What lawyers can do for the Union

The Mayor of London has decided to back Brexit. Besides stating that ‘there’s too much legislation coming from the EU’, he took a surprising move.

Juraj Čorba
1 July 2016

During the Brexit referendum campaign Boris Johnson explicitly attacked the Court of Justice of the European Union: “…you’ve got a supreme judicial body in the European Court of Justice that projects down on this entire 500 million people territory a single united judicial control from which there is absolutely no recourse and no comebacks. And in my view that has been getting out of control. There’s too much judicial activism…”

Boris Johnson clearly challenged the pinnacle of the Union’s institutional system. His statement was primarily political and it should be understood as such. Although his strategy to cast doubt on the Union’s judiciary did not actually gain too much attention on the continent, it is worth having a closer look at the Union’s highest judicial institution. Is there actually any room for a meaningful debate before the criticism of the Union’s judicial body becomes politicised or perhaps even politically misused in other corners of the EU? Should lawyers actually do or mend something before a wave of emotions and sharp political statements of Johnson’s kind take over the continent?

The public perception of the Union’s legal architecture is often inadequately reduced to questions of obvious political importance: the Union’s institutional design (the “democratic deficit”, “accountability” and “legitimacy” debate) and the scope of the Union’s competences (the “ever closer Union” and “subsidiarity” debate).

The question about what or how much is being regulated by the Union is also publicly raised from time to time (the “red tape” debate). But the question about how the Union implements and enforces its rules is rarely publicly discussed. If so, the debate is usually reserved to relatively low-numbered circles of legal academics circled around the EU institutions. Or, in some cases, to legal consultants who exchange their views in their private couloir chats.

VI9-visual_cut-1

While some important dialogue is taking place through the institutionalised channels of communication between the EU and national courts, between the EU courts and other EU institutions, and between the EU courts and the member states ́ governments, such a dialogue normally takes place only in the courtrooms, is often only implicit and seldom followed by a wider European legal community (not to mention politicians, media, and laymen).

It is the intricacies of the practice of the courts and related inner legal workings that are crucial for the actual modus operandi of the legal system underpinning the European integration project. And crucial also for the Union itself. What makes these discreet operational rules appear unknown, somewhat distant, or even awkward is perhaps their judicial origin and nature.

Unlike in the case of the Union’s financial and fiscal architecture where both effects and deficiencies had suddenly become visible and could even be literally counted, the impacts of the Union’s judicial decision-making practice shaping the resulting Union’s legal operational design are usually incremental and their effects take place over long periods of time.

Screen Shot 2016-06-30 at 14.51.36

Although seemingly hidden from the eyes of the wider public, the Union’s “legal world” faces a major challenge. Over the decades, the European legal arena has become incredibly complex and the price is a rising loss of certainty; modern information technologies are further fuelling these trends. There is hardly any major economic player or active lawyer who could plausibly deny this.

Following the recent crises in banking, the common currency, security, asylum and migration, the Union may soon face another important challenge of a different kind: a serious reconsideration of its legal modus operandi.

If EU law is to continue fulfilling its mission of harmonising and extending the common European legal space, successfully accommodating and balancing its differences and tensions, it needs to cease all its inherent tendencies of weakening legal certainty, clarity, and predictability.

In order for the wide EU legal universe (and the whole Union) to be sustained, the underlying legal operational architecture enabling the Union to function needs to undergo a significant adaptation mitigating the rise of complexity and corresponding loss of certainty.

It is of course true that any process of integration (or globalisation for that matter) is normally connected — at least temporarily — with a rising degree of confusion and instability. But the decisive question rests in proportion.

The EU may soon reach a point when the collateral legal uncertainty of its inhabitants and economic players will not be outweighed by all the bene ts brought about by harmonised and expanding common legal space.

Even the cherished protection of rights of individuals and private entities against the mistakes and maladministration of the member states — the cornerstone and driving rationale of the ever larger and imposing outreach of EU legal requirements — may not be an acceptable trade-of for loss of certainty in the eyes of the very same individuals and private entities.

The benefits of wider and expanding European legal space need to be put to a new balance with an elementary need for clarity and predictability. The crucial question is how this can be achieved without losing previous valuable gains.

Screen Shot 2016-06-30 at 14.51.36

It is not very realistic to expect that any “better regulation” or “subsidiarity” initiatives addressing the deficiencies of EU legislature will themselves bring about the desired certainty, clarity, and predictability of the EU’s legal environment. The practical lessons learned so far, as well as the rising complexity of the globalising world hungry for more supranational regulation, show that any such streamlining of legislative efforts will have only limited (albeit important) impact.

It is equally improbable that the EU member states would soon agree on a radical institutional overhaul of the EU’s judicial branch, such as creating a standard federative judicial system. Despite some bright efforts in the European legal academia, it is neither likely that a magical “Norm of the norms” or other ultimate mechanism solving the shaky relationship between EU law and national legal orders will soon be discovered and widely accepted.

