Cheerleading or judging? The CJEU upholds the EU's unitary patent system

Steve Peers

Two new CJEU judgments (here and here) have today upheld the legality of the EU rules on the unitary patent. To what extent are the Court's reasons convincing and coherent?

Background

The background to today’s rulings was summarised in my previous blog post, on the Advocate-General’s opinion. Suffice it to say that: the EU has tried for decades to agree on patent rules, and the Treaty of Lisbon created a specific legal base for the adoption of EU intellectual property rules (Article 118 TFEU). The main rules are to be adopted by the ordinary legislative procedure (qualified majority voting in Council, joint power for the European Parliament), but the languages rules, which apply in this case to translations of the patent (or patent claims), must still be agreed by unanimity.

Since Member States could not reach the required unanimity on the patent translation rules, most Member States agreed to apply the process of ‘enhanced cooperation’, ie adopting EU legislation that applied to some Member States, but not others. This entailed a two-step procedure: authorisationof enhanced cooperation by the Council (by a qualified majority vote of all Member States), and then the adoption of the legislation to implement enhanced cooperation, with only the participating Member States voting. Spain and Italy challenged the initial authorisation (adopted in 2011) regarding patents, but the CJEU ruledagainst them in 2013. The two Regulations implementing enhanced cooperation in this area were adopted, in the meantime, at the end of 2012, concerning the substantive rules governing a ‘unitary patent’ and the language rules.  Spain (this time without Italy) challenged these measures in turn; those two challenges are the subject of today’s judgment.

The EU legislation on this issue is closely linked to two international treaties. First of all, the European Patent Convention, agreed in 1973, which binds all EU Member States and a number of non-Member States, and which sets up a legal framework for registering a patent in a number of European countries, by means of an application to the European Patent Officewhich it established. This results in a ‘European patent’, but the legal title concerned is not genuinely uniform, but depends on the national law of each of the countries where the patent is registered. The point of the EU legislation is to create a form of European patent that will have uniform existence in all of the participating Member States, also reducing the costs of translation that would otherwise apply.

The second treaty concerned is a treaty among Member States creating a Unified Patent Court, in order to reduce the costs of litigation concerning European patents and the planned unitary patent. (Although the CJEU had objected to aspects of these plans in its Opinion 1/09, Member States believe that they have addressed the Court’s concerns). That treaty will come into force once thirteen Member States, including France, Germany and the UK, have ratified it. So far six Member States have, including France. The application of the EU’s unitary patent law is dependent upon this treaty coming into force, and the unitary patents will only be valid in Member States which have ratified the treaty (all Member States except Spain, Poland and Croatia have signed it; all Member States except Spain, Italy and Croatia participate in the Regulations).

The judgments

Spain’s legal arguments against the two EU Regulations differed somewhat. As regards the main Regulation, Spain argued that it was invalid because it created a unitary patent dependent upon the acts of the European Patent Office, whose acts are not subject to judicial review. Secondly, the Regulation did not create ‘uniform protection’ within the meaning of Article 118 TFEU. Thirdly, there is a ‘misuse of power’, ie enhanced cooperation was used for a purpose other than the Treaties allow for. Next, the Regulation breached the rules concerning the conferral of implementing power upon the Commission, because it gives power to the Member States to decide on issues such as renewal fees.

As regards the languages Regulation, Spain argued that the special status of the French, English and German languages set out in that Regulation was discriminatory. Also, it argues that there is no legal power for the EU to regulate language issues in the event of a dispute, as the Regulation does, and that the Regulation violates the principle of legal certainty.

In both cases, Spain argued that the rules on adopting implementing measures were invalid, since powers to implement EU law were granted to a non-EU body, the European Patent Office. Also, it argued that making the application of the Regulations dependent upon the ratification of the treaty creating the unified patent court breached the principle of the autonomy of EU law.

The CJEU has rejected all of these arguments. In its view, the main Regulation doesn’t violate the rule of law, since it simply takes the form of a ‘special agreement’ as provided for in the EPC. Secondly, the Court said that Article 118 TFEU was the correct legal base for the legislation, since it established a system of uniform protection for unitary patents. It did not matter that it referred to national law as regards some issues, since Article 118 does not require the EU to fully harmonise the particular intellectual property right at issue, and at least this provided for more harmonisation than the EPC, which is in effect a bundle of national patents. Thirdly, there was no ‘misuse of power’, since the Regulation did not secretly aim at a purpose other than its purported end. Next, it was acceptable for the Regulation to confer upon Member States the power (acting via their participation in the EPO) to implement its rules, since the EU Treaties only require implementing powers to be conferred upon the conditions where ‘uniform’ implementing measures were required. Nor did the Regulation violate the ‘Meroni principle’ of an impermissible delegation of discretionary powers. Finally, the Spanish government’s challenges relating to the unified patent court treaty were inadmissible, and its challenge to the rules on the timing of the application of the Regulation were rejected on the merits. The Court ruled that the EU is free to defer application of EU legislation until preparatory steps have been taken, and that limiting the application of the Regulation to those Member States which have ratified the unified patent court treaty was acceptable, since it only affected a few provisions of the Regulation.

