SOURCE: Monthly Case-law Digest - October 2021
EU trade mark – Opposition proceedings – Application for an EU figurative mark representing an arrow with wing – Earlier EU figurative mark representing an arrow with wing – Relative ground for refusal – Partial rejection of the opposition – Limited scope of the opposition in the context of the appeal before the Board of Appeal – Partial withdrawal of the opposition – Plea raised by the Board of Appeal of its own motion – Prohibition on ruling ultra petita
Škoda Auto a.s. applied to the European Union Intellectual Property Office (EUIPO) for registration of an EU figurative mark representing an arrow with wing. The applicant, Škoda Investment a.s., opposed the registration of that mark in respect of all the goods and services referred to in that application. The Opposition Division of EUIPO rejected that opposition as inadmissible. The applicant brought an appeal against that decision and requested, in the statement setting out the grounds of appeal, that it be annulled in part in so far as it concerned only certain goods and services.
The Board of Appeal of EUIPO inferred from this that the applicant had withdrawn its appeal in respect of the other goods and services covered by the mark applied for. The effect of that partial withdrawal was that the goods and services not mentioned in that statement no longer formed part of the opposition proceedings and that, as regards those goods and services, the rejection of the opposition had become final. Consequently, the Board of Appeal partially annulled the decision of the Opposition Division in respect of the contested goods and services and referred the case back to it for further examination of those goods and services.
In its judgment, the Court dismisses the applicant’s action and provides clarification as to the scope of the examination carried out by the Boards of Appeal of EUIPO in opposition proceedings. In that context, the case-law established in proceedings before the EU Courts concerning the relationship between pleas raised of the Board’s own motion and the form of order sought in an action applies.
Findings of the Court
First of all, the Court recalls that the Board of Appeal, in the context of an appeal relating to a relative ground for refusal of registration of a mark, which is brought against a decision of the Opposition Division, cannot adjudicate beyond the subject matter of the appeal brought before it. 62 That Board, in accordance with the jurisdiction of the EU Courts under the system for governing judicial review proceedings, can only annul the decision of the Opposition Division within the limits of the submissions which an appellant set out in its appeal.
Next, the Court observes that the Board of Appeal must examine of its own motion the pleas relating to the issues of law which have not been raised by the parties, but which concern essential procedural requirements, such as the rules on admissibility of an opposition. Nonetheless, that power does not mean that the Board of Appeal has the power to modify of its own motion the form of order sought by an appellant in the appeal brought before it, since such an approach would disregard the distinction between the pleas in law and the form of order sought, the latter of which defines the limits of an appeal. Thus, by examining of its own motion a plea relating to essential procedural requirements, the Board of Appeal does not go beyond the scope of the dispute before it or in any way infringe the rules of procedure relating to the presentation of the subject matter of the dispute. However, it would be different if, following the examination of the decision forming the subject matter of the appeal, the Board of Appeal, on the basis of such an examination of its own motion, were to declare an annulment going beyond what was sought in the duly submitted form of order before it on the ground that such an annulment was necessary in order to correct the unlawfulness found of its own motion in carrying out that analysis.
Finally, the Court concludes that, in the present case, the applicant is not justified in claiming that the Board of Appeal should have annulled the decision of the Opposition Division in its entirety, since the effect of that decision would have been to rule outside the subject matter of the dispute as defined by the applicant itself.
SOURCE: Monthly Case-law Digest - October 2021
Reference for a preliminary ruling – Competition – Compensation for harm caused by a practice prohibited under Article 101(1) TFEU – Determination of the undertakings liable to provide compensation – Action for compensation directed against the subsidiary of a parent company and brought following a decision finding only that the parent company participated in a cartel – Concept of an ‘undertaking’ – Concept of ‘economic unit’
Between 1997 and 1999, the company Sumal SL acquired two trucks from Mercedes Benz Trucks España (‘MBTE’), which is a subsidiary of the Daimler group, whose parent company is Daimler AG. By a decision of 19 July 2016, the Commission found an infringement, by Daimler AG, of EU law rules prohibiting cartels in that Daimler had concluded, between January 1997 and January 2011, arrangements with 14 other European truck producers on pricing and gross price increases for trucks in the European Economic Area (EEA).
Following that decision, Sumal brought an action for damages against MBTE, seeking payment of the sum of EUR 22 204.35 for loss resulting from that cartel. Sumal’s action was nevertheless rejected by the Juzgado de lo Mercantil no 07 de Barcelona (Commercial Court No 7 of Barcelona, Spain) on the ground that MBTE was not referred to in the Commission’s decision. Sumal brought an appeal against that judgment before the Audiencia Provincial de Barcelona (Provincial Court of Barcelona, Spain). In that context, that court wonders whether and, if so, under what conditions, an action for damages may be brought against a subsidiary following a Commission decision finding anticompetitive practices by the parent company. Thus, that court decided to stay the proceedings and refer that question to the Court by way of a reference for a preliminary ruling.
By its judgment delivered by the Grand Chamber, the Court sets out the conditions under which victims of an anticompetitive practice by a company punished by the Commission are entitled to engage, by way of an action for damages brought before the national courts, the civil liability of the punished company’s subsidiary companies, which are not referred to in the Commission decision.
Findings of the Court
In accordance with settled case-law, any person is entitled to claim compensation from ‘undertakings’ which have participated in a cartel or practices prohibited under Article 101 TFEU for the harm caused by those anticompetitive practices. Even if such actions for damages are brought before the national courts, the determination of which entity is required to provide compensation for the harm caused is governed directly by EU law.
Given that such actions for damages are an integral part of the system for enforcement of EU competition rules, in the same way as their enforcement by public authorities, the concept of an ‘undertaking’, within the meaning of Article 101 TFEU, cannot have a different meaning in the context of the imposition of fines by the Commission on ‘undertakings’ (public enforcement) and in actions for damages brought against those ‘undertakings’ before the national courts (private enforcement). According to the Court’s case-law, the concept of an ‘undertaking’, within the meaning of Article 101 TFEU, covers any entity engaged in an economic activity, irrespective of its legal status and the way in which it is financed, and thus designates an economic unit even if in law that unit consists of several persons, natural or legal.
