Sovereign Immunity

Yesterday's US Supreme Court ruling in Coleman v. Court of Appeals of Maryland gave me some serious non-employment discrimination-related food for thought. As such, the case is about whether Daniel Coleman can sue his former employer, the Court of Appeals of Maryland, for firing him while he because he was ill, which is ostensibly in violation of the Family and Medical Leave Act of 1993, specifically 29 USC 2612(a)(1)(D). The interesting thing is not the FMLA as such, but the reason why the Court held for the defendant:

A foundational premise of the federal system is that States, as sovereigns, are immune from suits for damages, save as they elect to waive that defense. See Kimel v. Florida Bd. of Regents, 528 U. S. 62, 72–73 (2000); Alden v. Maine, 527 U. S. 706 (1999).

From this premise, the result naturally follows, and I'm not sure why this was a 5-4. (Somehow it seems to involve a concise history of feminism. Don't ask.) The obvious exception to the rule is Congress' explicit power under section 5 of the 14th Amendment, but it is difficult to see how that helps sick people, as opposed to women, ethnic minorities, etc. Conclusion: this particular subsection of the FMLA is ultra vires to the extent that it applies to state government entities. Not very interesting.

Instead, the reason why this gave me food for thought is that it rests on a very peculiar approach to sovereign immunity. (The Wiki-page is not very good, but OK.) The state cannot be sued, unless it consents. Not even the Federal government can overcome this barrier, absent specific Constitutional provisions. (Justice Ginsburg, with only Justice Breyer concurring, brings up the case of Seminole Tribe of Florida v. Florida again, but not even Justices Kagan and Sotomayor are willing to follow her there. In that case they were in the minority too, and would have held that Congress can authorise suits against states under the Commerce Clause. The conservative majority, however, disagreed.)

This approach to sovereign immunity is peculiar because it is almost unique in the world. It has some roots in British common law, where the Crown was the fountain of all justice and the authority that created the courts, and could therefore not be sued, but even that was done away with by Act of Parliament in 1947. For that reason, sovereign immunity barely got a mention in the litigation over Frankovich and Factortame, where the European Court of Justice created a tort remedy for an infringement of EU law by a Member State.

In Frankovich, AG Mischo wrote:

[A] Member State cannot object to the bringing of an action for damages against the State in respect of the infringement of a right granted to individuals directly by Community law on the ground that its national legal system recognizes the principle of immunity of the public authorities, in particular the legislature; once the action for damages exists as a form of action, a Member State can no longer rely on the status of the person alleged to be liable in order to deprive individuals of the possibility of bringing such an action and thus impair the effectiveness of Community law with direct effect.

Indeed, the context we are dealing with here is completely different from that in which the theory of the immunity of the State in its capacity as a legislator was developed in certain Member States. The Commission correctly pointed out at the hearing that in national law there can hardly be a situation where not only is the legislature under the obligation to enact a law, not only is it possible to determine with a sufficient degree of precision what it must do, but in addition the legislature must act within a certain period. In my view it is not excessive to say that in relation to the transposition of directives the legislature is in a situation close to that of the administration responsible for the implementation of the law.

and:

In the Waterkeyn judgment the Court was careful to state that pursuant to Article 171 of the Treaty,

"all the institutions of the Member States concerned must ... ensure within the fields covered by their respective powers that judgments of the Court are complied with" (paragraph 14).

That is merely the consequence of the fact that

"under Article 169 of the Treaty the Member States are liable no matter which organ of the State is responsible for the failure, and ... a Member State may not plead provisions, practices or circumstances existing in its internal legal system in order to justify a failure to comply with the obligations and time limits under Community directives" (18)

and under Community law in general. Furthermore, in Humblet the Court expressly stated that the obligation to rescind the national measure which is contrary to Community law and make reparation for the effects which it may have had results from the Treaty, which has the force of law in the Member States following its ratification and takes precedence over national law ([1960] ECR 569). A Member State cannot therefore take refuge behind the principle of the immunity of the legislature, even if that has the status of a constitutional rule, (19) in order to escape its obligation under the Treaty to take all necessary measures in order to ensure that Community law has full effect, where necessary by making good the wrongs suffered by individuals as a result of its infringement of its Community obligations. (20) On the contrary, as the Court has required in a different context, that of national budgetary rules,

"it falls to a Member State in accordance with the general obligations imposed on Member States by Article 5 of the Treaty, to recognize the consequences, in its internal order, of its adherence to the Community and, if necessary, to adapt its procedures for budgetary provision in such a way that they do not form an obstacle to the implementation ... of its obligations within the framework of the Treaty." (21)

I think that that is all the more necessary inasmuch as the implementation of directives is not always, or in all Member States, a matter for the legislature; to take refuge behind the principle of the immunity of the legislature would therefore give rise to disparities not only from one Member State to another, according to whether they recognize that principle or the implementation of directives as a matter for the legislature, but even within Member States where the legislature has the power to implement some directives but not all. I should add that in its order in Joined Cases 24 and 97/80-R ([1980] ECR 1319 at page 1333), paragraph 16, the Court had already firmly declared that

"by reason solely of the judgment declaring the Member State to be in default, the State concerned is required to take the necessary measures to remedy its default and may not create any impediment whatsoever".

