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.

Continue reading “Event Coverage: BRITAIN ALONE, 9 May 2014”

Case C-435/12 ACI Adam v Stichting de Thuiskopie

Justin Koo, PhD Candidate, The Dickson Poon School of Law, King’s College London

The claimants in this case were importers of data media storage devices such as CDs. By virtue of Article 16c(2) of the Auteurswet (Dutch copyright law), the claimants were responsible for the payment of remuneration to authors. This payment has the effect of offsetting the costs of the private copy exception under Article 16b given that the imported media storage devices facilitate acts of private copying. However, the claimants contended that the remuneration payable to the defendants incorrectly takes into account copying from unlawful sources. In other words, the importers were being forced to pay compensation for illegal acts that should not fall within the private copy exception under Article 16b.

On appeal to the Hoge Raad der Nederlanden (Supreme Court of the Netherlands), the case was stayed and three questions referred to the Court of Justice of the European Union (CJEU).[1] In short, the first question asked whether private copying from unlawful sources fell within the scope of the private copy exception under Article 5(2)(b) of the Information Society Directive. In terms of the second question, the Dutch Supreme Court essentially asked what the role of the three-step test under Article 5(5) of the Information Society Directive is. The CJEU in addressing both questions together, posed the question whether reading Article 5(2)(b) and Article 5(5) of the Information Society Directive together would preclude national legislation that does not distinguish between the sources (lawful or unlawful) from which a private reproduction is made. With this in mind, the significance of the case was not about the determination of the levy to be paid but rather, the scope and application of the private copy exception.

In simple form, Article 5(2)(b) does not expressly address whether the source of the reproduction must be lawful in order to come within the exception. As such it was unclear whether copying from unlawful sources could also be included in the scope of the private copy exception. From a preliminary perspective, the exceptions and limitations provided by Article 5 of the Information Society Directive must be interpreted strictly following the decision in Infopaq.[2] Furthermore, their implementation into domestic law must be in accordance with the three-step test, as provided under Article 5(5) and emphasised under Recital 44 of the Information Society Directive. Following this established reasoning, the interpretation of Article 5(2)(b) must be understood to preclude the making of private copies from unlawful sources.

In respect to the strict interpretation of the exceptions and limitations, this can be aligned to the aim of establishing a smooth functioning internal market. Therefore, adopting a broad interpretation of the private copy exception as in the case of Article 16c of the Dutch copyright law could be detrimental to the proper functioning of the internal market.  This is because it could allow Member States to have varying forms of copyright protection not envisaged by the Information Society Directive. Furthermore, tolerating private copies made from unlawful sources would run counter to the Information Society Directive’s aim to establish a high level of protection and foster creation and investment in copyright works. Moreover, it would likely influence further acts of piracy and counterfeiting. This is because the toleration of copies made from unlawful sources could be indirectly seen as toleration of the unlawful sources.

In terms of the application of the three-step test, making private copies from unlawful sources would fail that test in at least two regards. Firstly, allowing private copies to be made from unlawful sources would conflict with the normal exploitation of the work because persons would be inclined to make a personal copy from a cheaper illegitimate copy rather than from a legal copy. This could negatively impact on the demand for legitimate versions of authors’ works. Secondly, tolerating private copying from unlawful sources may prejudice the legitimate economic interests of the author because he would be effectively unable to rely on his exclusive right of reproduction in cases of private copying. In other words, authors would be forced to tolerate the reproduction infringements that accompany private copying even where the source is an unlawful one. Thus allowing, private copying from unlawful sources would undermine the effectiveness of the exclusive right of reproduction.

With this in mind, Articles 16b and 16c of the Dutch copyright law have to distinguish between the lawful and unlawful sources of private copying in order to be compliant with Article 5(2) (b) of the Information Society Directive. The implication of this is that the inclusion of compensation for copying from unlawful sources would not be fair on the grounds that copying from unlawful sources does not fall within the scope of the private copy exception.[3] As such the claimants were right in contending that the private copy levy they were being charged was unfair and excessive.

What Now

From this case it is made clear that the private copy exception only applies to copies made from lawful sources. Therefore, making copies from unlawful sources amounts to an infringement of the exclusive right of reproduction provided by Article 2 of the Information Society. However, the more pertinent lessons to be learned from this case relate more generally to the implementation of the exceptions and limitations found under Article 5 of the Information Society Directive. It would appear that Member States do not have much leeway in transposing and interpreting the twenty-one exceptions and limitations provided. Member States do not have the freedom to expand the scope of the exceptions provided. Rather, they only have the freedom to restrict the scope of the exceptions especially in regards to new technologies.[4] Furthermore, there must be coherent and consistent application of the exceptions across Member States. As a result, it can be inferred that the wording of the exceptions provided under Article 5 are not just prototypes but perhaps ready-made provisions to be implemented verbatim.

On the one hand this strict interpretation may be good in terms of legal certainty. However, from a different perspective this development of narrow exceptions may be cause for concern given the broad and far reaching interpretations given to the exclusive rights.

 

[1] Only the first two questions are looked at in this article.

