Magical Formula

Following the example of Peter Lindseth, I thought I'd also copy/paste my reply to Kenneth Anderson's question on Opinio Juris:

Part 1:

Kenneth,

I’m not sure that I understand what you’re looking for. Obviously there is analysis like the one mentioned by my – let’s go with colleague – prof. Maduro above. The most famous one in recent weeks is by Joshka Fischer, also on Project Syndicate:

http://www.project-syndicate.org/commentary/fischer67/English

Such analysis is not uniquely the province of jurists; when you’re re-writing a constitution, you can do whatever you like as long as it is legitimate. And legitimacy is a political issue, not legal. What European law specialists can do is point out where there is and is not a need for a Treaty change. Behind closed doors, that’s what the Council has Mr. Legal for (the successor to Jean-Claude Piris, who actually wrote the Lisbon Treaty, in the sense of turning the political agreement into legal language). However, for many of the main proposals on the table today, it is perfectly clear that they require a Treaty change. (Or a change in the ECB’s statutes.) In that situation, law scholars have no particularly privileged position. They can make their proposals just like everybody else.

Part 2:

The “non-functionalist” outcome [i.e. the outcome that does not involve giving the EU whatever powers it needs to get the job done] will continue to be on the table for the very simple reason that, if the people are allowed to vote, they will vote against further integration in virtually every EU Member State. The victims of the crisis will vote against because they don’t want austerity – regardless of whether it is necessary – and the countries that are currently paying the bill will vote against because the people don’t want to pay for other people’s sins – regardless of whether it is necessary. (And the Brits will vote against because, well, because they’re Brits.)

And that is the uncertainty, looking forward: the members of the Council are exposed to two opposing sources of pressure: on the one hand, they want to do what is necessary, and on the other hand they want to “obey” their voters. (Or at least not upset them too much.) This tension is resolved a little through elections, even though such elections only bring people to power who will end up doing much the same thing as the politicians they replaced.

(Which is why elections in Greece aren’t a very helpful idea. Note also the paradox of Spain, where the indignados were so unhappy with Zapatero that they ended up electing a centre-right government instead.)

A more drastic solution is referendums. Even though voters have a surprising ability to abstain from voting while still complaining, referendums forcibly put everyone back on the same page. They give the people ownership of the problem and its solution, especially if they are properly designed, for example by giving people different alternatives, the way Switzerland does. If the people of Greece don’t like the current deal with the EU, do they want the government to renegotiate, to leave the Euro, or to leave the EU entirely? Regardless of how they answer, the legitimacy problem is resolved, at least as to Greece. The people deserve to get what they want, right between the eyes.

As the reaction to the Greek referendum idea demonstrates, most European leaders will not go that far. However, they are still exposed to elections. Sarkozy has to run for re-election next year. Merkel has a few more years, but she can’t afford to lose too many state-elections. This is why the uncertainty continues, and why everyone is looking for the magic formula. Joschka Fischer’s article, that I linked to above, is an attempt to do exactly that. He’s proposing something he really doesn’t like – a European Senate – as a way of simultaneously improving the EU’s legitimacy and pushing forward with European integration. And in many ways he’s right; all it takes is some magic formula that resonates with voters that shows them that the powers that be take their concerns seriously. The only problem is that it is impossible to tell which formula will work. Probably, the answer is that it takes a formula that is both drastic enough to have substance, and that is then adopted with full commitment by a large number of influential politicians, who use their political skill to sell it to the people. Untill the politicians take such a risk, there will be no magic formula, no solution to the tension between what needs to be done and what the people want done, and no end to the uncertainty and the speculation.

Last Week in Luxembourg

Unquestionably, the most important judgment last week was Scarlet Extended v. Sabam, the internet privacy case. Internet Service Providers cannot be made to police the use of peer-to-peer file sharing software among their customers, because such a requirement would violate both the rights of the ISPs and of their customers. Cf. EUObserver, bbc.co.uk.

On the other hand, the Court did strike down a Spanish Royal Decree that gave data subjects a greater level of protection than what was foreseen by the Data Protection Directive 95/46. Apparently the Directive aims at full harmonisation on this point. Asociación Nacional de Establecimientos Financieros de Crédito

The Court sided with the Commission on the alternative modes of TV-advertising used in Spain, “such as telepromotions, advertorials, overlays, sponsorship credits, micro‑ads comparable to advertorials, self‑promotional spots, virtual advertising and public service advertising”. They do count as advertising, putting Spain in violation of the maximum amount of time allowed for that purpose by art. 18(2) of Directive 89/552.

In Medeva and in Georgetown University and others, the Court gives some guidance as to the correct interpretation of art. 3 of Regulation 469/2009 on the supplementary protection certificate for medicinal products.

For some reason, Italy apparently decided to ignore the whole Factortame/Brasserie du Pêcheur line of cases. Commission v. Italy (FR, IT)

In anti-terrorism news, the General Court rejected Jose Maria Sison’s claim for compensation based on the unlawful freezing of his assets. Sison v. Council

In Jones and others v. Commission, the General Court dives into the pre-1990 British Coal market. Curiously, the applicant’s claim is rejected, but the Commission is still ordered to pay their costs.

The Commission’s Decision not to go after the producers of ink cartridges and toners for competition law violations was upheld in EFIM v. Commission.

