March case law digest

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Decided cases

Freedom of establishment

C-297/16 Colegiul Medicilor Veterinari din România (CMVRO) v Autoritatea Naţională Sanitară Veterinară şi pentru Siguranţa Alimentelor

Judgment date 1 March 2018

Preliminary ruling concerning the interpretation of Article 15 Directive 2006/123/EC on services in the internal market and Article 63(1) TFEU. The request has been made in proceedings between the College of Veterinary Physicians of Romania (CMVRO) and the Autoritatea Națională Sanitară Veterinară și pentru Siguranța Alimentelor (National Veterinary Health and Food Safety Authority), supported by the National Association of Distributors of Veterinary Products of Romania.

The request concerned an application for the annulment of an order issued by the National Veterinary Health and Food Safety Authority, the adoption of which had the effect, according to the CMVRO, of abolishing the requirement for the share capital of establishments retailing veterinary medicinal products to be held only by veterinary practitioners.

The court held that Article 15 is to be interpreted as not precluding national legislation, such as that at issue in this case, under which veterinary practitioners have an exclusive right to retail and use organic products, special purpose anti-parasitic products and veterinary medicinal products. Additionally, it held that the same article is to be interpreted as precluding national legislation under which shares in establishments retailing veterinary medicinal products must be owned exclusively by one or more veterinary practitioners.

Area of freedom, security and justice, judicial cooperation in civil matters

C-274/16, C-447/16 and C-448/16 flightright GmbH v Air Nostrum, Líneas Aéreas del Mediterráneo SA

Judgment date 7 March 2018

This case held that an airline which operated only the first leg of a connecting flight in one Member State can be sued before the courts of the final destination in another Member State for compensation for delays. The different flights in this case were part of a single booking for the entire journey and the long delay of the arrival at the final destination was due to an irregularity which took place on the first of those flights.

The final destination (Germany) can be considered to be the place of performance of the services to be provided not only with respect to the second flight, but also with respect to the first domestic flight in Spain. The Court noted in particular that, according to the regulation on the rights of air passengers, where an operating air carrier which has not concluded a contract with the passenger fulfils obligations under that regulation, it is to be regarded as doing so on behalf of the person which concluded the contract with the passenger concerned.

Non-discrimination on grounds of nationality

C-284/16 Slowakische Republik v Achmea BV

Judgment date 6 March 2018

In 1991 the former Czechoslovakia and the Netherlands concluded an agreement on the encouragement and protection of investments (‘BIT’). The BIT provides that disputes between one Contracting State and an investor from the other Contracting State must be settled amicably or, in default, before an arbitral tribunal. Slovakia succeeded to that country’s rights and obligations under the BIT after Czechoslovakia in 1993.

In 2008, Achmea brought arbitration proceedings against Slovakia under the BIT on the grounds that a prohibition on the distribution of profits generated by sickness insurance activities was contrary to the agreement and had caused it financial damage. The tribunal found that Slovakia had infringed the BIT and ordered it to pay Achmea damages of approximately €22.1m. Slovakia then brought an action before the German courts for the award to be set aside on the grounds that the arbitration clause was contrary to Articles 18, 267 and 344 TFEU. The question was referred to the court by the Federal Court of Justice in Germany.

It was found by the Court that the arbitral tribunal may be called upon to interpret of apply EU law due to the primacy of EU and its direct effect on the Member States, and also that the tribunal does not form part of the judicial system of either the Netherlands or Slovakia and therefore cannot be classified as a court of tribunal ‘of a Member State’ within the meaning of Article 267 TFEU and so has no power to make a reference to the Court for a preliminary ruling.

On these grounds, the Court held that Slovakia and the Netherlands established a mechanism for settling disputes which is not capable of ensuring that those disputes will be decided by a court within the judicial system of the EU by concluding the BIT; only such a court is able to ensure the full effectiveness of EU law. The arbitration clause was therefore held to be incompatible with EU law.

Additionally, the Court also pointed out that under certain conditions, the review of arbitral awards by the courts of Member states could be legitimately limited in scope in the context of arbitration proceedings, these rules could not be applied in this case. While the former proceedings originated in the freely expressed wishes of the parties, the latter derived from a treaty by which Member States agree to remove jurisdiction of their own courts, and hence from the system of judicial remedies which the EU Treaty requires them to establish in the fields covered by EU law, disputes which may concern the application or interpretation of EU law.

