Piris (4)

I finally got around to reading Jean-Claude Piris' The Future of Europe, the book that was the basis for his lecture here in Florence in April. While I still don't agree with his policy recommendation - a new Schengen-like treaty that creates further European Integration among a subset of EU Member States - there's not much point in arguing over it here. That difference of opinion simply comes down to the costs and benefits of adding even more complexity to the European framework. Where he sees an avant-garde that will inspire the European people, I see even more clutter that will test their patience and make them suspicious of whichever politicians come out in support of this plan. Even as it is, European voters are too (rationally) ignorant to know the name of the President of the Council, or the President of the Commission, or any other EU politician. They don't know how the EU works, they don't bother to find out, and they complain anyway. Whose fault is that? I don't know. But I do know that it will hardly be solved by adding even more complexity.

There is, however, a specific part of his analysis that fascinates me in a broader sense, because it is a point that you hear quite frequently in recent months, especially coming from France: When law is made for a subset of Member States, only the Commissioners and MEPs from those countries should have a say. 

In its Parliamentary version, this discussion has been going on for quite some time already in the UK, where Scottish, Welsh and Northern Irish MPs get to vote on laws that apply in England, while the reverse is often not true. Just like in the UK, a complicating factor is that MPs or MEPS don't necessarily have to be from the constituency that they represent. In the UK, Winston Churchill famously represented Dundee for a significant part of his political career (1908-1922, to be precise). In the European Parliament, the most famous examples are in the Green Party, which seems to have somewhat of a policy encouraging candidates to stand in constituencies outside their native countries: While Daniel Cohn-Bendit (first representing Germany, now France) is actually not such a good example, Monica Frassoni is. She served her first term representing Belgium, and only her second term as an MEP for an Italian constituency.

Add to that that I'm generally critical of any kind of naive "lawyer-model" of parliamentary work, i.e. the approach where the job of the parliamentarian is to do what his voters would want him to do, rather than what is in the best interest of all constituents or even the country as a whole (in case those two are different), and it is clear that even in the case of the European Parliament I have significant sympathy for the view that MEPs all work for the best interest of all EU citizens, and should therefore all get to vote on matters concerning the Euro or Schengen. Nevertheless, though I am loathe to admit it, I think in the case of the European Parliament on the balance their connection to the country that elected them is such that it is preferable if MEPs from outside the Schengen-area or the Eurozone do not vote on legislation that affects only those Member States. (Participating in the debate is a different story, of course.)

M. Piris, however, also applies this argument to the European Commission. The factual basis of his argument I can only support: for a variety of reasons, the Commissioners are not as independent from their home countries as originally intended, and this shortcoming has been getting worse over the last decade or so, in the wake of the most recent enlargement and the entry into force of the Nice and Lisbon Treaties. With a large Commission (too large), and with one Commissioner per Member State (instead of two, as the larger Member States used to have), the Commissioners act ever more as representatives of their home countries. We should count ourselves lucky that the change of government in the UK hasn't yet caused them to try to force Baroness Ashton to resign.

That said, I'm not sure that the solution is to treat Commissioners like duplicate MEPs or Council Members. Instead, I am reminded of one of my favourite Shaw quotes:

The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.

In other words, if you treat Commissioners like they cannot be trusted to do their jobs properly, then they won't. But if instead you insist all the more that they observe strict neutrality, then perhaps you will end up with as much neutrality as is possible in this mortal realm. This is not just wishful thinking. There is ample literature from management and agency theory that shows that people respond positively to trust, and negatively to mistrust: Putting extra safeguards in place to guard against unwanted behaviour X often results in more of X, not less. I shudder to think how much (more) procrastinating I would do if my bosses made me clock in & out every day, just to make sure I put enough hours in.

So instead of creating a Eurozone-Commission to go with the Eur-Council and the Eurozone-Parliament, why not make yet another attempt to fix the Commission, if only to make it actually work? Let's go ahead and implement my two-tier Commission idea, or even actually cut the number of Commissioners this time. A crisis is a terrible thing to waste, after all. A convenient side-effect would be that we might actually be able to trust them not to put the interest of their home country ahead of everything else. Wouldn't that be a more constructive way to go?

All Cops Are Bastards

You've got to love a jurisdiction where the prosecution can appeal an acquittal. So a guy in (ever exciting) Goes wears a jacket with the print "ACAB". Result: he gets charged with insulting a police officer in the execution of his duties, under art. 266 and 267 Sr. In the District Court, he gets acquitted. In the Court of Appeals in The Hague, convicts him (€ 200 fine), but we end up before the High Council, i.e. the Supreme Court of the Netherlands. The High Council overrules, on the grounds that the meaning of the abbreviation ACAB is not "a fact of general knowledge" that need not be proved. The Court of Appeals in The Hague now acquits, holding that there was no insult now that the meaning of ACAB could not be considered a fact of general knowledge. Which brings us to the High Council a second time, this time at the instigation of the prosecutor at the Court of Appeals. Now, the High Council sides with the prosecution, overruling again: it is not necessary for the crime of insult that the insult in question can be understood by the general public. The case gets referred to the Court of Appeals in 's-Hertogenbosch for further examination.

