At a recent event in Brussels hosted by Brussels Report, in cooperation with Bündnis Bürgerwille e.V. and the Property Rights Alliance, the former longtime President of the EFTA Court, Professor Carl Baudenbacher gave a keynote lecture on the superiority of EU law. The following article is a version of the speech which he delivered.
Check out some pictures here of our seminar in Brussels today on the superiority of EU law with a keynote by Prof. @C_Baudenbacher, the former President of the EFTA Court, hosted with @BuendnisB & @PRAlliance.
— BrusselsReport.EU (@brussels_report) June 14, 2022
Prof. Dr. jur. Dr. rer. pol. h.c. Carl Baudenbacher is a Partner at the law firm Nobel Baudenbacher (Zurich/Brussels) and a visiting Professor at LSE. Between 2003 and 2017, he served as the President of the EFTA Court.
The issue of primacy of EU law over conflicting national law of the Member States has always been topical since the recognition of the principle by the ECJ through an act of judicial law making in 1964. However, it has attracted considerable attention with the May 2020 Weiss ruling of the German Federal Constitutional Court (“Bundesverfassungsgericht”, “BVerfG”). Karlsruhe held that both the European Central Bank and the ECJ acted outside their powers: The former with its Public Sector Purchase Programme (PSPP) and the latter in finding that the PSPP was in line with EU law. After much barking over the years and decades, Karlsruhe has bitten for the first time and refused to follow the ECJ, and this in a rather aggressive tone. The European Commission opened infringement proceedings against Germany, but subsequently dropped them after the German government declared that Germany recognized the primacy of EU law and will actively avoid a repeat ultra vires finding in the future. The supreme and constitutional courts of many other EU States have also made reservations about the scope of primacy. However, none has done it with the thoroughness of the BVerfG in Weiss. It is important to note that all these reservations were made in preliminary ruling proceedings where the national courts play an important role.
The Polish Constitutional Court has in 2021 even fundamentally questioned the primacy of EU law. To legitimise this, Polish government circles have referred to the Weiss ruling of the BVerfG. The Karlsruhe environment retorted that the comparison was untenable, even shameless, because, unlike in Germany, judicial independence no longer existed in Poland. It is true that the two judgments are not equivalent. However, the circumstances of the appointment of the current President of the BVerfG and the COVID jurisprudence of this body raise doubts about its independence. After the “COVID-19 emergency brake” judgment, NZZ commented: Only one can still rely on the Federal Constitutional Court: The Federal Government. In fact, the BVerfG has also in other COVID cases only subjected the Federal Government’s restrictions on fundamental rights to a light proportionality test.
II. The citizenship dispute
There is another arena where the (alleged) primacy of EU law over national law is at stake: It is the battle over who has the final say in granting national (and thereby European) citizenship of EU Member States. The Commission has opened infringement proceedings against Malta and Cyprus over their citizenship by investment programmes. The legal basis is somewhat shaky. Apart from Article 20(1) TFEU. the EU’s watchdog relies on the duty of sincere cooperation.
III. The political Commission
Since President Juncker’s time, the European Commission officially sees its role as a political one. This can be at the expense of the traditional task of monitoring compliance with the law in a community of law. On 31 May 2016, Mr. Juncker said that the Commission had given France leeway on fiscal rules “because it is France” (“parce que c’est la France”). One is reminded of George Orwell’s dictum that “all animals are equal, but some animals are more equal than others”. The Commission von der Leyen even wants to be geo-political; talking about democracy and other values all the time and at the same time acting politically, as some say, even at the expense of the rule of law.
IV. The case of Norway
A comparison with well-established Western European states makes it clear that the political orientation of the Commission may lead to unequal treatment. It is plain, for example, that the two small states of Malta and Cyprus have been singled out and other, larger Member States with similar citizenship by investment programmes were left alone. As far as Poland is concerned, it is obvious that the country violates the rule that judges must be indepedent and the principle of primacy in many ways.
However, in Western states there are finer mechanisms that lead to similar results. An example is Norway, which participates in the Single Market as an EEA/EFTA state. Norway ranks first in virtually all international classifications on democracy and the rule of law. However, the country has problems with the independence of its judiciary. A high percentage of Norwegian judges are former bureaucrats of many years’ standing who have been socialised accordingly. Two and a half years ago, the “NAV” scandal blew up. For 30 years, welfare payments to EEA citizens (Norwegians and non-Norwegians alike) had been made conditional on physical presence on Norwegian soil in violation of the EEA Agreement. Innocent people were prosecuted and imprisoned. The report of a government appointed committee found numerous violations of the law, but no culprits were identified, and not a single head rolled. An Oslo lawyer’s complaint to the European Commission, as far as can be seen, remained without consequences. A few weeks ago, a second scandal became known. Norwegian authorities apparently systematically prevent their citizens from seeking medical services elsewhere in the EEA. In both cases, there are precedents from the EFTA Court, but the Norwegian government ignores them. Norway is thus also violating the principle of primacy, which is enshrined in the EEA Agreement in a modified form. Certain professors at the Universities of Oslo and Bergen have taken it upon themselves to develop a so-called “doctrine” called the theory of the “Room for Manoeuvre” to justify restrictions on fundamental rights and fundamental freedoms. The means to this end is, as in the COVID case law of the German BVerfG, a re-interpretation of the proportionality test into a mere plausibility test. Unlike in Germany, in Norway this affects the entire scope of the Single Market, i.e. also state monopolies, advertising bans and migration law. In addition, the Norwegian Government continues to block the creation of a panel modelled on Article 255 TFEU, which would scrutinise government-nominated candidates for the EFTA Court bench for their suitability and independence. This is obviously incompatible with the maxims underlying the EEA Agreement, in particular the principles of homogeneity and reciprocity. The EFTA Surveillance Authority has nevertheless declined to take up a complaint.
