International Business LawPart I

European Union

Law

A HISTORICAL

OVERVIEW

The European Union

Two main Ideas, two main Missions:

• Europe

• Union

Europe

A common set of values which can distinguish Europe from non-Europe

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EUROPEAN IDENTITY

European Union

The unification of all the States which take part in the European Identity

HOW?

FUNCTIONALISM

• Step by step process (SPILL-OVER)

• Creation of supranational authorities representative of, but independent from, the Member States

INTERGOVERNMENTALISM

• Closer cooperation between sovereign States

FEDERALISM

• Establishment of a European Federation among independent, but no longer sovereign, States

MULTI-LEVEL GOVERNANCE

• Relationship between the actors and institutions involved at all the different levels of governance

• Network structure

Schuman-Monet Declaration9 May 1950

Unification of Europe1. as the only means for longstanding

peace (a political project)2. as a step by step project (first step: the

unification of a limited field, the coal and steel production)

3. by means of a supranational organizazion open to all countries willing

to take part

The Treaty of Paris1951

The European Coal and Steel Community

(ECSC)Six States:• France

• Germany• Italy

• Belgium• Netherlands

• Luxembourg

The Treaties of Rome1957

• [The European Defence Community (1953): failed]

• The European Economic Community (EEC)• The European Atomic Energy Community

(EURATOM)• Objectives: establishment of a common market (customs union, four

fundamental freedoms, competition policy, regulation of State intervention in the economy, harmonization of fiscal regimes of goods, general cooperation in economic fields)

• Original institutional arrangement (Commission, Assembly, Council, European Court of Justice)

During the 60s,70s, 80s

• 1973: First enlargement: UK, Ireland and Denmark (resignation of De Gaulle)

• 1981: accession of Greece

• 1986: accession of Spain and Portugal

• 1986: Single European Act

Single European Act1986

• Completion of the common market by 31 December 1992

• Institutional reform (cooperation procedure; formal recognition of the European Council)

• Laying down of foundations for greater economic and monetary integration

• Intergovernmental cooperation in foreign policy

During the 90s

• 1992: The Maastricht Treaty

• Application for membership by 12 Eastern Europe States

• 1993: Copenhagen criteria:• Stability of institutions guaranteeing democracy, the rule of law, human

rights, protection of minorities

• Existence of a functioning market economy

• Ability to assume the obligation of membership

• Adjustment of the national administratve structures

• 1997: The Treaty of Amsterdam

The Maastricht Treaty1992

• From the European Economic Community to the European Union, from policies to polity

• Three pillars:• First pillar: The European Community (EC)

• Second pillar: Common Foreign and Security Policy (CFSP)

• Third pillar: Justice and Home Affairs (JHA)

• (EC: supranational; CFSP and JHA: intergovernmental)

• A single institutional framework

Main features

• Serious consideration of democracy and legitimacy

• Institution of EU citizenship

• Introduction of the subsidiarity principle

The drama of ratification

• First referendum in Denmark: no (second referendum in 1993: yes)

• British Parliament: motion of confidence

• Challenges to the Treaty before national courts (UK, Spain, France, Denmark and Germany)

The Treaty of Amsterdam1997

• Area of Freedom, Security and Justice (integration of Schengen

Agreements into the legal framework of the EU; immigration, asylum and the rights of non-EU nationals brought within EC legislative competences)

• Third pillar renamed as Policing and Judicial Cooperation in Criminal Matters (PJCC)

• Stronger commitment for fundamental rights and enforcement of the principle of non-discrimination

• Provisions for “Enhanced Cooperation”• Increasing number of opt-outs (a multi-speed European

Union)

After Amsterdam

Negotiations for membership opened with:• Czech Republic• Poland• Hungary• Slovenia• Estonia• Latvia• Lithuania• Malta• Cyprus• Slovakia• Bulgaria• Romania

