The Swiss vote against free movement of people and the implications for the UK's membership of the EU

Steve Peers

There are two implications of the narrow vote in the Swiss referendum to renegotiate treaties with the EU in order to permit a quota on labour migration? First, and most immediately, the vote will affect Swiss relations with the EU. Secondly, the vote foreshadows key aspects of the debate concerning the UK’s relationship with the EU, and the possible renegotiation of EU membership.

The Swiss implications

The details of what the Swiss voted for have been incisively analysed in the Kent EU rights blog post, here: http://blogs.kent.ac.uk/eu-rights-clinic/

So what are the broader implications? There is now a domestic constitutional obligation for the Swiss government to renegotiate its free movement treaty with the EU, so that labour quotas are allowed. Of course, such a renegotiation is technically possible, but will be politically difficult, since the EU insisted upon this treaty as a quid pro quo as part of a broader package that included treaties on six other issues, such as public purchasing and aviation access. The EU can, and probably will, insist on renegotiation of some of these other treaties as a consequence.

The EU should not be criticised if it demands a renegotiation of other treaties, as it had always insisted upon this link, which is set out expressly in all the treaties concerned. The Swiss public was also always aware of it. Indeed, undoubtedly the link with the other treaties explains why the Swiss public has voted for the free movement agreement in three previous referenda (once to approve it initially, and twice to extend it to new Member States). And it is clear that the supporters of a ‘no’ vote in the new referendum made the link clear to the voting public. We must conclude that the narrow majority who voted ‘yes’ thought that this would be a price worth paying.

After all, any agreement contains an element of quid pro quo. For instance, employees might like to be paid even if they don’t work, while employers might prefer it if employees worked without pay. Obviously both sides compromise; and a ‘pick-and-choose’ approach will have consequences. If employees start working for 3 days a week instead of 5, they won’t still receive full-time pay.

The implications for the UK

When re-negotiating with Switzerland, at least some Member States will be thinking about the UK. While it used to be the case that the cost of the UK’s net contribution to the EU was the main cause for Eurosceptics, that has been joined first by doubts about the EU’s democratic legitimacy and second by concerns about large-scale immigration from new Member States. Could the UK hold a referendum like Switzerland’s?

Legally speaking, no. The UK does not have a specific free movement agreement with the EU (linked to other treaties) like Switzerland does. Rather, free movement is part and parcel of our membership of the EU. If we want to be rid of it, we either have to renegotiate our entire membership or leave the EU. As a matter of domestic law, we could hold a referendum or otherwise change the free movement rules, and breach EU law while remaining a Member. But that course would be dishonest and disreputable. If the majority of the British people don’t like a key aspect of our arrangement with the EU, we should either leave or try to change that arrangement, while being aware of the consequences of doing so.

So we could ask to renegotiate our membership as far as free movement of people is concerned (among other things, of course). This is legally possible, but politically even more difficult than the Swiss case. Indeed, as I suggested already, the negotiations with Switzerland could serve as a proxy for the possible future negotiation with the UK – much as any EU negotiations concerning an independent Scotland would be a proxy for many Member States’ concerns about their separatist movements. Spanish politicians look at Edinburgh, and think of Barcelona.

It seems likely, then, that we are about to witness a ‘dry run’ for a possible British renegotiation process. This will provide a useful laboratory to test the theory that renegotiating the UK’s EU membership, or the UK leaving the EU, would only have (in Eurosceptics’ view) positive consequences for the UK.  


Barnard & Peers: Chapter 24

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Clash of the Judicial Titans: Will the Euro survive?

Steve Peers

The German Federal Constitutional Court (BVerfG) has finally sent a reference to the Court of Justice of the European Union (CJEU). Moreover, it has chosen a crucially important issue to ask questions about. This issue is the validity of the Outright Monetary Transactions (OMT) policy of the European Central Bank (ECB) – the very policy which is credited with keeping the EU’s single currency alive, perhaps single-handedly. If either of these courts rules that this policy is invalid, the very existence of the EU’s single currency could be called into question.

 In a nutshell, the OMT constitutes a promise made by the ECB, back in the summer of 2012, that it would if necessary purchase the government bonds of troubled eurozone Member States on the secondary market (ie, from banks and other financial institutions which own those bonds). The purpose of the policy was to shore up confidence as regards the specific economies in question, and therefore in the single currency in general. In return, among other things, the countries concerned would have to sign up to austerity programmes. While the OMT has never actually been triggered, the mere possibility of its use appears to have calmed financial markets’ doubts about the survival of the single currency (and about the continued use of the euro by all the EU Member States which currently use it) considerably. The BVerfG’s decision to send any question to the CJEU is itself historic. It comes soon after the first references to the Court of Justice from the Spanish Constitutional Court (Melloni) and the French Constitutional Court (Case C-168/13 F, which concerned Jeremy Forrest, the British schoolteacher who ran off with one of his pupils). So all the big beasts among Europe’s constitutional courts have now engaged with the CJEU.

 However, it is clear that the BVerfG at least still does not really regard the CJEU as the king of the jungle. It asserts its intention to find that the OMT programme breaches the German constitution, depending on what the CJEU has to say. On the other hand, the CJEU has always asserted that it is the sole judge of whether an EU act is valid (going back to the judgment in Foto-Frost). Can the single currency survive this conflict between constitutional principles?

The legal issues 

The BVerfG (along with many others, particularly in Germany) doubts that the OMT programme is legal, because it constitutes economic policy (rather than monetary policy) and because it amounts to the ECB buying up eurozone governments’ debt, which is not permitted under the Treaties which the EU is founded up.