The question arises why the Commission remains passive, even though citizens and companies from the EU pillar of the EEA are also harmed. Of course, the EU’s watchdog has no direct competence in the EFTA pillar, but it could put the issue on the agenda of the Joint EEA Committee if it wanted to. Whatever the reason for the Commission’s attitude, it must be recalled that in addition to the cohesion contribution owed under EEA law, Norway voluntarily puts the same amount of money on the table again as “Norway Grants”. Moreover, if one looks at things geo-politically, Norway is a founding member of NATO.
For the sake of completeness, it should be noted that the Norwegian Government also refuses to implement the rulings of the European Court of Human Rights concerning the unlawful removal of children.
V. National courts of EU Member States
One may also raise the issue of the extent to which national courts of EU Member States adhere to the primacy of EU law. Here, reference is made to a landmark case decided by the Cour d’Appel of Paris on 13 December 2021. UBS Switzerland was criminally convicted of aggravated money laundering, among other offences. A fine was imposed. French criminal law was applied despite the fact that there was an international treaty – the so-called Savings Taxation Agreement – between the EU and Switzerland binding France. This treaty recognised Swiss banking secrecy and obliged Swiss banks to levy a final withholding tax on the assets of French clients. UBS levied this tax and the money ended up in the coffers of the French state. This treaty, which took precedence over contradictory French criminal law, was not properly taken into account by the court. France was thus paid twice. Although the Paris Cour d’Appel has a good track record in this regard, no reference was made to the ECJ.
VI. Excursus: The project of an Institutional Framework Agreement EU – Switzerland
In the course of an excursus, it should finally be noted that under the failed Institutional Framework Agreement, the Swiss Federal Supreme Court would not have had any opportunity to make a reservation regarding the issues discussed here. This agreement would have been based on the so-called “Ukraine mechanism”: in the event of a conflict, the only procedure available would have been for the European Commission to take Switzerland to a pro forma arbitration tribunal. However, this panel would have had to request a binding decision from the ECJ in practically every significant case. The Swiss Federal Supreme Court would have been excluded from the proceedings. There was a parallel with the extraterritorial courts that were forced on China in the 19th century under what was called the “unequal treaties”.
It is to be noted that the EU has stuck to this model in the talks since the negotiations broke down. The Swiss government does not rule out swallowing this in individual bilateral agreement, obviously because they want to make a point of no return on the road towards EU membership. Whether this policy will be successful, may be doubted. With the EEA and the institutions of the EFTA pillar, EFTA Surveillance Authority and EFTA Court, a model is available that protects the sovereignty of the non-EU states to a much greater extent.
VII. The future
To conclude, the question arises as to how to proceed with regard to primacy in the future. As far as the Commission is concerned, the change in function from an authority committed to protecting a community of law to a political or even geo-political actor creates considerable problems. The ECJ, for its part, is criticised for alleged judicial activism. This has also played a role in the debates that ultimately led to Brexit. As far as the City of London is concerned, it is worth recalling the ECJ’s judgment confirming the EU’s power to ban short selling (C-270/12 UK v Parliament and Council). This ruling was rendered in a nullity proceeding. Not only in the UK, many felt that it was politically motivated.
The accusation of judicial activism is admittedly an empty formula. Whether a particular court ruling is successful (and thus legitimate) or not depends upon whether it is accepted by the relevant constituencies, in particular the national high courts. Here, perhaps, the ECJ itself is called upon. It should change its French style of judging and focus less on decreeing and more on reasoning. The introduction of a dissenting opinion system is also overdue. Contrary to a widespread opinion, the Advocate General cannot replace the missing dissenters simply because they deliver their opinion before the judgment is handed down.
Conflicts such as the one between the ECJ and the Bundesverfassungsgericht can only be addressed by way of mutual consideration in the European judicial network. Former BVerfG Judge Dieter Grimm has rightly stated that the uniformity of the legal system must not be “fetishized”; the EU has been living with contradictory law all the time. The question of what has been delegated to the EU and what has not remains controversial. One will continue to muddle through, like in the past, but more consistency on the part of the Commission is needed.