This Week in Luxembourg

This week, the Grand Chamber considered the problem of which court has jurisdiction over cases regarding tortious publications on the internet. The Court ends up splitting the difference: the ideal forum is the home forum of the defendant or – and this is new – the home forum of the plaintiff, but the case can also be brought anywhere else the content was published, although then the court can only award damages to the extent damage was incurred in that particular jurisdiction. (Sorry about that sentence…) Cf. art. 5(3) Regulation 44/2001. eDate v. X and Martinez v. MGN cf. bbc.co.uk

In Competition law, the Grand Chamber gave Solvay a big win. It found that the General Court had erred by rejecting Solvay’s arguments that its right of access to the file and its right to be heard had been infringed to the point of requiring the nullity of the Commission’s Decisions. As a result, both the General Court’s judgements (1 and 2) and the Commission’s Decisions (1 and 2) go in the trash bin. For those keeping score, the total fine was € 23 million. Solvay v. Commission and Solvay v. Commission

AG Cruz Villalón took a look at some Italian gambling law, and found that it probably favoured incumbents in a manner incompatible with the Treaties. (“Probably” because the national court would still have to have a look.) Some other aspects of the law, however, can stay in place as far as the AG is concerned. Costa and Cifone (NL, DE, FR, IT)

And finally, there are two AG opinions that are a bit more technical:

In Centre Hospitalier universitaire de Besançon (NL, DE, FR), AG Mengozzi interprets Directive 85/374 as allowing Member States to make the user (in this case the hospital or the doctor) liable for using a defective product in addition to the liability of the producer.

And in Söll (NL, DE, FR) AG Jääskinen looks at art. 2(1)(a) of Directive 98/8 to determine the correct definition of “biocidal products”. He opts for a broad definition, whereby the substance in question need not necessarily have a direct biological or chemical effect on the harmful organism in question, as long as it has an indirect effect, and as long as this effect is intended.

P.S. the archive of these emails is here.

Ratings Agencies' Speaking Ban

Given my question from last week, and questions raised by Eugene Volokh and Kenneth Anderson elsewhere, I should probably look into this story myself. The original Financial Times Deutschland story explained:

EU-Binnenmarktkommissar Michel Barnier will es Ratingagenturen notfalls verbieten, Urteile über kriselnde EU-Länder zu veröffentlichen. In einem vertraulichen Vorabentwurf für eine Reform des Gesetzes zu den Ratingagenturen schlägt Barnier vor, dass die neue Wertpapieraufsicht ESMA das Recht erhält, die Veröffentlichung von Einschätzungen über die Zahlungsfähigkeit "vorübergehend zu untersagen". Der Entwurf liegt der FTD vor.

Der Kommission geht es um Staaten, die über Finanzhilfen verhandeln - etwa Gelder aus dem EU-Rettungstopf EFSF oder vom Internationalen Währungsfonds (IWF). Ein Verbot könne verhindern, dass ein Rating in einem "unangebrachten Moment" kommt, "mit negativen Folgen für die Finanzstabilität des Staates und möglichen destabilisierenden Effekten auf die Weltwirtschaft", heißt es im Entwurf.

Spiegel Online has the English version of the story:

European Internal Market Commissioner Michel Barnier is considering a move to ban the agencies from publishing outlook reports on EU countries entangled in a crisis, according to a report in Thursday's issue of the Financial Times Deutschland newspaper.

In an internal draft of a reform to an EU law applying to ratings agencies obtained by the paper, Barnier proposes providing the new EU securities authority, the European Securities and Markets Authority (ESMA), with the right to "temporarily prohibit" the publication of forecasts of a country's liquidity.

The European Commission is particularly concerned about countries that are negotiating financial aid -- for example from the euro rescue backstop fund, the European Financial Stability Facility (EFSF), or the International Monetary Fund (IMF). A ban could prevent a rating from coming at an "inopportune moment" and having "negative consequences for the financial stability of a country and a possible destabilizing effect on the global economy," the draft states.

