Category Archives: Section 001

Self-amending Treaty rules and the birth of constitutional robotics

Among the many fascinating questions that Brexit has brought to the legal arena, there is one that has not raised much attention: the need to repeal the references to the United Kingdom in primary law, mostly the Treaty on European Union and the Treaty on the Functioning of the European Union. Once the United Kingdom is gone, its presence in the Treaties is a piece of legal archaeology that must be removed. There are no possible compromises here.

This is a purely technical adjustment that should raise no concerns. But unfortunately it is not as simple as it may seem.

The obvious choice would be to introduce minor adjustments to the Treaties in the withdrawal agreement. The treaty establishing the conditions of Brexit should be the instrument that cleans the Treaties of all references to the United Kingdom. However, this is not possible due to the withdrawal agreement’s bilateral nature and parties: the EU is party to the withdrawal treaty, not the Member States. The EU cannot amend multilateral treaties entered into by Member States (i.e., the TEU and the TFEU) and, above all, it cannot amend its constitutive Treaties, only its Member States can.

Another option is to enact an ad hoc multilateral treaty, for example the treaty in which a transitory agreement UK/EU would be envisaged to ensure the transit from Brexit towards a future trade agreement. This option is not workable for several reasons: the United Kingdom cannot be a party to this agreement, because it cannot participate in an agreement amending Treaties to which it is not a party. But above all, an international treaty amending the TEU and the TFEU will find the insurmountable obstacle of the Defrenne II case-law, which is now enshrined in the Treaties themselves: all amendments to the Treaties must be undergone through the Treaty amendment rules to this effect. In other words, all Treaty change must pass through the procedures of Article 48 TEU. The only exceptions, and subject to very strict conditions under Article 49 TEU, are Treaty “adjustments” in accession treaties. But that’s all. And this is not an accession of a new Member State, but exactly the opposite.

It therefore appears that the only option left for a rather simple reform is a Treaty amendment by way of Article 48 TEU. It is tempting to assume that such a modest reform would be an excellent candidate for a simplified revision procedure. But alas, EU was never an easy travelling partner and the simplified revision procedure is available only for amendments to Part Three of the TFEU. The references to the United Kingdom are everywhere throughout the Treaties, so the simplified revision procedure will not do (in fact, the references are everywhere except in Part Three of the TFEU). We are thus in the hands of the ordinary revision procedure, which requires ratification by all Member States.

Ratification in all Member States might seem like the least terrible option, but it raises a question of timing. If an agreement in reached between the United Kingdom and the EU on the conditions of withdrawal, the ratification process will require the consent of the British Parliament and the EU (Council and European Parliament). This will be a rather straightforward process (fingers crossed), but definitely a much quicker one that going through twenty-seven national ratifications. If the withdrawal agreement needs to be synchronized with the ordinary revision for the amendment of the Treaties, the former will be de facto conditioned to national ratification processes in all Member States. This might take a long time. Or it might risk Brexit becoming hostage of a national (or regional) Parliament. Nobody will really care if the revision only concerns very straightforward amendments to a few references to the United Kingdom. National politics are politics, and any chance is a good chance for small parties to make noise and threat with blowing up the entire Brexit process.

And thus we arrive at the brave new world of robotics and self-amending Treaty rules.

My suggestion is that scrubbing all references to the United Kingdom needs no revision procedure at all. It is an automated effect of the triggering of Article 50 TEU. Article 50 TEU provides a procedure for withdrawal, but it also contains a Treaty-amending rule for the indispensible “adjustments” resulting from the withdrawal of a Member State. This is an automated amendment that does not allow for any further changes in the Treaties. All it can do is “clean” the Treaties and erase all traces of existence of the withdrawing State. It is automatic, the mere effect of legal robotics.

The self-amending virtues of Article 50 TEU are not only practical, they are also crucial to preserve the integrity of EU Law, particularly after in the case of a hard Brexit with no withdrawal agreement. The options I mentioned earlier rely on the existence of an agreement between the United Kingdom and the EU. But if there is no agreement, the withdrawal will take place anyway and the Treaties will need an immediate filtering of its rules. The only way to ensure an efficient withdrawal, including the removal of references to the withdrawing State from the Treaties, is by providing an automated amendment mechanism.

This feature of Article 50 TEU is also coherent with the automated guillotine approach to the timing of the withdrawal process. A Treaty rule establishing that “the Treaties shall cease to apply” to the withdrawing State after two years, is anticipating an amendment to the Treaties. The fact that Article 50 TEU makes an explicit reference to “the Treaties” reinforces the idea that the said Treaties undergo a transformation. Therefore, the guillotine rule is not only a tool for political pressure in negotiations, it is also a rule governing the legal effects of a clear-cut withdrawal. Such withdrawal entails a revision of the Treaties, an automated revision, just as automated as the running two-year clock.

Such automated revision is necessary in order to ensure the proper functioning of the Union, particularly when the withdrawing Member State has been so talented in scratching special arrangements that are now scattered throughout the Treaties. In the case of the withdrawal of a country like the United Kingdom, the amendment of the Treaties is not just a surgical act of removal of a specific reference, but a broad revision of the practical totality of Treaty chapters. The Preambles of the TEU and TFEU contain references to the United Kingdom. Part Four of the TFEU, on overseas countries and territories, makes very relevant references to the non-European countries and territories with special relations with the United Kingdom. Article 355 TFEU, on the territorial scope of the Treaties, refers several times to the United Kingdom. The Protocols specify aspects as varied as the United Kingdom’s capital subscriptions in the European Investment Bank (Article 4, Protocol 5), or its arrangements under the Schengen acquis (Protocol 19). Some Protocols are specifically concerned with the enactment of rules for the United Kingdom only (Protocol 15 on the United Kingdom’s opt-out from the euro) or for the United Kingdom bilaterally with another Member State (Protocol 20 on the application of Article 20 TFEU to the United Kingdom and Ireland). On the day after Brexit, these provisions must be gone, or otherwise a lot of uncertainty will be created.

It could be argued that the automated revision resulting from Article 50 TEU would only occur in case of a hard Brexit. If there is an agreement, there will also be a broad Treaty amendment that would reach beyond the mere cleansing of references to the United Kingdom. For example, an agreement on the UK/Irish border will probably require specific recognition in the Treaties, providing for special rules on border control that might derogate from Treaty rules. This agreement could provisionally enter into force before ratification, and any revision of references to the United Kingdom could be included there. However, this option raises concerns once again. It is not clear if Article 48 TEU and, in particular, the ordinary revision procedure allows for temporary entries into force of Treaty amendments. And above all, it is dangerous to mix specific arrangements for the purpose of bilateral relations with a broad cleansing of the TEU and the TFEU. The chances of collision with the orthodoxy on Treaty amendments and with the preservation of the autonomy of EU Law are a risk too serious to be taken.

I therefore suggest that the way forward, whether there is a withdrawal agreement or not, is to assume that Article 50 TEU provides an automated removal of all references to the United Kingdom in the Treaties, including its Protocols and Declarations. The day after Brexit, the Publications Office should provide a new consolidated version of the Treaties in which all references to the United Kingdom disappear. If this causes any disarray, it will have to be handled either through secondary law in a preventive way, or afterwards through an ordinary revision procedure with ratification in all Member States. But that is the price to pay for a clean rupture in Law, and not a messy faux Brexit, real in practice, false in Law.