[2] Case C-5/08 Infopaq International A/S v Danske Dagblades Forening [2009]

[3] This position was suggested in the earlier Advocate General Opinion of Trstenjak on Case C-467/08 Sociedad General de Autores y Editores (SGAE) v Padawan SL [2010] para 78

[4] See Recital 44 of the Information Society Directive

New Guidelines for State Aid to Energy Infrastructure – A Helpful Move Toward Europe 2020?

 Robert Miklós Babirad

  

1        Introduction

On April 9, 2014, the European Commission adopted in principle new State aid guidelines, which will now encompass the application of State aid to energy infrastructure within the European Union.[1]  In 2008 the present Community guidelines on State aid for environmental protection[2] were established, which extended in duration through 2014.[3] The focus of the 2008 Guidelines centered upon the improvement of performance with regard to environmental concerns.[4]  Energy issues were addressed to the extent that they related to the support of environmental or climate related goals, but energy infrastructure failed to be specifically or adequately considered.[5]  This article will begin with a brief overview of Europe’s 2020 energy and climate goals.  The Commission’s inclusion of specific guidelines for energy infrastructure will then be assessed as well as their helpfulness with regard to achieving the goals of Europe 2020 and with respect to the Single Market.  In conclusion, it will be suggested that by extending the present Guidelines, specifically into the area relating to energy infrastructure, there will be an overall positive impact upon Europe in attaining its 2020 energy and climate objectives while minimizing any accompanying market distortions.

 

2        Europe’s 2020 Climate and Energy Goals

The goals of Europe 2020 include creating an EU wide policy for energy, which seeks to provide for energy services and products that are uninterrupted while fostering European innovation, technology, the development of a market for energy that is integrated and the overall attainment of Europe’s climate and energy goals as a whole.[6]  Europe 2020 also provides that by the year 2020, there will be an increase in the efficiency of energy by the EU’s Member States of 20% and with respect to emissions that are connected with global warming, a reduction of 20%.[7]  The European Union’s energy and climate objectives also provide for the goal of attaining 20% of Europe’s energy derivation from renewable resources by this time.[8]

  

3        Controversy Concerning State Aid In The Energy Sector

There is a concern as to whether extending the 2008 State aid environmental guidelines into the area of energy infrastructure will actually aid in the securing of Europe’s 2020 climate and energy objectives or instead result in a negative and measurable disruption of market forces.

Article 107(3)(b) TFEU permits the promotion of “an important project of common European interest” even where competition may be potentially distorted.  However, a concern is always present with regard to the conflict between unaltered competition in a market based economy and that of subsidies being applied through the granting of State aid, which may result in the internal market being disrupted.

It is important though to note that policy objectives have also always played a crucial role alongside competitive concerns.  Dr. Townley suggests that even agreements under Article 101 TFEU have been upheld by the Commission where they were even only “theoretically” based upon the larger policy objective of ensuring the supply of energy and this has occurred despite concerns regarding the integration of the Single Market or economic efficiency being negatively impacted.[9]  The Commission’s decisions in International Energy Agency are offered by Dr. Townley as support for the value, which has been attributed by the Commission to the certainty of availability with respect to particular goods of importance.[10] State aid becomes an essential instrument for the provision of a secure and reliable energy supply and attainment of European climate and energy objectives where energy operators on the market are unable to otherwise provide an adequate and modern energy infrastructure and supply; and also acts as an important device for overcoming failures both with regard to the market and existing regulatory schemes.[11]

The application of State aid as an instrument for achieving policy may therefore be employed, but must operate in tandem with the goal of minimizing distortions of the Single Market.  The Commission’s proposed Guidelines for energy and particularly energy infrastructure do not appear to be an unreasonable extension of policy making through the application of State aid, but rather a logical progression toward the attainment of Europe’s climate and energy goals.

Extending the guidelines to energy infrastructure becomes necessary, particularly because of the intended purpose of the rules, which is to aid in the creation of a European energy market that is integrated and able to meet Europe’s 2020 energy and climate objectives.[12]  Additionally, there is a focus on providing State aid to energy infrastructure projects that will enhance the flow of energy across Member State borders and encourage the establishment of energy infrastructure in those areas of Europe, which to date have experienced a lesser degree of overall development.[13]

Revised guidelines developed specifically for State aid to energy infrastructure become particularly essential when it is considered that for renewable energy resources to be used to their full potential while reducing expenditures, new facilities that are enabled to store the energy must be provided for that have the ability to convert “intermittent supplies of these energy sources” into an energy supply that is secure.[14]  Guidelines for State aid to energy infrastructure can aid in the effective attainment of this objective.

 

4        The  Helpfulness of the Guidelines for State Aid to Energy Infrastructure

A key aspect of the new guidelines is that they extend the 2008 environmental rules for assessing the application of State aid into the energy field and now specifically include rules for supporting energy infrastructure.[15]  This is an important step by the Commission, which resolves an existing failure to address State aid for the development of energy infrastructure.

The need for State aid guidelines for energy infrastructure is evident through the Commission’s acknowledgment that the generating of electricity has experienced a transition within Europe from a supply that was previously continuous and “relatively stable” to one that is now from a greater number of “variable sources,” which provide production on a smaller scale.[16]  As a result, the EU has had to find new ways to secure adequate energy production and supply.[17]  The establishment of guidelines for State aid to energy infrastructure is one manner of helping to address this challenge.