Now obviously I have several bones to pick with this case. Most importantly: ARE YOU F-ING KIDDING ME???? Just two months after our highest court ruled that "Mierenneuker", i.e. "Ant-fucker" is capable of constituting a criminal insult, depending on the context, we get another one of these nonsense cases? Don't the police have real criminals to arrest anymore? Don't the courts have real cases anymore? I realise that we don't have a permission system, meaning that the High Council has to take all cases that come, but still. What are all these judges and magistrates doing wasting each others' time like this? But I'd better let this point of criticism go, before I get prosecuted for insulting someone.

Secondly, and per usual, I take issue with the very sparse motivation. In fact, I had no idea what exactly was going on until I read the opinion of the Advocate-General (and my former Criminal Law professor) Geert Knigge. (It's behind the same link, after the court's judgement.) After summarising the holdings of the Court of Appeals in par. 2.1-2.6, the full extent of the High Council's reasoning is in par. 2.7:

2.7. Aldus oordelend heeft het Hof een te beperkte uitleg gegeven aan art. 266 in verbinding met art. 267 Sr. Bij de beoordeling van de vraag of de genoemde uitlating beledigend is in de zin van die bepalingen is niet doorslaggevend de enkele omstandigheid of het een feit van algemene bekendheid is dat de onderhavige lettercombinatie de afkorting is van bovengenoemde woorden. Door de verdachte van het tenlastegelegde vrij te spreken heeft het Hof hem dus vrijgesproken van iets anders dan was tenlastegelegd. Het middel klaagt terecht dat het Hof aldus de grondslag van de tenlastelegging heeft verlaten.  

When broken down and translated, what they're saying is this (with the sentences numbered):

1. The reading of the Court of Appeals is too narrow.
2. It is not necessary for the crime of insult that the insult in question can be understood by the general public. (aka: the conclusion)
3. It follows that the Court of Appeals acquitted the defendant of something other than what he was accused of. (aka: the procedural conclusion)
4. The appellant is correct to object that the Court therefore went beyond the charges as filed. (aka: the procedural conclusion again)

That's it. Then they move on to ignore the other grounds for appeal, to annul the lower court's judgement and to refer the case to 's-Hertogenbosch. There is seriously nothing more here than ipse dixit. No reference to literature, to legislative history, to a dictionary, nothing. At least in the Mierenneuker-case we were given a few precious lines of explanation, but here they don't even do that.

Moving on to the AG's opinion, which was given on May 29, we find - in par. 7.5 and again in par. 8.6 - a perfectly convincing explanation of why the crime of insult does not require that the insult is generally understood. It even cites some literature. (OK, one case annotation.) The AG gives the example of a Russian insulting another Russian in Russian, and more generally points out the difference between talking about "facts of general knowledge" in the context of an evidentiary question and demanding that the meaning of the insult be such a fact as an element of the crime. He even goes so far as to give some guidance for the new Court of Appeals trial that will now follow, pointing out that it will generally be difficult to prove that the defendant knew what the abbreviation meant if it was not a fact of general knowledge.

(He also points to the difficulty created by the fact that the defendant wore the offending jacket before he ever ran into the cop, making it difficult to say that he insulted the cop "through some [overt] act" and in the cop's presence, as required by the law. Likewise, the subsidiary charge of publicly insulting the public authorities is difficult in the absence of proof that the general public knows what ACAB stands for. But that, too, is a problem for a later day.)

Finally, I'm amused by the AG's insistence that there is no criminal libel here. This is necessary because the law explicitly says that there is no criminal insult when there is criminal libel. Under the normal definition, calling a cop a "bastard", i.e. "an illegitimate child, a racially impure person or a person of lesser quality" (cf. the charges as quoted in par. 5 of the AG's opinion), is not defamatory because no "right-thinking" member of society would think less of anyone of they were a bastard. (I have to use this definition because I don't have access to the source cited by the AG, the Text & Commentary of the Criminal Code, specifically art. 261 Sr.) But this is not a foregone conclusion. Moreover, if being labelled a bastard is not defamatory, because no one cares, why is it an insult?

So yes, as always, let's just stop talking about all this nonsense and abolish all of Title XVI of Book 2 of the Criminal Code once and for all.

Municipality requires Supermarket to help the Poor

The Walloon daily L'Avenir reports about a new supermarket in Herstal that is required, as a condition of its permit, to give away all the food that it doesn't sell to food banks for the poor:

Herstal: les supermarchés obligés d’aider les démunis 

HERSTAL - En matière d’action sociale, la commune d’Herstal a innové en inscrivant dans le nouveau permis d’exploitation du magasin «Carrefour» une obligation de donner ses invendus aux démunis.

Cette initiative est à mettre à l’actif du député européen et bourgmestre d’Herstal, Frédéric Daerden. «Dans le cadre de mon action d’eurodéputé, j’ai été confronté au problème d’aide alimentaire, explique le fils de «Papa». Dans ce contexte, j’ai rencontré les banques alimentaires qui m’ont fait part de leurs problèmes, tant au point de vue financier qu’au niveau des stocks.»
L’envie d’aider les associations était donc présente dans le chef du bourgmestre. «Quand il a fallu renouveler le permis d’exploitation du Carrefour d’Herstal, je me suis dit qu’il fallait saisir l’opportunité, poursuit-il. Le Collègue communal a donc inscrit dans le nouveau permis une obligation de mettre les invendus à la disponibilité des associations.»

Une décision qui permet d’éviter les gaspillages. «La grande surface doit s’organiser en interne pour pouvoir stocker la nourriture invendue dans un espace tampon, détaille Frédéric Daerden. Libre aux associations de venir les chercher par après.» Deux associations («Espoir et fraternité» et «La cordée») se sont déjà montrées intéressées. 