After all these years, we were unaware that there was an additional Treaty amendment procedure in the Treaties. In fact, there were more procedures than those envisaged in Article 48 TEU, because Article 49 TEU allows for specific “adjustments” in accession Treaties. What is new is the ability of Article 50 TEU to act as a Treaty amendment rule as well, in a fashion that is different to other procedures, but coherent with the dynamics of the time-bomb philosophy of the withdrawal process. After all, an automated withdrawal within a fixed time-period also needs automated Treaty amendments.

Welcome everybody to the age of constitutional robotics.

The Singapore Silver Bullet

According to the Daily Telegraph, “Brexit has received a significant boost” after a “landmark ruling” of the European Court of Justice on the EU-Singapore trade agreement. The Times of London stated yesterday that the Court’s ruling “smooths the way for a Brexit trade deal without veto”. The Guardian declared that the Luxembourg judgment “raised a ray of hope for British trade negotiators”.

Such good news for Brexit and its ardent brexiteers!

However, I must admit that after reading the Court’s Opinion my feeling is exactly the opposite. The Court has made a clever juggling exercise with Christmas presents for everybody. But in fact, the Court has saved the best Christmas present for itself. And there are hardly any gifts for Britain.

The Singapore Opinion is a marvelous gift for the EU because it paves the way for smooth ratification processes for the latest generation of trade agreements, so-called megatrade agreements. This makes life certainly much easier for the Commission and, in the end, for the EU altogether. The growing tendency to make use of mixed agreements with a tedious and politicized national ratification process (in which anything, except the genuine trade issues, was used to torpedo very reasonable agreements) has been put partly to a halt, and for all the good reasons.

The Opinion is also good news for Member States, for it nevertheless admits that portfolio investment is still a matter of Member State competence, shared with the EU. Member States have not been deprived of all role and purpose in trade policy, particularly in a sensitive area such as portfolio investment that can eventually involve foreign investment in strategic resources of a Member State.

But above all, the Opinion is wonderful news for the Court of Justice itself. The Court has never been a big fan of other international courts meddling in the interpretation of EU Law. It has not been a supporter of arbitration either. It is therefore no surprise that investment arbitration has been received with some hostility from EU Law, first by the European Commission, and now, since yesterday, by the Court. In a very clever way, the Singapore Opinion paves the way to the extinction of EU investment arbitration, at least in megatrade agreements to which the EU is a party. The court does not state that investment arbitration is contrary to EU Law, it simply says that this is a shared competence and therefore needs Member State ratification. In a masterclass of judicial diplomacy, the Court has made it very easy for the parties of a megatrade agreement to renounce to investment arbitration as a means of dispute settlement. If the price of introducing investment arbitration is to risk the derailment of the megatrade treaty in a national or regional parliament after so many years of touchy negotiations, it is reasonable to assume that the EU’s counterparty will live happily without these contentious tribunals. Therefore, the Court is actively contributing in putting to rest arbitration tribunals in EU megatrade agreements.

And who is the big loser of the Singapore Opinion? Besides the arbitration community, the other victim of the Court’s ruling is the UK and its blue, red and white Brexit. In paragraph 300, the Court makes an ominous assertion that should be taken closely into account by the UK negotiators. The Court states that a dispute settlement regime between States is part of the ordinary institutional framework of the trade agreement and it is thus an exclusive competence of the EU. However, the Court adds,

“the present procedure does not relate to the question whether the provisions of the envisaged agreement are compatible with EU Law”.

And the Court carries on reminding the reader that the Opinion only concerns the issue of EU competence, but not whether the dispute settlement agreement in the Singapore agreement “fulfills the criteria set out by […] other opinions, in particular the criterion relating to the autonomy of EU Law”.

It was inevitable. Sooner or later it had to come up.

Of course, it’s the autonomy at last!

For those who have been following the Brexit saga, paragraph 301 of the Singapore agreement will probably ring a bell. It certainly did it for me. The European Council Guidelines on the Brexit negotiation are quite clear in this regard:

“17. The withdrawal agreement should include appropriate dispute settlement and enforcement mechanisms regarding the application and interpretation of the withdrawal agreement, as well as duly circumscribed institutional arrangements allowing for the adoption of measures necessary to deal with situations not foreseen in the withdrawal agreement. This should be done bearing in mind the Union’s interest to effectively protect its autonomy and its legal order, including the role of the Court of Justice of the European Union.”

And later on, when referring to the future trade agreement, the Guidelines declare:

“23. The future partnership must include appropriate enforcement and dispute settlement mechanisms that do not affect the Union’s autonomy, in particular its decision-making procedures.”

In other words, the UK should start assuming that it will have to accept the jurisdiction of the Court of Justice one way or the other, or it will otherwise undermine the autonomy of the Union legal order. The Guidelines were an apéritif in this regard. The Singapore Opinion, in paragraph 301, is the confirmation that the European Council was not bluffing on this. The Court is not bluffing either.

The withdrawal agreement will need to be subject to dispute settlement mechanisms that do not interfere with the autonomy of Union law. The future trade agreement will be subject to similar mechanisms too. But if the reader takes a look back and follows the Court’s track record when scrutinizing the compatibility of international dispute settlement systems subject to EU Law, he or she will quickly notice that the Court has been very careful to protect its own jurisdiction from any suspicious intrusion.

In fact, the withdrawal agreement will be an act of primary law (materially primary law, as the ECHR accession treaty or the Electoral Act) and it is to be expected, for the sake of autonomy, that the Court will preclude any other jurisdiction from interpreting key rules of the Union legal order. The future trade agreement with the UK will be even more complex than the current megatrade agreements, and the Court is not going to let an arbitration tribunal or anything of the kind come close to it. Yesterday’s Opinion is the confirmation of how ferocious the Court will be if the EU negotiators give away, even in the slightest portion, the jurisdiction of the Luxembourg Court.

So indeed, the Singapore Opinion is good news. Good news for trade. Good news for the EU, good news for Member States and, above all, wonderful news for the Court of Justice, once again in full control of process, in perfect timing and immaculate tone.

And while the brexiteers cheered the Court for paving the way for a wonderful Brexit, nobody seemed to notice paragraph 301 of the Opinion, a camouflaged silver bullet, quietly waiting for it to be used in a near future, to blow up the entire Brexit process in the name of the autonomy of EU Law.

The Great Repeal Bill and the Charter of Fundamental Rights – not a promising start

One of the messages that the UK government has repeated since the decision of the British people to leave the EU, is that the withdrawal will not entail a loss of any right, particularly of social rights. This was (and is) an important part of the message, considering the high turnout of labour voters that voted for Brexit.

Yesterday the Government published an insightful White Paper on the upcoming Great Repeal Bill, which will incorporate most of EU Law into UK Law once Brexit takes place, in order to provide stability and legal certainty to citizens and undertakings currently living and working in the UK. In Chapter 2, the White Paper makes a reference to the hundreds of thousands of EU acts that will be incorporated and stresses the importance of providing stability in the legal framework once Brexit happens. EU Law will carry on being applicable, but only as UK Law, and reforms will be introduced into this “repatriated EU Law” from then onwards by both Parliament and Government.

Therefore, on the day Brexit happens EU Law will be incorporated into the UK legal system, including the entirety of the Court of Justice’s case-law. This is a huge digestion of rules and judicial rulings, unprecedented in the way and speed in which it will take place.

However, there is a piece of EU Law that will not be incorporated into UK Law. This is no ordinary or irrelevant piece. It is the Charter of Fundamental Rights of the European Union. It is another revealing sign of the impact that Brexit will have in the UK and, above all, for UK citizens and their rights.

