Tag: proposal

Commission Proposal for a Directive on actions for damages revealed – tout pour le peuple, rien par le peuple?*

Jose Manuel Panero Rivas

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

 

On 11 June 2013, the Commission issued its much expected[1] Proposal for a Directive concerning damages claims by victims of antitrust violations (‘the Proposal’).[2] This post aims to examine what the Commission has finally done in an area in which it has never felt too comfortable. The obvious reason for this is that, contrary to what happens with the vast majority of its legislative proposals, depending on its content the Directive could have a potentially detrimental impact on the crown jewel: public enforcement by the Commission of EU competition Rules.[3]

This is a controverted area of EU competition law. Therefore, rather than aseptically describe what the content of the Proposal is, this post rather begins with an explanation of several elements the Commission considered when drafting the Proposal. This will be followed by a description of the solution retained by this institution.

A final word of caution in this introduction: this is a long-waited and matured legislative proposal. However, it is still for the Council and the Parliament to intervene in the legislative procedure. At this stage it is still unclear if amendments will be introduced by any of the two institutions. Nevertheless, what is already known is that some Member States have distinguished themselves by putting spokes in the wheels of this project, in a perceived defence of ‘their’ large corporations potentially exposed to this kind of actions – although one may think they should also consider the interests of, at least domestic, consumers.

 

(i)                 Some background elements for understanding the Proposal

It is worth recalling that the right of compensation for parties suffering the consequences of infringements of EU competition rules is well established in the case law of the Court of Justice of the European Union (‘CJEU’).[4] Nevertheless, absent any EU rule governing this type of actions, it has been for the legal systems of the Member States to lay down detailed rules governing these claims. The limits of this autonomy were identified by the Court when proclaiming the principle of effectiveness (the national rules should not make the exercise of the rights excessively difficult or practically impossible) and the principle of equivalence (the rules may not be less favourable than those governing damages actions for breaches of similar rights conferred by domestic law).[5]

However, the Commission has always been reluctant to introduce US-type actions for damages in the toolbox of competition law enforcement mechanisms.[6] It is no secret that the star tool for the Commission with regard to its fight against cartels is its leniency programme. However, the incentives for an undertaking to apply for leniency (thereby escaping without a fine a prisoner’s dilemma-type situation) could be drastically reduced if the applicant could be subject to follow-on actions for damages by affected.[7] This incentive could be further reduced if the documents which the leniency applicant provided to the Commission could subsequently be requested by a national court, as is now permitted in accordance with the Pfleiderer case law,[8] in order to prove the existence of an infringement. In other words: one might expect that if actions for damages were to be made available to affected parties by a participant in a cartel which applies for leniency – as the principle of compensation of the harm suffered would require – then less applications for leniency would be made. Also companies would perceive less pressure to apply for leniency as they might consider that other undertakings would also be less likely to reveal the existence of the practice.

Determining what the actual damage suffered by a customer of those practices infringing antitrust rules is another essential element of actions for damages, but it is not an easy task.[9] One reason for that is that some of the overcharges incurred could have been passed on to final consumers or other downstream actors in the supply chain. However, it is not uncommon that those indirect purchasers could face procedural hurdles for claiming compensation from the damage they actually suffered. It is also worth noting that the actual damage for some types of antitrust infringements are far from being evident, consider for instance certain infringements of Article 102 TFEU or even infringements of Article 101 TFEU which, despite being classified as infringements “by object”, do not have an actual impact on prices or output.[10]

 

(ii)               Main elements of the Proposal

Bearing in mind the above, the Commission issued its Proposal, which contains the following key elements:

  1. It contains the principle of full compensation. In Article 2, the Proposal states that ‘full compensation shall place anyone who has suffered harm in the position in which that person would have been, had the infringement not been committed. It shall therefore include compensation for actual loss and for loss of profit, and payment of interest from the time the harm occurred until the compensation in respect of that has actually been paid’.
  2. In Article 5, the Proposal establishes the rules on disclosure of evidence, which should allow affected parties to obtain the necessary evidence for presenting their case to a court when the claimant presents reasonably available facts and evidence showing plausible grounds for suspecting it has suffered harm from an infringement of antitrust rules. However, Article 6 offers absolute protection to leniency and settlement applications (for both leniency corporate statements and settlement submissions), also limiting access to other kind of documents needed for the purposes of public enforcement of competition rules.
  3. In Article 11, the Proposal establishes the joint and several liability of participants in collective infringements of competition rules (typically cartels). However, this Article makes an exception for leniency applicants having received immunity, which could only be forced to compensate damages caused by other participants in the infringement after the injured parties have shown they are unable to obtain full compensation from the other undertakings involved in the prohibited practice.
  4. The Proposal expressly recognises the possibility for infringing undertakings to invoke a passing-on defence (Article 12.1 of the Proposal) except in those cases in which it is legally impossible for indirect purchasers to claim compensation for their harm (Article 12.2 of the Proposal). However, this also establishes that indirect affected parties (those suffering harm because of the passing-on of the extra costs) should have at their disposal effective mechanisms of redress (Article 13 of the Proposal).
  5. On quantification of harm, Article 16 establishes the rebuttable presumption that, in case of cartel infringements, it shall be presumed that the infringement caused harm.

 

(iii)             A foreseeable long and winding road until its adoption

The Proposal is now in the hands of the Parliament and the Council. Although the Proposal is a mature piece of legislation, the first reactions of these two institutions suggest that the Proposal is not likely to remain untouched in its final wording and that it will face a rocky ride in the course of the ordinary legislative procedure.

First reactions from various different actors within the Parliament suggest inter alia that (i) collective redress mechanisms should be part of the proposal; (ii) there should be changes in the rules concerning discovery of evidence (with contradictory views with regards to the direction in which the change should go); and (iii) limitation periods – five years in the wording of the Proposal – should be shortened. However, the final vote on the issue is scheduled for 5 December 2013.[11]

At its turn, the Council seems to seek a tightened of disclosure rules, and also a shortening of the limitation period (to three years). It also seems to water down the possible fines a national court could impose to defendants in case they refuse to comply with disclosure orders or destroy evidence (provided by Article 8 of the Proposal).[12]

Apparently, the Council is even contesting the legal basis used by the Commission. The Proposal has used a dual legal basis, namely Articles 103 and 114 TFEU. However, it seems that the Council – against the opinion of the Commission – is trying to avoid the use of Article 114 TFEU. In practical terms, this would mean depriving the Parliament from exercising effective legislative powers with regards to the Proposal.[13]

 

(iv)              Conclusion

The Proposal shows a complex equilibrium. The Commission has tried to genuinely foster actions for damages in the antitrust field while at the same time avoiding undermining a key element of its public enforcement of antitrust rules as is its successful leniency policy.

It is not for this post to determine if the Commission has been too zealous in its protection of public enforcement of competition rules or not.  It is neither for this author to consider if, given the direct impact of the issue on a key competence of the Commission, this institution is the most appropriate actor to issue the Proposal (although, in any event, no other possible actor could have started the legislative procedure). However, the first reactions from the Council seem to point out that Member States would like an even less litigation-friendly environment than the one envisaged by the Proposal. At its turn, voices in the Parliament are claiming for the introduction of collective redress mechanisms. It is worth recalling that the Proposal enters into a field (actions for damages) in which there are significant divergences between Member States. It is possible that its content (for instance with regard to joint and several liability or passing-on defence) could potentially shock well-established principles of civil or commercial statutes or judicial practices in certain Member States.

The final Directive would be a major piece of legislation for EU antitrust policy. Because of the compensation to be awarded under it, it is also of vital importance for undertakings and consumers. Finally this is likely to have an impact on general EU law concerning judicial procedures in Member States. Time will tell what the final result is and if the Directive has the ability to close the gap between antitrust and civil and commercial law rules in several Member States, which may have the impression that competition rules are from Venus while tort liability is from Mars.

 

*’Everything for the people, nothing by the people’. As the learned readers of this blog know, this motto corresponds to the age of Enlightened absolutism having been attributed to some of the European kings of the 18th century.

[1] Precedent works from the Commission in the field include (1) the European Commission, White Paper on Damages Actions for Breach of the EC Antitrust Rules, COM (2008) 165; and (2) the Commission Staff Working Paper Accompanying the White Paper on Damages Actions for Breach of the EC Antitrust Rules, SEC (2008) 404.