Let’s have a closer look at these arguments. First of all, is the OMT programme an economic policy? While the EU has established an economic and monetary union (EMU) among eurozone Member States, and economic and monetary policies are obviously closely related, there is nonetheless a sharp legal difference between the two policies as a matter of EU law. Monetary policy is an exclusive competence of the EU, as far as the eurozone Member States are concerned. Within the EU, the ECB is in charge of that policy.

On the other hand, economic policy is primarily a matter for Member States; the Union (primarily the Council) only coordinates such policies.While this division may not make much economic sense, any significant shift of powers over economic policy to the EU would have been impossible to agree politically, and have raised great(er) doubts about the EU’s legitimacy.

In its Pringle judgment of 2012, the CJEU ruled that the treaty establishing the European Stability Mechanism (ESM), which establishes a system for eurozone Member States to lend financial support to each other, was an act of economic policy, not monetary policy. But the CJEU did not define what ‘monetary policy’ consisted of.

The BVerfG doubts that the OMT programme is valid because it constitutes an independent economic policy of the ECB. But as the BVerfG itself notes, the Treaties provide (in Art. 127(1) TFEU) that the European System of Central Banks (which the ECB forms a key part of) ‘shall support the general economic policies in the Union with a view to contributing to the achievement of the objectives of the Union’ set out in Art. 3 TEU. Arguably the OMT programme is exactly that: support for the economic policies of Member States (including the ESM) as regards the EU’s objective of establishing and maintaining a single currency. As long as the economic conditionality linked to the OMT programme is no different from, or at least consistent with, the economic conditionality linked to the ESM and the EU rules on economic governance (ie, control of excessive deficits), then the OMT programme cannot be said to constitute a separate economic policy of the ECB.

Secondly, does the OMT programme circumvent the ban on buying government debt? Article 123 TFEU specifies that the ECB and national central banks cannot ‘purchase directly’ the ‘debt instruments’ of eurozone Member States’ governments. Obviously, the word ‘directly’ is significant; if the authors of the Treaties had wanted to ban the ECB from ever owning a government bond issued by a eurozone Member State, they would have left that word out. So it can hardly be doubted that the ECB can purchase such bonds from financial institutions, at least on a modest and non-systematic basis. 

But the BVerfG is concerned about the underlying purpose of the ban on direct purchases of government bonds: to prevent governments from being ‘propped up’ by the central bank. If all government bonds issued by Eurozone Member States were systematically snapped up by the ECB from the financial institutions which had initially bought them, the ECB would arguably be circumventing the ban on direct purchases.

The best approach to this objection is to interpret the ECB’s powers in light of its obligation to contribute to achieving the EU’s objectives, in particular the development of the single currency. In the ordinary course of events, purchasing significant numbers of eurozone government bonds directly on the secondary market might not have a strong link to the existence of the single currency. But in the current circumstances, it does. So this justifies a flexible approach to the limits which might otherwise apply to the ECB’s actions – provided that such purchases are on secondary markets, and are necessary to ensure the single currency’s survival.

The judicial politics 

The BVerfG states clearly what it expects the CJEU to do: to interpret the OMT programme in accordance with its specified constraints, otherwise it will rule that the programme is in breach of the German constitution. But the BVerfG has warned the CJEU before, and then not gone through with its threats. It has come to resemble an angry parent issuing increasingly dire threats to a naughty child – and then not following through on them. The naughty child soon realises that the threats won’t be carried out, and adapts her (mis)behaviour accordingly. 

And there is another factor at play here. When the BVerfG was asked if Germany could ratify (for instance) the Lisbon Treaty, there was a clear route to ensure that its judgment was carried out. Very simply, it could have ordered the German government not to ratify that Treaty. Similarly, in cases concerning the EU’s banana market legislation, or the interpretation of EU age discrimination rules, it could have ordered the German administration and courts not to apply the rules concerned. But it is less clear exactly what it can do to stop the actions of the ECB, which presumably would not consider itself bound by a BVerfG decision. The BVerfG refers to requiring the German government to act (unless there is a retroactive amendment of the German constitution), but exactly how that will stop the application of the OMT programme is unclear. So our naughty child in Luxembourg – and her naughty brother in Frankfurt – must know that their ostensibly strict parent probably can’t carry out this particular threat.

In that case, how will they behave? It might be expected that many of the concerns raised by the BVerfG can be addressed, but not all. In particular, it is hard to see how the OMT programme could achieve its objectives if the ECB does not have the power to buy significant number of government bonds on secondary markets. Possibly the CJEU will allow such purchases to continue, subject to certain conditions – which the BVerfG may decide are strict enough to meet its concerns. Judging from the overall tone of the latter court’s ruling, it is looking to find a way to uphold the validity of the OMT programme despite its fundamental objections.


Barnard & Peers: chapter 19

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Jailing the bankers: the new EU Directive on criminal penalties for market abuse

Steve Peers

It must come as a relief to EU politicians to find that there is still one group in society which is much less popular than they are: the bankers. Indeed, bankers’ unpopularity has only grown as the austerity caused by the global financial crisis has an ever-greater impact on ordinary people in many Member States.  No politician ever lost an election because he or she demonised unpopular groups of persons, and so the EU institutions have duly agreed on legislation which would lead to jail terms for particular types of bad behaviour by bankers.