The Commission also notes that failures of both a regulatory and market nature have the potential to create a lack of sufficient investment in “generation capacity,” without the application of State aid, which may be used to ensure adequacy of the energy supply and the employment of renewable energy within the EU’s Member States.[18]  These acknowledgements by the Commission are important, because they recognize the changing nature of how energy is being supplied throughout the E.U. and the need for State aid and accompanying guidelines for energy infrastructure if market and regulatory failures are to be corrected and adequate energy production is to be ensured.

The Guidelines also encourage an avoidance of using State aid as a subsidy for fossil fuels, which would have the potential to result in harmful environmental effects.[19]  This is an important move by the Commission toward encouraging the development of an energy infrastructure that will foster the use of renewable energy and aid in the overall achievement of Europe 2020’s energy and climate goals.

The burden is also placed upon the Member State to provide reasoning as to why State aid is necessary for “adequate capacity” and why this cannot be met by the market.[20]  This is a positive aspect of the Guidelines in that an undue reliance on State aid is discouraged and market forces are instead supported.  However, the Commission provides that factors to be considered in the assessment should include a consideration of “the impact of variable generation,” and this will extend to that which is available in neighbouring Member States, the availability of interconnectors, projects that may be in the planning stages or already under construction and any additional factors with the potential to “cause or exacerbate the generation adequacy problem.”[21]

The difficulty is that the Commission fails to explain the scope of these broad factors, which must enter into an assessment of whether State aid should be granted to energy infrastructure.  Factors that have the ability to result in a failure to generate sufficient energy need to be more clearly defined if this provision of the Guidelines is to be interpreted meaningfully.  The Commission also neglects to provide for the extent that energy generation facilities in neighbouring Member States must be considered in the assessment.  Additionally, it is problematic that projects, which have not been completed, as well as those that are under construction and which may not come to fruition, are to be considered as viable factors in the State aid assessment.  As a result, State aid may be needlessly granted or incorrectly denied to the development of energy infrastructure in a Member State.

The Commission also provides that State aid to energy infrastructure should not provide for the undertaking to be remunerated for energy being sold, but rather compensation should only be provided through State aid for the actual availability of the energy provided by the undertaking.[22]  This is a positive ideal, but requires greater clarification by the Commission. The cost charged by an operator for “availability” may be inflated and thereby enable an energy operator to benefit from the State aid, which it is in receipt of, while also obtaining a profit through inflating its cost for the “availability” of the infrastructure.  A misapplication of State aid could subsequently result under this provision if greater oversight is not provided by the Commission in how aid will actually be dispensed with regard to this provision.

It is beneficial to Europe 2020’s energy and climate objectives that the appropriateness of State aid to energy infrastructure will be evaluated in terms of whether the measure encourages “adequate incentives” to operators and generators for the use of technology that is sustainable.[23]

The Commission also provides that the measure receiving State aid should possess a design that enables other undertakings, which are able to “effectively contribute to addressing the generation adequacy problem” to be able to take part in the measure, but only where this is “physically possible.”[24]  This is a positive aspect of the Guidelines that should encourage the improvement of cross-border energy flow and support less developed regions.

It is also noted that the measure, which is receiving the State aid should avoid the creating of “negative effects on the internal market” or measures that would “unduly strengthen market dominance.”[25]  The Commission appears to be taking concerns with regard to competition into account as well as limiting potential market distortions through the inclusion of these provisions.  These guidelines in particular help to alleviate concerns regarding the Commission enabling an excessive dependence on State aid subsidies for the development of energy infrastructure.

It is also interesting to note that market distortions through the application of State aid are minimized by the new Guidelines, which support market based tools for encouraging the use and development of renewable energy through the application of certificate schemes as well as the Commission’s endorsement of market premiums.[26]  A particularly positive aspect is that a tradable permit scheme for energy infrastructure must exceed the mandatory environmental standards, which have been established.[27]  Additionally, an undertaking that has poor performance with regard to environmental standards for energy production will receive a reduction in their allowances under these schemes, which are provided for in the Guidelines.[28]

The Commission’s endorsement of tools that are based on the market with regard to trading schemes are a positive step in continuing to support competition and market based tools alongside the application of State aid to energy infrastructure.[29] The incorporation of a trading scheme assessment into the guidelines will also aid the climate objectives of Europe 2020 in that allowances for harmful emissions and the associated costs to energy infrastructure will foster the development of a European energy infrastructure that pursues the use of technology that is efficient and based less upon carbon and fossil fuels.[30]

The employment of a tradable permit scheme under the new guidelines for energy infrastructure serves as both an endorsement of market based tools for achieving EU objectives as well as an important aid for the attainment of Europe 2020’s energy and climate goals.  It is also important to note that the EU Emissions Trading System (ETS) is a long-standing instrument of EU environmental policy, which the new guidelines will continue to build upon in their future application.