The Government’s White Paper justifies the decision to exclude the Charter from the Great Repeal Bill with an argument so simple that it is, in fact, incorrect. I very much doubt that the UK Government incurred in a clerical error when drafting the text, so I assume that the justification is simply the best effort they could do. In the Government’s own words, “the Charter was not designed to create any new rights or alter the circumstances in which individuals could rely on fundamental rights to challenge the actions of the EU Institutions or member states in relation to EU Law.” The document carries on and claims that “the Charter was intended to make the rights that already existed in EU law more visible by bringing them together in a single document”.

I might be missing something, but the Charter, besides codifying some fundamental rights already recognized in the case-law of the Court of Justice, introduced many new rights and principles of enormous relevance and inexistent under EU Law until the entry into force of the Charter in 2009.

Thanks to the Charter, EU Law recognizes the prohibition of human cloning as part of the fundamental right to physical integrity (article 2.2.d). There is nothing in EU secondary law on schools, but the Charter enshrines the freedom to found educational establishments (article 14.3). And there is a very important right conferred on nationals of non-EU Member States that are authorized to work in the EU: the right to working conditions equivalent to those of citizens of the Union (article 15.3).

In an aging society in which we will live longer than any other previous generation, the Charter recognizes the rights of the elderly “to lead a life of dignity and independence and to participate in social and cultural life”. Many of the elderly in Britain voted for Brexit. This fundamental right has been deprived from them.

The effect is even more brutal when it comes to vulnerable groups, as is the case of persons with disabilities. Article 26 of the Charter recognizes the right of persons with disabilities “to benefit from measures designed to ensure their independence, social and occupational integration and participation in the life of the community”. This right under the Charter will be gone after Brexit.

The Government’s document is even more striking when it adds that “the removal of the Charter from UK law will not affect the substantive rights that individuals already benefit from in the UK”. This assertion is made on the assumption that EU secondary law suffices to keep all the rights untouched. But this claim is wrong, and it can be easily proved with an example.

In Kušionová, the Court of Justice was faced with an unfair term in a consumer credit contract, in which the guaranteed asset was the consumer’s home. When she faced the risk of an eviction and loss of her home, Mrs. Kušionová argued that the fundamental right to accommodation, as recognized in article 7 of the Charter, protected the consumer from procedures of enforcement that would entail her eviction, the auction of the property and, as a result, the loss of her home. The Court of Justice agreed and ruled that the enforcement could not carry on as a result of the Directive 93/13 (which says nothing about extrajudicial enforcements), as interpreted in light of the Charter. By relying on the Charter, the Court of Justice interpreted Directive 93/13 in a way that created a new provision, a rule of judicial creation, coherent with the Directive 93/13, but not included by the legislature in the articles of the legal text.

With the Great Repeal Bill, Mrs. Kušionová’s case would still apply in the UK because Directive 93/13 and the UK implementing legislation will be interpreted in light of the Court of Justice’s pre-Brexit case-law. And the judgment is Kušionová was rendered in 2014, so it will remain as part of UK law.

However, this will not be the case when it comes to interpret the 2014 Mortgage Credit Directive, which has not been interpreted yet by the Court of Justice (and will not be interpreted before Brexit). This Directive will be incorporated into UK Law as a result of the Great Repeal Bill, but it will be introduced with no case-law of the Court of Justice attached to it. Therefore, the right to protect the consumer’s home will be ensured when the substantial applicable rules are those under Directive 93/13 (Kušionová), but the consumer will be left all alone, in the hands of internal UK Law, when the same risk appears but the consumer can only rely on the Mortgage Credit Directive.

It is true that the Charter can only apply in Member States when there is another rule of EU Law at stake. But all EU lawyers know that the Charter is not only an interpretative tool for the application of EU Laws, but also a source of creation of new jurisprudential rules, closely attached to the EU rules governing the case. Kušionová is a good example of how the system works. It is also a good example of how unfair and regressive the Great Repeal Bill will be for millions of right-holders in the UK, particularly for the most vulnerable communities and individuals.

As every day goes by, we understand better what “take back control” means. In the area of fundamental rights, it means a lot. And the prospects are not very good for right-holders, despite the promises of the happy Brexiteers to keep rights untouched. 

An Instruction Manual to Stop a Judicial Rebellion (before it is too late, of course)

2016 was not a good year for the EU. In fact, it was not a good year for the world in general, but the EU has taken quite a good beating compared to other regions. Brexit was terrible news for European integration (the ever closer Union backtracks for the first time). The arrival of Donald J. Trump to the US presidency, hailed by cheerleaders of the likes of Le Pen, Farage, Wilders and Petry, doesn’t spell any good for the Union. Growth continued to be stagnant and unemployment still soared in many southern Member States. Italy, where a growing eurosceptic ambiance has taken hold of the political discourse, is a source of growing concern. Poland and Hungary carry on with their illiberal anti-EU agendas, to the dismay but cowardly attitudes of other Member States.

In the meantime, one of the EU’s proudest achievements, its judiciary, has shown the first signs of worrying instability.

On 21 June 2016 the German Constitutional Court green-lighted the European Central Bank’s OMT programme, after having made a reference of validity to the Court of Justice. Many reacted with relief, but the reasoning of the German court’s judgment was hardly a consolation for the Luxembourg court. Throughout its reasoning, the German court shows its deep discontent with Luxembourg’s decision, its arguments, its approach towards judicial review, its lack of respect towards the question that was actually put by the German court, and several other grievances. If anybody interpreted the OMT judgment of the German Constitutional Court as a positive sign for the future, I would recommend them to read the judgment twice.

On 6 December 2016 the Danish Supreme Court ruled that non-written general principles of EU Law are not binding in the Danish legal order. The Danish court interpreted strictly the Danish Accession Act and came to the conclusion that the Court of Justice’s activist stance towards general principles has no legal base in the Treaties. Despite the fact that the Court of Justice had recently ruled on the case at hand, giving clear instructions to all Danish courts, the Supreme Court decided that such guidance was not binding. Mangold and Kükükdeveci are no longer the law of the land in Denmark.

In the meantime, the Italian Constitutional Court was struggling with a judgment of the Court of Justice (Taricco), to such a point that on 26 January 2017 it made a reference openly inviting the Court of Justice to overrule its past decision. The Italian court had a good point: The judgment in Taricco imposes on the Italian legal system the setting-aside of a rule on time-limitations that would allow the reopening of criminal proceedings that had been, until Taricco, time-barred. According to the Italian court, this is not a mere procedural issue, it is quite substantive and relevant for the accused. From the perspective of human rights protection, the Italian Constitutional Court seems to be quite horrified, but at least it had the deference of making a reference.

One could argue that these are just sporadic and individual decisions of activist and nationalist courts, and that the Court of Justice is right in standing firm and putting things in their proper place. Unfortunately, it is rather more complex and worrying than all that.

All three decisions have one point in common: all three of them are strongly reacting to three different judgments of the Court of Justice. They are all unsatisfied national supreme and constitucional courts with the Court of Justice’s decisions. The German Constitutional Court is unimpressed with the quality of the reasoning of the Court of Justice in the OMT ruling. The Danish Supreme Court is upset with the activism of the Court of Justice in Danks Industri and others. The Italian Constitutional Court is horrified with the approach towards fundamental rights of the Court of Justice in Taricco. I would not say that these are nationalist overreactions. These are worrying (and I would add justified) signs of something going wrong.

Unfortunately, I must admit that all three courts have a point.