Context of the Directive

The new Directive was approved by the European Parliament today, and will likely be formally adopted by the Council in March. It will apply in parallel alongside a Regulation on market abuse, which requires administrative sanctions to be applied for certain behaviour by bankers. Member States will have to apply the Directive by two years after its adoption.

The ‘legal base’ for the Directive is Article 83(2) of the TFEU, which allows the EU to adopt legislation setting out ‘minimum rules’ for the ‘definition of criminal offences and sanctions’ if this ‘proves essential to ensure the effective implementation of a Union policy in an area which has been subject to harmonisation measures’. Clearly this area has been subject to harmonisation measures, and the preamble to the new Directive sets out the reasons why, in the EU legislature’s view, it was ‘essential’ to adopt an EU measure concerning criminal liability on this issue. Basically, the Council and European Parliament were convinced by information that Member States imposed weak and diverse sanctions to enforce the previous EU legislation on this subject (Directive 2003/6, on market abuse).

Article 83(2) requires the criminal law rules to be adopted by the same legislative method as was used to adopt the main legislation that the criminal law Directive is supplementing. In this case, the market abuse Regulation was adopted on the basis of the EU’s internal market powers, ie the ordinary legislative procedure. So the market abuse criminal law Directive was adopted by the same method. This meant that the European Parliament could have a significant influence on the text, as detailed below.

Substance of the Directive

The Directive requires Member States to criminalise three types of activity, as further defined in detail therein: insider dealing; unlawful disclosure of inside information; and market manipulation. The first of these offences also extends to recommending or inducing another person to engage in insider trading. Member States must also criminalise inciting, aiding and abetting and attempting most of these offences. In each case criminalisation is only required where the acts were committed intentionally and ‘in serious cases’. The European Parliament had also wanted to oblige Member States to criminalise reckless acts which entailed market manipulation, but the Council resisted this. Also, the Council insisted on limiting Member States’ obligations to ‘serious cases’. The preamble to the Directive lists certain factors which should indicate whether the case is ‘serious’, such as the impact on market integrity and the profit derived or loss avoided.

On the other hand, the European Parliament successfully insisted that specific rules for criminal penalties for natural persons appear in the Directive. Member States must ensure that bankers guilty of insider dealing or market manipulation could potentially be subject to a maximum penalty of at least four years, and those guilty of unlawful disclosure of inside information could potentially be subject to a maximum penalty of at least two years.  The Directive also includes standard rules on liability for legal persons, but this need not be criminal liability, in deference to those Member States which do not impose criminal liability on legal persons.

The European Parliament also insisted that the Directive include rules on criminal jurisdiction. Member States must criminalise the relevant behaviour where an act was committed on a Member State’s territory, or where the act was committed by a Member State’s citizen outside its territory, at least if the act was criminal in the country where it was committed.  Furthermore, the European Parliament convinced the Council to add a provision on training judges, prosecutors et al about the relevant crimes. However, the European Parliament did not convince the Council to add provisions on investigative techniques and media coverage of the relevant crimes.

Comments

This is the first time that the EU has used the legal powers conferred by Article 83(2) TFEU, which was added to the Treaties by the Treaty of Lisbon. Previously, it has used only Article 83(1) TFEU as regards substantive criminal law. Article 83(1), also added to the Treaties by the Treaty of Lisbon, lists ten crimes which are deemed to have such sufficient cross-border impact that the EU can legislate upon them. The EU has used this power to adopt legislation on cyber-crime, sexual offences against children and trafficking in persons, and negotiations on legislation concerning counterfeiting currency are underway. The Commission has also suggested criminal law rules on fraud against the EU budget on the basis of Article 325, a legal base dealing with that specific issue, but the Council (and probably the European Parliament, when it defines its position) believe that Article 83(2) will again have to be used in order to adopt that legislation.

Prior to the Treaty of Lisbon, the EU’s Court of Justice, in a controversial line of case law, ruled that European Community law (as it was then) could be used to adopt criminal law measures closely related to the environment (Cases C-176/03 and C-440/05). The EU then adopted Directives to that end (Directive 2008/99 and Directive 2009/123), as well as a Directive imposing criminal liability for employing illegal immigrants (Directive 2009/52). But the CJEU ruled that prior to the Treaty of Lisbon, such European Community measures could not specify criminal penalties. In practice, those measures did not contain jurisdiction rules either. So the market abuse Directive breaks new ground on these issues.

The Directive also breaks new ground by imposing criminal liability in a new area. All of the other post-Lisbon substantive criminal law Directives or proposals (referred to above) simply replace pre-Lisbon measures on the same subjects, but there was no pre-Lisbon measure imposing criminal liability for market abuse. The market abuse Directive is also particularly detailed when compared to the EU’s other substantive criminal law measures, no doubt because it is enmeshed within the broader EU legislative framework imposing highly detailed regulation on the financial sector.
Will the Directive be effective at curbing bad behaviour by bankers? First of all, as with any crime, perpetrators have to be caught and punished, and the behaviour concerned is technically complex.

Secondly, it must be borne in mind that the two-year and four-year sentences referred to in the Directive must merely be on the books; there is no obligation to impose them in any particular situation. So even if bankers commit the activities criminalised by the Directive, and are caught and convicted, their sentences might be lighter (or indeed heavier: Member States can set a higher potential maximum penalty if they wish). And it is hard to imagine that many bankers will spend much jail time inside the unpleasant institutions where (say) burglars and muggers are incarcerated – even if the bankers’ crimes were far more lucrative and had a much bigger impact upon the economy.

