Why the Enforcement Procedure of Article 228 ECT is in Dire Need of Reform - Essay Example

Introduction The European Union is largely self-regulating in the sense that it is in the interests of Member s to implement its primary and secondary legislation if they wish the Union to continue; it is primarily a union of economic and political interests. To a certain extent this may explain the benign legislation available through which the Commission can enforce compliance from Member States. Instead there has been more development through Article 234 actions allowing remedies to be sought against Member States through their own national courts1. Such actions have been actively encouraged by such decisions as those made by the ECJ in Van Gend en Loos [1963]2. Indeed in Francovich & Boniface v Italy [1993]3 the ECJ stated that 'Community law lays down a principle according to which a Member State is liable to make good damage to individuals caused by a breach of Community law for which it is responsible'. This essay looks at the Commission's powers under Article 228 to enforce actions commenced under Article 226, and queries whether Article 228 is in need of reform. The Commission is empowered to bring enforcement actions under Article 226. Article 228 provides the remedy for an Article 226 action. Steiner and Woods et al4 argue that the ability to bring Member States to book for non-compliance is 'vital for the success of the Community' as it ensures both effective implementation of European Community law and 'illustrates certain supranational elements in the Community structure.' The Commission derives its legitimacy in this area under Article 221 which requires the Commission to ensure European Union law is applied: In order to ensure the proper functioning and development of the common market, the Commission shall: -- ensure that the provisions of this Treaty and the measures taken by the institutions pursuant thereto are applied. Article 226 gives the Commission the power to do so in the event of a Member State's failure to fulfil an obligation under the Treaty: If the Commission considers that a Member State has failed to fulfil an obligation under this Treaty, it shall deliver a reasoned opinion on the matter after giving the State concerned the opportunity to submit its observations. If the State concerned does not comply with the opinion within the period laid down by the Commission, the latter may bring the matter before the Court. A 'failure' can be an act or an omission to act to prevent an infringement by any agency of the State, even if that agency is constitutionally independent: Case 77/69 Commission v Belgium [1970]5. Such acts/omissions include any obligation arising from EU law and cover the Treaties, other EU legal instruments such as directives and general principles of EU law. The primary purpose of Article 226 is to persuade Member States to be compliant. Note in the wording of Article 226 that although the Commission has to deliver a reasoned opinion it would appear that it is optional whether or not it brings the matter before the Court6. To this end Article 226 provides Member States with ample opportunity to seek a non-contentious settlement of any dispute between itself and the Commission. 30% of all disputes are settled under the administrative procedure at the preliminary informal stage7. The main criticism of Article 226 is that it is a lengthy process with the ultimate outcome being nothing more than a declaration of non-compliance by the ECJ. Given the latitude Member States have prior to the Commission commencing action under the second paragraph of Article 226, it is no wonder that the Commission is particularly sensitive to non-compliance with an Article 226 ECJ decision in its role of 'guardian of the treaties', stating: 'Non-compliance with a judgement of the ECJ thus strikes at the heart of the legal order of the Community'8. It is only after the Commission has continuously monitored the situation, issued a formal notice, received the Member State's observations and sent it a formal notice and another reasoned opinion - and there is still no settlement - that the Commission may opt to seek a more formal resolution under Article 228. Article 228 reads as follows: 1. If the Court of Justice finds that a Member State has failed to fulfil an obligation under this Treaty, the State shall be required to take the necessary measures to comply with the judgement of the Court of Justice. 2. If the Commission considers that the Member State concerned has not taken such measures it shall, after giving that State the opportunity to submit its observations, issue a reasoned opinion specifying the points on which the Member State concerned has not complied with the judgment of the Court of Justice. If the Member State concerned fails to take the necessary measures to comply with the Court's judgement within the time limit laid down by the Commission, the latter may bring the case before the Court of Justice. In so doing it shall specify the amount of the lump sum or penalty payment to be paid by the Member State concerned which it considers appropriate in the circumstances. If the Court of Justice finds that the Member State concerned has not complied with its judgment it may impose a lump sum or penalty payment on it. This procedure shall be without prejudice to Article 227. An Article 