As for the languages Regulation, the CJEU ruled that while it was discriminatory in principle to confine translations to three languages only, there was no rule of EU law that all EU languages have to be equally valid as regards all issues linked to EU law. The discrimination as regards languages could be justified by the need for reducing costs and therefore encouraging innovation. It was appropriate to use the three languages already used by the EPO, in light of the link between the EPO and the EU system, and the EU law was not disproportionate, in light of the rules in the Regulation designed to address the concerns of patent holders using other languages. The Court also ruled that the entire Regulation fell within the scope of the ‘legal base’ relating to languages issues, and that there was no breach of the principle of legal certainty.

Comments

The CJEU did not really rule on any of the many interesting questions about the substantive grounds governing the implementation of enhanced cooperation, simply because Spain did not raise them. However, the argument relating to discrimination touches indirectly upon those issues.

Parts of the Court’s ruling are convincing, particularly as regards the possibility of delaying the entry into force of EU laws to wait for other developments, the ‘legal certainty’ issues relating to the languages Regulation and the legal base issue regarding the same Regulation. However, with respect, some of its reasoning was only partially convincing. The Court’s case for using a limited number of languages is sensible only if one accepts its underlying premise that the unitary patent system will have the overall impact of enhancing innovation. Many critics of the patent system argue that it does the reverse, by giving an overly lengthy monopoly to the patent-holders. To be fair, though, it would be too much to expect the Court to enter into this argument, particularly since Spain did not raise it.

Similarly, the Court’s argument that the Meroniprinciple was not infringed is sensible enough – if one accepts its separate conclusion that the main Regulation validly conferred implementing powers upon Member States. But that conclusion brings us to the chain of contradictions in the Court’s reasoning. For the powers that Member States will exercise when implementing the unitary patent Regulations will not result in divergent approaches in each country’s individual national laws, as is normally the case when Member States are left with the powers to implement EU law in practice. Rather, they must exercise their powers collectively, to adopt uniform rules regarding the unitary patent, within the context of the EPO. Indeed, the Court’s other conclusions insist upon the uniform nature of that patent. This points us inexorably toward the conclusion that uniform rules to implement the Regulations were necessary – which means (according to the Treaties) that such powers ought to have been conferred upon the Commission.

For the same reasons, the Court’s dismissal of the argument against limiting the application of the main Regulation to those Member States which have ratified the unified patent court treaty is unconvincing. The Court is indeed right to say that this limitation affects only a few provisions of the Regulation – but these are the provisions relating to the uniform nature of the patent, which the Court relied on so heavily when it defended the legal base of this Regulation.

This stress on the uniform nature of the patent also contradicts the first part of the Court’s reasoning on the main Regulation, which deferred to the EPC system and argued rather that EU law did notalter that system at all. The Court did not adequately answer the argument that the EU lacked power to do this, and entirely side-stepped the important argument that the EPO should be subject to judicial review. This contrasts with the Court’s famous insistence in Kadiupon the need for adequate review of international bodies whose acts impact upon the EU legal order.

In the Court’s view, the unitary patent system is valid because it largely refers back to the EPO system, and also because it does not. With respect, the Court is trying to have its cake and eat it too. A better argument would have been to embrace the hybrid nature of the system rather than run away from it. After all, the drafters of the Treaty of Lisbon were well aware of the existence of the EPO. In light of the discussions on a possible EU patent which were underway when that Treaty’s predecessor (the Constitutional Treaty) was drawn up, a hybrid solution based on a combination of the EPO and EU law was presumably exactly what the Treaty drafters were aiming to facilitate when they added Article 118 TFEU to the Treaties.  

Whether the Treaty drafters ought to have intended this is, of course, another question. But the best place for a debate about the fundamental merits of intellectual property protection is the political arena, not the courts. While today’s judgments confirm the legal validity of the EU’s unitary patent system, and enable it to go forward in the near future (after several more ratifications of the patent court treaty), their circular and contradictory reasoning suggests that the Court simply wanted to approve the patent system regardless of the legal arguments against. But this approach to judicial analysis could ultimately hinder, rather than bolster, the broader legitimacy of the unitary patent system.

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The Returns Directive and the Expulsion of Migrants in an Irregular Situation in Spain

 

Dr Diego Acosta Arcarazo, Lecturer in Law, University of Bristol

Dr Andrea Romano, Research Assistant, La Sapienza University of Rome.

 

In a much expected ruling delivered on 23 April in Case C-38/14 Zaizoune, the CJEU apparently left without validity the Spanish legal architecture by which undocumented non-EU (third country) migrants could be subject to a fine, rather than be expelled as a result of their irregular situation. Below, we will briefly explain the Spanish legal system as well as the rationale by the Court in declaring it in breach of EU law, notably its limited analysis of Article 4(3) of the EU’s Returns Directive, which grants Member States the right to adopt or maintain more favourable provisions provided those provisions are compatible with that Directive.

