Constitutional Law of the European Union - Essay Example

Constitutional Law of the European Union Part A In this case, both the litigating parties come from the same member of the U.K. There is no conflict between different national laws. Two questions arise in this connection are whether the U.K. Government is justified in not transposing the E.U.Council’s directive and in this background whether consumer Christina is entitled for the refund of money paid for the computer she wants to return within the stipulated time limit from the supplier or whether member state is liable pay her compensation. To decide on the issues, the validity of the directive of the council is to be examined and to find out what are remedies are available to the aggrieved party. Article 249 of the Treaty of the European Community enables the European Parliament to issue directive to its member states to implement terms of the directive. “Article 249 In order to carry out their task and in accordance with the provisions of this Treaty, the European Parliament acting jointly with the Council, the Council and the Commission shall make regulations and issue directives, take decisions, make recommendations or deliver opinions. A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States. 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. A decision shall be binding in its entirety upon those to whom it is addressed. Recommendations and opinions shall have no binding force.”1 The directive will only inform the end result of the directive without dictating as to how it should be implemented. Generally a time period is given to the member states to implement the directive by passing necessary legislation. The directive in question is to make it an option available to the purchaser of goods through mail order business to return the goods so purchased within fifteen days without having to assign any reason for doing so and to make it obligatory for the supplier to accept the return and refund the purchase price within 7 days after deducting reasonable expenditure incurred for the supply. The directives are applicable to which ever member state it is addressed to or to all the member states. It is binding on the member state to implement within the time frame given by the council which is called transposing into the national law of the member state failing which it is open for the European commission to initiate legal action against the defaulting member states in the European court of justice, first in the Court of First Instance Decisions, for necessary action depending upon the seriousness and also award damages for the affected individuals. Though originally the directive to be implemented by the member state as it may feel fit, lately 2the law has evolved to make the member state liable for non implementation of the directive. This is Direct Effect enforceable by the citizens of member states not stated in the treaties, was developed by the European Court of Justice in Van Gend en loos v Nederlandse Administratie der Belastingen3 wherein it was held that affected individuals could move their respective national courts for redress for non implementation of directives, regulations and treaties. Direct effect is known in different kinds as propounded by the court of justice in Defrenne v sabena.4 They are vertical direct effect and horizontal direct effect depending on whom enforcement is directed at. Vertical effect arises when there is incompatibility between EC law and National Law. It implies that state must ensure that national law is made compatible with EC law. This is otherwise known as ‘emanation of the state’ as defined in Foster v British Gas Plc.5 And this enables citizens to rely national law for taking against the State. The Horizontal Effect is between individuals including corporate entities. The present case is of horizontally directly effective as the directive can only be enforced against the state. The state liability arising out of non-implementation of directive was first decided in Francovich v Italy wherein Italian Government failed to implement Directive 80/987 in respect of minimum compensation envisaged for workers in the event of insolvency of employers. In this case European court of justice suggested that the affected party must prove that loss was incurred due to the State’s failure to implement a directive conferring a specific right on the individual implying that there must be a causal link between failure and loss. This State liability doctrine was further modified to give weightage to the seriousness of the lapse while deciding the cases of Brasserie du Pêcheur v Federal Republic of Germany and R v Secretary of State for Transport ex parte Factortame Ltd.6 In the present case it should be examined whether the directive is consistent with treaty articles. Article 5 of the EC treaty states as follows.” “Article 5 The Community shall act within the limits of the powers conferred upon it by this Treaty and of the objectives assigned to it therein. In areas which do not fall within its exclusive competence, the Community shall take action, in accordance with the principle of subsidiarity, only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale or effects of the proposed action, be better achieved by the Community. Any action by the Community shall not go beyond what is necessary to achieve the objectives of this Treaty.” The directive said to be made by the council in respect of mail order business purportedly deriving powers from article 14(20 and 94 and 95 does in fact give effect to prohibited actions under article 81 by others. When actions such as imposing trading conditions forcing the supplier to back the goods ordered does put supplier at a disadvantage, there is no rationale behind the EU itself imposing such a condition in derogation of article 94. It can not be the case that such a condition will enable free movement of goods or may promote this form of trade. The parties are free impose such conditions in their contracts without the EU or State having to force such a condition in the name of promoting such a trade or free movement of goods without frontiers. Whether to take back goods or not will be dependent upon the supplier’s ability to absorb losses arising out of returns and should arise out of his own free will and this is not expected of the EU to dictate unless it achieves the object of article 14. Hence the member state of U.K. is justified in not giving effect to the directive. At the same as article 249 states that any directive or regulation shall binding up on the member states concerned, as long as it remains law in force, the purchaser will be entitled to claim relief from the national courts. And the member state of U.K. has the right approach European court of justice for cancelling the directive. Even if it is a regulation instead of directive, the member state has the right to opt out “An example of a regulation not being binding on Member States would be COM 2004 116, setting standards for security features and biometrics in EU passports, which would not be binding upon the UK and Ireland as it falls under the area of visas and asylum which these countries opted out of in the last treaty.”7 But the present case does not create a situation for the member state to opt out and therefore regulation will be binding as long as it is in force and consumer Christina will be entitled for relief. Part B The case of Germany is that in order for the council’s said decision to be valid, it should be passed by unanimous voting and not merely by virtue of Qualified Majority Voting. Except for decisions relating to common foreign policy and security policy under pillar II and police