More profoundly, the United Kingdom, the home of the largest proportion of the EU’s financial industry, has opted out of this Directive – although the UK is subject to the parallel Regulation (Denmark is in the same situation). And even if a French national (for instance) commits the acts criminalised by the Directive while working in the City of London, it must be recalled that Member States are only obliged to criminalise the acts concerned if committed by their citizens in a State which also criminalises that activity. So it is up to the UK to decide whether to criminalise some or all of the acts referred to in the Directive, and only if it does so are other Member States obliged to criminalise the acts of their citizens when committed in the UK.

Barnard & Peers: chapter 25

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Should EU citizens who move retain the right to vote in their Member State of origin?

Steve Peers

The European Commission has recently produced a communication and a recommendation on the loss of EU citizens' right to vote when they move between Member States. According to the Commission, while Member States' national identity entails the right to decide who makes up a national electorate, Member States must consider whether their policies of disenfranchisement lead to a loss of the right to political participation. Many such citizens retain an interest in the politics of their country of origin, it is no longer difficult to keep in touch with political developments at home, and there is an ongoing trend toward allowing expatriates to retain their voting rights.

Five Member States disenfranchise their citizens who move abroad. Denmark, Ireland, Malta and Cyprus disenfranchise their citizens if they leave the country between 6 months and 2 years, while the UK disenfranchises its citizens after 15 years abroad. The European Court of Human Rights has recently upheld the British restrictions as compatible with the right to free elections, as set out in the First Protocol to the ECHR (Shindler v UK, 2013). Moreover, those who move to another Member State do not obtain the right to vote there in general elections (except in the UK, for Irish and Commonwealth citizens). They only have the right to vote (pursuant to EU law) in local and European Parliament elections.

The Commission believes that this disenfranchisement is: out of keeping with the premise of EU citizenship (ie, adding to national citizenship rights, not taking them away); could lead to complications regarding the exercise of free movement rights; and leads to a gap in political participation. In particular, the Commission points out that while all EU citizens resident in the EU qualifying to vote have the opportunity to vote for the European Parliament, those who move and are disenfranchised cannot influence the composition of the Council.  (One could add that they cannot influence the make-up of the European Council either).

Two possible options for solving this problem are rejected: obtaining the host State's citizenship would be at odds with the transnational and complex nature of EU citizenship, and mutual recognition of voting rights.

Therefore the Commission suggests a number of short-term solutions within the EU framework. In particular, Member States should allow citizens to remain enfranchised if they move between Member States, at least if they express an interest in doing so. And in the longer term, the idea of enfranchisement in the host country (including for regional elections) should be further encouraged.

These principles and suggestions (except for the longer-term ideas) are then set out in the preamble and main text of the Commission Recommendation. 

Comments

The Commission hints that Member States' disenfranchisement policies might infringe EU free movement and citizenship law. While the jurisprudence of the Court of Justice of the EU in this area can be hard to predict (I did not expect either of the Rottmann or Ruiz Zambrano rulings, for instance), at first sight it appears that this interpretation cannot be correct.  The Treaties lay out the rights of EU citizens, including the right to vote and stand for election in another Member State's local elections, or in voting for the European Parliament. Then Article 25 TFEU sets out the possibility for adding new rights for EU citizens, subject to a unanimous vote in the Council and national ratification.  The obvious implication is that further political rights for EU citizens are subject to the adoption of such further measures by the Council.

Would it be a good idea to adopt such a measure? While political citizenship is obviously a key element of citizenship as traditionally defined, and the particular context of the EU suggests that voting rights should not be lost due to exercising free movement rights, and as regards the make-up of the Council (as co-legislator), it does not necessarily follow that those rights should be retained in the country of origin. It seems more sensible that they be transferred to the country of residence, given that the citizen has voting rights for the European Parliament there, along with local voting rights. Moreover, the main thrust of EU citizenship for those who move between Member States is about their equal treatment and integration into the host State, not the retention of links with their home State. EU citizens who have moved between Member States have the right to return to their home State without being prejudiced by their time away: but it is a different matter to say that they should be treated as if they had never left while they are still abroad. While it is true to say (as the Commission does) that expatriates retain some interest in taxation decisions in their country of origin, they are nonetheless likely to be paying most or all of their taxes in their host State.

Having said that, Member States obviously prefer retaining voting rights for their own citizens who move away, instead of extending them to foreigners who move to that country. The Commission's suggestion is therefore going with the flow, rather than spitting in the wind. So it has more chance of being successful than the more logical alternative.

Oddly, the Commission only briefly mentions the issue of regional elections, and does not mention referendums at all. On the first point, it would make even less sense to allow expatriates to continue voting in such elections, since those elections are more inherently territorial. On the second point (and there are of course regional and local referendums too), both expatriates and the citizens of other EU Member States who have exercised free movement rights have an obvious special interest in voting in national referendums on EU Treaty amendments, and (possibly soon in the UK) on whether the relevant Member State should remain part of the EU. One might expect that British expatriates living in other EU Member States, and citizens of other Member States living in the UK, would be particularly likely to vote to stay in the EU. Indeed, perhaps their votes could swing a close election - although there will always be some turkeys who vote for Christmas.


Barnard & Peers: chapter 13

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Pirates of the Indian Ocean: Legal Base and Democratic Debate

Steve Peers

Despite their central role in the world of EU law, legal base disputes often confound those outside the fairy-tale duchy of Luxembourg and the Brussels beltway, in particular when everyone agrees as to the substance of the issue concerned. And indeed, everyone agrees that the pirates in the Indian Ocean are a bad thing (except, presumably, the pirates themselves), and that the EU should establish (as it has done) a military action to combat them.