228 action does not simply lead to a repetition of the declaration of non-compliance originally obtained under Article 226. The Commission will have gathered more evidence, not only of the continuing infringement, but also of non-compliance with the ECJ's Article 226 decision. An action under Article 228 is the last option available to the Commission and had to be strengthened as a reaction to an increase in the number of Member States who were non-compliant in the 1980s9. Although the Commission is now empowered to impose fines and penalties against Member States in breach of Article 226 it has rarely done so. This is partly for historical reasons; Attorney General Roemer in Case 7/71 Commission v France [1971]10 pointed out that the Commission should weigh an Article 228 action against the possibility of a settlement being reached following the lapse of sufficient time and whether taking an Article 228 action may cause a major domestic political crisis for the Member State. Hence the application of Article 228 remedy is 'hampered' by the need of the Commission to be diplomatic. The Commission tends to fill the gap with 'soft law' - issued through its Communications -- and its own internal rules. It has been argued that because the Commission sees itself as a negotiator both pre- and post- litigation it actually undermines its own ability to enforce the treaties11. The basic problem is that the system is reactive. The net effect of negotiated settlements is that the Commission is unable to act decisively until the situation becomes untenable. When it does act, it is hampered by the procedural forms available to it - a formal notice, followed by a reasoned opinion. The reasoned opinion is not binding without a decision from the ECJ to that effect, which means that the Commission has to recourse to litigation in the event that the Member State refuses to comply. Even at this stage there are policy reasons why the Commission is prepared to negotiate rather than litigate with a Member State who has not only infringed the Treaty, but is also ignoring the ECJ's ruling. Since the Treaty on European Union (the Maastricht Treaty), the Court has been able to fine Member States as well as to re-declare their infringement. The Commission may request and the ECJ may subsequently impose a lump sum or penalty payment against a defaulting Member State. There is a basic penalty of 5,000 per day which is to be multiplied by factors which reflect the gravity and duration of non-compliance12. Article 228 is there to strengthen the broader Article 226. Academics such as Burca and Craig13 have cited a number of issues with the efficiency and effectiveness of Article 228: a) Only the Commission has discretion as to when to bring a Member State before the ECJ under Articles 226 and 228; b) The Commission does not have the time nor the resource to detect and follow through on every infringement; c) There are policy and political reasons for not following through on all detected infringements; d) There are no set deadlines for a Member State to be in compliance with an earlier ECJ ruling; e) Although the ECJ expects compliance as soon as possible, it has confirmed that it has no jurisdiction to require a specific deadline: Case C-473/93 Commission v Luxembourg [1996]14. f) This leads to uncertainty in the law and allegations of favouritism from Member States. g) There is no power to seek an injunction or to order a Member State to take action. h) There is no mechanism for collection. Since the ECJ decision in Case C-304/02 Commission v French Republic [2005] the Commission has been obliged to adopt a communication which clarifies and develops the policy of the Commission in asking the ECJ to impose a periodic penalty payment and a lump sum on a Member State which fails to comply with a judgement of the ECJ. This is one measure in providing legal certainty and ensuring transparency of the Commission's actions. The Commission had taken France to the ECJ following its persistence in harvesting undersized fish, dating back to 1984. France failed to comply with the ECJ's judgement of 11 June 1991 in Case C-64/88 Commission v France [1991]15. The Commission continued to monitor its progress until 2002 issuing 2 further reasoned opinions in that time. The Commission requested a declaration and a periodic penalty of 316,500 per day from the day of judgment until the day of compliance, along with costs in August 2002. The ECJ delivered its judgment 3 years later in July 2005 ordering both a periodic penalty 57, 761,250 for each period of 6 months from the date of judgement onwards and a lump sum payment of 20,000,000. This was the first time that the ECJ had order both types of financial penalty and it did so despite the fact that the Commission did not request both types of penalty. The ECJ made it clear in Case C-64/88 Commission v France [1991] that not only would it not be bound by the Commission's recommendations as to the type and amount of penalty to impose, it would also not concern itself with political considerations when doing so16. The ECJ felt that it was appropriate to do order a lump sum payment in this instance because 'of the particular features of the breach'17. France complained about the disparity between the fine it received and the fine which Greece received in the Chania waste case, but the ECJ pointed out that France