The seal products cases (I): The notion of ‘regulatory act’ according to AG Kokott

One of the hottest topics in international trade law currently is the seals dispute between the EU and a number of arctic countries, notably Canada and Norway. The dispute has not only given rise to proceedings before the WTO (providing more wood for the ongoing fiery debate on the legality of PPM-measures), but has also found its way to Luxembourg in the form of a number of direct actions for annulment of EU regulations banning trade in seal products.

Today’s Opinion of Advocate General Kokott (Opinion in Case C-583/11P Inuit Tapiriit Kanatami and Others v Parliament and Council) concerns one of those cases. It also concerns one of the most contentious issues in EU law: the locus standi of individuals for a direct action for annulment of EU legal acts (see my previous post on the judgment of the General Court). As is well known, the CJEU has taken a very restrictive stance on the locus standi of non-privileged applicants (that is: individual parties, rather than privileged applicants such as Member States and the EU institutions, as mentioned in the second and third paragraph of article 263 TFEU). The criteria for direct and individual concern are so strict that it is very difficult for individuals to directly challenge EU legal acts. In particular, the requirement for individual concern, also known as the ‘Plaumann formula’ (see the bottom of page 107 in Case 25/62 Plaumann v. Commission), is especially hard for individuals to meet.

This has lead the drafters of the Treaties to change the wording of article 263 TFEU which now no longer requires individual applicants to be individually concerned when challenging ‘regulatory acts’. As a consequence, legal scholars and practitioners are eagerly awaiting the interpretation of this term. In this Opinion the Advocate General endorses the approach taken by the General Court on the notion of ‘regulatory act’ introduced by the Treaty of Lisbon. The Advocate General considers that regulatory acts are all acts of general application apart from legislative acts. In my opinion, this is a somewhat cautious, but understandable position.

Locus standi for individuals: why does it matter?

The question of who has standing before the CJEU for the review of legality of EU legal acts is of fundamental constitutional importance. It determines whether individuals can challenge acts of EU institutions directly, rather than indirectly via national courts. The scope of the locus standi of individuals thus has consequences for the effective judicial protection of individuals, on the one hand, and for the relationship between national courts and the CJEU, on the other. The judicial protection of individuals is greatly enhanced by adopting an expansive view of locus standi. There is, however, a perceived risk that it might open the doors of the Court to “special interests” seeking to annul acts adopted by EU institutions that benefit from a certain democratic legitimacy. An expansive view of locus standi would also diminish the importance of the preliminary reference procedure and thus the role of national courts as gatekeepers in pleas of illegality, because more acts would be subject to direct review by the CJEU.

The CJEU has therefore always taken a restrictive stance on the locus standi of non-privileged applicants, effectively preferring the primacy of the EU legislator over the Court, as well as maintaining the important role of national courts through the preliminary reference procedure. This choice has led to much criticism because many considered the Plaumann formula too strict and liable to compromise the effective judicial protection of individuals affected by EU legal acts. These arguments amount to questioning the democratic legitimacy of the EU institutions themselves and arguing therefore that deference to the legislator is not a valid reason for restricting locus standi of individuals. Also, arguments have been forwarded that the very strict test employed leads to arbitrary results because judicial protection against EU legal acts depends on which country an individual can obtain standing in order to get a question referred to the CJEU in the framework of domestic proceedings (see for instance Michael Dougan, ‘The Treaty of Lisbon 2007: Winning minds, not hearts’, Common Market Law Review 45 (2008), pp. 617-703 (677 et seq.).

In part as a response to this criticism, the Member States revised the old article on judicial review by adding a sentence to the paragraph on the locus standi of non-privileged applicants. The new treaty article 263 TFEU reads:

The Court of Justice of the European Union shall review the legality of legislative acts, of acts of the Council, of the Commission and of the European Central Bank, other than recommendations and opinions, and of acts of the European Parliament and of the European Council intended to produce legal effects vis-à-vis third parties. It shall also review the legality of acts of bodies, offices or agencies of the Union intended to produce legal effects vis-à-vis third parties.

(…)

Any natural or legal person may, under the conditions laid down in the first and second paragraphs, institute proceedings against an act addressed to that person or which is of direct and individual concern to them, and against a regulatory act which is of direct concern to them and does not entail implementing measures.

Thus the new article adds that any natural or legal person can also challenge ‘a regulatory act which is of direct concern to them and does not entail implementing measures.’ If, therefore, an act is to be considered a regulatory act, an applicant no longer needs to demonstrate that he or she is individually concerned under the very restrictive Plaumann formula. The notion of ‘regulatory act’ (the term itself originally stems from the Draft Constitutional Treaty) is thus of fundamental importance, because the broader this term is interpreted, the more acts can be challenged by individuals directly without having to demonstrate the very high threshold of individual concern.

