The European Commission - Essay Example

E.U. Law work Article 226 EC allows the European Commission to investigate Member s that have failed to perform their obligations under the EC Treaty, and the scope of this power extends to both acts and omissions of the Member States. When a Member State fails to respond proactively to the institution of an Article 226 infringement motion, the Commission may resort to Article 228, which allows for the imposition of punitive measures against a Member State that does not conform to the requirements and time frames in the implementation of Directives. Advising the European Commission with regards to the UK Government: The failure of a Member State to fulfil its obligations under an EC Directive was raised in the case of Commission of the European Communities v Portugese Republic.1 The European Commission brought action against Portugal under Article 226 for a declaration that a feature of its national legislation contravened the objectives of the EC Treaty and interfered with the objectives of the Treaty to permit free movement of goods throughout the European Union. The Court in this instance rejected all its arguments supporting its legislation on the grounds of safety and public policy, stating that the Portugese Government was going beyond what was necessary to achieve the objectives being pursued.2 The Court held that the Portuguese legislation was in contravention of EC Directives and ordered it to pay the costs because it was the unsuccessful party in its submissions.3 The Commission was able to bring against the member State of Portugal on the strength of Article 226. One of the problems in enforcing Community legislation, especially in environmental issues for example, has been the “problems of communication and conformity” by the Member States which in turn have led to an inadequate application of EC law 4. The objective of Article 226 is to address the insufficient levels of Member state transposition of Directives, because it allows the Commission to start infringement proceedings against the Member State that is not complying with a Directive. Earlier, proceedings under Article 226 appear to have been brought forward by the Commission on an ad hoc basis; moreover since Member States can delay the implementation of an Article 226 judgment until the penalty provision under Article 228 begins to operate, this provides them with several years wherein the infringement can continue. In its response to the Commission, the UK contends that its legislative process has not yet been fully completed, which has delayed the specific legislation, but that the Courts will apply the principles of direct and indirect effect. A Directive may have a vertical Direct Effect under the precedent established in the case of Van Gend en Loos v Nederlandse Administratie der Belastingen5, hence it will allow individuals remedy against the State. In this instance, since the Directive in question concerns the guaranteeing of deposits by the Governments of the Member States, it is only Direct effect that needs to be established and actionable. A Directive does not have a horizontal effect as the UK claims, but considering the subject of the Directive, thus may not be material. Under the principle of Parliamentary Sovereignty, which is still applicable within the U.K,6 judges have limited powers in so far as application of the law is concerned. For example, Section 4 of the Human Rights Act of 1998 only allows them to make a declaration of incompatibility when UK law contravenes European law, they do not have the power to institute changes in the law. The argument offered by the U.K. appears to have merit, because its legislative process is a time consuming one and a two month time framework to complete the legislation process may be too short. But this does not necessarily deny its citizens remedy under the deposit guarantee scheme, since they can rely upon the Direct Effect. A Directive is intended to be a binding instrument in its entirety, but its application is general; it allows the Member States some levels of flexibility in achieving the desired end result7. As a result, where the U.K. is concerned, the question of non-transposition of the Directive is concerned, two aspects must be noted (a) its process for framing legislation is a long drawn one (b) its existing legal process allows recovery for individual citizens through the application of the Direct Effect and (c) the Commission has only delivered a reasoned opinion rather than submitting the case for resolution to the ECJ. On all these grounds, the arguments offered by the U.K. appear to have some merit. In order to effectively prosecute an action for infringement under Article 226, the Commission may need to prove that a general and persistent infringement has taken place in terms of deposit guarantee schemes in earlier years, before the current financial crisis has set in. In the case of Commission v Ireland8 which involved the question of an infringement under Article 226, the GAP principle was established, wherein the contravention of an EC Directive will become actionable when there is a general and persistent trend of breach that is evident. In the case of Ireland, its violation of several Waste Directives was taken into account, as well as the general background of such operations within Ireland. The Court held that there could be instances when such a finding of infringement of a Directive could be allowed, in order to detect an administrative practice from individual infringements that had taken place. This aspect is significant, especially when viewed in the context of cases such as Commission v Italy (San Rocco)9. In this case, the Court held that even when a direct link could not be established between a specific situation and the Directive, if the situation has been persistent for a long time, it provide a definite indication that the provisions of the Directive were not being implemented. In applying the principle of “General and persistent” infraction, the Court in Commission v Italy10 has also stated that three dimensions should be taken into account in determining whether there was a general and persistent structural infringement of a Directive. The first is the dimension of scale, or the number of infringements, which may not necessarily be geographically localized. The second is the dimension of time, or how long the infringement has been persisting. The third dimension is seriousness, i.e, when the violation has an adverse impact