Bientôt la même action ailleurs en Wallonie ?Si cette mesure n’est actuellement effective que dans une grande surface d’Herstal, l’objectif est bien de l’étendre dans toute la région liégeoise. Et pas seulement. «Nous allons inscrire cette obligation à chaque renouvellement de permis des moyennes et grandes surfaces d’Herstal, explique fièrement le bourgmestre. Mais je peux déjà dire que plusieurs collègues m’ont contacté pour lancer le même projet dans leur commune respective.»

Difficile cependant de savoir quelles seront les grandes surfaces concernées. «Pour inscrire cette obligation, il faut qu’un permis arrive à échéance», détaille Frédéric Daerden. 

Une mesure qui ne fait pas l’unanimitéSi Frédéric Daerden se réjouit de cette nouvelle mesure, ce n’est pas le cas de tout le monde. Herman van Breen, délégué national d’ATD Quart Monde en Belgique, a réagi chez nos collègues de la rtbf. «On leur donne des miettes qui tombent et puis on leur dit de se débrouiller avec.» 

Une réaction que regrette l’eurodéputé liégeois. «Évidemment que ce n’est pas révolutionnaire mais je trouve cette réaction très défaitiste. Ce n’est pas avec un magasin que nous allons régler le problème, mais l’envie d’étendre la mesure est bien présente.»

This idea is interesting on several levels. To begin with the lawyerly one, as always:

It is not entirely clear to me why a supermarket needs a permit of any kind. The article simply speaks about a "permis d'exploitation", an operating permit, and some quick Googling also didn't make things any clearer. However, as a general matter permits are required for a reason, they serve to allow the public authorities to protect a certain public interest that might otherwise be neglected. It follows, the courts have long opined, that the public authority is not allowed to use its power to award or refuse permits for any reason other than the reasons contemplated by law. The government may not refuse to give you a driving license on the grounds that you owe them back taxes, but only on for the reason that you're a horrible driver, or because your license has been suspended by the courts. Where it does otherwise, the public authority is guilty of "détournement de pouvoir", i.e. abuse of authority. (Art. 263(2) TFEU translates the concept as "misuse of powers", which, I guess, is a little bit less on the nose.) So with the emphatic proviso that I do not know the legal basis for this permit requirement, I would suggest tentatively that there is a case for détournement de pouvoir here.

From an economics point of view, this case represents a slightly different situation than the one I'm most familiar with: concessions. In a concession, the fact that the private party obtains the right to do business is only part of the story. At the same time, a sum of money flows from the government to the private party or the other way, depending on whether the business in question allows for economic rents or not. In that case, anything the government does in the way of extra requirements, conditions or rules immediately translates into a higher or lower economic rent for the private business, and therefore a higher or lower subsidy. In other words: anything the government wants, it has to pay for left or right. If the Dutch government wants toilets in all trains and at all train stations, it has to accept that this will reduce the profitability of NS and ProRail, and that the government will therefore have to make do with a lower concession payment and dividend from these companies. (Or, alternatively, a higher ticket price for consumers.) The government can have whatever it wants, as long as it is willing to pay for it.

But here, there is no money flow between the supermarket and the city. Whatever the city does to the profitability of the private company, it won't feel it in its own purse. This brave mayor is simply spending other people's money. (Not just the money of Carrefour, but also, to some extent, the money of Carrefour's customers who will have to put up with a small price increase.) And, as Mrs. Thatcher told us long ago, the problem with spending other people's money is that it has the annoying habit of eventually running out. We know that this rule costs money, even though the food in question would have otherwise been thrown away, because if all of this generosity involved no cost Carrefour would have done it already of its own accord.

And this, in the end, is the rationale for the rule against détournement de pouvoir. The legislature, in its infinite wisdom, creates a permit requirement. In so doing, it weighs the social costs and benefits: on the one hand, the permit requirement imposes a cost on private citizens, and on the other hand it promotes the public good. If suddenly the cities that are meant to carry out this law start using it to promote all sorts of other public goals, there is no longer any guarantee that the benefits will exceed the costs. They  might. And a particularly overconscientious mayor might even do a cost/benefit analysis himself, but ultimately he is not empowered to make that decision. Only the legislature, relying on the expertise of the - in the Belgian case - regional executive branch, decides how much of which public benefit is worth how much in costs for the private sector. So however nice this Belgian mayor sounds, I think it is safer for everyone if he just goes back to carrying out the law instead of making up new rules. If he wants to help the poor, let him pay for it with municipal tax money. (If the law allows this, which it may or may not.)

This Week in Luxembourg

Fra.bo involved some fun with a private law standards setting body carrying out what are essentially government duties. Conclusion: “Article 28 EC must be interpreted as meaning that it applies to standardisation and certification activities of a private-law body, where the national legislation considers the products certified by that body to be compliant with national law and that has the effect of restricting the marketing of products which are not certified by that body.” NEN-Norms, anybody? Cf. European Law Blog and ECJBlog.com

The Austrian company Compass-Datenbank tried to get access to the Austrian companies’ register by suing the government for abuse of dominance under art. 102 TFEU. The Court (per Judge Lenaerts), however, holds that in running the “Firmenbuch”, the Austrian government does not act as an undertaking. Compass-Datenbank v. Austria Cf. ECJBlog

