Friday, November 16, 2012

European Union Law Outline

Law of the European Union: Outline

Unit I: European Community System
·         Historical Perspective and the Basics of Integration
        Foundational Myths
§  the EC is, above all, a long term strategy for securing peace in Europe
*        the founders set out to avoid the mistakes and failures of Versailles
*        they believed that the EC should be conceived of as a long term contract with the necessary flexibility to allow for changing circumstances and ever increasing cooperation
*        increased solidarity and cooperation will make war (between France and Germany) and “unthinkable” and, therefore, “materially impossible”
          NOTE: “unthinkable” represents the reality; while war will never be truly materially impossible, there will be no war between States that no longer conceive of each other as enemies
§  economic myth: the common market (now the single market)
*        promote the well-being of the people of Europe (TCE)
*        prosperity, rise in the standard of living, closer relationship btw States -> all aim at forming “an ever closer union”
*        stages of economic intergration (Ballasa theorem)
          nondiscrimination principles
·         most favored nation (MFN)
·         national treatment (NT)
          ad hoc trade liberalization
          free trade area
          customs union
          common market
          economic and monetary union
·         externally impose strict monetary policy on domestic systems
§  the political myth: community citizenship
*        positive law
*        what does it mean to be a European citizen? how does Europe understand itself?
·         The Political Institutions
        The Commission
§  Nomination and Appointment
*        Nomination of the President of the Commission: common accord of the Member States; must be approved by the European Parliament
*        Nomination of Commissioners: common accord with nominee for President
*        Parliamentary approval: all nominees must be approved in a single vote by Parliament
*        Appointment of the Commission: by common accord of the Member States
*        NOTE: President is a huge issue in the new constitution
§  Composition of the College of Ministers: 20 members – 2 from each of the five larger States, 1 from each of the smaller States
§  Term: 5 years with the possibility of one renewal
§  Qualities of Commissioners
*        independent: cannot take instructions from any government or other body; cannot take action incompatible with duties; cannot engage in other occupations; must act with integrity and discretion (inc. not accepting certain appointments or benefits after leaving office)
*        dismissal: failure to fulfill conditions above or serious misconduct
§  Portfolios: allocated by President, but must balance national interests and consider general competence and reputation of nominees
*        sliced thinner and thinner as EU grows
*        NOTE: another huge issue for the Constitution
§  Cabinet: each Commissioner is assisted by a cabinet whom she appoints
*        restrictions: maximum of six advisors per Commissioner headed by the chef de cabinet; represent at least three nationalities; either chef de cabinet or her assistant must be of a different nationality than the commissioner
§  Directorates-General (DGs) or Services (Commission divided into 36)
*        qualification: entry exam or secondment of national administrations
§  Decisions: simple majority, but bound by the principle of collegial responsibility
*        “clearly defined measures of management and administration” may be delegated to individual Commissioners
*        decision to issue reasoned opinion and to commence enforcement against Member States cannot be delegated (some other decisions as well)
§  Procedure
*        Rules of Procedure may be adopted by commission, which must also adhere to general principles of administrative fairness and consistency
*        inalterability of administrative measures
          translation cannot be left to individual Commissioners
          versions cannot be authenticated before text is ready for notification / publication
*        collegial responsibility
          in order to insure that decisions were actually taken by the Commission and correspond exactly to its intention, the entire Commission must be involved in drafting and finalization
§  Mediation and Conciliation: independence from national governments allows Commission to give ‘European perspective’ and help mediate conflicting interests, esp. in the Council
§  Powers and Tasks
*        Formulation of Policy
          proposals for action
·         small initiatives: draft legislation for adoption by Council
        in most areas the Commission has the exclusive right to propose legislation;
        thus, nearly all Council law-making power begins with such a proposal;
        Commission has broad discretion in the proposals it puts forward;
        Parliament and the Council can often request that the Commission propose certain legislation, but they cannot force the Commission to do so;
        why is this such a huge power?
§  first draft always has great influence over the outcome; it is the starting point against which all changes are measured
§  they set the agenda
·         large initiatives: proposals for EU action within broad field
          allocation of resources: Commission drafts the budget
          policy decisions granted by Treaties
·         free movement of persons: joint right of initiative re. secondary measures with Council
·         legislative and regulatory powers may be delegated to Commission by Council
        NOTE: how does Constitution change the role of the Commission re. delegated powers
·         ECJ has held that where Commission is granted specific tasks (eg. encouraging cooperation and facilitating coordination btw Member States in social policy – such as emp, labor rela’ns, work cond, training, and social security) it has power of decision necessary to carry out these tasks
*        Executive and Administrative Function
          policy implementation
·         NOTE: EU has relatively small bureaucracy, thus it must rely of MSs for implementation of policy objectives;
·         in major policy areas Commission makes rules to which national administrators must adhere, and ensures compliance;
·         thus, the administrations of the individual MSs’ are also the administration of the EU;
·         rule making power usually delegated by Council; rules often made in conjunction with committees of national reps.
          budget – responsible for collection and expenditure
          reports – obliged to issue number of reports inc General Annual Report
          intervene in every case before the ECJ
§  the Commission is an autonomous political body – so why is it so important for each member to have a commissioner? and why do MSs fight so fiercely for the portfolios given their commissioner?
*        question of legitimacy – inform Commission of the values of particular epistemic community; Commissioner from a MS will understand and consider the MS’s position
*        shrinking the number of Commissioners will change the paradigm of legitimation – major divisions are no longer along MS lines, but along left / right, male / female, urban / rural
          it’s not at all clear whether the EU is really at this point; will the new MSs in 2004, who are widely considered more nationalistic
          the social engineer will argue that the structural change must proceed the social reality, but, two critiques:
·         this isn’t always true (see Canada);
·         this is true, but we don’t want such a social reality (don’t want to be a US, Australia, etc.) – of what kind of union do we want to a member?
§  General
*        Presidency
          rotates on a six month basis
          controls agenda for Council meetings
·         this power has been used to some extent to usurp the Council’s policy-making and mediation functions
          MSs usually have an interest in achieving tangible results during their presidency (e.g. Italy – Berlusconi – wants to complete the Constitution so that it can be signed in Rome)
*        Transparency
          least transparent: secret deliberations, no full record of business is published, no permanent political presence, information channels have not been established to the same degree as the other institutions
*        Accountability
          not accountable to any EU institution
          accountability at national level varies
·         some governments (e.g. UK and Denmark) insist that the democratic legitimacy of the EU is rooted in the role national parliaments play in overseeing their government’s involvement in the Council
*        Qualified Majority Voting
          Treaties have begun to call for QMV in a number of situations; however, the unwillingness of the Council to commit fully to QMV is a persistent theme
          MSs have a set number of votes (est. by treaty); but weighting does not fully reflect population
§  European Council
*        resolving conflicts: deal-breaking horse trading; breaking logjams
*        long-term strategic political guidance
*        foreign policy: only group that can have proper sensitivity to the two pulling interests; namely,
          only by speaking with one voice can they have global influence equal to their economic might;
          each country wants to preserve its ability to disagree
§  Council of Ministers
*        originally Foreign Ministers, but now varies depending on topic (e.g. Agriculture,
§  COREPER: permanent mission of each MS to the EU (specifically the Council)
*        de facto approve all legislation that is uncontroversial
*        allows Council of Ministers to focus on tough issues
*        cannot take ‘decisions’ in a legal sense
*        both the MSs’ Trojan horse within the EU and the EU’s Trojan horse within the MSs
§  626 representatives elected in a five year cycle based on a set distribution among the MSs
§  P is charged with drawing up uniform electoral procedure, and must assent to any provisions adopted by Council (adoption requires unanimity) for this purpose
§  Legislative Process
*        before SEA only had to be consulted by Council on Commission proposals
§  Supervisory Powers
*        put questions to the Commission
*        discuss the annual general report
*        power of censure over Commission: can require resignation of entire Commission on a two-thirds vote
§  Democratic Deficit
*        the case for greater Parliamentary powers was traditionally defeated by pointing to low caliber and low level of commitment of members;
*        absence of coherent transnational party structure;
*        an effective Parliament with a full range of legislative and supervisory powers would acknowledge that EU has become something approaching a federal association;
§  Single European Act (SEA)
*        power of assent over accession of new members
*        cooperation procedures: second reading of and propose amendments to certain legislative acts
*        extend range of provisions requiring a Parliamentary opinion
§  Treaty of Masstricht
*        assent provisions expanded
          uniform electoral procedure
          reorganization of structural funds
          supervision of some aspects of ECB
          request Commission to submit proposals
          co-decision (with Council) included in many provisions
*        guardian of interests of citizens
          investigate allegations of maladministration
          right of EU residents to petition Parliament
§  intergovernmental role
*        very limited in foreign policy sphere;
*        SEA: most be kept informed concerning European Political Cooperation
§  Parliament and the Commission
*        budgetary weapon: can withhold discharge in relation to expenditure
*        instead of censure, may convene a Committee of Independent Experts (CIE)
*        transparency and honesty: Commission must supply information P feels is necessary and it has a right to receive
§  European Ombudsman
*        inquires, decisions and recommendations regarding individual complaints
*        undertaken investigations that have exposed areas of resistance within the institutions
*        areas of particular concern
          access to documents / transparency
          role of Commission in enforcement proceedings against MSs
          need for a Code of Good Administrative Behavior
          problems with late payment of creditors
*        resolving disputes
          attempts to bring about friendly settlement between parties if maladministration is found
          may close a file with remarks critical of an institution or body
          may make formal finding of maladminstration with formal findings
·         Structural Issues
        three pillars
§  1st pillar: common market – European (Economic) Community (in the strict legal sense) – Community law, ECJ, etc.