Therefore, the necessary increased level of certainty, clarity, and predictability of the EU legal space can be most likely achieved only through gradual adaptation of those very instruments which actually serve to implement and enforce the vast body of EU requirements: the discreet underlying operational architecture and techniques that have been developed until now mainly by the courts.

Screen Shot 2016-06-30 at 14.51.36

To whom to address this urgent call? If one wishes to express worries or systemic objections against the current Union’s legal operational architecture and techniques, there is actually hardly anyone to turn to. There are no easily identified politicians or public officers directly responsible for this discreet and sensitive area, which has developed mainly through judicial practice.

Moreover, it would be bizarre or even unacceptable to publicly challenge the EU or national judges. It is just as if the rising legal uncertainty accompanying the ever wider impact of EU law had no instance capable of addressing such concerns.

In any case, it would be completely wrong to come to a conclusion that the time is ripe for a revolution against the untouchable “gouvernement des juges”, as some may believe. There are reasons why the judges are behaving the way they are.

One must also bear in mind that the operational legal architecture of the Union has developed into an extremely unique and fragile phenomenon. It has started as — and still remains — a kind of testing playground for future global and regional attempts to integrate national legal systems and traditions without a prior fully-edged political integration.

Due to its inherent characteristics, any abrupt change in the Union’s legal system may do more harm than benefit, if not even become fatal. For this very reason any scrutiny of the Union’s legal design must be handled with care by anyone who is truly concerned about the rule of law, the future of Europe, and the global community. That does not of course mean that such issues should not be openly discussed.

Screen Shot 2016-06-30 at 14.51.36

It is perhaps not extremely difficult for any active EU legal practitioner to identify those tricky features of the Union’s legal operational system, which currently tend to impede certainty, clarity, and predictability without actually offering an obvious and convincing countervailing benefit in return. They can be roughly divided into three types: (i) features that cause a disproportionate delay of finality of legal solutions; (ii) features that unnecessarily blur the content of the EU’s legal requirements; and finally (iii) features that simply disappoint natural legal instincts of individuals and private entities.

As many of these confusing or even destabilising tendencies have actually been developed through spontaneous judicial practice, they can be equally addressed and balanced by reasonable response in such practice. And by a careful approach of the European Commission when using its policing powers, as well as by relatively simple legislative amendments that can be passed by relevant legislative bodies.

A delayed finality of legal solutions (the first type of tricky features) can make a meaningful legal solution and advice extremely difficult. As EU law advances into more and more fields of human activities and relations, where reasonable time planning, early feedback, and adequate risk mitigation is inevitable, these features prolonging “final answers” need to be revisited with a new degree of sensitivity.

subscribe

Several negative tendencies of a largely procedural nature stand behind this problem. First of all, the absence of limitations on the retrospective effects of CJEU’s legal interpretations provided to national courts through the preliminary ruling procedures is very unfortunate since the interpretation usually has a retrospective impact beyond the remit of the individual case in which it is rendered, i.e. on all other similar previous situations in the EU.

As such interpretations do indeed have serious and sometimes surprising impacts on intra-state or EU laws, decisions and contracts on which private parties and public authorities had relied, the effects of such interpretations should be — as a rule — limited to the pending case in which the interpretation is rendered and to cases arising in the future.

For the good reasons of certainty and predictability, the starting rule should not be the one currently in place, which is that unless the court limits the effects to the given interpretation to the future (which happens only very rarely), these apply to all similar situations, including those preceding the judgement. Instead, the ability of the CJEU to provide for retrospective effects beyond the remit of the given case and future cases should be construed only as an exception.

Secondly, questioning or even ignoring intra-state final judgements (res iudicata) in infringement proceedings initiated by the European Commission and on other occasions where the CJEU finds national solutions and outcomes incompatible with EU law is certainly not a positive trend.

The rising tendency to consider intrastate administrative proceedings and final administrative decisions as largely irrelevant under EU law is a problem of a similar type. All this is further exasperated by alternative EU avenues for a (prolonged) revision of intra-state decisions and procedures even when those are final and finished, namely through the so-called infringement proceedings initiated by the European Commission and decided by the CJEU.

The problem is not necessarily that intra-state final decisions and procedures are being revised ex post facto for the sake of their compatibility with EU requirements. The problem is that all this reopening of final decisions takes place outside of standard rules of procedural retrial, which normally provide for limited periods, and limited grounds for such reopening. A more nuanced approach by the CJEU and the European Commission in this respect and clear principled rules would bring much ease to many complex projects and transactions implemented (previously or in the future) in the Union.

The second category of tricky features of EU law relates to the blurred content of EU requirements, which creates problems even for the most compliant and diligent ones. Firstly, the legislative use of open-ended provisions with vague normative content that are deliberately left for further development by integrationist judicial practice should be used in the future only in those instances where this is clearly inevitable. A new kind of cost/benefit test and impact assessment needs to be adopted so that the potentially destabilising impacts of such open- ended provisions can be better appreciated (this is something different from the “subsidiarity” and “proportionality” tests currently employed). Courts need to be more careful with using such open-ended provisions for their decisional expansion into fields where the final programmatic goal may be desirable, but without a proper detailed legislative regulation simply confusing.

