Article, Event review

Unveiling the Mechanics in EU Courts: Centre of European Law Public Lecture – “How EU Judges Behave in Competition Appeals”

Joe Lee, LLM Student (King’s College London), BBA (Law), LLB & PCLL (The University of Hong Kong)

On 5 November 2015, Dr. Angela H Zhang, Lecturer in competition and trade law at the Dickson Poon School of Law, King’s College London, gave a presentation on the topic of “How EU Judges Behave in Competition Appeals” based on her recently published research paper titled “The Faceless Court”.[1]  The lecture examined the career structure and incentives as well as background of EU judges and evaluated how these factors and the design of the EU judicial decision-making process may impact competition appeals. This article discusses the three main parts of the lecture: firstly, the selection, compensation and tenure of EU judges and the role of référendaires; secondly the dominance of French judicial culture in EU courts and lastly the hierarchical design of judicial decision making in EU courts and its impact on the degree of judicial scrutiny.

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Event review

European Rights and European Wrongs: Some Short Notes from Professor Takis Tridimas’ Inaugural Lecture

Davide Sardo
PhD student (King’s College, London), LL M (College of Europe, Bruges)

On the 10th February 2015, Professor Takis Tridimas gave his inaugural lecture for joining King’s College London in September 2013. The lecture gravitated and revolved around the position occupied by the CJEU in two distinct, but strictly connected, open-ended processes that accompanied and shaped the European integration: on the one hand, the definition of the boundaries of the competences of the Union, and, on the other hand, the emergence of an autonomous function of protection of fundamental constitutional rights at the supranational level. Continue reading “European Rights and European Wrongs: Some Short Notes from Professor Takis Tridimas’ Inaugural Lecture”

Event review

Event Coverage: BRITAIN ALONE, 9 May 2014

Niall Coghlan, BPTC Student at City University  London

 

9 May is Europe Day. This Europe Day, Senate House hosted a conference with the strikingly un-European title ‘BRITAIN ALONE’. The all-star attendee list, with representatives from most major EU law firms and universities, European institutions and governmental departments, was eclipsed only by the eminence of the four panels. These were successively chaired by the Supreme Court’s Lord Reed; Henderson Chambers’ Sir Alan Dashwood QC; former Advocate General Sir Francis Jacobs; and the conference convenor, Professor Takis Tridimas.

 

Fourteen speeches on topics ranging from the constitution through finance to social policy resulted.  What follows is a digest of those speeches.

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Event review

REVIEW: EU Law Panel at the International Graduate Legal Research Conference (IGLRC) 2014 at King’s College London, 14-15 April 2014

Florian Nitu

PhD Candidate, King’s College London

 

The European Union Law panel at the 8th edition of the IGLRC addressed the standards of regulation theme showing convincingly that EU norm generation remains as topical as always. It also becomes increasingly sensitive given the global recoup of the pluralist paradigm of law-making.

As Professor Alex Turk chairing the panel has stated at the outset, one way of approaching regulatory activities within the EU, from a standards’ perspective, would be to apply a balancing test to the normative process and its results, measuring comparatively the effects of regulations by reference to norm generation and enforcement. Under the proposed conceptual framework, the next logical step was to choose a number of interconnecting areas of regulation. For the event three typologies were selected.

The first one consisted of standards, which albeit properly enacted by the Member States, are rejected at the European Union level. Still, they are applied in practice given a blatant resistance to compliance. The ‘Golden Shares’ regulations were addressed as category-sample, with Jelena Ganza of King’s College London presenting ‘Resistance to Compliance: Is there a future for ‘Golden Shares’ within the EU’. The second one covered standards set in a collective regulatory process involving a number of different EU actors whose effort to harmonize conflicting interests appears to have yielded mixed results. Regulation of EU financial supervision was assumed to be the proper case study here, handled by Arien Van’t Hof of Erasmus University Rotterdam under the heading of ‘The institutional balance in EU financial supervision’. The third and final one dealt with the category of norms generated outside European Union administrative structures, in a transnational sphere, which are nonetheless embraced by the EU and its Member States. In this vein, Sabrina Wirtz of Maastricht University discussed the ‘EU risk regulation and its global standards: the case of pharmaceuticals’. All three perspectives have been explored insightfully by the speakers putting forward arguments of high interest and practical relevance.