§  2nd pillar: common foreign affairs and defense policy
§  3rd pillar: common justice and domestic affairs policy

Unit II: The Community System of Judicial Remedies
·         Structural Overview (Unit II-1)
        Articles 226, 227 & 228
§  226 provides method for Commission to bring cases against Member States; four step process:
*        notify MS that Commission believes it has failed to fulfill an obligation
*        allow MS to submit observations
*        issuance of a reasoned opinion (if Commission still believes obligation has not been fulfilled)
*        bring case (if MS does not comply with reasoned opinion)
§  227 provides method for Member States to bring cases against one another
§  228 provides for Commission oversight of Member State compliance with ECJ decisions
§  the important point is that the process prior to bringing a case provides a number of opportunities for resolving disputes without bringing the matter to trial, thus limiting litigation and the attendant ill will
        Article 234
§  provides method for ECJ to give preliminary rulings on interpretation of the Treaty when requested to do so by Member State courts
§  enlists the habit of obedience and compliance pull of domestic courts in defending EC system
§  solves (unintentionally) problems of monitoring, resources, and discretion that would prevent the Commission from adequately policing the Treaty
*        private attorney general model: individual self-interest will ensure that MS violations do not go unchallenged
*        compliance of domestic courts, especially lower courts, is insured by appealing to the psychology of judges
          gives lower courts power to overturn national legislative acts (which in many countries they do not have even on constitutional grounds)
          removes judges’ fear that they may be forcing a stricter interpretation of the Treaty on their State than is applied in other States (harmonizes interpretation)
*        NOTE: rests on a belief in a strong judiciary
·         Articles 226, 227 & 228 In Action (Unit II-2)
        considerations for the Commission in determining whether to bring a case
§  increasing MS compliance (foremost concern)
§  costs: limited resources (time and money), have to focus on the important cases
§  ECJ docket
*        don’t want to clog the courts with needless cases
*        justice delayed is justice denied, etc.
§  EC reputation
*        bringing needless cases would bring the entire system into disrepute
*        also, judgments that cannot be enforced in a timely manner (eg. b/c Parliament is dissolved) make it look as if ECJ is ineffectual
        Liability of MS for failure of parliament to act
§  as long as it has complied with the procedures set out in Art. 226, the Commission may bring an action whenever it wants (Case 7/68: Commission v. Italy (Art treasure case), 3 – 1968)
*        case brought when it was clear that Italian Parliament was going to be dissolved preventing them from enacting legislation that would have brought Italy into compliance; the legislation had already been approved by the Senate and was awaiting parliamentary action; Italian government (executive) claims there was nothing more they could have done (ie. they were attempting to comply)
*        lessons
          MS are strictly liable for failure to fulfill obligations – domestic difficulties are no defense
·         every branch of MS gov’t is liable – want to discourage free-riding
*        dissolution of parliament is not force majeure; MS is still liable (Case 77/69: Commission v. Belgium (Timber Tax case), 14 – 1970)
        Partial implementation
§  partial implementation of a Community Directive does not make case inadmissible even if the specific allegations of the Commission are of complete noncompliance (Case 117/95: Commission v. Italy (African horse sickness), 12 – 1996)
*        despite AG’s opinion that the case should be held inadmissible because the MS ought to be required only to reply to the specific allegations, ECJ found partial compliance was not a satisfactory answer
*        Italy had jerked the Commission around, not raising the claim of partial compliance (based on a 1954 Presidential Decree) until the matter was before the ECJ
*        even the AG thought that Italy should bear its own costs (usually the loser pays)
*        NOTE: this decision seems to trivialize the Art. 226 procedures, even though the ECJ clearly thought it needed to send a signal to MS to take 226 clearly, in so doing they themselves do not take it seriously
        Liability of MS for breach of CL by the judiciary
§  such cases were not considered for quite sometime due to ECJ’s reliance on domestic courts for the effectiveness of Art. 234
§  however, now that the relationship is solidly established they are beginning to consider breaches due to acts of the judiciary
        Moot cases
§  even if the reason for the case has disappeared, a decision by the ECJ can be important in “establishing the basis of a responsibility that a Member State can incur as a result of its default, as regards other Member States, the Community or private parties” (¶ 11) (Case 39/72: Commission v. Italy (Slaughtered cows case), 19 – 1973)
*        case may act as a signal to private individuals (in other MS) that they have a right which may be vindicated in the courts – allows private attorney general model to operate
§  “the purpose of judgments delivered under Articles [226 to 228] is primarily to lay down the duties of Member States when they fail to fulfill their obligations (¶ 15) (Cases 314 and 136/81 and 83/82: Procureur de la Republique, 34 – 1982)
*        “it is the duty of the national court … to infer
        Principle of collegiality
§  decision to issue a reasoned opinion may not be delegated (¶ 36)
*        Commission must deliberate because it is required to exercise political discretion
*        this is a message to the legal services:
          keep the Commission informed
          let the Commission know what choices it has to make; differentiate professional judgment from political discretion
        Counter measures and reciprocity
§  “…in no circumstances may the member states rely on similar infringements by other member states in order to escape their own obligations under the provisions of the treaty” (¶ 8) (Case 142 and 143/80: Essevi, 23 – 1980)
*        NOTE: in this respect CL is unlike normal international law; the duty is not contractual between the MS, instead it is owed to the Community and to the people of the MS
§  MS ought to be given sufficient time to comply with ECJ ruling; this is particularly the case where the obligation in question requires the MS to achieve a certain result by altering and monitoring practices throughout the country rather than simply enacting legislation (Case 278/01: Commission v. Spain, AG Opinion, 39 – 2001)
·         Article 234 In Action (Unit II-3)
        “…any court or tribunal of a Member State…”
§  where the annulment and withdrawal of a body’s members as well as their impartiality and independence are provided for by law, and where the body exercises a judicial function, it is a court or tribunal for purposes of Art. 234 (Case 54/96: Dorsch Consult, 5 – 1997)
§  ECJ will not accept preliminary references from arbitration panels (Case 102/81: Nordsee, 11 – 1982)
*        however, the ECJ suggests that questions of EC law can be raised in national court proceedings ancillary to arbitration and, if so, a preliminary reference can be made
§  insofar as domestic rules require national courts to grant an application for annulment of an arbitration award if the application is based upon failure to observe national rules of public policy, those courts must also grant applications based upon failure to comply with the EC Treaties (Case 126/97: Eco Swiss, 14 – 1999)
§  see also AG Ruiz-Jarabo’s review of the ECJ’s case law re. “national court or tribunal” and proposal for tightening the definition (which was rejected by the ECJ) (Case 17/00: De Coster, 18 – 2001)
        discretion to make a reference
§  lower court may make a reference under Art. 234 even if domestic rules bind it on points of law by rulings of a superior court (Case 166/73: Rheinmühlen-Düsseldorf I, 38 – 1974)
§  however, the decision by a lower court to refer remains subject to judicial remedies available under domestic law (ie. appeal) (Case 146/73: Rheinmühlen-Düsseldorf II, 40 – 1974)
*        in other words, the superior court may quash an order to refer, in which case the ECJ will not consider the questions referred
§  NOTE: this question arose in the context of case that was being reconsidered after the superior court quashed the original judgment
        duty to refer
§  “…necessary to enable it to give judgement…”
*        referral is not necessary if the answer to the question cannot affect the outcome of the case (eg. the Community law claim is one of two or more, and the other is independently decisive)
§  “Where such a question is raised…”
*        not raised if it has already been answered by the ECJ;
          materially identical
          already dealt with the point of law (even if not materially identical and even if not decided on a preliminary reference)
*        or, if the answer is so obvious (to the court before whom the question is raised, but the court must also believe that it would be equally obvious to the ECJ and to courts in all MSs) as to raise no reasonable doubt re. interpretation
          but you must consider the following:
·         different languages may produce different interpretative problems;
·         legal concepts may have a different meaning in Community law;
·         context / interpretation in light on CL as a whole
§  binding nature of preliminary references
*        one upshot of this decision is that answers to preliminary references are binding erga omnes (otherwise it wouldn’t make any sense to say that the question or point of law had already been addressed)
§  “…court or tribunal … against whose decision there is no judicial remedy…”
*        court from which appeal is available only upon a declaration of admissibility (granting of certiorari) by higher court is not a “court or tribunal … against whose decision there is no judicial remedy” (Case 99/00: Lyckeslog, 45 – 2002)
§  an international tribunal (in this case the Benelux Court) operating within the EC boundaries may make preliminary references to the ECJ; moreover, insofar as such a court is the court of last appeal, it is required to make a preliminary reference (Case 337/95: Parfums Christian Dior, 120 – 1997)
§  a preliminary reference to determine the validity of a law is not admissible in a case where the a party argues before the national courts of one MS that breach of contract was justified with the need to comply with the law of another MS because it is not clear why a reasonable belief in the need to comply with the other MS’s law depends upon the validity of the law (Case 318/00: Bacardi-Martini, 125 – 2003)
        Art. 234b: “preliminary rulings concerning … the validity and interpretation of acts of the institutions…”
§  purpose of Art. 234: uniform interpretation of the Treaties
*        necessity for legal certainty: once the ECJ has declared an act of one of the institutions void, national courts ought no longer apply the act (Case 66/80: International Chemical Corporation, 50 – 1981)