 

The Case

 

Mr Zaizoune, a third-country national irregularly residing in Spain, received an expulsion order in October 2011. Mr Zaizoune brought an action against that decision and requested that such expulsion order should be replaced with a fine. Indeed, based on the Spanish legislation, which had been adopted in 2009 before the deadline for implementing the Directive had expired, and which followed consistent jurisprudence from the Spanish Supreme Tribunal, migrants in an irregular situation had to be subject to a fine as the only sanction as a general rule. Expulsion was indeed only possible when aggravating circumstances beyond the mere irregular stay were present, and only after having regard to the principle of proportionality, the degree of fault, the harm caused and the risk arising from the offence and its effects. In other words, irregular stay was, as a general rule, not considered to be of sufficient gravity to order expulsion from the territory.

 

However, we find here an instance of the dichotomy, that the American scholar Motomura has marvellously depicted in the US case, between immigration law in theory and immigration law in action or practice. Indeed, the fine was the first step for expelling an individual. Such person was told not only that he had to pay a fine but also that he had the obligation to voluntarily leave Spain or to attempt to regularize his status. Such regularization was only possible after having paid the fine, but paying the such fine did not excuse the person from being expelled if he had not been able to regularize.

 

The reasons for this system may be traced back to the Spanish immigration policy. Spain received a large number of third-country nationals in the first decade of this century. There were very few legal routes to migrate to Spain but this was coupled with a generous regularization policy well represented by the “arraigo” (settlement) figure. Arraigo allows an undocumented third-country national to request a residence permit after having resided for three years in Spain if some conditions are fulfilled out of which the most important one is to have a job offer. A scheme of fines fit well with this system where numerous third-country nationals could obtain a residence permit after having worked for a number of years in Spain.

 

The Court does not obviously enter into discussing these internal issues and concludes that the Directive precludes the Spanish provision providing for the fines as an alternative to expulsion, since it is likely to jeopardise the achievement of the objectives pursued by the Directive, notably the removal of the third-country national concerned, and, therefore, deprive it of its effectiveness (paras 39 and 41).

 

Comment

 

Since the adoption of the Directive, the Court has repeatedly ruled on the incompatibility between EU law and national law on return-related issues, where the latter provided for more restrictiverules. The CJEU clearly stated in El Dridithat “the Directive does not allow those States to apply stricter standards in the area that it governs” (par. 33).

 

In contrast, in Zaizoune the Court had to interpret the notion of the possibility of Member States adopting “more favourable provisions” than the Returns Directive, as permitted by Article 4 (2) and (3) of the Directive.

 

Labour law is an area where similar “more favourable provision” clauses have raised major concerns for the Court. Several rulings deal with the possibility for Member States to set higher standards for workers than EU employment legislation, and in some of these cases the Court has allowed them to do so.

For example, in Merino Gomez, the CJEU affirmed that number of days of leave for women who had taken maternity leave could be higher than those laid down in the relevant directive, since the latter only provides for minimum standards (par. 42-45). A similar rationale was also adopted in other cases such as Dominguez(paras 47-48) or Neidel(par. 35).

 

Probably a less linear attitude to the more favourable clause characterizes the case-law on migration and asylum law. In B and D the Court allowed a Member State to grant protection on the basis of its constitutional law in favour of a person excluded from the refugee status provided for by Directive 2004/83, the so-called “qualification Directive” that defines eligibility for refugee and subsidiary protection status in the EU. However, the Court excluded the application of the “more favourable provision” clause in that Directive in order to grant the persons concerned refugee status in accordance with the Directive, as the Directive required persons in the situation of the applicants to be excluded from refugee status (par.  113-121). Like the Returns Directive, the qualification Directive (and other EU asylum laws) only allow Member States to apply more favourable provisions that are compatible with the Directive. It should be noted that EU law on legal migration allows Member States to have more favourable standards withoutsuch a compatibility requirement.

 

A restrictive approach as regards “more favourable” rules for obtaining refugee and subsidiary protection status can again be found in the recent M’Bodjcase, discussed further here. Here, the Court held that a person suffering from a serious illness cannot be eligible for subsidiary protection based on the more favourable provision clause (art. 3, Directive 2004/83), as this situation “has no connection with the rationale of international protection” (par. 44).

 

Furthermore, the interpretation of the more favourable provision clause has also been problematic in the area of free movement of EU citizens: in Ziolkowski, Advocate-General Botargued that as art. 37 of the EU citizens’ directive provides for more favourable national provisions, residence periods of a Union citizen in a hosting Member State, on the basis of a residence permit issued under national law, are to be counted in order to obtain a permanent residence right (par. 46-49 and 58). This argument was however rejected by the Court (par. 48-50).