Where it is established that a company belonging to such an economic unit has infringed Article 101(1) TFEU such that the ‘undertaking’ of which it is part has committed an infringement of that provision, the concept of an ‘undertaking’ and, through it, that of ‘economic unit’, gives rise to the joint and several liability across the entities of which the economic unit is made up at the time that the infringement was committed. In that regard, the Court observes, moreover, that the concept of an ‘undertaking’, used in Article 101 TFEU, is a functional concept, as the economic unit of which it is constituted must be identified having regard to the subject matter of the agreement at issue.
Thus, where the existence of an infringement of Article 101(1) TFEU has been established as regards a parent company, it is possible for the victim of that infringement to seek to engage the civil liability of a subsidiary of that parent company on the condition that the victim proves that, having regard to, first, the economic, organisational and legal links that connect the two legal entities and, second, the existence of a specific link between the economic activity of that subsidiary and the subject matter of the infringement for which the parent company was held to be responsible, that subsidiary, together with its parent company, constituted an economic unit.
It follows that, in circumstances such as those at issue in the main proceedings, in order to bring an action for damages against MBTE as a subsidiary of Daimler AG, Sumal must establish, in principle, that the anticompetitive agreement concluded by Daimler AG concerns the same products as those marketed by MBTE. In so doing, Sumal would show that it is precisely the economic unit of which MBTE, together with its parent company, forms part that constitutes the undertaking which in fact committed the infringement found earlier by the Commission pursuant to Article 101(1) TFEU.
However, in the context of such an action for damages brought against a subsidiary company of a parent company which has been found to have infringed Article 101 TFEU, before the national court concerned, that subsidiary company must dispose of all the means necessary for the effective exercise of its rights of the defence, in particular so as to be able to dispute that it belongs to the same undertaking as its parent company. That said, where an action for damages relies, as in the present case, on a finding by the Commission of an infringement of Article 101(1) TFEU in a decision addressed to a parent company of the defendant subsidiary company, the latter cannot challenge, before the national court, the existence of an infringement thus found by the Commission. Indeed, Article 16(1) of Regulation No 1/2003 provides that national courts cannot take decisions running counter to the decision adopted by the Commission.
By contrast, in a situation where the Commission has not made a finding of conduct amounting to an infringement in a decision adopted under Article 101 TFEU, the subsidiary company is naturally entitled to dispute not only that it belongs to the same ‘undertaking’ as the parent company, but also the very existence of the infringement alleged against the parent company. In that regard, the Court states, moreover, that the possibility for a national court of making a finding of the subsidiary company’s liability for the harm caused is not excluded merely because, as the case may be, the Commission has not adopted any decision or that the decision in which it found that there was an infringement did not impose an administrative penalty on that company.
Therefore, Article 101(1) TFEU precludes a national law which provides for the possibility of imputing liability for one company’s conduct to another company only in circumstances where the second company controls the first company.
(Reference for a preliminary ruling — Social policy — Directive 2003/88/EC — Article 7 — Right to paid annual — Retirement at the request of the party concerned — Worker failing to use up all his entitlement to annual paid leave before the termination of his work relations — National legislation excluding allowance in lieu of paid annual leave not taken — Sick leave — Public servants
SOURCE: Court of Justice of the European Union, Press Release No 81/16, 20 July '16
Mr Hans Maschek, a civil servant of the city of Vienna, retired, at his own request, with effect from 1 July 2012. Between 15 November 2010 and 30 June 2012, he did not report to his work place. During the period from 15 November to 31 December 2010, Mr Maschek was on sick leave. From 1 January 2011, he was required, in accordance with an agreement concluded with his employer, to not report to his workplace, while continuing to receive his salary. After retiring, Mr Maschek asked his employer to pay him an allowance in lieu of paid annual leave not taken, claiming that he had fallen ill again shortly before he retired. His employer refused his request on the grounds that, according to the rules on the remuneration of civil servants of the city of Vienna, a worker who, at his own request, terminates the employment relationship – particularly because he applies for retirement – is not entitled to such an allowance.
The Verwaltungsgericht Wien (Administrative Court of Vienna), hearing an action brought by Mr Maschek against that refusal, asks the Court whether such rules are compatible with EU law and, more specifically, with Directive 2003/88.
(…) the Court recalls that the Directive provides that every worker is entitled to paid annual leave of at least four weeks and that the right to paid annual leave is a particularly important principle of EU social law. It is granted to every worker, whatever his state of health. When the employment relationship comes to an end and paid annual leave can therefore no longer be taken, the Directive states that the worker is entitled to an allowance in lieu in order to prevent the impossibility of taking leave leading to a situation in which the worker loses all enjoyment of that right, even in pecuniary form.
The Court states in this regard that the reason why the employment relationship has ended is irrelevant. Therefore, the fact that a worker terminates, at his own request, the employment relationship has no bearing on his entitlement to receive, where appropriate, an allowance in lieu of the paid annual leave that he could not use up before the end of his employment relationship.
The Court concludes from this that the Directive precludes national legislation such as that on the rules on the remuneration of civil servants of the city of Vienna, which deprives the worker, whose employment relationship was terminated following his request for retirement, of an allowance in lieu of paid annual leave not taken and who has been unable to use up his entitlement to paid annual leave before the end of that employment relationship. The Court recalls, in addition, its case-law according to which an employee is entitled, on retirement, to an allowance when he could not, because of sickness, use up his right to paid annual leave. Mr Maschek is therefore entitled to an allowance for the period 15 November to 31 December 2010, a period during which it is established that he was on sick leave and for that reason could not use up his entitlement to the annual paid leave acquired over that period.
The Court adds that the right to annual leave has the twofold purpose of enabling the worker both to rest from carrying out the work he is required to do under his contract of employment and to enjoy a period of relaxation and leisure. In order to ensure the effectiveness of the right to annual leave, the Court proposes the following principle: a worker whose employment relationship has ended and who, pursuant to an agreement with his employer, while continuing to receive his salary, is required not to report to his place of work during a specified period preceding his retirement, is not entitled, should the case arise, to an allowance in lieu of paid annual leave not taken during this period, unless it was owing to sickness that he could not use up that entitlement.
