FROM THE ARCHIVES Does the Court of Justice of the EU need a new judicial approach for the 21st Century?

In 2015 I argued that the CJEU should be less picky about the EU values it promoted, and should adopt a more literal approach to the interpretation of EU law. Here is a brief summary of that lecture.

I have added headings so readers can skim through. For the full text of the footnoted paper on which the lecture (at the British Institute of International and Comparative Law) was based, see here. I have added one or two recent thoughts.

The best of courts and the worst of courts

The Court of Justice has always provoked controversy. Critics accuse it of pure judicial invention, of providing a blank cheque for ever-expanding EU competence, and of result or policy driven decision-making. Supporters argue that the Court has provided the legal glue which has made a reality of the single market, and of key EU policies such as competition, state aids, the environment and equality.

What makes the debate interesting is that both sides of it are right, though they place their emphasis on different aspects of the Court’s case-law. That does not mean that the Court of Justice always strikes the right balance. I do not think it does. I would argue that the Court needs a new judicial approach for the 21^st century.

The Court should be more deferential to the EU lawmaker

The new approach which I advocate would allow more leeway to the EU lawmaker, even when the EU lawmaker has decided to compromise. And even when that compromise conflicts with what the Court conceives to be the overall aim of the legislation in question.

The new approach would accept that concepts referred to in the Treaties, such as EU citizenship, and equality, should be principally defined by EU secondary legislation, rather than by judicial decision. And it would accept that the EU lawmaking institutions should be accorded a wide discretion in defining the scope of such concepts.

EU constitutional values which urge a restrained use of EU powers should be given more respect by EU judges

My proposed new approach would mean that the Court of Justice would re-appraise its approach to subsidiarity, and to the requirement that EU law respects the national identities of its Member States. The Court would promote these de-centralising values of the EU legal order as strongly as it promotes centralising values, such as the direct effect and supremacy of EU law, and the concept of Citizenship of the Union.

More weight should be given to a literal interpretation of EU law

The new approach would also place greater weight on a literal interpretation of EU rules, especially provisions of secondary legislation. In the great majority of cases, a literal interpretation will give effect to the intention of the draftsman, and be more likely to produce a predictable outcome. By a literal interpretation I mean an interpretation which is consistent with the relevant words used in the text. There may be more than one literal interpretation of the text.

There should be a strong presumption in favour of a literal interpretation, but that presumption will be rebutted if the result is so unreasonable that it cannot have been intended. That is the approach I would commend to the Court of Justice.

My criticism is of over readiness to let policy considerations override the ordinary meaning of words

Calling for a new judicial approach implies criticism of the old judicial approach. What, precisely, am I criticising? I have already said that over readiness to depart from the text is part of the criticism. A related criticism is of judgments driven by judicial policy, rather than reached by a convincing process of legal analysis and reasoning. I shall call this the result-driven approach.

The Court should not undermine democratic processes nor should it choose which constitutional values to protect

Such an approach has led to a relentless increase in EU competence. And such an approach undermines the political and democratic processes provided for or recognised in the Treaties. It substitutes, without sufficient justification, the Court of Justice’s preferences for the preferences of other actors on the EU’s institutional stage. And it allows the Court to choose those EU constitutional values which it promotes, and those which it does not.

Tribute to the generations of EU judges which have built the European Union

It would be wrong and misleading for me to speak only of what I would urge upon the Court as reform. I must refer to and pay tribute to what the Court has done well, and in some respects done supremely well.

The Court of Justice must take much credit for developing the rules of the internal market. It has contributed in a major way to the “highly competitive social market economy” envisaged by the Treaty on European Union. The Court has created a system in which the rule of law can be enforced and more often than not is enforced. There is much else that the Court has done which I would praise, but not today.

Outcomes I like are not always the product of judicial process I approve of

What I have found troubling for a number of years, is that some judgments of the Court which I have praised from a policy point of view, I have found difficult to justify in terms of legal reasoning. I give as an example the highly significant Centros decision, confirmed in Inspire Art. These judgments have contributed to making the internal market more competitive, and have encouraged Member States to adopt less burdensome rules for the formation of private companies.