 

As far as migration law is concerned, in the recent Tahircase, the Court adopted a systematic reading and dismissed the literal interpretation of the applicant, who claimed the right to obtain a long-term residents’ EU residence permit on the basis that according to national legislation the requisite of an uninterrupted residence of 5 years was not explicitly required for family members of a TCN already holding such a long-term residence permit (par. 38-44). In both Ziolkowski and Tahir we see a refusal by the Court to incorporate those more favourable rules into the system of the Directive rather than a limit per se on the ability of Member States to have more favourable provisions.

 

As it can be seen, systematizing EU case law on more favourable national provisions is a hard task.  In Zaizoune, the Court could have explained more fully the reasons why Spain could not rely on Article 4(3) and given more details about the contrast between Spanish law and the Directive´s effectiveness. In particular, the Court´s appraisal of effet utile seems inconsistent with its earlier case-law (El Dridi, par. 31, 38, 42; Achughbabian, par. 42). The CJEU only mentions these cases to refer to the removal´s mandate and avoids mentioning that the directive also aims at ensuring guarantees and fundamental rights for migrants.

 

The CJEU provides for a narrow and literal reading of the Directive where any national provisions not leading to return are inconsistent with it. With respect, an alternative reading of Chapter II of the Directive, entitled termination of illegal stay, could have accepted more favourable provisions, such as those at play in the Spanish case, where the national legislation provides for a permanent mechanism of regularization which will indeed potentially lead to the termination of such legal stay. The Court could have then adopted a more nuanced interpretation, by stating that the Spanish law would be inconsistent with the directive where the person concerned could not regularize his status, something for the national court to assess in each scenario.

 

Spain will not now be able to impose a fine as an alternative to expulsion. It will however also have to make sure that the period for voluntary departure, which as a general rule has to be granted to any individual issued with a return decision, is effectively put into place. Indeed, this is not always the case in the Spanish practice. During such period for voluntary departure, which can be extended (according to the Directive) beyond 30 days taking into account the specific circumstance of the individual case, the person concerned could avail himself of the possibility to regularize his status through arraigo and have the return decision withdrawn in line with Article 6(4) of the Directive, which allows Member States to regularize irregular migrants. This alternative will respect the Returns Directive but will also allow the individuals concerned an opportunity to regularize and avoid expulsion. It will also take into account the particular circumstances of a Member State where a large number of undocumented migrants are those who fell into irregularity. In other words, these are individuals who, having resided for a number of years in Spain, could not renew their temporary permits due to, for example, having lost their jobs. This alternative will also require careful judicial oversight and good lawyering involved and will almost mirror the previous system while also respecting the Directive. It will also tackle the ongoing challenge of those third-country nationals who cannot be removed, a situation which not only arises in Spain but also in the other 24 Member States (all except the UK, Ireland and Denmark) bound by the Directive.

 

Barnard & Peers: chapter 26

Photo credit: bagnewsnotes.com

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Whatever it takes: the Advocate-General’s opinion on the EU’s unitary patent

 

Steve Peers

Today’s two opinions (see here and here) on the legality of the EU rules on the unitary patent would, if followed by the Court of Justice, finally make way for the EU’s patent plans to bear fruit. However, this would be at the cost of compromising some established principles of the EU legal order.

Background

The European Union (and previously, the European Community) have struggled for decades to agree on patent rules. Treaties between Member States on patents were signed in 1976 and 1989, but never came into force. A proposed EU Regulation was agreed in principle in 2003, but the deal was regarded as unworkable because of its translation requirements.

The Treaty of Lisbon, in force 2009, then created a specific legal base for the adoption of EU intellectual property rules (Article 118 TFEU). It provides for the main rules to be adopted by the ordinary legislative procedure (qualified majority voting in Council, joint power for the European Parliament). However, the languages rules, which apply to translations of the patent (or patent claims), must still be agreed by unanimity.

Discussions on a proposed EU patent were revived starting in 2008, and the rules on the patent were agreed by the time that the Treaty of Lisbon entered into force, except for the languages issue. Due to a deadlock on that point, most Member States eventually agreed to trigger the process of ‘enhanced cooperation’, ie adopting EU legislation that applied to some Member States, but not others.

The enhanced cooperation process is different from the specific opt-outs that some Member States have as regards EU economic and monetary union and justice and home affairs law. The relevant Treaty rules set out a two-step procedure. First, enhanced cooperation must be authorised by the Council (by a qualified majority vote of allMember States): this requires also a request by a group of Member States, a proposal by the Commission, and the consent of the European Parliament (EP). Secondly, the legislation to implement enhanced cooperation must then be adopted using whichever EU procedure would usually apply, with the exception that only the Member States participating in enhanced cooperation get to vote.