On the resistance to compliance front and the case of ‘Golden Shares’ regulations, Jelena Ganza opened her presentation by defining the golden shares provisions as corporate control devices/special voting rights attached to named shares. They are issued for the benefit of minority shareholders, mainly former state-owned entities or public authorities, in relation to privatization projects. Although it may be argued that a first expression of the ‘Golden Shares’ concept may be found in the UK before, according to the panellist it is during the early-nineties that the idea took off in continental Europe. The ‘Golden Shares’ regulations have been fostered by the EU privatization wave involving mainly the utilities sector and other heavy industries, as well as by numerous public-to-private deals and, in general, by market liberalization programs, concluded in various South-Eastern Europe countries before and as a condition to their accession to the European Union.

According to Jelena Ganza’s research, in spite of their controversial nature and their clear conflict with the fundamental right to free movement of capital, the ‘Golden Shares’ regulations or at least their primary objectives subsist. Indeed, Member States refuse to comply with or try to circumvent the effects of no less than 15 judgments of the European Court of Justice adopted within infringement cases, starting with Commission v. Italy (C-58/99) to the recent Commission v Germany (C-95/12). It was also stressed out that enforcing the said judgments would affect not only the Member States concerned, but also their flagship corporations such as Telecom Italia, Enel, Volkswagen, Telefonica, etc.

She further discounted heavily the effects of the only judgment clearing the golden share-type regulation in Belgium [see Commission v. Belgium (C-503/99)], on the ground that the finding of the CJEU could not be further used as a concept clearance, because of the specifics of this case.

Picking up on audience questions regarding the indirect legality control of the regulations, through the domestic preliminary reference procedure, the panellist informed that to date there is no such judgment, due to lack of interest of the Member States to pursue such proceedings and the limited effects of the regulation over individuals/entities having standing to raise the EU illegality inquiry.

It was claimed that there should be more, since the change in the economic climate appears to be used by Member States as an opportunity to devise new non-compliance defences and to maintain the ’Golden Shares’ system in place or even replicate it. Theoretically, there have been attempts to pre-empt the freedom of capital movement by recourse to employment protection and social security values, Member States public policy stances and other state strategic interests.

Concluding, much remains to be seen on the Golden Shares regulation saga. In spite of the numerous infringement decisions, which Jelena thinks are fully justified as the free movement of capital right is the prevailing value in this tension of local and community interests, the Commission is unlikely, at least in the harsh economic times, to move more aggressively against non-compliant Member States.

It was Arien Van’t Hof of Erasmus University Rotterdam to address the regulation of the local-community tension, but in the systemic risk context. While looking critically at the EU banking regulation and supervision framework, his main aim was to determine which EU, national or other interests would the institutions and authorities involved ultimately serve.

Methodically, Arien used as research guiding tools the powers of EU agencies and institutions, the procedural aspects of rule-adoption and implementation, the institutional checks and balances, by comparing roles and responsibilities between the Commission, the Council and the European Central Bank.

In terms of regulation and supervision, the assessment process was filtered through the lenses of the micro prudential stability and the macro-prudential stability. To do so, it started with a critical presentation of the European System of Financial Supervisors, consisting of European Systemic Risk Board (ESRB), European Supervisory Authorities, including the European Banking Authority (EBA), the National supervisory authorities (NSAs) and the Single Supervisory Mechanism (SSM), as well as of the key instruments of system functioning that include the Capital Requirements Regulation (CRR) and Capital Requirements Directive (CDR) IV.