Regarding the correct interpretation of art. 13 of Directive 2002/20, the telecoms Authorisation Directive, the Court sided with the mobile telephone operators against the Spanish local authorities. No fees may be imposed on operating undertakings which, without being proprietors of transmission facilities, use them to provide mobile telephony services. Joined cases Vodafone España v. Ayuntamiento de Santa Amalia, Vodafone España v. Ayuntamiento de Tudela and France Telecom v. Ayuntamiento de Torremayor

The Court (per Judge Malenovský) did its part to illustrate the need for a European patent court by ruling in a case where art. 6(1) of Regulation 44/2001 is applied in a patent dispute. Basically, the Belgian chemicals company Solvay is suing the Dutch and Belgian subsidiaries of its American competitor Honeywell in Dutch court for alleged violation of a patent in force in Denmark, Ireland, Greece, Luxembourg, Austria, Portugal, Finland, Sweden, Liechtenstein and Switzerland. It turns out that, yes, this can all be handled in The Hague. Solvay v. Honeywell et al.

Unusually, the Commission was shot down in an infringement procedure against Germany this week. The Court (per Judge Ó Caoimh) did not agree that the German rules for care insurance violated art. 56 TFEU. This is an interesting case on the boundary between the free movement of services and the harmonisation – or lack thereof – of the rules on social security and health care. Commission v. Germany

In consumer protection & banking law, the Court (per Judge Prechal) clarified some aspects of Directive 2008/48. SC Volksbank România SA v. Autoritatea Naţională pentru Protecţia Consumatorilor – Comisariatul Judeţean pentru Protecţia Consumatorilor Călăraşi (CJPC) Cf. Recent Developments in European Consumer Law Blog

Austria does not permit advertising for foreign casinos unless the countries that these casinos come from have an equivalent level of legal protection for gamblers that Austria does. While AG Mazák insisted that the advertising permit should depend on the protection offered by the casino, the Court (per Judge Toader) signed off on this approach. HIT and HIT Larix v. Bundesminister für Finanzen Cf. Recent Developments in European Consumer Law Blog, the IPKat and the European Law Blog

In more Court/AG disagreement, the Court (per Judge Cunha Rodrigues) also signed off on the Italian rules for the liability of legal persons in the course of criminal proceedings. Framework Decision 2001/220 did not intend to require that legal persons should be made liable to compensate the victims of their crimes, and in the case at bar the administrative offense with which Rete Ferroviaria Italiana is charged is not even the immediate cause of the harm suffered by the victims. Maurizio Giovanardi and Others

Cetarsa lost its competition law appeal in the Spanish raw tobacco cartel case. Then again, so did the Commission. So the reduced fine imposed by the General Court (FR) stays. Cetarsa v. Commission (FR) (per Judge Arabadjiev)

AG Jääskinen voluntarily touched the third rail of Belgian politics by suggesting that a Flemish rule that requires all employment contracts to be drafted exclusively in Dutch even if the job is international in nature violates EU law, specifically art. 45 TFEU. Las v. PSA Antwerp

According to the General Court (Judge Frimodt Nielsen), the Commission jumped the gun by declaring the aid given for the purposes of building a paper mill in Eisenhüttenstadt compatible with the Common Market. The formal investigation procedure should have been opened in order to assess the importance of the project for regional development. Curiously, the Commission already seems to have done so in 2010 (link). Smurfit Kappa v. Commission

In other State Aid news, the General Court (Judge Gratsias) rejected the appeal of a number of French broadcasters against a Commission Decision declaring the state subsidy for France Télévisions compatible with the Common Market. TF1 and others v. Commission

Voting NO

Much as GeenStijl and I are getting along splendidly this week (here's why), I have to take issue with their analysis of the VoteWatch stats on Council voting. The tenor of their post, which was also the implication of the general news wire story, was that it is good that the Netherlands votes no.

Mede omdat de rest van Europa altijd overal 'ja hoor doe maar' op zegt, eindigde Nederland daarom op vier landen na het vaakst bij de verliezende minderheid. Niks braafste jongetje van de klas dus. Bijna net zo tegendraads als Engeland. Gelukkig niet zo intens laf als de Frambozen, die letterlijk overal 'oui, bier sûr' op zeggen wegens niet aflatende vrees voor de terugkeer van Duitse tanks op de Boulevard Haussmann. Maar wat kopen we d'r voor? Niets. Het betekent alleen maar dat onze politici (minus die van D66) *iets* minder kritiekloos Eurofiel zijn dan we allemaal denken, maar het bewijst tevens dat we al lang niets meer te zeggen hebben over wat nota bene ooit ons eigen handelsprojectje was. Was, ja.

Translation, with apologies for the GeenStijl tone:

Also because the rest of Europe always says "yeah sure, go ahead" to everything, the Netherlands ended up in the losing minority 5th most commonly. No way most compliant boy in class. Almost as contrary as England. Fortunately not as intensely cowardly as the Frenchies, who literally say "oui, bien sûr" to everything on account of a continuing fear of German tanks returning to the Boulevard Haussmann. But what do we get for all this? Nothing. It only means that our politicians (except those of D66) are a *little* less uncritically Europhile than we all think, but it also proves that we no longer have anything to say about what used to be our own little trade project.

