Category: Direct effect and primacy

Implementation of Union law by Member States: when does the Charter of Fundamental Rights apply?

The scope of EU fundamental rights protection and the influence of the Charter of Fundamental Rights on this scope is a much discussed topic among EU  constitutional lawyers. As is well-known, the recognition of fundamental rights as part of the general principles of EU law by the Court is not new. Already in the cases of Stauder and Internationale Handelsgesellschaft, handed down in 1969 and 1974 respectively, the Court recognized fundamental rights as part of the general principles of EU law. It did so to anticipate challenges to the primacy of EU law by national constitutional courts and the Court therefore took great care in stressing the autonomous nature of EU fundamental rights protection. This means that the Court has maintained authority in determining the content of EU fundamental rights protection and thus remained the ultimate interpreter of EU law. However, before the coming into force of the Treaty of Lisbon, there was no EU catalogue of rights formally binding on the EU as such. Rather, the Court drew inspiration from international treaties and national constitutions, whilst at the same time maintaining the autonomy of the EU rights standard. With the coming into force of the Lisbon Treaty the Charter of Fundamental Rights has also become formally binding on the EU. This means there now is a binding catalogue of rights at the EU level.

 A contentious issue is whether the Charter of Fundamental Rights alters the scope of the EU fundamental rights standard laid down in previous case-law of the Court. In its case law, the Court has held that fundamental rights recognized as general principles of EU law apply not only to the acts of the EU institutions but also to the acts of Member States in certain circumstances. Generally, Member States have to act in accordance with fundamental rights recognized at the EU level ‘whenever they act within the scope of EU law’. In the case-law of the Court this includes at least two situations. First, Member States are bound by the EU rights standard where the implement and enforce EU law. Second, the Member States are also bound by the EU rights standard where they derogate from EU law provisions (see cases such as Schmidberger, and ERT). However, when precisely a Member State acts within the ‘scope of EU law’ is not entirely clear. The dividing line between situations within the scope and those outside the scope of EU law often appears arbitrary, as was pointed by AG Sharpston in the case of Zambrano.

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Case C-571/10 Kamberaj: the Charter and not the ECHR has effect in Member States’ legal orders

In a grand chamber judgment on Tuesday (case C-571/10 Kamberaj), the Court dealt with some fun and intriguing aspects of EU law, which relate to the relationship between the ECHR, EU law and national law on social security matters.

Mr Kamberaj, an Albanian national with a residence permit for an indefinite period in Italy, was denied certain housing benefits because the funds for those benefits were exhausted. Mr Kambery was of the opinion that this resulted in discriminatory treatment between him, a third country national, and Union citizens since the funding of those housing benefits was split in two categories namely Union citizens and third country nationals and only the funds for the latter category were exhausted.

There are two interesting aspects of EU law in this case:

  • Firstly, the relationship between the EU legal order and the national legal order with respect to the ECHR;
  • and secondly, the interpretation of Directive 2003/109/EC on the status of third country nationals and its implications for national social security systems.

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VAT Litigation in Italy: Union Loyalty vs. fundamental rights

Member States are obliged to take all necessary measures to ensure fulfillment of their obligations under EU law according to article 4(3) TEU. This includes taking all legislative and administrative measures appropriate for ensuring collection of VAT in conformity with the obligations imposed on Member States by the EU VAT Directive (Directive 2006/112/EC) and its predecessors (amongst which the Sixth Directive, 1977/388/EEC). One may ask whether national legislation, by which a national court is effectively prohibited to judge in certain long-lasting VAT disputes in favour of the tax authorities, complies with the Member State’s obligation to collect VAT. In the case Belvedere Construzioni Srl (Case C-500/10) this was under discussion vis-à-vis the principle of resolving judicial proceedings in tax matters within reasonable time under Article 6(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms. Somewhat hidden is furthermore the problem whether tax authorities can directly invoke an EU directive to set aside national law to the disadvantage of a taxpayer.

What is the case? Well, Italy has introduced a decree by which (in essence) courts have to conclude tax disputes automatically if the first actions in the dispute have been lodged more than ten years before the date of entry into force of the decree (at the 26th of May 2010) and if two courts have already decided in favour of the tax payer. By introducing the decree, Italy aimed to comply with the obligation to resolve judicial proceedings in tax matters within reasonable time under Article 6(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms. According to the decree, the referring court in the case at hand has to conclude the VAT dispute between Belvedere Construzioni Srl and the Italian tax authorities automatically in favour of Belvedere Construzioni Srl. However, the referring court calls into question the conformity of the decree with EU-law.