[2] Proposal for a Directive of the European Parliament and of the Council on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union, COM(2013) 404, 11.6.2013. But the Proposal does not come alone. The documents issued by the Commission on 11 June 2013 are the following: (i) Proposal for a Directive of the European Parliament and of the Council on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union, COM(2013) 404, 11.6.2013 (‘the Proposal’); (ii) Communication from the Commission on quantifying harm in actions for damages based on breaches of Article 101 or 102 of the Treaty on the Functioning of the European Union, C(2013) 3440, 11.6.2013 (‘the Communication’); (iii) Commission Staff Working Document – Practical Guide on Quantifying Harm in Actions for damages based on breaches of Article 101 or 102 of the Treaty on the Functioning of the European Union, SWD(2013) 205, 11.6.2013 (‘the SWD’); (iv) the Impact Assessment Report, SWD(2013) 203 final, 11.6.2013 (the ‘RIA’); (v) Executive Summary of the Impact Assessment Report, SWD(2013) 204 final, 11.6.2013; (vi) a Frequently Asked Questions document; and (vii) a Citizens summary.

[3]  See W.P.J.Wils, “Should Private Antitrust Enforcement be Encouraged?” in W.P.J. Wils, Principles of European Antitrust Enforcement, 2005 pp.111-127.

[4] See Case C-453/99 Courage and Crehan [2001] ECR I-6297; Joined Cases C-295 to298/04 Manfredi [2006] ECR I-6619; and Case C-360/09 Pfleiderer [2011] ECR I-5161.

[5] See Case C-453/99 Courage and Crehan [2001] ECR I-6297; and Joined Cases C-295 to 298/04 Manfredi [2006] ECR I-6619.

[6] Section 4 of the Clayton Act empowers private parties injured by violations of the Act to sue for treble  damages. For a comparison of several aspects of both systems (including the role played in the US by actions for damages and the interface between the different tools) see J. Panero Rivas Criminalisation of EU Competition Law enforcement: the long and winding road in Derecho de la Competencia Europeo y Español, vol  Dykinson Vol XI, 2013, pp. 139-185.

[7] Nonetheless, it is worth noting that those parties, independently from subsequent decisions of the participant in the cartel, have effectively suffered the harm.

[8] Case C-360/09 Pleiderer [2011] ECR I-5161. In that case, the CJEU stated that, in absence of EU Law, it is for the national court to decide on the basis of national law and on a case-by-case basis whether to allow the disclosure of documents, including leniency documents.

[9] On that issue see S. Bishop and M. Walker, The Economics of EC Competition Law: Concepts, Application and Measurement, Sweet & Maxwell, 2010, pp. 699 to 721.

[10] A good example could be information sharing practices that are traditionally considered infringements of Article 101 TFEU by object but whose impact on prices in not evident.

[11] MLex Lawmakers face scrap over ‘group claims’ in damages law, 17 October 2013.

[12] MLex EU States may seek tighter disclosure rules in draft damages law. 10 October 2013. For the initial position of the different Member States see MLex EU Governments size up draft damages claims-law, 3 September 2013.

[13] MLex Legal advice casts doubt on EU damage-claim law, 31 October 2013.

 

The Single Banking Supervisor: A giant’s step towards a genuine EMU?

Andrea Redondo
LL.M in European Law and Economic Analysis, College of Europe; BSc Economics and Finance, LSE; LLB, Université Paris 1 Panthéon-Sorbonne and Universidad Complutense of Madrid

 

Introduction

On 5 December 2012 a report signed by Mr. Van Rompuy (President of the European Council) in close collaboration with Mr. Barroso (President of the European Commission), Mr. Juncker (President of the Eurogroup) and Mr. Draghi (President of the European Central Bank) was issued, which outlined the steps to be adopted to tend towards a genuine Economic and Monetary Union (“EMU”).[1] The publication of this report marked the beginning of a new era for the EMU.

Shortly after, on 13 December 2012, the Council of the European Union agreed on its position on two proposals aiming at establishing a single supervisory mechanism (“SSM”) for the oversight of credit institutions. The first was a Proposal for a Council Regulation conferring specific tasks on the European Central Bank (“ECB”) concerning policies relating to the prudential supervision of credit institutions.[2] The second proposal aimed at amending the existing Regulation establishing the European Banking Authority (“EBA”).[3] This has been seen as a landmark event in the European construction and Commissioner Barnier has even gone as far as qualifying this as an “historical agreement”.[4]

The intention was to have the package voted by the European Parliament by the end of 2012 or beginning of 2013. For a series of reasons – of which some are more legitimate than others[5] – this vote has been delayed. It is however interesting to analyse at this point in time what the content of the proposal is and some questions which come to mind when reading the proposal, in the hope that some – if not all – will be answered by the time the final texts are adopted.