*        national courts do not have the power to declare community acts invalid; if they believe an act to be invalid, they must make a preliminary reference to the ECJ (Case 314/85: Foto-Frost, 53 – 1987)
          on the other hand, national courts against whose decision there is a judicial remedy need not make a preliminary reference in it believes that a claim of invalidity of a community act is unfounded
§  suspension of enforcement of a community act
*        a national court may suspend enforcement of a community measure while a preliminary reference is pending if it entertains serious doubts as to the validity of the act (Case143/88 & 92/89: Zuckerfabrik, 58 – 1991); however, in so doing the national court must
          NOTE: this is an example of purpose (uniform enforcement) overcoming language (“may refer”)
          determine that enforcement of the contested community act would result in serious and irreparable damage; and,
          take into account the interests of the community
·         whether the act “would be deprived of all effectiveness if not immediately implemented (¶ 31)
·         whether “suspension of enforcement is liable to involve a financial risk to the community” (¶ 32)
          the national court “must set out … the reasons for which it considers … the act to be invalid” (Case 465/93: Atlanta II, 64 – 1995, at ¶ 36)
§  failure of a community institution to act
*        a national court may not make a preliminary reference based upon failure of a community institution to act, nor may it grant interim measures pending community action (Case 68/95: T-Port I, 71 – 1996, at ¶ 53)
*        actions for failure to act must be brought with either by
          a MS before the ECJ (under Art. 230)
          an individual before the Court of First Instance (under Art. 230)
§  temporal effect of preliminary references under 234b
*        in the interest of legal certainty, the ECJ may hold that a preliminary reference applies only prospectively (see Case 24/86: Bliazot, 75 – 1988, at ¶ 34)
          in such cases, the ruling will only be applied to legal relationships arising after the judgment is handed down and to those individuals whose cases involving the same point of community law were pending at the time of the decision
*        in some cases, the ECJ will determine the appropriate level of compensation due when an act is found invalid (see Case 4/79: ONIC, 79 – 1980)
        jurisdiction of the ECJ
§  a preliminary reference may be made even in cases that are “purely internal” (Cases 515/99 & 527-40/99: Reisch, 82 – 2002)
*        “A reference for a preliminary ruling … may be rejected  … only if it is quite obvious that the interpretation of Community law sought … bears no relation to the actual nature of the case or the subject-matter of the main dispute” (¶ 25)
§  Art. 177 “does not give the Court jurisdiction to take cognizance of the facts of the case, or to criticize the reasons for the reference”; national court need not expressly specify the provisions of the Treaties requiring interpretation (Case 13/68: Salgoil, 86 – 1968)
§  ECJ need not entertain a preliminary ruling if the ruling arises in the context of a false dispute (ie. the dispute is an expedient to have a law declared invalid in a case with no opposition) (Case 104/79: Foglia-Novello I, 88 – 1980)
*        Italian wine dealer sold Italian liqueur to a French woman; the parties stipulated that the buyer would not be liable for any duties contrary to provisions for free movement of goods; the dealer adopted a similar contract clause in relation to the transporter; nonetheless, the transporter paid a French imposed duty without protest and charged the dealer; when the dealer attempted to recover the amount form the buyer in an Italian court, the buyer refused on the basis of their contract; both parties argued that the duty was incompatible with Community law
§  manufacturing a preliminary reference regarding the compatibility of a MS law with Community law before the courts of another MS will prevent the MS whose legislation is called into question from arranging an appropriate defense of its laws (Case 244/80: Foglia-Novello II, 91 – 1981); in such cases is not irrelevant whether the proceeding is really a dispute between the parties or rather is directed against a MS who is not a party
§  the ECJ may entertain a preliminary reference even if the persons against whom the proceedings are aimed are unknown at the time of the reference; “The decision at what stage in proceedings a question should be referred to the Court of Justice for a preliminary ruling is … dictated by considerations of procedural economy and efficiency to be weighed only by the national court”; once the accused are identified, the national court may again refer a question to the ECJ to ensure that a fair hearing is given (Case 14/86: Pretore di Salò, 97 – 1987)
§  preliminary reference is admissible where the dispute in question in the main action is not a procedural device as evidenced by the fact that the national court allowed interveners to argue that the national law in question was not contrary to Community law as long as the referring court “sufficiently defined the national legislative background and clearly explained why it consider[ed] that the questions it raised are relevant” (Case 379/98: PreussenElektra, 100 – 2001, at ¶¶ 44, 47)
§  preliminary reference is admissible where a MS has incorporated Community law into its domestic law and thus given effect to a regulation in purely internal situations (Case 28/95: Leur-Bloom, 117 – 1997)
*        in such cases the Community has an interest in maintaining uniform interpretation of the regulation in question
*        ECJ rejects AG’s argument that the objectives and context of national legislation may be different than those of Community law (see AG’s opinion at 111-13, ¶ 56)
*        moreover, the AG argues that is not wise to interpret a regulation in a situation not contemplated by the Community drafters, especially where the national legislation applies to situations that Community law was not intended to reach
          any indirect threat to the proper interpretation of Community law by the ECJ is minimal; the ECJ could determine the correct interpretation as soon as a case arose in a Community law context
*        in addition, such situations fall outside the scope of Art. 234b, which gives the ECJ jurisdiction only over the validity of Community acts
*        finally, admitting such references may result in a huge increase in the volume of preliminary references, delaying justice for more worthy references and preventing the ECJ from performing its true functions
·         Article 230 (Unit II-4)

Unit III: Direct and Indirect Effect
·         purpose
        in order for Art. 234 to function successfully, Community norms must create individual rights of action
        the doctrine of direct effect is effectively the way in which individual causes of action are realized
        although often spoken of in terms of ECJ respect for individual rights, it is better conceived of as a necessary means of enforcing Community law through the private attorney general model
·         the basic formula
        a provision of Community law confers rights upon individuals (ie. has direct effect) if it is clear, precise, and unconditional (ie. not qualified by a reservation requiring positive legislative enactment) (Case 26/62: van Gend & Loos, 5 – 1963)
        a provision meeting these requirements is “complete, legally perfect, and … capable of producing direct effects” (Case 57/65: Lütticke, 26 – 1966)
·         spelling out the doctrine
        that a provision describes MS as being subject to its obligations does not imply that individuals cannot benefit from it (Lütticke)
        Community law produces rules that apply to all legal relationships located within the territory of the Community (ie. direct effect extends to private relationships – relationships between individuals – not just relationships between individuals and the MS) (Case 36/74: Walrave and Koch, 28 – 1974)
        an article need not produce direct effect as a whole in order for certain obligation contained therein to produce direct effect (Case 43/75: Defrenne, 31 – 1976)
§  ECJ distinguishes between direct discrimination that can be identified on the basis of criteria explicitly included in Art. 119 (equal work and equal pay) and indirect discrimination which can only be identified by more explicit provisions (either Community or national)
§  the former are given direct effect, while the later are not
·         direct effect of directives
        Article 249 (ex 189)
§  “regulations” are explicitly given direct effect
§  “directives”, on the other hand, leave “choice of form and methods” to MS
        directives may produce direct effects
§  it does not follow from the fact that regulations may by their very nature produce direct effects that other categories of acts may not have similar effects (Case 41/74: van Duyn, 43 – 1974)
§  MS “may not rely, as against individuals, on its own failure to perform obligations eg. [adopt implementing measures] which [a] directive entails” (Case 148/78: Ratti, 48 – 1979)
*        the result is that directives have direct effect only in relationships between individuals and MS, not between private individuals
§  an individual who is exempt from the requirements of a directive cannot be required to prove that they fulfill such requirements; however, the MS may determine, by its own investigation, that such requirements are not met (Case 21/78: Delkvist, 62 – 1978)
§  in the period prescribed by a directive for transposition into national law, a MS may not adopt legislation inconsistent with the directive (ie. “measures liable seriously to compromise the result prescribed”) (Case 129/96: Inter-Environment Wallonie, 66 – 1997)
·         vertical and horizontal direct effect
        NOTE: remember that directives have only vertical (btw. an individual and a MS), not horizontal (btw. individuals), direct effect
        public authority
§  an individual may rely on a directive as against a MS regardless of the capacity in which the MS is acting (eg. employer or public authority) (Case 152/84: Marshal I, 72 – 1986)
§  “a body … which has been made responsible [by law] … for providing a public service under the control of the state and has for that purpose special rights beyond those which result from the normal rules applicable in relations between individuals is included … among the bodies against which the provisions of a directive capable of having direct effect may be relied upon” (Case 188/89: Foster-British Gas, 77 – 1990)
        “indirect effect”
§  in an action between individuals, a court must, where possible (ie. where it is within the gamut of plausible interpretations), interpret national law so as not to be inconsistent with a Community directive even if this is not the interpretation which the court would otherwise have chosen (Case 106/89: Marleasing, 80 – 1990)
        NOTE: the final way in which the ECJ has attempted to close the enforcement gap left by refusal to give directives horizontal direct effect is imposition of liability on MS for damages suffered due to non-implementation (this is considered directly below in Remedies)

Unit IV: Remedies
·         system of tortious liability (Case 6/90 & 9/90: Frankovich, 1 – 1991)
        are provisions of the directive unconditional and sufficiently precise?