The Court holds therefore that it will be for the referring court to determine if that was the case in respect of Mr Maschek during the period from 1 January 2011 to 30 June 2012. If so, he will not be entitled to an allowance in lieu of the paid annual leave he could not use up during that period, unless it was because of sickness that he could not use up his right to paid annual leave. The Court further observes that, while the purpose of the Directive is to lay down minimum health and safety requirements for the organisation of working time, requirements that the Member States are obliged to comply with; the latter have the right to introduce provisions more favourable to workers. Thus, the Directive does not preclude domestic provisions giving entitlement to more than the minimum period of four weeks’ paid annual leave guaranteed by the Directive and granted on the conditions for entitlement to, and granting of, the right to paid annual leave fixed by national law.
Accordingly, the Member States are free to grant workers more paid annual leave than the minimum annual paid leave of four weeks provided for by the Directive. In that case, the Member States may provide for a worker who, because of illness, could not use up all his additional paid annual leave before the end of his employment relationship, to be granted entitlement to an allowance in lieu of that additional period. It is for the Member States to determine the conditions for granting that entitlement.
JUDGMENT OF THE COURT OF 6 OCTOBER 2021, CONSORZIO ITALIAN MANAGEMENT AND CATANIA MULTISERVIZI, C-516/19
SOURCE: Monthly Case-law Digest - October 2021
Reference for a preliminary ruling – Article 267 TFEU – Scope of the obligation on national courts or tribunals of last instance to make a reference for a preliminary ruling – Exceptions to that obligation – Criteria – Question on the interpretation of EU law raised by the parties to the national proceedings after the Court has given a preliminary ruling in those proceedings – Failure to state the reasons justifying the need for an answer to the questions referred for a preliminary ruling – Partial inadmissibility of the request for a preliminary ruling
In 2017, the Consiglio di Stato (Council of State, Italy), a national court of last instance (‘the referring court’), made a reference to the Court of Justice for a preliminary ruling in proceedings concerning a public contract for the supply of services relating to the cleaning, inter alia, of Italian railway stations. The Court delivered its judgment in 2018.
The parties to those proceedings then asked the referring court to refer other questions for a preliminary ruling. It is against that background that, in 2019, the referring court made a new reference to the Court for a preliminary ruling. It was seeking, inter alia, to ascertain whether a national court or tribunal of last instance must bring before the Court a question concerning the interpretation of EU law where that question is put to it by a party at an advanced stage of the proceedings, after the case has been set down for judgment for the first time or where a reference for a preliminary ruling has already been made in that case.
Findings of the Court
In its judgment, the Court, sitting as the Grand Chamber, reasserts the criteria identified in the judgment in Cilfit, which provides for three situations in which national courts or tribunals of last instance are not subject to the obligation to make a reference for a preliminary ruling:
(i) the question is irrelevant for the resolution of the dispute;
(ii) the provision of EU law in question has already been interpreted by the Court;
(iii) the correct interpretation of EU law is so obvious as to leave no scope for any reasonable doubt.
Accordingly, the Court holds that a court or tribunal of last instance cannot be relieved of its obligation to make a reference for a preliminary ruling merely because it has already made a reference to the Court for a preliminary ruling in the same national proceedings. With regard to the third situation referred to above, the Court clarifies that the absence of reasonable doubt must be assessed in the light of the characteristic features of EU law, the particular difficulties to which the interpretation of the latter gives rise and the risk of divergences in judicial decisions within the European Union. Before concluding that there is no reasonable doubt as to the correct interpretation of EU law, the national court or tribunal of last instance must be convinced that the matter would be equally obvious to the other courts or tribunals of last instance of the Member States and to the Court of Justice.
In that regard, the mere fact that a provision of EU law may be interpreted in several ways is not sufficient for the view to be taken that there is a reasonable doubt as to the correct interpretation of that provision. Nonetheless, where the national court or tribunal of last instance is made aware of the existence of diverging lines of case-law – among the courts of a Member State or between the courts of different Member States – concerning the interpretation of a provision of EU law applicable to the dispute in the main proceedings, that court or tribunal must be particularly vigilant in its assessment of whether or not there is any reasonable doubt as to the correct interpretation of that provision.
National courts or tribunals of last instance must take upon themselves, independently and with all the requisite attention, the responsibility for determining whether the case before them involves one of the situations in which they may refrain from submitting to the Court a question concerning the interpretation of EU law which has been raised before them. If such a court or tribunal takes the view that it is relieved of its obligation to make a reference to the Court, the statement of reasons for its decision must show that the matter involves one of those three situations.
Moreover, where the case before the court or tribunal of last instance involves one of those situations, it is not required to bring the matter before the Court, even when the question concerning the interpretation of EU law is raised by a party to the proceedings before it.
By contrast, if the question concerning the interpretation of EU law does not involve any of those situations, the court or tribunal of last instance must bring the matter before the Court. The fact that that court or tribunal has already made a reference to the Court for a preliminary ruling in the same national proceedings does not affect the obligation to make a reference for a preliminary ruling when a question concerning the interpretation of EU law the answer to which is necessary for the resolution of the dispute remains after the Court’s decision.
Moreover, it is for the national court or tribunal alone to decide at what stage in the proceedings it is appropriate to refer a question to the Court for a preliminary ruling. However, a court or tribunal of last instance may refrain from referring a question to the Court for a preliminary ruling on grounds of inadmissibility specific to the procedure before that court or tribunal. Where the pleas in law raised before such a court or tribunal must be declared inadmissible, a request for a preliminary ruling cannot be regarded as necessary and relevant for that court or tribunal to be able to give judgment. The applicable national procedural rules must however observe the principles of equivalence and effectiveness.