The OMT judgment of the Court of Justice arrives (in my opinion) at the right outcome, but its reasoning is nothing close to rocket-science. Considering the challenge raised by the German Constitutional Court, particularly on the ultra vires test, the reply of the Court of Justice sounds bureaucratic and dull. The passages on inadmissibility, where the Court of Justice deals with the German Constitutional Court’s threat of setting aside a judgment coming from Luxembourg, are blunt and uncompromising, but lacking hardly any reasoning. The factual analysis of the case is practically non-existent, despite the complexity of the file and the underlying problem. I insist that the Court of Justice reached the right solution, but I also confess that the German Constitutional Court’s critique, particularly on the point of the intensity of judicial review, is not completely unfounded.

The Danish Supreme Court’s reaction to the Danske Industri case is also unsurprising. The Court of Justice has stuck to its Mangold case-law quite firmly, but during this time it has hardly refined it or struggled to explain why it works and when does it not. The reasoning of Association de Médiation Sociale, where the Grand Chamber had the chance of explaining the limits of the Mangold case-law, was unanimously perceived as a disappointment. No wonder the Danish Supreme Court finds itself unimpressed when reading Danske Industri. In the past ten years, the Court has been applying a sort of “Brexit means Brexit” approach towards Mangold: “Mangold means Mangold”, but, alas, national courts need something more than that before making a leap of faith.

But the most worrying reaction is the Italian one. Taricco is a powerful decision of the Court of Justice rendered by the Grand Chamber, but its reasoning is based on a fragile premise: that time-limitations in criminal liability are a question of procedure and not of substance. The Court of Justice argued that extending a time-limitation (because it is too short) does not necessarily prejudge the criminal liability of the accused, which is indeed true. However, the impact that this decision might have in the domestic criminal system is enormous, and the reopening of criminal procedures, once time-barred, raises serious doubts in the light of fundamental rights. The financial interests of the Union are relevant, to be sure, but the legal certainty of citizens, particularly in criminal proceedings, is no minor thing. The Italian Constitutional Court is right in giving the Court of Justice a second chance, but the fact that it is making the reference is good proof that there is something wrong with the judgment in Taricco.

The Court of Justice has never been so questioned by those who are supposed to empower it and justify its role: national supreme and constitutional courts. 2016 has proved that the relationship between Luxembourg and its national counterparts is not going through a good time, but this could only be the beginning of a long and painful trend of rebelliousness and dissatisfaction from national courts.

So what should the Court do? Stand firm and hope for the best? Back down and show deference? Act as if nothing has happened and carry on with its own business?

Probably none of the above.

It is wise to stand firm when you are sure that you have taken the right decision, but it’s not so easy when your decision might be wrong. That’s probably the case in Taricco. On the other hand, improving the reasoning of a case-law is not a question of standing firm, it’s simply a question of doing a better job drafting judgments and explaining them. I believe that the Danish Supreme Court’s reaction has quite a lot to do with all that. And paradoxically, the Court of Justice is also being asked to take a tougher stance, particularly when it comes to complex technical analysis. This does not require to stand firm. It demands a firmer stance, and this is what the German Constitutional Court is asking from Luxembourg in the OMT judgment.

Therefore, it’s difficult to reconcile all the demands coming from these three upset national courts. But something has to be done, and it has to be done fast before it is too late.

In my opinion, the Court of Justice would be wise to be more empathetic towards national supreme and constitutional courts. Some will say that the Court already does that, but I think it does not, or not in the way I have in mind.

Take one example: in Gutierrez Naranjo, the Grand Chamber of the Court of Justice has recently stated that all Spanish courts have to set aside a judgment of the Spanish Supreme Court which limited the temporal effects of the nullity of an abusive clause in a consumer contract. The Spanish Supreme Court didn’t come to that conclusion simply because it was incompetent, arbitrary or naïve. It took that decision in 2013, right in the middle of the Spanish financial assistance programme, shortly after avoiding a complete bail-out of the country. The judgment concerned real-estate mortgage contracts, and thus the impact of the judgment fell entirely on the struggling Spanish banking system at the time. The Central Bank of Spain issued a report stating that a full retroactive judgment would have required another financial assistance programme, and thus the Supreme Court, with good sense, decided to limit the temporal effects of its judgment. The consumers were paid back in part, but the country avoided another painful rescue programme (and further conditionality, and further recession and further unemployment… should I carry on?).

The Court of Justice ruled in Gutierrez Naranjo simply stating that a nullity under Directive 93/13 cannot be limited in time. Period. No regard whatsoever to the circumstances of the case, to the circumstances back in 2013, to the reasons why the Supreme Court came to such a conclusion. Nothing. Brexit means Brexit. Mangold means Mangold. A nullity means a nullity.

The reader can just imagine how happy the judges at the Spanish Supreme Court are now with the Court of Justice, so he or she will not be surprised if sooner rather than later the Court of Justice finds another sign of rebellion from yet another supreme court of another Member State.

So is this all about deference towards national courts? Definitely not. It is about making careful and well-thought decisions that persuade national courts. The Court of Justice and national supreme courts are not antagonists, they share the same task of interpreting and upholding the law. But interpretation among different legal cultures will demand special attention towards the courts that are more strategically located. And to simply tell them that my decision stands because I have the authority, is a risky way of flirting with disaster.

Taricco was a preliminary reference made by an Italian first instance court. The Court of Justice would be wise to revisit its decision if none other than the Italian Constitutional Court considers that there is something wrong with the judgment. To simply reinstate what was said in Taricco and make the Italian Constitutional Court look like a fool is definitely not the way forward.

Danske Industri was a rather boring judgment that simply repeated what had been said in the past. A proper reaction to the Danish Constitutional Court’s decision would be to make a little effort when dealing with Mangold, Kükükdeveci and the like. If another Association de Médiation Sociale arrives in Luxembourg, it would be helpful if the Court of Justice explained properly what are the limits of Mangold, of the Charter’s social rights, and so on. It is not easy, of course, but if the Court of Justice is not willing to do so, who will?

Empathy is not deference, if it is done carefully and with care. But the current approach of the Court of Justice towards judicial challenges, asserting an authority by using the rationale of a “Mangold means Mangold”, or “a nullity means a nullity” kind of approach, might be the quickest path towards a painful (yet, alas, avoidable) disaster.

The purely internal situation in free movement rules – Some clarity at last (and from the Grand Chamber of the Court!)

The Court of Justice’s judgment in Ullens de Schooten, rendered yesterday, is a very welcome development. The Grand Chamber has put some order in a traditionally chaotic and obscure area of the case law: the definition of a purely internal situation in free movement cases referred by national courts in the context of preliminary reference proceedings. It was a life or death issue, because depending on whether the applicant proved to have a transfontier link or not, he or she would benefit, or not, from free movement rules. After many years of disorderly case law, mostly in chambers of five judges, the Grand Chamber has taken the reins and provided clear guidance.

In a nutshell, Ullens de Schooten confirms in general terms what the Court seemed to be doing in the past: as a rule, transfrontier links with free movement rules are quite flexible and easy to prove, but when there is no link whatsoever, then only in four different scenarios a national judge will be able to rely on free movement rules. The scenarios are the following:

  • First, when it is not inconceivable that nationals established in other Member States have been or are interested in making use of those freedoms for carrying on activities in the territory of the Member State that had enacted the national legislation in question, and, consequently, the legislation, applicable without distinction to nationals of that State and those of other Member States, was capable of producing effects which were not confined to that Member State. This is the Blanco Perez y Chao situation.
  • Second, when the referring court makes a request for a preliminary ruling in proceedings for the annulment of provisions which apply not only to its own nationals but also to those of other Member States, and the decision of the referring court that will be adopted following the Court’s preliminary ruling will also have effects on the nationals of other Member States. This is the Libert situation.
  • Third, when free movement rules may prove to be relevant in a case confined in all respects within a single Member State, where national law requires the referring court to grant the same rights to a national of its own Member State as those which a national of another Member State in the same situation would derive from EU law. This is the Guimont situation.
  • Fourth, cases in which, although the facts of the main proceedings are outside the direct scope of EU law, the provisions of EU law have been made applicable by national legislation, which, in dealing with situations confined in all respects within a single Member State, follows the same approach as that provided for by EU law. This is the Dzodzi situation.