 

The content of the proposal in a nutshell

The purpose of the proposal is to establish a SSM, thereby:

“[conferring] on the ECB specific tasks concerning policies relating to the prudential supervision of credit institutions, with a view to contributing to the safety and soundness of credit institutions and the stability of the financial system within the EU and each Member State, with due regard for the unity and integrity of the internal market”.[6]

The ECB is expected to assume its supervisory tasks on 1 March 2014 or 12 months after the entry into force of the legislation, whichever is later.[7]

The main criteria for a financial institutions to fall under the ECB’s supervision is thus that it is systemic or, as the proposal states, that it is “significant”. The assessment of the significance of financial institutions is carried out on the basis of three criteria: (i) size; (ii) importance for the economy of the EU or any participating Member State; and (iii) significance of cross-border activities.

On the basis of these criteria, a financial institution is thus considered significant if the total value of its assets exceeds €30 billion, if the ratio of its total assets over the GDP of the participating Member State of establishment exceeds 20% (unless the total value of its assets is below €5 billion), or if the national competent authority considers that the institution is of significant relevance and the ECB confirms this following an extensive assessment. Furthermore, financial institutions which have requested or received public financial assistance directly from the European Financial Stability Facility (“EFSF”) or the European Stability Mechanism (“ESM”) cannot be considered less significant.[8]

It is expected that around 150 credit institutions will fulfil these alternative conditions and will thus fall under the prudential supervision of the ECB.[9] However, although 150 might sound like a large number, there are two very notorious categories of credit institutions which are clearly missing.

The first one is that composed by the credit institutions of the City in London. The reason underlying this exclusion is that the UK (together with Sweden and the Czech Republic) has managed to keep its own credit institutions aside from this proposal. The second category is that composed by the Sparkassen, the German local savings banks, which escape the ECB’s prudential supervision given that Germany managed to negotiate thresholds sufficiently high for these savings banks to fall out.

The proposals also states that:

“[on 29 June 2012] the Euro area Heads of State or Government Summit pointed out that when an effective single supervisory mechanism is established involving the ECB, for banks in the euro area the ESM could, following a regular decision, have the possibility to recapitalise banks directly which would rely on appropriate conditionality, including compliance with state aid rules”.[10]

Although this idea is only contained in a small paragraph within a 73-page document, its importance is clearly inversely proportional to its size. Although the direct recapitalisation of banks by the ESM is not yet a reality as it requires a decision of the Council to become operational, if it is finally adopted it will have a great impact on Member States’ public finances.

Amongst other reasons, one of the advantage of this system over the current system whereby the ESFS/ESM facilitate the funds to national treasuries which subsequently recapitalise national banks themselves is that the funds being transferred to banks will not come to increase Member State’s debt-to-GDP ratio as the funds will be perceived as coming from a different legal entity, the ESM. This is a very important fact as it will allow cutting the existing vicious circle between sovereigns and banks, something which has greatly contributed to the debt crisis in Europe.

 

Some unanswered questions concerning the proposals

It is undeniable that the Council’s proposals constitute a giant’s step towards a genuine EMU given the extensive powers which are granted to the single banking supervisor. However, the text of the proposal and the various press releases and press conferences that have accompanied it cannot clarify some unknowns which come to mind when reading the proposals. Some of the most flagrant ones are:

  • Why is it to be expected that the ECB will carry out a more precise and careful prudential supervision of systemic banks than national central banks currently do? At the end of the day, it seems that staff from national central banks is going to be transferred to Frankfurt, which entails that it will most likely be the same people carrying out the supervision of the same credit institutions, but simply from a different geographical location.
  • Is the “two-speed” supervision that the proposals are establishing desirable for the European credit sector itself? It is not difficult to imagine a situation where clients, considering that their interests are better protected when the supervision is carried out by the ECB than by national central banks, will transfer their savings to systemic institutions, leading to the disappearance of smaller credit institutions, thereby leading to a higher market concentration, which can have pernicious competition effects.
  • What implications will this have for the IMF and its financial intervention in Eurozone countries? Will the IMF be entitled to give instructions to the ECB on how to conduct its prudential supervision as it current does to national central banks having received financial assistance from the IMF? A well-thought answer is to be provided to this question if we do not want to see muddy relations within the Troika.
  • Although the proposals foresee a common backstop loss mechanism (the ESM), why does it not contain a common “safety net” for depositors, which is equally important and necessary for a genuine EMU to exist?[11] There won’t be a fully-fledged EMU until such mechanism is put in place in the EU.
  • When bank recapitalisations are carried out by Member States, State aid rules apply. But what will apply when the recapitalisation is done directly by the ESM? Wouldn’t there be a conflict of interest between the ESM’s underlying goal of maximising the returns on its loans and the purpose of State aid rules of limiting distortions on competition? It is to be expected that it will be broadly in line with the rules contained in Articles 107 and 108 TFEU but, what if it doesn’t? Could such decisions be challenged before the Court of Justice?

Conclusion

The two proposals of the Council are certainly to be seen as a giant’s step towards a genuine EMU as the SSM is undoubtedly a central instrument of any decent monetary union. However, and although many unresolved questions arise, there are two main things which are to be regretted: first, that not all Member States subscribed to this initiative (thereby further fostering a two-speed EU) and, second, that the proposal does not cover all the necessary instruments for a fully-fledged monetary union to exist (in particular, the common safety net for depositors is clearly missing[12]). We are therefore facing another clear example of what Robert Schuman had in mind when proclaiming that “Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements (…)”.[13] The EMU is therefore no exception to this sequential nature of the EU construction, which needs to take another giant’s step to get to a truly genuine EMU.

[2] Proposal for a Council Regulation conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions: http://register.consilium.europa.eu/pdf/en/12/st17/st17812.en12.pdf

[3] Proposal for a Regulation of the European Parliament and the Council amending Regulation (EC) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority) as regards its interaction with Council Regulation (EU) No…/… conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions: http://register.consilium.europa.eu/pdf/en/12/st17/st17813.en12.pdf

[4] “Accord historique superviseur!”, see Commissioner Barnier’s tweet of 12 December 2013 on https://twitter.com/MBarnierEU

[5] Some of the most important reasons lying behind the delay in the vote of the proposal include the uncertainty surrounding the elections in Italy, the recapitalisation of Spanish banks and, more recently, Cyprus’ bailout.

[6] See Article 1, paragraph 1 of the Proposal for a Council Regulation conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions.

[7] See Article 27, paragraph 2 of the Proposal for a Council Regulation conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions. However, given that the vote of the text by the European Parliament has not yet taken place, it is unlikely that the entry into force will occur before April or May 2014.

[8] See Article 5, paragraph 4, (a) and (b) of the Proposal for a Council Regulation conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions.

[9] A fortiori, all other credit institutions remain under the supervision of their respective national central banks.

[10] See whereas number 8 of the Proposal for a Council Regulation conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions.

[11] The system currently in place obliges Member States to guarantee individually €100.000 per depositor and per entity in case of bankruptcy of the credit institutions where funds were deposited.

[12] There is currently a proposal on the harmonisation of national deposit guarantee schemes, which includes provisions to ensure that sufficiently robust national deposit insurance systems are set up in each Member State. However, even if the report entitled “Towards a genuine economic and monetary union” states that “a rapid adoption of this proposal is important”, it is not clear when this proposal will be adopted, although it seems highly unlikely that its adoption will take place before June 2013.

The New Proposal on Reception Conditions for Asylum Seekers: Genuine Change or Putting Lipstick on a Pig?