But what happens if the EU force catches the pirates? No-one wants the pirates coming to Europe to be tried, and it wouldn’t do to send them to Guantanamo. It would certainly be ironic if they could be forced to walk the plank, but that would violate their right to life. So they must be handed over to nearby countries in East Africa, for prosecution in those states, and everyone agrees that the EU must negotiate agreements to this end with the countries concerned.

One such treaty is between the EU and Mauritius, and the European Parliament (EP) has challenged the Council’s decision to conclude it on two separate grounds: the wrong legal base, and a failure to inform the EP sufficiently (Case C-658/11). The Advocate-General’s opinion, delivered today, is worthy of detailed analysis.
  The legal base issue: foreign policy, or development and judicial cooperation? 

The Council believes that the treaty with Mauritius concerns the EU’s Common Foreign and Security Policy (CFSP) alone, while the EP believes that the treaty concerns also judicial cooperation and development. In this case, the choice of legal base has far greater consequences than usual. Either way, the treaty had to be agreed unanimously by the Council, since both parties agree that it concerns foreign policy at least in part. But if the Council is right, and the treaty only concerns foreign policy, then: the EP did not even have to be consulted; the treaty had to be negotiated by the EU foreign policy High Representative; and the CJEU has no jurisdiction (except the jurisdiction to rule on whether the Council used the right Treaty base, as in this case: see Article 275 TFEU). If the EP is right, then: the EP had the power of consent over the treaty; the treaty had to be negotiated by the Commission; and the CJEU has its full usual jurisdiction.

 The Advocate-General first of all examines the EP’s arguments based on the precise wording of Article 218 TFEU, which specifies that the EP must consent to or be consulted about all treaties to which the EU will become a party, unless those treaties ‘relate exclusively’ to the CFSP. In his view, this rule simply echoes the legal distinction between the ‘legal bases’ of the CFSP and other EU policies, and so does not create a separate rule relating to the conclusion of external treaties.

 Then the Advocate-General turns to the heart of the issue: which legal base applies? In his view, taking account of the overall legal context, including Security Council Resolutions addressing the threat to international security posed by the pirates and the EU’s military action to combat them, the treaty is a CFSP measure. In particular, the CFSP measure providing for the military action contains rules on the possible transfer of the pirates to third States, including human rights protection. That EU measure would not be effective without treaties with third States regulating the transfer of those pirates.

Also, the treaty falls within the scope of the CFSP due to its objectives, which include (from the EU’s general external relations objectives) the requirements that the EU act in order to: ‘safeguard its values, fundamental interests, security, independence and integrity’; ‘consolidate and support democracy, the rule of law, human rights and the principles of international law’; ‘preserve peace, prevent conflicts and strengthen international security’; and ‘promote an international system based on stronger multilateral cooperation and good global governance’ (Article 21(2) TEU). In the Advocate-General’s view, these ‘are among those [objectives] that are traditionally assigned to the CFSP’ and ‘essentially correspond’ to the CFSP objectives as they were set out in the Treaties before the Treaty of Lisbon. The activity of transferring pirates also falls within the scope of the defence policy provisions of Articles 42 and 43 TEU, which refer to the use of ‘civilian and military’ assets.

The Advocate-General also rejected the use of the EU’s powers concerning criminal judicial cooperation. In his view, the external use of the EU’s justice and home affairs powers must ‘have a close link with freedom, security and justice within the Union’, namely ‘a direct link between the aim of the internal security of the Union and the judicial and/or police cooperation which is developed outside the Union’. This was distinct from a CFSP measure which had the objective of, ‘first and foremost, peace, stability and democratic development in a region outside the Union’. In this case, transferring pirates to East African states was too far removed from the development of the EU’s justice and home affairs policies. Finally, the Advocate-General rejected the use of the EU’s development policy powers, since the assistance which the EU gives to Mauritius is linked only to the application of the rules on the transfer of pirates, which constitute (in his view) a CFSP measure.

Is this first part of the opinion convincing? Some parts are more convincing than others. Certainly, the treaty should not have a legal base relating to development policy, since the assistance being provided is purely ancillary to the transfer of pirates. But this begs the question of the legal base which should apply to the transfer of pirates.

It makes sense to apply the same legal base rules to the conclusion of international treaties as apply to the adoption of internal legislation, since the Treaty drafters have forged a strong link between those two facets of EU decision-making. On the other hand, while it is true to say that a treaty containing rules on the transfer of pirates is necessary to ensure the effectiveness of the military operation which catches them, it does not necessarily follow that it has the same legal base. For example, for the EU’s patent legislation to be effective, there need to be rules on patent translation and the creation of a patent court. But the patent translation rules were adopted pursuant to a different decision-making rule, and the patent court will be established pursuant to a treaty between Member States. The legal base of the treaty with Mauritius should depend only on the content of the specific rules in the treaty with Mauritius. 

Here, the arguments are finely balanced. The Advocate-General makes a persuasive case that EU military operations can use civilian assets, and that the EU’s justice and home affairs powers can be used externally only where there is a sufficient link to the EU’s internal rules in this area. Incidentally, this line of argument strangles at birth the idea (floated, as it were, by Italy) that an EU foreign policy measure could establish a military action in the Mediterranean to control immigration towards the EU. The link between such an action and the EU’s immigration, asylum and border control powers is blindingly obvious.