I think both of these conclusions are very wrong. As Ronny Patz quite rightly points out, the fact that more than 90% of Council votes are unanimous shows that the vast majority of the interesting politicking goes on somewhere else. Now this is true for the Parliament as well, where the fun is usually focused on the rapporteur and on the Committee he/she is in, but not to the same extent as in the Council. In the Council, the dossier gets passed up from the Working Groups to COREPER to the Council and back down again however many times it takes to reach a substantial consensus. Moving a dossier up one level allows for the big bosses to do some serious horse trading, and moving the dossier back down allows for the specialists to come up with policy alternatives that can be traded and/or more details that can obfuscate the disagreement. This is a game that some countries play better than others, and that no one plays better than the French. So if you end up, after all this negotiating, voting no, then that can mean one of two things: Either your set of preferences is too far outside the mainstream for the others to accommodate you (i.e. the UK scenario, a lot of the time), or you just didn't play the game very well. And given that the Netherlands isn't that far out of the mainstream, the only logical conclusion is that they are bad at negotiating. Let's see who vote no or abstain the most (fig. 6 on page 11 here):

1. The UK, by some distance. This will often be a preferences issue.
2. Germany. Traditionally, the Germans are known to have difficulties establishing their position, given the time they need to consult with the Länder. As a result, they tend to start each dossier with a lot of reservations, i.e. places where they put a footnote because they still have to consult back home. By the time they finally figure out what they want, it is often already too late to move the consensus in the Council. For this reason, Germany often has less influence than one would expect from the largest EU Member State.
3. Austria. I'm surprised to see them there. They don't make much noise around the table. I suspect that they have similar problems to Germany, as well as an inherent preference for following the German vote.
4. Denmark. Denmark are known as the pioneers of the strong parliamentary control system. The Dutch tried to introduce it as well, in the Lisbon ratification act, at least for JHA matters, but no European parliament has managed to keep their government on a shorter leash than the Danish. This is a high risk-high reward strategy, which occasionally requires a No-vote. Of course, Denmark is also an ideological outlier in Europe.
5. The Netherlands. Why are we here? In the internal evaluation of the Dutch presidency in 2004, the Ministry for Foreign Affairs criticised the lack of policy coordination between the Ministries. (Cf. conclusions 1 and 5.) This is of course an issue that is particularly important when a Member State holds the presidency, but it is reasonable to assume that this is a problem that has persisted since. If the organisational infrastructure is not in place to decide what the Dutch preferences even are, it is hardly the diplomats' fault that they end up blowing the negotiating game.

So no, being 5th from the bottom on yes votes is not a badge of honour. It says nothing about the pro- or anti-EU stance of our government. More likely, it says something about their inability to stay well informed about impending policy proposals, their inability to formulate a set of preferences about those proposals that are widely supported among political and government actors and their inability to build coalitions with other Member States in support of those preferences. In other words, the Dutch aren't playing the game very well.

United States v. Alvarez

How is it possible that somehow the US Supreme Court managed to screw up the Stolen Valor Act case of US v. Alvarez? I know that they were distracted by the intra-office politics of the Obamacare case, but still... Come on!

Before we even get to the substance of the case, look at the lineup! At least NFIB v. Sebelius (i.e. the Obamacare case) had a (partial) opinion for the court...

KENNEDY, J., announced the judgment of the Court and delivered an opinion, in which ROBERTS, C. J., and GINSBURG  and SOTOMAYOR, JJ., joined. BREYER,  J., filed an opinion concurring in the judgment, in which KAGAN, J., joined.  ALITO, J., filed a dissenting opinion, in which SCALIA and THOMAS, JJ., joined. 

In other words, the result is a 4-2-3 split, with 6 votes to strike down the law, and with the three most conservative Justices - including the theoretically pro-speech Scalia - voting to uphold it.

Then the thing itself. From p. 3-4 of the opinion:

“(b) FALSE CLAIMS ABOUT RECEIPT  OF MILITARY DECORATIONS OR MEDALS.––Whoever falsely represents himself or herself, verbally or in writing, to have been awarded any decoration or medal authorized by Congress for the Armed Forces of the United States . . . shall be fined under this title, imprisoned not more than six months, or both.   

“(c) ENHANCED PENALTY FOR OFFENSES INVOLVING CONGRESSIONAL MEDAL OF HONOR.––  “(1) IN GENERAL.––If a decoration or medal involved in an offense under subsection (a) or (b) is a Congressional Medal of Honor, in lieu of the punishment provided in that subsection, the offender shall be fined under this title, imprisoned not more than 1 year, or both.”

So, as far as the 1st Amendment goes, the key ingredients are:

• False statement of fact
• This statement is knowingly false, or is false because of a reckless disregard for the truth. (It doesn't say so explicitly, but this has to be read in because of the general mens rea requirements in criminal law, etc. Cf. Alito, J.'s opinion, fn. 1 on p. 2)
• This false statement of fact does not fall within any of the previously recognised exceptions to the 1st Amendment. (Defamation, perjury, fraud, etc. Cf. Kennedy, J.'s opinion, p. 5.)

Hence the legally interesting issue: Are these previously recognised exceptions the full extent of what Congress may do under the 1st Amendment, or is there instead one overarching exception for knowingly false statements of fact, of which fraud, perjury, defamation, etc. are only examples? This is a question that was discussed at length on the Volokh Conspiracy while this case made its way through the courts - Eugene Volokh being a 1st Amendment specialst - but unfortunately prof. Volokh is on vacation and has not yet blogged about the Supreme Court's ruling. So I'm going to have to make it up myself. (For the record: In the past, and in his amicus brief, prof. Volokh has argued that there is one big exception for knowingly false statements of fact.)