Amanda Spalding

LLM student at King’s College London

 

This September the European Parliament voted to reinforce asylum seekers’ rights in the Member States.[1] This is a welcome development given that the EU states’ record on asylum is far from squeaky clean with asylum seekers often being shunted from one Member State to the other and horror tales of unsanitary and unsafe living conditions in detention centres.[2]  The draft proposals approved by Parliament clarify the responsibilities of states as well as providing a set of standards for the reception and treatment of asylum seekers. These standards include detention grounds, detention conditions, detention of vulnerable persons, asylum seekers’ access to the labour market, asylum seekers with special needs and access to benefits. The draft, which has been provisionally agreed with the Council, modifies the Directive 2003/9 and, if passed, will become EU law by December 2012. In this article I will outline the proposed changes to the Directive and will offer a critique to ascertain whether these changes will adequately change the current asylum system or whether it is simply ‘putting lipstick on a pig.’[3]

 

The Current System

Up until 1999 asylum policy between Member States still operated on an intergovernmental level in so far as it was covered by the Third Pillar, thus outside the competence of the European Community(now the European Union). However with the Schengen cooperation[4] being incorporated into the Treaties in 1997 it was thought necessary to change this and bring the relevant policy areas under the EU’s remit. From 2003 to 2005 the EU attempted to implement the first phase of a ‘Common European Asylum System.’ The relevant instruments adopted under this heading are:

  1. Regulation 343/2003 which covers the determination of responsibility for an application of asylum between Member States.
  2. Directive 2003/9 which lays down the minimum standards and conditions of reception of asylum seekers.
  3. Directive 2004/83 which sets the minimum standards for the qualification of persons as refugees or persons otherwise in need of international protection as well as what protections are granted.
  4. Directive 2005/85 which provides the minimum standards on Member States procedures for withdrawing or granting refugee status.

This system has proven to be disastrous. Notice the abundance of directives used – giving Member States discretion in their implementation of the system. This has resulted in very important issues such as standards of reception and the criteria for qualification of a refugee being subject to different interpretation in what is ostensibly a ‘common’ system. The whole area of EU asylum law generally is deeply in need of reform but given the parameters of this article the rest of the discussion will be confined to Directive 2003/9.

As stated above the Directive 2003/9 relates to reception conditions for asylum seekers. ‘Reception conditions’ are the rules for the treatment of asylum seekers while their claim is being processed.  They generally concern areas relating to social rights.

There are six main areas that the current proposal seeks to amend. These are detention grounds, detention conditions, detention of vulnerable persons, asylum seekers access to the labour market, asylum seekers with special needs and access to benefits. I will outline the changes in each area below:

 

Detention Grounds

At present the 2003/9 Directive does not provide any grounds for detention. Thus the grounds for detention vary from state to state as they have discretion in this area. The new proposal sets out an exhaustive list for grounds of detention of an asylum seeker which are:

–       to check his or her identity;

–       to verify the elements of the application for international protection;

–       to decide on their right to enter the Member State’s territory;

–       to protect national security and public order;

–       to prepare them for return to their  home country if the Member State “can substantiate on the basis of objective criteria … that there are reasonable grounds to believe that he makes the application for international protection merely in order to delay or frustrate the enforcement of the return decision”;[5]

–       in the context of a transfer to another Member State, under the “Dublin II” regulation on  responsibility for asylum seekers.

 

Detention Conditions

The current law does not provide any guidelines as to where an asylum seeker may be detained by a Member State. There is merely a requirement to provide them with a dignified standard of living. Thus a common ‘solution’ is to detain asylum seekers in prison. The European Parliament was in favour of prohibiting this in the new proposal but could not get the Council to agree. The new proposal merely reiterates the point that generally detention should take place in a specialised detention facility. However, if accommodation in such a facility cannot be provided and the Member State is obliged to place the asylum seeker in a prison, then they should be kept separately from ordinary prisoners and have access to open-air spaces. Asylum seekers who are detained must also be provided with information explaining their rights and obligations in a language that they understand “or are reasonably supposed to understand”[6].

 

Detention of Vulnerable Persons

Article 18 of Directive 2003/9 only provides that Member States should take into account the specific situation of vulnerable persons. The new proposal lays down some clearer rules. Minors are only to be detained as a last resort and if they are, it should be for the shortest period possible. All efforts should be made to release them and place them in more suitable centres. Unaccompanied minors should only be detained “in exceptional circumstances” and they should not be kept in prisons. They should be provided with accommodation in centres with staff and facilities which are adapted to their needs. They should also be kept separately from adults. Though this is an improvement on the very vague provision laid out in Art 18, the European Parliament wanted to insert clauses providing for a ban on the detention of vulnerable persons if it would be harmful to their health and to completely ban the detention of children. However they were resisted by the Council and the above compromise was reached.