On the other hand, with great respect, the Advocate-General’s analysis of the EU’s general external relations objectives is not fully convincing. True, the first and third of the four objectives he refers to (safeguarding values, et al, and preserving peace, et al) previously appeared in Article 11 TEU, which set out the CFSP’s objectives prior to the Lisbon Treaty. But the reference to the promotion of an international system based on cooperation and good governance is new, as is the general reference to the principles of international law; and these objectives are obviously applicable to any form of external action by the EU, whether it concerns the CFSP, judicial cooperation, development or anything else. As for human rights, democracy and the rule of law, they were indeed previously referred to in Article 11 TEU. But they were (and are) also a foundational value of the entire EU legal order (see now Article 2 TEU, and previously Article 6(1)), and are in part specifically referred to in the Treaty rules governing justice and home affairs and development cooperation. So this line of argument is ultimately not very persuasive.

Nor is the Advocate-General’s reference to the urgency of measures on this issue. The complications which the EU institutions face in their external action which result from the external relations rules in the Treaties simply can’t change the analysis regarding the legal base of those treaties (see Opinion 1/94, as regards the WTO). Anyway, the Council has the power, according to Article 218 TFEU, to decide to apply a treaty provisionally as soon as it signs it on behalf of the EU. Therefore the involvement of the EP in concluding the treaty would not compromise the urgency of achieving the treaty’s ends in any event.

So which legal base should apply? In my view, this should be determined on the basis of a teleological argument which the opinion does not consider. In the SEGI case, decided in 2007 (Case C-354/04), the Court of Justice ruled that an EU measure which imposed sanctions upon individuals could not be adopted in the form of a Common Position, a third pillar legal act which resembled a CFSP measure with a similar name. This approach ensured a minimum degree of democratic participation and judicial review at EU level of acts which directly imposed sanctions upon individuals. The same logic should apply by analogy here.

In fact, the Court should go further still. The elevation of the EU’s Charter of Rights to the ‘same legal value’ as the Treaties suggests that there should be a new approach to the resolution of legal basis and other institutional conflicts. Where relevant, if there is any ambiguity about the choice between possible legal bases or decision-making processes, the Court should ensure that EU measures concerning human rights should be decided by means of whichever process ensures the maximum possible parliamentary input and judicial control. It has already followed this approach in a case involving the powers of Frontex and national authorities to intercept vessels (C-355/10 EP v Council), and should confirm it as a fully-fledged new norm of interpretation. It is hardly necessary to point out how that rule should be applied in this case, as regards a treaty designed to ensure that criminal suspects who are in the hands of the EU receive a fair trial and basic human rights protection against torture and the death penalty when handed over to a third country.

Failure to inform the European Parliament

The Advocate-General’s conclusion on the first issue is reasonably argued, but his opinion on the second issue, with great respect, is deeply objectionable. The starting point as regards this issue is Article 218 of the TFEU, which specifies that the EP ‘shall be immediately and fully informed at all stages of the procedure’ relating to the EU’s international treaties. Remember those words in italics! The Advocate-General, sadly, did not.

First of all, the Advocate-General rejects the Council’s argument that the CJEU has no jurisdiction to examine the application of this rule as regards CFSP treaties. In his view, even where the substance of a treaty concerns the CFSP, the CJEU can examine the validity of the procedure used to adopt it, despite the Court’s lack of jurisdiction over the treaty as such (besides legal base arguments).

This is a fine line, but his argument has merit. If the CJEU had no jurisdiction, the EP’s procedural rights would be unenforceable as regards CFSP treaties – and those are the only rights it has as regards such treaties. And the CJEU can rule on those procedural rights without entering into any interpretation of the substance of those treaties, thus respecting the jurisdictional limit set by the Treaty drafters. It should follow by analogy that the CJEU would have jurisdiction under another provision of Article 218 to rule in advance on the compatibility of planned CFSP treaties with EU law.

Next, the Advocate-General argues that while the obligation to inform the EP applies to CFSP treaties, the EP should get more information, more quickly, where a treaty does not concern the CFSP, in light of the EP’s greater role regarding the conclusion of such treaties. Conversely it can receive less information, more slowly, as regards CFSP treaties.

How much was the EP informed as regards this treaty? When the Council decided to open negotiations, it informed the EP on the same day. That was certainly immediate. But the next time the EP heard from the Council was three months after the treaty was signed. This was one month after the publication of the decision to sign it in the Official Journal!

Shockingly, for the Advocate-General, this is sufficiently ‘immediate’. One is tempted to ask how many months he would be willing to wait to get served in a restaurant, or to use a toilet. With great respect, this is not, using any conceivable canon of interpretation, a plausible interpretation of that word. Put simply, no-one would consider a person who kept us waiting three months to be acting ‘immediately’.

As for the full information of the EP, the Opinion argues that because this was a CFSP treaty, the EP did not have to be informed of the progress of negotiations.

Let’s go back to the wording of the rule. First, a textual interpretation. Unlike the rules regarding the negotiation and conclusion of treaties by the EP, it makes no distinction between CFSP and other treaties. So prima facie, the two types of treaties must be placed on the same footing as regards information for the EP. 

Secondly, a contextual interpretation. The Advocate-General’s view of this rule is that it is designed to supplement the EP’s subsequent role as regards concluding the treaty concerned. But the Treaty makes no such link expressly. So the difference in wording between this rule and the rules on the EP’s role in concluding treaties suggests that it has a different purpose: to facilitate democratic debate as regards any planned treaty.