Now the Court:

• Kennedy, joined by the Chief, Ginsburg and Sotomayor argued the main question in the negative, and struck down the statute.
• The other two liberals, Breyer and Kagan, tried for some kind of European style proportionality analysis, without deciding anything about knowingly false statements of fact in general. (Although I read this opinion as being at least unsympathetic to a broad exception.)
• Alito, joined by Scalia and Thomas also don't answer the general question, but at least concede that "the right to free speech does not protect false factual statements that inflict real harm and serve no legitimate interest."

On the whole, where it goes wrong is towards the end of Breyer's opinion. After all, there is much common ground - at least when it comes to this case - between his proportionality analysis and Alito's broader rule, given that Alito's statement hides the proportionality analysis in the concepts of "real harm" and "legitimate interest". So fundamentally there are 5 votes for this approach. However, and confirming the reason why American jurists often don't like proportionality analysis, Breyer and Alito cannot agree on the outcome of the analysis:

Both the plurality and JUSTICE  BREYER argue that Congress could have preserved the integrity of military honors by means other than a criminal prohibition, but Congress had ample reason to believe that alternative approaches would not be adequate. The chief alternative that is recommended is the compilation and release of a comprehensive list or database of actual medal recipients. If the public could readily access such a resource, it is argued, imposters would be quickly and easily exposed, and the proliferation of lies about military honors would come to an end. This remedy, unfortunately, will not work.
(...)
[T]he concurrence comments that “a more finely tailored statute might . . . insist upon a showing that the false statement caused specific harm.”  Ante, at 9 (opinion of BREYER, J.).  But much damage is caused, both to real award recipients and to the system of military honors, by false statements that are not linked to any financial or other tangible reward.
(...)
JUSTICE BREYER also proposes narrowing the statute so that it covers a shorter list of military awards, ante, at 9 (opinion concurring in judgment), but he does not provide a hint about where he thinks the line must be drawn. Perhaps he expects Congress to keep trying until it eventually passes a law that draws the line in just the right place. 

(Opinion by Alito, J., p. 6-8)

I would tend to agree especially with this final point of criticism. Much as I respect the position that Justices should not tell the legislature what laws to enact, Justice Breyer could have - and should have - given Congress more guidance than he actually did. It is very difficult to look at the last two pages of his opinion and say which statute Congress could enact that would pass muster, and yet he insists that such a statute exists. 

And so, rather than gathering 5 votes for a clear proportionality analysis - which might end up striking down the statute or not - we ended up with this 4-2-3 monstrosity which still does not settle much of anything, except of course that the Stolen Valor Act is not OK. It is inevitable that proportionality is less predictable than a categorical analysis - that's the price you pay for avoiding the Scylla and Charibdis of nonsensical Byzantine sub-exceptions to sub-exceptions and rules that are much too black & white to make sense - but this judgement is a particularly disappointing example of proportionality at work. 


I guess prof. Volokh has his work cut out for him...

NS does a Jimmy Carr

Sometimes the most newsworthy piece of information in a newspaper report comes all the way at the end. Yesterday, for example, the Railway Gazette informed its readers that the Dutch historic railway operator NS was commissioning a couple of dozen new Sprinter trains, and that this new generation of Sprinters would actually have toilets instead of "piss bags":

NS seeks next-generation Sprinter

06 July 2012

NETHERLANDS: Bidders have been invited to prequalify for a contract to supply single-deck EMUs for national passenger operator NS. The base order would be for vehicles ‘with a total capacity of approximately 10 000 to 20 000 seats’, with deliveries commencing between October 2016 and October 2017.

The next-generation Sprinter is to be ordered in at least two train lengths, one offering 150 seats and the other between 200 and 250 seats. NS is looking for a modern appearance and ‘transparent and open interior’, with inter-car gangways to be as wide as possible and no narrower than 2 m. On-train toilets have been specified, following complaints over the lack of facilities on the current generation of Sprinter LightTrain EMUs.

Service speed will be 160 km/h, with ‘high acceleration’ a requirement as well as ‘short stopping times’ for ‘quick boarding and alighting’. The new EMUs should offer level boarding at platform height, and a level floor throughout the train ‘as much as possible’.

Potential options would see a further 17 500 to 27 500 seats delivered by 2024 depending on passenger growth and other factors. A separate spare parts agreement and/or support agreement could be part of the contract scope.

The purchasing party is Dublin-based NS Financial Services Co, a rolling stock leasing company owned by NS Group, which would lease the trains to NS Reizigers.

(My emphasis.)
What is NS doing with a Rolling Stock Leasing Company in Ireland??? 

The answer, of course, is very obvious, even if the company's website doesn't come straight out and say it. As long as the lease is structured correctly, with enough of the risk remaining in Ireland, the whole thing can be set up so as to leave all of the profits created in Ireland, where taxes are much lower than they are in the Netherlands. (12,5% vs. 25%, according to Wikipedia.) 

As a Dutch taxpayer, though, I have to wonder whether this is really what the (state-owned) NS should be doing. As a matter of corporate strategy, it makes perfect sense. And if this ROSCO-subsidiary truly operates on an open market, with  many different customers, I would not have much of an objection. But I fear that the reality is different. While I'm sure that NSFS occasionally leases rolling stock to other operators, I feel confident in predicting that it is essentially an NS financing vehicle. (For obvious reasons, NSFS does not list its customers on its website, or even its own separate financial statements.)