This process was applied first of all in 2010, to authorisea group of Member States to adopt EU rules on choice of law in divorce. That case was not controversial. Since the authorisation of enhanced cooperation as regards patents in 2011, the process has been used once more to date, to authorisea group of Member States to adopt a financial transaction tax. The UK challenged the latter decision, but the CJEU rejected its challenge this spring, essentially on the grounds that the UK was only challenging the legality of the substance of the planned tax. But that issue cannot not be raised, as long as the participating Member States have not yet adopted the EU law implementing enhanced cooperation as regards the tax (see the earlier discussion on this blog). Those Member States still haven’t adopted such a law; when and if they do, a second challenge by the UK is likely.  

Similarly, the EU patent legislation has been challenged at both steps of the enhanced cooperation procedure. The initial authorisationof enhanced cooperation regarding patents was challenged by both Spain and Italy, each of which objected to the languages rules in the planned legislation, which provided for the key translations to be in English, French and German only. They lost this initial legal challenge in 2013, when the CJEU ruledthat the conditions for authorisation of enhanced cooperation were satisfied.

In the meantime, the participating Member States adopted two Regulations implementing enhanced cooperation in this area at the end of 2012: one of them concerns the substantive rules governing a ‘unitary patent’, while the other governs the language rules.  Spain (this time without Italy) challenged these measures in turn; those two challenges are the subject of today’s opinion.

The EU legislation on this issue is closely linked to two international treaties. First of all, the European Patent Convention,agreed in 1973, which binds all EU Member States and a number of non-Member States as well. That treaty sets up a legal framework for registering a patent in a number of European countries, by means of an application to the European Patent Office which it sets up. This results in a ‘European patent’, but the legal title concerned is not genuinely uniform, but depends on the national law of each of the countries where the patent is registered. The point of the EU legislation is to create a form of European patent that will have uniform existence in all of the participating Member States, also reducing the costs of translation that would otherwise apply.

The second treaty concerned is a treaty among Member States creating a Unified Patent Court, in order to reduce the costs of litigation concerning European patents and the planned unitary patent. (Although the CJEU had objected to aspects of these plans in its Opinion 1/09, Member States believe that they have addressed the Court’s concerns). That treaty will come into force once thirteen Member States, including France, Germany and the UK, have ratified it. So far five Member States have, including France (UK ratification is imminent). The application of the EU’s unitary patent law is dependent upon this treaty coming into force, and the unitary patents will only be valid in Member States which have ratified the treaty (all Member States except Spain, Poland and Croatia have signed it; all Member States except Spain, Italy and Croatia participate in the Regulations).

The opinion

Spain’s legal arguments against the two EU Regulations differ somewhat. As regards the main Regulation, Spain argues that it is invalid because it creates a unitary patent dependent upon the acts of the European Patent Office, whose acts are not subject to judicial review. Secondly, the Regulation does not create ‘uniform protection’ within the meaning of Article 118 TFEU. Thirdly, there is a ‘misuse of power’, ie enhanced cooperation has been used for a purpose other than the Treaties allow for. Next, the Regulation breaches the rules concerning the conferral of implementing power upon the Commission, because it gives power to the Member States to decide on issues such as renewal fees.

As regards the languages Regulation, Spain argues that the special status of the French, English and German languages is discriminatory. Also, it argues that there is no legal power for the EU to regulate language issues in the event of a dispute, as the Regulation does, and that the Regulation violates the principle of legal certainty.

In both cases, Spain argues that the rules on adopting implementing measures are invalid, since powers to implement EU law have been granted to a non-EU body, the European Patent Office. Also, it argues that making the application of the Regulations dependent upon the ratification of the treaty creating the unified patent court breaches the principle of the autonomy of EU law.

The opinion of Advocate-General Bot rejects all of these arguments. In his view, the main Regulation does create ‘uniform protection’, since it gives unitary status to a European patent that would otherwise be dependent upon different national laws. While the Regulation does refer back to national law, it does so as a form of (in effect) mutual recognition, ensuring that the national law governing each unitary patent governs the validity of that patent in other participating Member States. He does not believe that the argument regarding judicial review of the European Patent Office has merit.

Next, he argues that the EU legislature could confer power on issues such as renewal fees back to the Member States, rather than the Commission, since there was no need for uniform rules at EU level (which is when the Treaty requires implementing powers to be conferred upon the Commission) in this case.

As for the autonomy of EU law, he argues that the CJEU cannot review the validity of the treaty creating a unified patent court. It does not violate the autonomy of EU law to make the implementation of the Regulations dependent upon the entry into force of that Treaty, given the close link between the judicial system for patent protection and the patent system as a whole. Indeed, he suggests that the ‘principle of sincere cooperation’ set out in the Treaties requires Member States to ratify the treaty creating the separate court, in order to ensure that the unitary patent is effective. 

The translation rules are also acceptable. While it is discriminatory to confine translations to three languages only, it is not disproportionate in light of the need to ensure the cost-effectiveness of the patent. Finally, the Advocate-General argues that the principle of legal certainty is satisfied, since only one language version is authentic. 