The Treaty of Nice2000

• Institutional reform directed at preparing Union for enlargement and at managing internal dissatisfaction

• Different allocation of seats in the European Parliament

• Recalculation of the distribution of the votes between national government within the Council

• [a poor and unsatisfactory compromise]• Proclamation of the Charter of Fundamental

Rights of the European Union (not legally binding)

The way forward

• 2000: Nice: Declaration on the Future of the Union

• 2001: Laeken: Declaration on the Future of the European Union

• 2001: Laeken: Establishment of the Convention on the Future of Europe (its task: to draft the Constitutional Treaty)

The Constitutional TreatyRome 2004

TREATY

or

CONSTITUTION?

STRUCTURE OF THE CT

Four parts:• Part I: general provisions on objectives,

symbols, fundamental rights, citizenship, democracy, institutional framework, law-making

• Part II: Charter of Fundamental Rights (legally binding)

• Part III: EU policies• Part IV: closing provisions• (Abolition of the three-pillar structure)

From Rome to Lisbon

• May-June 2005: French and Dutch referendum against the Treaty

• Period of reflection

• A two-fold process:

1. A political agreement (June 2007)

2. An Intergovernmental Conference with task limited by the mandate of the political agreement (December 2007)

The Treaty of Lisbon2007

• Two Treaties (same legal value):

1. The Treaty on European Union

2. The Treaty of the functioning of the European Union

• Abolition of all the “constitutional” provisions

• The Charter of Fundamental Rights as an annex to the Treaty

The Ratification Procedure

Very complex ratification for:• Ireland (second referendum on 2 October 2009)• Germany (sentence of the Federal Constitutional

Court, 30 June 2009)• Poland• Czeck Republic

• 1 December 2009: Entry into force

EU INSTITUTIONAL FRAMEWORK

MAIN INSTITUTIONS

• European Council

• Council

• Commission

• European Parliament

• European Court of Justice

• [European Central Bank]

• [Court of Auditors]

EUROPEAN COUNCIL

COMPOSITION

• Heads of States or government of the Member States

• President of the European Council

• President of the Commission

TASKS

• makes decisions about the future institutional shape of the EU

• defines the development of the EU policies

• establishes the EU priorities (Agenda-setting role)

PRESIDENT OF THE EUROPEAN COUNCIL

(Lisbon Treaty)• is elected by the European Council for a once

renewabile two-and-a-half year term• doesn’t hold national office• is an additional member of the European Council

TASKS:• Chairs and drives forward the work of the

European Council• Ensures cooperation between the EU institutions• Presents reports to the European Parliament• Represents the European Union externally

COUNCIL

COMPOSITION

• One Minister from each Member State (the Minister who is equipped to represent the government on the topic in question)

• Different formations depending on the issue in question

POWERS

• Legislative functions jointly with the European Parliament

• Decision to delegate normative powers to the Commission

MANAGEMENT OF THE COUNCIL

• PRESIDENCY

- rotation between the Member States for a six-month period

- chairs Council meetings

- represents the Council outside

• GENERAL AFFAIRS COUNCIL

- ensures consistency in the work of the different Council formations

DECISION-MAKING

• Now WEIGHTED system of voting: each MS is allocated a number of votes depending on its size

• From 2014 (or at most 2017): QUALIFIED MAJORITY system (at least 55% of the members of the Council comprising at least 15 of them, and representing MS comprising at least 65% of the EU population)

COMMISSION

INTERNAL ORGANIZATION

Three tiers:

• College of Commissioners (political branch)

• [Directorates-General (administrative branch; similar to national Ministries)]

• [Cabinets (offices of the individual Commissioners)]

COMPOSITION

• One Commissioner from each Member State including the President and the High Representative for Foreign Affairs (from 2014?)

