Why is the action admissible? Just because!!!

Today has brought many interesting judgments from the ECJ, but before I will comment in more details on one of them (concerning the EC's competence in the field of criminal law), just a quick note, which relates to my critique of the Court’s argumentative practices. In C-273/04 Poland challenged one of the Council’s decisions adopted before the actual accession of the new Member States on 1 May 2004. The decision had amended the rules concerning direct support schemes under the common agricultural policy - quite a sensitive area not only for Poland, but also for the Union in general. This amendment was possible due to a special provision in the Act of Accession. Poland claimed that the amendment had gone beyond the limits of the special provision and in fact had changed the conditions of Poland’s accession to the EU.

You do not have to be fans of the Common Agriculture Policy to find the case interesting: one of the issues was also the question whether or not Poland could even submit its action. The contested decision was published on 30 March 2004, while Poland submitted its action only on 28 June, thus much later than possible under the applicable rules on time limits for direct actions.

Several arguments were put forward in support to Poland’s right to have the case being heard by the Court: its dubitable status as applicant under Article 230 EC and therefore a very limited standing before its accession, and also the fact that the decision was not published in the Polish version of the Official Journal. Advocate General Poiraes Maduro took issue with these arguments and after a detailed consideration of all possibilities (in 48 paragraphs) he finally proposed to hold the action admissible - proposing a new standard of standing for new Member States (as according to the rules on standing as interpreted now, Poland’s action would be inadmissible).


Well, the Court was far more economical with its arguments:

Findings of the Court

(33) In the present case, the Court considers it necessary to rule at the outset on the substance of the case.

Full stop. Does this need any further comment?

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Palacios de la Villa, Mangold and … Pfeiffer: a two-step application of EC law(?)

In Palacios de la Villa (C-411/05) the Court of Justice had an opportunity to express its views on Mangold (C-144/04) - a judgment, which gave rise to much criticism not only from the part of the European legal doctrine, but also from one of the Court’s Advocates General (see also this related post concerning Lindorfer - judgment in Case C-227/04 P). In fact, given the circumstances of the case, the Court did not have to say much as regards Mangold. Rather, it added another piece to its jigsaw concerning horizontal direct effect of directives. Hence the reference to Pfeiffer (C-397/01 to C-403/01) in the title of this post.


In the case before the referring court from Madrid, Mr. Palacios de la Villa contested the automatic termination of his contract of employment based on his reaching the age-limit for compulsory retirement, which was presupposed by the applicable collective agreement. The agreement was in conformity with relevant Spanish legislation, which allowed such a termination, provided that an employee has fulfilled the conditions set out in the social security legislation of the Spanish State for entitlement to a retirement pension under the contribution regime. Mr. Palacios de la Villa contested this as discrimination on the grounds of age.

The legislation that implemented directive 2000/78 to the Spanish law expressly allowed such an automatic termination of a contract of employment and added: “such a measure must be linked to objectives which are consistent with employment policy and are set out in the collective agreement, such as increased stability in employment, the conversion of temporary contracts into permanent contracts, sustaining employment, the recruitment of new workers, or any other objectives aimed at promoting the quality of employment”. This additional requirement concerning the objectives of the possibility to terminate the contract of employment once an employee reaches retirement age was not mentioned in the previous legislation, applicable to Mr. Palacio de la Villa’s situation.

The Madrid court considered this as a possible breach of “the principle of equal treatment, which prohibit[ed] any discrimination whatsoever on the grounds of age and [was] laid down in Article 13 EC and Article 2(1) of directive 2000/78”. Its preliminary reference therefore asked on the conformity of the Spanish legislation with the mentioned principles. In case of their breach the referring court wanted to know whether these principles require it “as a national court, not to apply to this case” the contested provisions.