In that case, the Court itself was silent on the matter. Likewise AG Tesauro in Factortame I, the ECJ in Factortame I, and the ECJ in Factortame III/Brasserie du Pêcheur. In that latter case, AG Tesauro writes:

36. Admittedly, in the past the idea that the State was not liable for acts or omissions of the legislature was a widespread one. Its rationale was that the sovereign could do no wrong or, according to a more modern, democratic version, parliamentary sovereignty. In other words, in so far as it was the highest expression of the sovereign power, the legislature fell in principle outside the general rules governing liability in view, inter alia , of its democratic legitimacy.That view, which took root above all in legal systems in which the law was not reviewed in the light of some higher parameter, should take on a different complexion where there is a higher norm which can be used to verify and, in an appropriate case, deny the legality of the legislature's activity. Yet, also in those legal systems in which there is not only a clear, formal hierarchy as between constitutional rules and legislative rules, but also a mechanism of ad hoc supervision as to constant compliance with that hierarchy (Austria, Italy, Germany and Spain, for example), the question as to whether compensation can be awarded for loss or damage ensuing from an unconstitutional law is far from having been incontestably resolved. (42) The fact remains, however, that in such a case it cannot be ruled out that the State will be called upon to answer for the loss or damage caused by laws declared unconstitutional.

Fn. 42: For instance, in Germany such a possibility is not ruled out per se , but only to the extent to which the official duty infringed is not referable to a particular third party, which, as I have already mentioned, is true in most cases involving an unlawful act or omission attributable to the legislature; for those very reasons, the possibility in question is unquestionably available in relation to individual-case laws ( Einzelfallgesetze ). However, the prevalent view among academic writers is that an individual should have the right to compensation at least in the event of breaches of fundamental rights (see, for instance, in this connection, Haverkate: Amtshaftung bei legislativem Unrecht und die Grundrechtsbildung des Gesetzgebers, in NJW, 1973, p. 441). In Italy, in which the question is still the subject of debate, such a possibility has been allowed, for example, in the specific case of presidential expropriating decrees issued pursuant to the agrarian reform which have been declared unconstitutional, where the agrarian reform agency was held liable in damages even though it was not guilty of any unlawful conduct; hence the conviction that in such case the compensation is more in the nature of restitution of undue payments, relating solely to the value of the asset lost (for some more general observations in this connection, see Zagrebelsky in Processo costituzionale in Enciclopedia del Diritto XXXVI, 1987, p. 639).

In other words, even analogising from European Federal states does not lead the AG to consider anything even remotely resembling the US approach. And on the whole, the ECJ simply dismissed the problem as one of effectiveness of EU law and one of its uniform applicability in all Member States, regardless of their internal rules with regard to sovereign liability. Which is all well and good, but does not address the threshold philosophical question of whether it should be possible to sue sovereigns without their consent in the first place. (We're going to ignore, for the moment, the ultimate cop-out that the Member States consented to be sued when they joined the European Union. That argument may be legally sound, but philosophically it is more than unsatisfying.)

Long story short: I don't know as much about the difference between Europe and the US in this regard as I would like, but I know enough to know that I would like to know more.

Admissibility

Courtesy of the European Parliament's Twitter feed, I was informed that the PETI Committee had decided to declare the petition against ACTA admissible. Despite being an EU lawyer by training, I have to admit that that one made me do a double take. They declared WHAT admissible? WHO declared something admissible? In my defence, admissibility is usually something for courts and lawsuits. Petitions, on the other hand, are usually something that is imagined as low-threshold and lawyer-free. But look at what the Treaties say:

Article 227

(ex Article 194 TEC)

Any citizen of the Union, and any natural or legal person residing or having its registered office in a Member State, shall have the right to address, individually or in association with other citizens or persons, a petition to the European Parliament on a matter which comes within the Union’s fields of activity and which affects him, her or it directly.

This provision contains at least three reasons why a petition might not be admissible: The petitioner might not be an EU citizen, the petition might not be on a matter within the competences of the EU and the petitioner might not be directly affected by the subject matter of the petition.

These first two I do not care about very much. I would avoid like the plague any suggestion that a failure to meet those requirements results in anything as technical sounding as "inadmissibility", but it is clear that the EP can't be in the business of responding in detail to petitions by Chinese residents complaining about the Slovakian education system.