Now I hope very much that such a thing would be illegal under the European Convention for Human Rights, but I'm less than entirely convinced. Let's look at some relevant precedents, bearing in mind that I don't see how the ban could be struck down on proportionality grounds:

• Casado Coca v. Spain, 26 January 1994: A Spanish ban on professional advertising for attorneys upheld. The Court holds that "rights of others" is a sufficient justification.
• VgT Verein gegen Tierfabriken v. Switzerland, 28 June 2001: A Swiss blanket ban on political advertising on TV is held to be in violation of the Convention. The Court holds that the "rights of others" are an appropriate justification.
  
• Stambuk v. Germany, 17 October 2002: A fine on a German ophthalmologist for violating the advertising ban struck down on the grounds that the penalty was disproportionate. The Court approved of the aims of "rights of others" and "public health".
• Murphy v. Ireland, 10 July 2003: An Irish ban on religious advertising on TV and Radio is upheld. The Court holds that "rights of others" and "public order and safety" are sufficient justification.
• TV Vest As & Rogaland Pensjonistparti v. Norway, 11 December 2008: A Norwegian blanket ban on political advertising on TV is held to be in violation of the Convention. The disagreement did not concern the appropriateness of the "rights of others" justification, but only the proportionality question.

Preliminary conclusion: the justification is almost never the problem. Instead, the Court will normally look at the case most critically under the heading of "necessary in a democratic society". In my estimation, it is almost unthinkable that the Court would interfere with a law in an area so obscure (to them) and non-political (to them) as ratings agencies, at least not under this proportionality analysis. After all, this law is necessary to stop the heavens from falling down on us...

Mustafic II

Over on the blog of the European Journal of International Law, Tom Dannenbaum has started a series of posts about the Dutch Court of Appeals' Mustafic and Nuhanovic rulings: Part 1, Part 2,

This Week in Luxembourg

This week’s Grand Chamber news:

The main holding in Realchemie is easy enough: “The concept of ‘civil and commercial matters’ in art. 1 of Regulation 44/2001 [includes] a decision of a court or tribunal [imposing] a fine in order to ensure compliance with a judgment given in a civil and commercial matter.”

Also, the Grand Chamber handed down the first of two cases about the border between legislative and administrative functions. In this case, the problem is the Walloon legislature venturing dangerously close to administrative actions by ratifying administrative decisions regarding certain infrastructure projects. What does that decision mean for the rights of affected persons under the Aarhus Convention and other environmental law? The Court follows AG Sharpston, more or less, and takes a substance over formality approach. Boxus et al. v. Région wallonne

Finally, there is the case of Brüstle v. Greenpeace, regarding the interpretation of art. 6(2)(c) of Directive 98/44. When that provision says that “uses of human embryos for industrial or commercial purposes” cannot be patented, what is and is not a “human embryo”? Does that include various kinds of stem cells? And what about scientific research? To my untrained eye, it seems as if the Court gives a fairly expansive answer to these questions, i.e. bad news for the promotion of medicine and science. Cf. bbc.co.uk, EurActiv, EUObserver

UPDATE: There's a longer analysis of this case on the great new EU Law blog Eutopia law.

In other news:

In environmental law, the 4^th Chamber asked nicely whether Northern Ireland would please create some kind of functional separation between the agency drafting the plan and the agency that is consulted under art. 6 of Directive 2001/42 for the purposes of preparing an environmental impact assessment. Department of the Environment for Northern Ireland v. Seaport (NI) and others

The bankruptcy case of Interedil is mostly interesting for its procedural manoeuvring. Since it arises in the area of JHA pre-Lisbon, the Commission wondered whether a court against whose judgement a national appeal was available could ask a prejudicial question. The Court replied that the current jurisdictional rule applies, meaning that the questions are in. There was also a Rheinmühlen/Elchinov issue, where the Court simply repeated its earlier statement: a national appeals court cannot stop a lower court from asking a prejudicial question.