• Persons whose independence is beyond doubt (no conflict of interest)

APPOINTMENT OF THE PRESIDENT

• Nomination by the European Council, after appropriate consultation and taking into account the result of the European Parliament election

• Election by the European Parliament for a five-year term

APPOINTMENT OF THE COMMISSIONERS

• Nomination of individual Commissioners by the President

• Collective approval of the President, the list of Commissioners and the High Representative for FA by the European Parliament, after appropriate hearings

• Appointment by the Council for a five-year term

POWERS OF THE PRESIDENT OF THE COMMISSION

• Involvement in the appointment of individual Commissioners

• Allocation of the individual portfolios

• Dismissal of individual Commissioners (Lisbon Treaty)

• Political guidance to the Commission

• Representative role

POWERS OF THECOMMISSION

• Delegated legislation

• Legislative proposals and agenda-setting

• Executive powers

• Supervisory powers

HIGH REPRESENTATIVE

for FOREIGN AFFAIRS

and SECURITY POLICY

APPOINTMENT

• Appointed by the European Council with the agreement of the President of the Commission

• Collective approval (together with the Commission President and the individual Commissioners) by the European Parliament

ROLE

The HR

• Is a member of the Commission

• Takes part in the work of the European Council

• Chairs the Foreign Affairs Council

TASKS

Conduction of the EU foreign and security policy with the aim of creating a more integrated and coordinated external policy

EUROPEAN PARLIAMENT

MAIN FEATURES

• Aimed at representing peoples of the Member States

• Initially made up of representatives from national Parliaments

• From 1979 directly elected• Proportional representation system• Seats allocated from among Member States

(more or less) on the basis of population• Lack of “European political parties”

POWERS

• Legislative power jointly with the Council• Election of the Commission President• Collective approval of the President of the

Commission, of the College of Commissioners and of the High Representative for FA at the beginning of the term

• Dismissal of the Commission during the term (motion of censure)

EUROPEAN COURT OF JUSTICE

INTERNAL ORGANIZATION

• COURT OF JUSTICE

• COURT OF FIRST INSTANCE (GENERAL COURT)

• SPECIALISED COURTS (JUDICIAL PANELS)

JURISDICTION

• Preliminary reference from national Courts• Enforcement actions brought by the Commission

against European institutions or Member States for breaching of European Union law

• Enforcement actions brought by Member States against other Member States for breaching of European Union Law

• Judicial review of European Community institutions (recourse for annulments)

• Opinions on the conclusion of international agreements by the EU

CONCLUSIVE REMARKS

• Each institution represents a different EU component: principle of the INSTITUTIONAL BALANCE

• Similarity to parliamentary system of government but with relevant differences: a European politics is still lacking

EUROPEAN UNIONSOURCES OF LAW

TREATY ON EUROPEAN UNION

INTERNATIONAL SOURCE OF LAW

AND

THE “CONSTITUTIONAL CHARTER” OF THE EUROPEAN UNION

EUROPEAN UNIONSOURCES OF LAW

• Acts passed by the European institutions

• Hierarchically subordinate to the Treaty

• Distinction between legislative and non-legislative acts

TYPES OF EUROPEAN ACTS

ART. 288 TFEU

• Regulations

• Directives

• Decisions

• Recommendations and Opinions (not legally binding)

REGULATION

• Has general application

• Is legally binding as a whole

• Has direct applicability (automatic incorporation into the domestic legal order of each Member State)

• Is aimed at uniformity of norms in all the Member States

DIRECTIVE

• Is addressed to the Member States• Is legally binding as the result to be achieved• The choice of means and methods of

implementation is left to the national authorities• A national transposition by the deadline stated in

the directive is needed • Is aimed at harmonisation of norms in all the

Member States

DECISIONS

• Legally binding as a whole

• Binding only upon the addressee

• Similar to domestic administrative acts

LEGISLATVE PROCEDURE

CO-DECISION PROCEDURE

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ORDINARY LEGISLATIVE PROCEDURE

LEGISLATIVE ACTS

ART. 289 TFEU

Legal acts adopted by legislative procedure shall constitute legislative acts.