Direct concern, on the other hand, is a big, big problem. The issue is that direct concern is a doctrine from EU procedural law under the old art. 230 EC. In its new version, the provision allowing EU citizens to sue to have EU legal acts annulled reads:

Any natural or legal person may, under the conditions laid down in the first and second paragraphs, institute proceedings against an act addressed to that person or which is of direct and individual concern to them, and against a regulatory act which is of direct concern to them and does not entail implementing measures.

(Feel free to ignore the part where you're supposed to sue the Act rather than the EU Institutions that enacted it.)

When I took EU procedure in undergraduate, we had great fun studying the meaning of the bolded words, as discussed in such cases as Plaumann, UPA and Jégo-Quéré. But in so doing, we all understood that we were having lawyer-fun. Normal people do not tend to find this kind of thing the least bit amusing. Do we really expect EU citizens and residents to reflect on this before submitting a petition?

43. The Court's case-law shows that, for a person to be directly concerned by a Community measure, the latter must directly affect the legal situation of the individual and leave no discretion to the addressees of that measure who are entrusted with the task of implementing it, such implementation being purely automatic and resulting from Community rules without the application of other intermediate rules (see to that effect, in particular, International Fruit Company, cited above, paragraphs 23 to 29, Case 92/78 Simmenthal v Commission [1979] ECR 777, paragraphs 25 and 26, Case113/77 NTN Toyo Bearing Company and Others v Council [1979] ECR 1185, paragraphs 11 and 12, Case 118/77 ISO v Council [1979] ECR 1277, paragraph 26, Case 119/77 Nippon Seiko and Others v Council and Commission [1979] ECR 1303, paragraph 14, Case 120/77 Koyo Seiko and Others v Council and Commission [1979] ECR 1337, paragraph 25, Case 121/77 Nachi Fujikoshi and Others v Council [1979] ECR 1363, paragraph 11, Joined Cases 87/77, 130/77, 22/83, 9/84 and 10/84 Salerno and Others v Commission and Council [1985] ECR 2523, paragraph 31, Case 333/85 Mannesmann-Röhrenwerke and Benteler v Council [1987] ECR 1381, paragraph 14, Case 55/86 Arposol v Council [1988] ECR 13, paragraphs 11 to 13, Case 207/86 Apesco v Commission [1988] ECR 2151,paragraph 12, and Case C-152/88 Sofrimport v Commission [1990] ECR I-2477, paragraph 9).

(Société Louis Dreyfus v. Commission, Case C-386/96 P, ECR-I [1998] p. 2309)

Surely the whole point of the petitions process is to create a system for complaints with as few legal hurdles as possible? So why doesn't the Treaty more clearly distinguish between the legal hurdles for an Action for Annulment and whatever non-legal hurdles they want to create for a petition? And even if the EP does not apply the CJEU's detailed jurisprudence when deciding this issue, why are we restricting the right of petition to cases where the citizen or resident is directly affected? Why shouldn't I be able to petition them to complain about the Common Agricultural Policy? It's stupid, and I should be able to petition them to let them know I feel that way.

10 Words

The latest news out of the Netherlands is that the energetic 40-year-old Diederik Samsom has won the leadership election of the Labour party. And given that I've finally taken to using Twitter (see right-hand column), I was looking for something useful to tell him in my congratulations tweet. What I ended up writing sounded a bit harsh - that's what you get for being constrained to 140 characters. I asked him whether he was going to be a "tussenpaus", a Dutch word defined by Wiki-dictionary as

"an incumbent whose main function is not to exerce the office but to 'keep the seat warm' or prepare the way for a far more notable successor, but fully titled, without being formally styled 'ad interim'."

After all, it is widely expected that Lodewijk Asscher will take over the leadership of the Labour party in a few years, having decided that the time was not yet right for him to enter the fray this time. But I also managed to squeeze something positive into my 140 characters. If Samsom wants to avoid being a seat-filler, he should define "a mission" for his party.

Now, for sure, if you asked him, he could give you ten missions. But none of them would be the least bit appealing to anyone outside the Hague-beltway. The problem is that they are invariably too long, too filled with jargon and too unfocused. What I was looking for is best summed up in this story from The West Wing, which I've been re-watching in the last few weeks (jay!):

In the midst of the big debate, President Bartlet's opponent, Governor Robert Ritchie, played by James Brolin, was asked about his tax policy, to which he responded: "We need to cut taxes for one reason - the American people know how to spend their money better than the federal government does." President Bartlett's response was: "That's the ten word answer my staff's been looking for two weeks. There it is. Ten-word answers can kill you in political campaigns. They're the tip of the sword."

That's what Dutch politicians, including even the youthful Diederik Samsom, don't have: ten word answers.