 

5        Conclusion

The extension of the 2008 State Aid Guidelines on Environmental Protection into the area of energy infrastructure will enable the European Union to more effectively achieve its 2020 energy and climate objectives.  Critics may suggest that competition will be unduly distorted by the measure.  Ambiguities are certainly present in the new guidelines, which will need to be eventually clarified by the Commission, so as to prevent State aid from being needlessly dispensed or incorrectly denied to energy infrastructure applicants in a Member State.  However, the Commission effectively addresses concerns with regard to the Single Market by endorsing market based tools throughout the new 2014 Guidelines and generally succeeds in ensuring that market disruptions are minimal and greater gains are achieved toward the EU’s energy and climate objectives through a more effective application of State aid with regard to energy infrastructure throughout the European Union.

[1]Commission Communication, Guidelines on State Aid for Environmental Protection and Energy 2014-2020 C(2014) 2322/3.

<http://ec.europa.eu/competition/sectors/energy/legislation_en.html>

Accessed 5th of June 2014.

[2] Community guidelines on State aid for environmental protection OJ 2008 C82/01

< http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52008XC0401(03):EN:NOT> Accessed 11th of March 2014.

[3] Commission Press Release of 18 December 2013, State aid: Commission consults on draft rules for state support in energy and environmental field, IP/13/1282, p. 2.

< http://europa.eu/rapid/press-release_IP-13-1282_en.htm> Accessed 11th of March 2014.

[4] Ibid.

[5] Ibid.

[6] Commission Communication, A Strategy for Competitive, Sustainable and Secure Energy COM (2010) 639 final, p. 2, 5-6.

< http://europa.eu/legislation_summaries/energy/european_energy_policy/en0024_en.htm> Accessed 11th of March 2014.

[7] da Graça Carvalho, Maria, Matteo Bonifacio, and Pierre Dechamps.  “Building a low carbon society.” Energy 36, no. 4 (2011): 1842-1847, p. 1842.

[8] Ibid. at p. 1843

[9] Townley, C. Article 81 EC and Public Policy (Hart Publishing, Oxford, 2009), p. 169.

[10] Ibid, at p. 165; See also: Commission decisions, International Energy Agency (1994) and International Energy Agency (1983).

[11] Commission Paper, Draft Guidelines on Environmental and Energy Aid for 2014-2020 OJ 2013, p. 52.

<http://ec.europa.eu/competition/consultations/2013_state_aid_environment/index_en.html> Accessed 11th of March 2014.

[12] Ibid.

[13] Commission Press Release of 18 December 2013, State aid: Commission consults on draft rules for state support in energy and environmental field, IP/13/1282, p. 1.

< http://europa.eu/rapid/press-release_IP-13-1282_en.htm> Accessed 11th of March 2014.

[14] da Graça Carvalho, Maria, Matteo Bonifacio, and Pierre Dechamps.  “Building a low carbon society.” Energy 36, no. 4 (2011): 1842-1847, p. 1843.

[15]Commission Communication, Guidelines on State Aid for Environmental Protection and Energy 2014-2020 C(2014) 2322/3.

<http://ec.europa.eu/competition/sectors/energy/legislation_en.html>

Accessed 5th of June 2014.

[16] Commission Communication, Guidelines on State Aid for Environmental Protection and Energy 2014-2020 C(2014) 2322/3, p. 52.

<http://ec.europa.eu/competition/sectors/energy/legislation_en.html>

Accessed 28th of May 2014.

[17] Ibid.

[18] Ibid.

[19] Ibid.

[20] Ibid. at p. 53.

[21] Ibid.

[22] Ibid.

[23] Ibid.

[24] Ibid. at p. 54.

[25] Ibid. at pps. 54-55.

[26] Commission Press Release of 18 December 2013, State aid: Commission consults on draft rules for state support in energy and environmental field, IP/13/1282, p. 1.

< http://europa.eu/rapid/press-release_IP-13-1282_en.htm> Accessed 11th of March 2014.

[27]Commission Communication, Guidelines on State Aid for Environmental Protection and Energy 2014-2020 C(2014) 2322/3, p. 55.

<http://ec.europa.eu/competition/sectors/energy/legislation_en.html>

Accessed 28th of May 2014.

[28] Ibid. at pps. 55-56.

[29]Schleich, Joachim, Karoline Rogge, and Regina Betz.  “Incentives for energy efficiency in the EU Emissions Trading Scheme.” Energy Efficiency 2, no. 1 (2009), p. 1.

[30] Ibid. at p. 2.

Expulsion of the Roma from France; A breach of EU law?

Andrew Seow Xian Wen

 

Ideal application of EU law

Freedom of movement for EU citizens is enshrined in Articles 21 and 45 of the TFEU.[1] Before the Treaty of Maastricht in 1992, only the free movement of workers was facilitated, but this gradually expanded to involve all EU citizens. The CJEU decreed that freedom of movement for all citizens is “the destiny of the EU”,[2] and henceforth the modern trajectory of EU law has been towards that goal. Therefore, expulsions may be the most draconian measures that a state can take against foreign citizens and must be assessed comprehensively before being legitimately adopted.[3]

However, enforcing Articles 21 and 45 TFEU in a straightforward way is nullified by Article 5 TEU which places migration issues (concerning the movement of EU citizens) in the hands of the national court. [4] This means that the EU can only issue directives, which set out the purpose member states must work towards. Directive 2004/38, the Citizens Rights Directive” (CRD) makes clear that two conditions must be met before an expulsion of foreign EU citizens is warranted.[5] In general, the conditions for denial of free movement are that migrants (EU citizens moving across the EU)

i)                    Must have insufficient resources to sustain themselves such that they become a burden to social assistance services

ii)                  Be a sufficiently serious threat to public security.

