19 July 2012/
By Marek Zilinsky
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On 12 July 2012 the European Court of Justice (ECJ) ruled in the VALE case (C-378/10) that
“Articles 49 TFEU and 54 TFEU are to be interpreted as precluding national legislation which enables companies established under national law to convert, but does not allow, in a general manner, companies governed by the law of another Member State to convert to companies governed by national law by incorporating such a company.”
The case concerned a cross-border conversion of a company established under Italian law, VALE Construzioni Srl, into a company incorporated under Hungarian law, VALE Építési kft. Under Italian law it is possible for a company to convert into a company established under foreign law. Under Hungarian law only companies incorporated under the law of Hungary are allowed to convert. The VALE case is the ‘mirror image’ of the Cartesio case (C-210/06) which concerns a transfer of a registered office of a company under Hungarian law to Italy without a conversion. In the Vale case the Court stated that a Member State may restrict a company governed by its law to retain the status of the company established under the law of that Member State if the company intends to move its seat to another Member State, thereby breaking the connecting factor required under the national law of the Member State of incorporation. However, the Member State of origin of that company cannot prevent a company from converting itself into a company governed by the law of the other Member State, to the extent that it is permitted under that law to do so.
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17 July 2012/
By JC Lawrence
On 12 July 2012, the ECJ handed down a new ruling on gambling advertisements. The judgment in C-176/11 HIT and HIT LARIX clarifies that a country may restrict advertisements for foreign casinos on the ground that the casino’s home state does not provide equivalent protection for gamblers. However, they cannot require identical regulation, and the restriction must be directly related to protecting consumers.
At the same time, however, the judgment raises once more the question of what regulations should be found proportional in gambling cases. The disagreement over proportionality is evident in the differences between the opinion of the Court and that of Advocate General Mazák, and will no doubt lead to further debate regarding the exact scope of Member State freedom in this area.
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13 July 2012/
By Benedikt Pirker
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Yesterday, the Court decided to give horizontal effect to Article 34 TFEU on the free movement of goods. In the Fra.bo case, the Oberlandesgericht Düsseldorf had asked whether a private-law association (DVGW) ought to be subject to the principle of free movement of goods. The organisation at issue operates both to draw up technical standards for products used in the drinking water supply sector and to certify products based on these standards.
As Laurens has pointed out in his post on the Advocate General’s opinion, the Court has accepted such horizontal effect for the other Treaty freedoms, but not yet for the case of the free movement of goods. Advocate General Trstenjak, however, suggested in her Opinion to extend the reasoning of cases like Bosman, Viking and Laval by analogy. Based on their horizontal effect, fundamental freedoms could thus be imposed in cases where non-public organisations held the power to draw up certain kinds of collective rules. In the present case, the German private organization DVGW possessed in her view a de facto competence to determine what fittings could be offered for sale on the market in pipes and accessories for drinking water supply in Germany (para 41). The Advocate General pointed out that horizontal effect was required by the effet utile of European Union law because (paras 46 ff.) the abolition of obstacles to trade imposed on Member States might otherwise be compromised by obstacles erected by private parties. Also, the fact that some Member States would rely on public standardisation bodies while others turn to private organisations may lead to inequalities in the application of EU law.Continue reading
4 July 2012/
By Laurens Ankersmit
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Well, that came as no surprise. Today, the European Parliament officially rejected ACTA. In a vote today 478 MEPs voted against ACTA, 39 in favour, and 165 abstained. As we mentioned earlier on the blog, the Commission already requested the Opinion of the Court on the compatibility of ACTA with the Treaties and the Charter in accordance with article 218 (11) TFEU.
Now that the European Parliament has rejected ACTA, what happens to this request? The Commission could retract its request, saving the Court from a lot of headaches and drawing it into this political mud-fight. That would be kind of the Commission of course. However, since the Commission has been so determined in arguing the benefits of ACTA, as well as defusing concerns over fundamental rights issues, the Commission might be tempted to hear the Court’s Opinion anyway. The advantage for the Commission would be that it obtains legal certainty on whether ACTA is compatible with the Treaties and the Charter, possibly opening the door to ratification or renegotiation. And if the Court were to rule that ACTA is compatible, the Commission would have proven its case and save some face.