AG Mazák looked at the Market Economy Investor Principle, specifically as applied to the behaviour of the French state as sole shareholder of Électricité de France. The Commission thought it was unlawful state aid (part 1 and part 2, both dated 16 December 2003). The Court of First Instance annulled parts of that decision (NL, DE, FR). The AG now sides with the Commission on all of its grounds for appeal, and is actually quite critical of the CFI in doing so. For this reason, he proposes renvoi. Let’s see what the Grand Chamber says. Commission v. EDF et al.

AG Cruz-Villalón proposes that the Court should sign off on an Italian law (art. 392 CPP) which aims to protect minor victims of crimes against themselves by not giving them the right to be heard during the pre-trial phase that is accorded to adults under Framework Decision 2001/220, including the fact that such minors cannot appeal the prosecutor’s decision not to let them testify at that stage. The AG argues that the Framework Decision leaves the Member States ample freedom to decide on details such as this. X v. Y (NL, DE, FR, IT)

AG Sharpston has another Dutch Turkish free movement of workers case, and again the Dutch lose. Her conclusion is simple enough to quote: “Article 7 of Decision No 1/80 of the EEC-Turkey Association Council (…) must be interpreted as meaning that the family members of a Turkish worker duly registered as belonging to the labour force of a Member State may continue to invoke that provision notwithstanding that that worker has acquired the nationality of the host Member State while retaining his Turkish nationality.” Joined cases of Kahveci and Inan

Finally, I have a question: Even though the work of ratings agencies is not protected as free speech in Europe like it is in the US, how can this possibly be legal? “The Financial Times Deutschland on Thursday (20 October) disclosed plans by EU single market commissioner Michel Barnier to allow Esma, a new Paris-based EU financial supervisor set up in 2011, to impose "temporary" bans on agencies such as Fitch or Moody's from publishing sovereign debt ratings at critical moments.” Source: EUObserver

This Week in Luxembourg

Another big win for airline passengers. A flight is also cancelled if it takes off but returns to its origin, and the “further compensation” of art. 12 of Regulation 261/2004 may – depending on national law – include non-material damage. The only down side is that art. 12 may not be used as a basis for awarding such damage in case of a failure of the air carrier to comply with art. 8 and 9, which deal with reimbursement or re-routing and the right to care in case of delay or cancellation, respectively. Sousa Rodríguez et al. v. Air France

In the Postal Sector, Belgium is allowed to mandate an external scheme for dealing with customer complaints even for postal companies not subject to a universal service obligation. Express Line

In the state aid case of Deutsche Post and Germany v. Commission, the 3^rd Chamber annulled the General Court’s decision declaring the applicant’s case inadmissible. As it turns out, a Commission decision under art. 10(3) of Regulation 659/1999 requiring the Member State to produce information for the purposes of a state aid investigation is open to challenge before the Community Courts, both by the Member State in question and by the recipient of the aid.

In Prism Investments, the 4th Chamber held that the list of grounds for refusal of recognition of a judgement from another Member State (art. 34 and 35 of Regulation 44/2001) is exhaustive. In this case the defendant/appellant argued that the judgement had already been complied with in the MS of origin, but according to the ECJ that is not a valid reason for refusing recognition.

As one might expect, the Court did not look too kindly on a selective distribution agreement that had the practical effect of banning internet sales in certain areas. However, partly because the case came to the court as a prejudicial question, there are still a few ways in which the agreement can be saved. Pierre Fabre Demo-Cosmetique v. Président de l’Autorité de la Concurrence

The Association belge des consommateurs test-achats, of discrimination in insurance premiums fame, lost in an interesting judicial review of mergers decisions case. The General Court ruled that they were not entitled to protect their procedural rights under art. 11 of Regulation 802/2004 by asking for judicial review of the Commission’s decision not to object to the takeover of Segebel by Electricité de France, because they had not sufficiently availed themselves of those rights in the pre-decision phase. Association belge des consommateurs test-achats v. Commission

While last week the General Court reviewed the Commission’s treatment of an Italian raw tobacco cartel, this week the raw tobacco comes from Spain. Compared to the original decision from 2004, Agroexpansión (FR) and Alliance One both ended up paying somewhat less, because of some extra credit for cooperation and some confusion about the period for which they could be considered as a single economic unit.