SOURCE: Monthly Case-law Digest – March 2021
Appeal – State aid – Aid granted to certain professional football clubs – Article 107(1) TFEU – Concept of ‘advantage’ – Aid scheme – Regulation (EU) 2015/1589 – Article 1(d) – Reduced tax rate – Non-profit entities – Less advantageous tax deduction – Effect – Cross-appeal – Articles 169 and 178 of the Rules of Procedure of the Court of Justice
A Spanish law adopted in 1990 obliged all Spanish professional sports clubs to convert into public limited sports companies, with the exception of professional sports clubs that had achieved a positive financial balance during the financial years preceding adoption of that law. Fútbol Club Barcelona (FCB), and three other professional football clubs which came within that exception – Club Atlético Osasuna (Pamplona), Athletic Club (Bilbao) and the Real Madrid Club de Fútbol (Madrid) – had thus chosen to continue operating in the form of non-profit legal persons and enjoyed, in that capacity, a special rate of income tax. As that specific tax rate remained, until 2016, below the rate applicable to public limited sports companies, the Commission took the view, by decision of 4 July 2016, 41 that that legislation, in introducing a preferential corporate tax rate for the four clubs concerned, constituted unlawful and incompatible State aid, and ordered Spain to discontinue it and to recover the individual aid provided to the beneficiaries of that scheme.
Hearing an action brought by FCB against the decision at issue, the General Court of the European Union, by judgment of 26 February 2019, 42 annulled that decision on the ground that the Commission had not proved to the requisite legal standard the existence of an economic advantage conferred on the beneficiaries of the measure at issue. In particular, the General Court found that the Commission had not sufficiently assessed whether the advantage resulting from the reduced tax rate could be offset by the less favourable deduction rate for reinvestment of extraordinary profits applicable to clubs operating in the form of non-profit legal persons compared to that applicable to entities operating in the form of public limited sports companies.
In its judgment of 4 March 2021, the Court of Justice, granting the form of order sought in the appeal brought by the Commission, sets aside the judgment under appeal. In support of its appeal, the Commission raised a single ground alleging infringement of Article 107(1) TFEU, so far as concerns, first, the concept of an ‘advantage capable of constituting State aid’, within the meaning of that provision, and, second, the Commission’s duty of diligence in the context of the examination of the existence of aid, in particular from the point of view of the existence of an advantage. In that context, the Court specifies the evidentiary requirements incumbent on the Commission in the analysis of whether a tax regime confers an advantage on its beneficiaries and, therefore, whether it is capable of constituting ‘State aid’ within the meaning of Article 107(1) TFEU.
Findings of the Court
In its assessment of the merits of the single ground of appeal, the Court finds, in the first place, that the General Court erred in law when it found that the decision at issue was to be construed as a decision relating both to an aid scheme and to individual aid, since the Commission also expressed its view, in its decision, on the aid individually granted to the four clubs named as beneficiaries. In the case of an aid scheme, a distinction must be drawn between the adoption of that scheme and the aid granted on the basis of it. Individual measures which merely implement an aid scheme constitute mere measures implementing the general scheme, which do not, in principle, have to be notified to the Commission.
In the present case, the Court observes that the measure at issue concerns such an aid scheme, since the specific tax provisions applicable to non-profit entities, in particular the reduced tax rate, are capable of benefitting, by virtue of that measure alone, each of the eligible football clubs, defined in a general and abstract manner, for an indefinite period of time and an indefinite amount, without further implementing measures being required and without those provisions being linked to the realisation of a specific project. Therefore, the mere fact that, in the present case, aid was granted individually to the clubs on the basis of the aid scheme at issue cannot have any bearing on the examination to be carried out by the Commission to determine the existence of an advantage. In those circumstances, therefore, the General Court was wrong to find such a fact to be relevant.
In the second place, the Court finds that the error in law thus committed by the General Court vitiates the conclusions which the General Court draws from it as to the extent of the obligations incumbent on the Commission as regards proof of the existence of an advantage. That erroneous premiss led the General Court to consider that the Commission ought to have taken into account, for the purpose of its analysis, not only the advantage resulting from the reduced tax rate, but also the other components of the tax regime at issue, which the General Court finds to be inseparable from that regime, such as the possibilities of deductions, in so far as capping those deductions could offset that advantage.
The Court recalls that, admittedly, the Commission is required to carry out a global assessment of the aid scheme, taking into account all the components which constitute its specific features, both favourable to its beneficiaries and unfavourable to them. However, the examination of the existence of an advantage cannot depend on the financial situation of the beneficiaries at the time of the subsequent grant of individual aid on that basis. In particular, the impossibility of determining, at the time of the adoption of an aid scheme, the exact amount, per tax year, of the advantage actually conferred on each of its beneficiaries, cannot prevent the Commission from finding that that scheme was capable, from that moment, of conferring an advantage on those beneficiaries and cannot, accordingly, exempt the Member State concerned from its substantive requirement to notify such a scheme. If, as the General Court acknowledged in the judgment under appeal, the Commission were required to verify, in the context of the analysis of a tax regime, on the basis of updated data, whether the advantage has actually materialised in subsequent tax years, and, where relevant, whether the advantage has been offset by the disadvantages recorded in other tax years, Member States which fail to comply with their obligation to notify such a scheme would be favoured by the approach in question. It is, therefore, only at the stage of the possible recovery of the individual aid granted on the basis of the aid scheme at issue that the Commission is required to look at the individual situation of each beneficiary, such a recovery requiring the exact amount of aid which those beneficiaries have actually obtained in each tax year to be determined.
In the present case, it is common ground that, from the time of its adoption, the aid scheme resulting from the measure at issue, in so far as it granted certain clubs eligible for that scheme – including FCB – the possibility of continuing to operate, by way of derogation, as a non-profit entity, allowed them to benefit from a reduced tax rate compared to that applicable to clubs operating as public limited sports companies. In so doing, the aid scheme at issue was, from the time of its adoption, liable to favour clubs operating as non-profit entities over clubs operating in the form of public limited sports companies, thereby conferring on them an advantage capable of falling within the scope of Article 107(1) TFEU. It follows that, to demonstrate to the requisite legal standard that the aid scheme at issue confers on its beneficiaries an advantage falling within the scope of Article 107(1) TFEU, the Commission was not required to examine, in the decision at issue, the effect of the deduction for reinvestment of extraordinary profits or that of the possibilities of deferral in the form of a tax credit and, in particular, whether that deduction or those possibilities would neutralise the advantage resulting from the reduced tax rate. Therefore, it must be held that the General Court erred in law in ruling that the Commission was obliged to carry out such an examination, if necessary, by requesting relevant information. Consequently, the Court sets aside the judgment under appeal on that point.