Now, to be honest, the website that I lifted that summary from makes an entirely different point. There, the author emphasises Bartlet's reply, asking for "the next ten words" and argues for a political system that is not completely reduced to sound bites. But none of that matters unless you have politicians who are effective communicators. None of that matters unless you have politicians who are at least capable of defining what they stand for in 10 poignant words.

Pauw & Witteman is the only Dutch political talk show that matters. As a political junkie, I should be totally addicted to it. (At least while I'm in the Netherlands.) But I'm not. Why not? Because every time I watch it I can't help but yell at the TV in sheer frustration about the inability of Dutch politicians to speak effectively. That's not the same as speaking plainly, heavens forbid, but at least it means being able to answer any given question in 10 words, if you choose to.

Why doesn't Europe have a theory?

For completeness sake, I should probably explain the one area where I disagree with Paul Krugman about "that austerity nonsense", as I called it yesterday.

Krugman constantly describes the actions of the European leaders in the current economic crisis in terms of "the confidence fairy". I, on the other hand, think that this is wrong.

To be sure, when Wolfgang Schäuble came here to Florence last week to participate in Debating Europe, he spent a minute making the argument that research has shown that there is a debt/GDP ratio above which countries cannot tread without getting into difficulties. (Never mind that this research, by Reinhart and Rogoff, is highly flawed. It also conveniently ignores such pertinent cases as the 250% Debt/GDP ratio enjoyed by the UK at the start of its post-war economic boom.) However, the vast majority of policy makers either do not mention such research at all, or - like Schäuble - mention it only to "sell" something they already want to do anyway. That's why it is pointless to follow the Krugman mantra and keep taking pot-shots at the confidence fairy. The confidence fairy doesn't matter, it is only a rationalisation.

And that's what really puzzles me. For all its flaws, expansionary austerity is an actual theory. A wrong theory, but a theory that could conceivably be correct. It is possible to imagine a parallel universe where this would be a coherent description of what happens, where this theory would result in correct and useful policy prescriptions. It's not this one, but it's close. Actual this-world economic science has some better models too, generally rooted in Keynesianism. They tell you that the consequences of a fiscal impulse in the economy (i.e. the opposite of austerity) generally depend on the reaction of the central bank and more generally on the scope for crowding out on capital markets. Given that we're currently about 100 miles away from any rate increase, that no one is borrowing, that there are no inflation worries, no nothing, it's the best of all possible situations for stimulus. There's no down side, as long as you spend it on something that's worth the (near-zero) interest you have to pay to borrow the money in question. That's another model.

So if European policy makers aren't working from a framework of expansionary austerity, and they're not doing any form of Keynesianism, what are they doing? What is their model of the economy, the model that they are using to decide when to apply how much austerity?

The answer is that I think they don't have one. For people like Angela Merkel austerity is not something they do because they think it will benefit the German or European economy. Instead I think they view it purely in moral terms: the government should pay its own way the same as everybody else. To do differently would be unethical. In Germany, this is known as the principle of the Swabian Houswife. This is very, very bad.

If the German/Dutch approach were based on some kind of economic theory, it would be possible to have a reasoned argument about its efficacy. But given that their preference is purely value-based, it is like a religion. De religionis non est disputandum. But if we're not careful, this religion is going reduce us all to poverty.

Europeans can't jump

Since my friends from Breughel encouraged me to disagree more, I suppose I have to.

But seriously, most of their post of why there is no pan-European blogosphere is completely correct. There isn't one for very same reason that there is no pan-European public opinion, or even a pan-European labour market for that matter: too much heterogeneity and too many barriers to trade in ideas.

But I seriously have to disagree with the suggestion that Europeans aren't as good at arguing as the Americans. They write:

Second, there are probably also “cultural” reasons behind that phenomenon. Europeans don’t have “debate” classes in High School and they tend to have far less confrontational academic discussions (we have nothing as direct and antagonistic as the Cochrane/Hubbard vs. Krugman/DeLong for instance). European economists seem to prefer spreading knowledge rather than stirring debate. VoxEU, Telos, the column section at Eurointelligence, and the new OFCE blog all provide avenues to disseminate research and to express opinions, but are not, so to speak, blogs with arguments and disagreements.

We invented it for crying out loud! Not just parliament, but also continuation of politics by other means - an area that we have traditionally excelled at. The comments sections of our newspaper websites are full of moronic comments just like in the US. Everybody argues with everybody all over the place, often times quite unbothered by any lack of knowledge or understanding. My compatriots - the Dutch - pride themselves in their rudeness, in their willingness and ability to speak the truth, the whole truth and nothing but the truth regardless of whether it is polite, kind or politic. We're the ones who invented GeenStijl! (Official tagline: "tendentious, unfounded and needlessly hurtful".)