It appears from yesterday’s judgment that the Court is putting the burden of proving the existence of any of the enumerated situations on the referring judge. This appears to be the case, because the Court makes in paragraph 55 a very specific reference to article 94 of the Rules of Procedure, a provision that lists the contents that must be included in an order for reference pursuant to Article 267 TFEU. In other words: the Court will be happy to apply any of the four exceptions to the purely internal situation rule, but only if national courts make an effort to explain why the referred case falls under any of these four situations. If the national court simply makes no effort whatsoever, then the Court will do what it did yesterday in Ullens de Schooten: declare the absence of a transfrontier link and the lack of arguments justifying the application of any of the four situations.

This is good news for lawyers that deal with free movement rules, particularly before national courts, but it does not solve the genuine problem. In fact, the failings of the previous case-law were not only to be found in a lack of consistency, but also in the difficulty to apply the standards that have now been blessed by the Grand Chamber. Take the Blanco Pérez y Chao exception: to argue that it is not inconceivable that nationals established in other Member States have been or are interested in making use of free movement rules is not much help, because it is difficult to imagine a case in which a national from another Member State may not, in hypothesis, “be interested” in making use of free movement. The Opinions of Advocates General Wahl and Kokott in the cases of Venturini and ETI, respectively, show how tricky this criterion can be.

So the Court has taken an important step, but probably not enough to provide all the much-needed clarity that free movement rules still need. But it’s a first step in the right and very welcome direction.

The judgment also speaks highly of the Grand Chamber’s role as a forum in which to deliver clear guidance over past and erratic case law. This has always been the role of the Grand Chamber, but it sadly lost its way in the past years. For too long a time Grand Chamber judgments were cryptic, sometimes contradictory and lacking a lot of much needed legal reasoning. Things have improved in the past year, and this must be the result of the new President, who has voiced his priorities in public, among which stands out the need to recover the role of the Grand Chamber as a forum to set guidance and principle. Ullens de Schooten might be a little frustrating, but it does way much more than what the Grand Chamber of the past used to provide to its infinitely more frustrated readers.

Miller, Brexit and the (maybe not to so evil) Court of Justice

In Miller, the High Court of England and Wales has ruled that Article 50 TEU must be triggered by Parliament and not by the Crown. The reasoning of the judgment is clear and logical. I would even add that it is elegant and stylish in its typically British sobriety.

But the decision is deeply flawed.

In paragraph 10 of the judgment, the High Court relies on the common position of all parties in the proceedings, according to which the notice of withdrawal under Article 50 TEU is irrevocable. Therefore, once Parliament or the Crown has triggered the procedure, there is no turning back. The High Court is quite clever by simply stating that this issue was not subject to debate by the parties. They all agreed on this: a notice of withdrawal is irrevocable. Therefore, the High Court says, irrevocable it is.

I am afraid it is not. And even if I am wrong, I am certain when I say that this question is completely open and subject to interpretation.

There are plenty of highly elaborate articles on the question of irrevocability of a withdrawal notice pursuant to Article 50 TEU. I will only referer, by way of example, to two very respectable authorities: Jean-Claude Piris, former director of the legal services of the Council, and Paul Craig, Professor of Law in Oxford University and a leading author in the field. Both agree that Article 50 TEU must be interpreted in such a way that a Member State is entitled to withdraw an application (“the withdrawal of the withdrawal”, as it is commonly termed) if it finally changes its mind in good faith. I would personally add that this should be made conditional on the unanimous agreement of the European Council, but this is, as well, open to interpretation.

The consequences of this interpretative question are enormous in the case of Miller, mostly because the High Court assumes that the triggering of Article 50 TEU entails, per se, a deprivation of rights that had been previously granted by Parliament. The rationale of the judgment is implacable: once Article 50 TEU is triggered, there is no turning back, and thus the loss of rights is inevitable. The loss will occur sooner or later, but it will certainly happen. And if those rights were granted by Parliament, only Parliament can take them away.

However, the High Court is relying on a more than dubious reading of Article 50 TEU, insofar the question of revocability is completely open and subject to interpretation. In fact, there are many more chances that an Article 50 TEU application will be revocable than the contrary, for the simple reason that the latter sits uncomfortably with common sense. Let us just imagine the following scenario: Article 50 negotiations begin between the UK and the EU and the backlash from markets is so enormous that the turmoil in the UK leads to a general election. To the surprise of many, liberals and labour win a large majority on the argument of stopping the process. As a result, the new coalition government would have a clear mandate to put an end to Brexit. The EU would not object for all the obvious reasons. The UK would terminate the process of leaving the EU after a second democratic decision of the British people. Is it reasonable to say that in these circumstances the withdrawal negotiations must go on? Is the Treaty really telling the Member States to carry on negotiating even if nobody wishes the negotiations to carry on? Is it really as ridiculous as that, or isn’t it more reasonable to assume that the UK, after a clear mandate of the British people, and with the unanimous agreement of the 27 member European Council, can withdraw the application and put an end to the withdrawal procedure?

I have always been an admirer of the British legal system, mostly for its taste for common sense and practicality. But in this case I must admit that I completely disagree with the reading that the High Court has purported in Miller, precisely for its lack of all practical rationale. It is impossible, I would even say preposterous, to assume that a Member State has to be forced to withdraw, no matter what happens, once it has triggered the procedure envisaged in Article 50 TEU.

Therefore, by reaching this very flawed conclusion in paragraph 10, the entire judgment falls apart like a house of cards. If the withdrawal notice is revocable, then there is certainly no deprivation of rights until the procedure has effectively terminated. As a result, the Crown can trigger the procedure and put it to rest as well. Therefore, the Crown, by triggering the procedure, is not depriving anybody of their rights.

The High Court was of course very much aware of all this. The reason why it probably relied on such a brittle foundation is quite simple: it was probably just trying to avoid making a reference to the Court of Justice. I am afraid that is the reason. But the price to be paid is quite high: a judgment that is now the subject of enormous political tension and constitutional debate in Britain is flawed from its very premise.

One wonders why the High Court is so reluctant to make the reference to Luxembourg. There is a political explanation that comes immediately to my mind: such a sensitive case cannot be left in the hands of the Court of Justice. It would be a humiliation and an unpalatable course of events for the now all-mighty Brexiteers that currently rule Britain.

But there is another and much more practical reason. A preliminary reference procedure could take up to a year and a half to be dealt with. Of course nobody wants these proceedings to drag on for such a long time.

Therefore, the question is whether the Court of Justice can decide such a case by way of an expedited procedure, and in what time-frame.

The Court of Justice can certainly make use of the expedited procedure in a case such as Miller. If it was used in Pringle, it would be unimaginable to discard it in a case like Miller, in which another question of huge constitutional relevance is raised. In fact, Pringle is a very useful reference, because it was decided by the Plenary of the Court, a full 28 judge formation, and in only four months. It could even be argued that it was decided in three months, because the preliminary reference was filed on the 31st of July and the Court is on holidays during the month of August.