Free movement of capital

C-52/16 and C-113/16 ‘SEGRO’ KFT. v Vas Megyei Kormányhivatal Sárvári Járási Földhivatala

Judgment date 6 March 2018

This case decided that depriving persons of the right of usufruct if they do not have a close family tie with the owner of agricultural land is contrary to EU law.

SEGRO, owned by Germany residents and an Austrian national, held rights of usufruct over agricultural land in Hungary. In 2014 and 2015, Hungarian authorities cancelled SEGRO’s rights of usufruct without compensation by relying on new national legislative provisions which provided that such rights can be granted or preserved only in favour of persons who have a close family tie with the owner of the agricultural land concerned.

The Court held that the national legislation at issue is not compatible with the principle of free movement of capital, irrespective of whether it provides for compensation for the persons who have been dispossessed of their rights of usufruct because it deprives persons from Member States other than Hungary of the ability to continue to enjoy their rights and to transferring them to other persons. The measure constitutes an unjustified indirectly discriminatory restriction on the principle of free movement of capital based on nationality or the origin of the capital.

The Court dismissed Hungary’s arguments that the restriction was justified because it was necessary to ensure the land was used for farming, to penalise infringements of the national rules on exchange controls, and to combat covert contracts as the restriction was unrelated to these objectives and was also not proportionate to the objective of combating those practices.

Fundamental rights

Joined Cases C-524/15 Luca Menci, C-537/16 Garlsson Real Estate SA and Others v Commissione Nazionale per le Societa e la Brosa (Consob) and Joined Cases C-596/16 Enzo Di Puma v Consob and C-597/16 Conscob v Antonio Zecca

Judgment date 20 March 2018

In these four Italian cases, the Court was requested to interpret the ne bis in idem principle in the context of the VAT directive and of the directive concerning financial markets. This principle provides that a person cannot be criminally prosecuted or punished twice for the same offence.

The Court has held that the ne bis idem principle may be limited for the purpose of protecting the financial interests of the EU and the financial markets thereof. However, such a limitation must not exceed what is strictly necessary to achieve those objectives.

In the joined cases of Menci and Garlsson, the Court stated that the objective of guaranteeing the integrity of the financial markets of the EU and public confidence in financial instruments is capable pf justifying a duplication of proceedings and penalties of a criminal nature.

However, in the joined cases of Di Puma and Zecca, Consob imposed administrative penalties on the two parties with respect to insider dealing. They claimed that, in the criminal proceedings with respect to the same acts brought in parallel to the administrative proceedings, the criminal court had held that the insider dealing was not established. According to national procedural law, the final criminal judgment of acquittal prohibits the act of bringing administrative proceedings with respect to the same acts. The Court held that this national legislation does not infringe EU law. In such a situation, the act of bringing the administrative proceedings clearly exceeds what is necessary in order to achieve the objective of guaranteeing the integrity of the financial markets of the EU and confidence in financial instruments.

Provisions governing the institutions – access to documents

T-540/15 De Capitani v European Parliament

Judgment date 22 March 2018

When faced with a request relating to access to documents drawn up by the Parliament or made available to it which contain information concerning the positions of the institutions on ongoing co-decision procedures, in particular the multi-column tables drawn up in connection with trilogues, Parliament refused to disclose all the information. It took the view that one of the columns of the documents contained provisional compromise texts and preliminarily positions of the Presidency of Council, the disclosure of which would undermine the decision-making process.

The General Court held that no general presumption of non-disclosure can be upheld based on the nature of a legislative procedure. Trilogue documents are subject to the same rules as set out above, since it is precisely openness in the legislative process that contributes to conferring greater legitimacy on the institutions in the eyes of EU citizens and increasing their confidence in them by allowing divergences between various points of view to be openly debated. The General Court also noted that there can be no possibility of the decision-making process being seriously undermined unless a risk of external pressure materialises through the expression of public opinion.

The European Parliament therefore must in principle grant access, on specific request, to documents relating to ongoing trilogues. The work of the trilogues constitutes a decisive stage in the legislative process

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