§  identity of persons entitled to guarantee
*        employees with claims against insolvent employers
§  content of guarantee
*        although MS may chose between several possibilities, it is nonetheless possible to establish the minimum guarantee
§  identity of person liable to provide guarantee
*        state cannot be clearly and precisely identified as the person liable for unpaid claims because there is too much discretion in the organization, operation and financing of the envisioned guarantee institutions
§  thus, there is no direct effect
        right to reparation (ie. establishment of a system of tortious liability for MS failure to implement obligations)
§  three conditions must be met (¶ 40)
*        result prescribed by directive must entail the grant of rights to individuals
*        must be possible to identify the content of such rights
*        there must be a causal link between the breach of the MS’s obligation and the loss suffered
§  MS must establish procedural rules for legal proceeding through which individuals may obtain reparation from the MS
·         where the result proscribed by a directive would establish an individual right vis a vis other individuals, the MS is liable for damages resulting from failure to implement the directive (Case 91/92: Faccini Dori, Unit 3, p83 – 1994)
·         revising and expanding the system of non-contractual liability (Case 46/93 & 48/93: Brasserie du Pecheur, 13 – 1996)
        even if a directive does not have direct effect, Community law confers a right to reparation if the following three conditions are met:
§  rule infringed must be intended to confer rights on individuals
§  breach must be sufficiently serious (this is new – a change from Frankovich); for this determination the following factors may be taken into consideration
*        clarity and precision of the rule
*        measure of discretion left to MS or Community authorities
*        intentional v. involuntary infringement
*        excusable v. inexcusable error
*        whether the position taken by a Community institution may have contributed to the omission
*        adoption or retention of practices contrary to Community law
§  direct causal link
·         enforcement before national courts
        resistance to this line of decisions in MS
§  many feel that by creating a new tort, the ECJ is encroaching on national domain
§  this is even more worrisome given that the tort created (liability for legislative action or inaction) is precluded in most MS
§  even though the EC institutions are also liable for actions which exceed there powers, the ECJ has given the institutions tremendously broad discretion
        all of this means that MS court are likely to likely to be quite strict in their interpretation of “sufficiently serious” breaches
        however, after the Factortame decision, the English courts held that England was liable for breach of Community law
·         effectiveness of national court remedies
        (Case 33/76: Rewe, 102 – 1976)
        (Case 158/80: Rewe “Better-Buying cruises”, 104 – 1981)

Unit V: Supremacy
·         supremacy before the ECJ
        like much of the ECJ’s jurisprudence, the main arguments supporting its assertion of the supremacy of EU law are teleological, but they are also structural
        the paradigm case: Case 6/64: Costa v. ENEL, 2 – 1964
§  Treaties created a Community
*        of unlimited duration
*        with its own institutions
*        with its own personality
*        with its own legal capacity
*        with its own capacity of representation on the international plane
*        with real powers stemming from the limitation of MS sovereignty or transfer of powers from MS to the Community
§  thus, MS have created a body of law which binds both their nationals and themselves
§  this law cannot achieve its objectives if the executive force of Community law varied from MS to MS
*        thus, national laws cannot renounce Community obligations
*        any other conclusion would undermine the legal basis of the Community itself
        procedural rules
§  “in the absence of [harmonization measures], it is for the national legal order of eash MS to designate the competent courts and to lay down procedural rules for proceedings designed to ensure the protection of the rights which individuals acquire through the direct effect of Community law” (Case 45/76: Comet, 4 – 1976, at ¶ 13)
§  two qualifications
*        non-discriminatory application: the procedural rules must not be “less favorable than those governing the same right of action on an internal matter” (¶ 19)
*        procedural rules and statutes of limitations must not make it “impossible in practice [for individuals] to exercise rights” acquired through the direct effect of Community law (¶ 16)
        application of Community law
§  every national court  must … apply Community law in its entirety and protect rights which the latter confers on individuals and must accordingly set aside any provision of national law which may conflict with it” (Case 106/77: Simmenthal, 7 – 1978)
§  this applies even to those courts which under domestic rules do not have power to set aside national law
§  in effect, procedural options regarding application of Community law are removed from MS discretion
§  all national courts are thus transformed into enforcers of Community law
·         supremacy and national constitutions
§  secondary community law will be subject to national constitutional review so long as there is (a) no European bill of rights (“codified catalogue of fundamental rights”), and (b) no effective, democratically elected body at the heart of the Community system (full responsibility “on a political level”) (Internationale Handelsgesellschaft – Solange I, German Federal Constitutional Court, 36 – 1974)
*        transfer of powers to the Community does not mean that exercise of those powers will not be subject to constitutional review
*        suggests that the relationship between the Community and MS is not entirely hierarchical
§  principled pragmatism: while not completely abandoning its right to subject Community law to constitutional review in extreme and unimaginable cases, the German court recognized that ECJ has become committed to the protection of fundamental rights; as long as this situation persists, the German court will not exercise its jurisdiction to review Community law (Solange II, 41 – 1988)
        United Kingdom
§  English Court of Appeal located supremacy of Community law not in the Treaties themselves but in the domestic law giving effect to the treaty of accession (European Communities Act) (Macarthy’s v. Smith, 72)
*        since the UK has no written constitution, the court found it necessary to retain a buffer to complete Community supremacy in the form of Parliament
*        in short, Parliament has the power to override Community law (and perhaps leave the EC) in order to defend fundamental legal values of the country

Unit VI: Competencies
·         Treaty Provisions
        Article 5
§  Community shall act within limits of powers conferred and objectives assigned by Treaty
§  principle of subsidiarity: in areas of dual competence, Community shall take action only if:
*        objectives of proposed action cannot be sufficiently achieved by MS
*        objectives can, by reason of scale or effects of proposed action, be better achieved by Community
§  principle of proportionality: Community action shall not exceed that which is necessary to achieve the objectives of the Treaty
        Protocol on the application of the principles of subsidiarity and proportionality
§  all Community legislation shall state its rationale “with a view to justifiying its compliance with the principles of subsidiarity and proportionality”
§  guidelines in assessing whether legislation meets principle of subsidiarity
*        issue has transnational aspects which cannot be regulated by individual MS
*        MS action alone or lack Community action would conflict with the Treaty (ie. distort competition, act as disguised restriction of trade, weaken economic and social cohesion) or would otherwise significantly damage MS interests
*        action would produce clear benefits compared to MS action
§  proportionality
*        action shall be as simple as possible
*        will go no further than necessary
*        and will leave as much discretion as possible to MS
·         Directive of Advertising and Sponsorship of Tobacco Products
§  Article 152 (ex 129) (4)(c) excludes harmonization measures in protection of human health
§  Directive 98/43, effectively banning all tobacco advertising within the Community, was justified as a measure eliminating (a) obstacles to the free movement of goods; and, (b) distortion of competition
        Germany argued that the directive went beyond the powers of the Community and should therefore be annulled (Case 376/98: Germany v. Council and Pariliament, 8 – 2000)
§  free movement of goods
*        while a prohibition might be justified with regard to certain types of advertising, other types of advertising do not in any way limit the free movement of goods
*        free movement of goods gives the Community power to regulate in areas that it wouldn’t otherwise be allowed to regulate, but the specific use of power must be justified by relating the regulation to the good whose free movement would otherwise be obstructed
·         Weiler: The Transformation of Europe, 45 – Yale L.J. 1991
        the Treaties have been constitutionalized and the EC has become roughly a federal state, but how did it get here?