Lastly, as regards the consequences of setting aside the judgment under appeal, the Court finds, first of all, that, to uphold the action seeking annulment of the decision at issue, the General Court admittedly upheld, by the judgment under appeal, the second plea in law alleging, in essence, an incomplete analysis of the existence of an advantage, but first rejected the plea alleging infringement of Article 49 TFEU, in that the Commission ought, according to the FCB, to have found that the obligation imposed on professional sports clubs to convert themselves into public limited sports companies was contrary to the freedom of establishment guaranteed by that provision. In such circumstances, the Court finds that FCB or Spain, intervening in support of the form of order sought by the football club, were entitled to challenge, in the context of a cross-appeal, the merits of the grounds for rejecting the plea in question, even if the General Court had upheld their forms of order on other grounds. In the absence of such an appeal, the judgment under appeal therefore has the force of res judicata on that point.
That being stated, the Court considers that the state of the proceedings is such that it may give final judgment in the matter and, ruling, accordingly, on it, it rejects the four other pleas relied on at first instance, alleging, respectively, errors which the Commission committed in its examination of the advantage conferred by the measure at issue, infringement of the principles of the protection of legitimate expectations and of legal certainty, infringement of Article 107(1) TFEU, in that the Commission did not consider that the measure at issue was justified by the internal logic of the tax system at issue, and of the rules applicable to the recovery of existing aid. Consequently, the Court dismisses the action brought by FCB.
(Reference for a preliminary ruling – Judicial cooperation in criminal matters – Directive 2010/64/EU – Article 5 – Quality of the interpretation and translation – Directive 2012/13/EU – Right to information in criminal proceedings – Article 4(5) and Article 6(1) – Right to information about the accusation – Right to interpretation and translation – Directive 2016/343/EU – Right to an effective remedy and to a fair trial – Article 48(2) of the Charter of Fundamental Rights of the European Union – Article 267 TFEU – Second subparagraph of Article 19(1) TEU – Admissibility – Appeal in the interests of the law against a decision ordering a reference for a preliminary ruling – Disciplinary proceedings – Power of the higher court to declare the request for a preliminary ruling unlawful)
SOURCE: Court of Justice of the European Union, Press Release, No 207/21, 23 November '21
A judge of the Pesti Központi Kerületi Bíróság (Central District Court, Pest, Hungary) (‘the referring judge’) is seised of criminal proceedings brought against a Swedish national. At the first interview with the investigative authority, the accused, who does not speak Hungarian and was assisted by a Swedish-language interpreter, was informed of the suspicions against him. However, there is no information as to how the interpreter was selected, how that interpreter’s competence was verified, or whether the interpreter and the accused understood each other. Indeed, Hungary does not have an official register of translators and interpreters and Hungarian law does not specify who may be appointed in criminal proceedings as a translator or interpreter, nor according to what criteria. Consequently, according to the referring judge, neither the lawyer nor the court is in a position to verify the quality of the interpretation. In those circumstances, he considers that the accused’s right to be informed of his rights could be infringed, as well as his rights of defence.
Accordingly, the referring judge decided to ask the Court of Justice whether Hungarian law was compatible with Directive 2010/64 , on the right to interpretation and translation in criminal proceedings, and Directive 2012/13, on the right to information in such proceedings. In the event of incompatibility, he also asks whether the criminal proceedings may be continued in the absence of the accused, as such proceedings are provided for under Hungarian law, in certain cases, where the accused is not present at the hearing.
Following that initial reference to the Court, the Kúria (Supreme Court, Hungary) ruled on an appeal in the interests of the law brought by the Hungarian Prosecutor General against the order for reference and held that order to be unlawful, without, however, altering its legal effects, on the ground, in essence, that the questions referred were not relevant and necessary for the resolution of the dispute concerned. On the same grounds as those underlying the decision of the Kúria (Supreme Court), disciplinary proceedings, which have in the meantime been discontinued, were brought against the referring judge. Since he was uncertain as to whether such proceedings and the decision of the Kúria (Supreme Court) are compatible with EU law and as to the impact of that decision on the action to be taken upon the criminal proceedings before him, the referring judge made a supplementary request for a preliminary ruling in that regard.
Findings of the Court
First of all, the Court, sitting as the Grand Chamber, holds that the system of cooperation between the national courts and the Court of Justice, established by Article 267 TFEU, precludes a national supreme court from declaring, following an appeal in the interests of the law, that a request for a preliminary ruling submitted by a lower court is unlawful, without, however, altering the legal effects of the order for reference, on the ground that the questions referred are not relevant and necessary for the resolution of the dispute in the main proceedings. Such a review of legality is similar to the review carried out in order to determine whether a request for a preliminary ruling is admissible. for which the Court of Justice has exclusive jurisdiction. Furthermore, such a finding of illegality is liable, first, to weaken the authority of the answers that the Court will provide and, secondly, to limit the exercise of the national courts’ jurisdiction to make a reference to the Court for a preliminary ruling and, consequently, is liable to restrict the effective judicial protection of the rights which individuals derive from EU law.
In such circumstances, the principle of the primacy of EU law requires the lower court to disregard the decision of the supreme court of the Member State concerned. That conclusion is in no way undermined by the fact that, subsequently, the Court may find that the questions referred for a preliminary ruling by that lower court are inadmissible.
In the second place, the Court holds that EU law precludes disciplinary proceedings from being brought against a national judge on the ground that he or she has made a reference for a preliminary ruling to the Court of Justice, since the mere prospect of being the subject of such proceedings can undermine the mechanism provided for in Article 267 TFEU and judicial independence, which independence is essential to the proper working of that mechanism. Moreover, such proceedings are liable to deter all national courts from making references for a preliminary ruling, which could jeopardise the uniform application of EU law.
Lastly, in the third place, the Court examines the obligations of the Member States under Directive 2010/64 with regard to interpretation and translation in criminal proceedings. In that regard, the Member States must take specific measures ensuring, first, that the quality of the interpretation and translations is sufficient to enable the suspect or accused person to understand the accusation against him or her. The creation of a register of independent translators or interpreters is, in that regard, one of the means of pursuing that objective. Secondly, the measures adopted by the Member States must enable the national courts to ascertain that the interpretation was of sufficient quality, so that the fairness of the proceedings and the exercise of the rights of the defence are safeguarded.
