European Council's Acting within the Powers Conferred upon It by the EC Treaty - Assignment Example

Issues in EU Law: The Direct Effect of Directives And Majority Voting Rule on Decisions Introduction One of the main institutions that carry out the tasks of EU is the European Council, which is supposed to act within the limits of the powers conferred upon it by the EC Treaty. The Council, whose influence was expanded following the 1991 Chernobyl incident1, is empowered to promulgate secondary legislation in the form of regulations, directives and decisions. Problems arise every now and then when the Council issues directives and regulations that member states take too long implement. Because the Treaty has set strict guidelines on the Council's adoption of a decision, this becomes another area of frequent discourse. For example, EU law provides that no Council decision can be binding and executory unless it was voted by two-thirds of the Council membership. This paper discusses the conflicts often engendered by acts of the Council that have not been introduced into the national laws of member states, as well as the integrity and applicability of its decisions. In so doing, the paper presents two case scenarios involving consumer welfare and fair trade promotion as embodied in acts of the Council that run into controversy. Scenario A: The European Council, seeking to bolster consumer protection laws in member states, adopted a directive on May 1, 2005 granting consumers the right to cancel any mail-order purchase of goods or services if done within 15 days of placement. Within seven days upon receipt of such notice, the supplier shall make a full refund of the contract price to the consumer, minus a reasonable amount for administrative and handling costs. EU member states were enjoined to implement the directive by May 1, 2007, but UK dragged its feet on the measure and was yet to incorporate this Directive into its national laws until July 5, 2007. On this exact date, Brighton businesswoman Christina ordered a new computer system from Avalon Computers Ltd., a mail-order firm in Reading specializing in computer equipment for professional graphics design. After making the full payment of 3,000 pounds, the equipment was delivered to Christina's shop a few days later. A day after delivery, however, Christina lost her American clients who had specified new designs that required the new computer system. Without these clients, the equipment was hardly needed by Christina's design studio so she faxed Avalon for a return of the computer, which was still crated and untouched. Avalon denied the request, indicating that there is a UK law allowing the no-return policy on the purchase of goods. Problem Question: If asked to prepare a brief on Christina's problem, how would you help her obtain a refund In the event a UK court declines to hear the case, where else could she go for redress Would the complexion of the case be different if the directive were a regulation instead Answer: In 6/64 Costa v ENEL (1964) ECR 585, the ECJ observed that the "Treaty has created it own legal system, which becomes part of the legal system of each member state and which their courts are bound to apply." This fulfills the direct effect principle in EU law, which means that the Council directive applies to Avalon although is yet to be implemented in UK. The new EU Constitution says that the EC law, whether of general or specific application, must prevail over any national law and that even in cases of conflict, the national law must be adjusted to conform to the EC law (Craig & De Burca, 20003). The implications are that coverage of EC law does not distinguish between direct and indirect effects in regard to individual European citizens, such that they can avail of the EC law's provisions to complain against any violation. The same ruling was laid down in Marleasing SA v La Comercial Internacional: "In applying national law, whether the provisions in question were adopted before or after the EU directive, the national court called upon to interpret it is required to do so based on the wording and purpose of the directive in order to achieve the result pursued by the latter." It would appear then that the direct-effect principle of EU law applies to Christina's case. Based on another ruling set in Van Duyn v Home Office, EC directives unimplemented in member states can have a direct effect if certain conditions are satisfied.2 Under the Community Method principle of the new EU Constitution, it is also held that any law enacted by EC automatically becomes an integral part of the law of a member state, whose courts are duty-bound to apply it. In Centrosteel v Adipol, it was acknowledged that in the absence of a proper implementation in national law, an EC directive cannot by itself impose obligations on individuals. However, national courts are enjoined to interpret national law based, as far as possible, on the wording and purpose