 

Access to the Labour Market

At present, an asylum seeker will have access to the labour market one year after they have filed an application. However in practice there may be other obstacles. The Commission pointed out in its 2008 report on the application of the current directive that “additional limitations imposed on those asylum seekers who have already been granted access to the labour market, such as the necessity of a work permit, might considerably hinder such access in practice”. Also if a negative decision regarding the application is made within the year and the asylum seeker wishes to challenge that decision then the one year period restarts. Under the new proposal asylum seekers will have access to a Member State’s labour market no later than nine months after filing an application.  The Commission and the European Parliament wanted to change this to six months but again could not convince the Council.  The other restrictions to access also continue to apply.

 

Special Needs

Like minors, the current directive only requires the Member State to take account of the person with special needs (i.e. vulnerable persons) specific situation. It also provides that victims of torture, rape or other acts of violence should be given medical treatment if necessary. Under the new proposal the Member States will be obliged to assess whether an asylum seeker needs special attention, such as medical or psychological help. This assessment should take place “within a reasonable period of time” after an application is filed and the Member States should ensure that these special needs are properly addressed.


Access to Benefits

Currently the Directive merely provides that the Member State must provide emergency healthcare and treatment of essential illnesses to asylum seekers. All other benefits may be withdrawn at the Member State’s discretion.  The new proposal provides that benefits may only be withdrawn in exceptional and duly justified cases. This is again a compromise as the European Parliament wanted to ban withdrawal of benefits whereas the Council was happy for the current system to continue. Another change is to the practice of reducing benefits to asylum seekers who apply ‘late’. Now a Member State must be able to demonstrate that the asylum-seeker had not applied as soon as ‘reasonably practicable’ for asylum, ‘for no justifiable reason’ in order to reduce benefits. Again this is a compromise as the European Parliament wanted to abolish this practice, whereas the Council wanted to keep it. Finally Member States are now obliged to provide core benefits which includes emergency healthcare but also includes providing a ‘dignified standard of living.’ This is somewhat of a victory for the European Parliament as the Council only wanted to include healthcare but the vagueness of ‘dignified standard of living’ may prove to result in little change.

 

Is it enough?

Although undoubtedly there will be a lot of back slapping around the European Parliament over these changes, very little has in fact been achieved. The phrase ‘putting lipstick on a pig’ certainly seems apt here. The pig that is the EU’s broken asylum system has been very insignificantly altered. The number of asylum seekers who are detained may decrease slightly but given the broadness of some of the terms such as ‘to verify the elements of the application’; it is unlikely to significantly decrease. The ability of Member States to hold asylum applicants in prisons and for an imprecise period remains unchanged. Minors, unaccompanied minors and other vulnerable persons are still able to be detained by the state. The changes to access to the labour market are also relatively insignificant. As can be seen from above, this new proposal is most definitely a compromise. The limitations on withdrawal or reduction of benefits are a relative success but again encompass the features of a compromise. Although the Council may not have gotten its way with all measures, it has significantly diluted the Commission and European Parliaments proposals. Sadly this proposal will be viewed by those advocating fairer and more dignified treatment for asylum seekers as a missed opportunity. However these new proposals do meet for the most part with the UN Refugee Agency’s guidelines on detention of asylum seekers.[7] It provides grounds for detention, that detention in general and especially in prisons should be an exception to the rule and that the detention of minors and particularly unaccompanied minors should be an exceptional circumstance. The only way the proposal is lacking is that is does not specify the factors to be taken into account when deciding whether or not to detain a vulnerable person. Thus on the face of it, the new proposals at least means that the EU meets acceptable international standards on detention. Whether or not this is the case in practice will have to be seen but I am doubtful that the practice of detaining asylum seekers in prisons will see any change in near the future. Nevertheless any improvement on the current system is a welcome development and will hopefully mark the beginning of a trend in raising standards.

 

 

[4]  Which resulted in the abolition of passport controls between Member States

[5] July 2012, agreed text of Directive – Council document 12090/12:

http://www.statewatch.org/news/2012/jul/eu-council-reception-compromise-12090-12.pdf page 2 para 2

[6] July 2012, agreed text of Directive – Council document 12090/12:

http://www.statewatch.org/news/2012/jul/eu-council-reception-compromise-12090-12.pdf page 56