The problem isn't that Europeans don't debate, it is that European blogs don't debate, at least not with each other. And the reason for that, other than the ones already given in the Bruegel post, is that in Europe relatively more of the interesting topics are national rather than European. You can only have a European debate if there are things happening at the European level that make people mad.

Personally, I wouldn't mind a good debate about all this austerity nonsense, but it looks like Krugman already has that covered. (For what it's worth, I'm an economist and I think he's right.) So what else should we debate about? That dumbass PVV Polish complaint hotline? Surely not... It may be dumb in the extreme, but so is giving it more attention than strictly necessary. So what's left?

This Week in Luxembourg

The Grand Chamber ruled in two appeals in asset freeze cases. Melli Bank lost, again, but Pye Phyo Tay Za won. You can freeze the assets of people who are associated with the rulers of a foreign country, but not the assets of the family members of a person who is associated with the rulers of a foreign country. That is one step too far removed. I am left wondering, though, whether the new art. 215(2) TFEU would produce the same answer. (This case concerned sanctions based on art. 60 and 301 EC.) Cf. Verfassungsblog, EUObserver and me, concluding that it wouldn’t.

Two copyright cases courtesy of Judge Malenovský in the 3^rd chamber: Hotels have to pay for the “broadcasts” they make to their guests, Phonographic Performance (Ireland) v. Ireland, but dentists do not, Società Consorzio Fonografici v. Marco Del Corso, apparently because their guests don’t have any choice in the matter. The latter case is more broadly relevant because it contains an analysis of how the TRIPs Treaty, the WIPO treaty and the 1961 Rome Convention apply in the Union legal order. While none of them create individually enforceable rights, the former two are part of EU law.

G. v. De Visser involves a 10-part question (German, of course) about naked pictures on the internet. Or, to focus on the law for a moment, it is about service by public notice in cases where the defendant cannot be found, as it relates to art. 26(2) of Regulation 44/2001. Result: the German court can exercise jurisdiction in the normal way under art. 5(3) of the Regulation absent “firm evidence” that the defendant is domiciled outside the EU, it may issue a default judgement, but it may not certify a European Enforcement Order and it may not apply the e-commerce Directive.

Finally, on Chilling Competition there is a short but useful note on the overhaul of the state aid rules for SGEIs (the “Altmark package”).

Tay Za

Ahead of tomorrow's newsletter about this week's CJEU case law, there's a question I wanted to ask. Or rather, there's a point I wanted to make that may or may not be correct. It concerns the Grand Chamber's judgement in Tay Za v. Council.

Just to quickly line up the ingredients, Pye Phyo Tay Za is the 20-something son of the guy that owns whatever parts of the Burmese economy that aren't owned by the military. That is how both Tay Za sr. and Tay Za jr. ended up on the 2008 asset freeze list for Burma. As required by previous ECJ judgements, the legal basis for this Regulation was art. 60 and 301 EC.

Article 60
1. If, in the cases envisaged in Article 301, action by the Community is deemed necessary, the Council may, in accordance with the procedure provided for in Article 301, take the necessary urgent measures on the movement of capital and on payments as regards the third countries concerned.

Article 301
Where it is provided, in a common position or in a joint action adopted according to the provisions of the Treaty on European Union relating to the common foreign and security policy, for an action by the Community to interrupt or to reduce, in part or completely, economic relations with one or more third countries, the Council shall take the necessary urgent measures. The Council shall act by a qualified majority on a proposal from the Commission.

In 2010, the General Court (8th Chamber, Judge Dittrich rapporteur) decided that this asset freeze was lawful. Case T-181/08 Tay Za v. Council

This week, on appeal, the Grand Chamber of the Court of Justice of the European Union (Judge Cunha Rodrigues rapporteur), held that the asset freeze was ultra vires because the relative of a prominent business man is one step too far removed to qualify under art. 301. Specifically, while Tay Za sr. has close enough ties to be covered under "economic relations with [Burma]", his son does not.

While this may be inconvenient for the Council, from a legal point of view I have very little objection. Ever since my LL.M. thesis I have a strong emotional attachment to the doctrine of conferred powers (cf. also last week's Hungary v. Slovakia opinion), and I always welcome it when the Judges in Luxembourg remember that it exists. Let's just say it's a welcome change from their usual default stance of promoting European integration.

Instead, my question is this: Does this line of reasoning still apply under the Lisbon Treaty?

Post-Lisbon, the key section in the Treaties is art. 215(2) TFEU, which for the first time explicitly authorises the Union to freeze the assets of individuals. Until now, this was read as implied in the power to impose sanctions against countries, hence the initial confusion about whether or not this required the additional use of art. 308 EC as a legal basis. That was murky because that article, while extremely broad in its potential scope, was limited to "the operation of the Common Market" and "the Objectives of the Community". Ultimately, in Yusuf and Kadi, the ECJ said that art. 60 and 301 EC alone were the only permissible legal basis. The Court argued that asset freezes were useful in order to attain the objectives of the European Union, but not the objectives of the European Communities as they were listed in art. 3 EC.