P.S. the archive of these emails is here.

This Week in Luxembourg

This week there are two very cool Grand Chamber cases:

On Tuesday, the Court agreed with AG Kokott that the Premier League is not allowed to re-establish national borders for its satellite decoders. If Mrs. Murphy, pub owner in Portsmouth, wants to use a Greek decoder because they’re cheaper, she can. Football Association Premier League and Others Cf. bbc.co.uk.

On Thursday, AG Kokott released her opinion in the Grand Chamber case of Air Transport Association of America and others concerning the question whether the airlines will have to start handing over emissions credits while they’re still on the runway in San Francisco (instead of only when they’re flying over EU territory). I am in no position to judge the AG’s conclusion saying that the directive is compatible with the Chicago convention, but call me sceptical about her conclusion that it is not unlawfully extraterritorial.

The 8^th chamber had two food hygiene cases under Regulation 852/2004, taking a relatively relaxed approach in both. In Astrid Preissl they ruled that no high-tech specially devoted basin for cleaning hands was necessary, while in Albrecht and Others they were not overly concerned with the possibility that in a self-service bakery a potential purchaser might have touched or sneezed upon the foodstuffs.

In Graf and Engel, two Swiss citizens again suffered the consequence of not being European citizens. In limited circumstances, Austria is allowed to object to a lease of agricultural land.

The wheels of justice are moving slowly. In 1994, Italy created a scheme of state aid, which was judged unlawful by the Commission in 1999, a decision that was upheld by the General Court in 2008, which was in turn upheld by the Court of Justice in June 2011. Now, Italy is back before the ECJ again because they have not complied with the Commission’s decision yet. (It was not suspended pending examination by the courts.) Commission v. Italy (FR, IT)

In the anti-dumping case of GLS (NL, DE, FR), the Commission was a little bit (too) lazy when it came to determining the normal value of citrus fruits imported from China, where there is no “normal price” since it is not a functioning market economy. As a result, AG Bot recommends that Commission Regulation 642/2008 should be annulled.

In the Italian raw tobacco cartel case, three companies appealed to the General Court. One (IT, FR) received a reduction in its fine because the Commission failed to prove it had been part of the cartel for the full period claimed, one had its case dismissed because it had gone bankrupt in the meantime, and one (IT, FR) simply lost.

P.S. the archive of these emails is here.

Supervising ProRail

Despite the concerns of my committee, it turns out that my dissertation is of immediate practical relevance. Behold my proposition 5:

Neither liberalisation nor privatisation requires the use of private law instruments such as contracts and standard company types, such as standard-form public limited com-panies. Carefully designed public law instruments such as concessions and statutory companies should generally be preferred.

This was my very understated way of asking why it is necessary to turn infrastructure managers like ProRail in the Netherlands or Network Rail in the UK into private law companies if there is no intention of freely floating their shares. Based on my research into the New Institutional Economics, I could see no way that a company unrestrained by either market or hierarchy would not run amok. Since these INFRACOs clearly do not compete against each other or against potential entrants, they need to be restrained by hierarchy, i.e. by the government. The best way to do that is to create a public law company, where the government can be given whatever control rights it needs to get the job done. The fact that ProRail's Articles of Incorporation give the government some unusual rights as well is not enough. That, in a nutshell, is what I would have said had I been called upon to defend this proposition. But I wasn't.

Now, not even a month later, the Dutch Court of Auditors has published a report that is beyond damning for the Minister for Infrastructure and her ministry. Essentially, she has no institutional capacity and no interest to supervise what ProRail does with its budget of € 2 billion per year; the Ministry has exactly 2,5 fte to look after the spending of all that money. Specifically, the problem is that ProRail seems to decide all on its own - or at least without asking the Minister - whether the entire budget for a given year should be spent or whether it would be better to save some of it for another year, which explains why things like network-wide ERTMS are still a distant dream.

Other sources:

NRC Handelsblad, 3 October 2011, 'Schultz heeft geen grip op ProRail en informeert Kamer onvolledig'

Algemene Rekenkamer: ProRail's use of railway budgets (English summary)