These factors must be assessed with the principle of proportionality, and on an individual basis.[6]

The Directive aims to balance unfettered EU citizen migration within the Schengen area against the strain on social assistance systems that a flood of immigrants would bring to host countries. At present, policy-makers have attempted to strike a balance by imposing that citizens must achieve self-sufficiency in a reasonable timeframe (3 months) in order to stay in a host country without restriction. However, it might be argued that EU law is not applied evenly across the board, and may very well be skewed against the Roma.

 

Reality 1: EU law is skewed against the Roma

Faced with persecution back in their home countries of Bulgaria and Romania, some Roma have fled to France.[7] However, because they are not formally schooled and cannot obtain work permits in France, the Roma, unable to fulfill the conditions set out in the CRD, cannot prove ‘sufficient resources’ by employment. Many take to recycling glass, playing music on the street, or begging. For the authorities, this ‘deviant’ manner of obtaining income does not count towards fulfilling the conditions of “self-sufficiency”.[8] Additionally, if construed very widely, France may deem repeated thefts, begging, or illegal occupation of land to be ‘sufficiently serious threat to public security’ whereby two grounds to expel Roma are fulfilled.

There was an additional catch for the Roma in the seven years preceding 2014: temporary restrictions applied to Romania and Bulgaria (‘transitional measures’) meant that Roma must apply for work permits in order to be gainfully employed in France and stay beyond 3 months.[9] With the French government’s systematic programmes of expulsion in place, it seems impossible that the very individuals they are trying to expel will be granted work permits to stay on. Hence we see that the ‘transitional measures’, combined with the CRD conditions, when applied to the realities of the Roma, disproportionately affect them in terms of free movement into France.

 

Reality 2: French implementation does not fulfill the Directive

The conditions for expulsion in the 2004 Directive were drafted with a high threshold, and must all be fulfilled before expulsion can be administered. However, three French sources of law clearly violate the spirit of the Directive. They not only lower the standard for determining who is a threat to the public, but also make it possible to expel foreign EU individuals on the basis of one condition.

Firstly, in July 2010, the French passed Immigration Bill [No. 542] (2010 Immigration Bill) which lowered the threshold of what constitutes serious threats to public security, by conflating ‘aggressive begging’, ‘illegal land occupation’; and ‘repeated theft’, with a serious threat to public security.[10] The Bill introduced a judicial process that disregards the principle of proportionality by individual review and it potentially constitutes an infringement of fundamental human rights vis-à-vis ‘collective expulsion’.[11] Protesters[12] believed that the Bill disproportionately affected the Roma, who take to begging, theft, and squatting through a combination of personal beliefs, unfortunate circumstances, and the inability to obtain work permits due to discrimination.

Secondly, in October 2010, the French pledged to ensure the correct transposition of the 2004 Directive. As the original deadline had long passed, and the Commission set an additional deadline for France who begrudgingly met it within 1 hour of the new deadline.[13] Although this new Law No. 2011-672 on Immigration, Integration and Nationality (2011 Immigration Law) used similar wording to the Directive and was thought to advance the law in its spirit, it became clear that two Directive Articles were transposed inappropriately.

i)                    Article 27 of the CRD which transposed into Article 39(3) of Immigration Law set out that an order to leave the country (OQTFs –obligation de quitter le territoire français) may be issued to genuine, present serious threats even if the Roma stayed for less than 3 months.[14] Human Rights Watch (HRW) states their view that this is clearly against the wording of the directive as there should not be any conditions limiting foreign EU stay.[15] While such security concerns obviously apply to all individuals in a host country, this article, read together with the 2010 immigration bill, means that those Roma who have stayed less than 3 months can be legitimately expelled for squatting, and ‘aggressive begging’ – a disproportionately severe punishment.

ii)                  Article 14 of the CRD transposed as Article 22 of Immigration Law stated that an EU citizen may be expelled if he constitutes an ‘unreasonable burden on the social assistance system’ and this applies to citizens that have stayed for less than 3 months in France. When the European Parliament questioned the appropriateness of Article 22, it was clarified that this provision only applies in ‘clearly repetitive cases where applicants’ sole purpose of renewing the stays of less than 3 months is to circumvent the conditions for residence’ laid down in the directive.’[16]

On the evidence, 80% of the incoming Roma from Bulgaria are reliant on social support services in those countries,[17] and France’s fear of them taking advantage of the system is hence not unfounded. However, this is no reason to contravene EU Directives and attempt to expel them. Rather, these Roma clearly represent a humanitarian problem akin to refugees and must be assisted to the fullest extent as EU citizens. Deported Roma could face more extensive persecution and human rights violations of violence upon their return to Bulgaria and Romania as rule of law is less prevalent.