Of course, the amount of information which can be disclosed in public concerning a planned treaty in the midst of negotiations might be limited by confidentiality concerns, but these are addressed by agreements between the institutions concerned. Disclosing information to the EP as regards a planned treaty allows the EP to express its opinion, either privately to the Council or following a public debate, about whether a particular planned treaty is a good idea in principle. For instance, it should surely be a matter for public debate whether a particular country which the EU plans to transfer pirates to has a good record as regards fair trials, treatment of prisoners and the use of the death penalty. Of course, the EP’s influence may be limited as regards draft CFSP treaties because it will not get to vote on them. But why add insult to injury, and prevent it from holding an informed debate and expressing an informed opinion until (three months) after the treaty has been signed?

 If anything, the context of CFSP treaties suggests that the EP should have more information, not less, than as regards other treaties. After all, the EP has a formal role as regards the conclusion of other treaties, usually the power of consent. So if the EP only finds out at a late stage that a draft treaty contains something which it finds objectionable, it can veto that treaty. Whereas, as regards a CFSP treaty, the EP’s only chance to influence its content will be before its signature and conclusion.

Finally, what does it mean to require ‘full’ information ‘at all stages’ of negotiations? This obviously applies to decisions (including agreements in principle) to open negotiations, initial treaties, sign treaties, provisionally apply them, and conclude them. Given the wording and purpose of the Treaty rule, it also should apply to proposals to negotiate treaties, the progress of treaty negotiations, the denunciation of treaties and to EU actions within bodies established by treaties.


Barnard & Peers: chapter 24

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Want to be an EU citizen? Show me the money!

Steve Peers

Give me your rich, your bored,
Your pampered mistresses shopping duty-free,
The randy playboys through our open doors.
Send these, the chinless, party-goers to me,
Come flash your cash inside our finest stores!

We can only imagine whether Emma Lazarus, the author of the famous poem inscribed on the Statute of Liberty, would indeed have adapted her poem thus, in light of the sale of Maltese nationality (and hence, citizenship of the European Union) circa 2014. However, putting parody aside, are there any constraints deriving from EU law on Member States’ rules on the acquisition of EU citizenship, and if so, what are they?

The starting point is the judgment in Micheletti, in which the Court of Justice of the European Union (CJEU) stated that ‘'[u]nder international law, it is for each Member State, having due regard to Community law, to lay down the conditions for the acquisition and loss of nationality’ (emphasis added).

What limits are set by the phrase ‘having due regard to Community law’? In Kaur, the CJEU ruled that the United Kingdom was free to refuse to grant full British nationality to one of its quasi-citizens holding a special form of ex-colonial legal status, mainly because these rules were among the ‘conditions of accession’ of the UK to the Communities in 1973. ‘Furthermore’, the UK’s declaration to this effect did not deprive anyone ‘of rights to which that person might be entitled under Community law. The consequence was rather that such rights never arose in the first place for such a person’.

However, in Rottmann, the Court ruled that there were some constraints upon Member States’ rules upon the loss of their nationality, deriving from the existence of EU citizenship. The Court began by quoting the Council of Europe’s Convention on Nationality, Article 3:

‘1. Each State shall determine under its own law who are its nationals. 2. This law shall be accepted by other States in so far as it is consistent with applicable international conventions, customary international law and the principles of law generally recognised with regard to nationality.’

So international law (although Malta has signed, but not ratified, this Convention) gives States the power to determine who their citizens are, and requires other States to accept that decision in principle, with caveats (as regards the latter rule) about international law. If we could end our analysis here, the answer to the question posed above would be simple: Malta could sell its nationality.

But the answer is not simple, because, as a matter of EU law, the rules of public international law on nationality are not fully applicable. First of all, in Micheletti and subsequently (see Chen and Zhu), the CJEU stated that EU law establishes a rule of pure mutual recognition of Member States’ nationalities. In other words, the international law exceptions set out in Article 3(2) of the Council of Europe Convention do not apply. It must follow that, since Member States are obliged to recognise each other’s nationalities, they have at least some interest in what other Member States’ rules on nationality are – limiting the application of Article 3(1) of that Convention.

Let’s return to Rottmann. In its judgment, the CJEU then mentioned declarations and decisions of Member States to the effect that the acquisition and loss of nationality was purely a matter for national law. But the Court then stated baldly that: ‘Nevertheless, the fact that a matter falls within the competence of the Member States does not alter the fact that, in situations covered by European Union law, the national rules concerned must have due regard to the latter’. EU law applied to a national decision on the loss of Member State nationality, because it caused the person concerned to lose his status as an EU citizen.

The Court then explained the application of EU law to Member States’ nationality law as follows: 'The proviso that due regard must be had to European Union law does not compromise the principle of international law previously recognised by the Court…that the Member States have the power to lay down the conditions for the acquisition and loss of nationality, but rather enshrines the principle that, in respect of citizens of the Union, the exercise of that power, in so far as it affects the rights conferred and protected by the legal order of the Union, as is in particular the case of a decision withdrawing naturalisation such as that at issue in the main proceedings, is amenable to judicial review carried out in the light of European Union law (emphasis added).'

The Court then distinguished Kaur, as it concerned a person who had never had EU citizenship, rather than someone (like Mr. Rottmann) who had it and lost it. It then indicated that EU law could accept the idea that nationality of a Member State could be lost due to deception, subject to the principle of proportionality. Finally, it hurled this hot potato back to the national courts, which were left to apply these principles to the facts of this case. 