Before analysing whether or not the legislation in question was in conformity with directive 2000/78 or principles mentioned by the Madrid court, one could wonder what effects the Directive would produce in the dispute between Mr. Palacios de la Villa and his former employer. In Pfeiffer the Court stated:

The Court has consistently held that a directive cannot of itself impose obligations on an individual and cannot therefore be relied upon as such against an individual […]. It follows that even a clear, precise and unconditional provision of a directive seeking to confer rights or impose obligations on individuals cannot of itself apply in proceedings exclusively between private parties. (paras. 108 and 109)

This was exactly what some governments asserted in their submissions: directive 2000/78 could govern the case of Mr. Palacio de la Villa only through the principle of consistent interpretation, not through direct effect. The case cannot be distinguished from Pfeiffer, where the Court reached the above-cited conclusions and found consistent interpretation the only possibility left for the national court.

Nevertheless, despite these doubts made expressly in their submissions, the Court examined only the material scope of directive 2000/78 - whether the rules prohibiting discrimination, contained in the directive, intended to govern ‘employment and working conditions, including dismissals and pay’ within the meaning of its Article 3(1)(c). The nature of the relationship, i.e. whether it was a dispute between private parties, which could significantly limit the effects produced by the directive, the Court left unattended. What is not surprising - unfortunately - the Court did not mention any objections made by the participating governments and went directly to the examination of compatibility of the Spanish legislation with the directive. As it had not found any conflicts (on this see the very end of this post), it did not have to rule on what effects the directive could precisely produce in the dispute before the Madrid court.

However, to be fair with the Court, Palacios can be reconciled with Pfeiffer in the following way: in both cases the Court firstly examined compatibility of national legislation with the directive. Only after taking this (first) step, it continued to elaborate what consequences that finding would have in the case (second step). One could therefore say that the first step does not concern direct effect and all the exemptions from its application.

This view would come very close to a recent Lenaerts’ and Corthaut’s proposal having primacy as a “basic conflict rule” of the EU legal order and leaving very little for direct effect, defined very narrowly - as “the very particular way of invoking a higher norm in order to enforce rights that were conferred upon the applicant by that norm and which would not otherwise have existed in the internal legal order” (“Of birds and hedges: the role of primacy in invoking norms of EU law”, (2006) 31 EL Rev 287 at 291, an earlier version can be found here - pdf). All other “work” of making EU law effective in national legal order is according to Lenaerts and Corthaut being done by the principle of primacy.

Therefore, the first step made by the Court in Palacio, examining whether a norm of national law conformed to Union law, would be a consequence of primacy of EU law and would not entail the question of what the finding of a breach would mean for the national legal order and legal relationships existing there on the basis of the conflicting rules of national law. The main disagreement concerns the second step: what follows from finding the breach?

This would slightly undermine a conclusion recently reached by Dougan in his “When worlds collide! Competing visions of the relationship between direct effect and supremacy” (2007) 44 CML Rev 931 to the effect that Pfeiffer represented rejection of the “primacy” model as “a working template for the relationship between direct effect and supremacy” (p. 953). To the contrary, the first step taken by the Court in Pfeiffer, where the Court actually established incompatibility of the German legislation with the Working Time Directive, would confirm that primacy was in this case, and remains to be “the basic conflict rule of the EU legal order”.

Again, the second step is much more contested. There Dougan has very good arguments to doubt that primacy was “the basic conflict rule” in Pfeiffer. Instead of relying on consistent interpretation the Court could have ruled that the directive produced “exclusionary effects”, having required setting aside the conflicting legislation, which was not excluded in horizontal situations under the primacy model. However, he himself admits that neither the primacy, nor his own (“trigger”) model provide a complete and inherently consistent theory.

I would add, on the basis of the above analysis, that Dougan did not include the first step in his analysis, although it can prove crucial in cases such as Palacio or Pfeiffer: it allows the Court to rule on compatibility of national legislation without it being necessary to have an applicant who would finally benefit from its ruling. Pfeiffer reinforces this possibility of judicial review without a suitable applicant, totally within the logic of the primacy model.