Following that verification, a national court may conclude that, either because the interpretation provided was inadequate or it is impossible to ascertain its quality, a person has not been informed, in a language which he or she understands, of the accusation against him or her. In such circumstances, Directives 2010/64 and 2012/13, read in the light of the rights of the defence, within the meaning of Article 48(2) of the Charter of Fundamental Rights of the European Union, preclude the criminal proceedings from being continued in absentia.
SOURCE: Monthly Case-law Digest - January 2021
Reference for a preliminary ruling – Economic and monetary policy – Article 2(1) and Article 3(1)(c) TFEU – Monetary policy – Exclusive competence of the European Union – Article 128(1) TFEU – Protocol (No 4) on the Statute of the European System of Central Banks and of the European Central Bank – Article 16, first paragraph – Concept of ‘legal tender’ – Effects – Obligation to accept euro banknotes – Regulation (EC) No 974/98 – Whether possible for Member States to impose limitations on payments by means of banknotes and coins denominated in euro – Conditions – Regional legislation precluding the payment in cash of a radio and television licence fee to a regional public broadcasting body
Two German citizens who were liable to pay a radio and television licence fee in the Land of Hesse (Germany) offered to pay it to Hessischer Rundfunk (Hesse’s broadcasting body) in cash. Invoking its regulations on the procedure for payment of radio and television licence fees, which preclude any possibility of paying the licence fee in cash, Hessischer Rundfunk refused their offer and sent them payment notices.
The two German citizens brought an action against those payment notices and the dispute reached the Bundesverwaltungsgericht (Federal Administrative Court, Germany). That court noted that the exclusion of the possibility of paying the radio and television licence fee by means of euro banknotes, as provided for by Hessischer Rundfunk’s regulations on the payment procedure, infringes a higherranking provision of federal law, under which euro banknotes are to be unrestricted legal tender.
The Bundesverwaltungsgericht (Federal Administrative Court), however, queried whether that provision of federal law is compatible with the exclusive competence of the European Union in the area of monetary policy for the Member States whose currency is the euro, and referred the matter to the Court of Justice for a preliminary ruling. It also asked whether the status as legal tender of banknotes denominated in euro prohibited the public authorities of Member States from ruling out the possibility of a statutorily imposed payment obligation being discharged in cash, as is the case for payment of the radio and television licence fee in the Land of Hesse.
The Grand Chamber of the Court of Justice rules that a Member State whose currency is the euro may, in the context of the organisation of its public administration, adopt a measure obliging that administration to accept payment in cash or introduce, for a reason of public interest and under certain conditions, a derogation from that obligation.
Findings of the Court
First, the Court of Justice interprets the concept of ‘monetary policy’ in the area in which the European Union has exclusive competence for the Member States whose currency is the euro. 50 The Court begins by stating that that concept is not limited to its operational implementation but also entails a regulatory dimension intended to guarantee the status of the euro as the single currency. Next, it notes that the attribution of the status of ‘legal tender’ only to euro banknotes issued by the European Central Bank and the national central banks affirms the official nature of those banknotes in the euro area, excluding the possibility that other banknotes may also qualify for that status. It adds that the concept of ‘legal tender’ of a means of payment denominated in a currency unit signifies that that means of payment cannot generally be refused in settlement of a debt denominated in the same currency unit. Last, it points out that the fact that the EU legislature can lay down the measures necessary for the use of the euro as the single currency reflects the need to establish uniform principles for all Member States whose currency is the euro and contributes to the pursuit of the primary objective of the European Union’s monetary policy, which is to maintain price stability.
Consequently, the Court rules that the European Union alone is competent to specify the status of legal tender accorded to banknotes denominated in euro. The Court recalls that, where competence is conferred exclusively on the European Union, Member States cannot adopt or retain a provision falling within that competence, even in a situation where the European Union has not exercised its exclusive competence.
However, the Court notes that it is not necessary for the establishment of the status of legal tender of banknotes denominated in euro or for the preservation of their effectiveness as legal tender to impose an absolute obligation to accept those banknotes as a means of payment. Nor is it necessary that the European Union lay down exhaustively and uniformly the exceptions to that fundamental obligation, so long as it is possible, as a general rule, to pay in cash. Consequently, the Court concludes that the Member States whose currency is the euro are competent to regulate the procedures for settling pecuniary obligations, so long as it is possible, as a general rule, to pay in cash denominated in euro. Thus, a Member State can adopt a measure which obliges its public administration to accept cash payments in that currency.
Second, the Court notes that the status of legal tender of banknotes and coins denominated in euro implies, in principle, an obligation to accept them. However, it makes clear that that obligation may, in principle, be restricted by the Member States for reasons of public interest, provided that those restrictions are proportionate to the public interest objective pursued, which means, in particular, that other lawful means for the settlement of monetary debts must be available. In that regard, the Court states that it is in the public interest that monetary debts to public authorities may be honoured in a way that does not involve those authorities in unreasonable expense which would prevent them from providing services cost-effectively. Thus, the public interest reason relating to the need to ensure the fulfilment of a statutorily imposed payment obligation is capable of justifying a limitation on cash payments, in particular where the number of licence fee payers from whom the debt has to be recovered is very high.
It is nevertheless for the Bundesverwaltungsgericht (Federal Administrative Court) to ascertain whether such a limitation is proportionate to the objective of actually recovering the radio and television licence fee, in particular in the light of the fact that the lawful alternative means of payment may not be readily accessible to everyone liable to pay it.
JUDGMENT OF THE COURT OF 27 JUNE OF 2000, OCEANO GRUPO EDITORIALI SALVAT EDITORES, JOINED CASES C-240/98 TO C-244/98
(Directive 93/13/EEC - Unfair terms in consumer contracts - Jurisdiction clause - Power of the national court to examine of its own motion whether that clause is unfair)
(...) It follows that where a jurisdiction clause is included, without being individually negotiated, in a contract between a consumer and a seller or supplier within the meaning of the Directive and where it confers exclusive jurisdiction on a court in the territorial jurisdiction of which the seller or supplier has his principal place of business, it must be regarded as unfair within the meaning of Article 3 of the Directive in so far as it causes, contrary to the requirement of good faith, a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer (p. 24).
