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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The burden of proof in cases of discrimination during recruitment

The Rewe/Comet doctrine establishes that in the absence Union rules on procedural law, it is the responsibility of the Member States’ legal systems to provide for remedies stemming from EU law subject to the principle of effectiveness (national procedural rules may not make it impossible to exercise EU rights) and equivalence (national procedural law may not discriminate between EU remedies and similar domestic actions). This doctrine was developed out of the duty of loyal cooperation (article 4 (3) TEU). Of course, as European integration continues, procedural law gets harmonised more and more. So what happens if there are EU rules on procedural law, but those rules have not fully been harmonised? How does the duty of loyal cooperation affect the interpretation of those rules? In C-415/10 Meister the Court held that the duty of loyal cooperation requires, not surprisingly, national courts to make sure that in applying national procedural law the achievement of the objectives of secondary EU law are not compromised.

Ms Meister, a Russian national and systems engineer, applied for a job as ‘experienced software developer’ at a company called Speech Design. She was rejected twice (the job ad was published again after Ms Meister was turned down the first time) by Speech Design without letting her know the grounds for which she was unsuccessful in her application. Ms Meister subsequently brought an action for damages because she believed that she was being discriminated against on grounds of her sex, age and ethnic origin. The question was whether EU law (Directives 2000/43 on equal treatment on the basis of ethnicity, 2000/78 on equal treatment in employment and 2006/54 on equal treatment on grounds of sex in matters of employment) required the employer to disclose information on the grounds of refusal if a candidate demonstrates she meets the requirements listed in the job ad.

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EU FTA with Colombia and Peru moving forward, but still faces challenges

The long process of negotiating a free trade agreement (FTA) with members of the Andean Community may be winding up in the next few months. On 16 March 2012, the EU’s trade ministers authorized Trade Commissioner Karel de Gucht to sign the FTA with Colombia and Peru once it has been finalized. This means that the agreement could get the go-ahead as early as September, if the European Parliament gives its consent.

However, concerns about labor rights could stall the FTA on its way through the European Parliament. The agreement does contain commitments related to the enforcement of both labor and environmental standards. However, trade unionists and other groups are calling for a “no” on the FTA in protest against labor rights violations in Colombia.

This tension echoes the debate that has been raging in the US Congress for the past several years regarding the approval of a US FTA with Colombia. Though the US-Colombia FTA was signed in November 2006, it only received the approvial of Congress in October 2011, after the conclusion of a special Labor Action Plan to ensure protection of labor rights.

The EU-Colombia/Peru FTA is the product of negotiations that began in 2007 with the Andean Community. The broader talks were suspended in 2008 due to differences within the Andean bloc, following which the EU went on to complete negotiations only with Colombia and Peru. The FTA will remain open to signature by Ecuador and Bolivia, the two remaining members of the Andean Community.

For those who would like to read further, an extensive analysis of the agreement and its costs and benefits is available here.

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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EU-Competition Law in the Overseas: some recent French precedents

Parts of the territory of some EU-Member States are situated overseas. Does EU-Competition law apply there? Some recent French precedents answer this question. According to Art. 52 TEU the EU-treaties apply to the 27 Member States mentioned therefore. EU-law applies, in principle, to the whole territory of those Member States including the overseas parts of their territory. In Art. 355 TFEU, the territorial scope of the EU-treaties is further specified. There are more or less three ‘categories’ or ‘degrees’ of territorial scope with regard to the overseas (for a more extensive and general description see Kochenov’s article).

  1. First, the Outermost Regions, where EU-law applies, with the possibility for temporary exceptions to the acquis of the EU; although the term ‘temporary’ is perhaps not the right word, since the derogations are constantly extended. The Outermost Regions consist of the French départements d’outre-mer, the Spanish Canary Islands and the Portuguese Azores and Madeira.
  2. Secondly, the Overseas Countries and Territories (OCT) , where EU-law applies, with the possibility for more permanent exceptions to the acquis of the Union. On the OCTs a special regime of EU-law is applicable: the association regime (of Part IV of the TFEU). The OCTs are listed in Annex II to the TFEU and consist of Danish Greenland, the French territoires and collectivités d’outre-mer, the Caribbean part of the Netherlands and most of 12 British Overseas Territories.
  3. And thirdly, custom made regimes for specific parts of some Member States, such as the Channel Islands and Åland Islands. In addition some custom made regimes can be found in the accessions treaties, such as Gibraltar and the Spanish territories Ceuta and Mellila, which are situated on the African continent.