We actually do not know what would follow as the second step in Palacios, should the Court have found the Spanish legislation in breach of the directive 2000/78. However, if the Court intends to stick to Mangold, the only possible way to go would be (at least in my opinion) to allow the directive to produce horizontal direct effects. The underlying rationale (like it or not) would be horizontal direct effect of the principle prohibiting discrimination on the grounds of age, which the directive “only seeks to implement”, invented by the Court in Mangold. If it was possible to invoke the principle in a horizontal dispute before the period for implementing the directive had expired, it should be even more so thereafter. Another case currently pending before the Court, C-427/06 Bartsch (argued before the Court recently), can show how firmly is Mangold embedded in the heads of the ECJ’s judges.

Finally, to complete this comment, how did the Court come to the conclusion that the Spanish legislation was compatible with the directive? After excluding that the mere absence of statement of objectives pursued by the possibility to terminate a contract of employment of an employee who reached the retirement age would be contrary to the directive: “In the absence of such precision, it is important, […], that other elements, taken from the general context of the measure concerned, enable the underlying aim of that law to be identified for the purposes of judicial review of its legitimacy and whether the means put in place to achieve that aim are appropriate and necessary” (para. 57). Then the Court exercised such review and found that the Spanish legislation was “objectively and reasonably justified in the context of national law by a legitimate aim relating to employment policy and the labour market”, and that “the means put in place to achieve that aim of public interest do not appear to be inappropriate and unnecessary for the purpose”.

PS: I was inspired in the “step” analysis of application of EU law by national institutions by Sacha Prechal (Direct Effect, Indirect Effect, Supremacy and the Evolving Constitution of the European Union in Barnard (ed), The Fundamentals of EU Law Revisited: Assessing the Impact of the Constitutional Debate? (OUP 2007), particularly at 42.

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Mangold strikes back…

… at this time on the Union. Some comments on the judgment in Case C-227/04 P Lindorfer v. Council.

This post can be read as a teaser for the forthcoming Tuesday’s judgment of the ECJ in C-411/05 Palacios de la Villa. There the Court will have an opportunity to show how seriously (or not) it meant in C-144/04 Mangold that the prohibition of discrimination on the grounds of age is a general principle of Community law, enforceable before courts and possibly leading to setting aside conflicting legislation. You may remember Advocate General Mazák’s Opinion in Palacios, harshly critical about the Court and its Mangold judgment. Another Court’s Advocate General, late L. Geelhoed, expressed his difficulty with such a bold reading of general principles in the following way:

So broad an interpretation of Article 13 EC and of the rules adopted by the Community legislature on the implementation of that article results, as it were, in the creation of an Archimedean position, from which the prohibitions of discrimination defined in Article 13 EC can be used as a lever to correct, without the intervention of the authors of the Treaty or the Community legislature, the decisions made by of the Member States in the exercise of the powers which they – still – retain. (Opinion in C-13/05 Chacón Navas, para. 54).

The Lindorfer Case also reminds me of my recent contribution at the Utrecht conference (about which I hope to post some comments later). There I expressed some concerns about the way in which the Court treats arguments presented before it that (in my opinion) seriously undermines its legitimacy.

Before the Court of First Instance Ms. Lindorfer had challenged a decision of the Council calculating her years of pensionable service. One of the arguments presented by her was discrimination on the grounds of age, since the rules on calculation favoured older officials without any objective justification. The CFI dismissed her action, but Mr. Lindorfer appealed to the ECJ.

Originally the case had been dealt with by the First Senate (consisting of 5 judges). However, after the ECJ delivered its judgment in Mangold, this senate decided, in accordance with Articles 44(4) and 118 of the Rules of Procedure, to refer the case back to the Court in order that it might be reassigned to a formation composed of a greater number of judges. The case was taken over by the Grand Chamber, which on 26 April 2006 reopened the oral procedure, appointed a date for a hearing and asked Ms Lindorfer, the Council and the Commission to express their views i.a. on the following issues:

(a) the application of the general principle of equal treatment to a case such as the present, in particular the extent to which the situation of an official who joins the service of the Community institutions after a period of membership of a national pension scheme is comparable to that of an official who joined the service at an earlier age;
(b) the scope of the prohibition of sex discrimination when calculating actuarial values in the transfer to the Community pension scheme of rights acquired under a national pension scheme;
(c) the scope of the prohibition of age discrimination in the same context, in the light of the judgment in Mangold; and
(d) the extent to which the ‘principle of capitalisation’ may be capable of justifying a difference in treatment according to sex or age in the transfer of rights acquired under a national pension scheme to the Community pension scheme, which is characterised essentially by the principle of solidarity.