of relevant directives. That interpretation, the ruling in the case added, does not have the effect of determining or aggravating criminal liability but it can lead to the imposition of civil liability or civil obligation on an individual 3. Thus, Avalon as part of EC is under obligation to return Christina's purchase as requested notwithstanding a UK law to the contrary. Under the dual vigilance doctrine, EC law can be enforced against national law in two ways - through a legal action initiated by individuals as per the direct effect and state liability principles, and by direct proceedings against the member state concerned, as provided for under Articles 226-228 of the Treaty. This condition was practically acknowledged by UK from way back, when it passed the European Community Act 1972 providing for the direct effect and supremacy of EC law4. As first step, Christina may bring her case to a UK court, and if this national court upholds Avalon's position, the European Court of Justice is her last recourse. Article 234 of the Treaty provides that any European citizen may apply to the ECJ for a ruling on matters of interpretation and validity of EU law. ECJ is tasked to review the legality of the acts adopted by the Council as well as the European Parliament. Article 234, para. 3, specifically provides that "national courts against whose decisions there is no judicial remedy, must refer the matter to ECJ." Based on 146/73 Rheinmuhlen (1974) ECR 139, Article 234 "is essential for the preservation of the EC character of the law established by the Treaty and has the object of ensuring that in all circumstances, the law is the same in all states of the Community." As for the suggestion that Christina's case could have been stronger if the directive in question were in the form of a regulation, it would not have made any difference. The obligation imposed by a Council directive is unconditional on the part of member states, although they can choose the form and methods by which to implement the directive5. This means that national courts are duty-bound to implement the purpose of the directive in any form or method of their choice. Regulations, on the other hand, are defined as laws with general application such that member states are under no strict liability to adopt them into national law. Under EU law, member states "are under a duty not to obstruct the direct applicability inherent in regulations and other EC rules." (34/73 Variola v Administrazione delle Finanze (1973) ECR 981.) Scenario B: The European Council promulgated a decision admonishing Germany and France for providing financial aid to state-owned companies when their viability appeared to be threatened by competitors in the private sector. This gives the state-owned firms an undue advantage over the competition, which runs counter to EU laws that frown on unfair competition. France complied with the decision but Germany declined to implement and comply with it, contending that the decision did not meet the Qualified Majority Voting (QMV) proviso in the EC Treaty, which calls for a unanimous vote of the Council on such a decision. In response, the Council threatened to bring an enforcement action against Germany based on Article 226 of the Treaty. Problem Question: How can Germany challenge the legality of the Decision, defend its position and avoid being penalized for breach of Treaty Answer: There are three categories of decisions that the European Council enacts: 1) a decision addressed to an applicant, 2) a decision addressed to another person, and 3) a decision in the form of regulation6. The make-believe decision chastening Germany for unduly giving state-owned companies a competitive advantage over private firms clearly falls under the third category, since it has the effect of a regulation intended to maintain a level playing field in the business environment of Germany. From the evidence, Germany is not contesting the basic point of the Council decision that it engages in unfair competition in favor of state-owned firms, but is challenging the validity of the measure on a legal technicality. Germany is invoking Article 205 of the Treaty, which provides that any decision of the Council is enforceable only if it meets the qualified majority-voting (QMV) requirement. Such a decision complies with the QMV rule if there is a unanimous vote in its favor. This means two-thirds of the Council membership, which is 72.3 percent or 232 of the Council's 321 members. In addition, the Treaty provides that any member state can ask for confirmation if the pro-votes so cast represent at least 62 percent of the total EU population. If the decision falls short of even this criterion, it cannot be adopted. Article 230 of the Treaty sets four grounds by which any member state or individual can petition for a review of the Council's decisions. These include: 1) lack of competence, 2) infringement of an essential procedural requirement, 3) infringement