Introduction

2021 has seen a number of pivotal judgements handed down by judges in the Court of Justice of the EU and the European Court of Human Rights. These have spanned numerous areas of law and had a wide impact.

This article is far from an exhaustive list of pivotal cases of 2021 and acts as a brief snapshot only.

 

Snapshot of key cases of 2021

Taken in chronological order, we first start at the case of C-362/19 P Fútbol Club Barcelona on state aid advantage from the Court of Justice (“CJEU”) on 4 March 2021.

In February 2019, the General Court ruled that Spain had unlawfully implemented aid (specifically tax privileges) to the applicant clubs - ordering Spain to discontinue the arrangement and recover aid. Under Article 19 of Law 10/1990, all professional sport clubs in Spain were required to become a public limited sport company on the basis that this reform would lead to better financial management. Those clubs with a positive financial balance in previous years were exempted from this requirement, however. As non-profit legal persons, those exempted clubs benefitted from special tax rates for more than 20 years. Fútbol Club Barcelona (“FCB”) applied for the annulment of this decision.

The decision in this case provides a useful explanation that the existence of an advantage must be assessed ex-ante - irrelevant of a potential future offset. To classify a national measure as state aid, one of four conditions required is that the measure confers a selective advantage to the beneficiary. The CJEU explain that, when assessing whether there is an advantage, the Commission must focus exclusively “to that scheme and not to aid subsequently granted on the basis of it”, meaning that the question must be assessed “with reference to the time of adoption of the scheme in question, by carrying out an ex-ante analysis” [86]. Further helpful guidance on the ex-ante approach can be found in the judgement.

We move next to the CJEU case of Luxembourg v Commission and T-318/18 Amazon EU Sàrl and Amazon.com, Inc. v Commission dated 12 May 2021. Here the CJEU annulled a decision by the Commission finding aid to be incompatible with the internal market.

As a brief overview, Amazon have been active in Europe via two companies; Amazon Europe Holding Technologies SCS (“LuxSCS”) and Amazon EU Sàrl (“LuxOpCo”). A tax ruling was handed down by the Luxembourg tax authority confirming that LuxSCS was not subject to corporate income tax in the jurisdiction due to its legal form and approved a method of working out annual royalties payable to both companies under a licence agreement.

In 2017, the Commission found the method of calculating royalties to amount to state aid under Article 107 TFEU, against the internal market. For instance, they felt this calculation allowed LuxOpCo’s remuneration (and therefore tax base) to be reduced artificially. On assessment, the CJEU stated that, in the above instance, the Commission can conclude an advantage only where they can show methodological errors impacting the transfer pricing result in a reduction in the company’s taxable profit versus the tax burden stemming from normal rules on taxation.

The CJEU found other errors in the Commission’s approach such as their method of calculating LuxSCS’ expected remuneration associated with its ownership of intangible assets of focus in the case. Overall, the Court held the Commission’s evidence was not sufficient to prove an artificial reduction to the tax burden. An advantage under Article 107 TFEU was not established.

Moving next to the EU and Poland. Throughout 2021, we have witnessed the EU institutions interactions with Poland in response to PiS’ judicial reforms enacted in the country and the Polish Constitutional Court’s ruling finding that some EU Treaties are incompatible with the Polish Constitution (with the latter holding supremacy).

Of particular interest is the CJEU case of C-204/21 R Commission v Poland of 27 October 2021. Here, the CJEU agreed to order a daily penalty of €1,000,000 on Poland for their failure to comply with interim measures introduced in their Order of 14 July 2021. The case at hand focuses on the disciplinary chamber established in Poland which was found to be incompatible with EU law, due to risking judicial independence and other EU principles, and was ordered to be removed. Please click here to see our article of 23 November 2021 for further detail on the topics of judicial independence and primacy of law within the EU-Poland relationship. The judgement can be accessed here.

Two cases were handed down last month in relation to Google. Firstly, we will review the CJEU case of 10 November 2021, Case T‑612/17, Google and Alphabet v Commission (Google Shopping) covering competition issues. The full judgement can be accessed here.

By way of background, on 27 June 2017, Google were found to have abused their dominant position in the online general search service market in a total of 13 countries within the European Economic Area. Of note, the Commission established that Google had favoured its own comparison-shopping service (“CSS”) on its general results page (presenting product searches in an “eye catching manner”), together with demoting results from competing CSS’. A fine of €2,424,495,000 was placed on Google and its parent company, Alphabet.

Google and Alphabet proceeded to bring an action against this decision. Overall, the majority of their action was dismissed with the fine upheld. The CJEU restated points on placement and display of its CSS and use of ranking algorithms to demote the position of CSS’. The Court found that Google had departed from competition on the merits. Their action was liable to result in a weakening of competition on the market. Overall, the CJEU emphasised the severity of the infringement – having been adopted with intention. This all supported a conclusion that the level of fine was correct.

Moving to the next Google decision of the same date, we see the UK Supreme Court’s judgement in Lloyd v Google LLC [2021] UKSC 50 on the topic of group action litigation. On the facts, applicant Mr Lloyd wished to bring a claim against Google as part of a representative action for 4 million individuals in England and Wales as a result of Google’s breach of privacy laws. This amounted to an opt-out litigation I.e., those within the group could choose to be opted-out of the action.

To bring such representative action, each and every class member must have the same interest in the claim. This test exists to ensure that the representative will pursue the action in a manner “which will effectively promote and protect the interests of all the members of the represented class. That plainly is not possible where there is a conflict of interest between class members, in that an argument which would advance the cause of some would prejudice the position of others” [71].

The Supreme Court set out the reasons why the claim could not be brought under this method. Emphasis was placed on the use of representative action where the compiling of claims into one action is the only way to attain justice in the context where all individuals have the same interest in the result. The judgement set out guidance on the representative rule, such as emphasising that these actions can be brought for damage claims but that the nature of the claim can make a representative action unsuitable. Where individual assessment per person is needed common issues of fact or law should first be reviewed with individual assessments of quantum to take place if needed.

Following, where the use of representative actions is suitable, managed and appropriate to achieve justice, its use was clearly advocated. In the context of data breaches and resulting claims however, this judgement places a question mark over the applicability of this form of action. Please click here for the full judgement.

On 16 November 2021, the CJEU handed down their judgment in Case C-479/21 PPU Governor of Cloverhill Prison and Others confirming the application of the European Arrest Warrant (“EAW”) and surrender regime to Ireland. The full judgement can be found here.

In this case, it should be noted that Protocol 21, attached to the Treaties, allows for non-participation of Ireland in measures implemented under Title V Part Three of the TFEU (Area of Freedom, Security and Justice (“AFSJ”)). Here, Ireland have the option to opt-into these measures. Therefore, if the EAW provisions fell into the scope of the Protocol, they would not be bound by it.

The CJEU found that provisions in the Withdrawal Agreement for the continuation of the EAW in the UK during the transition period, together with provisions in the Trade and Cooperation Agreement on the new surrender regime for EAWs issued prior to the end of the transition period for individuals not yet arrested prior to that period are indeed binding on Ireland. The case provided an opportunity for the CJEU to elaborate on the EU competence to conclude the Withdrawal Agreement and legitimacy of its legal basis.