on the specific interests protected by the relevant provisions. Applying these three dimensions in the case of the U.K., the serious nature of the financial crisis may provide a strong case for the Commission to pursue its action under Article 226 further. But if the same principle of “general and persistent infringement” is applied to Germany, there may be a stronger case against the State, because one individual, namely Jurgens, is already suffering the adverse impact of failure to transpose the Directive. Hence, the number of infringements is higher, the situation is serious, thereby satisfying at least two of the three dimensions. Advising the European Commission with regards to the German Government: The provisions of Article 226 have been found to be inadequate in some cases, for example the Commission filed four infringement proceedings against France for failing to adhere to an environmental Directive.11 Similarly, it brought 5 Article 226 cases against Germany for violating Council Directive 92/50/EC on public procurements.12 This has given rise to Article 228, which allows the Commission the possibility of imposing punitive measures for failure to comply with the provisions of a Directive. In the case of Germany, the European Court of Justice has already passed a judgment that Germany was in breach of EC law by not transposing the Directive on time. The European Commission is planning an action based upon Article 228 EC, under which, in an instance where a Member State has not complied with a judgment of the ECJ, the matter could be referred back to them and this second referral would necessitate the imposition of a penalty13. This would also mean that the provisions of the Directive would be expected to be active and operational within Germany. But Germany’s failure to implement the Directive, even after the judgment of the ECJ is equivalent to non compliance with the judgment. Article 228 EC allows for a “special judicial procedure” in order to enforce judgments of the ECJ which also provides for the “imposition of penalty payments or lump sums” by the ECJ on a member State that has failed to comply with a judgment of the ECJ.14 In the case of Commission v France15 community legislation had established certain controls on fishing activities and Member States were required to monitor fishing and other related activities. The Commission contended that France was maintaining an inadequate system of controls and in support of its case, had adduced mission reports prepared by its Inspectors. The European Court of Justice found in this instance that there was a breach of EU Fisheries law as a result of which France had to pay a fine of 20 million Euros. This precedent can also be applied by the Commission in terms of procuring a judgment against Germany and seeking the imposition of penalties or a lump sum fine payment. In this context however, it must be noted that one of the issues raised in the case of Commission v France16 was whether both a lump sum fine and a penalty could both be issued at the same time, since Article 228 specifies that it can be one “or” the other.17 It was also contended that imposition of both penalties would compromise equal treatment among Member States, which was not the objective in the cases of Commission v Greece18 and Commission v Spain.19 The Court however, pointed out that the objective of imposition of each kind of penalty was different.20 The payment of a penalty could function as a spur to induce the Member State to stop the offending activity or failure to comply at the earliest possible time, while the imposition of a lump sum penalty is based upon an assessment of the failure of compliance by the Member State on public and private interests. On this basis, the Court held that the argument of non bis in idem or taking the same breach into consideration twice, would not apply. Hence, it held that a lump sum and penalty could be imposed simultaneously on the States21. Applying this precedent, especially in the context of Germany refusing to guarantee Jergens’ deposit, it appears likely that the Commission can successfully impose both a lump sum payment and penalty on Germany. Conclusions: On an overall basis, it may thus be noted that the UK has offered better arguments to the Commission as compared to Germany. In the latter case, the accounts of several depositors has already been frozen, which is not the case in the U.K. Secondly, the legal system in the U.K. is a more time consuming process so that the formulation of legislation constitutes a greater chink of time in an administrative sense. However, since the UK has already implemented provisions that mandate the superiority of Community legislation, such as for example, by allowing judges the facility of a declaration of incompatibility under Section 4 of the Human Rights Act of 1998, this leaves individuals some respite and room for recovery, as also under the Direct effect. In Germany however, individuals like Jurgens have been left with no recourse, hence there may be a stronger case to impose punitive measures on Germany. Advising Jurgen on remedies available: In Jurgen’s the fact that the Directive guaranteeing his deposits has not been transposed into German law, will not serve as a limiting factor in gaining recoveries from the German Government. The case of Van Gend en Loos v Nederlandse Administratie der Belastingen22 allows the Direct effect to operate to permit recoveries for individuals. In this case, the ECJ stated that when the provision specified under the EC Directive is (a) adequately clear in statement (b) unconditional and (c) confers a right on the individual, the citizen can enforce this right in national courts. In this instance, the Directive clearly states that the aggregate deposits of each depositor are to be guaranteed up to 50,000 Euros. Since Jurgens is claiming for an amount of 45,000 Euros, this would be covered and allow him the status to file as an individual for recoveries from the German Government, for enforcement of the provisions of the Directive. In the case of Francovich v Bonifaci23, an individual was allowed the possibility of redress in the case of a Directive that has been poorly transposed or transposed late. In this case, the liability of the state was established through another route. The Council Directive 80/987 allowed employees to be protected in case their employers became insolvent and Member States were required to pay employee outstanding claims that arose in connection with