Comments

In principle, this case is important because it raises questions about the substantivegrounds governing the implementation of enhanced cooperation. However, in practice only the argument relating to discrimination touches upon those substantive issues. And furthermore, in this case the discrimination argument doesn’t concern the nature of enhanced cooperation as such: the languages argument could equally be made against an EU legal measure which applies to allMember States, but which allows for the use of a limited number of languages only. Indeed, such an argument was made (unsuccessfully) against the translation regime of the EU trademark (the Kik judgment), which differs from the EU patent because it puts Spanish and Italian on an equal footing with the other three languages.  It looks as if we might have to wait for the legal challenge to the future financial transaction tax before the substantive rules on enhanced cooperation are interpreted by the CJEU.

But while the opinion doesn’t have much to say about enhanced cooperation as such, it has a lot to say about other forms of unorthodox law-making by the EU institutions. While the details and the substantive rules are of course different, it’s clear that on this front, there’s a lot in common between the EU’s unitary patent rules and the recent developments regarding economic and monetary union. Admittedly, in the former case, the EU is trying to kick-start a major harmonisation project for the umpteenth time, whereas in the latter case, it is trying to save the flagship of European integration from sinking. But in both cases, it is resorting extensively to treaties outside the legal order, such as the treaty approved by the CJEU in its Pringle judgment, as well as differentiated integration within it. Equally, it is creating new rules for the EU institutions (such as the powers for the European Central Bank being challenged in the pending Gauweilercase), including the deferral of power to Member States or international bodies (approved here by the Advocate-General, in spite of the Kadi precedent in which the CJEU frowned on decisions being made for the EU by a committee of the UN Security Council).

As with economic and monetary union, EU patent law will therefore (if the Court follows the opinion) be established and survive in a sui generis environment, in which many of the usual rules which govern the EU legal order do not apply.  Time will tell whether these two areas of law remain the exception in this respect, or begin to become the rule.

Barnard & Peers: chapter 5

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“So these lawyers walk into a Bar and … “ The Court of Justice liberalises cross-border access to the legal profession

Dr Julian Lonbay, Senior Lecturer,
Postgraduate Research Admissions Tutor, Birmingham Law School, University
of Birmingham

Introduction

Does EU law allow its citizens to seek the quickest possible means to qualify for a professional activity, even if it means leaving out large areas of training required by national law on access to the national profession that exercises that activity? The Court of Justice has addressed this issue recently in its judgment in Joined Cases C-58/13 and C-59/13 Angelo Alberto Torresi and Pierfrancesco Torresi v Consiglio dell'Ordine degli Avvocati di Macerata.

Background: Mobility rights for lawyers under Directive 98/5/EC

In Italy, as elsewhere across Europe, there is a special section of the roll of lawyers (elenco) for those lawyers emerging from elsewhere in the European Economic Area who are seeking to establish under their ‘home State professional title’ in Italy. This follows the implementation of Directive 98/5/EC to facilitate practice of the profession of lawyer on a permanent basis in a Member State other than that in which the qualification was obtained. This Directive requires host State Competent Authorities to register and automatically recognise the professional titles of lawyers, whose professions are listed in Article 1(2) of the Directive. Such lawyers, once registered, have the right to exercise their profession in the host country, according to Article 5 of the Directive.

However, unlike other countries, in Italy 92% of the registered European lawyers are Italian nationals. The Consiglio nazionale forense (Italian National Bar Council) has established that nearly 3,500 such registered European lawyers were Italian nationals who had obtained their professional title elsewhere in the EEA. 83% of these lawyers had obtained their professional title, abogado, in Spain.

The via spagnola

Spain, until recently, imposed no requirement for post–university mandatory training before becoming an abogado. One simply had to have a Spanish law degree, or one recognised as equivalent to a Spanish law degree, and one could register with one of the eighty-three Spanish Bars as an abogado. [There is now a mandatory training period and State exam in Spain, the first of which was held in 2014.]

As many Italians with a laurea in guirisprudenza (Italian law degree) discovered, the Spanish authorities often considered the Italian Law degree to be equivalent to a Spanish law degree, and their degrees could be homologated more or less automatically. Armed with their new Spanish recognised diplomas they could enrol as lawyers in Spain, and thence return triumphant to Italy, where they were entitled (under Directive 98/5/EC) to practise as Spanish lawyers. Such practise can include dealing with matters of Italian law (subject to some deontological and other restraints). So instead of undergoing the required Italian period of legal practice and passing a State exam before being able to practice as an avvocato (Italian lawyer), which would take at least two years, they could qualify abroad more speedily, and then return as lawyers from another Member State and practice in Italy as such. 

An abuse of EU law?

The Italian Bars were concerned at this practice and considered it to be an abuse of European Law and argued even that it threatened the Italian national identity which should be protected by Article 4(2) TEU.