In order to fix all that murkiness, Jean-Claude Piris gave us art. 215(2) TFEU:

1. Where a decision, adopted in accordance with Chapter 2 of Title V of the Treaty on European Union, provides for the interruption or reduction, in part or completely, of economic and financial relations with one or more third countries, the Council, acting by a qualified majority on a joint proposal from the High Representative of the Union for Foreign Affairs and Security Policy and the Commission, shall adopt the necessary measures. It shall inform the European Parliament thereof.
2. Where a decision adopted in accordance with Chapter 2 of Title V of the Treaty on European Union so provides, the Council may adopt restrictive measures under the procedure referred to in paragraph 1 against natural or legal persons and groups or non-State entities.
3. The acts referred to in this Article shall include necessary provisions on legal safeguards.

Now, unless I'm crazy, this allows for asset freezes quite unrelated to any policy towards a country. Chapter 2 of Title V of the EU Treaty is simply the stuff dealing with CFSP. I guess that means they have to link it to foreign policy somehow, but otherwise I'm not sure what the limitations would be. If the Council decides that Tay Za jr.'s assets must be frozen in order to prevent his father from circumventing his own asset freeze, that seems like a perfectly good reason for the purposes of legal basis. If the Council doesn't like how Fox News influences the US Presidential elections, art. 215(2) TFEU gives them a legal basis for freezing Rupert Murdoch's European assets. Fun huh?

Now obviously there are many other limits, most importantly the protection of property rights under art. 1 P 1 and art. 17 CFREU, which translates to an obligation not to freeze people's assets without an adequate reason. And freezing someone's assets for the speech they lawfully engage in abroad is almost certainly not a good reason. (And that's after I deliberately chose an example that did not involve using the asset freeze as a punishment for a crime, which would be even more out of bounds.) Still, it is fun to ponder...

In the end, it looks like this Tay Za judgement is one of those temporary judgements that appear in the history of EU law from time to time, cases that have already lost their relevance by the time they are handed down, overtaken by subsequent developments in the law. Am I wrong?

The Stalin Option

When it comes to the international uproar about human rights abuses in places like Syria, there's something I've been wondering about for ages: Why does it work so often?

For sure, there are many places in the world that doggedly resist any and all attempts by the international community to shame them into reforming. There's North Korea, Birma, Belarus and even China (PRC). But for every one of those, there's a Tunisia, an Egypt or a South Africa. Now, for sure all those countries were extremely unstable before the regime collapsed, but that only shifts the question: Why would the leadership allow the situation to get out of hand like that in the first place? Why not go for "the Stalin option" at the slightest sign of resistance? What is it that makes dictators reluctant to engage in the kind of massive bloodshed that that entails?

One of my all-time favourite models is Mancur Olson's theory of rational dictatorship (JSTOR link). He argued that rational dictators maximise the present value of their theft. It follows that the amount the dictator steals in the present period depends on whether he expects to still be around in the next period. The more stable the dictator's regime, the more his rational self-interest requires him to maximise economic growth even if this comes at the expense of short-term stealing. It follows, wrote Olson, that it can be in the people's best interest to leave their dictator alone, at least until a succession crisis makes the regime unstable anyway.

Let's think about dictators along these lines. Surely their number 1 interest is to avoid getting killed. Second to that, and closely related, is to avoid losing power. If the correlation between losing power and getting killed were sufficiently low, we can imagine a scenario where it is rational to allow yourself to be thrown out. However, that does not seem to be the case in actual fact. Idi Amin might have lived happily ever after, but many deposed dictators don't. In those circumstances, and assuming a sufficiently high disutility from dying, the rational dictator values continued power above everything else. Put differently, the rational dictator crushes his country in whatever way is necessary to avoid being overthrown, no matter how badly that affects his ability to steal his people's money. Better to be the living dictator of a dirt-poor country than the dead dictator of something more prosperous.

Of course, not all leaders have the Stalin Option in their arsenal, but then, not all leaders are dictators. A dictator tends to become a dictator in one of two ways: On the one hand, there are dictators who came to power by force. On the other hand, there are those who inherited it, usually from their father. There, too, somewhere down the line the founder of the dynasty came to force by power. Behind every great fortune lies a great crime. So if a dictator - properly so called - does not have the Stalin Option in his arsenal, the Option certainly used to exist at some point, but it was lost.