pay that was guaranteed by “guarantee institutions financed by employers but independent of them….”24 Francovich at first tried to seek redress from the employers being owed 6,000,000 lire by the employers who became insolvent. Since recovery against them was not possible, Francovich then sought relief from the Italian Government for compensation in lieu. In this case, the Court examined two issues (a) whether the Council Directive could have direct effect in Italy and (b) whether the State was liable because it had failed to institute measures to implement the Directive. As already established in the Van Gend en Loos case, EC Directives could have a direct effect in Member States, and this principle was also adhered to by the Court in the case of Francovich. But this case was significant in that it also established State liability for failure to implement the provisions of a Directive. The Court concluded that “it is a general principle inherent in the scheme of the Treaty that a Member State is liable to make good damage to individuals caused by a breach of community law for which it is responsible.”25 This can also be applied in the case of Jurgen to establish the liability of the state of Germany. Since Germany was responsible for making arrangements to implement the provisions of Directive 2008/999/EC, guaranteeing deposits up to 50,000 Euros. The Directive in fact, states that the amount of deposit to be guaranteed is to be increased to 100,000 Euros by the end of October 2008. The State was given two months time to implement measures to ensure that these ends were achieved, but it has failed to act. Jurgens is claiming against this Directive in October, and the amount is well within the 50,000 Euros that was to be guaranteed during the earlier part of the month. Germnay was supposed to guarantee larger deposits by the end of October, but because of its failure to act, it has not even been able to guarantee the funds of individual depositors to the amount of 50,000 Euros and has refused to accept liability for Jurgens’ deposit. In the case of Francovich, the Court held that a Directive that has not been implemented may not be enforceable by an individual against (a) the State because it has no direct effect (b) against another individual because it has no indirect effect, but if an individual has still suffered harm, s/he may sue the State as a tortfeaser.26 Jurgens may therefore be able to rely on the precedent established in this case to claim that Germany is liable to compensate him for his losses, since it failed to insure his deposits as it was required to do. However, in this context, it must also be noted that establishing liability on a State will be possible only when culpability can be clearly established. It must be noted that if Jurgens’ case had occurred in the U.K, the liability against the State may not have been so clear. For instance in the case of Francovich, the Court held that establishing culpability would require a “deliberate or knowing breach of community law, for example a clear failure to implement an obligation” as was the case on Francovich.27 In the U.K, the failure may be caused mainly by administrative difficulties in executing the legislation within a short time frame due to the principle of Parliamentary Sovereignty under which the law of the country still operates. In Germany however, the failure to implement legislation may not he held to be a partial failure, rather it could constitute a wrongful act or omission, especially because the Commission has already proceeded to the next stage after Article 226 and is ready to file suit under the provisions of Article 228 which will mandatorily impute punitive measures on Germany for failure to implement the legislation. While a Directive will start producing its effect only after the period provided for its implementation is exhausted, it must be noted that the period for implementation of the Directive in this instance, expired on September 30th 2008. As a result, it may not be possible for Germany to argue that it is still within the implementation period, allowed the flexibility to implement the provisions of the Directive in the manner which is best suited to conform to its legal, social and economic environment. On the basis of the above, it may thus be concluded that Jurgens has two strong grounds to contest the German Government’s failure to guarantee his deposits: (a) he can claim that the EC Directive which mandates that individual deposits be guaranteed will have direct effect in Germany, because the terms of the Directive are specific, relevant to individuals and allow for him to claim recovery against the Directive which is also effective in all the Member States. (b) he can invoke the principle of State liability that was established in the case of Francovich to show that despite the existence of an EC Directive guaranteeing his deposits, the German Government’s failure to implement the provisions of this Directive in time have been the direct cause of his failure to recover his losses. On this basis, Germany may be held responsible. Bibliography Action under Article 288. http://ec.europa.eu/community_law/infringements/infringements_228_en.htm; Financial Penalties for Member States who fail to comply with judgments of the European Court of Justice: European Commission clarifies rules”, 14 December, 2005, http://ec.europa.eu/community_law/docs/docs_infringements/memo_05_482_en.pdf; Hattan, 2003. “Implementation of EU Environmental Law”, 15, Journal of Environmental Law, 273 Dicey, A.V, 1959. “An introduction to the study of the Law of the Constitution”, (ECS Wade edn), Macmillan and Co. Directive. http://europa.eu/scadplus/leg/en/lvb/l14527.htm; Tillotson, John, 2000. “European Union Law”, Routledge Cases cited: Case 202/01 Commission v France (2002) ECR –I11019 Case C 414/03, Commission v Germany, Judgment date: March 3, 2005. Case C-387/97 Commission v Greece [2000] ECR I-5047 Case C-278/01 Commission v Spain [2003] ECR I‑14141. Commission of the European Communities v Portugese Republic, Case 265/06 Commission v France (1991) (C 304/02); http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62002J0304:EN:HTML; Commission v France, Case C-304/02 (2004) Commission v Ireland , Case C-494/01 (2004) Commission v Italy (San Rocco) Case 369/97 (1999) Joined Cases C-6/90 and C-9/90 Francovich v Italian State and Bonifaci(1991) Van Gend en Loos v Nederlandse Administratie der Belastingen (Case 26/62) (1963) ECR 1; (1970) CMLR 1 Read More