had jeopardised one of the fundamental objectives of the common fisheries policy, one of the key economic building blocks of the Community: ' the Court of Justice has made it clear that directives must be backed by dissuasive, proportionate and effective sanctions.' Where a directive requires both substantive and procedural obligations, the Member State must comply with both18. France's structural controls were at fault and therefore there was a strong possibility that non-compliance would be a continual problem unless France had a stronger, pecuniary, reason to comply. The purpose of the periodic penalty is to persuade the Member State to end the infringement as quickly as possible, while the imposition of a lump sum is based on an impact assessment of the infringement on public and private interests arising from long standing infringements, such as in the case of France, and to act as a deterrent for future breaches. The periodic penalty recognises that compliance will take time, and that the Commission also needs to monitor this. According to the Commission up to December 2005 it had only had to seek monetary fines in 2 other cases: Case C-387/97 Commission v Greece [2000]19. Greece had failed to comply with a 1992 judgment pertaining to the disposal of waste in the Chania area. The relevant directives went back to 1975. Greece were ordered to pay 20,000 for each day of delay. The second case referred to by the Commission was Case C-278/01 Commission v Spain [2003]20 in which Spain had not fully implemented all the measures of the 1998 ECJ judgment against it pertaining to quality of its bathing waters and was fined 624,150 per annum until compliance. However, on 26 January 2006 the ECJ also decided Case C-119/04 Commission v Italian Republic21 in which a periodic penalty of 265,500 per day was imposed by the ECJ. The ECJ also considered whether it should apply a lump sum penalty but Attorney-General Poiares Maduro felt that despite the length of time the infringement had been in existence, there were insufficient grounds of gravity of the infringement to order a lump sum penalty. The Commission has indicated that from December 2005 it will be asking the ECJ to order both types of financial penalty as a matter of course as experience shows that Member States are not attempting to become compliant until the end of the procedure, thus escaping any sanctions under periodic payments. The lump sum effectively penalizes past behaviour. It also gave the formula for periodic payments as 600 per day with coefficients for seriousness and duration, as well as the Member State's ability to pay and the number of votes it has on the Council22. Lump sums will be calculated based upon a minimum fixed sum which reflects the Member State's GDP and an exemplary daily amount. The Commission states that it does not wish to set an arbitrary sum as this would have no deterrent effect23. It has been said that 'Any increase in Article 226 proceedings devalues its symbolic significance and hence the basis of its authority'. Assuming that statement to be true, it will follow that Article 228 infringement actions will be likewise limited. Through necessity the Commission must selectively enforce its role as 'guardian of the treaties'. Gil Ibez argues persuasively that the only way in which the Commission with its limited resources will be able to cope with the number of possible infringements is through deliberate decentralisation of its supervision and enforcement functions24. This may impact the number of cases, and the type of cases which are dealt with under Article 228. This further makes monitoring of non-compliance quite difficult as in effect one is seeing a skewed picture and has long-term implications for future remedies since it will not be clear what is really happening in terms of non-compliance. Another undesirable side effect of the Commission's selective enforcement is that infringements where the only originating applicant must be the Commission may effectively have no remedy, hence those affected will be defenceless. It is possible for the European Ombudsman to intervene in certain circumstances, such as unacceptable delay. For example, following complaints the Commission issued a communication to the effect that it would seek to make decisions as to whether to pursue an infringement within a year of being notified of the complaint or to explain the delay25. However, the Commission's Communications do not bind the Commission A main area of sensitivity is the fact that the Member State is responsible for all infringements which take place in its territory even if the perpetrator is wholly independent. So a Member State might find it self held responsible for not transposing a directive and for the failure of a municipal authority for failing to implement the directive26. By decentralizing liability the Member State would become responsible enforcing compliance. This would have the effect of strengthening the relationship between Member States and perpetrators as well as strengthening community law since the fine would be coming directly out of the pocket of the offender. Whilst this would be ideal EU institutions have to track carefully in order to avoid a back-lash from anti-European Community lobbyists who query its legitimacy at national level and regional level. The Treaty Establishing a Constitution for