If that is the case, why is NS's owner - the Dutch State - letting it do something that improves the company's profitability at the expense of the Netherlands' total social welfare? After all, the tax advantage obtained works by taking € X away from the Dutch tax authorities and paying half that amount to the Irish tax man instead, which is equivalent to the Dutch tax authorities paying their Irish counterparts an annual sum of € ½ X. Clearly, that is not in the best interest of Dutch society.

The problem is that everyone is having so much fun playing company, that they're forgetting that NS is not actually a for-profit company. It is an NV, i.e. a plc, but that alone does not mean that it should have profit maximisation as its overarching corporate goal. In a plc, as in any corporation, the company's goals are whatever the shareholders say they are. And the shareholder of NS, as noted, is the Dutch State.

Now the official policy of the Dutch state with regard to the plcs it owns is actually a bit murky. In the 1990s, when we had a liberal - Gerrit Zalm - for a Finance Minister, his ministry published a policy document that essentially said that companies like NS should be regulated using ordinary regulatory instruments, which would be controlled by the relevant ministry. The Finance Ministry would vote its shares to have the company maximise profits. More recently, however, Zalm's socialist successor Wouter Bos more or less repudiated that policy, but - in typical Labour Party fashion - he neglected to say anything that was actually intelligible for any normal person. A summary of the current policy is here, which includes the statement that "corporate strategy must be consistent with the public interest".

At the end of the day, though, the relevant actors are getting much too hung up on formality. Whatever the legal niceties, NS is a government controlled entity, and if they do something that directly and blatantly conflicts with the interest of the state or with the public interest more generally, then heads should roll. So why has this Irish Rolling Stock Financing company existed since 1999?

P.S. for anyone who missed the story of Jimmy Carr's tax adventures, cf. here for a summary.

This Week in Luxembourg

This week, the Grand Chamber judgement (judge Lenaerts) concerns the exhaustion of copyrights on software under art. 4(2) of Directive 2009/24. Their reading of the directive gives a wide reading to the concept, treating online and hardcopy transfers the same, meaning that Oracle, the creator of the copyrighted software, loses. Usedsoft v. Oracle Cf. The IPKat, Chillin’ Competition and IE-Forum.nl

The French tried to indirectly take into account EU fonctionnaire income for tax purposes, but were shut down by the Court (per Judge Šváby). Bourges-Maunoury v. Direction des services fiscaux d’Eure-et-Loir

The Court (per Judge Arabadjiev) is still not prepared to call the automatic retirement age what it is: age discrimination (Directive 2000/78 makes an explicit exception for retirement in art. 6, but does the Charter?), so the plaintiff loses. Hörnfeldt v. Posten Meddelande AB

Art. 5 of the Distance Selling Directive 97/7 does not allow for service providers and sellers to convey information about, inter alia, a right of withdrawal to consumers only through a hyperlink placed on a website of the undertaking. Content Services v. Bundesarbeitskammer Cf. Recent Developments in EU Consumer Law Blog

In ERSTE Bank Hungary Nyrt v. Magyar Állam et al., the Court (per Judge Tizzano) has some fun with the pre- and post-accession effect of the insolvency Regulation 1346/2000, and the combination thereof with an action in rem.

AG Trstenjak resists the idea that Mr. Vítor Hugo Marques Almeida (NL, DE, FR) can use EU law on car insurance to get around the Portuguese rule that he is responsible for his own damage incurred in a car accident on the grounds that he didn’t wear his seatbelt. The AG thinks that the Portuguese rule that places 100% of the damage with the plaintiff in such a case is consistent with Directives 72/166, 84/5 and 90/232.

According to AG Mazák, the Austrian Datenschutzkommission, i.e. the data protection agency (cf. art. 28 of Directive 95/46) is insufficiently independent from the Chancellor. Commission v. Austria

Why election manifestos can't be legally binding

Just for sports, because it's better than actually working, why not answer Jason O'Mahony's question: "Why can’t election manifestos be legally binding?"

Being a jurist, I'll start with the annoying lawyerly answer: Who would have standing to sue over a breach of promise? All citizens? All voters? Or just the people that voted for the party in question? As a matter of normal private law, the answer would be that only the latter category would qualify, since they are the only ones who provided consideration, and are therefore a party to the "contract". But, given that elections are secret, how are people supposed to prove who they voted for?

Giving the right to sue to people who did not vote for the party in question opens the system up to massive abuse, because the party would have to endlessly defend itself in court against law suits by its political enemies. That would be enormously costly in terms of time and money, and even if the political parties were somehow spared the cost of defending themselves, it would still involve dragging the people who are supposed to run the country (and only they, since they are the only ones in a position to break their promise) into court over and over again. That can't be good.

More generally, I think we don't want politicians to keep their promises more than they currently do. Jason seems to envisage a system where politicians are much more careful about the kinds of promises they make, which is already better than an outcome where politicians keep their promises even though it is against the best interest of the country, but in practice those two alternatives will be impossible to separate. No one can know what will happen during the next 4 or more years and anyone who sets out to limit themselves to promises they know they will be able to keep will end up with a very short list of promises.

And this mistakes the purpose of these promises. Politicians don't make promises as part of some bargain with their voters, as a quid pro quo. They make promises to signal their political philosophy, their ideology. The promises signal how the politician will behave with regard to a million other issues that he can't and won't list.