But is it possible to solve a preliminary reference in an even shorter time-frame than the one in Pringle? For example, can the full Court rule in only one or two months? If the Supreme Court, that is about to hear the appeal against the High Court’s decision, decides to make a reference immediately, could it expect a judgment from the Court of Justice by mid-January 2017? The time-frame is very relevant, because a judgment from Luxembourg in mid-January would allow the Supreme Court to rule by the end of January or early February. In that case, if the Supreme Court ruled in favor of the Crown, Theresa May’s calendar would remain unaltered and it would be possible to file a withdrawal application in March 2017, as announced.

According to Article 105 of the Rules of Procedure (“RP”) of the Court of Justice, the expedited procedure allows the President to derogate from the RP. The only rules of the RP that the President cannot waive are those provided in Articles 105 and 106 RP. From these provisions it seems clear that the President cannot omit the written part of the procedure (as it can in an urgent preliminary reference procedure, pursuant to Article 111 RP). In fact, Article 105 RP ensures a minimum 15 day time-period to all the parties to file their written submissions.

However, things can go quite quickly after that.

If the Supreme Court referred the case to Luxembourg, say, on 8 December 2016, the Court of Justice could immediately serve all the parties in the main proceedings and interveners and grant them 15 days only to submit written observations. The President could fix the date of the hearing on Tuesday, the 3rd of January. The Advocate General would be heard orally on the 5th of January and the Court would deliberate on its traditional Friday morning Grand Chamber deliberation day, on January the 6th. The draft judgment would be finalized and edited by the lecteurs d’arrêts by the 10th and ready for an expedited translation (to English only, at least for a time being) that would allow the Court to publish its decision on Tuesday, 17 January 2017. This timeframe would allow the Supreme Court to deliberate during the following two or three weeks and thus allow, whatever the outcome might be, either the Crown or Parliament the power to decide within the current time-frame announced by Theresa May.

Of course, as the reader will have noticed by now, there is a paradox to all this.

As a result of the High Court’s refusal to make a reference to Luxembourg, hardcore Brexiteers are now facing a daunting prospect for their Brexit plans. However, a reference to the Court would probably provide Brexiteers with a welcome surprise, because I am quite certain that the Court would side with Piris and Craig on this one: Article 50 TEU is revocable for all the obvious reasons previously mentioned. In fact, a procedure in Luxembourg would grant all the Institutions concerned, and all the Member States, the chance to take a position on this crucial issue of EU constitutional principle. And I am quite certain that they would agree with Piris and Craig too.

If the Court followed this argument and came to the conclusion that Article 50 procedures are revocable, then the Supreme Court would have good reasons to overrule the judgment of the High Court. After all, if the withdrawal application is revocable, the Crown is not overstepping into Parliament’s terrain, quite the contrary. No rights would be deprived from the decision of the Crown to trigger Article 50 TEU.

As strange as this might sound, hardcore Brexiteers have now their most reliable ally not at home, but in what they have considered to be, all these years, the evil, monstrous, devilish, undemocratic, unelected, corrupt and dictatorial Court of Justice of the European Union.

Maybe they realize now that it is not such a bad Court, after all.

Post-Brexit Britain, or how to take back some control by losing all of it

Now that there is some clarity about the kind of Brexit deal the UK Government has in mind, it is shocking how such a simple message can be so misread. Theresa May announced that Britain will go for a hard Brexit in 2019, prioritizing immigration control over access to the single market. However, in order to avoid the absolute mess that a hard Brexit would cause, Mrs. May has called for a simple and straight-forward Great Repeal Act that will incorporate all EU Law into British Law, allowing the Government to adjust the provisions of this “repatriated EU Law” in the way it considers appropriate. Britain will be an independent nation again after digesting sixteen tons of acquis communautaire in one single bite.

This might seem like a clever trick, especially if it comes wrapped under the name of The Great Repeal Act, but I wonder if this is, in any possible way, in the interest of an independent post-Brexit Britain, or coherent with the wishes of those who loudly voted to leave the EU.

First, there is a democratic concern: a Parliamentary Act will introduce the entirety of EU Law into British Law, but it will be up to Government to introduce the appropriate amendments. In fact, whatever role is finally assigned to Parliament will be secondary, because it lacks the means to implement such a titanic task. Only Government and the Whitehall machinery have the resources to undertake what is probably the most complex process of rule incorporation in the history of European law. We are not speaking of an acquis that needs adjusting into a new Member State. This is different: it is an acquis that is already a part of the domestic legal system, but that it must be completely reshaped in such a way that keeps British law in line with its European partners, but also different enough to prove that it is deciding on its own. Thousands of Directives and Regulations will be redrafted or tweaked here and there, with the purpose of proving that Britain is out of the block, but that it can also be inside if it suits its interests. This will all be done by Government, with a very secondary performance of Parliament. If this is “getting back control” for the people of Britain, it is hardly an improvement.

Once EU Law has become more law of the land than ever, the United Kingdom’s companies, consumers and authorities will carry on with their daily lives and, of course, they will keep relying on the same rules that they have been applying all these years. It is probable that the review process will take a long time, and even when it is done it will leave millions of EU rules untouched, now incorporated into British Law. For years and decades to come, Britain will be a country infested by EU rules in every corner, but in a rather nasty and dysfunctional way.

For example, Theresa May has promised not to touch worker’s rights as a result of Brexit. Therefore, it is to be expected that the acquired rights Directive will carry on having a strong influence on TUPE regulations. But let’s just imagine that the Court of Justice decides to change its mind about its interpretation of some of the provisions of the Directive, overruling past case-law that had been strongly criticized in some Member States, including Britain (for example, the case-law in the judgment of Alemo Herron). Once Member States have guidance about the scope of the overruling and have amended their implementing legislation, employers and workers will start taking note of the change. But of course, workers in post-Brexit Britain, who would be “liberated” of the past binding interpretation of the Court of Justice, will happen to be trapped in… The Great Repeal Act! Of course British courts could decide to follow the Court of Justice’s new case law, but they would be accused of becoming prisoners of the hated Luxembourg court. Or they could stay put and simply tell workers that they have been extricated from European rule, so tough luck. Workers would look at Theresa May remembering her words on 2 October 2016 and feel betrayed. But if British courts end up doing what they probably would (because, in fact, Luxembourg judgments happen to be quite reasonable in 99% of the cases), Brexiteers would be looking with fierce eyes at Theresa May, shouting treason.

It is even more terrifying to think about the thousands of amendments that EU law goes through every day. Post-Brexit Britain will have incorporated EU Law into domestic law in order to provide certainty to companies and investors for some time. However, if certainty is what Britain wants to offer, it will also have to keep up with events in Brussels and carry on adjusting and amending the “repatriated EU Law”, or otherwise investors and companies will start feeling that Post-Brexit Britain is just a mess of a country, that they were lied to, and decide that they are better off in Ireland or in the Netherlands instead. Some kind of automatic incorporation mechanism for future amendments would have to be introduced in British Law. The Great Repeal Act would then become a magnificent machine of incorporation of new EU rules coming from Brussels, amending the British rule-book almost every day.

It will be easy to sweep the acquis inside the British legal system in one go, but keeping it updated on a daily basis will be a challenge, if not a nightmare.

These are just two simple examples of the challenges in Theresa May’s Post-Brexit Britain, but it all gets even better when looking at the influence of Britain and Britain’s officials in the entire process. If the Court of Justice changes its mind or it simply decides to interpret EU Law (as incorporated into British Law) in whatever way it considers appropriate, it will do so in the absence of British Judges and Advocates General in Luxembourg, who have been extremely influential in the past, as long as they had a seat in the Court. But not anymore in Post-Brexit Britain.