Further evaluating the microprudential banking supervision system, from EBA and SSM perspectives, the panellist found that, in what regards EBA, one could sense a rigid regulatory approach (when exercising binding powers) and certain discretion (when dispensing non-binding powers), while in relation to the NSAs as SSM agents, it argued that, all in all, their supervisory discretion is diminishing.

Turning to the macro prudential oversight, which was presented as crucial for identifying and prioritising systemic risks, Arien Van’t Hof has emphasized the hybrid nature of the European Systemic Risk Board. ESRB is composed of national central bank governors and 10 representatives of EU bodies or advisory committees. The presenter highlighted its likely inefficient decision-making process, but also the fact that the Council preserves the rights to reject some intended macro prudential measures of NSAs.

In this framework, the key arising question was how to harmonize the potentially different views at the level of various EU institutions and between national and EU bodies. As Professor Alex Turk mentioned in his comment, this further raises policy choices and issues of defining national interests against the systemic financial risk. The case of compatibility of bankers’ bonus regulation (limitation) at the EU level with bonus practices in certain Member States financial markets may well illustrate the national bias and policy choice point.

Concluding, the banking regulation and supervision framework attempts to resolve the local-community tension by diminishing supervisory discretion of the national authorities, despite further balancing this limitation by giving a say to such national authorities in many EU decision-making bodies. Result is that fragmentation of the internal market is reduced, while attention for financial stability is likely to increase.

Sabrina Wirtz of Maastricht University has brought the debate into the transnational sphere, by exploring the EU risk regulation and its global standards with a case study on the pharmaceutical industry and the operation of the International Conference on Harmonization (ICH).

As it was eloquently argued, the rule-making settings vary depending on the globalization context and on the regulative instruments. We are witnessing a shift in the regulatory landscape from ‘government’ of local or national/federal nature to the ‘governance’ of global cooperative networks, using numerous soft law mechanisms and defining standards in an osmotic manner. In this framework, a ‘standard’ was defined as a ‘voluntary and expertise based rule, constituting measurable criteria by which a product or a production process or service can be evaluated on the basis of technical or physical conditions’.

To substantiate the argument, Sabrina went on to discuss the structure of ICH (a truly transnational partnership between regulatory authorities from around the globe and industry associations, with the EU being represented through the European Medicines Agency), its mandate (harmonization of technical requirements on product and processes quality, safety and efficacy), as well as, its modus operandi (illustrating a bottom-up approach in setting standards and guidelines with no formal binding effect, but massively adopted as positive law).

A special attention was given to the process of formal adoption by the EU of the ICH standards, with the EU seen as participant and potential beneficiary of the rule making. In fact, it was pointed out, there are over 60 EMA Guidelines based on ICH similar technical documents, and although they are not legally binding, most of them do enjoy the same status as all other EMA Guidelines. In addition, there is certain evidence that such guidelines do influence further adoption of binding EU legislation. A number of factors may contribute to this result, including the EU Commission relying regularly on the EMA Guidelines and in its turn, the EMA being a member of ICH and applying consistently in its scientific assessment the ICH Guidelines.

While global governance under the promotion of the industry representatives could be an adequate frame for standard setting, issues of accountability and poor legitimacy of decision-makers, insufficient or lack of transparency and incidents of limited or mimicked public consultations in the rule-making process, often arise. The EU stands here in a delicate position, since so far, certain global standards so adopted had a large impact on European regulations.

But finally, according to Sabrina Wirtz the problem and the solution lie in the same place, as the expertise is with the industry and the regulatory powers with the authorities and hence, by putting them together, responsibly and transparently, satisfactory standard setting may be achieved.

The three case studies presented in the EU Law Panel at the IGLRC 2014 have showed that standard setting within the EU regulative process may be convincingly tested by reference to norm generation (using both top-down and bottom-up approaches) and norm compliance (illustrating formal non-compliance of binding law but also voluntary compliance of soft law).

