judgments would be cheaper and provide more legal certainty than the ECJ,’ he has written. If this database contained rulings from national courts of appeal and supreme courts, it would probably provide sufficient guidance not to have to seek clarifications from Luxembourg, Mercer suggests.
Cain is not convinced: ‘The way [member states] manifest domestic legislation and industrial practice in labour law from the options available to them in the directive are so varied and kaleidoscopic that there could be no authoritative value from a compendium of the decisions in the domestic courts of those countries, leaving aside all the linguistic difficulties.’
The upshot would be less legal certainty and increased costs, he says. Furthermore, Connor contends, the proposal would require a treaty change to make judgments of one EU member state binding on another.
Despite urgent challenges facing the EU and its institutions, experience shows that changes are usually gradual rather than radical. Achieving better EU justice could simply be a matter of better judges and greater openness.
Marialuisa Taddia is a freelance journalist