The two transpositions show a clear watering down of the procedural safeguards and are inconsistent with the requirements of the Directive. The inadequate transpositions mean that the Roma do not have guaranteed time to establish an economic presence or prove self-sufficiency, but rather can easily be thrown out due to lowered standards of what constitutes a security breach, or when the French Conseil d’Etat decides that such immigrants are potentially reliant on social services.[18]

Thirdly, the French Civil code conflates a dependency on social assistance services with a threat to public order.[19] France would allow for an immediate expulsion upon discovering an alien’s threat to public order or ‘abuse of law’, where abusing the social services would constitute a threat to public order. Combined with the requirement for a work permit ‘transitional measure” the effective transposition of the directive into French law transforms the test into a single step one with no need for individual review. As a result, desperate and poor EU citizens are prevented from finding work, and are subsequently expelled because they need state support rather than retained because they need help.

Reality 3: Half-hearted implementation

It is submitted that the watering down of the safeguards combined with an anti-Roma sentiment – President Sarkozy reportedly state that the Roma were to be ‘systematically evacuated’[20] – means that the law will be implemented to target rather than to protect the Roma.

HRW examined 198 OQTFs in 2010 and 2011 and found they embodied 4 traits implying a clear disregard for proportionality.[21] It was found that the OQTF’s were in standardized form, and virtually identically completed with no evidence of any social welfare assistance received. Additionally, there was a pro-forma declaration attached where the Romani stated they were begging and had no medical insurance. The rights of these people were clearly not taken seriously and the protections implemented were either half-hearted or not implemented at all.

However, there are cases where some courts threw out OQTFs because there was no proof that the Romani in question were security threats. This might show some extent of proportionality where individual assessments are made when it comes to OQTFs but these cases (wrongly so) are the exception rather than the norm.[22] Point in case, a draconian second mechanism exists to compliment the OQTF – a prefectoral order to remove persons to the border, (arrêté préfectoral de reconduite à la frontière, or the APRF)[23], which is issued in line with the provisions of the 2010 Bill to deem foreign citizens as security threats. It only allows a 48 hour appeal period after which persons are forcibly removed – an almost irrefutable burden.  It was held to be valid in EU law when used in clearly repetitive cases’ but arguably has much wider application in reality. Indeed in 2009, 10,000 Romani were expelled,[24] followed by 11,000 in 2010, and 13,241 in 2011.[25] It is highly doubtful the law was applied in the spirit of the Directive in all these cases.

 

Conclusion

Immigration is a highly sensitive issue and not only potentially depletes a country’s social services, but is a key political topic that if addressed against the wishes of the general population can spell the end for a politician. France has clearly breached EU law by misapplying the Directive, and by infringing the principles of proportionality and human rights by allowing ‘collective expulsions’. Although commentators have suggested taking France to task under the Treaty to face economic sanctions,[26] this overlooks the well-founded French concern that Roma present in France are an actual burden to social services, and that incoming Roma would add to this burden.

The EU politicians must reframe the Roma plight under the lens of “Development and Humanitarian Aid” rather than “Migration”. This would not only underscore the emergency of the situation, but would most importantly, eliminate improper transposition since EU law directly applies and must be enforced to the letter.

 

[1] Treaty on the Functioning of the European Union – Articles 21 and 45

[2] C 184/99 Rudy Grzelyczk v Centre public d’aide sociale

[3] Barnard, Catherine, The Substantive Law of the EU: The Four Freedoms, (3rd edition, Oxford University Press, 2010) at 226

[4] Treaty on European Union – Article 5

[5] C 413/49 Baumbast and R v Secretary of State for the Home Department

[6] Diana Mahoney, Expulsion of the Roma, 37 Brook. J. Int’l L. 649 2011-2012 at 663

[7] Suzanne Daley, Roma, on Move, Test Europe’s ‘Open Borders”, N.Y. Times, Sept. 17, 2010.

[8] Mahoney n6 668

[9] Mahoney n6 661

[10] Immigration Bill [No. 542], available: <http://www.hrw.org/en/news/2011/02/07/open-letter-french-senators-immigration-bill>

[11] Quinn Bennett, Please Don’t Be Our Guest: The Roma Expulsion from France under European Union Law, 40 GA. J. INT’L & COMP. L. 219(2011) 241

[12] Ibid 228

[13] Human Rights Watch <http://www.hrw.org/news/2011/09/28/france-s-compliance-european-free-movement-directive-and-removal-ethnic-roma-eu-citi>

[14] Ibid [5]

[15] Ibid [6]

[16] “Parliamentary questions E-008463/2011, EU Parliament, 22 September 2011

[17] Report by Thomas Hammarberg, Commissioner for Human Rights of the Council of Europe, 9 February 2010, p. 14.