The same would apply to the amendments of EU rules agreed by the Council, the European Parliament or the Commission. In its effort to keep stability and certainty during the transition, Britain will carry on swallowing EU Law in order to keep up with the rules it has incorporated domestically, but with no ability whatsoever to influence the content of such rules. No Commissioner, no Permanent Representative, no MEPs, nothing. The Great Repeal Act will facilitate the continuous arrival of EU rules amending pre-Brexit EU Law for the sake of certainty and stability. If the British people wanted back control… what kind of control is this?

Of course it will be said that this is just a temporary situation, only a technical patchwork to make things work while the UK and the EU find a reasonable agreement.

Think twice.

If hard Brexit is what Her Majesty’s Government wants, a hard Brexit it will get. The EU will sign off an Article 50 agreement letting Britain go, and any future bilateral agreements will be conditioned on Britain’s compliance with… EU rules! Just look at Switzerland, where EU Law is the law of the land as a result of bilateral agreements that condition their application to the compliance of a never-ending list of EU acts. Or take a glance at other nations such as San Marino or Monaco, that, in order to have a monetary agreement with the EU, have paid a heavy price in the shape of… compliance of EU rules. There is hardly any need to remind the reader of the cases of Norway or Iceland, where EU Law is a mammoth within the domestic legal system. Whatever our non-EU European partners do, no matter how big or small, they are surrounded, if not inundated, by EU Law.

Post-Brexit Britain will live with EU Law for many years to come, but with the disastrous outcome of losing the right to have a say in any of it. The Court of Justice will carry on having an enormous influence in the way EU Law is applied inside and outside the Union, and Britain will simply have to nod. The legislative and executive rule-making machinery will carry on in Brussels, and Britain will have to keep up with it. The Brexiteers will make sure that this is all done in a discreet and cleverly spinned way, far from the tabloids and from Eurosceptic hysteria. Having left Europe, British nationalism will find another punching-bag to strike and carry on with its business. But in the meantime, EU Law will be present, from north to south and east to west.

And if somebody complains, the heroes of Brexit will say that Britain is not being forced to do any of this. Britain is deciding to enforce judgments of the Court of Justice or adjust to EU rules on its own right and as an independent nation, because it has taken back control and it has made a huge success of it.

So on Brexit day the United Kingdom will get back control, only to lose it, in the worst possible way, as every day goes by. Quite an accomplishment indeed.

The Price of Borrowing EU Institutions, and the Price of Being Borrowed – A short comment on Ledra Advertising

The Court’s judgments in the cases of Ledra Advertising and Mallis are a huge step forward in the EU’s process of construing a coherent set of rules for EMU. The outcome might be upsetting for some, but it is good to have (at last) some certainty over crucial legal issues that have been in a limbo throughout the rough years of the crisis. Ledra Advertising and Mallis might not come to the perfect solution, but at least there is now a solution to hold on to.

In a nutshell, the Court, sitting in Grand Chamber, has stated that Eurogroup decisions are not subject to judicial review by way of an action of annulment. However, the Court adds that Commission and ECB action in the context of financial assistance programmes must comply with EU Law, including, of course, the Charter of Fundamental Rights. Therefore, specific actions of the Commission and of the ECB in the context of the European Stability Mechanism’s financial assistance programmes can result, if unlawful, in damages actions before the Union’s courts. This is a severe reversal of the General Court’s decision in first instance, and also a departure from the solution proposed by Advocate General Wahl.

To declare that the Commission is liable under EU Law for its actions outside the scope of the Union is quite remarkable. However, the alternatives were so worrisome that it seems as if the Court has chosen the least bad choice among an array of very bad ones. To suggest that an applicant can sue Member States individually for the ESM’s actions is not a very realistic scenario. This would also imply that the EU’s involvement in the financial assistance programmes had taken place in a legal vacuum, non-accountable before any court of law and granting EU Institutions a freedom to comply or not with the rules in the terms they considered most appropriate.

In Ledra Advertising, the Court states that EU Institutions, and in particular the Commission, were bound by EU Law when participating in ESM financial assistance programmes. That includes the Charter, of course. As a result of such duty, the Commission, if it considered that a draft Memorandum of Understanding was in breach of fundamental rights, had an obligation not to sign it. Therefore, the Commission can be liable for its activity, but also its inactivity in the context of financial assistance programmes. The judgment thus puts an end to a certain ambiguity in the practice of the Institution’s actions in non-EU contexts, which now comes full-circle under the scope of EU Law.

But many questions still remain. The Court is quite harsh when it declares that the Institutions are bound by the Charter, even if they are acting beyond the powers of the Union, but it also refreshes its case-law in Pringle, according to which Member States are not implementing EU Law in such contexts. Therefore, in the course of a financial assistance programme EU Institutions must comply with the Charter, but Member States do not.

Also, the way in which the Court has stated that Eurogroup Declarations are not reviewable acts makes it quite difficult to attack the Institution’s activity in actions of annulment. Therefore, the natural course of action will be damages actions, which is a complex route, a genuine minefield that hardly any litigants manage to succeed in. In fact, the Court goes into the substance in Ledra Advertising and dismisses the plaintiff’s action on the grounds that there was no violation of the Charter by the Commission. The essential content of the fundamental right to property of the applicants had not been breached, and therefore, in the absence of a manifest breach, no liability was declared by the Court. The balance is quite obvious: the Union is potentially liable for the actions of its Institutions outside the Union’s competence, but the standard of illegality that will be demanded from the applicant will be high (as it has always been).

Applicants who have suffered the results of strict conditionality now have the doors wide open to the Luxembourg courts, but they should get ready for a very rough ride.

Brexit or the art of “doing a Greenland”

The future looks rather grim for the United Kingdom at the current time. Life outside the EU will be tough and lonely, with hardly any of the so-called “models” being a real option: the EEA route is way too integrationist, the Swiss case does not allow immigration quotas, the Turkish model is too modest, and life under the WTO alone is just not good enough for a country the size of the UK. Furthermore, the EU made it clear after the referendum, in the first meeting of the 27-member European Council, that any agreement on market access shall include all four freedoms. No market access à la carte, and thus no market access if there is no free movement of workers. European leaders are quite in line on this point, and European voters, according to a recent YouGov poll, support their government’s tough stance.

The mess in which the UK has put itself into is damaging for all, but above all for the UK. The country had (and still has) the best of both worlds as a member of the EU: unbridled access to the internal market, voice in the negotiating room, influence among European nations, influence abroad, no duty to join the euro, no Schengen, an opt-out from judicial and police cooperation in civil and criminal affairs, and even a nice rebate after its budget contributions.

But that is all over now. And indeed, I think Theresa May is right when she says that “Brexit means Brexit”. In the future, the UK will abandon the status that it holds today and we should start assuming that. And the sooner the better.

Of course, putting an end to the status quo doesn’t mean that the UK must extricate itself entirely from the EU. In fact, I cannot imagine the UK, with its army of hired and highly competent advisors and negotiators, reaching a Norway-minus, a Swiss, a Turkish or an ad hoc agreement with the EU, leaving the country in a worse position than the one it holds today. It is simply not going to happen. The UK will strike a deal the moment it assumes that the deal is as good or even better that the one it has today. But how on earth are they going to get away with that?

My opinion is that we will certainly see the UK leave the EU as it is today, only to transform itself into a new kind of Member State. The UK could achieve this by “doing a Greenland”, but on a massive scale.