So, in Lindorfer v. Council the principle of non-discrimination on the grounds of age indeed stroke back on the Union and the ECJ in particular. This time, it was not for a national court to enforce the principle against the national legislator. Instead, the ECJ itself was put into a position to enforce its previous conclusions made in Mangold against the legislator of the Union.

As I mentioned above, I have already criticized the argumentative practice of the ECJ at various instances (see e.g. my article in EL Rev at pp. 481-483). However, in Lindorfer v. Council it seems to me that the ECJ has gone farthest so far in neglecting its justificatory obligations towards the parties and the European legal discourse in general. After two opinions of its Advocates General, who dealt with the issue in some length, after re-opening the oral stage of the procedure to discuss the relevance of the principle and its judgment in Mangold, there is no mention of it in the whole judgment (except when the ECJ recapitulates the CFI’s judgment under the appeal).

The Court opened its argumentation by the following:

(45) It should be recalled at the outset that, according to settled case-law, it follows from Article 225 EC, the first paragraph of Article 58 of the Statute of the Court of Justice and Article 112(1)(c) of the Court’s Rules of Procedure that an appeal must indicate precisely the contested elements of the judgment which the appellant seeks to have set aside and also the legal arguments specifically advanced in support of the appeal […].

Without having access to the pleadings, we cannot actually say to what extent the appellant was clear in invoking the principle of non-discrimination on the grounds of age. It is true that AG Jacobs had some difficulties with the grounds of appeal (see paragraph 59 of his Opinion). On the other hand, both Opinions examined the principle without further objections and, after all, the main reason for re-opening the oral stage of the proceedings seemed to be exactly this principle.

It seems to me that in Lindorfer v. Council the Court had to face all the difficulties connected with adjudicating on the basis of general principles of law, “which are to be sought rather in the Platonic heaven of law than in the law books, [and whose] existence and […] substantive content are marked by uncertainty” (AG Mazák in in Palacios de la Villa, para. 86) especially when the court’s judgment would have replaced previous decisions made in a political process. It is interesting to note that when the case was pending before the Court, the Council changed the applicable rules and removed some of its discriminatory elements, especially those distinguishing between genders when calculating pensions. The distinctions made on the basis of age remained without change, however. The Court’s avoidance of the issue of the alleged discrimination on the ground of age may be read as its deference towards the Community legislator and the decision made in a political process. The way in which the Court did it, however, put its legitimacy in question. Let’s see on Tuesday what happens in Palacios de la Villa - whether the Court will show the same attitude towards national legislators….

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Some thoughts on Legal Professional Privilege in the European Union: Case C-305/05 Ordre des barreaux

The ECJ has recently decided on validity of obligations to inform and cooperate with competent authorities imposed on lawyers by Directive 91/308/EEC on fight against money laundering. According to the Directive, some categories of legal professions are under an obligation to inform (on their own initiative) competent authorities of any fact, which might be an indication of money laundering and to furnish those authorities, at their request, with all necessary information. In Case C-305/05 Ordre des barreaux francophones and germanophone and Others the ECJ found these obligations compatible with the protection of secrecy of communication between lawyers and their clients, known as Legal Professional Privilege (LPP).

Well, not really: the ECJ in fact did not review the directive in light of LPP; it only examined whether it was compatible with the right to a fair trial and rights of defence. As I will show in this post, these are quite different things.