(Formal definition)

NON-LEGISLATIVE ACTS

• DELEGATED ACTS (ART. 290 TFEU)

• IMPLEMENTING ACTS (ART. 291 TFEU)

THE CONSTITUTIONALIZATION

OF THE E.U. LEGAL ORDER

PRINCIPLES

• PRIMACY

• DIRECT EFFECT

• DUTY OF CONSISTENT INTERPRETATION

• STATE LIABILITY FOR BREACHING EU LAW

FOUNDATIONS: VAN GEND EN LOOS (1963)

• Teleological reasoning

• Reference to the people

• Right conferred on individuals directly by Community Law

• Community as “a new legal order of international law”

PRIMACY

COMMUNITY LAW TAKES PRECEDENCE

OVER

NATIONAL LAW

COSTA V. ENEL1964

“The law stemming from the Treaty […] could not be overridden by domestic legal provisions […] without being deprived of its character as Community law and without the legal basis of the Community itself being called into question”

AMMINISTRAZIONE DELLE FINANZE DELLO STATO v. SIMMENTHAL

1978

1. “In accordance with the principle of the precedence of Community law, the relationship between provisions of the Treaty and directly applicable measures of the institutions on one hand and the national law of the Member State on the other is such that those provisions and measures not only by their entry into force render automatically inapplicable any conflicting provision of current national law, but […] also preclude the valid adoption of new national legislative measures to the extent to which they would be incompatible with Community provisions”.

2. “Every national court must, in a case within its jurisdiction, apply Community law in its entirety and protect rights which the latter confers on individuals and must accordingly set aside any provision of national law which may conflict with it, whether prior or subsequent to the Community rule”

DIRECT EFFECT

Nationals of Member States may on the basis of Community law provisions lay claim to rights which the national courts

must protect (Van Gend en Loos)

EARLY CRITERIA FOR DIRECT EFFECT

Has direct effect in national legal order:• A norm of the Treaty• Clear • Unconditional• Containing a negative prohibition, not dependent

upon further implementation

• Only vertical direct effect (between a private party and State)

LIBERALISATION OFDIRECT EFFECT

(1)

RELAXING OF THE PREVIOUS CRITERIA(Defrenne v. Sabena 1976)

Has direct effect in national legal order:• A norm of the Treaty• Sufficiently precise and unconditional• Negative prohibition not needed

• Horizontal direct effect (relationship between private parties)

LIBERALISATION OFDIRECT EFFECT

(2)

DIRECT EFFECT OF DIRECTIVES (Van Duyn v. Home Office 1974)

“Where the Community authorities have, by Directive, imposed on Member States the obligation to pursue a particular course of conduct, the useful effect of such an act would be weakened if individuals were prevented from relying on it before their national courts and if the latter were prevented from taking it into consideration as an element of Community law”

DIRECT EFFECT OF DIRECTIVESWHEN

• From the end of the transposition period

• Only if the Member State has failed to implement (“Estoppel clause”)

• No horizontal direct effect

DUTY OF CONSISTENT INTERPRETATION

The national legislation is to be interpreted in the light of EU law

(INDIRECT EFFECT)

EXTENT OF THE DUTY(1)

Von Colson1984

“It is for the national court to interpret and apply the legislation adopted for the implementation of the Directive in conformity with the requirements of Community law, insofar as it is given discretion to do so under national law”.

EXTENT OF THE DUTY(2)

Marleasing SA1990

All national legislation is to be interpreted in the light of EC Law, irrespective of whether it is implementing legislation or not and irrespective of whether it was enacted prior or subsequent to the provision of EC law in question.