Whether the EU law-making continues its somewhat anti-cyclic constitutionalisation process or, on the contrary, it allows more space for transnational self-creating, self-validating rules of law, it definitely remains a long(er) term debate.

Event review

Sword beach is in La Monnaie: King’s College London Centre of European Law celebrates its 40th anniversary with a high profile event in Brussels

Jose Manuel Panero Rivas

MA in Economics for Competition Law, King’s College London, LL.M in European Law, College of Europe, Bruges

 

 

Almost 70 years after the Normandy landings, the Centre of European Law of King’s College London arrived to the heart of Brussels to celebrate its 40th anniversary with the community of distance learners’ alumni. There, some of the most prominent London-based professors of the Centre were celebrating the success of the institution with their Brussels-based colleagues and former students. In attendance were Professors Biondi, Turk, Whish, Flynn, Jones, Wils, Buendía, Stefan amongst many others.

 

After a short introductory speech by Prof. Biondi (director of the CEL), the event was arranged in such a way that two different sessions ran simultaneously, one on EU Law (which was, in turn, divided into two sub-sessions) and another one on EU Competition Law. As the author is not ubiquitous, the EU Competition Law session, bearing the title “The increased use of settlements and commitments in antitrust enforcement: a success or a problem?” is not reviewed or summarised (although sources reported it was excellent, as it is the rule when one thinks of a session lectured by Profs. Whish and Wils). The lectures were followed by a great dinner not summarised here.

 

Free movement of capital with Prof. Flynn

There were two topics within the EU Law session. The first was “Recent developments on free movement of capital in relation to fiscal sovereignty” and was conducted by Prof. Flynn. This consisted in a review of two interesting 2009 CJEU judgments on the application of free movement of capital to issues related to charity. As Prof. Flynn mentioned, there is the general belief that “charity remains at home” but, notwithstanding that, the CJEU has consistently held that fundamental freedoms should equally apply to cases where the State provides a given framework for private entities and individuals donating to certain goals or institutions (not directly, as otherwise State aid rules might be applicable if the beneficiary develops an economic activity).

The first of them is Persche.[1] Mr Persche claimed that his donation of certain goods (Zimmer frames, toys, bed linen and towels) to Centro Popular de Lagoa, in Portugal, should qualify as deductible expenses for the purpose of his tax return in Germany. However, the German authorities refused his request on the grounds that the recipient of the donation was not established in Germany.

 

The Court clarified that the taxable treatment of such goods are within the scope of the rules on capital, irrespectively of their in-kind nature,[2] and that the inability to deduct these donations when the recipient is not established in Germany constitutes a restriction on the free movement of capital.

 

Thereafter, the Court analysed whether the restriction could be justified. Three arguments were put forward : (i) a tax allowance decreases Member State’s tax revenues, and the Member State should have to allow it only if there is a corresponding decrease in its expenses by the taxpayer taking a burden that would otherwise fall on the State; (ii) the tax advantages allow the Member State to discharge it of  some of its duties, which are confined to the territory of the Member State itself; and (iii) tax authorities cannot control that the funds benefiting from tax advantages granted outside the relevant Member States are indeed going to a truly charitable cause.

 

The Court dismissed all three arguments on the basis that: (i) the idea of justifications based on a reduction of fiscal incomes is neither a pure economic reason fitting within Article 65 TFEU nor does it constitute an overriding reason of public interest; (ii) the Member State should be free to choose the charitable goals it might consider appropriate and there is no good reason to consider that only specific institutions within its borders can fulfil such goal; and (iii) concerning the effectiveness of fiscal supervision, there are mechanisms within the EU for mutual assistance between tax administrations.[3]

 

The second judgment is Servatius,[4] where was at stake the eligibility of  a social housing project in Liège (Belgium) promoted by an association established in The Netherlands for the purpose of funding by the Dutch authorities of social housing projects. The system of prior authorisation established by the Dutch authorities was considered by the Court as a restriction of the free movement of capital. However, the Court considered that the financing of public housing could be considered as an overriding reason of public interests, particularly in the specific context of The Netherlands. Ultimately, as it happens often with preliminary rulings, the question on whether the measure was proportionate or not was left for the national court.