[18] Mahoney n6 663

[19] Ibid 672

[20] Owen Park & David Toke, The Politics of a Multi-level Citizenship, Global Society, 27:3, 360 (2013) at 367

[21] HRW n12 [14]

[22] Ibid [17]

[23] Ibid [29]

[24] Claire Suddath, “Who are Gypsies, and why is France deporting them?” Time, 26 August 2010, available: <http://content.time.com/time/world/article/0,8599,2013917,00.html>

[25] HRW n12 at [38]

[26] Bennett n11 244

Solution outsourced? – Case comment on C-458/12 Lorenzo Amatori

Julian Emanuel Titze

LLM student, King’s College London

 

A transfer of undertaking providing for the continuity of employment relations is usually in the interest of employees. This was, however, not the case in the preliminary ruling Amatori handed down by the CJEU on 6th March 2014. In its first judgment on transfer of undertakings after the highly contested ruling in Alemo-Herron[1] last year, the Court clarified the freedom of action Member States enjoy to define a transfer beyond the Acquired Rights Directive[2]. Upon the particular facts of Amatori, the application of this finding seems to be in conflict with the purpose of the Directive.

 

The facts of the case concern an outsourcing operation by Telecom Italia. The liberalization of the telecommunication market in Italy resulted in increased competitive pressure. As the incumbent, Telecom Italia carried out a reorganisation in 2010 to drive down costs.[3] It decided to formally split its IT operations department and outsource part of them. The operation of the software and testing services was bundled and transferred to a subsidiary company called ‘Shared Service Center’. The innovation and design operations were kept in the mother company and continued to collaborate with the outsourced employees.

Lorenzo Amatori and other claimants sought a declaration from the Tribunale di Trento that the transfer could not be relied on and their employment with Telecom Italia continued. On 20th September 2012 the Italian court decided to stay its proceedings and make a preliminary reference to the CJEU to ask the Court whether the Acquired Rights Directive 2001/23 precluded national legislation such as article 2112 of the Italian Civil Code. It provides for the continuity of employment relations without the employee’s consent in the case of a transfer of an economic entity that retains its identity. It allows the transferor to identify a functionally autonomous economic entity for the purpose of the transfer.

The question arose whether the Directive precluded defining a transfer without the need to identify a functionally autonomous economic entity existing before the time of the transfer. Linked to this issue is Member States’ freedom of action in the context of a partial minimum harmonization in the area. The application of implementing measures is particularly problematic where a transfer of undertaking is to the material detriment of an employee.

Having revisited the notorious notion of a transfer of undertaking (I), the case revealed the ambiguous nature of a transfer for employees (II).

 

I) The notion of a directive transfer revisited

The Court explained that an economic entity to be transferred must have been independent before the transfer, whereas the transferor’s control over the transferee is immaterial to fall within the scope of the Acquired Rights Directive.

 

A) Independence of the economic entity before the transfer

The CJEU’s point of departure is to recall its previous case law on the notion of a business transfer under Article 1 of the Directive. There must be an economic entity that retains its identity (Spijkers[4] criteria). In addition, the object of this transfer must be a stable economic entity with a sufficient degree of functional autonomy.[5] As can be deduced from Art. 6(1) of the Directive, this autonomy need not be preserved in the transferee’s organizational structure, i.e. a transfer cannot be avoided by a reorganization following the transfer.[6]

However, “the use of the word ‘preserved’ in the first and fourth subparagraphs of Article 6(1) means that the independence of the entity transferred must, in any event, exist before the transfer” (Amatori paragraph 34). If a transferor bundles specific operations ad hoc in order to source them out, it is doubtful whether this will be the case. The present case is therefore likely to fall outside the scope of the Directive. Was there not a differing provision in Italian law, this would be a new way to avoid the application of the transfer guarantees. Arguably, the transferee doesn’t have the economic advantage of taking over a business as a going concern in such a case. Nevertheless, this seems to be an easy way to circumvent the guarantees of the Directive in Member States other than Italy.

 

B) Control over transferee immaterial

Unsurprisingly, the Court rejected the claimants’ argument that there cannot be a transfer of an undertaking where the transferor exercises control over the transferee, notably a subsidiary. As the Court had decided before, the companies in question may well be part of the same group.[7] The emphasis of the Court on the formal separation of distinct legal personalities aims to avoid abuse and guarantee the safeguard of the rights of employees. However, this line of reasoning sits uncomfortably with the CJEU’s functional notion of an employer in the Heineken[8] case and does not sound very convincing, where a transfer is to the material detriment of an employee[9].

 

II) The ambiguous nature of a transfer for employees

The Court makes it clear that Member States are free to adopt a wider concept of a transfer than the Directive. Upon the particular facts of the main proceeding, its application of this finding appears to be in conflict with the objective of the directive.

A)     A partial minimum harmonisation

Having indicated that services bundled ad hoc to be outsourced are not covered by the Directive, the CJEU analyses whether a national law such as article 2112 Italian Civil Code is compatible with the Directive. By not requiring functional autonomy before the transfer, Italian law essentially adopts a broader notion of a transfer than the directive.

The Court refers to the preamble of the Directive providing for the protection of employees by appropriate measures. “Therefore, the mere lack of functional autonomy of the entity transferred cannot, in itself, prevent a Member State from ensuring in its national law for the safeguarding of employees’ rights after the change of the employer” (paragraph 39). To support this finding the Court refers to Article 8 of the directive allowing for regulations more favourable to employees than the directive itself (minimum harmonisation). Moreover, it refers to the fact that Article 4(1) of the Directive doesn’t harmonise the general protection against dismissal in national law, but merely excludes a dismissal on the ground of a transfer itself (partial harmonisation).