Europe proposed that the administrative stages of Articles 226 and 228 should be reduced to a single stage; hence removing unnecessary and expensive duplication. It also proposed that the Commission would be able to combine a request for a declaration and a penalty in a single request to the ECJ27. A proposal which was not adopted was that the Commission should also be able to have the power to adopt a decision finding that a State has failed to fulfil an obligation under the EC Treaty. This would have given the decision the power to bind the Member state through direct applicability. Conclusion There are contradictory statistics on the level of non-compliance within the EU28. For example, the Commission reported that in 2004 it brought 193 infringements to the ECJ's attention of which 144 were ruled to be non-compliant. This makes a total of 2,497 infringement procedures since 195229. Yet Brzel et al claim to have been given 6,230 infringement cases by the Commission covering the period 1978-1999.30 Academic opinion on the impact of Article 228 remains mixed. Steiner, Woods et al argue that Article 228 has been successful as it does 'go some way to persuade Member States that there is nothing to be gained and much to be lost by failing fully to comply with their obligations under Community law'. The other side of that coin is that Article 228 should be obligatory once a Member State is in breach of an ECJ decision under Article 226. Disturbingly Gil Ibez states that the problem with Article 228 is endemic throughout European Community enforcement legislation since it has developed to meet the challenges of specific policy areas rather than specific infringements31. Gil Ibez also points out that 100% compliance is 'utopian' with any system of law suggesting that 'The real problem is determining what level of noncompliance the system can tolerate and still be considered useful, effective, and legitimate'32. It will be difficult to reform Article 228 without a clear picture of a) whether there is a 'problem' with non-compliance; Gil Ibez for example suggests that there is not and b) how large the problem is, and c) the cause(s) of that problem. To complicate the picture the Commission itself seems to take the view that there is considerable education to be done in the EU, and this is reflected in the emphasis on negotiation and ensuring that all non compliance judgments are available, so that Member States can learn from the mistakes of others as it were. The Commission sees its role very much in the sphere of what has been called 'compliance management'33. The strengthening of Article 228 in the Maastricht Treaty seems to herald the adoption of a two-pronged attack in the EU to tackle non-compliance. Intrinsic within the treaty and the original Articles is a framework which encourages negotiation and learning. Now the EU has matured, we see the development of a secondary pecuniary threat which has been introduced as a weapon of last resort. It is submitted that this two-pronged approach avoids alienating those Member States who fall into the 'cannot comply' camp whilst providing the Commission with some ammunition against the 'will not comply' Member States and is indicative of the EU's development as its Membership expands and adjusts. Bibliography Bell, S and McGillivray, D. (2006). Environmental Law. 6th Edition. Oxford University Press. Craig, P and De Burca, G. (1998). EU Law: Text, Cases and Materials. 2nd Edition. Oxford University Press. Cuthbert M. (2003). European Union Law. 5th Edition. Cavendish Publishing. Steiner J, Woods L and Twigg-Flesner C. (2003) 8th Edition. Oxford University Press Cases Francovich & Boniface Italian Republic [1993] 2 CMLR 66 Van Gend en Loos [1963] ECR 1, CMLR 105 Case 77/69 Commission v Belgium [1970 ECR 237 Case 7/71 Commission v France [1971] ECR 1003 Case C-64/88 Commission v France [1991] ECR I-2727 Case C-103/88, Fratelli Costanzo v. Comune d. Milano, [1989] ECR. 1839 Case C-473/93 Commission v Luxembourg [1996] ECR I-3207 Case C-387/97 Commission v Greece [2000] ECR I-5047 Case C-278/01 Commission v Spain [2003] ECR I-14141 Case C-119/04 Commission v Italian Republic [2006]. Available at: http://www.lex.unict.it/eurolabor/en/documentation/altridoc/c119-04e.htm Papers 8th Annual Report to the European Parliament on Commission Monitoring of the Application of Community Law 1990 [1991] OJ C338/6-7 Article III-362 of the Treaty Establishing a Constitution for Europe. 2004 O.J. (C 310) 3 Bonnie, A. (2005). The Evolving Role of the European Commission in the Enforcement of Community Law:From Negotiating Compliance to Prosecuting Member States JCER Volume 1, Issue 2: 39-53 Brzel, T., Hofmann, T., and Sprungk, C. (2003). Why Do States not Obey the Law Lessons from the European Union. Humboldt Universitt zu Berlin. Commission Communication to the European Parliament and the European Ombudsman on Relations with the Complainant in Respect of Infringements of Community Law, 2002 O.J. (C 244) Financial Penalties for Member States who fail to comply with judgments of the European Court of Justice. 14 December 2005. Memo/05/482 Gil Ibez, Alberto J. (2004). The "Standard" Administrative Procedure for Supervising and Enforcing EC Law: EC Treaty Articles 226 And 22. Law and Contemporary Problems. Available at: www.law.duke.edu/journals/ lcp/articles/lcp68dwinter2004p135.htm Read More