The position of the General Court and the Advocate General

The General Court in case T-18/10 Inuit Tapiriit Kanatami and Others v Parliament and Council held that

the meaning of ‘regulatory act’ for the purposes of the fourth paragraph of Article 263 TFEU must be understood as covering all acts of general application apart from legislative acts. Consequently, a legislative act may form the subject-matter of an action for annulment brought by a natural or legal person only if it is of direct and individual concern to them. (para. 56)

For the General Court, ‘legislative acts’ can thus only be challenged if a non-privileged applicant can demonstrate direct and individual concern (see also the Microban judgment of the General Court and related commentary). The General Court effectively pays lip service to the introduction of a formal hierarchy of norms within the EU (see art. 289 TFEU). Acts which are adopted by European Parliament with the participation of the Council, or by the latter with the participation of the European Parliament are thus more insulated from direct judicial review because the non-privileged applicant needs to demonstrate individual concern in addition to direct concern.

The Advocate General in the appeal fully endorses the view of the General Court. Her argumentation follows that of the General Court and is quite instructive. While she notes that the ‘purpose of the revision of the former fourth paragraph of Article 230 EC by the present fourth paragraph of Article 263 TFEU was undoubtedly to strengthen individual legal protection by extending the legal remedies available to natural and legal persons against European Union acts of general application’ (para. 33), she nevertheless continues by making three arguments which underline the General Court’s interpretation of what regulatory acts entail.

Firstly, she refers to the relationship between national courts and the CJEU and the amendment in the Treaty of Lisbon that was also made to article 19 (1) TEU. She notes that

the authors of the Treaty of Lisbon achieved the aim of strengthening individual legal protection not only by extending the direct legal remedies available to natural and legal persons under the third variant of the fourth paragraph of Article 263 TFEU, but also, with the second subparagraph of Article 19(1) TEU, intended to strengthen individual legal protection in the fields covered by Union law before national courts. (para. 34)

She concludes therefore that ‘the legal remedies available to individuals against European Union acts of general application do not necessarily always have to consist in a direct remedy before the European Union Courts.’ (para. 35).

Secondly, she underlines the democratic legitimacy of legislative acts, which require a certain degree of deference by the Court:

The absence of easier direct legal remedies available to individuals against legislative acts can be explained principally by the particularly high democratic legitimation of parliamentary legislation. Accordingly, the distinction between legislative and non-legislative acts in respect of legal protection cannot be dismissed as merely formalistic; rather, it is attributable to a qualitative difference. In many national legal systems individuals have no direct legal remedies, or only limited remedies, against parliamentary laws. (para. 38)

Thirdly, the Advocate General argues that the interpretation given by the General Court is in line with the drafting history of the Treaty of Lisbon. Here, the Advocate General explicitly refers to the drafting history of the Constitutional Treaty. That treaty

was based on a clear distinction between and hierarchy of legislative acts and non-legislative acts, where the ‘European regulation’, as a ‘non-legislative act of general application’, fell solely into the latter category (first sentence of the fourth subparagraph of Article I-33(1) of the Constitutional Treaty). Consequently, where Article III-365(4) of the Constitutional Treaty mentioned a possibility for natural and legal persons to institute proceedings against a ‘regulatory act’, this clearly applied only to non-legislative acts. This is also confirmed by the preparatory documents of the European Convention on Article III‑270(4) of the Draft Treaty establishing a Constitution for Europe, (23) the provision which subsequently reappeared in the Constitutional Treaty as Article III-365(4); according to those documents, the wording ‘acts of general application’ was debated in the Convention, but ultimately rejected and replaced by the more restrictive expression ‘regulatory act’, which was intended to express the distinction between legislative and non-legislative acts. (24) (para. 40)

For the Advocate General, the fact that the Treaty of Lisbon did not incorporate the same language with regard to the systemisation and hierarchisation of EU acts as the Constitutional Treaty is of no consequence (the Treaty of Lisbon returned to the old language of directives and regulations). A broader interpretation of

the expression ‘regulatory act’ is difficult to reconcile with the mandate of the 2007 Intergovernmental Conference which negotiated the Treaty of Lisbon. The task of that Intergovernmental Conference was to abandon the constitutional concept underlying the Constitutional Treaty, (27) but otherwise not to call into question what had been achieved with the signing of the Constitutional Treaty. (28) The ‘end product’ of the Intergovernmental Conference was therefore to be as similar as possible in substance to the failed Constitutional Treaty and to stop short of it only in a few particularly symbolic aspects. (para. 44)

This last comment by the Advocate General will undoubtedly be quoted frequently in the future. Critics of the Lisbon Treaty will argue that a learned EU law scholar and authority confirmed what they already thought was the case: the Constitution, which was rejected by the populations of two founding members of the EU, nevertheless entered into force with only a few cosmetic changes.

Nonetheless, the position taken by the Advocate General and the General Court is cautious, but seems to be line with the intentions of the Treaty drafters as well as the overall Treaty structure. Non-privileged applicants who seek to challenge a legislative act might still find themselves without effective legal redress if they lack standing before national courts (see however, paras. 105-124 of the Advocate General’s Opinion on this matter). One may also wonder whether the deference to legislative acts is excessively formal, as certain special legislative procedures are not in the same ballpark as parliamentary acts of Member States in terms of democratic legitimacy. Even so, the Treaty modification and its interpretation by the Advocate General and the General Court is a step in the right direction. Individual applicants no longer need to meet the arbitrary and harsh test of individual concern when they seek to challenge an act of general application that is a non-legislative act (and there are many of such acts, including the regulation that implements the contested legislative act in this case itself!).

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