In principle, two broad categories of LPP’s justifications can be distinguished: utilitarian and right-based. Within these two groups further distinctions can be identified. Eric Gippini-Fournier wrote an excellent article on this.

Utilitarian rationales stress the importance of the privilege for clients’ very ability to consult a lawyer: only if certain that the content of their consultations with a lawyer remains without disclosure can they seek lawyers’ advice. This has broader societal implications, ranging from supposed better observance of law (since lay people can become aware of applicable legal rules) to proper administration of justice. In contrast to the right-based justifications, utilitarian rationales underlie broader societal implications of the protection of privilege.

Right-based justifications (as their denomination suggest) rely on individual rights to be protected by the privilege. It does not have to be solely the right to a fair trial or defence, as the case law of the European Court of Human Rights (the ECHR) shows. This court based the protection also on the right to respect for privacy enshrined in Article 8 of the European Convention.

The distinction between various justifications is by no means academic: it will determine the scope of the privilege and possible exceptions to it. For example, if the privilege relies on the right to defence, then the communication, which is not relevant for these purposes, will be excluded. Similarly, if we take utilitarian justification contending that the protection increases better compliance with law, than the communication obtained for the purposes of circumventing applicable legal rules or avoiding sanctions can be excluded (probably contrary to a privilege based on the protection of the right to defence, for which such considerations would be immaterial).

The problem was that the referring Belgian Constitutional Court had transposed its own reading of LPP, based on the right to a fair trial and the rights of defence, to the preliminary reference sent to the ECJ. It asked whether the Directive’s obligations are compatible with these rights only and not with LPP as such.

The ECJ was urged by the parties in the main proceedings to review the Directive on a wider basis, but the Court (contrary to what AG Maduro had proposed) did not satisfy this asking. There is no place to make an analysis of the ECJ’s approach to reformulating preliminary references and responding to something else than originally asked. I would dare to say that it is arbitrary and cannot be explained on a coherent basis. Perhaps, it can be said that if the ECJ wants to reply, it replies. If not, it does not. Full stop. (On this there is quite an interesting article by Gareth Davies).

But in this case it has had considerable consequences: by limiting the scope of its answer to the right to a fair trial and rights of defence, the ECJ actually limited the scope of the privilege, without giving any consideration to the other possible rationales for the privilege, which could justify its wider scope. In a crucial part of its judgment (paras. 33 and 35) the Court contends:

it is clear from Article 2a(5) of Directive 91/308 that the obligations of information and cooperation apply to lawyers only in so far as they advise their client in the preparation or execution of certain transactions – essentially those of a financial nature or concerning real estate, as referred to in Article 2a(5)(a) of that directive – or when they act on behalf of and for their client in any financial or real estate transaction. As a rule, the nature of such activities is such that they take place in a context with no link to judicial proceedings and, consequently, those activities fall outside the scope of the right to a fair trial. Given that the requirements implied by the right to a fair trial presuppose, by definition, a link with judicial proceedings, and in view of the fact that the second subparagraph of Article 6(3) of Directive 91/308 exempts lawyers, where their activities are characterised by such a link, from the obligations of information and cooperation laid down in Article 6(1) of the directive, those requirements are respected.

Well, as far as the right to a fair trial or to defence is concerned, it may be true. However, it is a completely different question whether the obligation is compatible with legal professional privilege, if the privilege is based on another right (e.g. the right to privacy, as it is in some judgments of the Court of Human Rights, which the ECJ elegantly omitted to mention), or if it is based on utilitarian considerations, as e.g. legal privileges existing in England are (see particularly this judgment of the House of Lords).

Moreover, the judgment seems to contradict even the ECJ’s own case law concerning LPP in competition proceedings. There the privilege is certainly granted outside the confines of judicial proceedings and these are interpreted fairly widely by Community courts. Ironically, a judgment by the CFI, further clarifying this was delivered at about the same time (see this information at EU Law Blog, with links to the judgment).

I have written a case comment, which can be found here. Comments of course most welcome!

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