EC Enforcement Procedures - Essay Example

EC Enforcement Procedures Question A In order to ensure compliance with EC laws, Article 226 of the EC Treaty makes provision for infringement proceedings against non-complying Member States.1 Article 226 is invoked when a Member State fails to observe its treaty obligations.2 The procedure is designed to permit a Member State an opportunity to respond to the Commission prior to delivering an opinion. In the event the Member State fails to accept the opinion, the Commission commences judicial proceedings against the infringing Member State. Under Article 228 the Commission is at liberty to impose penal fines against the Member State subject to the Article 226 process.3 Directive 2008/999/EC issued by the Council is regulated by Article 249 of the Treaty Establishing the European Community. The manner in which Article 249 applies to Directives is contained in the following excerpt from Article 249: “A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods...”4 Article 249 is similarly applicable to Council decisions with the result that the Council’s Directive and decision under Article 226 are both binding on the UK and Germany. Failure to comply with the instructions to implement the Directive into local law by the time stipulated for doing so constitutes an infringement capable of invoking Article 228’s judicial process for the implementation of sanctions. Likewise, a failure to comply with the Council’s opinion under Article 226 automatically invokes Article 228’s judicial proceedings for the implementation of sanctions.5 Additionally Article 211 of the EC Treaty confers up the Commission the power, generally to: “..ensure that the provisions of this Treaty and the measures taken by the institutions pursuant thereto are applied.”6 Cumulatively, Articles 211 and Article 249 not only ensures that EC laws are adapted and applied throughout the EC Community, but also imposes upon the Commission a residual duty to ensure that EC laws are implemented by Member States. In the Commission of the European Communities v French Republic Case C-177/04 a scenario arose similar in nature to the one involving Germany and the UK. In this case France had implemented an EC Directive on damages for product liability but had failed to reflect the actual extent of damages prescribed by the Directive. The Commission invoked Article 226 of the EC Treaty and issued a reasoned opinion in which it found that France had not fulfilled its Treaty obligations and required that it do so. France had argued, as did the UK in the case for discussion that the French Parliament had not had an opportunity to review the new measures and that in any event, French courts typically apply EC directives in its entirety.7 The court rejected France’s argument ruling that Member States are required to ensure that the Directives are implemented so that individuals are fully aware of their rights.8 The court specifically ruled that it was settled by EC case law that: “each Member State is bound to implement directives in a manner that fully meets the requirements of clarity and certainty in legal situations imposed by the Community legislature, in the interests of the persons concerned.”9 It was previously held in Commission v Ireland [2001] ECR 1-7657 that Directives are required to be implemented clearly and unambiguously and in such a way as to leave no doubt as to its binding nature. 10 Moreover, it was held in Commission v Germany [1991] ECR 1-825 that the provisions purporting to implement a Directive are required to reflect a legal scenario in which it is reasonably clear, exact and obvious that individuals are in a position to know exactly what their particular rights and duties are and that they can pursue those rights and obligations via the national courts.11 On the facts of the case for discussion, the UK had a plausible defence, however, based on the cases discussed above, the defence is insufficient to prevent the Commission pursuing Article 228 proceedings. Germany does not have a defence but merely missed the deadline having previously opposed transposition of the Directive. In both cases, the UK and Germany have failed to fulfil their treaty obligations and their reasons for failing to do so will not give rise to exceptions to Article 228 sanctions. In Commission of the European Communities v French Republic Case C-177/04 the court explained the purpose of Article 228 and how it would be applied. The court explained that: “The procedure laid down in Article 228(2) EC has the objective of inducing a defaulting Member State to comply with a judgment establishing a failure to fulfil obligations, and thereby of ensuring that Community law is in fact applied by that State.”12 The measures contained in Article 228 include both a penal fine and a lump sum payment, both of which have as their aim the assurance that the infringing Member State would be induced under economic pressure to terminate the infringement.13 The extent or degree of the penalty payment and the lump sum will reflect the “degree of persuasion” necessary for inducing the Member State to “alter its conduct.”14 It would appear that since the UK has not expressed any reluctance to implement the procedure and has only failed to do so as a result of administrative difficulties, the fine and lump sum should not be as large as the penalties applied to Germany. Germany has demonstrated a reluctance to implement the Directive and even after failing to achieve the necessary vote in Parliament to block the Directive have persisted in their infringement. Question B. Although Germany has failed to implement the Doctrine, Jurgen he is still entitled to the protection provided for under the deposit-guarantee scheme contained in the Directive. Directives are applicable and enforceable by virtue of the doctrine of Direct Effect which can be applied vertically or horizontally.15 The doctrine of Vertical Direct Effect applies against a Member State and/or its agents if and when a directive is either inadequately implemented or not implemented within the time constraints set for its implementation16 The doctrine of Direct Horizontal Effect on the other hand only applies to legal situations the arise between citizens within the European Community and can only be applied after the EC Directive has been properly implemented.17 In this regard, Jurgen’s complaint can only be lodged against the German government and/or its agents. The doctrine of Direct Effect is a principle of law which has been developed by case law by the European Court of Justice. The doctrine originates from the ruling contained in the case of Van Gend en Loos v. Nederlandse Administratie der Belastingen (Case 26/62); [1963] ECR 1. In this case the European Court ruled that all individual rights conferred upon the