European Union Law Research Paper

1. A Community Based Upon The Rule Of Law

As the Court of Justice has repeatedly held, the European Community is a ‘Community based on the rule of law, in as much as neither its member states nor its institutions can avoid a review of whether the measures adopted by them are in conformity with the basic constitutional charter, the Treaty’ (Case C-2/88 Imm. – Zwartveld – [1990] European Court Reports (ECR) I – 3365 para. 16). In comparison with previous models for the peaceful cooperation and integration of states, the Community approach is outright revolutionary. While political considerations and diplomacy still have a great impact on the settlement of conflicts between member states, national sovereignty is no longer unlimited. States have to respect Community law lest violations are ascertained by the Court of Justice. Access to the Court is not limited to the member states and the institutions of the Community, legal proceedings may also be commenced by national courts of law which can request a preliminary ruling concerning the interpretation or the validity of Community Acts (article (art.) 234 EC). The enforcement of Community law is thus indirectly entrusted, beyond national governments, to a great number of national judges. While a change of government policy usually threatens to undermine the application or even the existence of international obligations which states have assumed under traditional treaties, Community law is much more stable due to its decentralized enforcement. An agreement of some, or even all, member state governments not to comply with certain Community acts would fail sooner or later as long as it is not embodied in an amendment of the basic Treaty which, however, has to be ratified by the parliaments of all member states. The repercussions on national policies are clear: member states are compeled to conduct their policies within the Community institutions. The pursuit of a separate policy outside that framework will often meet with opposition from Community law and the agencies called upon to enforce it. Within the Community institutions it is, however, almost impossible to pursue a policy of segregation. Thus, the rule of law established by the Treaty of Rome has narrowed the political margin of discretion left to the member states and has channeled their policies towards integration.

2. Institutions

Under art. 7 EC the tasks of the Community are carried out by five institutions: the European Parliament, the Council, the Commission, the Court of Justice, and the Court of Auditors. In addition, arts. 8 and 9 EC provide for a European Central Bank and a European Investment Bank.

In the political process, only the European Parliament, the Council, and the Commission are involved. While the traditional model of the Western constitution provides for a separation of legislative and executive powers between parliament and government, the respective roles of the three European Institutions are more complicated. The Commission may originally have been conceived as a kind of European executive which had to implement the integration program of the Treaty. But this task implies wide margins of political discretion, concerning both the priorities and the content of the measures to be adopted. Moreover, the Commission is the only institution which is entitled under the Treaty to initiate legislative proceedings. It is therefore a political heavyweight in the integration process. The governments of the member states have the right to nominate one or, in the case of bigger member states, two members of the Commission who are, however, completely independent in the performance of their duties (arts. 213 vs. EC).

It is up to the Council to represent the interests of member states within the Community. The Council consists of a representative of each member state. While each representative may veto a decision where unanimity is required, the votes of the Council members are weighted in accordance with the size of the member state where the Treaty requires a decision taken by qualified majority (art. 205 EC).

The European Parliament was initially named the Assembly and had very little weight in the legislative process, its rights being limited to mere consultation. However, various amendments to the Treaty have improved the legal situation of the Parliament and thereby increased its political influence. As of 2000, its members are elected by direct universal suffrage (art. 190 EC), which however grants a much greater relative weight to the votes stemming from small member states like Luxembourg than to those originating in big member states like Germany. While the rights of the Parliament are still limited to mere consultation in some areas, such as immigration policy (art. 67 EC), most legislative acts now have to be approved by both the Council and the Parliament in the so-called codetermination procedure under art. 251 EC. The Parliament still lacks the power to initiate legislation by its own motions.

3. Legislative Powers Of The Community

The Community has no inherent powers, it can only act within the limits of the powers conferred upon it by the member states in the Treaty (art. 5 (1) EC). However, the effect of that limitation is mitigated by three factors: first, the Court of Justice interprets the empowering provisions of the Treaty in a wide manner; second, the Treaty contains provisions such as art. 308 EC that confer upon the Community an open-ended power; and third, by the doctrine of implied powers, the Court of Justice has extended the Community’s powers even beyond the limits imposed by the Treaty to international commitments insofar as they help to protect the uniform application of Community legislation vis-a-vis third states (Case 22/70 – ERTA – [1971] ECR 263 para. 28).

The exercise of Community competence is further limited by the principles of subsidiarity and proportionality (arts. 5 (2) and (3) EC). The legal significance of the principle of subsidiarity is rather limited as compared with its sweeping use in political discussions. It does not relate to the objectives of a Community action which have to be established in conformity with the Treaty by the political institutions. Subsidiarity pertains only to the question of whether such objectives can better be achieved by the Community than by the member states, the so-called comparative efficiency test. It is highly questionable whether the Court of Justice is in a better position than the political institutions of the Community to decide upon that issue. This may be different in the case of the principle of proportionality which prohibits the Community from taking action that goes beyond what is necessary to achieve the objectives of the Treaty. In the context of the basic freedoms (see Sect. 6), the Court of Justice has in fact frequently assessed the proportionality of national restrictions imposed by member states.