The question is: does the Court still need to give an Opinion now that the European Parliament has rejected ACTA?
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14 June 2012/
By Laurens Ankersmit
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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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9 June 2012/
By JC Lawrence
In the wake of last month’s spat over Argentina’s expropriation of Spanish energy holdings comes yet another economic dispute between Argentina and the EU.
On 25 May 2012, the EU filed a WTO complaint (DS438 Argentina–Measures Affecting the Importation of Goods) against Argentina regarding its import licensing rules. Argentina requires importers to obtain certain licenses before their goods can be put into circulation on the Argentinian market. The EU alleges that approval of these licenses “is being systematically delayed or refused by the Argentinian authorities on non-transparent grounds.”
Additionally, the EU alleges that Argentina “often requires” importers to agree to limit imports, balance them with exports, increase their local investments, control prices, not transfer benefits abroad, and/or meet local content requirements. The Argentinian authorities refuse to issue import licenses if these conditions are not met.
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7 June 2012/
By Laurens Ankersmit
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As one of the last bastions of purely national competence, trade in arms is excluded from the application of the Treaty rules. Article 346 TFEU provides that the Treaties do not preclude Member States to trade and procure war material for the protection of the essential interests of its security. Nonetheless, this provision is strictly interpreted by the Court and the case discussed here exemplifies that only goods intended for specifically military purposes qualify for the exemption under article 346 TFEU. But what exactly is equipment intended for specifically military purposes?
At issue in case C-615/10 Ins Tiimi is the procurement of the Finnish defense authorities of tiltable turntable equipment. This equipment is used to facilitate the ‘carrying-out of electromagnetic measurements and the simulation of combat situations’. As such it was argued by the Finnish authorities that it was procured for military purposes. Ins Tiimi, a company which lost the tender, did not agree, claiming that the equipment could be used for civilian uses as well. Whether or not the tiltable turntable equipment qualified for the exemption was important because otherwise the procurement procedure had to comply with the public procurement directive (directive 2004/18/EC).
There are essentially two conditions that Member States have to fulfill in order to escape the application of EU law according to article 346 TFEU when procuring military material:
- The measures relating to military procurement must concern ‘arms, munitions and war material’;
- And secondly, those measures must be necessary for the protection of the essential interests of the security of that Member State.
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1 June 2012/
By Jochem Vlek
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Under Article 27(2) of the Rome I Regulation (Regulation (EC) 593/2008 on the law applicable to contractual obligations), the Commission is charged with the task to submit to the EP, the Council and the European Economic and Social Committee a report on the proprietary aspects of voluntary assignment. The Commission report under Article 27(2) Rome I will be based on a comprehensive study that has just been released titled “Study on the question of effectiveness of an assignment or subrogation of a claim against third parties and the priority of the assigned or subrogated claim over a right of another person”. This study shall serve as a potential future proposal to amend Art. 14 Rome I Regulation to provide for a new harmonized conflict of laws solution for the third-party aspects of assignment. Why was this necessary?
The rule in art. 14 Rome I Regulation is concerned with the law applicable to assignment of debt and subrogation. As far as the third-party aspects are concerned however, no uniform solution to a conflict–rule could be agreed upon in the drafting process of Rome I and, consequently, the Rome I Regulation (save a reference in recital 38) doesn’t regulate the proprietary aspects of assignment. As a result, Member States currently adopt different approaches. The current incomplete conflict of laws solution in Article 14 Rome I gives rise to various problems, as described in the study. To end this situation, the Commission has to deliver a report (which, incidentally, was due 17 June 2010) accompanied with, if appropriate, a proposal to amend the Rome I Regulation and an impact assessment.
When the Commission will deliver its report is unclear at this point but there is no doubt that it will rely heavily on this study. We will go into more detail in subsequent posts.