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Opinion of Advocate General Jääskinen in Case C-5/11 Donner

The case I wish to highlight in this post is the Opinion of Advocate General Jääskinen in Case C-5/11 Donner, concerning a rather crafty and ingenious attempt by Mr. Donner to circumvent the application of certain German copyright laws. Mr. Donner sold various types of ‘Bauhaus’ furniture which was protected by German copyright, but not protected by Italian copyright. Although Mr Donner targeted German customers through advertisements in Germany and a website in German, he sold these products not in Germany but from a warehouse in Italy through cooperation with an Italian company called Dimensione. Those products could nonetheless be delivered optionally to German customers by the Italian company Imspem (owned by Mr. Donner).

One of the questions the Advocate General answers in this case is whether the conduct of Mr. Donner leads to ‘distribution to the public’, that is the German public, within the meaning of the Copyright Directive. Mr. Donner, of course, considers that these products were distributed to the public in Italy, not in Germany. The Copyright Directive provides in Article 4(1) that ‘Member States shall provide for authors, in respect of the original of their works or of copies thereof, the exclusive right to authorise or prohibit any form of distribution to the public by sale or otherwise’. The Advocate General considers that the products were distributed to the public in Germany:

55.      In the situation of cross border distance selling arrangements, the assessment of whether copies are made available to the public in the Member State where enforcement of copyright is sought must be based on the criteria elaborated by the Court in L’Oréal and Others. (38) If a seller targets consumers in a given Member State and creates or makes available to them a specific delivery arrangement and method of payment that enables consumers to purchase copies of copyright protected works in that Member State, then there is distribution by sale in that Member State. (39) The existence of a German language website, the content of Dimensione’s marketing material, and their sustained cooperation with Inspem, as an undertaking engaged in sales and delivery to Germany, all point toward a targeted exercise. What is important is whether the seller has created a targeted sales and delivery channel for buyers to acquire works that are copyright protected in the buyer’s Member State.

56.      In this respect the way the delivery of the copies is organised is of secondary importance. There is distribution by sale from Member State A to the targeted public in Member State B even if under the distribution scheme the copies of the works are delivered by mail or a distribution service. But the extent of the involvement of the carrier in the selling arrangement affects the question whether the carrier is to be considered as a participant in the distribution scheme or merely an intermediary referred to in Article 8(3) of the Copyright Directive, (40) whose services are used by a third party. Such an intermediary may be made subject to injunctions, but not to sanctions under Article 8(1) of the Copyright Directive and the corresponding provision in Article 11 of the Enforcement Directive.

Post Danmark: does the ECJ take the effects based approach further than a mere price/cost-test and does it oblige the national judge to apply that effects based approach ex nunc?

In a grand chamber judgment in case C‑209/10, Post Danmark, the European Court of Justice (ECJ) handed down a preliminary ruling on the interpretation of abuse of a dominant position (Art. 102 TFEU). The case was referred to the ECJ by a Danish judge in a dispute between Post Danmark and Konkurrencerådet, the Danish competition authority.

I have three remarks concerning this judgment:

  • first, it seems to me that the ECJ does not embrace the average incremental costs instead of average variable costs as the relevant economic parameter for analysing a per se abuse;
  • secondly, the ECJ requires the Danish judge to apply the as-efficient-competitor-test and seems to take it further than a mere price/cost-test to decide on the question whether the pricing practices of Post Danmark were anti-competitive in effect; he must take into account all relevant circumstances;
  • lastly, when the Danish judge takes into account all those circumstances, it seems that the ECJ prescribes an ex nunc appreciation, which might be a restriction of procedural autonomy.

In the Danish market for the distribution of unaddressed mail (direct mail of brochures, guides, newspapers, etc.) the two largest players are Post Danmark and Forbruger-Kontakt (FK). This market is fully liberalised. Next to that, Post Danmark is the universal postal service provider. It uses its distribution network for both the universal postal service and the distribution of unaddressed mail. In 2003, in the Danish market for the distribution of unaddressed mail Post Danmark had a market share of 44 % which increased to 55 % in 2004. According to the Danish competition authority Post Danmark held a dominant position in that market because of such high market shares and because it could maintain its distribution network covering the whole country because of it being the universal postal service provider, regardless of its activities on the market for unaddressed mail.
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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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