4. Sources Of Community Law

It is common to distinguish primary and secondary, or derivative, Community law. The primary law of the Community consists of the founding treaties indicated in the introductory paragraph of this research paper and some additional international conventions. Moreover, the general principles common to the laws of the member states are sometimes classified as part of the primary Community law. These general principles are explicitly referred to in art. 288 (2) EC in the context of the noncontractual liability of the Community for damage caused by its institutions or by its servants; the Court of Justice considers the general principles as a source of law even outside that field and has recourse to them in other matters, too. However, if the distinction between primary and secondary sources of law indicates a ranking, it would appear that only certain general principles such as the fundamental rights can actually count among the primary sources of Community law. Whatever the status of the general principles may be, they allow for the flexibility that every legal system needs in order to adjust to new and unforeseen situations.

Article 249 EC lists five types of secondary sources of Community law: regulations, directives, decisions, recommendations, and opinions. While recommendations and opinions are not binding, most Community acts are adopted either in the form of a regulation or a directive. Regulations are directly applicable in all member states which means that the Community can impose obligations on, and grant rights to, the citizens of the member states without the intervention of national legislators. As opposed to that, a directive is binding only upon each member state to which it is addressed, and only as to the result to be achieved; to have any effect on the citizens of the Community it must be implemented by member states in accordance with the forms and methods of their legal systems (art. 249 (3) EC). It soon turned out that member states are sometimes slow or reluctant to implement directives. In a long line of cases the Court of Justice has therefore extended their effects: national laws, even if enacted prior to the directive, have to be interpreted so as to conform with it (Case 14/83 – on Colson – [1984] ECR 1891 para. 26); insofar as the directive is sufficiently precise and deals with ‘vertical’ relations involving the defaulting member state it may even be applied directly by the national courts and authorities (Case 8/81 – Becker – [1982] ECR 53 para. 24 vs. ); while such a direct effect is not admitted in ‘horizontal’ relations (Case C-91/92 – Faccini Dori – [1994] ECR I-3325 paras. 22 seq.), the private party suffering loss from the non-implementation of the directive may invoke the defaulting member state’s government liability (see Sect. 5). Although case law has approximated the directive to the regulation, the differences are still conspicuous: the regulation creates uniform law whose appearance is the same in all member states, the directive provides for a harmony of solutions at best, but even after that harmonization it is still difficult to assess the precise state of the law in other member states in the area at issue.

It is generally acknowledged, and has been affirmed on various occasions by the Court of Justice, that Community law is a separate legal system distinct from both international law and the national laws of the member states. Ever since the leading case an Gend and Loos was decided in 1963, the Court has also stressed the need for a uniform application of Community law in all member states (case 26 62, [1963] ECR 1). Two consequences follow from this premise: Community law has to be interpreted autonomously, i.e., without reference to definitions established in national law; moreover, as recognized in an Gend and Loos, Community law must be given direct effect and precedence over national law in so far as the Community provisions are sufficiently clear and unambiguous. In the course of time the conditions for direct effect were watered down. At the end of the twentieth century, direct effect is the norm rather than the exception; it applies to many Treaty provisions, to regulations, and even to many directives (see above in this Sect.). By the doctrine of direct effect the Court of Justice has obliged the national courts to enforce Community law, a duty which has been accepted over time by the national judiciaries.

5. Ensuring Compliance With Community Law

Both the Community institutions and the member states must comply with Community law. The Community institutions are subject to legal review in respect of their acts and their failure to act (arts. 230, 232 EC). In case of a violation of its laws committed by the Community or by its servants the Community may incur liability under art. 288 (2) EC. With regard to the member states, the Treaty ensures their compliance with Community law in a much less comprehensive way. Under arts. 226 and 227 EC the Commission and other member states are entitled to bring a violation before the Court of Justice. In practice, only the Commission has made use of this right. The Treaty does not provide for a direct right of action of individuals who complain of a violation of Community law committed by a member state, nor does it establish the liability of member states for such violations. Both gaps have been filled by judge-made law. By the aforementioned doctrine of direct effect the Court has enabled and instructed the national courts to disregard national provisions which violate Community law. Private parties may therefore invoke Community law in national courts, which can ask the Court of Justice for a preliminary ruling under art. 234 EC if they have doubts about the interpretation of the relevant Community provisions. In addition, the Court of Justice has established the member state’s liability for violations of Community law. Insofar as the respective member state has manifestly and gravely disregarded the limits of its political discretion it has to compensate private individuals who have suffered loss as a consequence of that violation. This concerns in particular the cases of a continuous breach of the obligation to implement a directive (cases C-46/93 and 48/93 – Brasserie du Pecheur vs. Germany and R. vs. Secretary for Transport, ex parte Factortame – [1996] ECR I – 29; cases C-187 et al. – Dillenkofer vs. Germany – [1996] ECR I – 4845).