This is an important finding for the UK. Its TUPE Regulation[10] also adopts a broader notion of a business transfer. The legal effects of a transfer are not only attached to a ‘directive transfer’ under Art 3(1)(a), but also beyond the scope of the directive to service provision changes under Art 3(1)(b). The contested recourse in Alemo-Herron to the transferee’s freedom to carry out a business under Article 17 of the Charter of Fundamental Rights has been interpreted as changing the nature of the harmonisation of business transfers from “floor to ceiling”[11]. This threw some doubts on the compatibility of the TUPE regulation. Amatori now makes it clear that Member States remain free to adopt a wider concept of a business transfer than the Directive. However the Court should have explained this distinction in the judgment. Arguably, it is based on the fact that the notion of a transfer discussed in Amatori defines the scope of application of the directive, whereas Alemo-Herron concerned the interpretation of its legal effects. It is unfortunate that the Court decided to deal with the case without a written opinion of an Advocate General. Upon closer examination Amatori contains new questions of law that should have been further analysed.

In summary, if the Tribunal di Trento finds that the outsourced services were not functionally autonomous before the transfer – as indicated by the CJEU – the Directive doesn’t preclude the tribunal from attaching the legal effects of a business transfer to this operation. It should be noted that in any case, the Italian courts should verify if article 2112 Italian Civil Code is really intended to deviate from the directive or if its interpretation should be modified in line with the interpretation of the CJEU.

 

B) An application of the Directive in conflict with its purpose

In order to approve of Member States’ freedom of action to adopt a broader notion of a transfer, the Court refers to the need of protecting employees from the risks of business transfer. With reference to Rask[12] the Court recalls that the aim of the Directive is to “ensure that the employee is protected in his relations with the transferee to the same extent as he was in his relations with the transferor under the legal rules of the Member State concerned” (paragraph 41). No reference is made to the most recent ruling on the directive in Alemo-Herron. In that judgment, the Court suggested for the first time that the objective of the Directive was not only protecting employees concerned by a transfer, but to ensure “a fair balance between the interests of those employees (…) and those of the transferee”[13]. It can be inferred that the Court’s Ninth Chamber doesn’t seem to endorse such a re-interpretation of the objective of the Directive.

Unfortunately, it did not take into account the characteristics of the corporate transfer at hand. Upon the particular facts of the main proceeding, the assumption that a wider transfer notion under Italian law was in line with employee protection was mistaken. In fact, Mr. Amatori sought to defend himself against an outsourcing transfer materially undesirable for him.

In Member States like Italy where collective agreements are legally binding on the parties, employers such as Telecom Italia use transfer arrangements in a purposeful way to modify the employment conditions of their employees.[14] This can be done by transferring staff to a (subsidiary) company bound by a less generous collective agreement. If the wording of Art 3(3) of Directive 2001/23 seems to allow such practice, the Court’s ruling in Scattolon has created a heated debate whether the purpose of the Directive precludes any overall deterioration of collective agreement provisions. A preliminary reference[15] by the Austrian Supreme court in the proceeding between the Austrian Trade Union Federation and Austrian Airlines about the continued effect of a defunct collective agreement of the transferor could clarify matters.

The underlying contradictions about the purpose and effect of the Acquired Rights Directive that surfaced in Alemo-Herron remained undiscussed in Amatori. It is to be hoped that the preliminary reference by the Austrian Supreme Court will give rise to an extended Advocate General’s opinion engaging with corporate practice and the rationale of the Directive. For the time being, Amatori exemplifies that the extending the scope of a transfer is ambiguous for employees. If the legal consequences of a transfer can include a deterioration of collectively agreed work conditions, a closer scrutiny of transposing regulation will be warranted. The Court must double-check whether Member States’ regulations going beyond the directive are “more favourable to employees” (Article 8 of the Directive) upon the particular facts of a case. In the absence of legally binding collective agreements under UK law, this should not be a problem for the compatibility of the British TUPE regulation.

 

[1] C-426/11

[2] Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses

[3] See http://2010annualreport.telecomitalia.com/sren/Internalstakeholders/Industrialrelations.html

[4] C-24/85

[5] C-108/10 Scattolon

[6] C-466/07 Klarenberg

[7] C-234/98 Allen

[8] C-242/09 Albron Catering

[9] This is the case where the transferee is subject to a collective agreement binding on the employee that is less generous than one concluded with the transferor, cf. II B)

[10] Transfer of Undertakings (Protection of Employment) Regulations (SI 2006 No. 246) transposing the Acquired Rights Directive into UK law

[11] Prassl J, ‘Freedom of Contract as a General Principle of EU Law? Transfers of Undertakings and the Protection of Employer Rights in EU Labour Law Case ’ 42 Industrial Law Journal 434

[12] C-209/91 – the very first case applying the directive to outsourcing

[13] C-426/11, [25]

[14] http://eulawradar.com/case-c-45812-lorenzo-amatori-transfer-of-undertakings-and-telecom-italia/ with reference to the concerns of the Italian judge in the main proceeding