Secondly, the use of soft law instruments by the European Commission for filling in legal gaps should be abandoned for they only further encourage and in a way legitimise incomplete legislation while the above corresponding judicial programmatic expansions create poorly regulated fields of law. For the sake of legal certainty, the vicious circle of this well-intentioned but disputable activism needs to be cut somewhere for the benefit of all those involved and impacted.

janzielonka

Thirdly, legal techniques developed by the courts defining the situations and conditions under which EU requirements quash the solutions provided for under national law should be streamlined, more clearly set, and “tamed” so that their limits are clearly understandable, and can be relied upon. The current tendency in the application of the so-called “direct” effect or “indirect” effect and primacy of EU law where the resulting message often seems to be that the national authorities (courts and other bodies applying law) simply need to make sure that the case at hand is simply somehow effectively attuned to EU requirements, is not very helpful.

Fourthly, the current trend of deriving rules and especially obligations for private parties or public entities purely from abstract general principles of law is extremely problematic, unpredictable, and burdensome. The calls for abandoning such practice (or limiting it only to few clearly defined instances) are justified and should be visibly addressed by the decisional practice of the CJEU as this is indeed possible to achieve.

Finally, a judicial piecemeal unification (“communitarisation”) of legal concepts, terms, and notions where the CJEU simply creates a Union solution to overtake and regulate the national counterparts should be employed only when absolutely necessary and better left for complex legislative initiatives. The courts have sufficient possibilities for how to signal problems and needs to the legislators.

The last category of tricky features of EU law is a special, a very subtle one. These features somehow disappoint natural legal instincts and orientation skills that have evolved over centuries of development of national legal orders in Europe. Such disappointment leads to frustration and pitiful and unfortunate blaming and ridiculing of the European integration project by private parties, if not even by national public officers and representatives.

One such subtle example is the Union’s legal operational rules, which expect the private parties who had already entered into some kind of a direct or indirect relationship with national public authorities, or just follow the national legal framework in place to bear negative consequences if the relevant national legislative framework, public procedures, and decisions and contracts later turn out to be not fully compliant with EU requirements.

Although fears of unjustified “capture” of the state (and the Union) by private parties and ill-intentioned public officials as well as of the resulting moral hazard are certainly justified in areas such as public contracts, public funds, etc., the principle of legitimate expectations should be adequately protected and a new balance found.

One cannot reasonably expect private parties to bear responsibility for the complex and complicated relations between the Union and its member states, the respective legislatures and complex bodies of administration. Instead, more e ective and coordinated ways of legislating and of the exercise of mixed or delegated administration should be sought. If a correction disappointing natural instincts and expectations of private parties must nonetheless be taken, only proportionate solutions should be employed (especially by using instruments under private law).

Another similar disappointing feature of the Union’s law is its tendency to introduce rigorous and hard-line legal consequences for the breach of EU requirements, which is especially disappointing in cases when content and impact of such legal requirements is vague and case-bound. This is closely connected to the effect of (EU) public law requirements in the fields of private law and inter partes relations. Mandated outright invalidity of contracts, repeating of complicated procedures, bizarrely strict sanctions — all these will hardly win the hearts of citizens and economic players, especially of those active on a large scale and taking significant risks. All of these can and should be mitigated through wise and reflective decisional practice or legislative amendments.

Screen Shot 2016-06-13 at 18.16.20

Finally, the credibility of EU law is easily undermined in those instances when common sense leads the private parties or even national public officers to a conclusion that EU institutions (including the courts) are unwisely preempting national solutions by attracting jurisdiction over the matter, or simply by enforcing a “last word” for themselves. These are situations such as imposing EU-preferred solutions over the national ones where the balance of interests is assessed exclusively at the EU level without a detailed examination of the real legal impacts on relations and situations on a national level.

The initiation of infringement proceedings against a member state in concrete cases of breach through the application of law with a consequent obligation for a state to undertake an unspecified remedy to correct a complex intra-state situation is of such a kind. The better and transparent use of policing powers and tempered judicial practice may alleviate these concerns.

All the above tricky features of the Union’s operational legal system are truly systemic as they cut with varying intensity through multiple fields of EU (and national) law — through both the overarching fields as well as the sectoral ones. Fundamental rights and liberties as well as the four economic freedoms, public procurement, competition and state aids, taxation, environment, consumer protection, corporate law, labour relations, judicial cooperation, and protection, agriculture, transport, energy, electronic communications, financial and other services — all of these and others are at play. But, as suggested above, some solutions are identifiable. They should be further considered and examined, and subsequently gradually firmly embedded in decisional practice, with some necessary help from legislative bodies.

The basic common denominator of all these possible solutions is a heightened Union’s (and especially CJEU ́s) sensitivity accustomed to legal instruments and techniques as well as to detailed circumstances occurring at the level of member states and within their national legal orders. All of these suggested improvements can be potentially beneficial to legal certainty, clarity, and predictability. And none of them is truly revolutionary, but rather represents only an important and visible adaptation.

Juraj Čorba is an editor of Visegrad Insight.

Part two of this article is available here

BUY