§  answering this requires an analysis of structure and process
*        relationships between
          political power in center and periphery
          legal norms and policies of center and periphery
*        division of material competences (enumerated powers)
        exit and voice
§  definitions
*        exit: the ability to abandon an organization in the face of unsatisfactory performance
          selective exit (in EU context): MS seeking to avoid obligations
*        voice: mechanism for intra-organizational correction and recuperation
§  interaction
*        stronger voice reduces demand for exit; while, conversely, closure of exit leads to demand for enhanced voice
        the “foundational period”
§  growth of legal federalism (closure of selective exit)
*        the ECJ established doctrines that foreclose MS option of selective:
          direct effect
          implied powers (inc. complementary doctrines of exclusivity and preemption
          human rights (necessary to get national courts to go along with supremacy)
*        moreover, development of preliminary reference Article 234 addressed the weaknesses of Articles 226-28, thus substantial increasing the effectiveness of review of conflicts between national law and Community law
§  political confederalism (dynamics of voice)
*        at the same time, MS retained a veto over all legislation
*        this decisive influence over normative outcomes made the emerging legal structure acceptable
        1973 to the Mid-1980’s: Mutation of Jurisdiction and Competences
§  expansion of Community jurisdiction (or the substantial erosion of the enumerated powers constraint)
§  jurisdictional mutation
*        extension: mutation within areas of autonomous Community jurisdiction (eg. development of human rights doctrine, standing of Parliament)
*        absorption: exercise of Community powers which impinge areas of MS jurisdiction beyond explicit Community competence
*        incorporation: hasn’t really happened, but it’s not inconceivable that Community human rights doctrine might be used to review national law
*        expansion: original legislation outside of Community jurisdiction has remarkably not ignited major disputes; why not?
          part of the strategy of revival after Luxembourg crisis, etc.
          structuralism: Community seemed to be an instrument of national governments rather than a usurping power
§  democratic danger: removing decision making to Community level locks out many of the interest groups that operate effectively of a national level but are not well-placed to play the Community game
        1992 and Beyond
§  structural changes
*        majority voting has become the default procedure for Community decision-making for most internal market legislation
          Luxembourg is seldom invoked, and to the extent it is it seems now to require “the assertion of a truly vital national interest, accepted as such by the other Member States”
*        negotiating under the shadow of the vote gives the Commission considerable power to act as an intermediary between Member States and force compromises

Unit XI: Discriminatory Taxation and Measures Having an Effect Equivalent to         Customs Duties
·         Charges Having an Effect Equivalent to a Customs Duty
        relevant treaty provisions
§  Article 23
*        “The Community shall be based upon a customs union … which shall involve the prohibition between Member States of customs duties … and of all charges having equivalent effect…”
§  Article 25
*        (pre-Amsterdam) “MS shall refrain from introducing … any customs duties … or any charge having equivalent effect, and from increasing those which they already apply…”
*        (post-Amsterdam) “Customs duties … and charges having equivalent effect shall be prohibited…”
        any pecuniary charge, however small and whatever its designation, imposed by reason of the fact that products cross a frontier constitutes a charge having effect equivalent (Case 24/68: Commission v. Italy – Statistical Levy, 3 – 1969, at ¶ 9)
§  purpose of Article 25 is to remove obstacles to trade, not simply to prevent protectionism
§  moreover, even if the purpose were to prevent protectionism, burdening imports and exports equally does not pass muster; domestic products marketed internally are still advantaged
§  rejection of the de minimus argument
*        ECJ endorsed Commission’s desire to send a clear message to MS that obstacles to trade were not going to be allowed
          NOTE: this argument loses weight once the common market is firmly established; one might expect to see evolution of a less restrictive doctrine
*        judicial economy: bright line rule will prevent confusion and litigation
§  “taxation which is imposed in the same way … on similar or comparable domestic products” (Statistical Levy at ¶ 11); “form part of a general system of internal dues applied in accordance with same criteria to domestic goods” (Animal Inspection Fees – AG’s Opinion, 15 at ¶ 4)
*        if there are no comparable domestic products, the tax must be part of the general scheme of taxation
          hypothetical domestic product test
§  tax intended to compensate for internal taxation
*        tax imposed for the benefit of domestic producers does not apply equally to imported and domestic products because for the domestic products it is a set-off against benefits received while for imported products it is a supplementary tax burden (Case 77/72: Capolongo, 7 – 1973)
*        tax on imported lard is not justified by the fact that the same tax is charged at the same rate for similar animals when slaughtered domestically (Case 132/78: Denkavit, 23 – 1979)
          charge must (¶ 8):
·         (a) be imposed at the same marketing stage; and,
·         (b) “the chargeable event … must also be identical”
*        tax on exported tobacco to fund the Tobacco Workers’ Insurance Fund cannot be justified by the fact that a similar charge is levied on domestic products unless both charges are applied (a) at the same rate, (b) at the same marketing stage, and (c) on the basis of an identical chargeable event (Cases 441-42/98: Kapniki Mikhailidis, 26 – 2000)
          the social objective of a tax does not matter when determining whether it is a charge having effect equivalent
§  fee for service rendered
*        (1) for “a specific benefit actually conferred” (Statistical Levy at ¶ 16); “constitute the consideration for a benefit actually provided” (Animal Inspection Fees – AG’s Opinion, 15 at ¶ 4)
          that is, the service cannot confer an advantage that is too general or difficult to assess
*        (2) “charged in connection with inspections prescribed by a Community directive” (Animal Inspection Fees – AG’s Opinion, 15 at ¶ 4)
          health inspection fees are, in and of themselves, too general to constitute a benefit actually conferred
          fee may be charged for inspections established in accord with a Community directive intended to promote the free movement of goods by removing obstacles to trade (ie. veterinary and public health inspections adopted in accordance with Article 30 (ex 36)) (Case 46/76: Bauhuis, 9 – 1977, at ¶ 30)
·         but the fee must be no greater than the actual costs of inspection (¶ 36)
·         unless the directive specifically provides that MS must bear the costs of inspection, it does not matter whether the actual fee charged has been or are capable of being harmonized (see Animal Inspection Fees, 17 at ¶ 13-15)
          the following conditions must be satisfied (Commission v. Germany – Animal Inspection Fees, 17 – 1988, at ¶ 8):
·         fees do not exceed the actual costs
·         inspections are obligatory and uniform for all products concerned in the Community
·         prescribed by Community law in the general interests of the Community
·         promote the free movement of goods … by neutralizing obstacles to trade that might arise from unilateral measures adopted in accordance with Article 30 (ex 36)
·         Discriminatory Taxation
        relevant treaty provisions
§  Article 90 (ex 95)
*        similar products: no MS shall impose, directly or indirectly, on the products of other MS any internal taxation in excess of that imposed on similar domestic products
*        other products: no MS shall impose on the products of other MS any internal taxation of such a nature as to afford indirect protection to other products
§  this is really about discrimination (not
        differential taxation
§  it proves impossible to develop a “similar products” test; any measure of similarity depends on the distance from which the question is viewed (see Commission v. France – Alcoholic Beverages, 32 – 1980)
§  the ECJ claims that this doesn’t matter because taxation on products that might be similar will certainly be caught by the “other products” clause because the products will be at least in partial competition (¶ 38)
*        Note: this ignores the fact that the “other products” test is much more difficult
§  the question now becomes competition and substitutability
*        products are in competition with each other when they are substitutable
*        however, if consumers are unaware that they are substitutable, they will not be in competition
*        the cross-price elasticity test cannot affectively measure the degree of substitutability between products that are taxed at different rates because the tax may itself contribute to perceptions of substitutability (and thus produce a low cross-price elasticity result) (see Commission v. UK – Wine and Beer, 52 – 1983)
          in short, cross-price elasticity measures consumer preference, and preference may be affected by the fact that one product is more expensive due to higher tax rate
*        thus substitutability remains a subjective test
          however, a strong case for substitutability can be made whenever products are used in similar manners in different countries
        taxation of such a nature as to afford indirect protection
§  the “other products” clause suggests that small differences are not prohibited
§  Weiler: real test ought to be whether the difference in tax rate distorts the competitive relationship between products
*        competitive relationship is expressed by price ratio
*        thus an ad valorem tax will never distort the competitive relationship
*        one must argue around the language of Article 95 (which is horribly drafted) by saying any distortion of competition which is not de minimus
          this last qualification will, in practice, be taken care of by the fact that someone thought the difference was big enough to justify the costs of litigation
§  the difficulty is that not all taxes are ad valorem
*        if, for example, taxes are based on alcohol content and prices vary quite extremely between products with the same alcohol content it will be very difficult to determine whether taxation affects price ratio
*        whilse
        the pursuit legitimate economic or social goals
§  Community law does not prohibit Member States from granting tax advantages in pursuit of legitimate economic or social purposes (Case 148/77: Hansen & Balle, 31 – 1978)
§  MS may establish differential taxation between similar products on the basis of objective criteria if the differentiation pursues of objectives of economic policy that are compatible with Community law (Commission v. France – Natural Sweet Wines, 49 – 1987, at ¶ 6)