individual by EC law is required to be capable of enforcement in the national courts. The court specifically sated that: "...wherever the provisions of a directive appear...to be unconditional and sufficiently precise, those provisions may, in the absence of implementing measures adopted within the prescribed period, be relied upon as against any national provision which is incompatible with the directive or in so far as the provisions define rights which individuals are able to assert against the State."18 Ideally Directives have the force of law throughout the European Community. The European Court expanded on the original doctrine the case of in Van Duyn v Home Office, by holding that Directives are unconditional if they were capable of strict application and di bit gave to have the benefit of judicial interpretation in order to realize its true intent and meaning. In the Van Duyn case, it was determined that a provision relating to the freedom of movement of workers was ineffective because the Directive was: “…subject to limitations justified on grounds of public policy, public security, or public health”.19 On the facts of the case for discussion, the Directive is straightforward and precise. Its intention is clearly stated to encapsulate a means by which to ease the financial burden created by the global economic crisis. In fact the Directive specifies the sum to be covered by the deposit-guarantee scheme. That sum is EUR 50,000 and Jurgen’s deposit sum is 45,000 EUR dollars, putting him within the limit provided for by the Directive. The Van Duyn exception does not arise since the Directive clearly has as its aim a general relief to all of its Member States and addresses a concern which is collective rather than national in nature. In the case of Publico Ministero v Ratti [1979] ECR it was held that Article 189 (now Article 249 and cited above) of the Treaty of Rome, is interpreted to ensure that regulations and directives are capable of having the force of law in each Member State if they contain language indicating that they are “unconditional and sufficiently precise.”20 As previously stated, the Directive is sufficiently precise and is not conditional upon any event. The ruling in Emmot v Minister for Social Welfare and the AG provides the rationale for why Jurgen will have a cause of action against the German government but no recourse against the bank. The court rules that it is unfair to expect individuals to know the law if the Directive altering or making new law has not been properly legislated or has not been legislated at all. The Government, on the other hand is an entirely different mater and already has an obligation to not only know the law but to see to it that the law is properly implemented and adhered to. Moreover there is no reasonable justification for leaving avenues open for the Government to avail itself of its own failure to properly legislate.21 It was held in the case of Francovich and Bonifaci v Italy, that an individual who suffers harm in respect of the Government’s failure to implement or properly implement a Directive may t pursue an action in damages against the relevant Member State for any loss sustained as a result.22 Jurgen’s funds were frozen in Germany and he cannot obtain access to the funds since the German government has failed to implement the Directive guaranteeing the deposit. It therefore follows that his loss is a direct result of the German government’s failure to implement the Directive. In light of the foregoing discussion with respect to the doctrine of direct effect as it applies to Directives, Jurgen may pursue a claim for damages directly against the German government. Jurgen can successfully argue that the German government failed to implement an EC Directive and contravened Article 249 of the EC Treaty with the result that he has suffered damages. Although directives require enactment by the legislators of individual Member States, they are binding on all members, nonetheless. It was held in Van Gend en Loos v Nederlandse Administratie der Belastingen that the European Community constitutes a “new legal order” binding each of the Member States.23 Even so, if the German Finance Minister is relying on current German legislation or policies in denying Jurgen assistance, his reliance on that legislation is to no avail. It has been firmly established by the European Court that in the event a law issued by the European Community contradicts a domestic provision, the European Community’s law will prevail.24 The prevalence of European Community law can therefore be invoked by Jurgen to compel the German Finance Minister to render assistance by virtue of the deposit-guarantee contained in the Directive Although Germany has failed to implement the Directive, Germany remains bound by it. Jurgen, an individual within Germany’s jurisdiction is entitled to the protection contained in the Directive and that protection will not be ignored solely because the German government may not agree with it and has failed to implement it. The rights and obligations are contained in the Directive itself and not the resulting implementation. The law contained in the Directive is precise and unambiguous and does not provide the judiciary with control over its application. The implementation of a Directive is merely viewed as a means by which the rights and obligations contained in the Directive is brought to the public’s attention. The fact that it has not yet been brought to the public’s attention will not defeat its purpose and application. In light of the foregoing discussion, Jurgen has a right to the protection contained in the deposit-guarantee scheme contained in the Directive. As a result he may pursue a claim against the German government for enforcement of his right to protection. Bibliography Barnard, C., and Hepple, B. (2000) ‘Substantive Equality’ Cambridge Law Review, Vol. 59, pp. 562-585. Commission of the European Communities v French Republic Case C-177/04. Commission v Germany [1991] ECR 1-825. Commission v Ireland [2001] ECR 1-7657. Craig, P. P. (1997) “Directives: Direct Effect, Indirect Effect and the Construction of National Legislation”. European Law Review, December, pp. 519-538. Emmot v Minister for Social Welfare and the AG [1991] 3 CMLR 894. Francovich and Bonifaci v Italy, [1991] ECR I-5357. Ibanez, Alberto, J. Gill. (2004) “The ‘Standard’ Administrative Procedure for Suprevising and Enforcing EC Law: EC Treaty Articles 226 and 228.” Law and Contemporary Problems, Vol. 68, 135-159. Publico Ministero v Ratti [1979] ECR. Szyszczak, Erika and Cygan, Adam. (2005) Understanding EU Law. London: Sweet and Maxwell. Treaty Establishing the European Community. Van Duyn v Home Office [1974] ECR 1337. Van Gend en Loos v. Nederlandse Administratie der Belastingen (Case 26/62); [1963] ECR 1. Read More