of the Treaty or any rule of law relating to its application, including breach of general principles of law7, and 4) misuse of power or use of power for purposes other than those it was granted8. In questioning the validity of the Council's decision regarding its favored treatment of state-owned firms, Germany can strengthen its case by harping on ground no. 2, which is the possible infringement of an essential procedural requirement. The QMV rule is a basic procedural requirement that may have been violated by the Council if less than 232 of its members voted for the questioned decision, or if estimates show that the votes cast in its favor do not represent 62 percent of the combined EU population. Germany can further reinforce its case by invoking ground no. 3, thus accusing the Council of breaching a general principle of law9. Under EU law, decisions are defined as measures "emanating from a competent authority intended to produce legal effects and constituting the culmination of procedure within that authority, whereby the latter gives its final ruling in a form which its nature can be identified (underscoring supplied)10." The authority in this instance is the Council, and Germany is contesting the procedures with which it enacted the decision. As a bona fide member state of EU, Germany has the right to question the decision by the Council, otherwise "the effectiveness of such a measure would be weakened if the nationals could not invoke it in the courts (9/70 Fanz Grad v Finanzant Taunstein (1970) ECR 825)." If Germany cannot support its claim of a procedural defect in the Council decision it faces the prospect of paying penalties. The Francovich principle established in C-6 and 9/90 Francovich v Italy (1992) ECR I-5357 provides: "If member states manifestly and gravely disregarded the limits on its discretion, it is a serious breach of Community law." However, the infringement proceedings consider whether the breach is intentional or involuntary, excusable or inexcusable, and whether the Community's position may have contributed to the infringement. A member state commits a breach of Treaty only when it "deliberately ignored or disregarded the Community law." Under the new Constitution, any European citizen may petition EU institutions for redress of grievances. The Constitution introduced a new system called European Citizen's Initiative, which allows EU citizens to propose a new law or recall an existing one if they think it is necessary and justified. A consolation for Germany it was not the first EU member state threatened with penalty for promoting unfair trade practices. Among the other member states earlier cited for breach of Treaty were France, Italy and Ireland. In C-265/95 Commission v France (1997) ECR-I6959, EC faulted France for failing to take appropriate measures to prevent farmers from obstructing the free movement of fruits and vegetables, which violated Articles 10 and 28 of the EC Treaty. Italy was also found to have breached the Treaty by a ban on pork products from other EU member states (7/61 Commission v Italy), while Ireland was warned for allowing a situation in which Irish consumers discriminated against products from other EC member states11. Member states that fail to uphold the supremacy of EC law over their own law are subjected to infringement proceedings, the main objective of which is to cause the state to fall in line. Penalties are exacted on member states that fail to do so. The Francovich principle established in C-6 and 9/90 Francovich v Italy (1992) ECR I-5357 provides: "If member states manifestly and gravely disregarded the limits on its discretion, it is a serious breach of Community law." However, the infringement proceedings consider whether the breach is intentional or involuntary, excusable or inexcusable, and whether the Community's position may have contributed to the infringement. A member state commits a breach of Treaty only when it "deliberately ignored or disregarded the Community law."12 Bibliography: 1. Craig, P. & De Burca, G., EU Law: Text, Cases and Materials, OUP, 3rd edition. 2. De Witte, B., 1999, Direct Effect, Supremacy and the Nature of the Legal Order, in The Evolution of EU, Craig & de Burca (eds), OUP. 3. ECJ Case, http://curia.eu.int/en/content/juris/index.htm 4. Europa, Questions and Answers on the Constitution, at: www.europa.eu.int 5. Fairhurst, J., Law of the European Union, Pearson Longman, 5th edition. 6. Foster, N. (ed.), Blackstone's EC Legislation, Blackstone. 7. McLeod, I., 2002, Legal Methods, Palgrave Law Masters, 4th edition. 8. Sionaidh-Scott, D., 2002, Constitutional Law of EU, Longman. 9. Steiner, J. & Woods, L., 2006, Textbook on EC Law, OUP, 9th edition. 10. Ward, I., 2003, A Critical Introduction to EU Law, Butterworth, 2nd edition. 11. Wiler, J., 1999,The Transformation of Europe, in The Constitution of Europe, OUP. 12. Weatherill, S., 2006, Case and Materials on EU Law, OUP, 7th edition. Read More