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Horizontal direct effect of article 34 TFEU?

In her recent Opinion in case C-171/11 Fra.bo SpA v. Deutsche Vereinigung des Gas- und Wasserfaches eV (DVGW), Advocate General Trstenjak has broken a lance for horizontal direct effect of article 34 TFEU. Until now, the Court has always denied horizontal direct effect of the free movement of goods provisions, in contrast to the other fundamental freedoms.

In her reasoning she uses the analogy of the application of horizontal direct effect to justify the extension of the free movement of goods rules to apply to private persons. The case concerned the refusal by a German private organisation DVGW to certify the brass sockets produced by the Italian company Fra.bo. If certified by DVGW, German legislation would presume that the brass sockets were in conformity with its legislation and usable in German water supply.

Instead of interpreting the concept of public body in such a broad way as to include DVGW, the Advocate General choose to apply the Bosman,Viking and Laval cases by analogy, arguing that “rules of any other nature aimed at regulating in a collective manner gainful employment, self-employment and the provision of services” should also be extended to the case at hand and the free movement of goods.

This was so because DVGW had, in fact, legislative cometence:

 42.      Compte tenu de cette compétence de fait dont disposent DVGW et sa filiale à 100 % pour déterminer quels produits pour le montage, l’extension, la modification ou l’entretien d’installations d’eau potable situées après le point de raccordement du bâtiment ont des chances de se vendre sur le marché allemand et, donc, peuvent être commercialisés, leur activité de normalisation et de certification ne peut pas être exclue du champ d’application de la libre circulation des marchandises.

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Primacy and the Czech Constitutional Court

Primacy, that is the precedence EU law takes over any national laws in cases of conflict, is one of the most fundamental aspects of EU law. The primacy doctrine elaborated in Costa/ENEL by the Court has not always been fully endorsed by various constitutional courts in the Member States (the Solange judgment of the Bundesverfassungsgericht is the most well known example). However, to date national courts have always applied the doctrine, albeit with reservations.

That has ended with a recent ruling by the Czech Constitutional Court. In a case concerning an alleged discrimanatory pension scheme in the Czech republic that resulted from the dissolvation of Czechoslovakia, it held that the Court in its judgment in Case C-399/09 Landtová acted ultra vires and subsequently gave Czech national law precedence over EU law. This is a quote from the press release of the Czech Constitutional Court:

In its judgement, the Constitutional Court first expressed its view on the conclusions following from the judgement of the Court of Justice of the EU. In the introduction, the Constitutional Court summarized its previous case-law concerning the relationship between national and European law and above all emphasised the thesis (which follows also from the doctrine of the Federal Constitutional Court of Germany) under which constitutional courts maintain their role of supreme guardians of constitutionality even in the realms of the EU and even against potential excesses on the side of EU bodies. In this respect, the Constitutional Court believes that a European regulation which governs co-ordination of pension system among the member states may not be applied to an entirely specific situation of a dissolution of the Czechoslovak federation and to consequences stemming thereof. The Constitutional Court wishes to emphasise that the period of employment for an employer based in the territory of today´s Slovak Republic cannot be considered a period of employment in abroad (besides, social security had been subject to federal competence in the entire period of existence of the Czechoslovak federation). Therefore, the Constitutional Court expressed the view that matters of social security and claims following from them did not in the case of so-called Slovak pensions contain a foreign element which is a prerequisite for the application of the co-ordination regulation. This issue cannot be compared to consideration of social security claims with respect to acknowledgement of periods obtained in different states, whilst it is the issue of consequences of dissolution of the Czechoslovak federation and of division of costs on social security between the successor states.

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Case C-282/10 Dominguez

Dominguez, a worker on sick leave for over a year, was denied vacation benefits because a French statute required that a worker should work at least 10 days a year before being able to claim vacation benefits. The Working Time Directive, however, requires all employees to be entitled to 4 weeks of paid vacation.

The duty of consistent interpretation, coined in Marleasing, requires national courts of Member States to interpret national law consistently with EU law. There are of course limits to this way of remedying discrepancies between EU law and national law such as contra legem interpretation.

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