 

The paper prepared by Prof. Flynn is available here.

 

Constitutional problems with Prof. Turk

 

The second topic was a presentation by Prof. Turk on the constitutional problems posed by the current architecture of EU regulation of the financial sector under the title of ‘EU Institutional Architecture for Financial Regulation – Constitutional Issues and Solutions’.

 

As the readers of this blog know, there are currently different levels of regulation in the field. On the first level there are EU Directives and Regulations (such as the Capital Requirements Directive (CRD)[5] and the Bank Recovery and Resolution Directive (BRRD)[6]). On a lower level, the Commission adopts subordinate regulations. However, the ever increasing number of agencies (European Securities and Markets Authority – ESMA -, European Banking Authority _- EBA – European Insurance and Occupational Pensions Authority – EIOPA) prepare the drafts of those technical regulations, which specify the relatively broad concepts contained in the Directives or Regulations. Whilst those technical rules are formally approved by the Commission, some observers have pointed out the existence of a certain “rubberstamping” on the action of the Commission (especially because agencies are increasingly well funded while the Commission struggles to have the necessary resources to do a proper job). However, the problem is that, irrespective of the kind of “technical” decisions that are to be adopted, they would almost always have a political content. Therefore, the involvement of the Commission might be necessary after all.

 

This happens in a scenario in which there is a progressive takeover of the agencies by the Member States, whose representatives involved in the decision-making processes within the agencies act in the “general interest of the Union” but, one might wonder whether this “general interest of the Union” is as general as the one genuinely promoted by the Commission.

 

This status quo was reconsidered in the cases of Meroni[7] and ESMA,[8] which should be taken into account if the powers and acts of the agencies or the Commission in the field are challenged in the future.

 

The presentation prepared by Prof. Turk is available here.

 

Both presentations within the EU Law session were extremely interesting, fostering a remarkable debate.

 

Although the dinner is not to be reviewed, Prof. Whish’s speech is worth noting. The highly respected and regarded KCL Competition Law Emeritus Professor expressed his genuine joy for the success of the distance learning programmes, of which he is very proud. Prof Whish is fully committed with the distance learning programmes as he is the Director and Professor in the Programme on Competition Law, as well as co-director of the Economics for Competition Law Programme.

 

Overall, it has been an excellent experience that deserves to be repeated. Besides the interest of the lectures, it has been an excellent occasion for the Centre to consolidate its footprint in Brussels. And it has been extremely successful as it has been perceived as a tour de force and, when testing the audience, certain remembrances with the unforgettable passages in which Oliver Twist says “Please, Sir, I want some more”[9] (even if the Directors of the Centre do not resemble Mr. Bumble in any way) become apparent.

 

And finally, a big thank you to Andrea Cordwell James for her assistance in providing the presentations and obtaining the consent of the authors to share with the readers the materials presented during the lectures.

 


[1] Case C-318/07 Persche [2009] ECR I-359.

[2] Even if the provisions on free movement of goods were to be applied, one might not expect a different result given the facts of the case.  This might, however, be different if the situation would refer to beneficiaries located outside the EU.

[3] Particularly Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation.

[4] Case C-567/07 Winingstichtung Sin Servatius [2009] ECR I-9021.

[5] Capital Requirements Directive. For the documents integrating the CRDIV package see http://ec.europa.eu/internal_market/bank/regcapital/legislation_in_force_en.htm#maincontentSec1

[6] Bank Recovery and Resolution Directive. For an overview of the progress of adoption of the Directive see http://ec.europa.eu/internal_market/bank/crisis_management/index_en.htm

[7] Case 9/56 Meroni.

[8] Case C-270/12 UK v Paliament and Council. n.y.r.

[9] C. Dickens, Oliver Twist.