*        MS may pursue legitimate economic or social aims through differential taxation as long as such preferential systems extend to imported products conforming to the same standards as preferred domestic products (eg. non-discriminatory) (¶ 7)
§  end products which are identical but have different manufacturing processes may be taxed at different rates despite the fact that one is not produced domestically if the reason it is not produced domestically is the higher tax rate (Case 46/80: Vinal, 41 – 1981)
*        giving preference to a particular manufacturing process or raw material is a legitimate choice of economic policy
§  if a MS has a differential taxation rate based upon method of production, it cannot impose the higher rate on all imported products based upon the fact that it is impossible to distinguish between the products at the time of import (Case21/79: Commission v. Italy – Mineral Oil Products, 45 – 1980)
*        it is up to importers who wish to take advantage of the lower tax rate to produce evidence that their product was manufactured in accordance with the preferred method
*        the MS may not require a higher standard of proof than is necessary to avoid the risk of tax evasion
§  while a MS may require evidence enabling it to determine whether an imported product meets the standards required for a preferential rate of taxation (eg. certificates issued by the appropriate authorities in the state of origin), it must allow the exporting MS to choose control methods and designate the responsible authority for controls (Natural Sweet Wines)
*        recognition of equivalence may not be made dependent upon prior negotiation of an agreement between the national authorities concerned
§  tension between social purposes and non-discrimination
*        Finland taxed energy at differential rates based on source (eg. nuclear energy taxed much higher than wind energy); however, because it was impossible to determine the source of imported energy, the Finnish government taxed all imported energy at the average rate of tax of domestic energy (ie. greater than the lowest rate, less than the highest rate) (Case 213/96: Outokumpu Oy, 74 – 1998)
*        held: MS must abolish differential taxation which is objectively justified if doing so is the only means of avoiding direct or indirect discrimination against the imported products (¶ 40)
*        notice that this holding is in tension with other parts of the decision which maintain that MS have a right to pursue “objectives which are themselves compatible with the requirements of the Treaty and its secondary legislation” through differential taxation based on objective criteria (¶ 30)
*        thus, non-discrimination seems to trump social objectives
          practical difficulties cannot justify discrimination
        general system of internal dues
§  system must be applied systematically to categories of products in accordance with objective criteria
§  the method of taxation applied to imported products not produced domestically (eg. tax on supply) may not differ from the method of taxation applied to domestic products (eg. tax on use of products) within the same category (eg. products which make use of the Hertzian radio spectrum) (Case 109/88: CRT France International, 80 – 1999)

Unit IX: Non-Tariff Barriers
·         Relevant Treaty Provisions
        Article 28
§  quantitative restrictions on imports and all measures having an equivalent effect shall be prohibited between Member States
        Article 29 (ex 34)
§  quantitative restrictions on exports and all measures having an equivalent effect shall be prohibited between Member States
        Article 30 (ex 36)
§  Articles 28 and 29 shall not preclude prohibitions on restrictions on imports, exports or goods in transit on grounds of:
*        public morality, public policy or public security
*        protection of the health of humans, animals or plants
*        protection of national treasures
*        protection of industrial and commercial property
§  provided that such restrictions do not constitute a means of arbitrary discrimination or a disguised restriction on trade
·         Restrictions on Imports
        all trading rules enacted by MS which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are to be considered as measures having an effect equivalent to quantitative restrictions (Case 8/74: Dassonville, 5 – 1974)
§  the rule in question need not exclude an import, not even burden imports more than domestic products
        unilateral measures
§  rule of reason / doctrine of mandatory requirements (Case 120/78: Cassis de Dijon, 7 – 1979)
*        MS may unilaterally regulate the production and marketing:
          (1) in the absence of harmonization measures; and,
          (2) to the extent “necessary in order to satisfy mandatory requirements”
·         (a) mandatory requirements = compelling interest
        effectiveness of fiscal supervision
        protection of public health
        fairness of commercial transactions
        defense of the consumer
·         (b) necessary = narrowly tailored / least restrictive measure (proportionality)
*        the rule of reason operates as a part of the doctrine of justification, but it ought to be seen as an interpretation of ‘justified’ rather than as an expansion (by judicial fiat) of the list of acceptable justifications in Article 30
§  functional parallelism (Cassis de Dijon, at ¶ 14)
*        a product lawfully produced and marketed in another MS, which satisfies the lawful regulatory regime of another MS, must be allowed to be marketed if the regulatory regime of the other MS is functionally equivalent to that of the MS into which product is being imported
          NOTE 1: a regulation must be judged in relation to its ultimate purpose (eg. safety, etc.); can’t simply say that a regulation doesn’t insulate as well, have to say that the level of insulation required is necessary to protect consumer
          NOTE 2: this (n.1) only works where an objective standard is possible; this would not be the case, for example, in regards to emissions
*        ECJ misspoke when it claimed that any product “lawfully produced and marketed in one Member State” ought to be allowed into any other Member State
*        “It is … contrary to the principle of proportionality for national rules to require … imported products to comply strictly and exactly with the provisions or technical requirements laid down for products manufactured [domestically] when those imported products afford users the same level of protection.” (Case188/84: Woodworking, 13 – 1986)
        the law of justification
§  NOTE: treat the rule of reason and Article 30 basically in the same way – that is, read Article 30 to include the “least restrictive measure” requirement (but don’t say “necessary”)
§  non-arbitrary discrimination (rabies in the UK)
*        UK and Ireland require all animals entering their territory to remain in quarantine for long enough to prove that they do not have rabies
*        while this only applies to imported products (ie. discriminates), and thus insulates the pet market in both countries from competition, it is not arbitrary because there is no rabies in either UK or Ireland and there is a strong public interest in keeping it that way
§  disguised restrictions on trade
*        laws which burden (hinder) trade, but do so equally for domestic and imported products, are subject to rationality review (basically as described in the rule of reason)
*        laws which are neutral on their face, but have disparate impact (ie. are more burdensome to imports than to domestic products) are immediately more suspect
          disparate impact is not illegal per se
          however, it acts as a trigger for heightened judicial scrutiny of the regulation
*        although in theory all policy headings deserve the same consideration, in the practice the ECJ has created a continuum
          the ECJ gives the MS wide latitude in crafting regulations justified by public morality (despite having disparate impact) – low scrutiny
·         “if a prohibition on the importation of goods is justifiable on grounds of public morality and if it is imposed with that purpose the enforcement of that prohibition cannot, in the absence within the Member States concerned of a lawful trade in the same goods, constitute a means of arbitrary discrimination or a disguised restriction on trade” (Case 34/79: Henn and Darby, 18 – 1979)
          health = medium scrutiny
          fairness of commercial transaction = strict scrutiny
·         in most cases the ECJ will find that a labeling requirement would be ‘equally’ effective (see, eg., Cassis de Dijon)
·         rules denying consumers access to certain information (eg. prohibiting advertising from stating the length of a sale or referring to previous prices) cannot be justified by the MS’s compelling interest in consumer protection (Case 362/88: Inno, 47 – 1990)
*        in each case, the ECJ is in effect asking itself whether it agrees with the MS assessment of acceptable risk
          while the ECJ does not accept MS determination that no risk is acceptable in the case of fairness to the consumer, it is willing to give MS more latitude to determine acceptable health risks, and is almost completely unwilling to dictate appropriate acceptable risk assessments in cases of public morality
*        functional parallelism
          in cases where regulations are not functionally parallel (eg. red v. blue grounding wire example), it is impossible to argue that a regulation
          moreover, it is the π burden to prove that a regulation in the MS of origin is functionally parallel to the regulation in the importing MS (and thus the importing MS’s regulation is unnecessary)
        method of sale
§  in the first Sunday trading case, defended by the UK as a necessary measure to maintain Sunday as the traditional day of rest, the ECJ found that a regulation prohibiting retail shops from opening on Sunday was caught by Dassonville (hinder trade by reducing the total amount of products sold – ie. reduced consumption), but held that the regulation was nonetheless justified under Article 30 (Case 145/88: Torfaen Borough, 31 – 1989)
*        because the regulation was not justified by any of the policy headings mentioned in Article 30, the ECJ had to create a new exception: way-of-life justification (regulations which seek to ensure that market conditions are in accordance with national or regional socio-cultural characteristics)
*        however, the AG argued that justification should not be required in such cases; that is, the ECJ should have held that rules regulating method of sale should not be caught by Dassonville
§  “the application to products from other Member States of national provisions restricting or prohibiting certain selling arrangements is not such as to hinder … trade between Member States within the meaning of the Dassonville judgment, so long as” those provisions are non-discriminatory (apply to all relevant traders and affect domestic and imported products in the same manner) (Cases 267-68/91: Keck, 51 – 1993, at ¶ 16)
*        rule may not be by nature such as (¶ 17):
          to prevent [imported products’] access to the market; or,
          impede access [of imported products] any more than it impedes the access of domestic products