What can we derive from Rottmann? While the case concerned the loss of EU citizenship, we cannot conclude necessarily that EU law has nothing to do with its acquisition. The crucial words ‘in particular’ indicate that EU law might impact upon that topic too. While Kaur did concern the acquisition of nationality, it can be distinguished from the Maltese case because it concerned the refusal of nationality, not the grant of it. While refusal of nationality does not impact directly upon other Member States, the grant of that nationality (and therefore EU citizenship) does.

Having said that, Rottmann does indicate that prima facie EU law does not set very tight constraints on Member States’ nationality laws. But the outright sale of citizenship arguably bursts through even this loose corset. While the Court of Justice might be willing to accept extensive variants of the jus soli and jus sanguinis principles fro acquiring the nationality of a Member State, would it be willing to accept the principle of jus argentum? We cannot be certain until the Court of Justice is seized of the question; but we can hardly be sure that it would.

 *For an alternative view, by the foremost expert on the issue of EU citizenship, see Dimitry Kochenov, ‘Citizenship for Real: Its Hypocrisy, Its Randomness, Its Price’, at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2385340

Barnard & Peers: chapter 13

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Holocaust denial and hate crime: Can the EU and its Member States do more?

Steve Peers

The European Commission has chosen today, the International Holocaust Remembrance Day, to release its first report on Member States' implementation of the EU Framework Decision on combating racism and xenophobia by means of criminal law.

Implementing the EU legislation

Member States had to implement this law, a relic of the pre-Lisbon 'third pillar' of EU law (setting out special rules on policing and criminal law measures) by December 2010, and the Council had to assess the Member States' implementation of the rules, on the basis of the Commission report, by November 2013. So the Commission report is a little late, but most such reports arrive even later (due to Member States' tardy reporting on their implementation). All Member States must apply this law, although the UK is planning to opt out as of December 2014, and does not intend to apply to opt back in.

The first crucial legal question is whether Member States have properly implemented their obligations under the Framework Decision. They are obliged to criminalise: public incitement to violence or hatred based on race, et al; dissemination of tracts to the same end; the denial, trivilisation et al of war crimes, genocide and crimes against humanity as defined in the Rome Statute establishing the International Criminal Court; and denial or trivialisation of the Holocauat.

The Commission identifies some apparent breaches of the Framework Decision here; for instance, two Member States insist on some further conditions being met before criminal liability attaches to the first category of actions. Some Member States do not specify that the crimes can apply to an individual or to a group. Two Member States refer to 'nationality' instead of 'national origin'. As regards the Rome Statute crimes and Holocaust denial, some Member States' laws do not refer to all types of actions referred to as regards the first type of crime, or do not fully reflect the obligations as regards Holocaust denial. In particular, two Member States only criminalise Holocaust denial in relation to their own nation or citizens. Some Member States have no specific provisions on these issues, although arguably a general law on incitement to violence that fully covers all of the relevant actions would be sufficient.

According to the EU law, Member States must either provide for racist and xenophobic motives to be considered an aggravated circumstance, or provide that courts may take those motives into account. Some Member States restrict this obligation to certain violent crimes only. Furthermore, some Member States attach conditions to the rules regarding liability for legal persons, or do not fully apply the rules on jurisdiction, in particular as regards offences committed over the Internet.

As to the future, the Commission makes a number of recommendations to Member States, as regards (for instance) special hate crimes units, the exchange of information, cross-border cooperation, data collection, the rights of victims and comments by opinion leaders. The Commission intends to discuss the correct implementation of the Framework Decision with Member States up to 1 December 2014 - the date when it can begin infringement proceedings as regards pre-Lisbon third pillar legislation. It does not make any mention of any amendment of the legislation, or of the specific issues which the Council is required to review (the issue of judicial cooperation as regards the relevant crimes).

Comments

The Commission cannot be criticised for holding off on bringing infringement proceedings, since it cannot do so until the end of this year. After that point, this legislation will be another EU measure which the Commission ought to enforce vigorously by means of infringement proceedings if it is, as it claims, committed to ensuring the full implementation of the EU Charter of Fundamental Rights in practice.

It would be possible to clarify the interpretation of the Framework Decision if it were amended, and more importantly, its provisions could be improved. For instance, the recommendations which the Commission makes to Member States in its report could be incorporated into the legislation (except for the point concerning the rights of victims, which will become binding anyway once the EU's crime victims directive is implemented in 2015). The Commission does not consider the issue of possible amendments at all.

More significantly, the scope of the Framework Decision (or rather, the future Directive) could be enlarged, to cover other forms of hate crime. The Commission perhaps avoids mentioning the issue of amendment because of the lack of a specific legal base dealing with this issue in the current Treaties. True, racism and xenophobia are not listed among the crimes the EU can combat in Article 83(1) TFEU. But they surely fall within the scope of Article 83(2) TFEU, which gives the EU power to adopt criminal law measures when necessary in relation to a matter which the EU has harmonised. Since the EU has banned discrimination on grounds of race as regards all goods and services (inter alia), and it surely would interfere with equal access to transport, shopping and recreation (for instance) if crimes of racial hatred were committed, it could be argued that further EU measures could be adopted on this basis. The same would apply to bias crimes against women, given the scope of EU harmonisation already on the issue of gender equality.

However, it would be harder to argue that a legal power exists for the adoption of EU measures banning hate crime on grounds of sexual orientation, disability, religion or age, since the EU has only harmonised the law as regards equality in employment as regards those issues. When or if the Commission's proposed Directive extending equal treatment as regards these four grounds of discrimination is adopted, then a further measure relating to hate crime on the same grounds could be proposed.


Barnard & Peers: chapter 25, chapter 20

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