As to the question of whether a court seised of a dispute concerning a contract between a seller or supplier and a consumer may determine of its own motion whether a term of the contract is unfair, it should be noted that the system of protection introduced by the Directive is based on the idea that the consumer is in a weak position vis-à-vis the seller or supplier, as regards both his bargaining power and his level of knowledge. This leads to the consumer agreeing to terms drawn up in advance by the seller or supplier without being able to influence the content of the terms (p. 25).
The aim of Article 6 of the Directive, which requires Member States to lay down that unfair terms are not binding on the consumer, would not be achieved if the consumer were himself obliged to raise the unfair nature of such terms. In disputes where the amounts involved are often limited, the lawyers' fees may be higher than the amount at stake, which may deter the consumer from contesting the application of an unfair term. While it is the case that, in a number of Member States, procedural rules enable individuals to defend themselves in such proceedings, there is a real risk that the consumer, particularly because of ignorance of the law, will not challenge the term pleaded against him on the grounds that it is unfair. It follows that effective protection of the consumer may be attained only if the national court acknowledges that it has power to evaluate terms of this kind of its own motion (p. 26).
(...) the national court [is] able to determine of its own motion whether a term of a contract before it is unfair when making its preliminary assessment as to whether a claim should be allowed to proceed before the national courts (p. 29).
SOURCE: Monthly Case-law Digest - June 2021
Reference for a preliminary ruling – Intellectual property – Copyright and related rights – Making available and management of a video-sharing platform or a file-hosting and -sharing platform – Liability of the operator for infringements of intellectual property rights by users of its platform – Directive 2001/29/EC – Article 3 and Article 8(3) – Concept of ‘communication to the public’ – Directive 2000/31/EC – Articles 14 and 15 – Conditions for exemption from liability – No knowledge of specific infringements – Notification of such infringements as a condition for obtaining an injunction
In the dispute giving rise to the first case (C-682/18), Frank Peterson, a music producer, is bringing an action against YouTube and its legal representative Google before the German courts in respect of the posting online, on YouTube, in 2008, of a number of recordings over which he claims to hold various rights. Those recordings were posted by users of that platform without his permission.
They are songs from the album A Winter Symphony by Sarah Brightman and private audio recordings made during concerts on her ‘Symphony Tour’. In the dispute giving rise to the second case (C-683/18), the publisher Elsevier is bringing an action against Cyando before the German courts in respect of the posting online, on the ‘Uploaded’ filehosting and -sharing platform, in 2013, of various works over which Elsevier holds exclusive rights. Those works were posted by users of that platform without its permission. They are Gray’s Anatomy for Students, Atlas of Human Anatomy and Campbell-Walsh Urology, which could be consulted on Uploaded via the link collections rehabgate.com, avaxhome.ws and bookarchive.ws.
The Bundesgerichtshof (Federal Court of Justice, Germany), which is hearing the two cases, referred a number of questions to the Court for a preliminary ruling so that the latter can provide clarification on, inter alia, the liability of the operators of online platforms as regards copyright-protected works illegally posted online on such platforms by platform users.
The Court has examined that liability under the set of rules, applicable at the material time, under Directive 2001/29 on copyright, Directive 2000/31 on electronic commerce, and Directive 2004/48 on the enforcement of copyright. The questions referred do not concern the set of rules established by Directive 2019/790 relating to copyright and related rights in the Digital Single Market, which came into force subsequently.
In its Grand Chamber judgment, the Court finds, inter alia, that, as EU law currently stands, operators of online platforms do not themselves make a communication to the public of copyright-protected content illegally posted online by users of those platforms unless those operators contribute, beyond merely making those platforms available, to giving access to such content to the public in breach of copyright. Moreover, the Court finds that such operators may benefit from the exemption from liability under Directive 2000/31 on electronic commerce unless they play an active role of such a kind as to give them knowledge of or control over the content uploaded to their platform.
Assessment by the Court
In the first place, the Court examines the question whether the operator of a video-sharing platform or a file-hosting and -sharing platform on which users can illegally make protected content available to the public itself carries out, in circumstances such as those at issue in the present cases, a ‘communication to the public’ of that content within the meaning of Directive 2001/29 on copyright. 71 At the outset, the Court states the objectives and definition of the concept of a ‘communication to the public’ as well as the associated criteria which must be taken into account when making an individual assessment of what that concept means.
Amongst those criteria, the Court emphasises the indispensable role played by the platform operator and the deliberate nature of its intervention. That platform operator makes an ‘act of communication’ when it intervenes, in full knowledge of the consequences of its action, to give its customers access to a protected work, particularly where, in the absence of that intervention, those customers would not, in principle, be able to enjoy the broadcast work.
In that context, the Court finds that the operator of a video-sharing platform or a file-hosting and - sharing platform, on which users can illegally make protected content available to the public, does not make a ‘communication to the public’ of that content, within the meaning of Directive 2001/29 on copyright, unless it contributes, beyond merely making that platform available, to giving access to such content to the public in breach of copyright.
That is the case, inter alia, where that operator has specific knowledge that protected content is available illegally on its platform and refrains from expeditiously deleting it or blocking access to it, or where that operator, despite the fact that it knows or ought to know, in a general sense, that users of its platform are making protected content available to the public illegally via its platform, refrains from putting in place the appropriate technological measures that can be expected from a reasonably diligent operator in its situation in order to counter credibly and effectively copyright infringements on that platform, or where that operator participates in selecting protected content illegally communicated to the public, provides tools on its platform specifically intended for the illegal sharing of such content or knowingly promotes such sharing, which may be attested by the fact that that operator has adopted a financial model that encourages users of its platform illegally to communicate protected content to the public via that platform.