*        theoretical justification (Weiler’s constitutional argument)
          Article 28 is a vehicle for harmonization: the purpose of harmonization is to remove justified obstacles to trade
          way-of-life regulations should not be subject to harmonization
          thus, MS ought not be required to justify such measures; in other words, such a rule should not be held to be a measure having an effect equivalent to a quantitative restriction
          this preserves the proper scope of MS regulatory power
*        drawing the line between regulatory autonomy and trade law
          it is to the benefit of both producers and consumers that products produced and marketed in one country be allowed into the market of another (and vice versa)
·         almost as a duty of comity, a complete exclusion ought to be explained and justified; too drastic from a comity / relational / public policy view
·         moreover, with exclusionary rules we want to give the Community the possibility of harmonization legislation b/c we want to allow the MS to adopt rules which make the
·         in these circumstances MS is forcing others to internalize the costs of its regulation, by increasing production costs (forcing producers to alter products to gain access to their markets)
          on the other hand, as long as a MS allows a product into its marketplace, other MS have no call to determine how that marketplace is regulated (provided that there is no discrimination)
·         each country should be allowed to run its civil law, its criminal law, and its market regulation; and, most importantly, no country ought to be forced to justify its rules in these realms
·         such rules do not place additional requirements on the manufacturer / don’t make Euro production less efficient
          thus, way-of-life rules which hinder but do not exclude should not be held to be measures having effect equivalent
§  measures caught by Keck (rather than Dassonville)
*        rule prohibiting resale at a loss (Keck)
*        rule of professional conduct prohibiting pharmacists from advertising quasi-pharmaceutical products outside of the pharmacy (Case 292/92: Hunermund, 54 – 1993)
*        rule limiting the products that can be sold at gas stations outside of lawful opening hours and limiting the manner of sale (eg. tobacco products can only be sold by vending machines) (Case 401 & 402/92: Tankstation’t Heukske, 63 – 1994)
*        rule prohibiting the distribution sector from advertising on television (Case 412/93: Leclerc, 69 – 1995)
          as AG Jacobs points out, rules relating to advertising are more difficult than might first be imagined (see AG’s Opinion, 64)
          prohibiting advertising (or even certain forms of advertising) may effectively deny full market access to new products
          but note that the new products affected may be domestic as well as imported, and, moreover, the established products (which benefit from keeping the new products out) may be imported
          in short, this isn’t a simple case of discrimination
*        rule limiting the sale of infant formula (processed milk) to pharmacists’ shops (Case 391/92: Commission v. Greece – Infant Milk, 74 – 1995)
          Greece produces no infant formula (and, thus, the rule applies only to imported products)
          ECJ stated that “only if it was apparent that the legislation … protected domestic products which were similar to [the regulated product] … or which were in competition with [it]” would the fact that a MS did not produce the regulated product bring the regulation within Dassonville
*        rule requiring shops to close on Sundays and public holidays, but not prohibiting Sunday working (Cases 69 and 258/93: Punto Casa, 77 – 1994)
*        statute requiring energy providers to purchase electricity produced within their area of supply from renewable resources (at above-market prices) (Case 379/98: PreussenElektra, 116 – 2001)
          promoting the use of renewable energy resources is a purpose compatible with the Treaties
          given that it is still not possible to determine the source of energy once it has entered the transmission or distribution system, MS’s are unable to confer a similar benefit on imported electricity
          thus, the legislation in question is not a measure having effect equivalent to a quantitative restriction on imports
§  measures which are still caught by Dassonville
*        rule prohibiting the sale of ice-cream bars with the promotional marking ‘+10% ice-cream’ on their wrappers (Case 470/93: Mars, 90 – 1995)
          rule “may compel the importer to adjust the presentation of his products according to the place where they are to be marketed and consequently to incur additional packaging and advertising costs” (¶ 13)
*        rule prohibiting the sale of publications offering readers the chance to take part in games for prizes (Case 368/95: Familiapress, 91 – 1997)
          the legislation in question “bears on the actual content of the products” and, thus, constitutes a measure having effect equivalent to a quantitative restriction on imports (¶ 11)
          moreover, the MS could have adopted a less restrictive measure, eg. requiring pages containing prize competitions to be blacked out or removed or requiring a disclaimer that readers in the MS do not qualify for a chance to win the prize
*        requirement that beneficiaries of a social insurance fund obtain the prior authorization of the fund in order to be reimbursed (at a flat rate) for medical products (eg. prescription glasses) purchased in another MS is a barrier to the free movement of goods since it encourages insured persons to purchase products in the State in question, nor can such rules be justified by the need to control health expenditures (Case 120/95: Decker, 121 – 1998)
§  non-discrimination (the post-Keck battlefield)
*        rule requiring shops to close on Sundays and public holidays is non-discriminatory even though it has a disparate impact on imported goods because, with the rule in place, consumers will purchase more necessary goods from small shops located in the city center (which, in the case of Rome, tend to stock primarily domestic products) than from large retailers on the periphery (which sell more imported products) (Cases 418 etc. /93 & 9 etc. /94: Semeraro, 80 – 1996)
          any additional burden on imported products is entirely contingent
·         one might expect that over time shops in the city center will begin to stock more imported moreover
·         moreover, even if they do not, the reason may be that domestic products are of higher quality (think Italian shoes, clothes, etc.)
*        a Community Directive requires that all broadcasts emanating from the Community and intended for reception within the Community (particularly within another MS) must comply with the regulations of the state of origin, and, moreover, lays down a number of principles regarding the protection of minors, a MS may not require that broadcasts emanating from another MS (Case 34-36/95: De Agostini, 111 – 1997)
          receiving State may not apply legislation specifically designed to control the content of television advertising with regard to minor to broadcasts emanating from another MS (¶ 60)
          however, “an outright ban on advertising aimed at children … is not covered by Article 28 …, unless it is shown that the ban does not affect in the same way, in fact and in law, the marketing of national products and of products from other Member States.” (¶ 44)
*        “in the case of products like alcoholic beverages, the consumption of which is linked to traditional social practices and to local habits and customs, a prohibition on all advertisements in the press, on the radio and on television, the direct mailing of unsolicited materials or the placing of posters on the public highway is liable to impede access to the market by products from other Member States more than it impedes domestic products, with which consumers are instantly more familiar” (Case 405/98: Gourmet International, 127 – 2001)
          however, [in the case of alcoholic beverages] such measures may be justified by the protection of public health (¶ 26)
          there is, moreover, no evidence that the rule in question discriminates against imported products
          it is for the national court to determine whether the objective might be achieved by use of less restrictive measures
§  failure to take all necessary and proportionate measures in order to prevent the free movement of goods from being obstructed through criminal activity
*        MS must adopt and enforce measures necessary to remove obstacles to the free movement of goods not caused by the State (Case 265/95: Commission v. France – Fresh Strawberries, 96 – 1997)
          given that incidents of vandalism had been ongoing for over ten years, that they took place primarily in certain places and during certain times of year, that the group responsible is known to the police and yet only a small number have been arrested and prosecuted, France is in breach of its obligations under Article 28
          “unless it can show that action on its part would have consequences for public order with which it could not cope by using the means at its disposal,” the MS must “adopt all appropriate measures to guarantee the full scope and effect of Community law so as to ensure its proper implementation” (¶ 56)
*        the principle of the free movement of goods does not require a MS to ensure free access to major truck routes when they are countervailing fundamental rights interests at stake and when the disruption is temporary and transporters have been altered and informed of alternate routes (Case112/00: Schmidberger, 104 – 2003)
          permitting upon request a demonstration by environmental groups exercising fundamental rights of freedom of expression and assembly to shut down a major motorway for 30 hours on a single occasion when sufficient notice had been given
          this “isolated incident … did not give rise to a general climate of insecurity such as to have a dissuasive effect on intra-Community trade flows as a whole” (¶ 88)
·         Restrictions on Exports
        rule prohibiting sausage manufactures from having in stock or processing horsemeat does not have effect equivalent to a quantitative restriction on exports (Case 15/79: Horsemeat, 133 – 1979)
§  “national measures which have as their specific object or effect the restriction of patterns of exports and thereby the establishment of a difference in treatment between the domestic trade of a Member State and its export trade in such a way as to provide a particular advantage for national production or for the domestic market” are prohibited (¶ 7)
§  “This is not so in the case of a prohibition … which is applied objectively to the production of goods of a certain kind without drawing a distinction depending on whether such goods are intended for the national market or for export.” (¶ 7)
        rule prohibiting work in bakeries between 10 pm and 4 am, and prohibiting the transportation of bakers’ wares for delivery to consumers or retail outlets between 10 pm and 5:45 am does not have effect equivalent to a quantitative restriction on exports (Case 155/80: Oebel, 135 – 1981)
§  case would be different if the rule prohibited transportation to warehouses or intermediaries (¶ 20)