The Torresi cases were an opportunity to see if EU law could bear such an interpretation. The two Torresis returned from Spain qualified as abogados, and asked the Bar of Macerata (in Italy) to inscribe them on the special roll for registered European lawyers. The Bar Council of Macerata took no decision within one month (which was the time limit set by Italian law), and they then turned to the Consiglio nazionale forense(CNF) asking it to take action on their applications. The CNF was not convinced that Article 3 of the Directive could be used in such circumstances which it thought might constitute an ‘abuse of law’ and be contrary to Article 4(2) TEU

‘in that it permits circumvention of the rules of a Member State which make access to the legal profession conditional on passing a State examination, given that the Constitution of that Member State makes provision for such an examination and that the examination forms part of the fundamental principles of protecting consumers of legal services and the proper administration of justice?’

Two questions were referred to the CJEU by the Italian CNF. Preliminary issues of jurisdiction and capacity took up much of Advocate General Wahl’s Opinion (§§19-83) and more than half of the Grand Chamber’s ruling. The substantive legal issues dealt with aspects of the free movement of lawyers under Directive 98/5/EC and are dealt with below.

The following questions were referred to the CJEU:

‘1.      In the light of the general principle which prohibits any abuse of rights and Article 4(2) TEU, relating to respect for national identities, is Article 3 of [Directive 98/5] to be interpreted as obliging national administrative authorities to register, in the register of lawyers qualified abroad, Italian nationals who have conducted themselves in a manner which abuses EU law, and as precluding a national practice which allows such authorities to reject applications for registration in the register of lawyers qualified abroad where there are objective circumstances to indicate that there has been an abuse of EU law, without prejudice to respect for the principles of proportionality and non-discrimination and to the right of the person concerned to institute legal proceedings in order to argue a possible infringement of the right of establishment and, consequently, the possibility of judicial review of the administrative action in question?

2.      If the first question should be answered in the negative, is Article 3 of [Directive 98/5], thus interpreted, to be regarded as invalid in the light of Article 4(2) TEU, in that it permits circumvention of the rules of a Member State which make access to the legal profession conditional on passing a State examination, given that the Constitution of that Member State makes provision for such an examination and that the examination forms part of the fundamental principles of protecting consumers of legal services and the proper administration of justice?’

Were the Italian via spagnola practices an abuse of EU law?

Advocate General Wahl

The Advocate General first acknowledged that ‘abuse of law’ was a recognised concept in EU law. Citizens could not fraudulently or abusively rely on EU law. The concept of abuse had both objective and subjective elements that had to be assessed by national courts, but without compromising EU law.  Objectively EU law should not lead to the “wrong results” and ‘subjectively’ there should be no manipulations or artificial fulfilment of the conditions of EU law so that one could benefit from its provisions “abusively”.  

In this case the Advocate General the Italian practice in question showed the EU law was functioning correctly and achieving its correct aims. Nothing in Directive 98/5/EC indicated that the EU legislature wished to allow Member States to practise “reverse” discrimination against their own nationals. EU citizens were entitled to seek out the most favourable jurisdiction in which to qualify. This indeed was the rationale for “harmonising” the pre-conditions for exercising the rights conferred by Directive 98/5/EC.

Fraud

If there was a legitimate fear of fraud, then, in those rare cases, an investigation could be legitimate and Article 13 of the Directive, encouraging close collaboration between competent Authorities in the relevant Member States in such cases, should be used.

Italian national Identity (Article 4(2) TEU)

As to the threat to Italian national identity the Advocate General was perplexed, how did the fact that an Italian used EU law rights to become a Spanish lawyer and then practice in Italy as such, threaten Italy’s legal order and compromise Italy’s national identity? The Italian Government, at the hearing, had not supported the CNF on this point. The Torresi pair were not seeking access to the Italian legal profession itself, but to the Italian legal market as abogados. The Parliament, Council, Spanish and Polish Governments, intervening , had all considered that Italy maintained its rights to control access to the profession of avvocato. How could Italy deny an abogado right to practice in Italy? It was Spain’s competence to determine how anabogado qualified and it would strike at the heart of Directive 98/5/EC to allow such an interpretation.

Grand Chamber of the CJEU

The CJEU convened as a Grand Chamber to consider the case.  Having disposed of the preliminary jurisdictional issues they turned to the substantive questions of law. First they pointed out their earlier case law interpreting Directive 98/5 as a mechanism for the “mutual recognition of professional titles of migrant lawyers”.

§38
In that context, Article 3 of Directive 98/5 undertakes a complete harmonisation of the preliminary conditions required for the exercise of the right of establishment conferred by that directive, providing that a lawyer who wishes to practise in a Member State other than that in which he obtained his professional qualification is obliged to register with the competent authority in that Member State, which must effect that registration ‘upon presentation of a certificate attesting to his registration with the competent authority of the home Member State’ …

Presentation of the home State certificate by the migrant lawyer was the sole condition applicable before registration in the host State. The CNF argued that this was an abuse of law, as they were evading the Italian training requirements.