All EU businesses could operate through a private company incorporated under English law

The Centros case held that a couple running a wine shop in Denmark could do so through a branch of a private company incorporated in the UK. No business was to be done in the UK. All business was to be done through a branch in Denmark. The ruling allowed the Danish couple to incorporate with a capital of £100 in England, rather than at least £20,000 had it incorporated in Denmark.

The policy virtues of that judgment are of course open to debate. I take the free market side of that debate. So did the Court of Justice. But in order to reach that conclusion the Court side-stepped the Treaty requirement that a company incorporated in one Member State wishing to set up a branch in another, must already be established in the first Member State.

The Court assumed that simple incorporation of a company in a Member State amounted to establishment in that State. That seems contrary to the text, and to other case law of the Court. It might be possible to justify this conclusion, but the Court does not attempt to do so. I include this case in the discussion because I want to make clear that I am not simply criticising cases because I don’t like the result.

What I would maintain, is that there are judgments in the field of free movement which are open to serious criticism, both in terms of reasoning, and in terms of outcome. For example…

Applying single market rules to the UK’s National Health Service was a wrong turning

The Court of Justice has interpreted internal market rules as applying to hospitals which provide health care under social security schemes. One result is that a UK patient may opt for treatment in another Member State, and the NHS is required to pay the bill. The NHS is thus required to turn itself into an insurance fund to pay for treatment of its patients in other Member States, despite the fact that that is not the way that the NHS works. This is policy-making.

One effect of this case-law has been to subject national health care schemes to EU lawmaking authority. There is now an internal market directive on cross-border health care which covered patients of national health care schemes. This is an example of how case law of the Court expands the lawmaking powers of the EU, and diminishes the lawmaking powers of national parliaments.

Making the EU Treaty enforceable against trade unions was another wrong turning

Another example... In the Viking case trade unions had taken collective action which restricted the right of establishment of a ferry company. The Court held that a commercial operator could rely on its right of establishment to impose obligations on those trade unions. This ruling by the Court of Justice effectively circumvented the Treaty’s exclusion of EU competence as regards the right of association and the right to strike. By holding that trade union collective action could amount to a restriction on cross border establishment, the Court of Justice implied that the EU lawmaking institutions could regulate strike action which has this effect. That contradicted the exclusion of such regulation in the EU Treaty.

The Commission later initiated a proposal, the so-called Monti II proposal, to balance strike action with cross border economic activity. The proposal was widely condemned as an attempt to circumvent the Treaty exclusion of the right to strike from EU lawmaking power. It prompted a “yellow card” from national parliaments under the protocol on subsidiarity. The Commission abandoned the proposal. But the circumvention for which the Monti II proposal was blamed must be attributed to the Court of Justice in Viking.

Subsidiarity is a constitutional principle which the EU institutions have chosen to marginalise

National parliaments rebelled against the Monti II proposal under the banner of subsidiarity. The aim of subsidiarity is to ensure that decisions are taken as closely as possible to the citizen. Subsidiarity imposes two tests for the adoption of EU legislation. The first is that the objectives of the proposed action cannot be sufficiently achieved at national level. The second is that these objectives can be better achieved at EU level. The EU institutions regard these tests as satisfied where it is the aim of EU rules to lay down EU wide standards. All EU proposals pass this test. Subsidiarity is thus deprived of any effect, useful or otherwise.

The Court of Justice has for all practical purposes endorsed this approach. It could have breathed constitutional life into subsidiarity had it so chosen. It has not so chosen.

By way of contrast the EU Court has offered strong legal and political support to the concept of EU Citizenship

In contrast with the Court’s lack of enthusiasm for subsidiarity, it has worked hard to expand and develop the concept of EU Citizenship. It has branded EU Citizenship as a status “destined to be the fundamental status of nationals of member States” (first expressed in Grzelczyk).  This is based on judicial policy rather than any relevant text. It is supported by no reasoning. It makes an implicit contrast with national citizenship - if EU Citizenship is destined to be the fundamental status of the nationals of the Member States, then national citizenship is destined to be something less. This implication is confirmed by later case law.