        refusal to issue export licenses to another MS cannot be justified on the grounds that the other MS is not properly implementing a Community Directive on the slaughtering of animals (Case 5/94: Hedley Lomas, 138 – 1996)
§  “recourse to Article [30] is no longer possible where Community directives provide for harmonization” (¶ 18)
§  MS cannot unilaterally adopt measures designed to obviate a breach of Community law by another MS (¶ 20); they must rely on mutual trust to carry out checks on their respective territories (¶ 19)
        the fact that a harmonization measure allows derogations for the adoption of stricter protection of animals within the territory of a MS than those laid down in the directive does not mean that the MS may refuse to export animals to MS who have only adopted the minimum requirements of the harmonization measure (Case 1/96: ex parte Compassion in World Farming, 141 – 1998)
        rule requiring transporters of animals to bring them to the nearest suitable abattoir for slaughter upon embarking on transportation or entering the MS is a measure having effect equivalent to a quantitative restriction on both imports and exports (Case 350/97: Wilfried Monsees, 145 – 1999)
§  because the measure effectively makes international transit by road of animals bound for slaughter impossible within Austria, and, moreover, since less restrictive measures could achieved the MS’s interest in protecting the health of animals, the rule cannot be justified under Article 36
        rule prohibiting the use of a designation of origin for wines transported in bulk and bottled outside of the region of origin is a measure having effect equivalent to a quantitative restriction on exports (Case 388/95: Belgium v. Spain, 148 – 2000)
§  however, the rule is justified by Spain’s interest in preserving the high reputation of quality wines bearing the particular designation of origin
§  the requirement that bottling take place within the particular region aims to strengthen control over the particular characteristics and quality of the product since bottlers in the region have specialized experience and thorough knowledge of the specific characteristics of the wine in question

Unit XII: Intellectual Property
·         Articles on Competition
        Article 81 (ex 85)
§  prohibits as incompatible with the common market
*        all agreements between undertakings;
*        decisions by associations of undertakings; or,
*        concerted practices,
§  which have as their object or effect the prevention, restriction or distortion of competition; in particular:
*        fix selling prices or other trading conditions
*        limit or control production, markets, technical developments, or investment
*        share markets or sources of supply
*        apply dissimilar conditions to equivalent transactions with other trading parties (putting those parties at a competitive disadvantage)
*        make conclusion of contracts subject to supplemental agreements that have no connection with the subject of the contracts
§  these provisions may be declared inapplicable in the case of
*        concerted practice which contributes to … promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:
          impose … restrictions which are not indispensable to the attainment of these objectives
          afford … the possibility of eliminating competition
        Article 82 (ex 86)
§  abuse of dominant market position is prohibited insofar as it may affect trade between Member States
§  abuse may include in particular:
*        imposing unfair purchase or selling prices or other unfair trading conditions
*        limiting production, markets, technical developments to the prejudice of the consumer
*        applying dissimilar conditions to equivalent transactions with other trading parties (putting those parties at a competitive disadvantage)
*        making conclusion of contracts subject to supplemental agreements that have no connection with the subject of the contracts
·         Patents
        purpose: to reward the creativity of the inventor, thereby stimulating scientific progress
        existence v. exercise (Case 24/67: Parke, 20 – 1968, at ¶ 11)
§  the existence of patent rights is a matter of national law, which is protected by Article 30 (exceptions to measures having effect equivalent to a quantitative restriction on imports) and Article 295 (treaty doesn’t prejudice MS rules governing property)
§  however, the exercise of patent rights is limited by Articles 28, 81, and 82
*        charging higher price for product than is charged for similar product in MS that does not offer patent protection for such products is not necessarily an abuse of a dominant position
        justification under Article 30 (Case 15/74: Centrafarm v. Sterling, 24 – 1974)
§  specific subject matter of a patent is the guarantee that the patentee (to reward creativity) has the exclusive right to use an invention with a view to:
*        manufacturing industrial products
*        putting them into circulation for the first time
          directly; or,
          by grant of license to third party
*        opposing infringements
§  exhaustion of rights: once the patentee has introduced the product (herself or with her consent) into the market of one MS, the patentee may not oppose the importation of the product into another MS where she holds a patent
*        this holds even where the exporting MS does not provide patent protection for the product in question (Case 187/80: Merck I, 31 – 1981)
*        the right of first placing a product on the market enables the patentee to obtain a reward, without guaranteeing that reward (¶ 10)
*        it is up to the patentee to decide, in light of all the circumstances, under what conditions she will place the product on the market; once placed, however, she loses the right to object to trade between MS in which she has placed the product
*        an exception arises where the patentee proves that there is a genuine, existing, legal obligation to continue marketing the product in a MS that does not afford patent protection to the product in question (Cases 267-268/95: Merck  II, 34 – 1996)
          in such cases, the patentee cannot be deemed to have consented to the marketing of the product
*        exception 2: patentee may object to importation of a product from a MS in which the product is manufactured by a third party under a compulsory license (ie. without the consent of the patentee) (Case 19/84: Pharmon, 41 – 1985)
        limitations to MS right to afford patent protection
§  granting patent to a “re-invented” product (ie. making available of a product that had been previously patented but had never been placed on the market) does not constitute a means of arbitrary discrimination nor does it give rise to a disguised restriction on trade (Case35/87: Thetford, 49 – 1988)
§  MS may not use compulsory licensing to promote the domestic production of a product which is made available to the market by the patentee through importation from another MS (Case30/90: Commission v. UK – Compulsory Licenses, 53 – 1992)
·         Trademarks
        purpose: to reward the manufacturer who consistently produces high-quality goods, thereby stimulating economic progress
        distinguishing function: act as a guarantee [economic, not legal] to the consumer that all goods bearing a particular mark have been produced by, or under the control of, the manufacturer and, thus, are likely to be of similar quality
§  the purpose of trademarks is consumer protection (Hoffman-La Roche)
§  prior to Hoffman-La Roche, the distinguishing function of a trademark was described as the owner’s interest in maintaining the goodwill of consumers
        justification of trademark protections under Article 30 (Case 16/74: Centrafarm v. Winthrop, 87 – 1974)
§  specific subject matter: “the guarantee that the owner of the trade mark has the exclusive right to use that trade mark, for the purpose of putting products protected by the trade mark into circulation for the first time” (¶ 8)
*        this is “intended to protect him against competitors wishing to take advantage of the status and reputation of the trade mark” (¶ 8)
§  exhaustion of rights: “an obstacle [to the free movement of goods] is not justified when the product has been put onto the market in a legal manner in the Member State from which it has been imported, by the trade mark owner himself or with his consent” (¶ 10)
*        consent only applies where the trademark proprietor is either the same in the importing and exporting state or the proprietors are economically linked (part of the same undertaking, licensee, parent company, subsidiary of the same group, or exclusive distributor) (Case 9/93: IHT v. Ideal-Standard, 79 – 1994)
*        national rules may not provide for the exhaustion of rights in respect of products placed on the market in non-member states with the consent of the trademark proprietor (Case 355/96: Silhouette, 111 – 1998)
        disguised restriction to trade – repackaging
§  essential function of a trademark: “to guarantee the identity of the origin of the trade-marked product to the consumer or ultimate user, by enabling him without any possibility of confusion to distinguish that product from products which have another origin” (Case102/77: Hoffman-La Roche, 92 – 1978)
*        thus “the consumer of ultimate user can be certain that a trade-marked product … has not been  subject at a previous stage of marketing to interference by a third person, without the authorization of the proprietor, such as to affect the original condition of the product” (¶ 7)
§  conditions which must be met in order for enforcement of trademark rights against repackaged products to qualify as a disguised restriction on trade (Hoffman-La Roche, at ¶ 14):
*        enforcement of the trademark by the proprietor, having regard to the marketing system she has adopted, will contribute the artificial partitioning of the common market
*        repackaging cannot adversely affect the original condition of the product; eg.,
          trademarked product is marketed in double packaging and the repackaging affects only the exterior packaging (Hoffman-La Roche, at ¶ 10; Case 1/81: Pfizer, 97 – 1981, at ¶¶ 10-11)
*        the proprietor of the trademark receives prior notice of the marketing of repackaged products (Hoffman-La Roche, at ¶ 12)
*        new packaging states by whom the product has been repackaged (Hoffman-La Roche, at ¶ 12)
§  re-labeling
*        removal of an identification numbers applied for purposes which are legitimate under Community law (eg. identifying the lot to which a foodstuff belongs), but is also used by the proprietor of the trademark to combat parallel trade, the parallel trader should seek protection under the competition articles (Case349/95: Ballantine & Sons, 102 – 1997, ¶ 41-43)
*        if re-labeling is necessary to comply with the labeling requirements in the Member State of destination (Ballantine & Sons, at ¶ 45-46)
          the original label may be removed and a new label applied if the original label would prevent the product from being marketed in the destination State
          if additional information is required, this may be accomplished by applying a sticker with the additional information while leaving the original label is place

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