The Dyson case and the future of the TWD case-law

Last week, the Court of Justice and the General Court rendered a few decisions that shed light on an important topic: the standing of private parties when challenging EU non-legislative acts. In particular, when challenging delegated or implementing acts in direct actions and preliminary references of validity.

In Dyson, the General Court ruled on a case brought by Dyson, the vacuum cleaner producer, against Delegated Regulation 665/2013, on energy labelling of vacuum cleaners. Dyson complained about the Commission’s use of its delegated powers, as granted by Directive 2010/30 of the Council and the European Parliament. Dyson alleged lack of competence of the Commission, a failure to provide reasons and an infringement of the principle of equal treatment.

The Commission did not appear to have submitted an objection of inadmissibility for lack of standing. The General Court did not raise the issue on its own motion. It was understood that Dyson, a producer of vacuum cleaners, was directly concerned by a general act such as Delegated Regulation 665/2013. Furthermore, nobody suggested that this delegated act needed further implementing acts, probably because it was understood that the measure would be directly applicable to all interested parties from the day of its entry into force. The only way to challenge its validity would be by breaching it, thus forcing sanctions or penalties that would open the door to judicial review.

A few days later, Advocate General Kokott published her Opinion in the cases of Esso, DOW Benelux, and Borealis. These cases touch upon several complex issues, but one of them was the jurisdiction of the Court to rule, by way of a preliminary reference, on the validity of a Commission Decision that was to be considered, according to the AG, as an implementing act pursuant to Article 291 TFEU. According to the Court’s long-standing TWD case-law, private parties who have standing to challenge an EU act before the EU Courts through a direct action, may not benefit, by way of a preliminary reference of validity, of a supplementary remedy. If the private party did not bring the case before the EU Courts in an action of annulment, then no preliminary reference of validity will be available for him or her. According to the AG, it is not evident that the plaintiff could have directly challenged the implementing Decision in question before the General Court, so the Court of Justice should have jurisdiction to rule on the preliminary reference of validity.

As the Lisbon Treaty’s provisions on delegated and implementing acts slowly take shape, and now that the Court has rendered some relevant decisions in this domain (Telefónica, Inuit, T&L Sugars), we can start to draw some conclusions about the functioning of the system. In this post, I would like to focus more particularly on the impact of the said “system” on the TWD case-law.

After Inuit, it is now clear that private parties have to be individually and directly concerned when challenging legislative acts (even if the Treaty only refers to “regulatory acts” when introducing a flexibility rule in article 263 TFEU, paragraph 4, in fine). Also, T&L Sugars has confirmed that implementing acts will demand in most of the times (maybe all of them) further implementing acts from Member States that will exclude private parties from benefitting from the flexibility clause of article 263 TFEU, paragraph 4, in fine, that applies to non-legislative acts.

Therefore, when it comes to challenge the validity of non-legislative general EU acts, it appears that the flexibility clause of article 263 TFEU, paragraph, in fine, will be most frequently used for actions against delegated acts and, in particular, against Delegated Regulations. These seem to be the obvious targets of actions against “regulatory acts which [are] of direct concern to [the plaintiff] and [do] not entail implementing measures”.

The judgment in Dyson confirms this impression. Nobody questioned Dyson’s standing, even though it was challenging directly before the General Court a Delegated Regulation. Under pre-Lisbon Law, Dyson would have had a difficult time proving it was individually and directly concerned.

This brings me to TWD and the Court’s case law on preclusive limitations to make preliminary references of validity against acts that have not been previously attacked by way of a direct action. This case law makes sense inasmuch it attempts to preserve the role of time-limitations. If a private party with standing to challenge an EU act does not do so within the two months established in the Treaty, it must loose its chance to challenge the act indirectly, months or years later, by way of a preliminary reference.

I believe this case-law should not apply to non-legislative acts of a general scope that benefit from the flexibility clause of article 263 TFEU, paragraph 4, in fine. Undertakings might not have any incentive to challenge a Delegated Regulation, considering how broad and extensive these acts may be. Furthermore, an undertaking might find itself in the future being fined by the authorities of a Member State for not complying with a provision of the Delegated Regulation. However, it is obvious that the undertaking should not be forced to challenge the act in a preventive fashion, just in case it needs to challenge it in the future, a future that is very uncertain. The TWD case-law might still make sense for individual acts, where the good faith of the plaintiff that has missed his or her two-month time-period might be questioned, but it is difficult to accept when it comes to general acts. In fact, by making certain general act be more easily attacked, the argument against TWD is even stronger, not the opposite.

The Commission’s production of Delegated Regulations is quite high. It is therefore not reasonable to argue that undertakings and all other private parties should challenge these acts “just in case of what might happen in the future”. For the sake of the Court itself, and mostly of the General Court, it is in the interest of the Institution that the TWD case-law is reversed when it comes to challenge, via preliminary reference of validity, acts of a general scope under article 263 TFEU, paragraph 4, in fine. Otherwise the General Court might find itself flooded with direct actions against such acts. Even with 56 judges, it would be a heavy load to carry on the sole shoulders of the soon to be enlarged Court.

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