and judicial cooperation in criminal matters under Pillar III, all other decisions can be through Qualified Majority Voting (QMV) pursuant to Luxembourg Compromise before passing of Single European Act. Treaty on European Union, Treaty of Amsterdam and Treaty of Nice have adopted the concept of QMV for pillar I issues. Qualified Majority Voting has been extended by the treaty of Amsterdam into several areas which had been subject to unanimous voting.8 Article 226 clearly states that if any member state fails to fulfil its obligations under the treaty, the Commission can bring the matter before the European Court of Justice after giving an opportunity to the member state concerned.9 Article 67 (1) provides there shall be unanimous decision in respect of any proposal during the transitional period of five years following the treaty of Amsterdam. Germany must take a stand that the proposal to restrict its national policy of supporting companies with financial benefits should have been done observing the article 67 (1) also. Article 94 also envisages that there shall be a unanimous decision in respect of directives, regulations and regulations affecting the common market functioning. Germany can justify that helping companies in times of competition will enable them to survive in the market failing which they are likely to suffer from unhealthy competition by undercutting of prices by their competitors who are financially strong. Qualified Majority Voting is applied only by general derogation of obligations in most of the cases. The derogation power overlooking the unanimous supporting requirements must not be directed at a member state’s practice. It is open to all member states to help their respective national companies with financial benefits as protection against unhealthy and undercutting practices of financially strong companies. It can not be said to distort competition nor will amount to state aid. On the other hand unhealthy competition from financially strong companies by lowering their prices would only distort competition. Hence to neutralize the adverse effect, such a policy as is being followed by Germany is a necessity. It can argue that if the unanimity principle is applied, certainly the directive would not be passed. If it is still passed unanimously, then all member states would have been on equal footing. Now there are possibilities of many member states still be giving financial benefits in disguise. Hence singling out Germany alone is not going to stop the so called distortion of competition throughout the single market sought to be created. Articles 92 to 94 of the EC Treaty provide the formal legal basis for state-aid control within the European Union. However, the operation of these provisions may be affected by various other Treaty provisions. The latter provisions, by virtue of their very generality or their place in the Treaty, may invite processes of adaptation to social demands in the application of Article 92 and articulation of such application in policy terms.10 The objective of State aid control is, as laid down in the founding Treaties of the European Communities, to ensure that government interventions do not distort competition and intra-community trade. In this respect, State aid is defined as an advantage in any form whatsoever conferred on a selective basis to undertakings by national public authorities. Therefore, subsidies granted to individuals or general measures open to all enterprises are not covered by Article 87 of the EC Treaty and do not constitute aid. The EC Treaty pronounces the general prohibition of State aid. The founders, however, saw of course that in some circumstances, government interventions are necessary for a well-functioning and equitable economy. Therefore, the Treaty leaves room for a number of policy objectives for which State aid can be considered compatible. By complementing the fundamental rules through a series of legislative acts that provide for a number of exemptions, the European Commission has established a worldwide unique system of rules under which State aid is monitored and assessed in the European Union. This legal framework is regularly reviewed to improve its efficiency and to respond to the call of the European Councils for less but better targeted State aid in order to boost the European economy. While new legislation is adopted in close cooperation with the Member States, the application of exemptions to the general prohibition of State aid rests exclusively with the European Commission, which possesses strong investigative and decision-making powers. At the heart of these powers lies the notification procedure which -except in certain instances- the Member States have to follow. It is only after the approval by the Commission that an aid measure can be implemented. Moreover, the Commission has the power to recover incompatible State aid. Through these means, four Directorate-Generals are carrying out effective State aid control: while sector-specific services safeguard fair competition in Transport (aid to companies in the road, rail, inland waterway, sea and air transport sectors), Coal, Fisheries (the production, processing and marketing of fisheries and aquaculture products), and Agriculture (the production, processing and marketing of agricultural products), DG Competition deals with all other sectors. The Commission aims at ensuring that all European companies operate on a level-playing field, where competitive companies succeed. It ascertains that government interventions do not interfere with the smooth functioning of the internal market or harm the competitiveness of EU companies. Companies and consumers in the European Union are also important players who may trigger investigations by lodging complaints with the Commission. Furthermore, the Commission invites interested parties to submit comments through the Official Journal of the European Union when it has doubts about the compatibility of a proposed aid measure and opens a formal investigation procedure11 It maybe worthwhile mentioning that EC Treaty it has inbuilt provisions for creating interventionist funds to ward off difficulties. Hence Germany can put forth all the above arguments before the Court of Justice for annulling the directive restricting its practice of providing financial benefits to national companies without approval by unanimous voting. In fact the Luxembourg compromise was only a guide line on the qualified majority voting and not mandatory, though qualified majority voting has been since included in the statute book. Germany can argue that this area must be revisited so that in matters of such national concern unanimous voting is secured before enabling vested interests to thwart the genuine difficulties of German national companies. By means of QMV, the vested interested countries can join together and try to disrupt the national policies of Germany and countries similarly placed. As said earlier, there is no mechanism to check or detect such practices in disguise by other nations which if they are allowed to do so while at the same time curtail Germany’s open and transparent practice, it will surely result in competition distortion. Hence Germany can argue that even if QMV is applicable for such situations as envisaged in the directive in dispute, the European court of justice may revisit the provisions relating to QMV and unanimous voting. Alternatively Germany must argue that it should have been in the form of Regulation requiring unanimous approval. Germany may also argue for special treatment in view of devastation due to world wars and reunification Germany which has resulted in inequalities within newly merged country. Read More