Finally, I don't think Jason's solution for coalition building is feasible. Whatever merit his idea has in two-party systems like the US or the UK, it is much less desirable in a country like mine where we may well end up with a five-party coalition after September. Going into such negotiations with a list of promises that cannot legally be reneged upon makes coalition-building all but impossible. This is all the more true because the effect of the system will be for politicians to make more such promises than they optimally should; it's a prisoners' dilemma where everyone ends up making too many promises.

(Every promise you make gives you a higher payoff in terms of votes, while the cost of the promise is in terms of bargaining problems, i.e. shared between you and the other political actors, as well as the public at large. Result: everyone makes suboptimally many promises.)

So instead, let's turn to another Irishman: Edmund Burke:

... it ought to be the happiness and glory of a representative to live in the strictest union, the closest correspondence, and the most unreserved communication with his constituents. Their wishes ought to have great weight with him; their opinion, high respect; their business, unremitted attention. It is his duty to sacrifice his repose, his pleasures, his satisfactions, to theirs; and above all, ever, and in all cases, to prefer their interest to his own. But his unbiased opinion, his mature judgment, his enlightened conscience, he ought not to sacrifice to you, to any man, or to any set of men living. These he does not derive from your pleasure; no, nor from the law and the constitution. They are a trust from Providence, for the abuse of which he is deeply answerable. Your representative owes you, not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion.

Last Week in Luxembourg

Last week, the Grand Chamber (per Judge Kasel) overruled the General Court’s judgement in case T-258/04 Poland v. Commission. The General Court had treated Poland like a non-privileged applicant under art. 230 EC for the purposes of the annulment of certain parts of Commission Regulation 60/2004 (transitional measures in the sugar sector), and held that Poland had missed the 2 month deadline. The CJEU now decided that the Regulation  applied to Poland in its capacity as a Member State, meaning that it could bring an action for annulment even after April 2004. Poland v. Commission

In last week’s other Poland v. Commission, dealing with Regulation 1972/2003 as amended by Regulation 735/2004 (transitional measures to be adopted in respect of trade in agricultural products)the General Court again declared the application inadmissible (case T-257/04 Poland v. Commission), at least insofar as it concerned the former Regulation. The Grand Chamber of the CJEU (again per judge Kasel) overrules the admissibility holding but agrees with the General Court on the merits. Poland loses. Poland v. Commission

In the case concerning the insider dealing surrounding Jürgen Schrempp’s resignation at Daimler, the Court (per Judge Lõhmus) follows AG Mengozzi and gives a more expansive reading of the definition of “information” under Directive 2003/6 and Directive 2003/124. In other words, the plaintiffs will likely win their damages suit. Geltl v. Daimler

Melvin West has managed to have no fewer than three EAWs issued against him, by three different Member States. (Or, as Berlaymonster put it: “Pass the Larcenist”) Art. 28 of Framework Decision 2002/584 provides for a procedure in case of two arrest warrants, but three? According to the Court (per Judge Arabadjiev), only the last one counts for the purposes of obtaining consent under that article. Melvin West (FR)

In Access to Documents law, the CJEU (per Judge Juhasz) overruled two General Court judgements about merger control documents. Both in Commission v. Agrofert and in Commission v. Éditions Odile Jacob the GC annulled the Commission’s decision when it shouldn’t have.

The Competition Law Private Damages suite of European Communities v. Otis et al. (NL, DE, FR) is fun in at least two ways: Firstly, there are some issues about who gets to represent the EU institutions pre- and post-Lisbon (cf. my blog post from last year) and secondly the case raises some questions about the Commission’s two hats: first it adopts a decision pursuant to art. 81 EC, and then it turns around and uses that decision as the (unchallengeable) legal basis for a damages suit in Belgian court. AG Cruz Villalón thinks it is all OK, though.

Surprisingly, AG Cruz Villalón suggests that the Court should go near the question of Same Sex Marriage, which comes to it in the form of a question whether Germany is allowed to discriminate between married civil servants and civil servants who have entered into a registered partnership, given the requirement of equal treatment under Directive 2000/78. The AG suggests punting to the national court, but not on the general question of whether the Directive could potentially apply here. Joined Cases Germany v. Dittrich et al. (note that the BVerfG already fixed this problem in 2009)

According to AG Mengozzi, the General Court needs to be sent to do its homework again in the France Telecom state aids case of France v. Commission. Apparently, the General Court (per Judge Azizi) was too generous in its definition of aid. (i.e. more prudent investor tests, etc.) Bouygues Telecom v. Commission and Commission v. France (FR)

In asylum law, AG Trstenjak wrote about how to determine which Member State is responsible for considering a potential claim under the humanitarian clause of art. 15 of Regulation 343/2003. Her answer reiterates some of the things said in relation to Greece (this case concerns Poland as the suspect state), and emphasises the importance of implementing ECtHR case law. K

AG Mengozzi had an opinion about the European order for Payment Procedure of Regulation 1896/2006, and specifically the issue of the payment of interest. Iwona Szyrocka v. SiGer Technologie GmbH

The General Court, finally, did some competition law, upholding the €21 million price fixing fine against Bolloré (FR) in the market for carbonless paper and the € 12 million and € 110 million price fixing fines against Coats Holdings in the market for zippers. E.On, however, had its cartel fine (DE, FR) reduced from € 553 million to € 320 million because the Commission erred on the relevant time period (i.e. they failed to prove it).

Also, as you may have heard, the General Court (per Judge Forwood, of course), sided with the Commission and slapped a € 860 million penalty payment on Microsoft for its failure to comply with the Commission’s 2004 abuse of dominance decision. (Cf. here for all the case documents)