Abuse of Law

The Court confirmed that abuse of law was a concept that EU law recognised, and that Member States could take measures to prevent nationals from ‘improperly’ circumventing national law. Echoing Advocate General Wahl they considered that the concept had both objective and subjective dimensions. If, despite formal observation of the conditions of EU law, the objectives of that law were not met then the objective condition for abuse of law was met. The subjective element required an intent to obtain an improper advantage from EU law by ‘artificially’ complying with conditions set down.

Applying this test to the Torresi cases they declared:

            §48

… it must be held that the right of nationals of a Member State to choose, on the one hand, the Member State in which they wish to acquire their professional qualifications and, on the other, the Member State in which they intend to practise their profession is inherent in the exercise, in a single market, of the fundamental freedoms guaranteed by the Treaties …

It could not be an abuse of law as it was the intention and purpose of EU law to create the opportunity for an EU citizen with a degree to travel elsewhere, qualify there, and then return. The objective element of the abuse of law test was not met. EU law intended the result complained of. The fact that they were availing themselves of more ‘favourable’ legislation was not enough to meet the subjective element of the test.

Italian national Identity (Article 4(2) TEU)

The Court confirmed that EU law must ‘respect the national identity of Member States’ (Article 4(2) TEU). The Italian CNF argued that Article 3 of Directive 98/5/EC allowed a circumvention of Article 33(5) of the Italian Constitution as it allowed Italians to evade the national Bar exam, thus allowing circumvention of rules that formed part of the Italian national identity. The Court followed the Advocate General and confirmed that Article 3 of the Directive gave access to the legal market in Italy, not the Italian profession of avvocato (lawyer), therefore there was no evasion of national rules. They confirmed also that the Italian Government, at the hearing, had accepted this.

Commentary

The Court in this ruling is supporting a view that EU law allows for regulatory competition. There is a market formed of the national regulatory regimes for legal services of the Member States. Citizens and businesses can choose which regime to opt for. In doing so, it is true that future lawyers can leave out aspects of training that would have been required had they remained at home. But in making that choice there is no abuse, it was what EU law was designed to do. It is really no surprise that States are no longer fully sovereign within their territories. By the logic of the single market, borders are supposed to be disappearing.

In this case, EU law, decided by the Member States, has decreed that once admitted to the nominate legal professions, recognised in Article 1(2) of Directive 98/5/EC, then those with the relevant professional titles have the right to establish in another Member State, as set out in Directive 98/5/EC, under their home State professional titles. This means that it cannot be an abuse of law to exercise these rights. The purpose of the rule was to permit that very mobility.

Member States do not have to have identical rules for accessing the profession of lawyer. The content of education is a matter that is, in the main, reserved to Member States. Equally the range and depth of reserved legal activities varies across the EEA. So some States allow non-lawyers to practise in areas that, in other States, are reserved for particular legal professions. It is recognised that access to legal practice varies profession by profession, country by country, across the EEA. This causes complications when lawyers move across borders as their training and range of activities will be different. For the consumer of legal services this is great as they can have a wide choice of expertise to draw upon. For the regulators it is uncomfortable. They must co-ordinate with professional regulators from other Member States. They must learn and understand the regimes operating elsewhere. They must co-ordinate should disciplinary issues arise, and they must consult each other should complexities or misunderstandings arise when the migrant lawyer is seeking access to a host State legal market. All this interaction encourages pan-European engrenage (enmeshment) at many levels.

In the Torresicase the Consiglio nazionale forensedid not raise the issue of Article 10 of the Directive. This allows a migrant lawyer who has been practising law under the home State title for three years, to convert into an avvocato. Such lawyers must show that they have

effectively and regularly pursued for a period of at least three years an activity in the host Member State in the law of that State including Community law.

These lawyers are exempt from any aptitude test or adaptation period. Thus a few years down the line, the Italians who have taken the via spagnola will be easily incorporated into the Italian legal profession. This was probably not raised at the Court of Justice, as it had already indicated in its earlier case law that such access did not infringe the principle of non-discrimination.

In Luxembourg v Parliament and Council, Luxembourg had complained that Article 10 allowed the practice of national law by migrant EEA lawyers, without regard to any training requirements in national law. Luxembourg lawyers had to undertake a whole raft of training in national law, so why should the migrant lawyers be exempted? Furthermore could Luxembourg not protect its consumers of legal services against these untrained hordes of migrant lawyers? The Court found that there were sufficient safeguards in the EU legislation to protect consumers, and that national and migrant lawyers were not in exactly comparable situations, so discrimination had not arisen. The migrant lawyers had various restraints imposed upon them by the Directive itself. Thus there was no issue of ‘unequal treatment’ that EU law might have sanctioned.

The court, in Torresi , has re-affirmed the primacy of the Single market. It is there to benefit citizens and businesses in Europe, not to make life easy for the national regulators of economic activity. Future European lawyers can pick and mix their training and, once qualified, can decide where in Europe to practice. The forces unleashed by this liberalization fosters an ‘ever closer’ Union for providers of services, their consumers and also for the regulators of legal services.

Barnard & Peers: chapter 14

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