This Week in Luxembourg

The first Grand Chamber judgment this week concerned the corporate tax regime in Gibraltar. The Commission thought that it involved illegal state aid, the General Court disagreed, and now the Grand Chamber sided with the Commission. The reform does display unlawful selectivity in its treatment of offshore companies, contrary to what the General Court had said (par. 85-110). In the remainder, the Grand Chamber takes care of the case itself, noting for example the absence of any stare decisis rule for the Commission (par. 136). Commission v. Gibraltar and UK

The Grand Chamber also released another sequel to Ruiz-Zambrano, following McCarthy in May, this time in the form of five cases coming from Austria. The big difference was that this time there was no risk of Union Citizens being deprived of subsistence, since they would be taken care of regardless of whether their loved ones would be allowed to stay in Austria. For that reason, the Court came out on the side of the Austrian government. This whole “genuine enjoyment” test looks like it will be a pretty rare creature. Dereci et al. v. Bundesministerium für Inneres cf. Eutopialaw

In 2006, Germany became very unhappy about an intended audit by the Court of Auditors of its VAT system, the fear being that the audit would extend “to [a] review [of] the economic policy of the Member States in so far as that policy contributes to the creation of GNI which itself underpins the calculation of an own resource of the European Union” (par. 39), so they threw up a huge fuss, for which they were now finally rebuked by the Grand Chamber. Commission v. Germany

Zaza Retail cleared up some issues about territorial insolvency under art. 3(2) of Regulation 1346/2000, as well as the role of the public prosecutor as the plaintiff asking for insolvency. The result is that the Belgians were entitled to have Zaza declared bankrupt insofar as it was active in Belgium, but not prior to its bankruptcy in the Netherlands.

As I already explained when AG Trstenjak’s opinion (NL, DE, FR) came out in September, the mortgage non-payment case of Lindner is a bit complicated. The Court now cut the knot and decided that the Czech court was entitled to appoint a mandataris ad litem once the defendant could not be located, thus avoiding some of the problems the AG ran into. Hypoteční banka, a.s. v. Udo Mike Lindner

The Court signed off on Bulgaria’s practice of banning certain criminals and other offenders from leaving the country for extended periods of time, as long as the measure is proportionate. Gaydarov and Aladzhov

Italy was slapped with a penalty payment of € 30 million for every six months that they fail to recover a sum of illegal state aid (if they recover part, the payment decreases proportionately), as well as a lump sum fine of € 30 million. Commission v. Italy

Since the Court’s case law on terror suspect asset freezes is now pretty well settled, appeals are normally unsuccessful. That goes for this week’s Bank Melli v. Council as well.

Speaking of Iran, AG Yves Bot has a pretty fun case concerning the criminal prosecution of three individuals suspected of selling nuclear technology to Iran. The German court wants to know whether a high-tech oven is an “economic resource” even without the software (really?) and what it means to participate “knowingly and intentionally, in activities the object or effect of which is, directly or indirectly, to circumvent the [embargo]”. (Cf. art. 7(4) of Regulation 423/2007). The answer probably isn’t very helpful, but OK. Federal Prosecutor v. Afrasiabi et al. (NL, DE, FR)

In O’Brien, AG Kokott considers whether judges are “workers” for the purposes of the law on part-time work. Initially, she seems to dodge the issue a little, declining to make it an autonomous concept of EU law but declining to give the MS free reign either, but in reply to question 2 she concludes that discrimination between full-time and part-time judges is not permitted.

AG Jääskinen concluded that the data retention directive 2006/24 does not apply to a request for access to the data covered by that directive in the course of a civil proceeding. In this case, that means that online copyrights are once again safe. Bonnier Audio et al. v. Perfect Communication Sweden (DE, FR)

Finally, it looks like the Polish Constitutional Court incorporated the Solange reasoning into Polish law. EU law is presumptively constitutional, but it may not always be. Verfassungsblog

This Week in Luxembourg

Portugal lost another golden shares case, this one concerning its golden share in Oil and Gas Company GALP Energia SGPS SA. Commission v. Portugal

In Rank Group, the ECJ gave some interesting guidance on Fiscal Neutrality and gambling, without actually answering whether the UK was permitted to exempt certain games of chance from VAT but not others.

More taxation fun: If mineral oils used for navigation are exempt from excise duties (art. 8(1)(c ) of Directive 92/81), what about the oil used to fuel an on-board excavator that is fixed to the ship but has its own engine? The Court ruled that it does not get to enjoy the exemption. Sea Fighter

In the category of HUH???, there is the case of Idromacchine and others v. Commission (DE, FR, IT). What happened is that the Commission mentioned the plaintiffs by name, and in a not entirely flattering way, in a state aid decision against Italy. So they sued the Commission in defamation and now won € 20.000 in damages.

Finally, it might be useful to note that on October 27, the Council has released its report on its performance in the Court in the first half of 2011. That is to say: all cases that it was a party to. Link

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

Microban

It looks like I missed an interesting judgement last week. Apparently there's more to the General Court's Microban case than meets the eye. In my defence, this is the headnote:

Public health – List of additives which may be used in the manufacture of plastic materials and articles intended to come into contact with foodstuffs – Withdrawal by the original applicant of the application for inclusion of an additive on the list – Commission decision not to include 2,4,4’-trichloro-2’-hydroxydiphenyl ether in the list – Actions for annulment – Admissibility – Regulatory act – Whether directly concerned – No implementing measures – Legal basis

...so you can see why I would not immediately jump in to read the judgement. However, there is an interesting issue of procedure there, regarding the admissibility of an action of annulment for this kind of regulatory act. The new Eutopia Law blog has the story. The key point is that the General Court defined Regulatory Acts as "all acts of general application apart from legislative acts".

[UPDATE: On the blog of the King's Student Law Review, dr. Agne Limante has another useful writeup of this Microban case and the related Inuit case.]