6. Principles Of The Internal Market

Among the various Community policies listed in art. 3 EC the establishment of the Common Market which was later renamed the Internal Market is of central significance. With regard to other policies, the Treaty either limits Community activities to ‘a contribution’ to efforts made by the member states (e.g., health protection, education, consumer protection), contains vague indications as to the direction of a Community policy (economic and social cohesion, research, transeuropean networks), or empowers the Community only to conduct a policy in a given area without indicating any targets (agriculture, transport, environment, energy). As opposed to these policies, the establishment of a Common or Internal Market is not only unequivocal objective stated in arts. 2, 3, and 14 EC, but the basic principles of such a market are also spelt out in clear and operative rules throughout the Treaty. Thus, art. 14 (2) EC defines the Internal Market as ‘an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured.’ These basic freedoms are guaranteed in further provisions of the Treaty which the Court of Justice has interpreted as producing direct effects. National provisions which subject certain markets and activities to regulations in the interest of consumers, of the safety, of the environment, etc. are therefore regarded as restrictions of the basic Community freedoms and will be approved only if mandatory requirements of the public interest so command (case 120/78 – Cassis de Dijon – [1979] ECR 649 paras. 8, 9). By elaborating, in a long line of cases, both the basic rule of free movement and the exception in favor of national restrictions the Court of Justice effectively paved the way for the deregulation of many markets in Europe in the 1980s and 1990s. While political and economic discussions on deregulation were often deadlocked, a single judgment of the Court of Justice would announce a new deal for further negotiations. The case law being inspired by a strong stance against all kinds of discrimination on grounds of nationality (art. 12 EC), the Court has effectively opened national markets to competitors from other member states.

The basic freedoms are directed against restrictions imposed by states. Their implementation extends the scope of private liberties to engage in certain activities, but individuals and companies are not compelled actually to exercise them. Market actors may instead fear the intensification of competition and therefore try to maintain by private agreement the barriers to market access which were previously ordered by national legislation. The risk of such anticompetitive agreements and practices had been foreseen by the founders of the Community who explicitly provided for the prohibition of anticompetitive agreements and abuses of monopoly powers in arts. 81 and 82 EC. The enforcement of competition law which is entrusted to the Commission and to National Competition Authorities must be regarded as complementary to the basic freedoms: while the latter purport to open up the markets by removing national restrictions, the former are meant to protect that competition against private restrictions.

While the basic freedoms have been implemented to a large extent, the Internal Market is far from being a reality in many sectors. This is due to a great number of remaining and sometimes hidden obstacles. Thus, while nationality requirements for certain jobs have been abolished all over Europe, it is still lawful for member states to require a particular type of qualification which, in the absence of harmonization in the field of education, can hardly be acquired by foreigners in other member states; consequently, access to those professions and trades is still closed for foreign applicants. Another impediment to the implementation of the Internal Market consists in the diversities relating to the legal framework of transactions, in particular in civil and commercial law; they deter many small traders from making use of their basic freedoms. While the Community is empowered to approximate the laws of the member states for the purposes of the Internal Market (art. 95 EC), it makes slow progress in that area.

7. Fundamental Rights

The EC Treaty does not contain a list of unalterable rights. While some fundamental rights of that type are guaranteed by single provisions scattered over the Treaty such as prohibitions of discrimination or the basic freedoms, their scope is limited. It is therefore possible that secondary Community legislation infringes private rights which are protected by fundamental rights granted by national constitutions. In respect of such situations the German constitutional court indicated that it would subject secondary Community legislation to the basic rights granted by the German constitution as long as the Community had not developed a charter of basic rights of its own. A constitutional dispute between the Community and some member states appeared inevitable. As a response the European Court of Justice started to acknowledge the fundamental rights flowing from the constitutional traditions common to the member states and from the European Convention on Human Rights (UNTS Vol. 213, p. 221) as an integral part of the general principles of law protected by the Court (case 11/70 – Internationale Handelsgesellschaft – [1970] ECR 1125 at 1134). An attempt of the Community to accede to the European Convention on Human Rights failed when the Court ruled that the Community lacks the relevant power without an amendment to the Community treaties (opinion 2/94 – ECHR – [1996] ECR I – 1759). At present, a written affirmation of fundamental rights is absent in Community law, while the Treaty on European Union provides in art. 6 (2) that the Union shall respect fundamental rights as guaranteed by the European Convention on Human Rights and as they result from the constitutional traditions common to the member states. This assertion is of doubtful significance and does not go beyond the case law of the European Court of Justice.

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