Greenland, although a part of Denmark with a special constitutional status, stopped being a territory of the European Communities in 1985. In fact, the trick was to change its status from an outermost region under Danish jurisdiction into an overseas territory. As is known, the EU Treaties allow some States with close ties with EU Member States, as well as some territories of EU Member States, to stand outside the territorial scope of application of the Treaties, but holding a special association status with the EU that grants them special rights of access to the internal market. These are the so-called Overseas Countries and Territories.

One of the trickiest challenges the UK will face in the following years is how to handle Brexit and keep the country together. Scotland and Gibraltar voted overwhelmingly in favour of remaining in the EU, whilst Northern Ireland  delivered a firm remain vote as well. Making Brexit come true and keeping Britain in one piece will be no easy task.

That is exactly why “doing a Greenland” would be the UK’s best choice.

The United Kingdom could still be a member of the EU, but only after England and Wales withdraw from the territory of the EU, leaving Scotland, Northern Ireland and Gibraltar as “territories of the EU”. England and Wales would no longer be a part of the EU, but the Treaties could be modestly reformed, as they recently were for Mayotte, in order to embrace both regions as “overseas territories”, with total autonomy and freedom to do their own business and act accordingly. In fact, the Treaties could be minimally reformed to grant England and Wales a special status among the overseas countries and territories, being that the subject of upcoming negotiations with the EU. Under such negotiations, England and Wales could strike a reasonable deal on free movement of workers, and, as is the case of British OCTs, EU law would not be applied in their territory, unless the EU and the UK agreed on incorporating specific EU acts on a case-by-case basis. There would be no jurisdiction of the Court of Justice, no jurisdiction of the European Commission, no risk of being swallowed or bullyied by Eurozone members in Council meetings, and full control of most areas of policy, including some that had been fully transferred to the EU, such as the external commercial policy.

This outcome may sound preposterous, but in fact, considering the mess in which the UK has put itself and the EU in, it’s a rather good solution for all parties involved.

First, the EU keeps Britain as a Member State, at least part of it, and avoids the symbolic hit of a withdrawal of a Member State. Article 50 TEU would never be applied and it would remain as what it always was supposed to be: a nice symbolic provision never to be implemented.

Second, the UK manages to be in the internal market at its own pace, at different speeds and under a much better negotiating position: no two-year time-limit under Article 50 TEU, no tragic dilemmas, no threat of being thrown out of the EU if negotiations fail, and above all, no unbridled free movement of workers and no contributions to the EU budget, unless strictly necessary.

Third, this option would keep Scotland, Northern Ireland and Gibraltar exactly where they stand today, intact and untouched in their European-ness, whatever that might mean. In fact, this option would empower the three territories in their affairs in Brussels, for it would be up to them, not England nor Wales, to be in charge of negotiating with a single voice in the Council.

Fourth, this is a more palatable option for EU Member States individually considered, such as Spain, Ireland or even Germany. Spain prefers to see Scotland in the EU as a part of the UK, rather than as an independent State. So does France. In the case of Ireland, the idea of shutting the border in Northern Ireland and stopping trade with the UK is politically and economically terrifying to say the least. For Germany, keeping the UK as a reliable and free-movement-friendly Member State, smaller in size, but big enough to have a say and influence in Brussels, is a better option than having it gone out the door entirely.

Of course this option would require radical constitutional change in the UK. Devolution would have to go much deeper than it is today, the representation of the UK in the EU and in the international community would be radically reshaped, and Scotland, Northern Ireland and Gibraltar would have to find an arrangement to manage their common interests in the EU. It sounds radical indeed, but definitely less radical than breaking the United Kingdom apart.

And finally, the democratic argument: if Brexit means Brexit, “doing a Greenland” does not appear to be exactly in line with Brexit, doesn’t it? After all, the UK would still remain a Member State of the EU, although only partially. However, “doing a Greenland” is probably the most coherent response to Brexit, inasmuch it keeps the territories of the UK that voted “leave” outside the EU, with vast freedom of choice, at the same time it keeps inside the EU those territories that clearly expressed a desire to be a part of Europe. “Doing a Greenland” is the most articulate way to respond exactly to what the British people said: some of them wanted to stay, some of them wanted to leave. In some territories, the majority wanted to stay. In other territories, the majority voted leave. Instead of breaking up the UK, why not put a foot outside the EU for those who want “out”, and a foot inside for those want “in”?

If Brexit means Brexit, this is as close as it gets to a genuine yet successful Brexit. And a success is what Theresa May has promised to make of Brexit. “Doing a Greenland” could be the best route towards success, coherent with the mandate of the British people and, above all, a means to avoid complete, utter and irreparable catastrophe for all.

 

 

 

 

 

 

Inter alia…..

This blog has been very inactive lately and I apologize for that. The Court has given so many excuses to post on interesting judgments and opinions, that it is difficult to choose where to start. There are fascinating opinions concerning the EU’s scope of action when acting in unconventional domains, such as state aid rules as applied in the context of bailed-out banks in the eurozone (Kotnik), EFSP measures that are not “restrictive” but with clearly limitative effects (H), or the Commission’s and the ECB’s liability prior and during the Cypriot bail-ins (Ledra Advertising and Mallis). In the past difficult years the EU has been moving in extremely blurry domains, and now we are beginning to see the practical consequences for individuals and undertakings. The overall outcome is not always very inviting, I must say.

Other decisions of the Court have been more uplifting. Aranyosi and Caldadaru is a remarkable judgment that marks a shift in the Court’s traditionally hard stance on mutual recognition. In line with the precedent in N.S., the Court has introduced a very important proviso to mutual recognition in cases where there might have been a breach of Article 2 of the Charter in the issuing Member State. The constitutional courts that questioned the Court’s commitment to fundamental rights in harmonized areas subject to mutual recognition mechanisms, have good reasons to think twice after the Grand Chamber’s judgment in Aranyosi and Caldararu.

In PFE, the Court rendered a very important decision for the preliminary reference procedure and for the Court’s relationship with national courts. When asked about the duty of a chamber of the Italian Supreme Court to refer a case to the Plenary of the Supreme Court in order to overrule a previous decision, the Court stated that such a duty is in breach of Article 267 TFEU: if the chamber is certain that the Plenary got it wrong in the past, nothing should preclude it from making a reference to the Court in order to confirm the chamber’s assessment. For the first time, the Court has applied Article 267 TFEU to the internal arrangements of collegiate courts in Member States, going well beyond the typical scenarios in which national procedural rules come into conflict with the duty/faculty to make a preliminary reference.

In the meantime, other interesting developments have taken place that deserve being mentioned.

Olivia Tambou has launched a great blog, full of useful information, updates, alerts and… videos! Koen Lenaerts, Denys Simon, Robert Kovar, Melchior Wathelet and others are the subjects of very interesting interviews. If you still have not seen them, don’t miss any of them!

And there is more: a group of distinguished academics has launched an on-line publication dealing with EU Law: European Papers. It combines the format of a traditional journal with other means of on-line discussion, all of it available in its webpage. The first issue has excellent articles and insights by none others than Christian Joerges, Dimitry Kochenov, Christoph Hillion and Carol Harlow, among others.

And as the Brexit debate goes on, some very timely documents have been popping up from academia, governments, think tanks, law firms, etc. on the consequences of the UK’s potential withdrawal from the EU. One of my personal favorites is the UK’s report on withdrawal procedures and Article 50. The Brexit debate (and its referendum) is very damaging for the Union, but I must admit that it has become a source of fascinating discussion for EU and international lawyers.

There is a lot to read, so keep calm and enjoy (if you can)!