In the second place, the Court looks at the question whether the operator of online platforms may benefit from the exemption from liability, provided for in Directive 2000/31 on electronic commerce, in respect of protected content which users illegally communicate to the public via its platform. In that context, the Court examines whether the role played by that operator is neutral, that is to say, whether its conduct is merely technical, automatic and passive, which means that it has no knowledge of or control over the content it stores, or whether, on the contrary, that operator plays an active role that gives it knowledge of or control over that content. In that regard, the Court finds that such an operator can benefit from the exemption from liability provided that it does not play an active role of such a kind as to give it knowledge of or control over the content uploaded to its platform. On that point, the Court specifies that, for such an operator to be excluded from the exemption from liability provided for in that directive, it must have knowledge of or awareness of specific illegal acts committed by its users relating to protected content that was uploaded to its platform.
In the third place, the Court clarifies the circumstances in which, under Directive 2001/29 on copyright, 73 rightholders can obtain injunctions against operators of online platforms. It finds that that directive does not preclude a situation under national law whereby a copyright holder or the holder of a related right may not obtain an injunction against an operator whose service has been used by a third party to infringe his or her right, that operator having had no knowledge or awareness of that infringement, within the meaning of Directive 2000/31 on electronic commerce, unless, before court proceedings are commenced, that infringement has first been notified to that operator and the latter has failed to intervene expeditiously in order to remove the content in question or to block access to it and to ensure that such infringements do not recur.
It is, however, for the national courts to satisfy themselves, when applying such a condition, that that condition does not result in the actual cessation of the infringement being delayed in such a way as to cause disproportionate damage to the right holder.
(References for a preliminary ruling – Rule of law – Independence of the judiciary – Second subparagraph of Article 19(1) TEU – National legislation providing the possibility for the Minister for Justice to second judges to higher courts and to terminate those secondments – Adjudicating panels in criminal cases including judges seconded by the Minister for Justice – Directive (EU) 2016/343 – Presumption of innocence)
SOURCE: Court of Justice of the European Union, Press Release No 204/21, 16 November '21
In connection with seven criminal cases pending before it, the Sąd Okręgowy w Warszawie (Regional Court, Warsaw, Poland) questions whether the composition of the adjudicating panels called upon to rule on those cases is in line with EU law, having regard to the presence in those panels of a judge seconded in accordance with a decision of the Minister for Justice pursuant to the Law on the organisation of the ordinary courts.
According to that court, under the Polish rules relating to the secondment of judges, the Minister for Justice may assign a judge, by way of secondment, to a higher criminal court on the basis of criteria which are not officially known, without the secondment decision being amenable to judicial review. In addition, that minister may terminate that secondment at any time without such termination being subject to criteria that are predefined by law or having to be accompanied by a statement of reasons. In that context, the referring court decided to question the Court of Justice as to whether the rules referred to above are in line with the second subparagraph of Article 19(1) TEU and as to whether those rules undermine the presumption of innocence applicable to criminal proceedings resulting from, inter alia, Directive 2016/343.
By its judgment, delivered by the Grand Chamber, the Court rules that the second subparagraph of Article 19(1) TEU, read in the light of Article 2 TEU, and Directive 2016/343 preclude provisions of national legislation pursuant to which the Minister for Justice of a Member State may, on the basis of criteria which have not been made public, second a judge to a higher criminal court for a fixed or indefinite period and may, at any time, by way of a decision which does not contain a statement of reasons, terminate that secondment, irrespective of whether that secondment is for a fixed or indefinite period.
Findings of the Court
As a preliminary point, the Court finds that the Polish ordinary courts, which include the Regional Court, Warsaw, fall within the Polish judicial system in the ‘fields covered by Union law’, within the meaning of the second subparagraph of Article 19(1) TEU. To guarantee that such courts can ensure the effective legal protection required under that provision, maintaining their independence is essential.
Compliance with the requirement of independence means, inter alia, that the rules relating to the secondment of judges must provide the necessary guarantees in order to prevent any risk of that secondment being used as a means of exerting political control over the content of judicial decisions. In that regard, the Court emphasises that, although the fact that the Minister for Justice may not second judges without their consent constitutes an important procedural safeguard, there are, however, a number of factors which, in the referring court’s view, empower that minister to influence those judges and may give rise to doubts concerning their independence.
Analysing those various factors, the Court states, first of all, that, in order to avoid arbitrariness and the risk of manipulation, the decision relating to the secondment of a judge and the decision terminating that secondment must be taken on the basis of criteria known in advance and must contain an appropriate statement of reasons. In addition, as the termination of the secondment of a judge without that judge’s consent may have effects similar to those of a disciplinary penalty, it should be possible for such a measure to be legally challenged in accordance with a procedure which fully safeguards the rights of the defence.
Furthermore, noting that the Minister for Justice also occupies the position of Public Prosecutor General, the Court finds that that minister thus has, in any given criminal case, power over both the public prosecutor attached to the ordinary court and the seconded judges, which is such as to give rise to reasonable doubts in the minds of individuals as to the impartiality of those seconded judges. Lastly, the seconded judges in the adjudicating panels called upon to rule in the disputes in the main proceedings are also occupying the positions of deputies of the Disciplinary Officer for Ordinary Court Judges, who is the person responsible for investigating disciplinary proceedings brought against judges. The combination of those two roles, in a context where the deputies of the Disciplinary Officer for Ordinary Court Judges are also appointed by the Minister for Justice, is such as to give rise to reasonable doubts in the minds of individuals as to the imperviousness of the other members of the adjudicating panels concerned to external factors. Taken together, those various facts are, subject to the final assessments which are to be carried out by the referring court, such as may lead to the conclusion that the Minister for Justice has, on the basis of criteria which are not known, the power to second judges to higher courts and to terminate their secondment, without being required to give reasons for that decision, with the result that, during the period of those judges’ secondment, they are not provided with the guarantees and the independence which all judges should normally enjoy in a State governed by the rule of law.
Such a power cannot be considered compatible with the obligation to comply with the requirement of independence. Furthermore, as regards the presumption of innocence applicable to criminal proceedings, respect for which is intended to be ensured by Directive 2016/343, it presupposes that the judge is free of any bias and any prejudice when examining the criminal liability of the accused. The independence and impartiality of judges are therefore essential conditions for guaranteeing the presumption of innocence. However, in this instance, it appears that, in the circumstances referred to above, the independence and impartiality of judges and, accordingly, the presumption of innocence may be jeopardised.