So how does one lose The Big Gun? It seems like mighty careless thing to allow to happen. To start with the latter category, it is possible that the son has less authority than the father. If that is true to the extent that he is unable to apply the Stalin Option, his inheritance is essentially a poisoned apple. The history of the Roman Empire is full of imperial pretenders who only accepted the purple because to decline it would mean certain death. Instead, they elected to fight so they might have a small chance of not being killed by the incumbent. Heirs of dictators might face a similar situation, the only difference being that for them it is easier to flee abroad and live happily ever after. In the small time between the father's death and the son officially accepting the crown, this is certainly a viable option. (And even before, the son might indicate to his father that he is not interested.) So why would someone accept an inheritance that will get him killed? Until his older brother died in 1994, Bashar al-Assad was an eye doctor in Britain!

Regardless of whether the dictator has used the Stalin Option before himself or has simply inherited it, he can lose it through carelessness, by growing weak and forgiving in his old age. But surely this carelessness is a gradual process, uninfluenced by sudden outrage in response to atrocities? The international community is certainly able to slowly and gradually encapsulate a dictatorial regime in a web of international commitments. That's why they let China and Russia into the WTO. (Well, also so that they could do this.) Such commitments can persuade the dictator to dress up his pretend-democracy with pretend-elections, a pretend-parliament and pretend-human rights more than he perhaps should. But what kind of a dumbass dictator lets any of that get in the way of applying the Stalin Option?

The only possible answer is that all this make-believe can start to take on a life of its own. Dictatorship relies on a complex network of stag hunt games. Unlike the related Prisoners' Dilemma, the Stag Hunt is a game that is extremely vulnerable to actors' expectations about one another. It is rational for all players to cooperate as long as they expect everybody else to. (In the Prisoners' Dilemma, cooperation can only be rational if the game is repeated.) As long as everybody expects that everybody else will obey the dictator no matter what, the dictator's power is untouched. But once the dictator starts implementing make-believe democratic reforms, these beliefs can disappear, and with it the dictator's power. This is true even if nothing has actually changed about the dictator's actual intentions or the actual legal constraints that he is subject to, if any. If sufficiently many people think the pretend-democratic institutions are real, they are real.

But is this what happened in Syria? I don't think so. I'm no expert, but I am not aware of any reforms in that country, make-believe or otherwise. Instead, the difference between today and 30 years ago seems to be entirely one of international visibility. It is no longer possible to kill 40.000 people without the rest of the world noticing. And this is what the protesters seem to be banking on: their expectations about the rest of the world have changed. Given these expectations, it is rational for them to resist much more forcefully than they otherwise would. But why does Assad care? He can easily prove them wrong, simply by sending in some air force bombers.

The fact that he hasn't yet can mean one of three things: either his inheritance is poisoned and he was wrong to accept it, or he is a softie unfit for the job, or the Stalin Option was never quite as unilateral as I made it seem. Perhaps it, too, needs at least a little bit of support from the inner circle. And perhaps the (rational) resistance from the people has made them (rationally) reluctant to support anything quite so drastic. In that case, Assad should find himself a better inner circle sooner rather than later. Then again, maybe it is better for everyone if he doesn't.

Breaking news: Sanity prevails

It's been more than a month, but I didn't get around to blogging about it until now. In a dramatic break with tradition, sanity has actually prevailed in the criminal prosecution of the people behind Coffeeshop Checkpoint in Terneuzen.

The story is this: the marijuana condonement policy in the Netherlands allows any individual to possess a "personal use quantity" of marijuana without getting arrested. How much that is varies a bit depending on how close you are to the borders, but that's a different story. Essentially it's one baggie full. Of course, this poses a bit of a problem for the coffeeshops that sell the stuff, which is why they are allowed about 500 gr by way of inventory. Where they're supposed to get that inventory is anybody's guess. Those purchases are not part of the policy. But that, too, is a different story.

What happened in Terneuzen is that Checkpoint for years - since 1996 to be precise - ran a very successful business, thanks in no small part to the fact that Terneuzen is only about a 20 mins. drive from the Belgian border. They had 5 cash registers and an annual turnover of several million euros. Because all this drug tourism started to annoy the law & order crowd more and more, in 2007 the mayor and the police decided to put an end to it. They raided the shop and found, to their extreme surprise I'm sure, that there was more than 500 grams of marijuana on the premises. To be precise, there was 4,5 kg, with another 92 kg. in a storage facility nearby. At a further raid in 2008, another 160 kg. was impounded and the coffee shop was closed. Since the terms of the condonement agreement had been violated, the court held that it had no choice but to convict the defendants of the various offences with which they had been charged. (Link, in Dutch.) The main defendant got 16 weeks in jail, of which 7 were suspended. More importantly, this meant the forfeiture of various equipment.