But the Court goes too far in Rottman and encroaches on national citizenship

The Court of Justice has deduced from this allegedly fundamental status the proposition that the acquisition and loss of national citizenship is subject to review in light of EU law. The Court announces this in the Rottman case. There is no textual basis in the Treaties for this, and it subjects the very existence of national citizenship to EU law.

The Court’s conclusion is in my view inconsistent with the Treaty requirement that EU Citizenship shall not replace national citizenship. If the EU law concept of Citizenship over-rides conditions on the acquisition and loss of national citizenship imposed by national law, then to that extent EU Citizenship replaces national citizenship. The Court’s conclusion in Rottman is also inconsistent with the treaty requirement that the Union respect the national identities of the Member States, and respect their essential state functions. There is no more essential a state function than determining the conditions for acquisition and loss of national citizenship. The UK Supreme Court in Pham heavily criticised the Rottman case and hinted that it might be a case in which the CJEU exceeded its competence.

The CJEU continues its mission of Europeanising national citizenship in its Maltese golden passports decision

The aim of the Maltese Government to sell EU citizenship via the sale of Maltese passports was an appalling scheme that the EU institutions had to stop. The Commission was right to challenge the scheme before the CJEU, and the CJEU was right to hold the scheme incompatible with EU law. But the CJEU did not need to review Maltese nationality law in light of the requirements of EU citizenship, following the Rottman approach referred to above. The Court of Justice could and should have held that Malta was free to grant its nationality to anybody it wanted, but that such nationality could only be relied upon against other EU Member States and the EU institutions to the extent it was based on a “genuine link” recognised by international law and relevant principles of EU law. That approach would have upheld both the principle that EU law respects the national identities of Member States, and the integrity of European citizenship. Since the outcome of the case is so self-evidently correct, few commentators are likely to criticise its reasoning. As we common lawyers like to say “hard cases make bad law”.

The integration envisaged in the EU treaties does not require an ever expanding European legal universe

I would also add a few observations about European integration. First: The integration envisaged by the EU Treaties does not require a constant expansion of EU competences under the guise of interpretation. Such expansion contradicts the principle that the Union only has those lawmaking powers which have been conferred upon it. Secondly: European integration should never be measured by the volume of decision-making transferred to Brussels and Luxembourg.  Subsidiarity, respect for national identities, and respect for essential state functions, are core constitutional values of the Union. They are values which militate against any theory of an ever expanding European legal universe.

The Court of Justice favours centralising constitutional values over decentralising values.

I have referred to the contrast between the Court’s handling of subsidiarity cases, and its handling of EU citizenship cases. It is striking. It is also striking that the Court does not see aspects of its EU citizenship case law as impacting upon the national identities of the Member States. I conclude that the Court is choosing, on grounds of policy, the constitutional values which it upholds, and those which it does not, and that it always opts for centralising values rather than for de-centralising values.

These might have been the right choices for the 20^th century. In particular during a period when modern de-centralising values had yet to be articulated as part of EU primary law. But in my view, it is now time for the Court to reflect upon the choices it has made in the past, and consider whether they are the right choices for the future.

Postscript

This lecture was given about seven months before the UK referendum on EU Membership. The vote to leave was in my view a big mistake. My criticisms of the EU and its institutions, and in particular its Court of Justice, were never a coded message that the UK should leave the EU. That is not really so surprising. After all, few critics of their national constitutional courts are trying to say in a roundabout way they would like to emigrate. I stand by my 2015 lecture as being the truth at the time, though no statement of the CJEU’s role can ever be the whole truth, nor valid for any time other than the time when it was written. That said, I do not think that a centralising approach on the part of the CJEU can protect the EU from the increasing influence of populist eurosceptics and Putin-admirers. Could that centralising approach have even contributed in some small way to their rise?

I would add that the most rewarding activity of my professional career as a barrister was pleading before the EU Courts in Luxembourg. They are a force to be reckoned with.