WHEN

• Only from the end of the transposition period

• If the Member State has failed to implement

• Yes horizontal indirect effect

STATE LIABILITY

AN ACTION FOR COMPENSATION AGAINST THE STATE FOR BREACH OF

EU LAW MUST BE AVAILABLE

Francovich and Bonifaci1991

“It is a principle of Community law that the Member States are obliged to make good loss and damage caused to individuals by breaches of Community law for which they can be held responsible”

CRITERIAFOR STATE LIABILITY

• The result prescribed by the Directive should entail the grant of rights to individuals

• It should be possible to identify the content of those rights on the basis of the provisions of the Directive

• A causal link between the breach of the State’s obligation and the loss and damage suffered by the injured parties has to exist

EXPANSION OF STATE LIABILITY

Köbler v. Austria

2003“In the light of the essential role played by the judiciary in

the protection of the rights derived by individuals from Community rules, the full effectiveness of those rules would be called in question and the protection of those rights would be weakened if individuals were precluded from being able, under certains conditions, to obtain reparation when their rights are affected by an infringement of Community law attributable to a decision of court of a Member State adjudicating at last instance”

EU LAW and

ITALIAN LAW

CONSTITUTIONAL BASES

• ART. 11 Const.

“[…] Italy agrees to limitations of sovereignty when they are necessary to allow for a legal system of peace and justice between nations, provided the principle of reciprocity is guaranteed; it promotes and encourages international organizations furthering this end”

• ART. 117, par. 1

“Legislative power belongs to the State and Regions in accordance with the Constitution and within the limits set by European Union law and international obligations”

THE ITALIAN CONSTITUTIONAL COURT CASE-LAW CONCERNING THE

SUPREMACY OF EUROPEAN LAW

FIRST PERIODDEC. n. 14/1964

• Dualistic approach

• European norms and national norms possess the same binding authority: the most recent one prevails

• Denial of supremacy

SECOND PERIODDEC. n. 183/1983 – DEC. n. 232/1975

• Dualistic approach

• Acceptance of supremacy

• Two-folded judicial guarantee:

1. Direct application by national judges of the more recent European norm

2. Declaration of unconstitutionality of the more recent national norm (indirect infringement of art. 11 Const.)

THIRD PERIODDEC. n. 170/1984

• Dualistic approach

• Direct application by the national judges of every European norm, regardless of the time of their enactment

• Irrelevancy of the national norm to state the cases before national judges

RESIDUAL JURISDICTION OF THE CONSTITUTIONAL COURT

1. Direct procedures between State and Regions

Dec. n. 384/1994 – Dec. n. 94/1995

The national or regional norms conflicting with European law are declared unconstitutional

2. COUNTER-LIMITS DOCTRINE

Dec. n. 98/1965 – 183/1973 – 232/1989The European law can NOT violate

fundamental rights or other basic values protected by the Italian Constitution: if it does so, the judge shall apply to the Constitutional Court for judicial review of European law (rectius: for judicial review of the part of the Italian act of ratification of the European treaties on which the contested European norm is based)

(SUPREMACY UNDER CONDITION)

3. European norms lacking direct effect

DEC. n. 170/1984 – DEC. n. 28/2010

When a conflict between a European norm lacking direct effect and a domestic norm arises, the judge shall apply to the Constitutional Court for judicial review of the domestic norm. The national provision conflicting with the European one is declared unconstitutional.

THE ITALIAN CONSTITUTIONAL COURT CASE-LAW CONCERNING THE DIRECT

EFFECT OF THE EUROPEAN LAW

WHEN AND WHAT

Every European norm (other than regulations), if clear and unconditional, can have direct effect in the Italian legal order.

So• Treaty provisions• Decisions of the European Court of Justice• Directives can have direct effect, under the conditions fixed

by the Court of Justice.

PRELIMINARY REFERENCE FROM THE ITALIAN CONSTITUTIONAL COURT

Ord. n. 103/2008

The first preliminary reference from the Italian Constitutional Court in a direct procedure between State and Regions: the Constitutional Court can be qualified as a “national jurisdiction”.