The Court of Appeals, however, decided to use one of the two (three?) big loopholes in Dutch criminal law. (We can argue whether a decision to convict without punishment is a loophole.) Under art. 349(1) of the Code of Criminal Procedure, the court can decide that the prosecutor "cannot be received in his prosecution". The law mentions some examples of when this happens, most importantly in various cases of prosecutorial misconduct (including serious cases of unlawfully obtained evidence), but doesn't define the term. Generally, a trial is concluded in this way in the interest of fundamental fairness, when the prosecutor has forfeited his right to prosecute in some way.

In this case, the Court of Appeals - quite rightly in my view - decided that the defendant was entitled to rely on the prosecutor not suddenly changing his de facto policy towards the coffeeshop, or rather on his not doing so without without weighing the public interest against the interest of the defendant, and without considering whether the route of administrative law should be preferred instead. Now that such a weighing did not take place, the prosecutor's right to prosecute was forfeited.

While this means that the defendant gets his stuff back, the time he spent in pre-trial arrest is gone forever. Also, it is unlikely that the coffeeshop will be able to do business as before. One way or another, it will probably have to close for good or at least drastically reduce its size, particularly when it comes to selling to foreigners. (In case anyone was wondering, selling weed to foreigners is not protected under EU law. Cf. Josemans v. Mayor of Maastricht, CJEU 16 December 2010.) After all, this criminal ruling does not affect the administrative courts' decision that the mayor was right to close the coffee shop, cf. the ruling of the Council of State of March 2011. Still, justice was done...

Court of Appeals in The Hague, criminal case no. BV2572 of 2 February 2012

This Week and Last Week in Luxembourg

Unquestionably the coolest case this week is AG Bot’s Opinion in Hungary v. Slovakia (!), about a refusal by Slovakia to allow the President of Hungary access to its territory. Hungary tries to argue it as a straightforward free movement of persons case, but the AG argues that the EU is not empowered by the Treaties to make rules about the access of a Head of State to the territory of another MS. Also interesting: “the Member States should not exercise their diplomatic competence in a manner that might lead to a lasting break in diplomatic relations between two Member States”. (par. 58)

AG Mazák agreed with the General Court that the Commission’s decision to conditionally approve the takeover of Vivendi’s European publishing activities by Lagardère was OK. The main fun of this case is that Lagardère sought to make sure that Vivendi got paid as quickly as possible by having a bank act as the purchaser pending approval by the Commission, based on an undertaking that said bank would be indemnified by Lagardère for any losses resulting from the arrangement. Éditions Odile Jacob v. Commission

Conservatives everywhere will find AG Bot’s opinion in P.I. v. Oberbürgemeisterin der Stadt Remscheid a decidedly mixed bag. On the one hand, the AG argues that a child molester cannot be expelled based on “imperative grounds of public security”, because he is not a threat to the public at large. On the other hand, the AG treats the 10 year limit for the highest level of protection as nothing more than a rebuttable presumption of integration, and argues that integration has not occurred in this case. Cf. art. 28(3) Directive 2004/38

AG Mengozzi argues that online contracts that provide the information required by art. 4 of Directive 97/7 via a hyperlink do not comply with the requirement of art. 5 of that Directive that the information should be provided to consumers in a “durable medium”. In fact, given that a further click was necessary to access the information in the first place, the AG argues that the consumer in question hasn’t received the information at all. I wonder how the internets are going to solve this problem… Content Services v. Bundesarbeitskammer

On renvoi, the General Court annulled a State Aid decision that it had initially upheld (original judgment). As far as I can see, the key error identified by the Court of Justice concerned the GC’s focus on the “causes or objectives of the aid”, rather than its effects. There was also a problem with the overall level of scrutiny. British Aggregates v. Commission

Finally, there was a partial loss for the Commission in the Industrial Bags cartel case, where UPM-Kymmene had its fine reduced by about 10% because the Commission failed to prove the cartel for the full time period claimed. The remaining amount is still the highest of the 13 companies involved, though. FLS Plast and FLSmidth got an even smaller “discount” for an even smaller period of time. For those keeping score, the total fine is now approximately € 280 million (instead of € 290 million).

Last week, there was at least a partial win for Germans with Czech driving licenses. The driver in question still lost, but only because he didn’t satisfy the residence requirements for a license, not because he’d evaded the German court’s decision to refuse him a license on the grounds that he “displayed aggressive tendencies”. Akyüz

For the purposes of the part-time work directives, Ireland was allowed to discriminate between judges and workers (i.e. to say that judges are not “employees”), but not between full-time judges and part-time judges. O’Brien v. Ministry of Justice

Also last week, the General Court backed the Netherlands against the Commission regarding some of its state aid for ING. The Commission had decided (link) that the aid in question was acceptable subject to three pages of commitments, but in front of the Court they failed to prove that it was aid at all, i.e. that ING couldn’t have gotten similar terms on the normal capital markets. Netherlands v. Commission